FilmHedge Provides Film Debt Financing for $3 to $50 million

With Guest Erik Gordon from FilmHedge

FILM & TV FINANCING, DONE BETTER

Streamlined financing platform that provides filmmakers with the funds they need to bring their creative visions to life—quickly and reliably.

At FilmHedge, we're revolutionizing the way stories are brought to life by reshaping the film and television financing landscape. As a trusted partner, we provide senior debt financing for productions with budgets ranging from $3 million to $50 million. Our proprietary database, the largest of its kind, offers unparalleled insights into production financial data and credit history, empowering smarter decisions for all stakeholders.’

Transcript

SPEAKER_00 1:11

In today's episode of The Art of Film Funding, we share how filmmakers can secure up to$25 million in private credit and also unlock powerful tax incentives with innovator Eric Garden of FilmHedge. So thank you for joining us, Eric. Tell us about yourself and FilmHedge.

SPEAKER_02 1:33

Yes, well, there's one thing I love to do is talk about Film Hedge. Not myself as much, but I I'm more than happy to uh briefly uh give a description of who I am. Uh and since this is an audio uh podcast, I like to say that I am very handsome. Uh I know you guys can't see me, but I'm a looker, okay? And then, but more importantly, um, my name is Eric Gordon. I am a partner and VP at Film Hedge. Uh and more what we do at FilmHedge, well, let me give you a little background about myself, if you don't mind. I was a professor for 10 plus years uh in business, organizational theory, behavior, uh, marketing, supply chain management, etc. And uh what always drew me to film was the nostalgia and the beauty, the elegance and overall sexiness of the actual industry. Um, but I also noticed that it was kind of hard to break break into it if you didn't know the right people. Um so then I tried to look and understand other ways to do so. Uh and as a professor or former professor, I was able to create different courses in different uh disciplines, uh specifically within business and business management. And uh FilmHedge came about because of John Gauzier and co-founder Mickey Vetter. I was one of the first people. There's only five of us, uh eight, you know, ancillary, but five mains. And uh when he came to me with the idea, I said, this is brilliant. This is paradigm shifting brilliance. And one thing I will say about John Gauzier, whether he's around me or he's not, is he's one of the smartest people I have ever met in my life. And so when he was explaining to me how this works, how film financing works, I then realized that, and we always talk about this, him and I, it's about for me, it's a, oh, we can democratize film. That means more people will have access to funds to be able to get more creative stories out there. Uh, he looks at it a little different than I do, you know. Yeah, but uh it's it's a beautiful way for people to really uh get their dreams out there from, you know, and this basically how this works, it basically takes you through the levels, the multiple levels of what a studio does. If you notice anything about a studio, they will break down all of these different departments into eight to ten different departments, and none of the departments really talk to each other. And uh as a result, the film financing from a debt facility standpoint makes it easier for a filmmaker and creative to have control over their destiny, uh, if that makes sense.

SPEAKER_00 4:25

Well, yes, but uh you offer up to 25 million in credit. So tell us what does the production company need to qualify for that kind of capital?

SPEAKER_02 4:35

Of course. So there's really a very specific list. First and foremost, your film has to be bonded. Now, I created a four-course method with over 80 quizzes and seven tests called the Business of Film or Bizoffilm.com, B-I-Z-O-F-F-I-L-M.com. And the reason I did this is because people really need to know this. I know Academy Award nominees and winners from the producer level to the actor level to the director level who have had tremendous success, but they do not know how the machine is ran. So you need to have your film bonded. You need to go ahead, and that's that's paramount. We cannot do anything with you if your film is not bonded. We can, however, get tax incentives for you or cash flow your tax incentives. And then we can also finance you with a domestic distribution deal that has a minimal guarantee. In addition to that, we can also finance you if a reputable international pre-sale company is willing to offer cash, and we can finance that as well. So we finance receivables, much like a construction loan.

SPEAKER_00 6:00

Yeah. Great. Well, everybody knows financing receivables if you've ever been in business. So, yes, we understand that. So, first you have to build up some assets for you to finance, right?

SPEAKER_02 6:16

Well, yes, and so and the reason I keep mentioning this course is because, and the reason I mentioned film hedge is because they're intertwined almost, right? So a lot of filmmakers don't know that before they even get a camera or a set, if they can package their film correctly, not a pitch deck, but if they can package their film correctly, they can get international pre-sales and we can lend against that.

