even though actors really do already make far more money than they honestly really should, i'd still rather that they get the money over 20th century fox , who just gives their money to disney's multinational conglomerate, who then use that money to lobby the government to put in laws that make it easier for them to make more money off us.
I interviewed three people. A mathematician, an engineer, and an accountant. I asked each the very same question. What is 2 plus 2? The mathematician said "4". The engineer said "4.00" The accountant however looked around, closed the windows, locked the door, and whispered "What do you want it to be?"
I’m replying 8 months later but you inversed the roles, engineers are known for taking shortcuts and using approximations whilst mathematicians and scientists are known for the accurate and over aggressive sig fig usage
@@ben3559 if engineers used approximations and shortcuts, buildings would collapse all the time a mathematician writing just the natural number 4 makes perfect sense
@@thekyuwa Most engineering branches can afford to round up. Even in civil engineering, it is acceptable to simplify calculations as long as they stay within 80% to 120% of the original value. An insane amount of range if you ask me, but it works out nonetheless.
Yeah thanks I came her to watch how Harry Potter movies lost money now I’m just sitting here ignoring the audio and focusing on each individual stock footage clip
I got this exact feeling when I saw that "throwing around money" footage. Then I couldn't help but feel how ridiculous the stock footages after that were...
I just want to point out that agents for big name stars are well aware of these accounting tricks and negotiate for a percentage of gross revenue rather than net profit.
Gross revenue is what money was made before operating costs and expenses Net profit is after tax You get income from the revenue as an asset Profit or loss is Assets less Liability add owners equity this determines the value before tax. You pay tax on income earned but not on losses procured. Another loophole is to pay yourself an income of 20k and then pay yourself million dollars in bonuses. All legal in the United States
@@haruhisuzumiya6650 That's not true. Bonuses are taxed as supplemental wages. Bonuses in the form of stocks are taxed based on their current value if they are fully vested on receipt. If they are stocks that need vesting, then that tax gets deferred until the date they do vest, when they could be worth much more or much less and are taxed at whatever price it is at that time. However this does have the advantage that if they choose to sell the stock after waiting a year, they'll only get taxed on long-term capital gains of 15%. This is why many companies will instead offer options instead, which allow these employees the choice to buy an amount of stock at a certain discounted price (out of their own pocket), which are not taxable unless the employee takes the option and until they sell the option. This means they can wait a year to sell it and get taxed only on the long-term capital gains of 15%, rather than taxed upon the value of the stock when their acquire it and taxed on the selling of it. However this still results in them getting hit by the Alternative Minimum Tax but that's still much less taxes paid than otherwise.
I was just about to ask about this. I think I read somewhere that RDJ had a clause to make extra money as %gross revenue. I think he made an additional 75 million on Endgame's 4 billion+ revenue. I think they make the shell companies more for tax reasons rather than expenses, not to mention that most star actors have LLCs, which she paid by the shell companies in the same way as the movie studios...
I feel like after the first time the actors could do something about it. Like the get the paid on profit, not net profit or they need to find a new cast for the squeal.
@@pleasedontwatchthese9593 Supply and demand mean actors can't really do anything about it. Don't want to accept the studio's contract? There's the door and please send in the next of the 10,000 applicants who are all looking for their big break on your way out. Of course there have been attempts to create actor's unions and whatnot to fight back against this, but they rarely have much in the way of teeth because literally everyone everywhere has dreamed of being a star at some point in their lives, and other than the odd iconic shot there is little geographical restriction to movie making, so the studios can and do just hire actors in another state or even another country any time the locals start demanding better deals. Its a pretty shit system from any sort of humanitarian point of view. But there's also not much that can be done about it without somehow getting a law codified not just federally but even internationally. And that's never going to happen because the very-very-rich studios have _far_ more political influence than the somewhat-rich actors.
@@pleasedontwatchthese9593 There's a special term to guarantee your money: First Gross They can't fake the first gross, since you get the money before the accountants get to cut your money(the accountants have to consider you in determining how much to balance, by taking your cut first)
2:00 "Don't worry, no accountants are watching this video. It's tax season, a.k.a. corporate slavery season." But what if the accountants get sneaky and watch this video later?
Wow I actually felt ashamed enough of watching movies on random streaming sites to rent movies on iTunes. This changed my mind. Screw the Hollywood companies.
"The security guard at my editor sweatshop, $30 to bribe Susan Wojcicki to put the video on trending, and $20 to license the HAI initialism from Helicopter Association International" lol
to be fair india is a special case, in that an amount of budget that would be absolutely insufficient in any other country and result in poverty, in India can actually grant you a rather comfortable existence. hell, in India ATMs spill out 100 rupee bills (about $1), compare that to Europe where most ATMs will only give you bills bigger than €20 (about $25).
