Home > Financial arcana, Media > Why isn’t there a new Bond movie?

Why isn’t there a new Bond movie?

Yes, I know MGM (or, more accurately, the latest in a long bunch of shysters to own the rights to the MGM name and to make James Bond movies) are in serious financial trouble.

But if I was in serious financial trouble, and I owned a money tree, but I couldn’t afford to harvest the money tree due to my serious financial trouble, then I’d sell someone the rights to the next harvest of my money tree. Then, I might be able to do the following money tree harvest myself. At a worst case, the money tree’s money crop hasn’t just rotted on the branches.

So I’m genuinely perplexed about the weird machinations that mean we’re not going to get another Bond movie until forever. What incentive have MGM’s management got to not sell the rights to make a new Bond (which will make copious quantities of money, unequivocally) to someone with dollars, rather than sitting around making nothing until they go painfully bust?

I suspect it’s an accounting / US law / principal-agent problem, but would appreciate guidance from anyone who either knows, or can come up with a vaguely sensible reason for MGM’s management to do what they’re currently doing…

  1. Tom
    July 22, 2010 at 1:22 am | #1

    Because the business of America ceased being business some years back in favour of 'fucking about like amateurs'?

  2. July 22, 2010 at 1:27 am | #2

    Aye, true, but Mike Wilson and Barbara Broccoli (Bond licensed-to-MGM rights owners) don't fuck about. Thinking about it slightly more, I suspect those two are hoping to buy the Bond rights and stop being beholden to whichever loons next buy MGM, and are willing to THCREAM AND THCREAM TIL THEY'RE THICK until they get a deal at the right price (as far as I get it, MGM can only make Bond films with their full approval). And the longer they go without making a deal, the more busted MGM is.

    (semi-relatedly, British Airways)

  3. Tom
    July 22, 2010 at 1:35 am | #3

    There is the point that this particular money tree probably doesn't actually go rotten – there's not much chance of a five or ten year gap stopping the next one making a mint and it may even make a bigger mint as a result. Therefore if MW/BB don't need the money (which is probably a safe assumption) getting the rights off MGM now or later makes no difference.

    Then again, what's stopping them raising whatever the purchase price is now, given the money tree nature and it thus being a cast iron investment? Shouldn't there be billionaires falling over themselves for a share in Bond Buyout Bonds?

  4. July 22, 2010 at 1:37 am | #4

    Quite. It's a "desperate, need money now" money tree for MGM, and a money perennial for MW/BB. Presumably the reason they're reluctant to raise the price is that they reckon the longer they hold out, the cheaper MGM (or its creditors) will be willing to sell.

    Shame artistically, though. Daniel Craig was a good Bond in CR and QoS, and I'd hoped he'd get a good four or five movies in…

  5. dsquared
    July 22, 2010 at 5:02 am | #5

    But if I was in serious financial trouble, and I owned a money tree, but I couldn’t afford to harvest the money tree due to my serious financial trouble, then I’d sell someone the rights to the next harvest of my money tree.

    depends how serious your financial trouble was. If the hole you were in was an order of magnitude bigger than your projected harvest (so all the money went to creditors and left you in a more or less identical position), you might not bother.

    Also (and this is probably more likely the issue) – if I was your creditor, and I'd lent your current debts on the basis of you putting together a set of financial statements which included a money tree, then I would be very, very averse to allowing you to sell rights to important assets like that. By selling rights to make a Bond film, you would effectively be inserting a fixed charge above me in the debt payout hierarchy, and it's quite likely that I would have put clauses in the original debt agreement restricting your ability to do something like that.

  6. July 22, 2010 at 5:13 am | #6

    This is why I love blogging. If Dan, RIchard J, Jamie and Ajay turn up here (because this is, actually, the least boring fight) then woo yay. I just did something – and as an example of why journalism is the best profession, meh – I got real life and that's all.

  7. Richard J
    July 22, 2010 at 11:07 pm | #7

    I think D^2 has it bang on the money. Another likely (but lesser) explanation is that there's something really weird in the licensing agreements that gives ransom or reversion rights to a particularly obstreprous bugger, who refuses to play ball.

  8. ajay
    July 23, 2010 at 1:00 am | #8

    If films were funded on a project finance basis, then this wouldn't be a problem; presumably lots of people would be willing to buy bonds whose payout was linked to the gross of the 19th Bond film, and MGM would simply licence out the rights to the "Bond 19" SPV and make a decent fee from it.
    Caveat: I don't actually know much about film financing; feel free to correct me on this.

  9. Richard J
    July 23, 2010 at 1:28 am | #9

    Yes but, as D^2 notes, if the existing MGM debt holders have been at all clever, they'd have got restrictions in on issuing further debt that was in priority to their own, which is what your suggested route implies.

    An interesting hint as to how film financing works in practice comes from a lawyer friend's email yesterday…

    "Most of my closings are done on the phone, with frantic last minute changes being agreed before the bank closes so that they (and we) can fund and people can start shooting the next morning."

  10. July 23, 2010 at 12:12 pm | #10

    Yup, that's very much the impression I got from Michael Deeley's book.

    That's partly why I was surprised by the Bond thing, since Deeley's work involved roping in money from any source on almost any terms right up until after shooting had begun. But I suppose if you're working for shoestring British production houses that you own and that only take on debt movie-by-movie, it's a bit different from working for a large corporation with its IP assets mortgaged even *before* they start thinking about making movies.

  11. ajay
    July 23, 2010 at 10:10 pm | #11

    @Richard J
    Good point, that's clearly not an option for them now, for the reasons dsquared goes into. But it might be a more sensible way to run a film industry in general, though. It seems to be the way things are done on Broadway. (Again, I know little of the details of theatre financing outside what I got from "The Producers".)

  12. Richard J
    July 23, 2010 at 10:30 pm | #12

    As I understand it, it's how films are normally financed (hence the profusion of LLPs and LLCs that appear at the end of film credits these days), but I'd guess that in the case of a Bond movie, part of a larger franchise, there's valuable IP extrinsic to the movie itself [1], which is a key asset of the core of MGM, and hence is probably leveraged already five ways from Tuesday.

    [1] Unlike, say, Run, Fatboy, Run, which has arguably very little value (in any sense) even in the film itself.

  13. Richard J
    July 23, 2010 at 10:48 pm | #13

    And the far more cynical explanation is that interested parties are waiting for MGM to go bust so they can pick up the rights at firesale prices.

  14. Luis Enrique
    July 26, 2010 at 10:47 pm | #14

    John,

    I haven't read through above comments to see if somebody already said this … but FT Weekend Magazine just published a feature on this
    http://www.ft.com/cms/s/2/55278510-9527-11df-b2e1

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