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Please explain this film booking fees and costs to me.....
I am trying to forecast costs for a business plan.
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2-Screen Cinema
Population of only 16,000 within the 5-mile radius, 32,000 in 16-mile radius.
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nearest competes are a 12-screen 54 miles away, a 16-screen 60 miles away, and numerous 12-16 screen cinemas in metro area 64 miles away.
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I have an associate who did low gate cinema in Atlanta, Ga and Throughout Georgia. When last talked with him 12 years ago he was charging $1.50 admission and making his cash on concessions.
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I had a coin op-business (still do Coin Op Repairs, and have some machines out on locations) and had Video Games in 5 of his locations. Did really well (he was happy and so was I).
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So now I am considering the Cinema Business. I'm not greedy, but ya gotta eat....
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Tried talking with a film broker - their too busy (something about Monday and Tuesday being busy times, etc.). The person at the firm wouldn't discuss pricing and said a film broker would contact me. Sounds a lot like the brush off....
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I am wondering, what do you pay for gate royalties (that is how it works? You lease the films, and then give the distributors' a portion of the tickets sold? Like 80%, 60%, what?).
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This is the sticky point with me. I totally hate going into anything (including Property Leases with "Triple Net") where somebody gets a fee to be determined later by them that I am "Obligated to pay" without recourse or negotiation.
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I understand things like $600.00 to lease for 7-Days and 20% of tickets sold. But "I'll bill you what I think it may be worth" isn't very business like in my mind (but I could be wrong).
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My motivation is that I have an exclusive opportunity in numerous "private developments". These are communities that are "closed" and select residents, (non-disclosures apply). They are building large communities and businesses are selected - no "Franchises are Exclusive, ( - except as stipulated by the "Governing" Committee), which means some body could walk in with a Subway Franchise - and the committee could deny their ability to place a subway on the development (since the community owns all land rights within a 25 mile radius - they dictate who can and cannot place businesses).
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Then their is the security clearance thing, these are high security developments and even local law enforcement is restricted to interaction with "community Security".
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So the audience/customer base is motivated" and "receptive" that's why I have been asked if I was interested. Since I helped put three businesses into five of their communities already in three states - they are asking for "more" (what a wonderful sound - "Give us something else, we already have the money, we want more!")..
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So here I am, looking for things to put in "their" communities...
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Can someone help me here. I am not a Cinema Chain, don't really know if I want to be. Talked with one distributor who told me I was waisting my Time by installing "any" 35mm projectors. Told me 3-D Digital was the requirements now. Is this true? While I appreciate the desire for 3-D movies, why is 35mm already dead? I can get 35mm Projectors for from $3,500 to $9,500, Digital from $6,500 all the way to $24,000 - which is a really wide disparity from place to place. But projectors isn't all the stuff I realize that I will need.
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I am a Broadcast, Microwave, HF/UHF/VHF/SHF Technician/Engineer. I have build studios (both Broadcast, Commercial and Private Recording and even owned one FM station (The Radio Station Put me through College back in the 60/70's). I do Bio Energy and Green Ecology Systems and even have designed and built one Ethanol Plant, and five BioDiesel Plants, Several Solar Power Installations (Commercial, Residential and Municipal) and even three geothermal installs. So I know how to get things done. Including building a commercial building for 65% less than other people. Seriously, I have done it several times (from 2-Car Garages for $3,900 to a 4,600 sq Ft Light Industrial Building for $14K). So the building cost is somewhat mute (And my Understanding is that the building costs now days is like 60% of the cost...).
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But enough of this tooting my own horn - I want to know what you can help me with... And I would like to know what you (the established cinema exibitioners) are paying?
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Thanks
Dave

Well, Dave, somebody will probably come along here shortly to suggest you go back and do plenty of reading in older posts, so I might as well beat them to the punch. There are answers to most, if not all, of your questions in what has already been written many times. You seem like a guy with plenty of knowhow in a lot of areas, but not much in the movie theater business. You openly admit this, so it's not a bad thing. You just need to take some initiative and read as much as you can to educate yourself.

A few points though... bookers really are busy on Monday and Tuesday. The very successful bookers may have hundreds of theaters for which to arrange multiple movies each, and they usually do most of that on Monday and Tuesday. You may yet receive that call back.

"Gate royalties" vary based on agreements made for each individual movie. It can range from 70% (more likely 60% or so) of ticket sales for the first week of national release down to 35% for movies that have been out a month or more. The terms in these cases become less each week as a movie gets older. Sometimes you pay a set percentage of ticket sales no matter when you open the movie or how long you play it. They call that aggregate terms... say 57% for all weeks.

So, you are not committing blindly. You will know the terms before you agree to take a movie. Aggregate terms can increase if the film does better nationally than expected, but you will be made aware of this in advance too.