It is sad that this is also how the music industry works - labels usually force artists to pay exorbiant fees to rent studios that they own, even if the actual cost is nowhere near that high, just so that they can make more money...
Untrue, there are plenty of videos that stress how much more corrupt accountants are than this video portrays, easily one of the most corrupt and overlooked contributors to worsening conditions.
The Harry Potter fella needs a good tax lawyer and accountant on his side. Transfer pricing rules would dictate pricing of transactions between related entities. If the amount paid exceeded the arm's length price to an unrelated entity, the excess paid would be disallowed. Don't see why a lawsuit or arbitration wouldn't comfortably settle this in favour of the actor (and yes, I am an accountant)😁
Fun fact: Harry Potter all started with JK Rowling getting a suggestion from her viewers. If you want to help HAI start a multi-billion dollar franchise, suggest an HAI topic here: docs.google.com/forms/d/e/1FAIpQLSfUdlvw6YgU44J8AnM2U_ZvRMyvh_CUM51LYSqF5nYJB9d1-w/viewform?usp=sf_link If we use yours, we’ll reward you with one whole free T-shirt.
If you have ever wondered how companies offshore profits it is through this practice called transfer pricing. This is what Facebook is in court for. They are basically licensing their brand to Facebook Ireland. You want revenues to be sourced in a low tax environment and expenses to be sourced in a high tax local. So this means FB California records an expense and FB Dublin records a revenue. This is perfectly legal and actually does have a sound accounting and business basis but where companies go wrong is when they make the agreements too generous with terms that no company in the free market would ever agree to if it was an arms length transaction. The Harry Potter movies are doing this not to avoid taxes but rather to avoid paying profit participants. But the practice can be used for a variety of purposes. The smart celebs know not to ask for a share of the profits but a share of the revenues. Of course since studios are releasing movies directly to streaming, celebs are not making money on their cut of the gross deals. This is what Scarlett Johansson is suing over. She's the most prominent one but lots of them are suing over this. Not sure I have much sympathy for Radcliff since his agent should have told him up front about Hollywood accounting. Of course if he dropped out of the movies, there's a good chance they could have replaced him with another actor and the franchise would have been just fine. If he had demanded a percent of the gross they probably would have told him no thanks.
Well with a sane government yes it would be scamming, but since you can just go down to D.C. and literally buy a congressman's re-election campaign you can tell the government "here make this legal as a rider on an unrelated bill".
Yeah, it's just like how in corrupt nations like Russia and most of South America, if you want to demolish a park in a middle class community and put in an office building, you need to grease the hands of some politicians with a few hundred thousand, illegally, to get that done. But in North America, we don't have such illegal corruption. Instead the developer would make "In Liu Of" payments to the City Development Fund and City Council Pensions, which provide development credits. Once those exceed the replacement value of a park in a new area, the old park is allowed to be demolished and replaced with a modern office building. Then the new park is placed 25 miles away in that newer area with the $3m homes, leaving the old middle class area without an outdoor recreation spot. This is totally legal and demonstrates our commitment to not being corrupt like those thugs all over the rest of the world.
@@Dall1n ...so? Brazil, Venezuela, Peru - lots of countries to pick from down there. It's mean to single one of them out, though. But the Russians won't care. More vodka!
Seeing how the Harry Potter series is 8 movies long, and the actors were somewhat aware that there was always going to be another movie, why did none of them ever refuse to act in the following movies until Warner Brothers stopped doing this? Did they just not take notice of the million they were missing out on? Or did they only have this deal for like the last 2 movies?
Which would be at most a fraction of a fraction of 1%. First rule with any films worldwide boxoffice 50% goes the theatre chains which is not a lot with the thousands of theatres and the hundreds of thousands of staff. Advertising is expensive too a 30 second TV ad can get up to $5.6 million and that's for 1 add shown once (this years superbowl to be precise).
The technical term would be "gross points"; as opposed to "net points". Very, very few actors can negotiate for gross points; but the ones that can have the leverage to turn an average film into tens of extra millions gross with their name alone.
Studios (especially WBD) are now trying this trick with gross profits too. If you just delete the movie for a tax write off and never release it, the movie makes $0 gross, and 1% of $0 is $0
Hi, not an accountant but an accounting major. The "balance sheet" you showed at 3:24 is not actually a balance sheet but an income statement. In all its not a big deal but just thought I'd point it out.
@@jeeeeeeeee2977 Saying "it's not that hard" when you have a degree in financial accounting law is like me, a med student, telling you the metabolism of the liver (or idk any other organ) is easy and basic understanding. It's not. And it's easy for some people to get fooled by stuff like this because they have no idea how it works. And i'm not saying they're stealing my money? Even if they're already paid a LOT i'd rather the actors get what's due to them that's all
that's why you negotiate on gross profit. the first sales job i did paid the commission part of my salary this way. in fact the boss said to me in the interview, "you must be driven by commission". i am sure more experienced actors have caught on and will negotiate this way moving forward. which side gives in will then be based on game theory and how confident each side is that the other needs them more.
