EXCLUSIVE: When the Danny Boyle-directed fable Yesterday was released last June, it was viewed as a bright spot for counter-programming at a moment when Toy Story 4 owned the box office leading into Spider-Man: Far From Home.
The Universal/Working Title film, which grossed over $153.7M worldwide, did well enough to make it onto a list of Deadline’s 2019 outliers, smaller films with outsized profits, in our recent movie revenue tournament, estimated to earn $45M in net profit. It’s a different story, however, when it comes to collecting net points on films like these.
Deadline was slipped a net profit participant sheet on Yesterday, and according to that document, the Beatles-themed romance movie is still in the red by as much as $88 million.
Net profit participant sheets are quite different from the film profit-and-loss statements we published during the tournament. A net profit participant sheet specifically shows the film’s profitability in regard to a person’s specific deal, and it’s often loaded with heavy expenses that aren’t necessarily subtractions to a film’s bottom line, rather just to that specific participant’s deal. What this document shows is that despite movies making a profit for the studio, they don’t necessarily make a profit for all of those involved.
It’s hard to lay hands on these net profit documents. Deadline previously shook up the town ten years ago with its report that the 2007 Warner Bros movie Harry Potter and The Order of the Phoenix , despite grossing $942 million-plus worldwide, showed that the participant of that sequel was losing money to the tune of $167.3 million.
Yesterday isn’t as nearly as egregious, but still it shows that accepting net points can be a fool’s errand even though studios are making money, and have invited talent to share in the risk and potential rewards. Something to note: cash breakeven participants and gross participants are in a higher bracket than net profit participants, the latter typically reaping any financial upside when a movie is a massive hit.
So, what’s going on here in the Universal document below?
Let’s start with the production cost for Yesterday, which is shown here to be $41.3M. But didn’t Yesterday reportedly cost $26M net after UK tax credits? Essentially, the participant isn’t getting the benefit of that tax credit, or the tax credit hasn’t been paid out to the studio yet. That $41.3M makes sense when you consider the studio reportedly shelled out $10M for the use of Beatles songs alone. Universal finances and has full equity in Working Title movies.
A big ding for the participant here are Yesterday‘s distribution fees of $22.89M, which are very different from the distribution expenses which are listed at $81.47M. The bigger figure is the actual expense in promoting the Himesh Patel-Lily James movie, including a $75.4M worldwide marketing line. That distribution fee number represents the overhead cost for the studio in distributing the movie around the world, an expense not captured in the production cost of the movie or the marketing cost line. When it comes to a net profit participant, distribution fees are typically factored at around 30% of overall revenues.
There’s also an administrative fee (essentially overhead) charged to the participant, which is $6.25M here, and interest of $4.6M, which is the allocation of the studio’s borrowing costs based on production costs. It’s standard in any studio net profit participant deal for such items to impact net profit.
Keep in mind that not all TV and video revenues have been realized here for Yesterday; that the details of its financial state below are mid-stream and not ultimate (the statement is for the October-December period of 2019). Still, this is an insightful glimpse at how the profit points machine works. Our finance sources believe that $68M in global TV revenue will be realized for Yesterday, along with another $8M in total net video revenues (on top of what is already $2.4M for video and streaming). Combined, that’s $78.4M.
So in regards to Universal making money on Yesterday, based off this sheet, our sources tell us that we should take the current loss of -$87.7M, then back out the distribution fee of $22.89M, then factor in the estimated remaining tax credit of $15.3M, another $8M in global video plus the $68M in global TV revenue in the plus column for the film. The estimated net profit for Universal would then stand around $26.5M.
Nonetheless, our sources believe that for the profit participant at hand, Yesterday isn’t an easy game to play.
