The Italian Job: How Studio Accounting Said it Lost Money

This article comes from Den of Geek UK.

It’s hard to find something close to precise figure when trying to ascertain just how much money the 1969 classic The Italian Job has brought in, but the film is widely regarded as a very successful one. Starring Michael Caine and Noel Coward, and with Peter Collinson directing, the movie was first released in June 1969.

On its original box office run, its receipts were said to be just shy of $10 million. The film was a big success, although it struggled to hit in America. In fact, it failed to do so, instead garnering its sizeable support primarily in the UK, and across Europe.

Still, it has enjoyed theatrical re-releases, a belated tie-in computer game, sizeable sales on VHS and DVD, and at the last count, two remakes. In 2003, F. Gary Gray directed the likes of Mark Wahlberg and a reluctant Ed Norton in a Los Angeles-set take on The Italian Job, that grossed $176 million in cinemas alone (a sequel, The Brazilian Job, never came to pass, and the Fast & Furious series has stolen what thunder it had there). Meanwhile, the 2012 Bollywood feature Players was a remake of the 2003 film, that was a remake of the 1969 original. You’d think that first film would have long proven a sound investment for Paramount Pictures.

But apparently not so.

The producer of the original film, Michael Deeley, wrote an entertaining memoir – Blade Runners, Deer Hunters & Blowing The Bloody Doors Off – where he recounted his time making The Italian Job. And in it, he does – yes! – blow the doors off Hollywood accounting just a little.

A few weeks ago, we touched on how Paramount Pictures originally claimed that Forrest Gump hadn’t turned a profit, in spite of grossing over $675 million against a $55 million budget. That particular story can be found here.

In the case of The Italian Job, Deeley’s book revealed some accounting that too could be described as on the creative side. He reprinted in his tome a ‘cumulative distribution statement’ for the original The Italian Job, that Paramount had prepared on September 25, 1999, over 30 years since the first film was released. And on said statement, Paramount was continuing to claim that The Italian Job had made a loss.

How? Glad you asked.

After factoring in gross receipts less distribution fees, the film’s fortunes seemed promising. The statement reports that the film was just over $6 million in the black.

But then further charges are applied. The $3.5 million for production charges covers the cost of making the film itself, so that’s hard to quibble with. But then there are nearly $2 million of further distribution expenses, that leave the film around £600,000 in profit.

The killer, though, is the line where Paramount calculates “interest on production cost from date of delivery (estimated)”. The charge? $9,440,000, an amount just shy of three times the cost of making the film itself. Paramount charged interest on its own money that it spent to make the film, in effect.

Deeley, in his book, is quite sanguine about this, arguing that “I’ve always been somewhat sympathetic to the studios’ need for ‘creative book keeping’. For the amount they spend and risk, their financial return isn’t that high.”

Yet he also notes that the money the studio tends to charge a production for fronting the cash for a film in the first place “is generally nearer to credit-card rates than those of the banks,” noting that on films made around 1973, the going rate was close to 23%. Furthermore, interest was being charged from studios from absolute day one of a project, even before shooting had begun.

Its accounting is of importance for those on any kind of profit share. Paramount was embroiled in a notorious case over the movie Coming To America in 1988, where the film’s writers, Art Buchwald and Andre Bernheim, were contractually entitled to a slice of the film’s net profits. Net profits, though, is when everyone else’s cut has been taken, and Paramount contended that the $28 million movie – that grossed just shy of $300 million in cinemas – had made a loss. After a high profile court case, the studio and writers settled out of court. If you’re interested in that case, then the book Fatal Subtraction – by Pierce O’Donnell and Dennis McDougal – is a dense telling of the story.

Back to The Italian Job, though. Deeley describes Paramount’s cumulative distribution statement as “a masterpiece of creativity,” noting that a successful film that cost just over $3 million to make was still, somehow, $8 million in the red 30 years later. That’s notwithstanding the “hundreds of thousands of DVDs sold,” and the fact that the 2003 remake would see the studio invest $50 million. “Whenever did Hollywood remake an unprofitable picture?”, Deeley mused.

There’s nothing illegal in what Paramount did, and it’s worth noting that the statement Deeley referred to was issued back in 1999. Thus, who knows, The Italian Job may finally be in profit now. If not, the planned TV series based on the original film may finally tip it into the black…