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TOPIC: film renting and leasing

film renting and leasing 02 Feb 2004 02:11 #7386

ok i have read tons of posts about how you lease a film for a certin amount of time and so forth and pay a certing amount but im so confused. why do theaters not make money with tickets when i see people posting here saying they paid x number dollars and made xx number of dollars on that film? i mean i see where someone paid a few hounderd and made 3k so why tehn are you all complaning you dont make money? someone please in simple terms explain how i go about getting a film and how much it would cost? there is one other theater in town a 12 plex carmike cinema that is hurting since they are in bankruptcy. i think they dont know how to chose a film they chose alot of bombs and great films never come there. the town is manhattan,ks pop about 45000 or so but a major university here (ksu) and a major military base (fort riley army) and carmike took away all discounts seniors, student, military so the only thing left is either matnee or ful price. no one likes going there people complain they have bad service they dont clean thier auditoriums and they over charge by not giving discounts they are always raising the price on consessions. they do what they want because they have a monopoly and have had for years and untill i open up they will. so i think i can do a combo first run,moveover or 2nd and some art films as well. maybe bring back movies that did really well say star wars in anticapation of the 3rd installment coming next may. LOTR triliogy i know when they did the triligoly tues here in kc and in wichita 2 theaters got to do it and they were sold out the day tickets went on sale and they were going to bring it back but said its to much of a hassle to change the film 3 times in one day just for one event. and they have other things they want to do they dont want to tie up the auditurioum or so they say. i know AMC could easily bring it back gosh they started here in kc i have been to thier head quarters building and they have over 118 screens here in the metro area and thats alot of screens. i was told that when LOTR came out the rotk we had it playing on our 4 biggest screens at just our theater all with seating from 465-590 and the first week it was almost always full. at night it was but some matiness wernt all full. and star wars did well too. anyway i might be crazy but i think if you give people something they can see with a good service and a decent movie they will come. i have tons and tons of college kids and even older people in the city asking when are you going to open when are you going to start remodling we cant wait for opening night and so forth. so that makes me excited. back to what i was saying help me understand what i can estimate paying for a film and how to figure what i will pay them if i make alot more or less then originaly expected. what is this 35% or 50%. 35% of what? my total sales for that film alone? like how many tickets i sell? do they tell me what i have to set my price at if im first run 2nd run whatever? or how to you determine the ticket cost you should charge? which is better the 90/10 i hear talked about which i dont get either or just paying them a flat fee like x number dollars no matter what the film does or a percentage like 35 or 50 or whatever? and if you make more then what they thought is that why people say this company is taking 15% more then oringlay stated? how can they charge you extra if you agree on a certin amount up front? any thing else you can tell me would be great but i cant think now so im done talking
jason
i know all this has been talked about but i still am confused that is why i am posting this so please forgive me
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Re: film renting and leasing 02 Feb 2004 12:53 #7387

  • Mike
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Greetings Big Bad Voodoo;

I will respond to your post later.

I'll say this in general: policies being a good topic this day I'll use your post to illustrate a personal loose policy here at BSB. Grammar-spelling-and punctuation. Perhaps it's my years of writing for a newspaper showing but I believe that posts should be written with a certain amount of care. Capitals-commas-spelling, etc. should be used. Paragraphs are a good thing too.

Why?

Because most of us are professionals and we make our living doing this. Part of doing business is good communication. You can't run a theatre without good comm skills. Bad grammar, bad spelling, improper English in business and life relegates you to a lower status. Sorry but it is true. When I receive an e mail or letter and someone can't or won't take the time to spell it signals to me (and all) that they are not serious. And not being serious means that people don't take you seriously. So: when I read a post that has all of the above it makes me less likely to respond. Dot those t's and cross those I's!


Michael Hurley
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Michael Hurley
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Re: film renting and leasing 02 Feb 2004 13:16 #7388

  • lemonice1
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Just a quick response concerning bringing back the Star Wars trilogy: I cannot imagine George Lucas would ever allow any of the Star Wars films to be shown again before the last installment comes out. Does anyone else have a definite answer to this?
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Re: film renting and leasing 02 Feb 2004 15:59 #7389

  • Mike
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Jason; don't get your tail in a knot about terms at this point. This biz is a lot like the diamond industry: all verbal and in the end changeable. Yes; terms can change after they quote you if it does better or worse than expected. The 90/10 vs. house allowance is a hard thing to wrap your head around but rarely applies to small theatres. Think about first things first.

