3 Ways Money Inevitably Bleeds Out of a Production

An important part of producing movies – or working anywhere creating content, really – is fighting unpreparedness, larceny, and fraud. We probably can’t eliminate them (unless there’s a magic wand I’m unaware of), but we can ease their influence on a production.

Production companies are notorious for bleeding money. If you were to go through every transaction and interview every crew member and vendor, you would undoubtedly find plenty of inefficient spending, graft, or theft.

Production companies are notorious for bleeding money. Click To Tweet

I’ve always felt like part of my role was to police this kind of stuff; to identify and plug those leaks as best I can. In that effort, I’d like to shine a light on the three biggest ways money seeps out of a film production.

Get the bonus content: How to Tell if that Receipt or Invoice Isn’t Legitimate

Unpreparedness

Film production

This is the biggest reason money bleeds out of a production.

Productions spend money inefficiently when the senior team (director, executives at the studio, and to some extent producers) are ill-prepared for shooting. When you’re spending $100,000 to $1,000,000 a day, you can’t waste a single minute.

It typically takes four forms:

1. Unskilled Leadership

I once worked with a director who was tight with an executive at the studio. “Director” is a generous title because he had no idea what he was doing.

He would show up in the morning on a day of shooting with no fucking clue what he wanted to do. He didn’t know what the scenes were about or why they existed. He certainly had no idea what he wanted them to look like.

The producer would say, “He just needs to get inspired,” but that was a cop out.

We would start a day planning to shoot 25 setups. We would maybe get through 15, but it was usually more like 12. We were forced to drop shots and even entire scenes.

When 4 PM came around each day and we only had a couple hours left to shoot, this genius’ idea was to scramble by shooting oners. A oner is when you shoot everything in one shot. No additional footage or coverage.

When the footage gets to the editing room, oners make it hard to cut. Everything happens in the same shot, so there’s nothing to cut away to. You can’t remove pauses because the camera has only one angle. You can’t cut to reactions or close ups because there are none.

The result is a boring movie. As one critic said about his movie, “It reads like the Torah.”

On the opposite end of the spectrum are the highly efficient directors like Mick Jackson. Mick did a bunch of features back in the 90s, as well as a lot of television. He was known for his clear direction and preparedness.

Mick showed up every day and knew exactly what he would shoot. He knew the set like the back of his hand. He knew where he would place every camera. There was a picture in his head of what the movie would look like long before we started shooting.

Sometimes he would deviate from his plan when something inspired him or the cast, but he didn’t rely on inspiration to keep moving forward. We almost never dropped a scene because we didn’t have enough time. Mick was prepared, so we got the best movie for the money.

2. No Direction for Crew

If the crew don’t have specific instructions from the creatives, they’re going to do everything they can so they aren’t the cause of bad execution.

For example, let’s say a director needs set construction to build a room. He doesn’t know how many walls he’ll shooting against, so construction has to build all four. When shooting day comes, the director only films against two walls. The other two walls were a waste of time and money.

It wasn’t construction’s fault for building too much. It was the director’s fault for not planning his shots and telling construction that he only needed two walls..

The same phenomenon can occur with every department. Props can limit themselves to one or two rentals if they know exactly what’s needed. Wardrobe can focus on fewer costume changes if someone gave them some criteria. Practical effects can be especially expensive.

If a director doesn’t know what he’ll shoot, everyone imagines the worst case scenario and builds that to protect themselves from blame. Protecting for the worst case scenario is expensive.

3. Overspending

UPM or line producers tend to say “no” to every expense… until the end of shooting.

You see, line producers want to come under budget by just a little bit. If they come under budget too much, the director will be pissed that she didn’t have more time to shoot or choose a better location. The designers will get pissed because they could have had more time in prep. Executives will be pissed because they could have spent a little more on whatever.

So if a line producer thinks he’ll come in well under budget, he’ll start throwing money around like a drunk sailor in port. Suddenly money pours out of him so no one gets pissed.

Spending the budget isn’t a bad thing. But spending it at the last minute so a line on the cost report isn’t too small is inefficient and wasteful. They should have prepared better earlier so they could spend that money on things that matter – like day rates for great actors, better locations, and more time shooting.

4. Poor Scheduling

I worked on an Eddie Murphy film. We were two weeks from principal photography, getting things ready in San Francisco when some executive decided to hold production for a few 6 more weeks to rewrite the draft.

There were more than 50 people sitting around, collecting their paychecks and per diem, and sitting in housing paid by the production. Vehicles and rentals sat idle. It cost almost a million bucks.

The late shooting schedule forced them to condense the post production. Ultimately, the movie was rushed and who knows what could have been possible with more time in editorial.

This kind of thing happens all the time because the producer and/or executives aren’t certain about when they’ll shoot. They shouldn’t have scheduled principal if the screenplay wasn’t finished.

Why did this happen? Probably because a producer made a promise to an executive that wasn’t realistic. It happens all the time. The producer delivers a budget and schedule. The executive says, “Do it cheaper and faster.” The producer says, “Yes sir,” knowing full well things will probably turn out just like he or she predicted in the first draft of the budget and schedule.

