Hollywood studios have a long history of shooting blockbusters in England. For instance, Britain’s Pinewood Shepperton has been the location of choice for big Hollywood blockbusters like the Harry Potter, James Bond and Batman franchises. But for all intents and purposes the U.S. majors have viewed the 20% UK tax credit they receive for making films here as free money. Now Matthew Vaughn, director of X Men: First Class which is just about to start shooting here, is floating an interesting suggestion. He is proposing that Hollywood majors who take advantage of the 20% British tax credit then repay the money in the event of a hit — and plough that portion of the profits into a UK film fund backing British-produced pics.
“The thing I’m annoyed about,” Vaughn tells me, “is how many movies are made in Britain without any British money in them. It’s tragic how we’ve handled things. Most British producers think it’s an achievement even getting a film made. My goal is that we won’t even need Hollywood money in 10 years’ time.”
Vaughn tells me that the UK needs to monetize that 20% studio tax credit. Since Hollywood needs investor equity now that Wall Street money has dried up, the studios could count on UK plc as a firm partner that takes a secondary equity position. “In today’s cash-strapped world, ‘soft equity’ is a valuable commodity for studios and producers alike,” Vaugh insists. “Looking at the UK’s position as a production centre, the country has a strong hand and should play to it.”
Simply put, the fund will match cash invested by other private investors and split its profit share with the producer once it has recouped its investment. However, the fund would be aimed at commercial, rather than arthouse films. Producers must either have a U.S. studio on board or a big-hitting sales agent who has pre-sold the film to at least two major territories. Only then will the fund come in.
Vaughn acknowledges the risk of Hollywood quitting England atogether and basing productions elsewhere. Attracting Hollywood is, after all, a competitive race between nations as to who can provide the most attractive package. i mean, rival counties such as France won’t be asking for their 20% tax breaks back. But, Vaughn tells me, “We’re convinced that the U.S. film industry will keep coming back to England.” Also, trying to get Hollywood to say that a film’s gone into profit is like trying to nail custard to a wall. Deadline ran a story recently showing Warner Bros accounting still doesn’t acknowledge that a recent Harry Potter film has seen a dime. Maintains Vaughn: “I know what deals can be structured. There’s a reason why investors like Legendary keep coming back to Warner Bros. The way we’ve structured [the film fund plan], it’s a win/win for Britain and Hollywood.”
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