The 7 Most Under-budgeted Items For Film & TV Productions

Movie budgeting is definitely an art-form and while we 100% are not self-proclaimed budgeting Van Gogh’s (shout out to the true artists – the amazing line producers, UPMs and production accountants that will work serious magic), we’ve come across enough productions to see which line items are sometimes overlooked, or under-budgeted. Here’s our take on the seven most under-budgeted items for film and television productions.

Note: An earlier post in 2021 had this listed as "The 6 Most Under-budgeted Items…” but after many conversations with publicists, we’ve revised to bump this up to 7.

1.     Music Licensing

Ah, music in film. Music in film is like sunscreen in Australia – essential.*  We can all agree that that Mr. Blonde scene in Reservoir Dogs wouldn’t have been the same without Stuck In The Middle With You. And who can forget John Cusack holding a boombox over his head blasting In Your Eyes (swoon) in Say Anything. 

In order to incorporate an existing song into a film, producers will need to get permission from the song’s rights owner or owners. In some cases, the rights to a song will have more than one owner involved. The first thing to know is the rights to a song are broken down in two parts – there are master rights and sync rights, and you’ll need to get sign off from both owners in order to be in the clear.

In clearing the music and securing licenses, you can either a) license the music outright which, depending on the track, can get pretty expensive, or b) lock in a step deal where you have the right to use the music for a certain number of times or until certain things happen (like, securing distribution). The fee doesn’t really change depending on duration of song being used. If you’re looking at securing the license to a particular track for the purpose of submitting to, and participating in, festivals with the view to finding distribution, a license can range anywhere between USD$500 - $5,000, depending on the track.

In any event, you should always check you’re in the clear that the music you wish to use can in fact be used. If you’re stuck, ASCAP is a great place to start.

*Acknowledging those great films without a soundtrack – Sweet Country, Network, The Blair Witch Project and many others.

2.     SAG-AFTRA Bond (if applicable)

If your production is a SAG-AFTRA production, you’ll need to set funds aside for the SAG-AFTRA bond. This a refundable security deposit paid to SAG-AFTRA before the start of principal photography. Until you’re all paid up, your cameras can’t start rolling. The bond is usually an amount equal to your performers’ first two weeks of payroll, and the applicable pension, health and welfare contributions. The exact amount will be calculated by SAG-AFTRA and provided to you directly by your SAG-AFTRA business representative once the signatory process is underway.

Why this is an underbudgeted amount is because of the following – the bond is held by the union through to the end of production and only returned to you once you provide satisfactory evidence that performers have been paid, all contributions have been made and all requirements met. Simultaneously, while the bond is being held, you’re still paying out wages through payroll (and often your payroll company also requires an upfront deposit). So, in essence, a portion of payroll is being paid twice during production. 

There are debt financiers out there that can cashflow the SAG-AFTRA bond – they lend you an amount equal to the bond, and upon return of the deposit, you repay the debt financier. The downside is this also comes at a cost – you’d likely be paying interest as well as other administrative fees. 

Hot tip: If your performers’ talent agencies have escrow capabilities, one way to have your SAG-AFTRA bond returned to you earlier than usual is to arrange having the total amount owed to performers escrowed with their respective agents. 

3.     Contingency

Contingency is always budgeted for but sometimes its skimmed. A 10% – 15% contingency is nice to have in there as a buffer.  You never know what might go wrong and when you might need it. Always better to dip into contingency as a backstop than your other line items – like post! And if you want to keep your financiers happy, you definitely want to avoid going overbudget. 

4.     Financing Costs 

If you’ve got a debt financier on board (e.g. a bank or a specialist film financing company), part of the deal will probably be interest on the loan amount and then potentially additional financing costs like arrangement fees and reimbursement of their legal fees incurred in connection with providing you with the loan. These are usually percentages of the total loan amount. 

Every lender is different and they’ll give you quotes upfront, but for budgeting purposes, it’s safe to go with the following estimates:

• For arrangement fees: 2 – 5% of the loan amount;

• Legal fees can be anywhere between $5,000 - $30,000 depending on the complexity of the financing; 

• Interest Rates – this is anyone’s guess and really depends on the lender but if you budget for 8% – 15%, you’re probably in the average ballpark.

The big variable will be whether interest rates are locked at drawdown, and whether it’s compound or simple interest.  In any event, the most accurate way to budget your financing costs is to go directly to the source and get a quote.

5.     Production Legal 

Ah, the dreaded (essential) line item for many. Production legal can range anywhere from $10,000 to $50,000, depending on the scale of your project, but budgeting $20,000 - $30,000 will get you the proper coverage needed by the average indie production. 

6.     Foreign Exchange 

Hedging! Hedging! Hedging! If you’re shooting oversees, and/or have a multi-currency project (i.e., you have foreign money coming in or going out), you need to consider hedging! In any event, many film financiers may require it, and if they don’t, it should still be factored in. Without it, sure you can save some money, but imagine a scenario where you’ve got funds coming in from a pretend foreign country and said pretend country’s democracy explodes with pretend political unrest after a pretend election and now your pretend foreign currency drops in value – you either need to find extra cash to make up the gap in the budget, or dip into your contingency which is not the ideal scenario.  

7.     Publicity

The importance of publicity and publicity strategy when it comes to premiering at film festivals, without distribution in place, seems to be an overlooked budget line item for independent filmmakers. Publicists can bring a lot to the table - they can get your film in front of the right audience and the right film critics, assist with festival strategy to get the right buyer looking at your film, provide guidance on marketing materials you’ve created, punch up your loglines and those initial materials that are the first thing prospective buyers see when (not if!) your film enters the festival circuit.

Budgeting appropriately in order to hire a publicist is actually a good investment in the long run. If you’re budgeting $15,000 - $30,000 for publicity, you'll be in the right ballpark but if you’d like to be sure - getting a direct quote is always a good idea. A quick note though, it’s also important to be able gel with your publicist and make sure they understand your goals, your film’s goals and the film itself. Just like any other member of your team, they’ve gotta the right fit - so date around and find the right publicist for you!

Disclaimer: This post should not be construed as legal or financial advice and should be used for informational purposes only.