So You Wanna Be A Movie Investor Like The Hedge Funds, Dot Commers, Real Estate Developers, And Othe Private Equity And Other Accredited Investors

Alright, so you woke up one day, checked your Swiss Bank Account, called your family office planner, had breakfast with your private client service wealth manager, got your tax accountant on the phone, and between three of you, you decided to invest your proceeds from your latest company's Merger or Acquisition not into some dubious hedge fund or start-up biotech venture, but into financing Hollywood films because you figure you need the State tax Credits, the Federal tax write-offs, as well as a nice hedge of revenues from a few movies.

Now, this may not ring too well initially with your hedge fund manager neighbors in Connecticut or your oil and gas investor friends in Bahrain or Dubai, but aren't these the same guys who are financing Hollywood blockbusters? And the only question for you, how do you get in the game without feeling like the Uncle of the film school student who wrote his nephew a $1,000,000 check for a film that starred his theater department classmates and ended up as a free download on youtube.com?


So after doing your share of homework, here's what you discover may be the opportunity to spice up your wealthy but boring life:

*Sergey Brin And Larry Page Of Google, Fred Smith, the CEO of Federal Express, Norman Waitt, the Co-Founder of Gateway Computers, Jeff Skoll Of Ebay, Todd Wagner and Marc Cuban (formerly of broadcast.com), Max Levchin and David Grodnick Of PAYPAL, Marc Turtletaub of The Money Store, Roger Marino Of EMC Corp, former Chicago bulls co-owner Jim Stern, Sidney Kimmel Of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg, Bob Yari; and, financiers Robert Sturm, Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, Rafael Fogel, and Philip Anschutz are just a handful of high net worth entrepreneurs who entered the motion picture finance and production business with successful results.


*There are various tradable state, federal, and international tax credit incentives that would offer a premium based on an equity position. Assuming there is a 10 million dollar budget film, where 50% of it is in equity, and 50% is through international distribution guarantees prior to release. Now assume there is a 20-25% tax credit on the entire amount of $10 million dollars, which will immediately translate into $2-2.5 million tax credit to an investor.

*Numerous hedge funds such as Reed, Conner & Birdwell (DISNEY), Legendary Fund (Warner Brothers), Melrose Fund (Paramount Pictures), Ingenious Media’s 700 Million dollar Float on London’s AIM, Benjamin Waisbren Investments, and a host of other funds and fund managers are entering the film finance arena.


*The explosion of international DVD, pay-per-view, home video, cable, megaplex theaters, the future of multi-lingual Internet video on demand downloads, and cross-market digital distribution including low-cost theatrical digital projection, the movie industry is accelerating at an unprecedented growth rate.


*The American Jobs Creation Act of 2004, which amends the Internal Revenue Code of 1986, was signed into law . The Act creates three tax incentives expressly applicable to motion pictures, one of which – § 181 of the Internal Revenue Code – is especially significant to independent film producers and their passive investors on qualifying films with budgets under $20 million dollars.


*The filmed and other entertainment sectors are constantly outperforming and beating analyst expectations with regards to growth, and are the only industries resistant to untimely global events and adverse economic conditions.


*Movie Investor returns may be more favorable and more liquid than holding direct equity positions in most public entertainment and other public companies, real estate investments, and other alternative investments.


*There is a huge demand, audience, and growing distribution structure for specialty independent, ,crime, horror, and other low budget films as exemplified by the success of such films as “Brokeback Mountain”, “Sideways”, “Capote”, “Garden State”, “Napolean Dynamite”, “Y Tu Mama Tambien”, “My Big Fat Greek Wedding”, “Memento”, “Crash” , “Saw 1 &2”, Friday The 13th”, “Halloween”, “Texas Chain Saw Massacre”, “Hostel” and “WOLF CREEK”, which was made for $800,000, bought for nearly 4 million dollars prior to its release by Dimension, as well as “Hustle and Flow” which was made for $2 million dollars and bought for $16 million by Paramount Pictures.

*Apart from large blockbusters such as “King Kong”, “Harry Potter”, and other large scale studio films, the majority of studio-produced films have been under performing at the box office. The films that have been successful for studios were all externally financed and or co-financed with studios, sold for 2-3 x their costs, and a majority of them retained foreign sales rights to maximize revenues.

So after looking at all the great benefits, how do you actually go about finding a deal or movie project where you are certain that half your money isn't going to be used by a Hollywood producer as a down payment on a new mansion in Pacific Palisades?