SPEAKER_00 6:43

Well, now this is really important. Package the film correctly. So, do you help them package their film?

SPEAKER_02 6:51

Um, we don't offer those services, uh, but we still try to help people along the way because at Film Hedge we truly believe in the small wins. And what do I mean by that? There's only about four to five other companies that do what we do. We just do it a little bit faster, and we have another suite of uh opportunities that people can actually use, right? Uh, for example, um, there are other companies that we won't name that have packaging services and they charge filmmakers for that. Uh, we don't necessarily do that. We develop the relationships. Some of these other companies that are like us will take a significant amount of equity to do a debt facilitation. We don't do that. We believe in the interest, and if we negotiate a small equity piece, that's possible, but we believe in the smaller wins, which is the interest on the loan that is going out. Uh so that's some of the indifferential, uh the indefensible differentiation that we have at Film Hedge that makes us unique to the space. Uh, the packaging is key, right? LOIs don't necessarily count. Uh, letters of intent don't necessarily count. Having people truly attached uh with contracts and dates uh can make that film go faster, as you well know, and can attract uh real big pre-sale companies, which will then offer an amount, and then we can lend against that as well.

SPEAKER_00 8:19

So just one second here. So you're saying having people attached with contracts and dates of shooting, you mean shooting dates, right?

SPEAKER_02 8:30

Yes, ma'am, or shooting periods, right? So however you however you get them attached is how you get them attached. But that, but you know, your script is paramount, but having those attachments, and I don't know, and I don't I'll just say this, and maybe you know the audience knows, but every single person has a value attached to them uh of note, right? Uh so an actor has their pre-sale value, uh, their domestic value, producers have pre-sale value, domestic, international presale value, domestic value, directors have the same. So when you have those attachments, you're basically putting money of value onto your actual project.

SPEAKER_00 9:17

Right. As well as your DP and your director, those are great assets, right?

SPEAKER_02 9:23

Yeah, absolutely.

SPEAKER_00 9:25

Okay, so uh when someone wants to come to you with a product, they have to uh be uh fully developed, really. They have to have a script, a good script, a director attached, maybe one or two actresses or two actors attached. So they've got to raise the money to get to that level before they come to you, right?

SPEAKER_02 9:51

Yes and no. Uh, there are projects that we've seen people attached, but there was no money exchanged. Directors that are attached and there was no money exchanged on their development side. It's the it's simple, just not easy, right? And that's where relationships and a good script on their end works. I often tell people from our end as financiers, I don't care if you have Tupac, Betty White, and Geraldo Rivera in your movie. Right? I don't care, right? Now, the left hand, the left side of my brain absolutely cares. The right side business side from the film financier side, I do not care. We just care that it is packaged, you're financially packaged correctly. And so, say for example, uh the the the producer that you were talking about has a relationship with an A-list actor. Hey, I'm I will need you attached. Can you attach this? Yes, I can attach this on these grounds. Okay, perfect. Hey, director that I've known forever, can you attach absolutely on these grounds? So now you have a pretty strong start out to the package, right? Because you have that relationship, or that person believes in that script, or the director really wants to direct it. And that's when a lot of your networking comes in. And people are like, well, you have to be a big, you don't have to be a big Hollywood nothing. You know, the blacklist who has an amazing amount of scripts that people want all the time, people try to attach those people for next to nothing, if for nothing. And then now you have something that you can go out and lend against from a pre-sale international pre-sale value or from a domestic uh distribution minimal guarantee value. It's just about how and where uh you you make this this play. But traditionally, most people would have to raise a few funds to attach those people.

SPEAKER_00 11:44

Right. Well, how much uh uh do you care about the script? Do you use uh something like a Largo AI and run the script in a and get a report of the potential return on investment? Or how do you judge the value of the script?

SPEAKER_02 12:03

Yes, ma'am. This the script is inconsequential to us unless it's you know ridiculously offensive. But we don't necessarily care about that because your film could go on to make a billion dollars. And we wouldn't have a piece of that. We would only take the interest from the studio, uh, the the interest amount of the loan that we take, that the minimal guarantee that was given by the studio distributor would give them. So we don't take any money from the actual success of your film.

SPEAKER_00 12:35

Okay. So you're really looking for a package to present for financing.

