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A Method To Uwe Boll's Madness 82

grandfenwick writes "Ever wonder why Uwe Boll keeps getting bigger budgets and bigger-name actors for his awful film adaptations of videogames? Stuart Wood of Cinema Blend theorizes in an exposé on Boll's methods. His position? Thanks to a loophole in German tax laws, he and his investors actually make *more* money the more a movie tanks at the box office." From the article: "Boll's movies aren't being made out of a love for cinema. They are a shallow exercise in money-making greed and exploitation. Rich Germans getting richer by exploiting the stupidity of the Hollywood system and the naivety of critics like us, who never thought to question the true motives of why these horrible, horrible movies existed. Pure and unfiltered 21st century capitalism." Take with a grain of salt.
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A Method To Uwe Boll's Madness

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  • Thanks to a loophole in German tax laws, he and his investors actually make *more* money the more a movie tanks at the box office.

    That plot's clearly been done before.
  • by Keith Russell ( 4440 ) on Wednesday November 30, 2005 @02:43PM (#14149691) Journal

    Does this mean "Springtime for Hitler" will be on the Resident Evil 3 soundtrack?

  • Yeah, flashing back to the Producers here. I mean, it fits, save for the fact that they aren't taking the worst script they could find. They just took some game licenses that wouldn't mesh well with the silver screen and used them!

    Ouch.

  • I don't know what it is, but as far as I can tell, capitalism, it is not. What are people's viewpoints on either side of the issue...

    If it's capitalism, please explain why.

    If it's not capitalism, please explain why.

    If it's something else, please explain why.
    If someone has said it is something else, and you think they're wrong, please explain why.

    If you disagree with people's expressions of the above, please explain why.

    It's time we had this whole capitalism, communism, socialism, democracy, tota
    • This is an example of capitalism at its finest.

      If the studios can continue to produce one craptastic game-based movie after another, and we continue to pile into the theatres at $9 a pop to watch them, why should they stop making them (or at least put more effort into actually making them good)? They have no reason to.
      • by roystgnr ( 4015 ) <royNO@SPAMstogners.org> on Wednesday November 30, 2005 @03:15PM (#14149946) Homepage
        According to the article, we don't pile into the theatres at $9 a pop to watch them:

        House of the Dead cost $22,000,000 including marketing costs. It's worldwide gross was $13,818,181. That's a LOSS of $9,000,000 by my calculator. Alone in the Dark cost approx $32,000,000 including marketing costs. To date its worldwide gross is $6,040,827. That is an even more impressive LOSS of $26,000,000.

        I'd want to doublecheck those numbers, though, based on the author's odd ideas about tax law:

        But crucially, the bizarre tax laws in Germany mean that any wealthy Germans who invest in a movie can write-off the production cost, delay paying their taxes and generally reduce their tax burden. When you disseminate all the boring legal business law surrounding it the bottom line is this - the German investors in a movie only pay tax on any RETURNS the movie makes, their investment is 100% deductible, so the minute the movie makes a profit, said investor has to start paying tax.

        He first claims that Germany has "bizarre tax laws" which only tax businesses on their profits rather than their costs (isn't that how every country's tax laws work?!), then he seems to believe that a tax writeoff of $1 reduces your tax by $1 (which still wouldn't make the movie investors any money) rather than reducing your taxable income by $1 (which means the investors are still losing money, just not quite as much). I don't know anything about German tax law, but I've seen more than a few people who mistakenly think that's how writeoffs work in the USA, so I'd like to see some references before I believe that Germany's tax code is based on our urban legends.

        Plus the investors can actually borrow money to put towards investment and write that off too.

        Yes, if you borrow money and lose it, then your taxable income gets reduced by the amount you lost. But why the hell would anyone do that on purpose? Instead of paying (marginal tax rate) * (money borrowed) to the government, you'd have to pay 100% * (money borrowed) to your creditors!
        • You fund a movie to the tune of $5 million. You get a tax deduction for it, due to tax breaks given to the movie industry. Since investors get paid back before a movie is profitable (funky Hollywood accounting), you can make back your $5 million (but no more) and have a tax deduction but no additional tax burden - free money. Even when it doesn't work out exactly (which would be pretty hard to manage, I'd think), there are lots of cases where taking a loss on an investment can reduce your tax bracket enough
          • But... if that's what happens, then why didn't the author say that? The way it's described in the article, you think the investors invest their several million dollars, get back less than that, but then they're all happy because they pay less in taxes. So much less, that it somehow works out to magical profits, where lower box office sales equals EVEN MORE MONEY. Is the top tax bracket in Germany 200% or so?

