7 Things Production Finance Teams Need to Know for Budgeting in 2023
For the UK production industry, 2022 was as busy as it gets. We not only saw unprecedented demand for content, we also had to manage the changing economic landscape – and the resulting pressure on production budgets. However, just like in 2020, when we were tested by the pandemic, UK production has proven how robust and reliable it is, as it continues to flourish amid these challenging times.
If January is anything to go by, 2023 is shaping up to be another bumper year. To help you navigate the ups and downs and minimise the impact on your budget, here are some of the key things production finance teams should consider in 2023.
1. Pact/Bectu TV Drama Agreement 2023
Production teams across the UK let out a sigh of relief in December when Pact and Bectu reached an agreement on the new terms and conditions for hiring crew on independent scripted TV productions. While the new agreement is a step forward for the industry in terms of crew work-life balance, the uplifted rates and changes to how overtime is calculated will have budget implications.
At a high level, the potential impact of the new agreement can be estimated as:
- A c£10k ($12k) hourly increase for shows with a £1m ($1.2m) budget per hour
- A c£70k ($86k) hourly increase for shows with a £5m ($6.2m) budget per hour
- A c£100k ($120k) hourly increase for shows with a £7m ($8.6m) budget per hour
The financial impact of the new agreement will be particularly challenging where budgets have already been submitted, as savings will need to be identified to mitigate the additional costs.
It’s worth noting that several factors can swing these estimates significantly, both up and down. For example, period versus contemporary, number of supporting artists, types of location, studio versus location, and level of VFX.
Where additional costs have created a funding gap, schedules may need to be pushed to allow time to identify areas of saving. Could schedules be reviewed to find a balance between efficiencies and costings? Or perhaps the way in which departments operate could be adjusted to better fit the perimeters of the new agreement.
It’s also worth analysing the cost difference between hiring an additional team member and paying overtime to members of a smaller team (not to mention the morale impact).
For more information on the new Pact/Bectu TV Drama Agreement, see our overview of the key changes.
2. Crew shortage
Production accounts crew, like all production crew, are in hot demand. Accounts crew are being asked to climb the ladder quickly, which can create a knowledge gap, slowing down processing and making accurate forecasting a challenge. Add to this the complexities of the new Pact/Bectu TV Drama Agreement and the incredibly short implementation period, and you have a perfect storm which will be putting pressure on already stretched teams.
To help mitigate the risks, invest in services and technology which do the heavy lifting for you. Entertainment Partners can provide everything you need to manage your production finances from start to wrap. You’ll also have rapid access to expert help when you need it from our extensive, UK-based team.
It’s also imperative that – as an industry – we get behind training initiatives aimed at attracting and retaining newcomers, like those being led by The Production Guild of Great Britain (PGGB), ScreenSkills, and MAMA Youth.
Entertainment Partners is pleased to partner with PGGB and Netflix to launch the Talent Development Fund, which will support the development and progression of film and HETV production talent across the UK. Entertainment Partners and Netflix have each pledged £250k ($308k) to form the fund, which will invest in specialist training for below-the-line professionals working in roles represented by PGGB’s members, including production accountants, production managers, LPs and ADs, all of which are in high demand.
Inflation is affecting every aspect of life, and production spend is no different. Petrol, utilities, food, travel and accommodation are all increasing in price and can easily increase "non-value add" expenditure in your production budget.
Be mindful of the impact of inflation when budgeting and forecasting, and be sure to monitor the actuals. This is particularly key for returning series, as the comparisons will be distorted (the price of fuel today will not be the same as it was a year ago)!
You may also want to consider ways to reduce the impact of price increases. Travelling less, car-sharing, fewer overnight stays, and managing the scheduling of locations can all help to cut costs.
4. Additional UK bank holiday
This year, the UK will enjoy an additional bank holiday on Monday, May 8 to mark King Charles III’s coronation.
Under the new Pact/Bectu agreement, worked bank holidays are now paid at 2T (previously this was 1T). In addition, crew working on Band 4 shows (i.e., shows with a budget of £7m ($8.6m) or above per episodic hour) are also entitled to be paid at 1T for unworked bank holidays.
Where possible, productions may choose to schedule production around this bank holiday (and others) to avoid paying the uplifted rates. Alternatively, the uplifted rates will need to be factored into your budget.
With the Film & TV Production Restart Scheme now closed and the government’s response switching to “Living with Covid,” the reality for the UK production industry is an ongoing gap in the insurance market.
If a key member of cast or crew tests positive and needs to isolate, there will no doubt be frantic rescheduling to ensure the cost impact is minimised. As such, COVID protocols will need to continue, although the level and intensity will have to be managed in line with the available funds and the level of risk.
6. Locations and studios
The continued increased level of production in the UK is leading to space shortages, in terms of both regularly used locations and purpose-built studios. Late scheduling can lead to a lack of space or increased rates as landlords take advantage of the competition.
While many creative institutes welcome business to their regions, funding pots are not endless and their ability to aid in the use of locations (and crew) is restricted to what’s available.
To manage this competition, be proactive in speaking to creative institutes, particularly when looking for funding.
Further, given the crew shortage, it’s advisable not to get locked into a particular region or location until you know that you can crew sufficiently in that area, particularly when there are Ofcom requirements around regional spend.
With a number of UK services – including rail and airport staff, paramedics, nurses and now teachers – engaged in union disputes, there are a number of strikes planned across the UK. Productions need to be mindful of their plans on these days, as industrial action in the rail and aviation industries could lead to delayed and expensive travel alternatives, which will trickle down to your budget.
The government guidance on days that paramedics strike is to apply common sense to your plans for the day, so it’s also worth considering the health & safety implications of that message for productions team, which could lead to additional costs.
How Entertainment Partners can help
When it comes to managing your budget, the team at Entertainment Partners is here for you every step of the way! We've got the tools you need to manage your production finances from start to wrap, as well as UK-based experts with years of industry experience to answer questions.
Send us an email or click the green 'contact us' button on the website if you have any questions.
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About the author: Mark Hammond is Vice President of International Finance & Ops at Entertainment Partners, where he is responsible for the financial reporting and operational structure of Entertainment Partners UK, as well as for supporting global expansion outside the US and Canada. He has significant experience in senior financial roles at leading UK studios and production companies, most recently as Finance Director at Lookout Point (part of BBC Studios). Before that, Mark led the finance team at Mammoth Screen (part of the ITV group) and worked within the ITV across International Studios and the Corporate Finance team. Before moving into the film and TV industry, Mark qualified as a Chartered Certified Accountant while working as an auditor at Ernst & Young.