1:02 That’s the definition of gross profit. Net profit it what you’re left with after paying costs other than the cost of production, such as taxes and finance costs.
In the cartoon Freakazoid, the title character teaches an alien about the ways of Earth. In one clip, he says, "Always ask for a piece of the gross. Never the net. The net is fantasy."
And this is why (knowing) actors now negotiate for a percentage of the gross, plus back-end from the studio directly; so they actually get paid money. A percentage of the **net** will mean they always lose, but a percentage of the gross is built into the distribution up front.
"Cats" (2019) was made on a budget of $95 million, and when you add in the cost of marketing, it easily goes way over 100 million. It made a pathetic *$ 27 million* at the US box office over an *eight week run.* Slice that up, Hollywood Accountants. Meanwhile, Sonic the Hedgehog made twice as much in its *opening weekend.*
Hollywood accounting will sometimes include an expense 'Provision for bad future movies.' So if you agree to a royalty on Sonic, your royalty will be reduced, because eventually somebody else is going to make a movie like 'cats'. Even if you had nothing to do with it, too bad. Tough Luck.
"people like having money and don't like giving it to other people" Eeeeeeh? The entire point of money is to exchange it with other people for goods and services. If you don't give your money away, it just becomes useless paper.
Actors (agents) began negotiating for "points" (percentage of profits) when they were not especially rich, by California standards; it's a tl;dr complicated story, but it has to do with the old "studio system" the actors had to work under and what happened when it faded out. Might be a good video in there, while you're on the topic.
I don’t know how things went in America, but they lost a lot of money on the last film here in the uk, as LOADS of people refused to watch the last film in 3D and would only watch it in 2D as countless cinemas reported near empty screenings of the film in 3D but full screenings in 2D, I think people wanted to make a point of the whole why make the last film in 3D, how pointless etc which it was
I've noticed that trend towards every movie getting its own production company. But this doesn't quite explain that phenomenon just yet: Why create a new company foe every movie? What would be the problem with just having one shell company that handles all productions?
@Your Final Meal hmmm, sounds good so far. Obviously it must be easier to act like there's a huge deficit up front than to manage how much money goes in and out without making it legally unambiguous what's going on. As a person with next to no business experience, I'm still curious as to why and how in detail it's easier/safer to do so than to find ways to balance the books in-between projects. Ah, but writing this, the inconvenience of possibly being effectively frozen until things are settled may be a reason, if that's sort of a de facto requirement
Would that be the difference between a percentage of the net profit, and the percentage of the proceeds? Because Keanu Reeves famously made some 175 millions $ or so for the Matrix movies, thanks to box office...
Hollywood: if you pirate the movie, the actors won't get paid
Also Hollywood:
+
exactly lol
This is why I hate Hollywood LOL
even though actors really do already make far more money than they honestly really should, i'd still rather that they get the money over 20th century fox , who just gives their money to disney's multinational conglomerate, who then use that money to lobby the government to put in laws that make it easier for them to make more money off us.
New plan: After the movie hits it's production costs, head to Pirate bay.
I interviewed three people. A mathematician, an engineer, and an accountant. I asked each the very same question. What is 2 plus 2?
The mathematician said "4". The engineer said "4.00" The accountant however looked around, closed the windows, locked the door, and whispered "What do you want it to be?"
I’m replying 8 months later but you inversed the roles, engineers are known for taking shortcuts and using approximations whilst mathematicians and scientists are known for the accurate and over aggressive sig fig usage
@@ben3559 could depend on the engineer. I assume NASA engineers have to be pretty precise?
@@ben3559 if engineers used approximations and shortcuts, buildings would collapse all the time
a mathematician writing just the natural number 4 makes perfect sense
Accountants and statisticians: "the numbers will confess to anything if you torture them enough."
@@thekyuwa Most engineering branches can afford to round up. Even in civil engineering, it is acceptable to simplify calculations as long as they stay within 80% to 120% of the original value. An insane amount of range if you ask me, but it works out nonetheless.
I'm always shocked at the stock footage that is available ... like wtf who decided to film some of those scenes!
Imagine what the script is like
people literally get paid to make stock footage.
Yeah thanks I came her to watch how Harry Potter movies lost money now I’m just sitting here ignoring the audio and focusing on each individual stock footage clip
The stock footage in this one is less surprising than the bird pooping in the last one...
I got this exact feeling when I saw that "throwing around money" footage.
Then I couldn't help but feel how ridiculous the stock footages after that were...
I just want to point out that agents for big name stars are well aware of these accounting tricks and negotiate for a percentage of gross revenue rather than net profit.
