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A Method To Uwe Boll's Madness
grandfenwick writes "Ever wonder why Uwe Boll keeps getting bigger budgets and bigger-name actors for his awful film adaptations of videogames? Stuart Wood of Cinema Blend theorizes in an exposé on Boll's methods. His position? Thanks to a loophole in German tax laws, he and his investors actually make *more* money the more a movie tanks at the box office." From the article: "Boll's movies aren't being made out of a love for cinema. They are a shallow exercise in money-making greed and exploitation. Rich Germans getting richer by exploiting the stupidity of the Hollywood system and the naivety of critics like us, who never thought to question the true motives of why these horrible, horrible movies existed. Pure and unfiltered 21st century capitalism." Take with a grain of salt.
Thanks to a loophole in German tax laws, he and his investors actually make *more* money the more a movie tanks at the box office.
That plot's clearly been done before.
Does this mean "Springtime for Hitler" will be on the Resident Evil 3 soundtrack?
This sig intentionally left blank.
Ouch.
Beyond the Polygons : Because 50,000 polygo
Something like The Producers?
I don't know what it is, but as far as I can tell, capitalism, it is not. What are people's viewpoints on either side of the issue...
If it's capitalism, please explain why.
If it's not capitalism, please explain why.
If it's something else, please explain why.
If someone has said it is something else, and you think they're wrong, please explain why.
If you disagree with people's expressions of the above, please explain why.
It's time we had this whole capitalism, communism, socialism, democracy, totalitarianism, aristocracy, imperialism thing hashed out once and for all, or at least a good start on it.
2) Whatever one thinks of Hollywood executives, their ability to pour money into their own pockets is pretty much beyond question. To present them as helpless pawns of "rich Germans" seems implausible.
What I'm listening to now on Pandora...
...if we want Uwe Boll to stop making shitty video game knockoff movies, we have to go see one enough times so that it makes a profit and his financial backers lose money?
Jesus, that's quite the kick in the head, eh?
..somebody has a case of "The Producers" to me.
Hexy - a strategy game for iPhone/iPod Touch
A completely speculative piece about Uwe Boll now passes as news. Amazing.
You know, not everyone gives a damn about videogames... shockingly to many people they aren't worth the time of day let alone fanaticism. Games and the games industry, like hollywood, could really care less about everything except money. There are a few exceptions where a few studios really try to push the envelope, make an artistic product, or even just focus on fun... but they are dwindling day by day.
Uwe Boll is mediocre, and works for mediocre pay, and puts out mediocre content. That is all that is needed when you are trying to get a movie to screen in short order and simply capitalizing on an existing franchise. Once you've paid to see the film, they could care less if you enjoy it from there... and they know that no matter how poor the reviews and press that there are a line of dedicated fans that wil lmake it profitable enough.
http://teasphere.wordpress.com - A little spot of tea
This is an old game. Do you really think that companies spend $100+ million on a movie budget? There are many countries, like Germany, where movie investments become tax write-offs.
Only German national productions can quality for the tax rebate. Hollywood *loves* this trick: sell the production rights to a German company, and lease them back immediately, with the option to buy out the lease when the movie hits theaters.
I've heard it said that Tomb Raider was made for under $9 million, excluding salaries. The "official" budget on paper was ten times that amount. Where did the rest of the money go? Back into the investors' pockets, of course, but now completely tax-deductable.
Do you know why Sky Captain and the World of Tomorrow was such a big deal? It was made for practically nothing. The stated $30-mil figure was totally bogus. Thanks to some budget manipulation, it turned a profit for the production company long before the first reel was shipped. Any profits from theaters or DVD were just icing on the cake.
I fall firmly in the "show me proof" camp.
;)
From what I understnad, tax loopholes might reduce your tax burden if you have millions in other income. But blowing your money still seems foolish, unless the tax rate is over 100%. Disclaimer: I have never had anywhere close to a million dollars, so I have no first-hand experience. But if anybody cares to donate...
So, how can you loose, say, $10 million in making a movie and come out ahead. Surely Germany will not actually GIVE you $10 million in replacement. Can sombody explain this or provide hard numbers for the financially challenged?
Of course, if investors are involved, and you could claim your investors losses as your own, this might work -- if you could avoid prison.
"-1 Troll" is the apparently the same as "-1 I disagree with you."
According to the article, we don't pile into the theatres at $9 a pop to watch them:
House of the Dead cost $22,000,000 including marketing costs. It's worldwide gross was $13,818,181. That's a LOSS of $9,000,000 by my calculator. Alone in the Dark cost approx $32,000,000 including marketing costs. To date its worldwide gross is $6,040,827. That is an even more impressive LOSS of $26,000,000.