Michael Hurley
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Re: film renting and leasing 02 Feb 2004 16:05 #7390

  • Large
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The question was, "Why can't a theatre make money on ticket sales alone?"

A commercial theatre pays an aggregate of 55% of their ticket revenue back to the distributors. This percentage has been going up over the years.

So 55% of your ticket revenue goes out the door before you get to pay for anything else like:

· Staff
· Rent or Mortgage
· Heat & Air-conditioning
· Servicing loans to pay for projection and concession equipment, (theatres are expensive)
· Janitor
· Manager
· Investors

Exhibitors have found that since concession revenue isn't shared with the distributors, that it is possible to make a profit by providing concessions to the movie going public. (By the way, exhibitors have tried to get their hands on a percentage of the concession revenue for years.)

Now, films make as much or more with their DVD sales than they do during theatrical distribution, so distributors aren't going to bend over backwards to make it easier for us to make money on their product.

So remember, it may be your theatre, but it's their product and they will have a huge say in how and when it is presented. So many of your good ideas are simply not allowed by the distributors.
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Re: film renting and leasing 02 Feb 2004 20:50 #7391

  • BECKWITH1
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You said:
they do what they want because they have a monopoly and have had for years and untill i open up they will

When you open up they will probably still have a monopoly. Why? Unless you are able to afford the cost to equal or outscreen them (millions of $) or are able to locate just far enough away, they will continue to get the first run products and you won't. Movies are licensed by the distributors in such a way that 2 copies of the same film are not given to competing theaters in the same town. If you are in a major metropolitan area there will be several theaters running the same films but many distributors also limit films within a metro area so that all theaters cannot get all the films that they want. Carmike film bookers will have plenty of clout to get what they want for their theater. You may have heard of "Allocation" discussed here but that doesn't even come into play unless you are big enough or have a proven track record of grosses to be a major player. Unfortunately, you won't have an opportunity to build a track record as distributors won't make anything available to you. So you will have to choose a another format which allows you to get the best films that are available to you. So they will still be the only place in town to see X film while it is on their screen. Is this fair? No, but that is the way it is. This system is not about fostering competition and fair play so that people get the choice of movie going environments.

Now as to the cost of renting movies. In practice you will pay a percentage of gross ticket sales. Distributors can and can't tell you how much you are going to charge. They can't call you up and say you must charge X. However, they don't have to grant you a license either. Therefore they have the upper hand and you will charge whatever you have to to get film. In my area $5.50 for first run evening shows is the minimum. If you sell tickets to 1000 people at $5.50 you will have grossed $5500. First week of the movie you may pay 60% rental so $3300 goes out the door leaving you with $2200 to start paying all of your bills detailed by Large. 2nd week works the same way except that attendance drops off about 50% so that maybe only 500 people came in. That is $2750 and the rental might be 50% so you get to keep $1375.00. Week three probably won't decline as much so lets say attendance drops by 35%. You gross $1787.50 on those 325 people and pay 40% keeping $1072.50. Week four drops another 35% so you gross $1160.50 on 211 people, paying 35% and keeping $754.32. You have a 4 week contract and you now think that you have better options than keeping this film so you send it out for another film and the process starts over. Totalling up your gross receipts for the past 4 weeks:
$5500
$2750
$1787.50
$1160.50
which totals: $11,198.

You have paid your film rentals and now have left:
$2200
$1375
$1072.50
$754.32
which totals: $5401.82 (or 48% of your grosses).
All of us have different cost factors but we can easily spend this $5401.82 just by paying our regularly monthly bills:

Rent-single screen $2,000
Electric 900
Gas 400
Telephone 100
Water & sewer 100
Film shipping 36
Film booker 240
Advertising 800
One employee 824
(minimum wage -40 hrs)