Gross revenue is what money was made before operating costs and expenses
Net profit is after tax
You get income from the revenue as an asset
Profit or loss is Assets less Liability add owners equity this determines the value before tax.
You pay tax on income earned but not on losses procured.
Another loophole is to pay yourself an income of 20k and then pay yourself million dollars in bonuses.
All legal in the United States
@@haruhisuzumiya6650 That's not true. Bonuses are taxed as supplemental wages. Bonuses in the form of stocks are taxed based on their current value if they are fully vested on receipt. If they are stocks that need vesting, then that tax gets deferred until the date they do vest, when they could be worth much more or much less and are taxed at whatever price it is at that time. However this does have the advantage that if they choose to sell the stock after waiting a year, they'll only get taxed on long-term capital gains of 15%.
This is why many companies will instead offer options instead, which allow these employees the choice to buy an amount of stock at a certain discounted price (out of their own pocket), which are not taxable unless the employee takes the option and until they sell the option. This means they can wait a year to sell it and get taxed only on the long-term capital gains of 15%, rather than taxed upon the value of the stock when their acquire it and taxed on the selling of it. However this still results in them getting hit by the Alternative Minimum Tax but that's still much less taxes paid than otherwise.
You can also take your money to the Ozarks, launder it, and pay zero taxes. I know a guy who did it. Sort of. Its complicated.
I was just about to ask about this. I think I read somewhere that RDJ had a clause to make extra money as %gross revenue. I think he made an additional 75 million on Endgame's 4 billion+ revenue. I think they make the shell companies more for tax reasons rather than expenses, not to mention that most star actors have LLCs, which she paid by the shell companies in the same way as the movie studios...
and isnt net profit after taxes not income - expenses?
This video has a surprisingly unhealthy amount of stock footages.
He mustn't make profit so he purchases stock footages.
I stopped watching it just to listen to it. But the voice sounds like comming from commercial too :(
expecting stock footage service sponsorship in some video of HAI someday
Every HAI video is mostly stock footage...
Seth Hu He already did
“Its only a banana, how much could it cost? 10 dollars”
Nice AD reference there :p
came here to say this haha
Me too!
i no get
th-cam.com/video/Nl_Qyk9DSUw/w-d-xo.html
Immediately came to the comment section when I heard that reference in hopes to find fellow Arrested Development fans.
*I can't wait to see how this relates to planes.*
Ehhhhm wrong youtuber dude
lol
PumpkinEater69 HAI and Wendover are the same person
@@vatnidd but wrong channel
The money the actors didn't make kept them from buying a private jet... or another private jet
It's literally called "Hollywood accounting" and has its own wikipedia page.
I feel like after the first time the actors could do something about it. Like the get the paid on profit, not net profit or they need to find a new cast for the squeal.
Yeah, Sam gets all the video ideas from a Wikipedia list called WP:interesting-articles
@@pleasedontwatchthese9593 Supply and demand mean actors can't really do anything about it. Don't want to accept the studio's contract? There's the door and please send in the next of the 10,000 applicants who are all looking for their big break on your way out.
Of course there have been attempts to create actor's unions and whatnot to fight back against this, but they rarely have much in the way of teeth because literally everyone everywhere has dreamed of being a star at some point in their lives, and other than the odd iconic shot there is little geographical restriction to movie making, so the studios can and do just hire actors in another state or even another country any time the locals start demanding better deals.
Its a pretty shit system from any sort of humanitarian point of view. But there's also not much that can be done about it without somehow getting a law codified not just federally but even internationally. And that's never going to happen because the very-very-rich studios have _far_ more political influence than the somewhat-rich actors.
It is fraud
@@pleasedontwatchthese9593 There's a special term to guarantee your money: First Gross
They can't fake the first gross, since you get the money before the accountants get to cut your money(the accountants have to consider you in determining how much to balance, by taking your cut first)
How Stock Footage industry technically lost money
-Half as Interesting
Lol😂😂😂
1000th like
Video: "So if dashlane pays me $100......"
Caption: "So if brilliant pays me $100......"
Can't decide huh??
Double ads Double Profit 👀
And that’s when the big bucks start rolling in...
😂😂😂😂
But why do the bananas cost $10
Isn't this illegal? I thought there were laws against "paying yourself" in order to hide profits. Or am I thinking of something else?
well ik apple pays billions to a patent holding company that's ran by them
No its not illegal its virtually standard accounting practices. Hence why big companies pay so little tax.
So, when you participate in a movie, ensure, that there are specific rules in your contract which forbid this.
I think your thinking of money laundry for illegally gotten money.
L. Wolf nope, this is what they do
"here's the actual balance sheet"
shows an income statement
Come on man economists should know basic Accounting 101
the guy don't know the different...