I'd want to doublecheck those numbers, though, based on the author's odd ideas about tax law:
But crucially, the bizarre tax laws in Germany mean that any wealthy Germans who invest in a movie can write-off the production cost, delay paying their taxes and generally reduce their tax burden. When you disseminate all the boring legal business law surrounding it the bottom line is this - the German investors in a movie only pay tax on any RETURNS the movie makes, their investment is 100% deductible, so the minute the movie makes a profit, said investor has to start paying tax.
He first claims that Germany has "bizarre tax laws" which only tax businesses on their profits rather than their costs (isn't that how every country's tax laws work?!), then he seems to believe that a tax writeoff of $1 reduces your tax by $1 (which still wouldn't make the movie investors any money) rather than reducing your taxable income by $1 (which means the investors are still losing money, just not quite as much). I don't know anything about German tax law, but I've seen more than a few people who mistakenly think that's how writeoffs work in the USA, so I'd like to see some references before I believe that Germany's tax code is based on our urban legends.
Plus the investors can actually borrow money to put towards investment and write that off too.
Yes, if you borrow money and lose it, then your taxable income gets reduced by the amount you lost. But why the hell would anyone do that on purpose? Instead of paying (marginal tax rate) * (money borrowed) to the government, you'd have to pay 100% * (money borrowed) to your creditors!
Mel Brooks parodied a similar scam in his musical "The Producers". Where two guys created a scam by intentially coming up with the worst idea for a musical involving singing Nazis and other nonsense. The idea was to make the play so badly that it would quickly flop and get pulled after the first performance, the producers would then pocket the remaining investment money. Of course the plan was foiled when the fictional show became a smash hit.
See, the way a tax write-off works is, if I throw $1,000,000 into a tax-deductible expense, then I don't pay taxes on that $1,000,000. So, I'm out my $1,000,000 but being in the 40% tax bracket, I save $400,000. But that's still $600,000 that I've lost with no compensation other than seeing my name in the credits of a really bad movie.
Maybe there's another thing involved besides straightforward tax deductions, but the situation wasn't explained very well.
Possibly what he's meant is that if you invest $1 million you don't pay taxes on that $1 million (because it's deducted) and you only pay taxes on returns from that $1 million that are in -excess- of $1 million. (If by 'returns' he means return-on-investment, ie, net profits, and not box office returns, ie, gross profits, that could be what he's trying to say). So, if I make a movie that exactly breaks even then I'd get all my money back -and- not pay taxes on it. In which case it's not true that you make money by tanking at the box office, but by breaking even. It would also be a really, really dumb way to write a tax law, but such dumb laws -have- been written before when trying to 'stimulate investment'... or by corrupt legistlators. I just wouldn't expect to see anything that dumb in a first world nation in this century.
Anybody out there know anything about german finance laws?
--Parity
'Card carrying' member of the EFF.
I merely want a hashing out of which activites belong to which category, all in one place.
The problem with wikipedia is one of no self research.
I didn't think there'd be much progress along even those lines, so I threw in the "or at least a good start on it" part.
All the article says is that (in Germany) money you invest in foriegn films is tax deductible, while you pay normal taxes on the profits.
.505 million euro gain after over no investment, or a 3.8 million euro gain over the movie that tanks). It is clearly in the investors best interest invest in a movie that will make money.
In Germany income taxes work like this (2004):
" a zero tax rate on taxable income up to 7,664
" a marginal tax rate rising form 16% to 45% on taxable income between 7,664 and 52.152
" a marginal tax rate of 45% on taxable income over 52.152"
And money invested in films just doesn't count as taxable income.
So, let's say someone in germany makes a 10 million a year (they would have to make a lot to invest 10+ million euros in a movie). Then, let's say they invest 5 million in a movie that flops, and get no money back. If they never invested, they would have 5.5 million euros left after taxes. Losing 5 million euros, they only 2.25 million euros left.
Run the numbers, it is impossible for a german to have a net gain in his take home income on a film that looses money.
However, if the same German investor invests 5 million euros, and gets back 6 million, at the end of the year they end up with 6.05 million euro(a
Dear god, this isn't even hard math. I mean I did these numbers in 30 seconds without a calculator using nothing more than junior high algebra.
At worst, this trick could help someone defer taxes for a bit, it's no incentive to flop movies.
I thought that the more badly the film did at the box office, the higher potential for more money being made on DVD sales. If your DVD is selling at Walmart (even in the $3.50 sales bin), you're still making money after the movie flops.