35mm is dying fast because all the major movie distributors are heavily invested in digital projection. It will save them a ton of money to distribute digitally. They have convinced all the big theater chains and many others that they should use digital for convenience and better quality presentation, so they are following suit. If you try to use 35mm, you may be able to do it for a short while, but you will probably not be able to get film anymore within a year or two.

As for your estimate of how much digital projectors cost, you are looking at the wrong kind of projectors. Even the very good ones on your list are the wrong kind. You will need DCI compliant projectors made specifically for theaters. They do not use DVD or Blu-ray (although these are used on rare occassions for showing classic movies in some theaters). Plan on spending at least $60,000 each for those from what I've read. You need sound and screen to go with that of course, so the package is probably more like $75,000 per screen or more. Don't forget to add seats, concession equipment, etc.

That's enough for now. Read, read, read. That's the best advice I can give.

Thanks for the reply..
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Incidentally - I Did read Through this entire Forum this past weekend. My associates widow in Georgia told me about it in an eMail last week while responding to an eMail that I had sent to her late husband. I was surprised and sad that he had past on on a little over a year ago.
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She courteously answered my eMail and told me they tried to contact me at my place in the Bahamas (I haven't had a chance to visit my place in the Bahamas in over eight years - and will bring this fact about the message I did not get up with the care taker when I talk with him this coming weekend). Sorry - I'm off subject.
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My concern about the cost to lease the movies is based upon rumors that I have perceived from others who own/operate theater. While I would never claim that I am an Industry savy individual - I will state that I am vigilant, and highly deductive and inquisitive. I got that way while working for the US Government (even worked on two presidential staffs, which really opened my eyes to all the goings on at the Legislative level)... My last 9 years working for the Government I was an SOAA (Separate Operating Agency Agent) which meant that I was in Charge, I made the decisions, I did my own funding, and I decided on my own. I was responsible and accountable to two people - the chairman of the Joint Chiefs of Staff, and the President of the United States. My theater of responsibility was the southern Border Region of the United States, Central America and the Caribbean. I also was on the HQ CENTAF Staff in the original Desert Storm - mainly because I was on the team that laid all those concrete patches in the Arabian desert back in the 1970-s thru 1980's, as a contingency for what may someday come - it came when Iraq invaded Kuwait.
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I am an upper level College grad with extensive research ability and an in depth skill set.
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My place in my current project is to get a 2 screen cinema into this community along with the Fitness center that I have already placed. My responsibility ends when I get the staff's trained and complete the Facility Handbook (that I write and provide) so that they have a technical and managerial guide to help them manage the facility. At that time I will be bought out, but until them I am principal owner/operator.
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As you can see - I am motivat6ed to get it done and get out. Besides there is a nice carrot dangling in front of me (the project completion Bonus).
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My tentative budget is $750K, my power restriction is 60KW (does not include Air Conditioning and climate control - that is already provided, as are all utilities). My space restrictions are 80 feet by 180 feet per theater ( I plan to only use about 60 x 120 feet). The lobby/concession will occupy an additional 50 foot by 90 foot area. The client wanted LCD Movie Screens - I want a nuclear powered car that I don't have to charge - neither of us is going to get that...). The best I can do In that area is a 60" x 90" LCD Screen - not what I would call cinema size... A jumbo Tron is another option butt it requires about 35KW by itself - and would be over whelming in a movie theater.
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My time frame is what ever I take. I have my initial fee/bonus (the one where they pay me to start) and I get a retainer every month until I finish. All the expenses are reimbursable on a bi-monthly basis, expenses billed are billed to the project auditor - who pays them (better for me.).
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Incidentally, there are already five other community's, and several more planned/under construction. So this is going to be a long project, especially since I keep getting tasked over and over... Whine... Wine.... Complain.... NOT... I like the work, who wouldn't.
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Your advice and assistance is always appreciated...
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Dave

Dave,

I am one of the providers of tough love on this forum.

a) Number of screens-If you have read anything on this website you would have read about the horrors of operating singles and twins. They are far from desirable for many reasons that have been stated before. Seldom do you see anything smaller than 6 screens being built brand new from scratch. There is a reason for that. I know of a 3 screen that was built in the S. Louis area but it is owned by the city it is in. There are many areas that draw from 20,000 populations that are grossing $500k in ticket sales. That is $25 per person. Nationally it is approx. $34 a person.

b) Film rental- I understand why you may feel a bit unsure. Theater operators have for years allowed the public to think that we as operators keep almost nothing from the ticket sales. Which is just plain wrong. Most first-run theaters will pay on average of 55% of ticket sales to the studio. So that $8 ticket will get you as an operator $3.60 while paying the studio $4.40.