Larceny

Every production company deals with larceny to some degree. There’s a certain amount of larceny in every industry, but Hollywood probably sees more of it because we deal with so much cash and make so many fast decisions.

Sometimes on-set larceny is as simple as a crew member buying themselves lunch without approval. Someone might buy themselves a package of pens they intend to take home with them, or a stick of deodorant that obviously won’t be used in production.

These kinds of purchases are small and trivial. They don’t usually add much to the budget and they aren’t worth our time tracking down.

Some people step up their thievery by making big purchases they intend to keep all along. I once worked with a set decorator who was tasked with supplying a couch with a particular fabric for a set. She had the film pay to reupholster her own couch, which she took back home with her after shooting.

She put $1,000 of new fabric and upholstery labor on her own fucking couch.

Kickbacks are another kind of larceny that happens way more than you think. It’s also tough to prove because both parties want to keep it quiet.

Here’s how it works: Someone who has the authority to choose vendors picks the one that offers him an under-the-table kickback. The kickback is often as high as 10% of the invoice.

I once knew a CFO who ran payroll through a particular payroll service (we’re talking millions of dollars of payroll) because the service paid him a few thousand dollars every week.

There was even a prop house in town that got themselves banned from a big studio for a few years before they gave generous kickbacks to prop masters. This kind of stuff is less common now, but it still happens.

My favorite example of larceny is one I caught personally on a studio picture. A driver on the crew kept turning in receipts for dinner. He claimed Robert De Niro kept sending him out for food. Who’s going to say “no” to the Raging Bull, right?

As it turns out, the driver wasn’t just a thief. He was also an idiot. The restaurant receipts he turned him came from my favorite restaurant in the area… which had closed two years earlier. I mourned the closing of that that damn place!

I asked the guy about it and he got angry with me. So I told an executive, who told security, who told the cops, and that driver was arrested. He won’t ever work for that studio again, or any studio for that matter. It’s a small town. You can fuck your career over something like this.

It’s important to distinguish these kinds of dishonesty from good old fashioned palm greasing that happens all the time – in Hollywood and everywhere else. Sometimes a vendor throws you a $25 Amazon gift card as a thank you or a come work with us.. That’s just sales and not unethical, in my opinion.

Fraud

Film production

The film industry sees the entire gamut of white collar crime and fraud. Wealthy executives paying for prostitutes on the studios payroll are the extreme examples, but there’s plenty of little fraud all over.

I couldn’t possibly explain all the ways people have tried to defraud production , but I can tell you four stories of events that happened near me.

Kids? What Kids?

When I worked on THE FAN (Robert De Niro and Wesley Snipes), we used something like 125,000 extras to fill a baseball stadium. A crew member was in charge of wrangling all of those people for the 10-15 days of shooting.

This person had the gall to put his own kids on payroll as extras, even though they never worked. Why didn’t they show up? Because they were about eight or nine years old and they were in school. No one ever saw the kids, but I saw their time cards and they got paid. The crew member made $100-$150 per day, per kid.

Bonnie and Clyde

I once heard about an executive at Paramount who oversaw a group of TV shows liked to use a particular grip and electric vendor because her husband owned the company. That’s already pretty unethical, but the pair took it one step further.

Her husband would send her invoices for equipment the production never used. She would sign off on the invoice so he got paid.

Pretty blatant fraud, right? Unfortunately, the lawyers didn’t see it that way. Since she had the authority to make those purchases and the equipment was stored in a truck on Paramount’s lot, the prosecutor had a hard time proving they stole anything.

The Check Thief

When I worked at Sony, I knew an accountant who had trouble reconciling an account during an audit. The show she was auditing wrote 150-200 checks per week for 12-14 weeks, so there were a lot of transactions to comb through.

Eventually she narrowed it down to one check to a vendor. The check was signed by a production manager because the vendor was legitimate.

When she dug through Sony’s archives, she learned that the check number had a different name in the AP log than the name on the cleared check.

It turned out that some assistant changed the name on the check by lifting the name off the check (the letters were made by plastic impression from an old manual typewriter) and replacing it with his boyfriend’s name. I was told Both went to jail.

$30K Loan

An accountant on a TV show drew $30,000 in cash out of the bank for a TV show’s petty cash. He immediately used the cash as a down payment for a house.

Later, he was fired for something unrelated. During an audit, the studio realized the petty cash was $15,000 short. Inside the safe was a note in the accountant’s handwriting logging how much he took from the till and how he was paying back. Each week he would deposit his per diem, his housing allowance, and his paycheck into the petty cash to recover what he took.

With such damning evidence, he likely went to jail. If he hadn’t gotten himself fired for something else, he probably would have gotten away with his little loan!

Want to make sure your crew are handing in legitimate expenses? Look for these signs of fake or fraudulent receipts and invoices.

Going Forward

An important part of producing movies – or working anywhere creating content, really – is fighting unpreparedness, larceny, and fraud. We probably can’t eliminate them (unless there’s a magic wand I’m unaware of), but we can ease their influence on a production.

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