The key that separates the successful film financiers vs. the newbie Oil magnates who come to Los Angeles with a pocketful of money and end up leaving with half a pocketful of money is called several things: structured finance, leverage, risk minimization, multiple exit strategies, tax credits, and the ethical consciousness of the filmmaker/producer.

What does that translate to you in a real world scenario. Lets say you want to finance 100% of a $1.5 million dollar low budget genre film whose worst case scenario is a DVD release and profits from international sales and perhaps some other equity sweeteners in the conversion of the securities that you subscribe for as part of the deal. Well, if you write a check for $1.5 million, and the film is shot in a state that has 30% in tax credits, you get back $450,000 in tax credits + under Section 181, you are able to write off that amount under Federal. So you are already making a nice return before the profits kick in. Then you figure you sell the film to 50 countries, and if you are really lucky, you sell the film for 3-4 times it cost to a studio at a swanky festival like Sundance, Toronto, Cannes, etc. Do this over 5-10 films and you can make a very profitable name for yourself among the Hollywood elite.

But lets really take this a step further and see how the bigger boys leverage film investing because they can get a bigger star which can translate in larger overseas sales. Lets say a filmmaker/producer has a $10 million film and you want in on the action. You would park $5 million in equity, receive an 20-30% tax credit on $10 million which will be $2-$3 million, the producer will get the biggest star he can, get a studio to kick in the other $5 million dollars, you wont worry about ever seeing a penny from the theatrical release because you know your DVD profits and international sales will cover your equity position. Make sense?

Now leverage this with different budgets, genres, stars, distribution, places where you can get high tax credits (Ie Puerto Rico is 40%), other exit strategies where you can find your shares on the London AIM, and you are on your new career path as a sophisticated and educated film financier. Off course, if you want to go even further and guarantee 100% of your capital, there are tricks to that as well.

If you have any further questions on your quest to a movie premiere on the French Riviera at the Cannes Film Festival, and its a burning a hole inside your heart and soul, contact yours truly at filmhedge@aol.com or yuri@noci.com.

CFO with capital markets, investment banking,capital raising with institutional and high net worth clients, family office

Chief Financial Officer

*Structures and coordinates international film finance transactions utilizing various risk minimization and hedging strategies including private equity and debt placements, structured finance, tax credit monetization, studio-co finance, reverse mergers and/or IPO exits
*Must have 7-20 years of proven experience in international film finance, investment banking, capital markets at global financial institution.
*Must have proven hands on deal making in structuring large global private placements (100 million dollars +) from international institutional investors and extremely high net worth investors.

*Must have stand alone relationships with global institutional capital and family offices.


Please email your resume and interest to careers@noci.com

Private Equity Deal Shows How Innovative Film Fund Can Protect 100% Of Capital Invested By Hedge Funds, Alternative Investorr,Pension Funds

CITIGROUP financed Relativity Media’s global film fund in excess of $1 Billion dollars. The fund’s manager, Ryan Kavanaugh, is 32 years old and has raised more than $4 Billion dollars for film finance in the last few years from other institutions such as Merril Lynch and Deutche Bank. Thomas Tull, the founder of Jackson Hewitt Tax Services recently closed a $2.5 billion dollar deal with Dresdner Kleinwort and Columbus Nova Asset Management for his Legendary Pictures Film Fund. GE CAPITAL recently was the lead arranger for a $200 million film fund lead by production executives Mark Gill and Neil Sacker and whose investors also include Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, and Rafael Fogel. Numerous other private equity groups and hedge funds are also bankrolling other film deals.

While the dollar amounts are significant and the structures seem to be identical in leveraging junior equity with tranches of mezzanine and senior debt, there is one question that still remains? Who gets their money back if the deals and funds flop?

A Chicago film finance and production company, Noci Pictures Entertainment, may have answered the last question. “Everyone”, states the firm’s visionary President Yuri Rutman in regards to a $1 billion dollar film deal where 100% of principal capital can be guaranteed, exclusive of profits spread out among 40-100 films.

Without any formal Ivy league MBA degrees or tenures on Wall Street or in Hollywood studios, Mr. Rutman spent many sleepless nights self-educating himself the A-Z’s of what they don’t teach you in practice at business or film school. Leveraging the international structure of film finance with the nuts and bolts of private equity, collateralized debt obligations, tax credit incentive finance, hedging strategies, and multiple exit scenarios, Mr. Rutman, a filmmaker and actor who also spent more than a decade as a top commercial real estate consultant and entrepreneur in Chicago has come up with a formula that is attracting a lot of interest from institutional investors, hedge funds, capital markets, investment banks, high net worth investors, and other global private equity groups.

