A month after they were scheduled to start filming, the producers of the upcoming James Bond film got an e-mail from studio executives with what must have been a frustrating directive: the script needed rewriting.
The bosses at Sony Pictures Entertainment and Metro-Goldwyn-Mayer Studios Inc. (MGM) weren't looking to avoid an R rating or ensure that Spectre could get past foreign censorship boards.
And although the director had repeatedly agreed "under duress" to bring in new writers to address "logic issues" and an "unsatisfying" third act, the studio bosses didn't even want more changes to the underlying storyline.
They just wanted tax cuts.
"We are currently facing a budget that is far beyond what we anticipated and are under immense pressure to reduce the number to $250M net of rebates and incentives," wrote Jonathan Glickman, president of MGM's motion picture group. "This is not about 'nickel and diming' the production. As of now, our shooting period is $50M higher than Skyfall and the current gross budget sits in the mid $300Ms, making this one of the most expensive films ever made."
Glickman's e-mail went on to suggest changes to the film's content and shooting schedule that he hoped could bring down the bottom line.
That e-mail was among the many internal Sony documents hacked and leaked by an organization the FBI says is affiliated with the North Korean government. The records have provided the public with a unique inside look at how studios seek to use their clout to influence the terms of government subsidies for their work.
$14 Million in Incentives for 4 Minutes of Footage
In the case of Spectre, the e-mails suggest that the film's lavish budget put the studio, which did not respond to Tax Analysts' request for comment, in a position in which it was so desperate to save money that it allowed itself to cede some level of creative control to foreign bureaucrats.
Many of the changes recommended in Glickman's e-mail focused on cutting costs by reducing the number of crews being used, relocating some work to less expensive locales, and abandoning plans to shoot using an ultra-high-definition resolution.
But before all that, Glickman started with proposals to increase the project's eligibility for film incentives, beginning with a request to highlight the skyline and other "modern" features of their first shooting location -- Mexico City.
Glickman also asked the Bond team to consider moving other scenes to London, where the film is likely pursuing the United Kingdom's recently expanded and extended film credits.
All these changes came just a month after executives were circulating a memo titled "Considerations for Cuts," which balanced suggestions for moving some production out of Mexico with the criteria for maintaining the incentives, many of which governed the content -- rather than the production -- of the film.
Under the heading "Elements needed to preserve Mexican deal," the memo lists criteria suggesting that although Mexican officials wanted to see their citizens in the film, they were sensitive about how they might be portrayed.
To fill the role of Estrella, a woman whose hotel room Bond uses to begin his hunt for an assassin named Sciarra, the producers needed to cast a "known Mexican actress," for instance, though Sciarra himself "cannot be Mexican," the memo said.
Similarly, the governor of the Federal District, whom the assassin is targeting, needed to be replaced with an international leader instead, just as the notes call for the use of some sort of "special police force," apparently in place of the Mexican police shown just moments into the film's start.
The memo also called for aerial shots of "modern Mexico City buildings."
Other e-mails suggest that all of those requirements were met through changes to the script: Bond's pursuit of Sciarra during the Mexican "Day of the Dead" celebration replaced a cage match with no apparent geographical setting, it allowed for the addition of a role for a Mexican actress, an ambassador replaced the governor as Sciarra's target, and the most recent script calls for that scene to end with Bond stealing Sciarra's helicopter and "taking off into the Mexican skyline."
Although those changes were expected to bring in $14 million for a sequence as short as four minutes, executives thought that featuring the skyline even more prominently could generate still more incentives.
"You have done a great job in getting us the Mexican incentive," Glickman wrote. "By all accounts we can still get the extra $6M by continuing to showcase the modern aspects of the city, and it sounds like we are well on our way based on your last scout. Let's continue to pursue whatever avenues we have available to maximize this incentive."
"We should insist they add whatever travelogue footage we need in Mexico to get the extra money," she wrote.
Spectre Incentives Far Exceed Published Caps
It's not unusual for film incentives to come with strings attached. Some jurisdictions require that qualifying projects pass a "cultural test," while others simply demand that films portray them positively -- or at least not negatively.
