Why the IFO’S $499 mm film income should be higher

Last Friday the IFO / DCEO released its year-end summary of revenues from 2016 statewide film productions, stating they were $499 million, from 345 projects.

Becoming half-billion dollar film market is indeed exciting, especially given the previous, so-so year-end tallies. ReelChicago, however, believes the total should be at least $200 million greater, or an estimated $700 million.

The reason is the way by which IFO/DCEO bases its process. They keep records only on the three categories that are eligible for the Illinois’ 30% Filmmakers’ Tax Credit – movies, TV shows and commercials.

Here’s how it works. A production company applies for a tax credit prior to production. At that time, the company applying for the tax credit is required to estimate its anticipated Illinois resident labor costs and business done with Illinois suppliers.

But those figures do not cover such items as out-of-state directors’ fees, mark-up and the like.

The state’s breakdown of the 345 productions that submitted tax credit applications was 116 TV and digital projects for an estimated $426.9 million in spending and 25 films that created an estimated $23.9 million, said DCEO’s Director of Media Relations Jacqueline Reineke.

The Reel used a much broader playing field base for our $700 million-plus estimate. It includes estimated revenue from reality TV, indie films, corporate, web entertainment, games, music videos – plus an estimated $100 million from local postproduction that traditionally has gone into the mix.

What the state’s PR announcement did not include was the revenue from commercial production, a staple in IFO/DCEO’s reports on film/TV/spot revenues since 2004, when the tax credit was first legislated.

While the total of $48 million from 2016 spot production sounds low, considering that it generated $58 million in 2015 and $60 million in 2013, the pace of corporate spending (i.e., advertising) traditionally turns sluggish during an election year.

What also lowered Illinois spot expenditures was the loss of Illinois tax credit enthusiast Walmart, when its abundant production headed South, literally, to Atlanta.

The report also said, “This growing industry is a priority of the Rauner Administration,” which should reassure filmmakers who are worry about politically-motivated changes in our successfully-working tax incentives.

“And by focusing on making it as an inclusive and diverse industry,” it continued, “(we are) creating opportunities for under-represented (diversity) groups in every corner of the state.”

Using the 2.7 multiplier, 2016 film production’s direct and indirect contribution to the local economy’s prosperity, based on state reporting, was $1.347 billion. Based on the Reel’s more encompassing estimate, it was $2.550 billon.