            If one were to summarize the strategy as described in that article, using a numbered list, it would a
        • That's because they can claim a tax break on the expenses, yet not pay tax on the income until they break even. Hypothetically, if you invested 10 mil in the film, got 4 mil back in taxes.. then you make back your initial 10 mil.. you don't pay tax on that 10. You essentially launder 10 million dollars without any law-breaking.

        • I'm German, and the article is true. There IS such a "hole" in our tax laws. It's not exactly a hole - it was supposed to support funding of movies, of shipbuilding, of wind energy construction and some other things. So if you invest money in an Uwe Boll fund, and the movie is a loss, you have to pay less income taxes. (I'm sorry, i lack the tax vocabulary to give more details :) ) The new government with Angela Merkel has decided to close such "tax holes", so i have hope that the movies of Uwe Boll will
    • Of course it is.

      Capitalism is, in essence "anything for money." If people crept into your house at night to kill you and steal your organs for profit -- and get away with it -- that would still be capitalism.

      Don't be jealous :)
      • This is such a blatant misrepresentation that it can't be anything other than a troll.

        Don't feed the trolls.
      • Dbhankins has a point, but he failed to mention why it is such a blatant misrepresentation.

        Relevant dictionary defintions of capital:
        1. Assets available for use in the production of further assets.
        2. Wealth in the form of money or property owned by a person or business and human resources of economic value
        • Explanations feed the troll.
          • Really? I was of the opinion that falling for the troll and thinking it was serious fed the troll, but explaining why the post was so bad it's probably a troll kept food from the troll's mouth. Currently scanning Wikipedia articles for the care, feeding, abuse, and starving of trolls.
          • If dbhankins isn't serious, then my other reply to his post taking him seriously would mean I fell for his troll...*sigh*, Furthermore, his post without an explanation is feeding the Troll quality of the original post in question *okay*
            • Any reply to a troll which addresses the content of his assertions constitutes taking him seriously enough to feed him.

              In that regard, my post fed the troll a little. My apologies. It should have just been:

              "Troll."
    • "It's time we had this whole capitalism, communism, socialism, democracy, totalitarianism, aristocracy, imperialism thing hashed out once and for all, or at least a good start on it."

      So, you think that a bunch of one-off posts in /. is going to be able to cover centuries worth of political and economic theory, along with modern applications of the relevant theory, with examples?

      Ummm... good luck with that.

      Here's a start: http://www.wikipedia.org/ [wikipedia.org]

      Have fun.
      • I merely want a hashing out of which activites belong to which category, all in one place.

        The problem with wikipedia is one of no self research.

        I didn't think there'd be much progress along even those lines, so I threw in the "or at least a good start on it" part.
        • Umm, the categories you mention are not mutually exclusive... you mix political systems, economic systems, socioeconomic classes.

          Also, these are systems, individual actions cannot be 'categorized' as belonging to a particular system, without viewing them in context of each system.
          • I never said they were mutually exclusive. I just made a list of elements that fit into the scopes that you mention that people frequently get all mixed up.

            It seems to me that there are some actions that don't exist in some of the systems, or are more prominent in one system than in others.

            But what I'm interested in, and the point of my parent post, is to foster discussion that would facilitate developments that would lead to perhaps something like the production of perhaps one document that we could al
            • Well, first, slashdot isn't the most appropriate place for this.

              Re: slamming of systems, that's why we have moderation... it's not a perfect system, but I think it works well enough.

              Unfortunately, there's just too much involved to be able to tell someone to RTFM for social/political/economic systems, and expect that it would do any good.

              Most of the people slamming certain systems are just trolls, and don't want to learn.
              • Thing is, slashdot is one place the practice is rampant. Another one is that the slamming has gotten to the point that it shows up quite a bit in Slashdot articles.

