The Importance of Below-the-line Costs
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.
- 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