”I am not reinventing the wheel in trying to raise money to fund my passion and the aggressive interest of film finance by many global investors and financiers”, Rutman states. “I am just doing it in regards that in the last 30 years, a lot of private equity money has flowed into Hollywood, but only a nominal amount of it stayed and made any significant returns for Wall Street and Main Street alike. I just happen to want to stay for long term and what’s the point of betting on one horse if I can guarantee an entire breed”.

Rutman is no stranger to raising capital in an innovative fashion for film finance. A few years ago he met a VC investor on the Internet who read his business plan and wired him money a week later without ever meeting him. The result was a small, but very well received independent film, “Mr. Id”, which is currently one of the top downloaded films online at such sites as Brightcove.com and Vuze.com.

”I thought with “Mr. Id”, the investments would continue to roll in. But I realized I had to do go above and beyond what anyone has ever offered to investors and it took me years to figure out how to do it”.

Rutman further states that having a firm studio distribution deal for his fund would actually limit the upside of profits and revenues. While a lot of funds are structured in conjunction with a major studio, a few are being done without being married to a particular one. “Working in Chicago real estate and being a trained negotiator, what’s the point of using my skill set and everything I learned if I can’t apply that in Hollywood? I am used to shopping real estate deals on a property by property basis to the highest bidder, why not do the same thing with studios and other distributors and be in control of the situation?”

The key factor is that the major studios are in fact primarily now in the business of distributing externally financed films, so creating long term value for A-level films with A talent becomes an economy of scale as well as the creative merits and control of a movie.

Part of that control is that Rutman has written several of the scripts for the film fund himself. “Kiev Nites” is a crime epic about a boy who comes to Chicago in the early 1970’s and is growing up to be a violinist. Something goes wrong and he ends up being an enforcer for a crime family and after ten years he wants to get out. With the historical success of crime films at the box office ranging from “The Departed”, to “Goodfellas”, “Godfather”, and the tv show, “Sopranos”, the timing may be right for another international crime film hit. “My tastes run from wanting to do edgy crime dramas to thrillers ,action, horror, kids movies, etc., to doing a movie based on the real historical facts and spiritual significance of the Exodus and how it applies to all denominations and beliefs without taking sides” .

“I am in a unique category because one side I am no different that the creative filmmaker who stays up all night writing scripts and takes his final movie to Sundance or Cannes and sells it to a studio. On the other hand, I understand and am conscious of private equity and maximizing investor returns, can negotiate with the Hollywood werewolves, and still be able to sleep at night knowing that I utilized an ethical and conscious approach to making something happen and protecting someone’s money 100%”.

The Company is currently reviewing numerous proposals from various global partners including investment banks, hedge funds, private equity groups, and other investors.

Rutman is also becoming too familiar with "fishermen" who are more interested in his proprietary business model than in actually investing.

"There are so many individuals out there who claim they can structure the deal or provide a significant capital infusion, , but I think their hearts are in the wrong place. I want to make sure I partner up with someone where we are both of the same consciousness to succeed on a win-win basis. This is my life’s passion and I am not looking to do a fly-by night venture with someone who isn’t on the same frequency as me and wants to do a quick vanity fix and move on. A lot of the heart and soul has been taken out of movies lately and if I can resuscitate that with a financial partner who is also conscious of how positive entertainment can influence the world proactively, it will only increase the upside profit potential as well”.

Next Hot Alternative Investment For Accredited Investors, Venture Capital, Private Equity, Family Office Is Principal Protected Movie Fund