                The slashdot moderation system is totally broken. It has been since it's inception. If it were scrapped and replaced with a moderation system of (underated|overrated) it could only improve. There's no way to clearly moderate for people who aren't trolling but have no clue what they're talking about, for example, and the current labels are pract
                • Well, I think the problem is not that people are posting with uninformed positions -- the problem is that other uninformed people are moderating them up. This is what the overrated mod is for.

                  The thing that needs to be done is to address the misinformation in a reply, which will hopefully be modded up.

                  My solution? Read at +3, unless I wanna see a whole thread. If somoeone's full of it, and still gets modded up, I check my facts and then respond.
    • Re:Capitalism? (Score:2, Informative)

      No,it's not capitalism. Under 'pure capitalism' there would be no taxes, no bizzare tax code and the only way to make money from a movie would be for it to make more money than you invested.
    • "It's time we had this whole capitalism, communism, socialism, democracy, totalitarianism, aristocracy, imperialism thing hashed out once and for all, or at least a good start on it." Capitalism, aristocracy, and imperialism are not governments. Capitalism is strictly an economic model, aristocracy is a class, and imperialism is an outlook taken by a government (be it totalitarian, democratic, or communist).
  • by dasunt ( 249686 ) on Wednesday November 30, 2005 @02:48PM (#14149745)
    "Heh, heh, heh, amazing. It's
    absolutely amazing. But under the
    right circumstances, a producer
    could make more money with a flop
    than he could with a hit ... It's simply a matter of creative accounting. Let us assume, just
    for the moment, that you are a
    dishonest man."
    ~ Leo Bloom, the Producers
  • by Otter ( 3800 )
    1) I'm not a fan of video game-to-lousy-movies either, but comparing them to life in North Korea is, to put it mildly, demented.

    2) Whatever one thinks of Hollywood executives, their ability to pour money into their own pockets is pretty much beyond question. To present them as helpless pawns of "rich Germans" seems implausible.

    • "1) I'm not a fan of video game-to-lousy-movies either, but comparing them to life in North Korea is, to put it mildly, demented."

      I know! how dare people compare crappy video game movies to glorious lifein the worker paradise! juse forever! log live the great poet and computer master wonder of society and the world the dear leader kim il sung!!

      i just wanted to get that out of the way before a leftist poster goes off on a rant saying the same thing.
  • So... (Score:4, Funny)

    by CanSpice ( 300894 ) on Wednesday November 30, 2005 @02:54PM (#14149791) Homepage
    ...if we want Uwe Boll to stop making shitty video game knockoff movies, we have to go see one enough times so that it makes a profit and his financial backers lose money?

    Jesus, that's quite the kick in the head, eh?
  • Sounds like... (Score:1, Redundant)

    by BigZaphod ( 12942 )
    ..somebody has a case of "The Producers" to me.
    • Heh. Funny moderating. I admit, my comment isn't terribly funny but it looks like about 3 or 4 people all had the same thought as me and posted about at the same time (I was probably latest to the game, though). I get modded redundant and several others echoing the same sentiments from the same movie have been modded up. :-) Oh well, my comment was basically redundant anyway.
  • A completely speculative piece about Uwe Boll now passes as news. Amazing.

    You know, not everyone gives a damn about videogames... shockingly to many people they aren't worth the time of day let alone fanaticism. Games and the games industry, like hollywood, could really care less about everything except money. There are a few exceptions where a few studios really try to push the envelope, make an artistic product, or even just focus on fun... but they are dwindling day by day.

    Uwe Boll is mediocre, and works
    • I'm no expert but I think you completely missed the point.

      Uwe Boll is not "mediocre" and his films are neither "mediocre" nor "profitable". Your cynical assessment of the studios desire to profit irregardless of our enjoyment is technically correct. However, it deliberately ignores the clearly stated facts.

      Uwe Boll is a horrible director. His films are both horrible and NOT profitable. So given your assessment of it being all about the money, how is Uwe able to continue making movies? Unless you agree that
      • Well, here are the facts for just one of his films "Alone in the Dark." When you total them up you see it almost breaks even right there... this is only US numbers and does not take into account DVD sales and rentals as well as the fact that a band paid $30,000 just to have their music in the film.

