June 1, 2010

Conceptual Reality: It Doesn't Take Vulcan Logic to Fund Concept-Based Documentaries

A lion's share of documentaries consists of issue-driven works that can serve as tools for social change. Character-driven documentaries, experimental documentaries and concept-based documentaries are a more difficult sell and, as such, more difficult to finance. And for some masochistic reason, those are the documentaries I make. My first concept documentary, Trekkies, is an anthropological study of a subculture of science fiction fandom. Six Days in Roswell is portrait of Americana, a small town gone alien crazy. My latest, The Nature of Existence, is about the most esoteric of all concepts: existentialism. 

Even though the funding source was different for each of my films, the process was the same. My first step is to write a simple one-page proposal. People with money don't like to read. In fact, if your pitch doesn't grab them in the first three sentences, your chances of getting a check decline with each line of explanation. In your outline, excite your reader with bold and colorful descriptions. Propose some of the questions you will ask, and the answers you expect. I wrote the toughest questions I could think of about why we exist, and tested them out on friends, usually without advance permission. Some questions blossomed, like, "What is our purpose?" Everybody has a unique take on that. Other questions fell away when the answers were all too similar. For example, most questions about religion have been debated to death--like, "What is the good and the bad that religion does?" We all know about religious charity work, as well as the Inquisition. Your take needs to stand out and break new ground.

Make sure you tell human stories--especially with concept films. Ideas without people are not engaging. If your concept is "greed," for instance, profile and contrast people living selfishly and people living altruistically. Describe whom we will meet and why they are so incredibly fascinating. What crises are they facing? What are their stakes? If it's a journey, where will you take us? Explain why this story must be told. Add star names where you can; list the famous people who are interested in your topic, or have agreed to be interviewed. And never speak as if you will make the film; you are making the film. Investors prefer to get on board a train that is already moving.

Next, create the lean-and-mean documentary budget. The less you spend, the lower the profit threshold. As different as all four of my documentaries are, their budgets were fairly similar, costing around $125,000 in hard costs for expenses that can't be deferred, like equipment, tapes, travel, film festivals, etc. Once I added in the deferred salaries, each of the films' production budgets rose to about $350,000. You usually have to pay larger salaries when your crew agrees to the deferment gamble. But when negotiating back-end money, treat it like real money. As easy as it is to be generous with money that doesn't yet exist, the goal is to have that money in the bank some day, and if you've promised someone a million dollars, that's a million real dollars.

One way I funded the travel for The Nature of Existence was to piggyback some trips on other expense-paid travel. I was invited to screen Trekkies 2 at a Star Trek convention in Israel. Upon arriving at the convention, I put my local resources to work. I was ushered on stage for an introduction, and I said, "Hi, everybody. I'm starting my new documentary today, and, uh...I need a rabbi!" They found me a rabbi in Jerusalem to interview, and I was off and running.

You also need a business plan that explains why your project is such a good bet. List other comparable (successful) documentaries, and any supporting evidence like core audiences that will seek out the film. Add up the costs versus potential revenue streams, and put your investor at the bottom, surrounded by lots of dollar signs. My typical split is 50/50: half the income to the investors and half to the filmmakers. The typical payback priority is, Hard cash comes out first (sometimes plus 10 percent), then filmmaker deferments, then a 50/50 profit split. You should try to negotiate to split the first dollar right away--50 percent to the investor and 50 percent to filmmaker deferments. Ask for the better deal first; you can always fall back.

Now that you have your proposal, budget and business plan, what do you do next? Start shooting! Don't wait for somebody to validate your idea. You will validate it by making it real. With your initial footage you will be able to create a visual sample of your terrific idea, which will be a much stronger selling point than the prospective nature of a verbal pitch. And it will now be clear that your train is moving. Plus, just as important, you will know after your first interview if your idea is a winner; you will feel it. And then you can sell that excitement to investors more passionately. If you don't feel it, you can't sell it. When I made a film about car salesmen (Suckers), I learned from them that the most successful salesman truly believes that his product is the best. 

What format should you use? It's about content, not format. People choose to watch and recommend movies based on how it makes them feel, not according to frame rate or lack of interlacing. Use the best format you can afford. HDV is widely available and no longer expensive. And don't skimp on sound. Buy two quality wireless microphones, and a decent shotgun for the camera mount. Sound is where it becomes immediately clear whether you're pro or amateur.