SPEAKER_02 12:42

Absolutely. If you go to filmhedge.com, you can go ahead and apply for our film financing right then and there, uh, which other companies are just now starting to catch up and do. But we were the one of the first to do that. Like we all of us at Film Hedge love film and television, love it. But we also know the path to getting people's dreams out there doesn't necessarily believe on, rely on if we love something or not, or if it does well. We are simple, we're we operate very similarly to a bank.

SPEAKER_00 13:23

To a bank, right? Okay, that's easy to understand. So tell us about how filmmakers can use section 168, uh, the depreciation to attract investors.

SPEAKER_02 13:38

Well, I 168 is interesting, but I really do love 181.

SPEAKER_01 13:45

Yes, me too.

SPEAKER_02 13:47

So, and you know, you'll hear some filmmakers. I'm I'm sure somebody's like, it doesn't work. Somebody right now is listening to this podcast, it doesn't work. Oh man, I don't, I've never seen it used before. I'm here to tell you we did it eight times last year alone, and in those eight times, we were able approximately let's let's use a rough amount of six million dollars. We saved investors over 70 million dollars in taxes.

SPEAKER_00 14:13

Whoa.

SPEAKER_02 14:14

Using 181.

SPEAKER_00 14:15

And so those things are well with the 181, uh, you're you're using that. So uh do you is that part of the asset side? In other words, if the film has been uh you have to uh put in your tax report that you are going to use 181, right? And then you have to uh go work with an attorney who understands it.

SPEAKER_02 14:44

Absolutely. We have and that we have that built in here at Film Edge.

SPEAKER_00 14:48

Oh, how fabulous.

SPEAKER_02 14:50

Yes, ma'am. It's part of the suite of uh uh suite of things that we have that we use for our advantage that others just don't know or haven't caught up to use yet. So if you know, if you have somebody, and this is the this is the best way I can say it to people who are listening. And that's why I tell you now bizoffilm.com, eight hours of lecture, four textbooks, eighty plus quizzes, five tests, and if you can do that and understand it, nine times out of ten, not just us, but others will be able to fund your film because you'll understand the business of film. So I this is the this is the easiest example, right? Say you have a$10 million film, and it's the$10 million of strike, right? But you only have nine million dollars that you've been able to get. You can talk to somebody that has a$10 million tax bill.$10 million tax bill, and say, hey, look, if you give me a million dollars in equity, you can write that full$10 million off. They give you the million dollars in equity to make get you to strike, they can write off that full$10 million on their taxes. Wow. It's an asset asset class, it's right there, it's right there in the federal tax code. Don't believe me. Look it up yourself.

SPEAKER_00 16:13

Right. It's in the tax code. Well, what about state taxes? Because if you sometimes, some states are 40 35%, you put that with the 181, and you're what 60% funded, 70%, somewhere in there.

SPEAKER_02 16:31

Listen, these tax attorneys are brilliant, and the taxes are brilliant. People need to understand, like, you know, I've taught at every level of education. I've taught it at elementary, I've taught it middle, I've taught it at high school, and I was taught at the college collegiate level. One thing I learned that differentiates the success stories from the from the stories that could have been is not talent. Actually, talent is 30% of success. It's the hard work, determination, and drive that I see from the people who want to know more. Uh, one of the analogies I use is uh say you work in an office building and everybody parks in the parking deck, right? A thousand cars, a thousand people at the office. One day, one day, everybody comes out and none of their cars work. None of them. Now, the question is, out of a thousand people who was all trying to figure out what happened in their car, who knows where to look first or what to do? That person is the person that can get their dreams out there. Because they've taken the time to learn about the car. Because most people, just like with film and television, just like with everything else, they know to get in the car and push the button or turn the key, and the car starts and they drives. But there's somebody who has a passion for cars that want to know why when the car turns or when I press that button, it turns on. They want to know about the combustion and the spark plugs and the oil and the you know, and the alternator. And the reason I'm using this analogy is I collect cars. But it's that person who wants to know more, who has a desire to not be told no at face value that it's going to be successful. And and that's why when I we talk to people, to filmmakers, we take the time to talk to them, to try to educate them as much as possible for what they're doing. We don't always have the time for it. It's not in our job description, but we do it because we're genuinely good people. And the reason I developed those four textbooks and those quizzes and those tests at Bizoffilm.com is because I want people who want to know. Because every film festival, whether it be Cannes or Berlin or Toronto or Holly Shorts, you know, or ABF or uh Martha's Vineyard, and I'm watching these creatives have a severe passion, an obsession to get their stories told. And sometimes I look at them and they're worn and they're defeated because they think that the world is not listening to them when all they have to do is turn that creativity off or put it to the side and learn the business side of film. Learn this industry like you learn the creative, and you'll see success.

