Michigan last week didn’t just become the latest state to offer incentives to the entertainment industry, it became the most egregious of all. If a producer spends $10 million making a movie in that state, he gets a check back for up to $4.2 million, courtesy of Michigan taxpayers.
But if Michigan doesn’t work out, the producer needn’t despair. Most states now beckon the entertainment industry by giving away all manner of outsized goodies. Most states, but not California.
Los Angeles has got to be concerned. While the local industry is focused on the possibility of another strike, other states are quietly focused on something else: carting one cinematic art piece after another out of Los Angeles, slowly looting the museum that is Hollywood.
Did you see this year’s big Oscar-winner, “No Country for Old Men”? It was filmed in New Mexico. In fact, four movies filmed in that state received 14 Academy Award nominations this year. Until Michigan, New Mexico may have been the most aggressive.
In past years, most runaway production went to other countries, but the sinking dollar makes foreign work more expensive now. Today, the proliferation of state-based giveaways means that production is more likely to run across state lines.
If you dismiss the other states as locations for quick shots places where film crews move in for a few days of on-location shooting and then return to L.A. you’re misunderstanding the threat. Several states are well into the next step: creating the infrastructure to house a year-round entertainment industry.
Louisiana had six sound stages in December 2006, but it had enough work to support 10, according to a study done for that state, and more construction started after that. Albuquerque Studios, a complex of five cavernous buildings in New Mexico, opened last summer. (Check out abqstudios.com.) Michigan’s new incentive package gives tax credits to those who will build studios.
Here’s another thing local folks tend to miss: The other states are intent on developing home-grown stables of below-the-line workers. That way, a producer doesn’t have to fly in his crew from Los Angeles but can hire locally and maybe get a check back from the state for doing so.
It’s not just feature films that are targeted. Television shows, commercials, games and music videos are all getting that come-hither stare from the neighbors. Have you seen the Sheryl Crow video of “Love is Free”? Shot in Louisiana.
Entertainment is L.A.’s third biggest industry. But it’s even more important than that because other industries here tourism, fashion, etc. depend on the halo effect from entertainment.
Make no mistake. The entertainment industry is vitally important to Los Angeles, and it’s starting to seep away.
For the record, I dislike economic incentives. They’re bribes given to companies with taxpayers’ money. Incentives mess with true competitive forces, distort the market and all that. But the reality is, other states are doing it.
The time has come for lawmakers to recognize that the incentive game is the game that’s being played now. It’s being played ruthlessly, and it’s being played harder, thanks to Michigan’s one upmanship.
If we want to keep this industry firmly rooted to Los Angeles, we need to get into that game. Incentives will need to be offered. You may not like it. I don’t like it. But that’s the reality.
Charles Crumpley is editor of the Business Journal. He can be reached at
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