        His movies are all crap, I'm no fan by a long shot, but this "news" story is totally wrong and fueled by nothing more than dislike for the guy and his work.

        Budget
        $20,000,000 (estimated)

        Opening Weekend
        $2,834,421 (U
  • by Edgewize ( 262271 ) on Wednesday November 30, 2005 @03:04PM (#14149864)
    This is an old game. Do you really think that companies spend $100+ million on a movie budget? There are many countries, like Germany, where movie investments become tax write-offs.

    Only German national productions can quality for the tax rebate. Hollywood *loves* this trick: sell the production rights to a German company, and lease them back immediately, with the option to buy out the lease when the movie hits theaters.

    I've heard it said that Tomb Raider was made for under $9 million, excluding salaries. The "official" budget on paper was ten times that amount. Where did the rest of the money go? Back into the investors' pockets, of course, but now completely tax-deductable.

    Do you know why Sky Captain and the World of Tomorrow was such a big deal? It was made for practically nothing. The stated $30-mil figure was totally bogus. Thanks to some budget manipulation, it turned a profit for the production company long before the first reel was shipped. Any profits from theaters or DVD were just icing on the cake.
    • I've heard it said that Tomb Raider was made for under $9 million, excluding salaries. The "official" budget on paper was ten times that amount. Where did the rest of the money go? Back into the investors' pockets, of course, but now completely tax-deductable.

      Do you know why Sky Captain and the World of Tomorrow was such a big deal? It was made for practically nothing. The stated $30-mil figure was totally bogus. Thanks to some budget manipulation, it turned a profit for the production company long before

  • I fall firmly in the "show me proof" camp.

    From what I understnad, tax loopholes might reduce your tax burden if you have millions in other income. But blowing your money still seems foolish, unless the tax rate is over 100%. Disclaimer: I have never had anywhere close to a million dollars, so I have no first-hand experience. But if anybody cares to donate... ;)

    So, how can you loose, say, $10 million in making a movie and come out ahead. Surely Germany will not actually GIVE you $10 million in replaceme
    • Re:Proof... (Score:4, Interesting)

      by Yokaze ( 70883 ) on Wednesday November 30, 2005 @03:40PM (#14150194)
      > So, how can you loose, say, $10 million in making a movie and come out ahead. Surely Germany will not actually GIVE you $10 million in replacement. Can sombody explain this or provide hard numbers for the financially challenged?

      I understand it the following way: Say, you're a resident of Germany and make 10 million EUR profit in some way or another, Germany taxes that profit. But, when you reinvest that money, the government will not tax it. It will only tax the profits from that investment. But, what when the investment is not profitable? Well, then it is a loss, and losses aren't taxed.

      So, instead of paying a, say, 20% tax, you make a loss of 10%, which is gives you practically a plus of 1 million EUR.

      The idea was, that this money is invested in "hard" things, like factories, machinery, and the like, which have a real value.

      Almost as interesting as subsidiaries in one nation buying from the main company in different nation compontents to excessive prices, in order to turn their profits in said nation to zero, and pay only taxes in the country of the main company, where the taxes are coincidentally much lower than in the country the profits were originally made.
      • Crazy! These guys would rather give 1 million to bad movies and put 9 mil in their pocket than give their government 2 mil and put 8 mil in their pocket. You might say "Duh" but it's just stupid. That 2 mill should be for schools, public services and the benefit of every damn body. Well, movies aren't the devil but, damnit, won't someone think of the children! LOL :P
      • Almost as interesting as subsidiaries in one nation buying from the main company in different nation compontents to excessive prices, in order to turn their profits in said nation to zero, and pay only taxes in the country of the main company, where the taxes are coincidentally much lower than in the country the profits were originally made.

        I work for a large Japanese corporation, and this is often used as a method to funnel money back to Japan. For example we need to buy manufacturing piece of equipm

  • by Parity ( 12797 ) on Wednesday November 30, 2005 @03:21PM (#14150007)
    See, the way a tax write-off works is, if I throw $1,000,000 into a tax-deductible expense, then I don't pay taxes on that $1,000,000. So, I'm out my $1,000,000 but being in the 40% tax bracket, I save $400,000. But that's still $600,000 that I've lost with no compensation other than seeing my name in the credits of a really bad movie.

