Where does the profit from a movie go?

First, you have to understand that what a film makes in box office receipts does not equal profit.

That being said, the profits are split between the investors and the filmmakers.

The normal formula goes something like this. 

For every dollar that the box office takes in 50% goes to the theater.

The distributor takes around 30% plus expenses.

If there’s a bank or debt they then get their money…

Any deferrals to talent is then paid.

Whatever is left is split between the filmmakers and investors. For simplicity assume you have one investor who put up all the money. If there are no deferrals and no debt financing, then approximately 20% of box office would go to the film for disbursement.

Usually, the investor recoups his money (in the case of Get Out $5 Million PLUS 15–20% ROI - so they would receive the first $6 million or so out of profits)

So, out of every dollar the investor would realize $0.10 cents, and the filmmaker would get $0.10. Out of the filmmakers $0.10 the director, stars, and writer often have profit participation. If they receive 2% of the profits then the producers now have approximately $.08 on the dollar.

If after expenses (prints and advertising) there was $100,000,000 left then the producers would see approximately $20 million, but remember six of that goes to the investor before the disbursement of profits. That leaves $14 million to split.

The investor gets an additional $7 mil, and the filmmakers get theirs - minus the percentages promised to talent, which brings you down to about $5.95 million for the filmmakers. Not a bad day's work, but not the $150 million that was taken in at the box office.

Of course, there are “ancillary” incomes not accounted for in pure theatrical box office numbers, but the waterfall is similar, and keep in mind that all deals are negotiable. The box office may take less, the distributors may take less, there may be a bigger P&A fund, and there may be banks or other debt financing involved.

But that gives you a broad stroke overview.

Follow me on Quora or read the full post here! If you enjoyed this post, head on over to the Horror Equity Fund Company Page and follow our company page for more updates and articles on the entertainment business! 

Written by Brian Herskowitz