Now you're ready to pitch to funding sources: investors, friends, parents, dentists, foundations, corporations, charities, studios... Be ready for every objection: "Sure, great idea, but what do we need you for?" You say, "I've already got the people lined up and signed off, and the main interviews are in the can." Or, "Documentaries never make money." You say, "The worldwide market is strong, and the threshold to profit on this project is low." Or, "How do you know who would want to see it?"  "I've fully researched every aspect, the core audience is huge--just look at this fascinating chart."

For my first documentary, actress Denise Crosby, who starred in the Star Trek: The Next Generation series, pitched me the idea. She had seen first-hand at the conventions how interesting Star Trek fans are. I said, "What a great idea. It seems so obvious. I can't believe nobody's done it yet." We took the pitch to a production company, Neo Art and Logic, for whom I had just directed a $2 million action film. They agreed to put up enough money to finance one convention shoot to test the waters.

There's a saying about investors: "Get them a little bit pregnant." Once they're in, they have to stay in to the end if they want to protect their initial investment. After that first weekend, I cut a 20-minute demo and we screened it for more investors, garnering interest. Denise, our Neo producers and I felt the offers were way too low; plus, we wanted to keep the ownership instead of becoming somebody else's employees. But that meant Neo had to push all their chips in. The deal we worked out was an ownership split among the producers, Denise and myself. In the long run, it paid off. We still receive royalty checks from Paramount every September. And we own the film; the rights will revert to us in a few years, and we can re-release it.

A sole investor is the ideal situation. You may need several investors, but it's much easier to answer to one master than several differing opinions. Coming out of a distributor screening for Trekkies, one of the Japanese co-producers of my action film offered to invest in Trekkies. His was one of several offers that we received when the film was done, when it was obvious we had a good product. But why sell out when you're at the finish line? Instead, I pitched him an idea for a new documentary about the town of Roswell, New Mexico. The heat from an imminent Trekkies deal helped lock in the investment for Six Days in Roswell from a magazine publisher in Japan who the producer was representing. 

My next source of funding was from a major studio for Trekkies 2. I notified Paramount that we intended to make a sequel. They had first right of negotiation; if we did not come to terms after good-faith negotiations, we would be allowed to take the project elsewhere. That wasn't necessary, though, because Paramount closed a deal based on the possibility that we might. They agreed to reprise the original Trekkies deal with a few tweaks, and we were in production very quickly with a budget of $325,000 in our pocket at the outset. On delivery, we were paid a profit of $625,000, plus a contingent deferment of $150,000 to come out of domestic television sales.

The search for funds is a never-ending process. Despite flirting with two potential investors for my latest film, I decided to self-finance. Win or lose, I'm working for myself again. In between directing or editing television shows like The Office and Curb Your Enthusiasm, I saved money and went on the road every few months. 

Once you have finished your fully-financed movie, you may be surprised to find that you're only at the halfway point in your fundraising. If you sign a deal with a small distributor, or if you self-distribute, you may still need a P&A investor. A typical last-money-in deal will probably require payback as first-money-out (plus 10 to 25 percent) ahead of the original investment, plus ownership points. Is it worth giving up that much? The theatrical-spend rule-of-thumb is that for every dollar spent in advertising, you get one dollar back in box office gross. Theaters keep half the gross (or more--sometimes a 60/40 or 70/30 split is not uncommon when they have the leverage). Of course there are outliers like Avatar that do vastly better than the one-dollar-spent-versus-one-dollar-returned metric, and there are films that completely tank. But for a typical indie release, that's the goal. However, you make up the shortfall in the ancillaries due to vastly greater product awareness and a perception that your film is cinematic, not a direct-to-video release. And there is always the chance that your film could break out into the outlier realm.

With the paint still drying on The Nature of Existence, I have already started shooting my next documentary, while piggybacking on the travel for screenings. My new film is another concept documentary. My proposal is written and the demo is in the works. I'm incorrigible. It's almost like a cry for help: "Somebody stop me before I document again!"

 

Roger Nygard is a filmmaker and television director and editor. His latest documentary, The Nature of Existence, will be released theatrically beginning June 18 in New York City and July 2 in Los Angeles, followed by a rollout to the rest of the country.

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