Accredited Investors, including institutional capital, high net worth investors, opportunity seekers in Dubai, Bahrain, Israel, oil and gas speculators, pension fund investment managers, capital markets executives, and private equity companies are eyeing a 100% principal protected film fund as the next hot alternative investment to pre-ipo companies, seed stage investments, series A investments, and other high growth and top performing hedge fund managers. Recently, CITIGROUP financed Relativity Media's global film fund in excess of $1 Billion dollars. The fund's manager, Ryan Kavanaugh, is 32 years old and has raised more than $4 Billion dollars for film finance in the last few years from other institutions such as Merril Lynch and Deutche Bank. Thomas Tull, the founder of Jackson Hewitt Tax Services recently closed a $2.5 billion dollar deal with Dresdner Kleinwort and Columbus NovaAsset Management for his Legendary Pictures Film Fund. GE CAPITAL recently was the lead arranger for a $200 million film fund lead by production executives Mark Gill and Neil Sacker and whose investors also include Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, and Rafael Fogel. Numerous other private equity groups and hedge funds are also bankrolling other film deals.While the dollar amounts are significant and the structures seem to be identical in leveraging junior equity with tranches of mezzanine and senior debt, there is one question that still remains? Who gets their money back if the deals and funds flop?A Chicago film finance and production company, Noci Pictures Entertainment, may have answered the last question. "Everyone", states the firm's visionary President Yuri Rutman in regards to a $1 billion dollar film deal where 100% of principal capital can be guaranteed, exclusive of profits spread out among 40-100 films.Without any formal Ivy league MBA degrees or tenures on Wall Street or in Hollywood studios, Mr. Rutman spent many sleepless nights self-educating himself on the A-Z's of what they don't teach you in practice at business or film school. Leveraging the international structure of film finance with the nuts and bolts of private equity, collateralized debt obligations, tax credit incentive finance, hedging strategies, and multiple exit scenarios, Mr. Rutman, a filmmaker and actor who also spent more than a decade as a top commercial real estate consultant and entrepreneur in Chicago has come up with a formula that is attracting a lot of interest from institutional investors,hedge funds, capital markets, investment banks, high net worth investors, and other global private equity groups."I am not reinventing the wheel in trying to raise money to fund my passion and the aggressive interest of film finance by many global investors and financiers", Rutman states. "I am just doing it in regards that in the last 30 years, a lot of private equity money has flowed into Hollywood, but only a nominal amount of it stayed and made any significant returns for Wall Street and Main Street alike. I just happen to want to stay for long term and what's the point of betting on one horse if I can guarantee an entire breed".Rutman is no stranger to raising capital in an innovative fashion for film finance. A few years ago he met a VC investor on the Internet who read his business plan and wired him money a week later without ever meeting him. The result was a small, but very well received independent film, "Mr. Id", which is currently one of the top downloaded films online at such sites as Brightcove.com and Vuze.com.Rutman further states that having a firm studio distribution deal for his fund would actually limit the upside of profits and revenues. While a lot of funds are structured in conjunction with a major studio, a few are being done without being married to a particular one. "Working in Chicago real estate and being a trained negotiator, what's the point of using my skill set and everything I learned if I can't apply that in Hollywood? I am used to shopping real estate deals on a property by property basis to the highest bidder, why not do the same thing with studios and other distributors and be in control of the situation?"The key factor is that the major studios are in fact primarily now in the business of distributing externally financed films, so creating long term value for A-level films with A talent becomes an economy of scale as well as the creative merits and control of a movie.Part of that control is that Rutman has written several of the scripts for the film fund himself. "Kiev Nites" is a crime epic about a boy who comes to Chicago in the early 1970's and is growing up to be a violinist. Something goes wrong and he ends up being an enforcer for a crime family and after ten years he wants to get out. With the historical success ofcrime films at the box office ranging from "The Departed", to "Goodfellas", "Godfather", and the tv show, "Sopranos", the timing may be right for another internationalcrime film hit. "My tastes run from wanting to do edgy crime dramas to thrillers ,action, horror, kids movies, etc., to doing a movie based on the real historical facts and spiritual significance of the Exodus and how it applies to all denominations and beliefs without taking sides" ."I am in a unique category because one side I am no different that the creative filmmaker who stays up all night writing scripts and takes his final movie to Sundance or Cannes and sells it to a studio. On the other hand, I understand and am conscious of private equity and maximizing investor returns, can negotiate with the Hollywood werewolves, and still be able to sleep at night knowing that I utilized an ethical and conscious approach to making something happen and protecting someone's money 100%".The Company is currently reviewing numerous proposals from various global partners including investment banks, hedge funds, private equity groups, and other investors."There are so many individuals out there who claim they can structure the deal or provide a significant capital infusion, , but I think their hearts are in the wrong place. I want to make sure I partner up with someone where we are both of the same consciousness to succeed on a win-win basis. This is my life's passion and I am not looking to do a fly-by night venture with someone who isn't on the same frequency as me and wants to do a quick vanity fix and move on. A lot of the heart and soul has been taken out of movies lately and if I can resuscitate that with a financial partner who is also conscious of how positive entertainment can influence the world proactively, it will only increase the upside profit potential as well".For further information please visit http://www.noci.com or email yuri@noci.com

Leveraging Tax Credit And Tax Shelter Strategies For High Net Worth Investors, Acccredited Investors, Hedge Funds, Private Equity, And Venture Capital

Leveraging Film Finance And Tax Incentive Investments For Corporate Purchasers And High Net Worth Investors.
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In order to attract film production and provide for economic development and incentives, many states and territories including Arizona, Rhode Island, Georgia, Connecticut, Illinois, New Jersey, Iowa, Pennsylvania, Louisiana, Massachusetts, Connecticut, and Puerto Rico have enacted aggressive legislation that provides for tradable Film Production Tax Credits.