Really? I was of the opinion that falling for the troll and thinking it was serious fed the troll, but explaining why the post was so bad it's probably a troll kept food from the troll's mouth. Currently scanning Wikipedia articles for the care, feeding, abuse, and starving of trolls.
...that the next movie he produces is titled "Springtime for Hitler".
If dbhankins isn't serious, then my other reply to his post taking him seriously would mean I fell for his troll...*sigh*, Furthermore, his post without an explanation is feeding the Troll quality of the original post in question *okay*
Thing is, slashdot is one place the practice is rampant. Another one is that the slamming has gotten to the point that it shows up quite a bit in Slashdot articles.
The slashdot moderation system is totally broken. It has been since it's inception. If it were scrapped and replaced with a moderation system of (underated|overrated) it could only improve. There's no way to clearly moderate for people who aren't trolling but have no clue what they're talking about, for example, and the current labels are practically meaningless.
What everyone is missing is that they don't pay taxes on the revenue from the movie until it turns a profit and that the entire expense of the movie is tax deductable, not just the loss from the movie.
So, if they make $50 million a year, that would be $27.5M after taxes if they didn't invest.
But if they did invest $20M in a movie, they would end up with $16.5M after taxes. Now, if the movie makes $12M (technically an $8M loss), they will still end up with $28.5M (a net gain of $1M vs not investing).
Yes the movie still had to make some money, but it can take a loss and still make the investor end up with more money vs not investing.
Things you think are in the Constitution, but are not.
Well, I think the problem is not that people are posting with uninformed positions -- the problem is that other uninformed people are moderating them up. This is what the overrated mod is for.
The thing that needs to be done is to address the misinformation in a reply, which will hopefully be modded up.
My solution? Read at +3, unless I wanna see a whole thread. If somoeone's full of it, and still gets modded up, I check my facts and then respond.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
can be found at Slate, in a "Hollywood Economist" column written by Edward Jay Epstein. The column is very good in general for untangling the frequently recondite and illogical ways in which Hollywood makes money.
http://www.slate.com/id/2117309/
--
Excerpt: The Hollywood studio starts by arranging on paper to sell the film's copyright to a German company. Then, they immediately lease the movie back--with an option to repurchase it later. At this point, a German company appears to own the movie. The Germans then sign a "production service agreement" and a "distribution service agreement" with the studio that limits their responsibility to token--and temporary--ownership.
For the privilege of fake ownership, the Germans pay the studio about 10 percent more than they'll eventually get back in lease and option payments. For the studio, that extra 10 percent is instant profit. It is truly, as one Paramount executive told me, "money for nothing."
--
So it's conceivable to me that German investors could come out ahead even if a film flops (even if the article at cinemabend does a very bad job illustrating how this happens).
Click here for more info.
This article may have identified why lousy movies get made by German directors, but it's wildly off the mark when it comes to assigning blame. Look at this inflammatory excerpt:
"Rich Germans getting richer by exploiting the stupidity of the Hollywood system and the naivety of critics like us, who never thought to question the true motives of why these horrible, horrible movies existed. Pure and unfiltered 21st century capitalism."
Right...
Capitalism is simply what you get when people create and own property, consume goods, and forego total consumption by reinvesting your capital. All people are capitalists; an economy can't exist without capital.
The culprit here is not "capitalism" or "greedy rich Germans". Germans, like all people, would like to keep their hard-earned money. With an onerous socialist tax system and the resultant stagnant economy, Germans must resort to crazy schemes like Boll's if they want to keep their capital from disappearing into the coffers of the bureaucracy. In the absence of these high taxes, the same "greedy Germans" would be free to save or reinvest their capital in more productive ventures that would benefit the entire economy as a whole.
The culprit is stupid laws, and a lack of economic freedom. German investors are simply acting rationally according to the same motives that exist in all of us.
And really - if this bothers the article's author so badly, he can just stop going to Boll's movies. I see no value in his pathetic diatribe against rich Germans.
He who lights his taper at mine, receives light without darkening me.
Germany closes tax loophole for Hollywood
:)
Hollywood's Big Loss - No more free money from Germany
I find it odd that Slashdot reports on this only AFTER it's no longer true
I'm German, and the article is true. There IS such a "hole" in our tax laws. It's not exactly a hole - it was supposed to support funding of movies, of shipbuilding, of wind energy construction and some other things. So if you invest money in an Uwe Boll fund, and the movie is a loss, you have to pay less income taxes. (I'm sorry, i lack the tax vocabulary to give more details :) )
The new government with Angela Merkel has decided to close such "tax holes", so i have hope that the movies of Uwe Boll will finally get better...