    Maybe there's another thing involved besides straightforward tax deductions, but the situation wasn't explained very well.

    Possibly what he's meant is that if you invest $1 million you don't pay taxes on that $1 million (because it's deducted) and you only pay taxes on returns from that $1 million that are in -excess- of $1 million. (If by 'returns' he means return-on-investment, ie, net profits, and not box office returns, ie, gross profits, that could be what he's trying to say). So, if I make a movie that exactly breaks even then I'd get all my money back -and- not pay taxes on it. In which case it's not true that you make money by tanking at the box office, but by breaking even. It would also be a really, really dumb way to write a tax law, but such dumb laws -have- been written before when trying to 'stimulate investment'... or by corrupt legistlators. I just wouldn't expect to see anything that dumb in a first world nation in this century.

    Anybody out there know anything about german finance laws?
    • by Ayaress ( 662020 ) on Wednesday November 30, 2005 @03:42PM (#14150221) Journal
      Somebody above posted this link: http://www.slate.com/id/2117309/ [slate.com]

      Basically, to use your example, you spent that $1,000,000 of investor money (not your own). However, you collect investments of $100,000,000 to cover your rediculous budget, and you have a German company as your producer. Under German law, you get that tax deduction before the movie enters production, and then lease the film for your US studio for actual filming. So that's $99,000,000 you basically pocket on your $100m movie that really cost $1m.

      Now, let's say your film goes to market and makes $125 million in revinues. By contract obligations, you pay back your investors their $100 million plus interest. Let's say 10% for another 10 million. Or, if you really screwed them, they signed for a percentage of the profits instead of that 10%, which means they get a set percentage out of $25m which could end up being even less. Heck, if you're lucky, the movie won't even make back the budget and your investors also get screwed even out of their full $100m.

      All scenarios aside, let's say you agreed to 10% interset on the investment. That means $110m out of the $125m goes back to the investors, and your studio makes another $15m for a grand total of $114m profits on a movie that "cost" $100m and grossed $125m.

      It's called cooking the books, it can get you in a lot of trouble, but a lot of companies get away with it for decades. However, if you have a good team of lawyers to handle your contracts and such, you can probably get away with this sort of thing without technically breaking the law.
      • Not quite. The picture the article paints is a one-time transaction, not a long-term investment they intend to pay off.

        Take a closer look at the Tomb Raider situation. They found investors willing to pony up 94 million dollars to buy the rights to Tomb Raider. Paramount then repurchased the film for 83.3 million, making almost 11 million on the deal.

        So, you say, how do the Germans make money? Simple:

        Suppose you made 94 million dollars in income this year, and lived in Germany. You might be upset by the
        • That only works if you don't have to pay taxes on the 83.3 million that you 'sell' the film for, though. So, basically, what you're saying is that my second speculation - they one I called a -really dumb way to write a tax law- - is actually true. They invest their money in a tax-deductible way and then get tax-free income in return. Or is it just a year-to-year carry thing? Invest 94 million -this- year, get 83.3 million back -next- year, repeat every year to eternally postpone taxes? That's almost startin
          • They don't have to pay taxes on the 83.3 million "earned" because they "lost" 11 million on the investment venture. The way the law is structured, you don't have to pay taxes on capital invested in German movie productions, only the net earnings.

            Do the math: 94 million in, 83.3 million out = a loss. No taxes.
            • Ah, right. If that's the way the law actually works, then it's a brain-dead law that should never have been passed.
              It's also a really simple case that should've been clearly explained in the original articles.

              (Although... your explanation still doesn't make sense directly, though I understand it anyhow, but, 'You don't pay taxes on capital invested' ... well, of course not, -nobody- pays taxes when they invest capital in -any- country. What you mean is, 'investments into German movie productions are -tax de
  • by neomage86 ( 690331 ) on Wednesday November 30, 2005 @03:48PM (#14150285)
    All the article says is that (in Germany) money you invest in foriegn films is tax deductible, while you pay normal taxes on the profits.