Tradable tax credits have historically been part of state and federal programs aimed primary for real estate development, including historic structures rehabilitation, energy, and other activities that stimulate economic growth.

With film projects, Production companies earn a transferable tax credit on the total eligible production costs, and wage expenses. That can translate to 20% – 30 % of the total production cost for a film, in the form of a tax credit issued directly to the production company. It can be used to offset state tax liability, or sold to another taxpayer.

In Illinois, a 20% tax credit based on "Illinois Production Spending" plus an additional 15% tax credit based on Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment is available. New Jersey offers filmmakers a 20% tax credit for productions that film at least 60% in the state, as well as a 30% loan guarantee from the New Jersey Economic Development Authority.

In Connecticut, film makers can earn a tax credit worth 30% of their eligible Connecticut production costs, and in Massachusetts, productions with a minimum expenditure of $250,000 earn 20% and 25% for production expenses and labor expenses, respectively, when at least 50% is shot within the Commonwealth. Note: in MA, pending regulations propose a flat 25% combined tax credit, a minimum spend of $50,000, and removal of per-project cap.

In CT., the 4 new bills are being debated in the legislature, and the expected result in June will be a combination bill. Rhode Island offers a 25% tax credit to productions with a minimum eligible expenditure of $350,000, when 51% of the total budget is spent within the State. For more information about qualifying for each states’ tax credit, contact Tax Credits, LLC.In Puerto Rico, A tax credit is granted to the investors in a Film Project equivalent to 40% of budget items paid to Puerto Rico residents, up to 50% of the cash invested as equity in the project. 50% of the tax credit granted to the investor may be made available to the investor upon investment if a completion bond or a letter of credit is obtained, including the Puerto Rico Secretary of the Treasury as one of the beneficiaries.

Tradable tax credits allow production companies earning credits to sell their credits to companies and/or high net worth investors who have a tax liability within the state, where the credit was earned. The tax credits are sold at a discount for cash, garnering the seller cash to lower their net production expense.

Any company may take advantage of these “Financial Assistance Programs” to reduce their state tax liability. Purchased credits can typically be used for any year in which a tax return has not been filed. In general, credits may be used to offset any, or all, of the following: Individual Income Tax, Corporate Business Tax, Franchise Tax, Premium Tax, and Utility Tax (qualified taxes allowed for offset vary by State).

Large corporations and high net worth investors with a significant state tax liability can benefit from the purchase of film production tax credits, as they are able to purchase a dollar’s worth of tax credit at a discount.

NJ, RI, CT and MA film credits provide the buyer with the right to carry the tax credits forward for at least 3 years, which protects the buyer from investing significant dollars in tax credits that they cannot immediately use. In Illinois, tax credits can be carried forward for 5 years. The tradable, and thus marketable aspect of these state-issued tax credits means that tax credit investors can also retain an equity position in a film or a slate of films.

For example, lets say that a tax credit investor has $3,000,000 in tax credits he needs to purchase. While normally the final tax credit amount is calculated after a film's production, he decides to benefit from the upside in potential profits and receive his tax credits.

So if a film has a budget of $6,000,000, 50% of the budget is equity ($3,000,000) and 25% is tax credits, an investor/tax credit buyer will receive benefits of $1,500,000 and 50% equity in the total international film profits and revenues.

But what happens to the other $1,500,000 he still needs to receive as tax credits?

Well if his or a company's film investment was part of a film package, that amount is rolled over to another film that can be shot in a state or province where there may actually be a higher tax credit incentive which would be transferable back to him and any other investors on a pari pasu basis. For multinational firms and investors, this can also be leveraged and cross-collateralized to a multiple country and territory transaction where there is a significant tax credit incentives such as Manitoba, Saskatchewan, Spain, Hungary, UK, South Africa, Australia, New Zealand, and others.

Another option would be to leverage the initial tax credit investment with a direct equity co-investment and set up several additional tranches of debt for a larger film fund.

To find out how a tax credit investment can also turn into a film investment that would hedge the risk and revenues across multiple films, please visit us at http://www.yurirutman.com or http://www.noci.com