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The success of the Irish film industry depends on innovative financing and improving services Back  
Ireland’s film industry has enjoyed considerable success in recent years, but according to Lucy Conran, who was involved in the financing of the forthcoming ‘Phantom of the Opera’, the sector must improve its service offering and make innovative use of financing options if it is to continue prospering.
AAl Pacino, Johnny Depp, Woody Allen and the ‘Phantom of the Opera’ don’t often feature in the pages of a specialist finance industry magazine but recent developments in activity in the Irish film industry have meant that they are very much part of the life of one of our biggest financial institutions.

Film production is now a truly global enterprise with a complete world of options that producers can choose from in terms of locations. To maintain its position and success as a film location worthy of choice, Ireland must continue to enhance its overall offering. A multifaceted approach is required to ensure ongoing success in attracting and winning projects ahead of the many countries now competing to attract international film investment.

The pull factors for international film producers are wide and varied. Considerations include the cost base, the availability of high calibre and experienced film crew, the accessibility of filming locations and editing suites, location characteristics right down to climate condition and, critically, the regulatory and tax environment, including the availability of grants and subsidies. We can’t do much about the climate (would that we could), but other factors, including the operating environment for film financing and the nature of the Irish film tax structure, are under Irish control to varying degrees.

The increasing competitiveness of low cost jurisdictions such as South Africa, Eastern Europe and Asia is a growing concern. The Irish cost base does not necessarily compare favourably with all these jurisdictions but our technical expertise is on a par with the best. Ireland needs to remain at the international forefront in terms of offering quality film personnel and facilities. We have an exceptionally high calibre of pre and post production professionals ranging from critically acclaimed make-up artists to our award wining directors such as Neil Jordan and Jim Sheridan whose reputations and achievements provide a stimulus and a lead to encourage the growth of Ireland’s indigenous film industry.

It is also important to make it as easy as possible for producers to shoot on location in Ireland. To this end a noteworthy recent initiative is the provision of the location shooting vehicle, ‘Film Dublin’, a partnership between the Irish Film Board (IFB), Dublin City Council, An Garda Siochana, Dublin City Centre Business Association, Screen Producers Ireland and the Department of Arts, Sport and Tourism. The partnership has drawn up a ‘Filmmakers Code of Best Practice’ providing guidelines, advice and important contact details for producers shooting in Ireland. IFB’s involvement is through its dedicated Location Services unit that promotes Ireland as a film location. Another recent IFB initiative in collaboration with the Arts Council is the Documenting the Arts fund. The fund aims to finance 10 to 12 quality national interest documentaries per annum.

The financing of film of course is about more than equity or borrowing. Film producers are now extremely savvy when it comes to accessing what the industry terms as ‘soft money’ – sources such as tax based investments, tax credits and grants. The wide range of tax incentives and grants available worldwide are a measure of how strategically important international governments view the film industry and the importance to the Irish film industry of ex-Minister McCreevy’s extension of the s481 tax based investment scheme cannot be underestimated.

The s481 incentive was introduced, ‘to promote the Irish film industry, by encouraging investment in Irish made films which make a significant contribution to the national economy and Exchequer and/or acts as an effective stimulus to the creation of an indigenous film industry in the State.’ (Irish Revenue Guide). On the basis of its success for all parties the scheme will now run until the end of 2008 as opposed to end of 2004.
The s481 investment allowed in any one film production varies from 55 per cent to 66 per cent of the production’s costs subject to an overall cap of €15 million in any one film. Investment by both corporate bodies and individuals in any one tax year is limited by certain thresholds, the maximum for an individual being €31,750, of which 80 per cent, or €25,400, is deducted from that individual’s taxable income. The extension of this incentive to 2008 means that investor funds will now continue to be made available to qualifying Irish films. On average the benefit of raising s481 finance equates to approximately 10 per cent and 12 per cent of a film’s budget.

Whether a film will qualify for the relief is certified by the Revenue Commissioners and the Minister for Arts, Sports and Tourism. The relief is available to the investors in a qualifying film in the form of a deduction from taxable income or profits of that investor.

Irish financial institutions have taken a proactive approach to the opportunities arising from the film industry environment and over recent years Bank of Ireland has developed a very significant footprint and capability across the sector.

The Dublin based team specialises in tax efficient investments and has for some time been actively involved in financing Irish TV series, films and animated productions. Irish based productions for which it has raised s481 finance include the BBC production ‘Ballykissangel’, feature length films including the award winning ‘Dead Bodies’, the Merlin productions, ‘The General’ and ‘Evelyn’, and animated productions, including ‘Horrible Histories’, a co-production between Telegael Galway, Mike Young Productions (LA) and Scholastic Entertainment (NY).

More recently, since September 2003, Bank of Ireland has formed a specialist Telemedia Film Finance Unit consisting of a team of 8 people with significant international film financing expertise. This team operates from offices in London, Dublin and Los Angeles providing structured film financing facilities to large scale and independent production companies. Loan facilities are from $5 million upwards and incorporates taking risk on distribution rights yet to be sold, funding against performance bonds, bridging pre-sold distribution rights and monies due from grants, tax structured schemes etc.

Films financed by Bank of Ireland to date have mainly consisted of co-productions involving European, American, Canadian and Australian production houses. A sample of the 25 films financed in the first year of operation includes: The Merchant of Venice, starring Al Pacino and Jeremy Irons, which recently premiered at the Venice Film Festival; The Libertine (starring Johnny Depp), The Truth about Love (starring Jennifer Love Hewitt) and Woody Allen’s latest film (as yet untitled starring Scarlet Johansson). Bank of Ireland is also co-funding the big budget film version of Lloyd-Webber’s Phantom of the Opera (starring Minnie Driver and Jennifer Ellison). Of specific Irish interest are Boy Eats Girl, starring Samantha Mumba and Neil Jordan’s new film, Breakfast on Pluto.

The challenges facing the Irish film industry are numerous and the global industry is in a constant state of evolution. By maintaining the quality of our resources and with the support of bodies such as the Irish Film Board, the Arts Council and of course, the Irish Government, Ireland is well placed to meet these challenges. While the end product is pure entertainment, there’s some good business in there too.

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