Economic impact models can be troublesome. Sometimes, estimates of money re-circulating through economy can be overstated. Multipliers look at how induced impacts continue to roll out, how money re-circulates and what additional economic impact is created (i.e., real estate purchases, retail spending). These can sometimes vary greatly by city, state/province or region.
Involve many people and sources of data in your process to get the best economic impact information. More sources of data gives you a better picture of what’s really happening. The theory of “garbage in/garbage out” applies here. This means if the data you collect are weak or unreliable, the result will also be unreliable or un-defensible.
Clearly define the city or region to be studied. Are you looking at just your city or county, or are you looking broader at a state/province or specific region? Make sure you identify this in your research and reporting.
There are a variety of models and methodologies to use in determining the economic impact of production, but be sure you use the same models consistently so you can benchmark and compare different films or types of production against one another.
Watch your multipliers. Overstating economic impact can be a very dangerous place to go, as elected officials and others you are accountable to will want to know where and how you have obtained your information. Be conservative – do not overstate the economic impact of production in your area.
Economic Impact Reporting
Most film commissions are required to provide some kind of yearly report on what production came to the area, and how much they spent. These reports can be complex or simple, depending on the requirements of your government or funding agency. If you are not required to create such a report, it is probably a good idea for you to do it anyway. Nearly all film commissions, at one time or another, are called upon to demonstrate the value of their industry and the work done by their commission to support this industry. It is invaluable – and at times critical – for you to be able to provide a history of economic impact data for the industry. If you have carefully collected it each year, you will be prepared when information is required.
Some of the information you may want to collect and include in a yearly economic impact report includes:
• Number of projects shot, broken down by category (feature film, commercial, documentary, and television)
• Number of pre-production, production and post-production days
• Financial impact of production
• Number of workers hired (crew, actors, extras, community people)
• Number of “room nights” spent in area hotels, motels and apartments
• Local production costs
• If necessary, the economic impact of different parts of your jurisdiction
Your report should also include such items as the names of projects, both local and from out of your jurisdiction as well as information about major events affecting the industry. This could be an award won by a local filmmaker or screenwriter, the advent of a new studio, or a special or unique project scheduled for the near future. Your goal with this kind of report is to create an accurate picture of the local film industry, while also presenting the best and most interesting news about the impact that the industry has on your area.
A completed film economic impact assessment on a single project is a valuable tool in promoting the value of the work that a film commission does. It provides an ideal vehicle to get the message out to business partners, community residents, elected officials and funding agencies. While there is no standard template for such a report, the following should be included.
While it is the last part of the report to be completed, the most important element of the study to many people will be the executive summary. Most media and elected officials want to quickly understand the information from an easily digestible format, without having to spend time on the details. The executive summary provides such a tool. For a short report done locally, it would typically run one to two pages – for a more extensive study it could be many more pages. In all cases, it is a very brief overview of all the elements of a report. Some of these are described below.
Background on the Region
While this may not be particularly newsworthy to your commission or those in your jurisdiction, keep in mind that the impact assessment report can also be used as a marketing tool. Describe in brief the level of recent film production, the location, and experiences of production companies through short testimonials that can appear throughout the document. An overview of the production involved and the scope could also be a part of this portion of the report.
Describe the principle reasons for undertaking such an impact assessment. These objectives could include such things as the levels of tax revenue generated, social impacts on communities, and an assessment of the final outcomes of the production that can assist film policies and strategies well into the future. Be clear and concise.
1. Organizing system: the methods or organizing principles underlying a particular art, science, or other area of study
2. Study of organizing principles: in philosophy, the study of organizing principles and underlying rules
3. Study of research methods: the study of methods of research
Simply stated, the methodology in your report should outline the steps taken, assumptions made and approaches used in dealing with the research question:
What is the impact of a production in a particular Region?
The methodology section of the report should identify how the research was done, who was involved (was it the commission alone or did a private consultant undertake the work?), and if the local industry played a part. If you have made assumptions, particularly about multipliers and the production itself, those should also be laid out in the overview.
After you have collected and analyzed the data, the results of the study are now ready to be conveyed to the reader. They should be presented in a clear format, stating the key findings and then progressing to the details of the report. Results should focus on direct and indirect impacts, should relate to specific benefactors of the impacts (for example retail trade, or tourism accommodations to name but a few) and the overall numbers. If you choose to use a multiplier, it used should be explained and justified in the results. Charts and graphs are often useful tools in demonstrating the impacts in a concise manner.
Production Industry Perspective
It’s important for film commissions, the community and local/regional government to have an understanding and appreciation when Warner Bros. films on location. Warner Bros. has a policy to provide figures so local film commissions know the amount spent on labor and vendor expenditures. However, it is left up to the commission to share the information with the community in a fashion the film commission and government officials find appropriate. Warner Bros. sends the information to the state/provincial or local film commissioners approximately thirty days to six months following wrap of a production.
Warner Bros. estimates on feature film production, an average daily spend of approximately (U.S.) $260,000 per film day on location (prep and strike vary greatly, so those figures are not routinely included). Television shows are estimated at about (U.S.) $125,000 per day. The range is immense, from (U.S.) $150,000 – $600,000.
Two factors influence the money spent on a particular project.
1. The size of the production budget for the project can vary greatly. Independent projects are (U.S.) $5-$10 million on the low end; above (U.S.) $150 million for high end studio projects. TV production has a lower spend of approximately (U.S.) $100-175,000 per day typically.
2. Leakage of money from the local economy can be small or big.
The size of a production center dictates how money is spent. For example, leakage in Montana is much higher than in London. Montana requires a lot of equipment and crew to be trucked in, so money is spent elsewhere and per day spend is less. London can provide most everything needed for production, so per day spend is much higher. Some areas are also just more expensive to do business in than others.
Warner Bros. does not get involved in using multipliers. The studio wants to provide only hard figures of money spent, and leaves extrapolation of data for economic impact reporting up to the local/regional film commissions. However, Warner Bros. can help film commissions announce the impact of production if asked, but does not want to have the publicity. The studio does not release actor salaries.
The film industry is one of the easier industries in which to develop an Economic Impact Report. Following the samples provided and using the information about how economic impact reports can be used, you should be able to develop simple reports initially, then perhaps more complex as you perfect the craft, and gain support from your local jurisdiction.