@@campkira Just as you don't know the difference between '''different'' and ''difference''
Yeah i was like balance sheet?!? I dont see no assets and liabilities
I knew somebody would comment this.
Dashlane: *Exists*
Half as Intresting: *_"I am once again, asking for your financial support."_*
I have a lot of money because I make money with TH-cam i am famous i am rich
@@AxxLAfriku You aren't going to get anywhere in life bragging like that.
Well normally you don't ask for a sponsor, they just ask if they can be your sponsor
Half as Interesting: Exists
Dashlane: I am once again giving you financial support
Oof. _That_ meme didn’t age well…
2:00 "Don't worry, no accountants are watching this video. It's tax season, a.k.a. corporate slavery season."
But what if the accountants get sneaky and watch this video later?
This video will self-destruct after tax season.
It ain't tax season in my country. Accountants could be watching it here
And then there are us accountants who don't do tax :)
Thank you for the advice as accountant, I am thanking you. Now I know how to protect others from bad accountants.
Next up:
*How Dashlane lost money in its partnership with HAI
Wow I actually felt ashamed enough of watching movies on random streaming sites to rent movies on iTunes. This changed my mind. Screw the Hollywood companies.
"The security guard at my editor sweatshop, $30 to bribe Susan Wojcicki to put the video on trending,
and $20 to license the HAI initialism from Helicopter Association International" lol
Bananas are such ripoffs. He could have bought two whole cups of water with a piece of asparagus in them.
haha...i c wut u did there...
"I mean it’s one banana, Michael. How much could it cost, $10?"
- Lucille Bluth, Arrested Development
"no accountants are watching this video"
hello
*loads shotgun* he said no accountants
GET BACK TO WORK!!
Obviously if you're here that means you aren't an accountant!
Go back to taxes
@TechD123 then hes no more
I’m an accountant, and I can verify his accounting jokes are true.
Aren't you too busy with corporate slavery season to watch this video?
I bet they even have a way to outsmart even accountants to pay them less.
@@garreswe Yes, but with 3 screens I can have TH-cam in the background so I don't go insane...
@@galileykwong7017 Not really... And we're all salaried employees so it doesn't really matter...
@@usmfan101 Have you tried sharing and comparing you salary with your co-workers?
m.th-cam.com/video/7xH7eGFuSYI/w-d-xo.html
“Just enough to buy a banana” what a reference
Hernando Malinche the show Arrested Development. A very rich character tells her grandson to go buy a banana, thinking they cost 10 dollars.
Hernando Malinche it’s basically anyone that goes anywhere different ;)
to be fair india is a special case, in that an amount of budget that would be absolutely insufficient in any other country and result in poverty, in India can actually grant you a rather comfortable existence. hell, in India ATMs spill out 100 rupee bills (about $1), compare that to Europe where most ATMs will only give you bills bigger than €20 (about $25).
10 $for a banana???
That's a very expensive banana.
Actors: want share of movie
Movie studios: so I'm gonna do what's called a pro gamer move.
It's just a banana Michael, what could it cost, 10 dollars?
Michael? His name is Sam...oh...you're making reference to something I'm not aware of...
He lives in Luanda
It could, if its made by Apple.
Redrally arrested development
You've never actually stepped foot in a supermarket, have you?
"Profits are what fall out of the producer's pockets on the way to the bank" a Hollywood accountant told me back in the early 1980s.
Harry forgot to pay for his school fee for hogwarts... plus his lunch fee as well
Dumbledore probably got his tab, maybe some weird catholic priest type of loving I mean he did have the colorful robe and magical powers.
Didnt his parent left him a shit ton of money in the first film?
Lunch fee?
Robin Jin tf you on?
Stock videos: *exists*
HAI: “I’ll take your entire stock”
also
Bad Jokes: *exist*
HAI: MINE.
That accountant joke about how it's tax season is so accurate 😂😭😂😂😭😭
Accountant here
Hold up. Then it isn't accurate if an account is here
What are you doing here then? You should be working.
@@MidnightPhoenix07 it's called audit timeoff
1:06
Sam: Dashlane
Captions: Brilliant
😂😂😂
My Power you're either stupid, rude or have a bad sense of humour.
Seeing a typo in the description blows my mind, you actually retype each one instead of copy pasting them?
where’s the typo?
@@amelyalilyorme1247 Look at the word 'premium'
It actually said start browning instead of start browsing, but it's been fixed
Tim Gorodnitski time to oxidize
It is sad that this is also how the music industry works - labels usually force artists to pay exorbiant fees to rent studios that they own, even if the actual cost is nowhere near that high, just so that they can make more money...
I mean it's one banana Michael, what could it cost? Ten dollars?
Jamie Bray I came to the comments looking for this
This threw me. Is he buying his Bananas from Gwenyth Paltrow?