    In Germany income taxes work like this (2004):
    " a zero tax rate on taxable income up to 7,664
    " a marginal tax rate rising form 16% to 45% on taxable income between 7,664 and 52.152
    " a marginal tax rate of 45% on taxable income over 52.152"

    And money invested in films just doesn't count as taxable income.

    So, let's say someone in germany makes a 10 million a year (they would have to make a lot to invest 10+ million euros in a movie). Then, let's say they invest 5 million in a movie that flops, and get no money back. If they never invested, they would have 5.5 million euros left after taxes. Losing 5 million euros, they only 2.25 million euros left.

    Run the numbers, it is impossible for a german to have a net gain in his take home income on a film that looses money.

    However, if the same German investor invests 5 million euros, and gets back 6 million, at the end of the year they end up with 6.05 million euro(a .505 million euro gain after over no investment, or a 3.8 million euro gain over the movie that tanks). It is clearly in the investors best interest invest in a movie that will make money.

    Dear god, this isn't even hard math. I mean I did these numbers in 30 seconds without a calculator using nothing more than junior high algebra.

    At worst, this trick could help someone defer taxes for a bit, it's no incentive to flop movies.
    • What you're missing is that they don't pay taxes on the revenue from the movie until it turns a profit and that the entire expense of the movie is tax deductable, not just the loss from the movie.

      So, if they make $50 million a year, that would be $27.5M after taxes if they didn't invest.

      But if they did invest $20M in a movie, they would end up with $16.5M after taxes. Now, if the movie makes $12M (technically an $8M loss), they will still end up with $28.5M (a net gain of $1M vs not investing).

      Yes the movi
    • The article doesn't say anything about bad movies are better investments, just that big ones are. Basically if you have 100m euros, you'd normally pay 55m euros come tax time. Instead, you invest 90m of that so you're only paying 4.5m in taxes. Then you let the studio buy the film back for 80m euros. Well you just took a loss on your movie investment so you don't have to pay any taxes on the 80m. Final income from your 100m euros = 85.5m euros
  • DVD Formula... (Score:3, Interesting)

    by __aaclcg7560 ( 824291 ) on Wednesday November 30, 2005 @04:04PM (#14150425)
    I thought that the more badly the film did at the box office, the higher potential for more money being made on DVD sales. If your DVD is selling at Walmart (even in the $3.50 sales bin), you're still making money after the movie flops.
  • What everyone is missing is that they don't pay taxes on the revenue from the movie until it turns a profit and that the entire expense of the movie is tax deductable, not just the loss from the movie.

    So, if they make $50 million a year, that would be $27.5M after taxes if they didn't invest.

    But if they did invest $20M in a movie, they would end up with $16.5M after taxes. Now, if the movie makes $12M (technically an $8M loss), they will still end up with $28.5M (a net gain of $1M vs not investing).

    Yes the
  • can be found at Slate, in a "Hollywood Economist" column written by Edward Jay Epstein. The column is very good in general for untangling the frequently recondite and illogical ways in which Hollywood makes money.

    http://www.slate.com/id/2117309/ [slate.com]

    --
    Excerpt: The Hollywood studio starts by arranging on paper to sell the film's copyright to a German company. Then, they immediately lease the movie back--with an option to repurchase it later. At this point, a German company appears to own the movie. The Germans th
  • Not Anymore... (Score:3, Informative)

    by dpdawson ( 624716 ) on Wednesday November 30, 2005 @06:57PM (#14152178) Homepage
    Looks like the party is already over for Boll.

    Click here [slate.com] for more info.

  • This article may have identified why lousy movies get made by German directors, but it's wildly off the mark when it comes to assigning blame. Look at this inflammatory excerpt:

    "Rich Germans getting richer by exploiting the stupidity of the Hollywood system and the naivety of critics like us, who never thought to question the true motives of why these horrible, horrible movies existed. Pure and unfiltered 21st century capitalism."

    Right...

    Capitalism is simply what you get when people create and own property,
  • Germany closes tax loophole for Hollywood [monstersandcritics.com]

    Hollywood's Big Loss - No more free money from Germany [slate.com]

    I find it odd that Slashdot reports on this only AFTER it's no longer true :)

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