Universal Pictures has revealed that the cost of making last year's car chase extravaganza Fast X accelerated to a staggering $453.6 million (£365 million) putting it on track "to exceed the planned budget".
Its colossal cost gives the movie one of the highest budgets of all time and it is by far the most expensive film in the Fast & Furious saga. Indeed, its budget is 33.4% more than it was believed to have cost with Variety claiming that "the film is the most expensive entry so far, costing a gargantuan $340 million."
The star-studded film was released in May and is the first in a two-part finale to the wildly-popular series which is famous for its outlandish stunts.
Its cast list reads like a roll call for the Oscars and is headlined by series regulars Vin Diesel and Michelle Rodriguez playing two former street racers turned good. They team up with John Cena, Jason Statham and Brie Larson to take on a cyberterrorist working with the son of a drug lord who is out for revenge for the death of his father. No expense was spared on the antagonists as Charlize Theron and Jason Momoa took on the roles of the deadly duo.
The twisting and turning story plays out against a backdrop of exotic locations stretching from the Colosseum in Rome to Lisbon and Los Angeles. However, it is the more gloomy surroundings of Leavesden studios on the outskirts of London which shine a spotlight on its finances.
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The cost of making movies is usually a closely-guarded secret as studios tend to combine their spending on individual pictures in their overall expenses and don't itemize the budgets of each one. Movies filmed in the UK are an exception.
They benefit from the UK government's Audio-Visual Expenditure Credit which gives studios a cash reimbursem*nt of up to 25.5% of the money they spend in the country.
At the start of this year the UK government slightly raised the reimbursem*nt ceiling by 0.5 percentage points in the face of competition from other countries which are offering similar schemes. It has helped to make the UK a dream ticket for movie makers and according to the British Film Institute, foreign studios contributed around 77% of the $1.8 billion (£1.4 billion) spent on making films in the country last year.
To qualify for the reimbursem*nt, shows must pass a points test based on factors such as how many members of the production team are from the UK and how much of the post-production work is done in the UK. Furthermore, at least 10% of the core costs of the production need to relate to activities in the UK and in order to demonstrate this to the government, studios set up a separate Film Production Company (FPC) there for each picture.
The UK government's regulations state that each FPC must be "responsible for pre-production, principal photography and post-production of the film; and for delivery of the completed film." It isn't possible for studios to hide costs in other companies as the law also states that "there can only be one FPC in relation to a film."
The funding process differs slightly from film to film but generally follows a similar model which begins at the very start of production. Take, for example, a US-based movie studio which buys a script from a local screenwriter and green lights a film about it. If the studio decides to make the film in the UK it will then set up a subsidiary company there which buys the rights to the script from its US-based parent.
Acquiring the rights to the script gives the UK company the rights to the movie it makes. That company must be responsible for everything from pre-production and principal photography to post-production, delivery of the finished film and payment of goods and services in relation to it. Then comes some financial wizardry.
If the UK company makes a profit, the financial benefit from the government comes in the form of a reduction to its tax bill. However, if it makes a loss, it receives a cash reimbursem*nt in the form of a tax credit so studios fund the companies in a way which engineers this.
The studio buys the rights to the movie from the UK company but only gives it 74.5% of the projected production cost. The remaining 25.5% is provided by the studio in the form of a loan. This gives the UK company 100% of the production budget for the movie and it sets the scene for the cash reimbursem*nt.
Loans are not counted as revenue for accounting purposes because they need to be repaid. As a result of this, the UK company makes a loss equivalent to 25.5% of the movie's budget. That is when the UK government steps in as it reimburses this loss. As the amount of the reimbursem*nt is equivalent to the loan that the company owes its parent, the cash can be passed on to the studio in the US as repayment and, voila, the UK government covers 25.5% of a movie's costs.
The UK production companies have to file publicly-available financial statements and this lifts the curtain on precisely how much it costs to make the movies. The filings show everything from the headcount and salaries to the level of cash reimbursem*nt. The cash that the studio pays for the rights to the movie is shown as the revenue in the UK company's financial statements and, crucially, its expenses are the movie's total costs.
Obtaining this information requires some detective work as the UK companies usually have code names so that they don’t raise attention with fans when filing for permits to film on location. In addition to shooting in Los Angeles, Italy and Portugal, the Fast X crew took over seven of the sound stages and the backlot at the historic Leavesden studios where all eight Harry Potter films were made along with last year's highest-grossing movie, Barbie.
Universal's UK subsidiary which produced Fast X is named Fireball Films in a nod to its high-octane action scenes. Its latest financial statements were released at the end of last month and cover the year to August 31, 2023 which was just over three months after the movie debuted.
As the UK companies have to pay for services relating to the finished film they continue to book costs in their financial statements long after the premiere and in the year to the end of August 2023 a total of $125.4 million (£100.9 million) was spent on making Fast X. Combined with the $328.2 million (£264.1 million) spent on the movie before that, it gives total costs of $453.6 million.
The impact of this is laid bare in the financial statements which reveal that "the film is expected to exceed the planned budget". One of the biggest expenses was the $22.6 million (£18.2 million) spent on production staff which peaked at 211 people without even including freelancers or agency workers who represent the majority of the crew.
Filming in the UK doesn't just generate jobs for locals, it also drives spending on services such as security, equipment hire and special effects firms. It explains why the UK government offers such generous fiscal incentives for studios to film there and the filings reveal that Fast X received a total reimbursem*nt of $74.8 million (£60.2 million) bringing Universal's net spending on the movie to $378.8 million.
Importantly, this is not to be confused with the total costs of $453.6 million which were paid out by the production company to make the movie. In contrast, the company received the reimbursem*nt and as Universal owns the rights to the movie it receives the ticket sales from it.
Typically studios get around 50% of the box office receipts with theaters retaining the remainder. According to industry analyst Box Office Mojo, Fast X grossed $704.9 million making a hit but not enough to cover its turbocharged costs at the box office. A 50% share of the box office would give Universal $352.5 million which is $26.3 million less than its net spending on the movie.
That excludes the DVD and Blu Ray sales, as well as ancillary revenue streams such as licensing and merchandising. It simply shows whether or not the movie covered its costs from its box office revenues and it's a different story when the financial performance of the other films in the Fast and Furious series are added into the mix.
So far, a total of four of the films have been made in the UK - Fast and Furious 6, spinoff movie Hobbs and Shaw, F9 and Fast X. As we recently revealed in the UK's Sunday Express newspaper, analysis of 23 sets of financial statements for these movies shows that their total costs came to $1.4 billion (£1.1 billion) with the second most-expensive one being F9.
Universal's net spending on the 2021 movie came to $321.1 million as it received a $57.3 million (£46.1 million) reimbursem*nt on its $378.4 million (£304.4 million) cost which was higher than estimates suggested. Part of F9 was filmed in Scotland so it also received an additional $497,000 (£400,000) grant from the country's production growth fund.
According to Box Office Mojo, the four Fast and Furious movies grossed $3 billion putting the 50% share at $1.5 billion. After deducting their $219.3 million (£176.4 million) total tax credit, Universal's net spending on them came to $1.2 billion leaving the studio with an estimated $300 million profit. The final instalment in the series is due to be released next year so it may not be long before Universal's bottom line revs up even more.