@@politereminder6284 It'a a reference to a show
@@matheustoremember Oh! Thanks. Which show?
@@politereminder6284 arrested development :)
"People don't like giving other people money."
IRS: *U WOT MATE*
There is no video on this website that defines an accountant this accurately.
Also the "corporate slavery" line in relation to the insane hours accountants work around tax time is on point
Untrue, there are plenty of videos that stress how much more corrupt accountants are than this video portrays, easily one of the most corrupt and overlooked contributors to worsening conditions.
The Harry Potter fella needs a good tax lawyer and accountant on his side. Transfer pricing rules would dictate pricing of transactions between related entities. If the amount paid exceeded the arm's length price to an unrelated entity, the excess paid would be disallowed. Don't see why a lawsuit or arbitration wouldn't comfortably settle this in favour of the actor (and yes, I am an accountant)😁
Fun fact: Harry Potter all started with JK Rowling getting a suggestion from her viewers. If you want to help HAI start a multi-billion dollar franchise, suggest an HAI topic here: docs.google.com/forms/d/e/1FAIpQLSfUdlvw6YgU44J8AnM2U_ZvRMyvh_CUM51LYSqF5nYJB9d1-w/viewform?usp=sf_link
If we use yours, we’ll reward you with one whole free T-shirt.
Half as Interesting hi
Heh, JK Rowing. Not Rowling. Rowing.
If you see this you’ve been gnomed
@@nethascotx24 god dammit
Brooo
"It's one banana, Michael. How much could it cost? $10?"
-Lucile Bluth
Hollywood "accounting" at its finest.
1:10 If you open subtitles, when HAI is saying "Dashlane", the subtitles say "Brilliant"
Imagine having bought IMDbPro for a one second shot for one video...
Where is the shot
The hollywood logo I guess
Ansh Agrawal At 35 seconds in
If you have ever wondered how companies offshore profits it is through this practice called transfer pricing. This is what Facebook is in court for. They are basically licensing their brand to Facebook Ireland. You want revenues to be sourced in a low tax environment and expenses to be sourced in a high tax local. So this means FB California records an expense and FB Dublin records a revenue. This is perfectly legal and actually does have a sound accounting and business basis but where companies go wrong is when they make the agreements too generous with terms that no company in the free market would ever agree to if it was an arms length transaction. The Harry Potter movies are doing this not to avoid taxes but rather to avoid paying profit participants. But the practice can be used for a variety of purposes.
The smart celebs know not to ask for a share of the profits but a share of the revenues. Of course since studios are releasing movies directly to streaming, celebs are not making money on their cut of the gross deals. This is what Scarlett Johansson is suing over. She's the most prominent one but lots of them are suing over this. Not sure I have much sympathy for Radcliff since his agent should have told him up front about Hollywood accounting. Of course if he dropped out of the movies, there's a good chance they could have replaced him with another actor and the franchise would have been just fine. If he had demanded a percent of the gross they probably would have told him no thanks.
That sounds illegal. Isn't this technically scamming?
Well with a sane government yes it would be scamming, but since you can just go down to D.C. and literally buy a congressman's re-election campaign you can tell the government "here make this legal as a rider on an unrelated bill".
no, not just scamming
this is legal scamming
Yeah, it's just like how in corrupt nations like Russia and most of South America, if you want to demolish a park in a middle class community and put in an office building, you need to grease the hands of some politicians with a few hundred thousand, illegally, to get that done.
But in North America, we don't have such illegal corruption. Instead the developer would make "In Liu Of" payments to the City Development Fund and City Council Pensions, which provide development credits. Once those exceed the replacement value of a park in a new area, the old park is allowed to be demolished and replaced with a modern office building. Then the new park is placed 25 miles away in that newer area with the $3m homes, leaving the old middle class area without an outdoor recreation spot.
This is totally legal and demonstrates our commitment to not being corrupt like those thugs all over the rest of the world.
@@BikeHelmetMk2 insightful comment but South America isn't a nation
@@Dall1n ...so? Brazil, Venezuela, Peru - lots of countries to pick from down there. It's mean to single one of them out, though.
But the Russians won't care. More vodka!
They probably lost the money by hosting those large Quidditch games just like every nation lost money hosting Olympics
The very same accounting trick is used.
Losses keep away corporate income tax and can get money from the government instead.
How expensive are your bananas!!!
Benjamin Brooks I can get 4 for a dollar.
It’s a joke from Arrested Development
@@DeltaDarbyLiberator ah, I see
Maybe he's licensing them from his parent company.
They’re special bananas with their own copyright that’s owned by Disney, and which you have to license from Disney to use or eat
Seeing how the Harry Potter series is 8 movies long, and the actors were somewhat aware that there was always going to be another movie, why did none of them ever refuse to act in the following movies until Warner Brothers stopped doing this?