SPEAKER_00 19:36

That is brilliant. You're absolutely right. And thank you for putting all the time and energy and money into uh the business.com. Great. Uh now let me just ask you: do you think that film has become a serious asset class that people can really believe that they can make money in film and it it's becoming more of a go-to place for investors?

SPEAKER_02 20:09

Absolutely. If, if, if I would, I would, I am willing to say this out loud. Anybody who wants to make money, who wants to make more money in this specific asset class, need to be in film. They need to actually talk to us. And I'm not just saying, bring all your money here. The reason I say that is because we've made something as close to bulletproof as possible. As close to bulletproof as possible because of those bonds, right? When a film is bonded, look, I love creatives. Film hedge loves creatives, but anybody that knows anything about creatives knows that creatives can be creative and they can cause problems or cause issues with things that are you know not properly backed by insurance. And so to keep people's money safe, secure, and almost I can never say guarantee because nobody can ever guarantee anything fully, but uh we've never had any defaults. We're we've over 50 film and television shows. We have not had one default. And the reason being is because I can listen, I've been on the phone with some of the biggest stars in Hollywood, met with all of them. I got this thing, and like is it bonded? Nah, it's not can't help you. I don't care if you're on the hall, the walk of fame. I can't help you because we need to make sure that our money is safe, our investors' money is safe. These are the protocol and issues that we have to have to ensure that number one, the movie gets made. Number two, that our investors are, you know, I can't say guaranteed, but our investors are going to have their money when we say they're gonna have it. And that's how we are able to move so quickly and freely. Because we make sure we're very stringent on this. We underwrite about 10% of all Hollywood films. So we basically about and we do about an estimated$1.9 billion in loan uh loan requests every year. So we have no shortage of projects. It's do they fit this criteria? And that criteria has to look like that. No questions, no exceptions.

SPEAKER_00 22:34

All right. So the thing is that they really have to educate themselves on the business of film. That's uh the first thing, and come to you uh with the the things you've mentioned earlier. Uh and so what advice could you give to filmmakers uh to learn to think like investors, right? Because that's what it really takes. You have to be on the other side in order to sell them. You've got to create a pitch that takes into consideration the risk they're taking.

SPEAKER_02 23:11

You had to create a package. I have a whole textbook, 184 pages about packaging. It's called the truth about packaging inside that course. And the reason I have that, and and as always, any professor will tell you you had to have prerequisites, right? And when you're dealing with creatives, you had to keep them in line and in order. And what do I mean by that? Don't take offense, creatives. I don't want you hopping all around the course and then only say, Well, I didn't learn anything. Well, because you were going to the things you think you needed, but you don't know what you don't know until you know it. So the whole book, the whole book is dedicated to packaging. It's the first book. Well, I know how to package, do you? Because if you knew how to package, guess what? You'd be making film. And so you need to understand the truth about packaging, the script, the the actors, the production services, the team, the ROI, the debt, the pre-sales. All of this stuff needs to be in order. The next thing is domestic distribution. Your first window, your second window, how you're going to do that, why you're going to do that, the avenues you should take, the avenues you shouldn't take, the avenues you got to watch out for, the early adopted methods, the laggard methods. Then you do international presale for the international market. Understand that part. So then once you understand that, then you know why this actor appeared in this movie for no reason other than to guess what? Boost international presales. You ever seen a movie where you don't know why that person is in this movie? They don't fit for some reason? But they're it's because it's part of the business. The business of film. If you know God, God bless Bruce Willis. Do you remember when Bruce Willis was starring in all those random movies that appeared on Netflix?

SPEAKER_01 25:02

Yes.