Totals $5400 leaving you with $1.82 in your pocket. Boy that sure makes you feel rich doesn't it? So how do we all make it work? Concession sales. That is also another complicated set of calculations. So why are concession prices high? Because we need them to keep the doors open. You didn't really think that we could handle 1,000 people with one minimum wage employee did you?
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Re: film renting and leasing 02 Feb 2004 23:45 #7392

they didnt use to have a monopoly the theater im taking over was once there and so was another and then the theater im taking over went to a dollar theater and then they sold it to carmike cinemas for the reason they didnt want to do movies anymore then carmike went backrupt and then closed the theater. as far as the other one in town well they just couldnt keep the doors open to a single screen theater that was run down and they didnt want to put any money into it to make it better so then of course carmike has there one remaning cinema and a monoply as they do in so many towns. but yet i see flaws in what you say by what i have just said and also that there are other towns the same size such as lawrence about 1 and half hours away from there but same size town slighlty bigger but not much and they have 2 first runs in town a twin and a 12 plex. ok so who is to say that cant happen in manhattan? how or who could i talk to to find out if i could get a print and so forth. now dont get me wrong i know you know more then i do by far im sure but there is a law against monopolys is there not in all things? that is why dish network and directv could not combind. well hope i didnt step on anyones feet there
jason
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Re: film renting and leasing 03 Feb 2004 00:22 #7393

  • wimovieman
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After reading all this--I just have to pass on a true story that happened to a person I know. He is a younger gentleman with a very well to do family. He wanted to own a theatre. He elected to purchase a completely stripped out twin in a town with about 14,000 people. (The theatre was completely empty--I even bought the custom made concession stand when it was originally stripped).

The town has a 7-plex owned and operated by a smaller chain who I am not going to mention.

The gentleman put everything state of the art into the place before opening including new seats--each good sized auditorium seats 200 very comfortably. All digital sound, ect, ect.

The multiplex has much smaller auditoriums, along with mostly front/surround for sound.

He could not get a good movie to save his soul--he became so frustrated that he finally invited and flew in studio big wigs to look at his theatre--then he started getting movies.

I would have hated to not only have his investment, but suffered all the losses he has to get where he is today--but again--he had the money to play the game.

And Jason--just for your information--I do not believe Carmike is in bankruptcy anymore--I have a few friends that bought stock when it hit below 25 cents and sold at $28---if I would have only paid attention that their bankruptcy was mainly to get out of some losing long term rental contracts--I could have built my multiplex on profits from their stock--but I fear gambling in casino's and stock markets.

Mike--I tried proofing--hope I am close to perfection
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Re: film renting and leasing 03 Feb 2004 00:38 #7394

so what if i could get a good booking anget or what about movies they pass on there are lots of big movies that do very well at the box office and they dont get them they always get these movies that bomb and people are like you actully went to see that or they actully made a movie that bad type thing. they may not be in bankrupty anymore but doesnt mean i cant compete with them. where i say there is a will there is a way. there will always be a way maybe i will have to settle for not exactly what i want at first maybe a 2nd run or moveover run but soon i will get first run movies and i will do well. it may take time and if i dont get there at least i have a movie theater that makes money even if its not glamorous or first run or state of the art if people come then im happy.
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Re: film renting and leasing 03 Feb 2004 13:48 #7395

  • jimor
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Well, Big..., I guess the moral of the story here is: IF you have lots of bucks to throw away, don't worry; just throw the money in and be ready to wait years for any return on your investment. WiMovieman had it right in the experience he gave you; other exhibitors I know have had similar experiences. Be ready to pay the price of dealing with the big boys, for it is as the saying says: 'If you lie down with dogs, you will get up with fleas' and the movie producers/distributors are some of the biggest dogs out there, short of organized crime. And don't expect any laws about monopolies to help you out; the enforcers of those laws are bureaucrats bought and sold by the big money types, and prosecutions happen only when it is in somone's financial/election interests. Have you got very deep pockets and a thick skin? Then the movie exhibition business may be for you. Best Wishes; you will need them.
Jim R. (new E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) member: www.HistoricTheatres.org
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Re: film renting and leasing 04 Feb 2004 18:12 #7396

  • Mike
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And don't forget that there are other options: 2nd run/moveover/art etc. It does not all have to be first run mainstream.

Michael Hurley
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Re: film renting and leasing 09 Feb 2004 16:16 #7397

  • BECKWITH1
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Bigbadvoodoo: Please read topic "Need cinema equipment" in this forum. This could be you sinking in a fortune into your 6 plex and then finding out that you can't compete against the big guys in town. We are just trying to make you aware that free competition it ain't. You need to know the truth in order to structure your business plans so that they work.
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