Did they just not take notice of the million they were missing out on? Or did they only have this deal for like the last 2 movies?
As a public accountant: NOT ALL OF US ARE TAX ACCOUNTANTS 😤
What are the odds that you are watching a random TH-cam video and your name is taken more than 10 times in the video?
that why u need to ask for the % of what the film makes not in profit
You mean revenue?
Which would be at most a fraction of a fraction of 1%. First rule with any films worldwide boxoffice 50% goes the theatre chains which is not a lot with the thousands of theatres and the hundreds of thousands of staff.
Advertising is expensive too a 30 second TV ad can get up to $5.6 million and that's for 1 add shown once (this years superbowl to be precise).
@@Ushio01 a fraction of a fraction of 1% of a big number is still bigger than the $0 you get if you ask for a share of net profit though 😉
The technical term would be "gross points"; as opposed to "net points". Very, very few actors can negotiate for gross points; but the ones that can have the leverage to turn an average film into tens of extra millions gross with their name alone.
''It's more about accounting... goodbye everyone''
Me an accountant: a mere mortal dares challenge me?!
Hai : Ok so this video isn't about Harry Potter
Me : Ok, so it's about bricks isn't it?
Hai : Accounting
Me : Quaking!!!
One of the saddest cases is the writer of Forrest Gump. He never saw a penny from the movie because it has never turned a profit.
1:22 I mean it's just a banana, Micheal! What would it cost? $10??
Usually I loathe stock images/video, but I'll make an exception for 3:05 😂 They are having way too much fun haha
RIP David Prowse 1935-2020
and RIP CGP Grey (xthe Penguin) too :-(
Studios (especially WBD) are now trying this trick with gross profits too. If you just delete the movie for a tax write off and never release it, the movie makes $0 gross, and 1% of $0 is $0
1:23 what the hell is your countries economy? In the UK I can get at least 38 for $10 (£7.68)
Or, am I missing a joke?
Its a joke about from a tv show where a rich out of touch character said "its just a banana how much could is cost 10 dollars"
The reference is from Arrested Development.
Also, I believe he lives in Scotland, even though he is originally from the US
Here in Brazil $10 is R$43,74
ErickSoares3 and for R$43.74 how many bananas can you buy?
Hi, not an accountant but an accounting major. The "balance sheet" you showed at 3:24 is not actually a balance sheet but an income statement. In all its not a big deal but just thought I'd point it out.
I'm an accountant and I'm watching this two months after this was uploaded. Corporate slavery season is absolutely right on the money.
how does a sequel work? is it made by movie Inc? or is it a new company called Movie 2 inc?
I literally had no idea this was even possible 💀 rich people / companies are always finding ways to get richer (in kinda shady ways)
Kinda? this is about as shady as it gets without going into purly illegal
Maybe that's how "rich people/companies" are the first thing that i quoted because they find that way?
This is why actors now ask for a percentage of the gross.
Except that's common practice
@@jeeeeeeeee2977 Saying "it's not that hard" when you have a degree in financial accounting law is like me, a med student, telling you the metabolism of the liver (or idk any other organ) is easy and basic understanding. It's not. And it's easy for some people to get fooled by stuff like this because they have no idea how it works.
And i'm not saying they're stealing my money? Even if they're already paid a LOT i'd rather the actors get what's due to them that's all
Before you contract up, hire a very experienced entertainment lawyer. Jaws is a little fish compared to the sharks that swim in the movie business.
That is why actors today ask for a percent of gross revenue.
You are welcome
An Accountant.
Hahahahaha. Bs. The amount of actors who have the clout to ask for this can be counted by bad lumberjack on fingers of his one remaining hand...
Hey, no accountants!
@@KuK137 they have their agents.
At least with franchises it’s hard to replace the entire cast. Imagine a different Harry Potter every movie...
Percent of 'Gross Revenue' .. are you sure? Which producer is ready to make a movie with such contract, can you please name few ?
The Arrested Development reference is so subtle. Love it.
"You've never been in a super market, have you?"
The creators of the Harry potter movies lost money because they didnt have Dashlane
At about 1:06 the caption says brilliant but the narration says dashlane. War of the sponsors!
Edit: timestamp
uh oh
It's 1:06
It's 1:09
Fixed the timestamp, thanks
Lucille- It’s a banana, Michael.What could it cost? Ten dollars? Michael- You’ve never BEEN to a grocery store, have you, Mom?
4:57 sounds like a good way to get scammed imo
I am SO fascinated by everything related to Hollywood Accounting. The first time I learned about the very basics of it, my jaw hit the floor.
I'm here for the accounting.
You almost lost me with the (what I assume was) Harry Potter stuff at the beginning.