SPEAKER_02 25:03

Yes. Ask yourself why. Because the business of film will tell you why. When you're done with it, you'll understand why all of a sudden Keanu Reeves is in some random movie overseas because we knew it would sell here or they knew it would sell there. Or business, more than anything. And I want the creatives to take the time out to look at the passion, the pageantry, and all the sexy things about film, but also look at this stuff like you're making a tomato can, like you're making a license plate, like you're making a bike. And once you understand that, they will see the success that they think elose them or they think is unfair. I guarantee it.

SPEAKER_00 25:45

This is wonderful. Um, Eric, my son was an actor, and uh he went through all the things you're talking about uh being rejected and and finally getting accepted. But what he used to say was they don't know me in Hollywood, but they mauled me in Manila because the Philippines always played uh Corman's films, and he was in all of Corman's films. Absolutely.

SPEAKER_02 26:14

It's international sales, it's international pre-sales. Understanding that space is what's key. It's key for success. And you'll see, like um, there's a there's a recent uh two-time academy nominee actor who was talking about his place in in the space. And uh brilliant, talented, all the things. The issue is if they understood, and what we're doing now is helping them understand where their success lies. Their success lies in the business side of it. They already know who he is. Now he has to strategically place himself in certain films and in certain spaces inside that stratosphere to up his auntie, to up the price to get what he wants to get. But it's a process, just like I told you, like making a tomato can, like making a license plate, like putting putting together a bike. And these things are not always going to be smooth, but I I'm telling you, it's a market. It's just a simple market, and they'll understand that.

SPEAKER_00 27:18

Exactly. Well, uh, tell us how people can reach you, please.

SPEAKER_02 27:23

Yes, ma'am, of course. You can always or you can always reach me at Eric E-R-I-K. E-R-I-K at filmhedge.com. Uh, little side note, my parents were going to name me Junebug Jedi Gordon. It's in the story from this time. Uh it's the 80s. Uh, but eric at filmhedge.com. And then the other thing is you can follow me on Instagram at MrGordon to U, M-R, G-O-R, D-O-N, the number two in the letter U, Mr. Gordon to you, due to my educational background. And then always at bizofilm.com, B-I-Z-O-F, F I L M.com, BizOffilm.com. And also, if they do enroll in the courses, we give office hours. That means they can talk to me uh personally, they can talk to different uh people that we will bring in uh for lecture via Zoom from producers to other film financiers, so they can actually get the real world knowledge and ask those questions in real time because those things are extremely important. If you are a lover of people, I know I'm going off, but if you are a lover of people, you don't want to see people frustrated, hurt, sad, or dejected. That's why I made that course because I kept seeing those things whenever I would speak on panels across the world. And I just want to make sure that they actually actually have the education to arm themselves to be able to look at this not as a please let me get lucky and pick me, but look at it like a business. And they would have success.

SPEAKER_00 29:03

And you're so right, Eric.

SPEAKER_01 29:05

Tell me, where can we buy your book? Um, at Bizoffilm.com. It's the whole course.

SPEAKER_02 29:11

They'll get the all four textbooks. Uh, they'll get all four textbooks and and uh over eight hours of lecture, lecture um and live uh live lectures and everything, office hours, etc.film.com. Yes, ma'am.

SPEAKER_00 29:28

Thank you so much for giving us all this information and sharing your knowledge. It's wonderful, Eric.

SPEAKER_02 29:34

Well, I truly appreciate you with the questions. They were beautiful, actually. So thank you. And I hope I answered everybody's questions. But if they they didn't get it answered, info at bizofilm.com, Eric at filmhedge, E-R I K at FilmHedge, or any of the social medias, you can find me. I'd be more than happy to talk. I don't care if it's a million people, and you know, if I have a million, if I have a million minutes, I'm willing to talk.

SPEAKER_00 30:00

That sounds wonderful. We really appreciate you and your new company, FilmHedge. Thank you for joining us, and we hope you have a great day, Eric.

SPEAKER_02 30:09

Good luck. Yes, ma'am. Thank you. And look, let's reach back out. Let's let's get some updates, you know, because I just want to help. So if I can help as many people as I can understand the business of film, uh, I'd be more than happy and willing to do so.

SPEAKER_00 30:22

Okay, that's the deal. Thank you, Claire. Thank you very much, Eric.

SPEAKER_02 30:27

All right, you guys have a great day.

SPEAKER_00 30:29

Okay, bye. Be well, everyone.

SPEAKER_02 30:32

Be well.