What does ‘below the line’ mean in movie production?

The cast of "Batman."
Costumes are one of many below-the-line expenses in a movie's budget.
Silver Screen Collection/Moviepix/Getty Images

As you settle into your seat at the theater and immerse yourself in the magic of a major motion picture, it's easy to forget that film is about much more than glitz and glamour. At its core, filmmaking is a serious business, one that represents a colossal $30 billion annual industry in the U.S. alone [source: Reuters]. Like any business, the movie industry runs on money, with many top films priced in excess of $200 million.

To keep track of expenses during the making of a film, Hollywood accountants divide expenses into two basic categories, distinguished by where they go in the ledger books. Above-the-line costs include some major expenses, including cast salaries and the director's cut. While these figures tend to get all the attention, the real costs of making a movie are below the line.


Below-the-line expenses -- so-named because they were traditionally listed beneath a thick black line used to separate them from above-the-line costs in accounting documents -- include virtually all the costs of film production, including salaries for the majority of the people involved. Need some seriously elaborate sets for a sci-fi flick? You'll find the costs of these sets below the line. Looking to buy some fancy period costumes for a Jane Austen film or train a Golden Retriever to act in a lighthearted buddy comedy? Include these expenses below the line, or risk facing your accountant's wrath.

Looking to learn more about below the line expenses? Read on for more information about Hollywood budgeting basics.


What Falls Below the Line

Extras take part in a scene from "Unbroken."
The amount of money spent on extras, props and set rentals can vary during filming.
GREG WOOD/AFP/Getty Images

Perhaps the easiest way to define below-the-line expenses is to focus on what's not included in the category. Most expenses related to creative talent, such as actor salaries and the cost of directors and producers, fall firmly above the line. Any fees associated with screenwriting or securing the rights to a screenplay are also above the line. Once these costs are out of the way, virtually every other dollar spent making a movie is accounted for below the line.

So what kind of spending is included in below the line expenses? Start with salaries. Other than the millions paid to the cast, nearly every salary in the budget falls below the line. This includes the cost of any assistant directors, art and special effects folks, set designers, lighting technicians, cameramen, sound people and costume crew. Wardrobe, hair and makeup costs also belong to this category, as do any costs associated with "casual talent," or extras.


Beyond salaries, below-the-line costs also include the costs of production. This could include money spent on sets and props, music licensing and composition fees, trailers, craft services, publicity, travel and insurance. Basically, any money that isn't going to an actor, producer, director or screenwriter can be categorized as a below-the-line expense for accounting purposes.

In addition to their location on the balance sheet, below-the-line costs share a number of common features. Unlike above-the-line costs, they cover the cost of production, not pre-production, and are variable rather than fixed. In addition, they usually remain fairly stable between projects, while above-the-line costs can soar or tank depending on the key players involved in a production.

In Hollywood, the term "below-the-line" also has another connotation. It refers to the people whose salaries fall within this category, which is usually the crew or production staff on a film as opposed to the more recognized names. If your salary falls above the line, you've likely seen your name in lights; if it falls below the line, you're lucky if anyone has time to spot your name as the end credits scroll across the screen.


The Importance of Below-the-line Costs

Filming takes places at a restaurant in Massachusetts.
Many states offer filmmakers incentives for bringing business to their local economies, like breaks on below-the-line expenses. Here, a crew has turned a pizza restaurant in Massachusetts into a Cuban cafe.
John Tlumacki/The Boston Globe via Getty Images

Unless you're an accountant or Hollywood executive, you may be wondering why the distinction between above-the-line and below-the-line costs matters so much. You may be surprised to learn just how big of a role below-the-line costs play in film production and why they might matter even more than headline-grabbing star salaries and other above-the-line expenses.

To put it simply, below-the-line expenses make up the bulk of the budget for most films. Typically, above-the line-expenses are limited to just one-third of a film's budget, while below-the-line costs make up the remaining two-thirds. On low-budget films, the percentage of funds dedicated to below-the-line expenses grows even higher, while the portion devoted to big names and above-the-line salaries shrinks. Movies with mega-sized budgets may be able to devote as much as 50 percent of funds to above-the-line costs, but for the average production, below-the-line costs reign supreme [source: Goodell].


So what if you've established your budget, allocating a balanced portion to above and below-the-line expenses, then find yourself facing unexpected costs? Once you get to the filming stage, your above-the-line costs are set, and below-the-line expenses provide the most realistic means of slashing costs and keeping your budget on track. Simple methods of saving may include cutting out expensive scenes, choosing locations that allow free filming or repurposing costumes and props rather than investing in new ones. All these options reduce the overall film budget by lowering below-the-line expenses, and all can be accomplished at virtually any stage of a project.

Below-the-line costs also provide a final, often-overlooked opportunity to trim a film's budget. Many cities and states offer tax incentives to filmmakers to help encourage local filming. Why? Filming a movie is a complex process which requires a great deal of vendors, resources and materials. By bringing film crews to an area, authorities are hoping to spur economic development through job creation and increased demand for local goods and services. What does that have to do with below-the-line expenses? Many of these credits, including ones offered by the states of California and New York, are specifically aimed at covering below-the-line expenses. After all, states realize little local benefit when a well-known celebrity receives another $20 million check, but the benefits of hiring local crews, caterers and other below-the-line personnel can be recognized for months or even years to come.


Lots More Information

Related Articles

  • Cones, John W. "43 Ways to Finance Your Feature Film: A Comprehensive Analysis of Film Finance." SIU Press. 2008.
  • Goodell, Gregory. "Independent Feature Film Production: A Complete Guide From Concept Through Distribution." Macmillan. December 31, 2003.
  • Landry, Paula. "Scheduling and Budgeting Your Film: A Panic-Free Guide." CRC Press. 2012.
  • Medoff, Norman and Edward J. Fink. "Portable Video: ENG & EFP." Taylor and Francis. 2012.http://books.google.com/books?id=HNkjB2AMb28C&dq=below+the+line+costs+film&source=gbs_navlinks_s
  • New York Power Authority. "New York State Film Tax Credit." Date Unknown. (August 22, 2014) http://www.nypa.org/wp-content/uploads/2012/05/2013-FilmTaxCreditfactsheet.pdf
  • Reuters. "Why Technology Will Help the Film Business Grow $8 Billion in 5 Years." June 3, 2014. (August 22, 2014) http://articles.chicagotribune.com/2014-06-03/news/sns-rt-entertainment-mt1thewrap266676-20140603_1_home-video-revenue-u-s-market-digital-services