0:09 The box around the HAI logo is a different color from the background and it is triggering me
Ah yes, something I think about every day, thank you half as interesting
that's why you negotiate on gross profit. the first sales job i did paid the commission part of my salary this way. in fact the boss said to me in the interview, "you must be driven by commission". i am sure more experienced actors have caught on and will negotiate this way moving forward. which side gives in will then be based on game theory and how confident each side is that the other needs them more.
When you said accounting I almost clicked off the video but, the clever joke made me stay and watch the whole video
I just assumed it had to do with the fact that the producers poured a buttload of resources into details that NOBODY ENDED UP EVER SEEING.
Was caught off guard by the subtle “How much does a banana cost, Michael? $10?” reference. But man did I enjoy that.
1:02 That’s the definition of gross profit. Net profit it what you’re left with after paying costs other than the cost of production, such as taxes and finance costs.
*_searches up “Harry Potter and the Order of the Phoenix inc._*
(I got the Wikipedia page for the film)
So theoretically no actor should gal for it...
At 3:24, you are looking at the P&L not a balance sheet.
Was that a Tool reference? - "Lie cheat and steal"
Just needed stock footage of Maynard to go with it
Or A perfect circle art cover
In the cartoon Freakazoid, the title character teaches an alien about the ways of Earth. In one clip, he says, "Always ask for a piece of the gross. Never the net. The net is fantasy."
“It’s a banana Michael. What could it cost? Ten dollars?”
I love that arrested development joke - thanks HAI for making my day :)
In other words, never ask for a percentage of the net profits; ask for a percentage of ticket sales.
4:27 damn you. i was just about to make that comment
And this is why (knowing) actors now negotiate for a percentage of the gross, plus back-end from the studio directly; so they actually get paid money. A percentage of the **net** will mean they always lose, but a percentage of the gross is built into the distribution up front.
disney: * writes this idea down *
disney has more lawyers than animators...
I'm an accountant and his jokes put a smirk on my face. Also, Forrest Gump never turned a profit. It's how I first learned about Hollywood accounting.
"Cats" (2019) was made on a budget of $95 million, and when you add in the cost of marketing, it easily goes way over 100 million.
It made a pathetic *$ 27 million* at the US box office over an *eight week run.* Slice that up, Hollywood Accountants.
Meanwhile, Sonic the Hedgehog made twice as much in its *opening weekend.*
Hollywood accounting will sometimes include an expense 'Provision for bad future movies.' So if you agree to a royalty on Sonic, your royalty will be reduced, because eventually somebody else is going to make a movie like 'cats'. Even if you had nothing to do with it, too bad. Tough Luck.
How hard is it to say domestic or North American instead of US? The US is not everything.
$27 million is from North American grosses
$10 for a bunch of bananas? Holy shit dude, what the hell is up with that?
Me: watches this during my lunch break at my accounting firm...
Where do you buy your stock footage? Honest question, really want the answer.
"people like having money and don't like giving it to other people"
Eeeeeeh? The entire point of money is to exchange it with other people for goods and services. If you don't give your money away, it just becomes useless paper.
Actors (agents) began negotiating for "points" (percentage of profits) when they were not especially rich, by California standards; it's a tl;dr complicated story, but it has to do with the old "studio system" the actors had to work under and what happened when it faded out. Might be a good video in there, while you're on the topic.
3:32 this is actually an income statement, not a balance sheet. Please delete the video.
I don’t know how things went in America, but they lost a lot of money on the last film here in the uk, as LOADS of people refused to watch the last film in 3D and would only watch it in 2D as countless cinemas reported near empty screenings of the film in 3D but full screenings in 2D, I think people wanted to make a point of the whole why make the last film in 3D, how pointless etc which it was
A L O H O M O R E M O N E Y
I've noticed that trend towards every movie getting its own production company.
But this doesn't quite explain that phenomenon just yet:
Why create a new company foe every movie? What would be the problem with just having one shell company that handles all productions?
@Your Final Meal hmmm, sounds good so far. Obviously it must be easier to act like there's a huge deficit up front than to manage how much money goes in and out without making it legally unambiguous what's going on.
As a person with next to no business experience, I'm still curious as to why and how in detail it's easier/safer to do so than to find ways to balance the books in-between projects.
Ah, but writing this, the inconvenience of possibly being effectively frozen until things are settled may be a reason, if that's sort of a de facto requirement
Am I the only weird person that says "Hai!" immediately after every "slash H A I" on every video? It's kinda compulsive.
yea lol
yes
“This video is really about Accounting”
Me, An Accountant: Happiness Noise
While we’re at it, here’s my advice for Harry Potter fans: read the books, they’re *much* better. I am not lying. Read the books.
Would that be the difference between a percentage of the net profit, and the percentage of the proceeds?
Because Keanu Reeves famously made some 175 millions $ or so for the Matrix movies, thanks to box office...