But the changes to Spectre appear to go well beyond that, with the studio permitting Mexican authorities to make casting decisions, dictate characters' ethnicities, and even change the occupation of an unnamed character that never appears on-screen or figures into the story outside of the opening scene.
Such changes may have been a small price to pay for a rebate worth as much as $20 million, as a review of the script indicates that they were limited to the film's opening scene and have no impact on the remainder of the film.
But they raise thorny questions about the extent of the government's authority to interfere with artistic endeavors. If $14 million could buy a new opening, how much would it cost to change the ending?
Other studios are probably more interested in the practical question of exactly what they must do to qualify for this kind of money, but that may be just as difficult to answer as any far-fetched hypothetical.
According to Cristina Velasco, the head of production for the Mexican Film Commission, Mexico's federal government offers four main incentive programs for film production:
- the Fund for Film Promotion and Investment (FIDECINE), a trust funded by venture capital that covers 49 percent of the budget for films by Mexican directors;
- the Fund for Quality Film Production (FOPROCINE), which covers 80 percent of a production budget up to MXM 10 million, or about $670,000;
- the National Fiscal Stimulus for Film Production (EFICINE), an income tax credit equal to the amount of investment for the year, up to MXM 20 million, or $1.3 million; and
- the Proaudiovisual Fund (ProAv), a rebate worth up to 17.5 percent of Mexican production spending.
Velasco, who joined the film commission in February, said that she wasn't familiar with the incentives offered for Spectre, but John Hadity of EP Financial Solutions, which helps producers find and monetize film incentives, said its programs don't come with any serious content restrictions and suggested that the film must be tapping into some other funding source.
"I'm not actually aware that there's any kind of cultural text in Mexico," Hadity said. "There certainly isn't for the national credit."
More importantly, he noted that the caps on those programs would leave a serious gap between the published limits and the $20 million that Sony was trying to secure.
FIDECINE would not be available because Spectre has a British director, and FOPROCINE and EFICINE could be combined to yield about $2 million, leaving only ProAv to cover the remaining $18 million. But a rebate that size would require the producers to spend more than $100 million in Mexico, blowing a third of their budget on what may be just the first four minutes of the film.
"That being said, money's coming from somewhere," Hadity said. "If you're seeing a memo that says, 'Well, we can get another $6 million or $8 million or $2 million or whatever,' it's not coming through these programs."
Hadity said the published limits on the incentives have raised questions for him, as well, because he sees major projects locating in Mexico without any apparent financial benefit.
"You kind of have to ask yourself, how is it that Disney is down there and how is that Media Rights Capital is down there -- on these huge movies, right? -- knowing that you're capping out on a lot of these programs at $650,000," he said.
Velasco noted that many local governments have also established their own film programs that may have their own requirements. She said she couldn't speak to the incentives offered by the Mexico City Film Commission, and the commission itself did not respond to queries from Tax Analysts.
Hadity suggested that the producers may be working with local officials to "cobble together" leftover discretionary funds into an incentive package, a practice he said was common in the United States.
Catering to Film Commissions Is Just 'Part of the Job'
In both its ability to tap into unadvertised funds and the conditions associated with its acceptance of those funds, Spectre appears to be an extraordinary case, based on interviews with various people involved in financing motion pictures.
Because money is tight, producers are expected to save every dollar possible, said David Robinson, president of Morgan Creek Productions.
"Some movies wouldn't get made if it weren't for tax credits. That's brutally honest. If you didn't get that 20 percent or 30 percent back, you'd have to cut the base or it would have to come from somewhere," Robinson said. "We've chased tax credits around the world."
And as producers are required to ask for more and more, perhaps it's only natural that their patrons would begin to demand more in return.
Even if that means that creative sacrifices must be made to cover the budget, no one should expect to ever see screenwriters walking into the Oscars with "SLAVE" written on their faces like Prince did during his feud with Warner Bros. Entertainment Inc., said entertainment lawyer Schuyler Moore of Stroock & Stroock & Lavan LLP.
"Everyone wants to get paid," Moore said. "This is part of the job. Everybody accepts this."
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