Reasons why investing in film during the Wall Street financial crisis can help boost the US economy

With the nation teetering on the brink of economic collapse, Wall Street panics at an all-time high, and hedge funds and financial institutions unraveling, New York-based Elliott Associates has parked an additional billion dollars in Ryan Kavanaugh’s Relativity Media, which has a big list of The Universal Pictures films over the next few years.

And the question remains “why?” in today’s economic crisis and the recent withdrawal of billions of dollars in institutional capital from the studios.

No matter how bad things are in the world, people need to be entertained. And while the mass mentality of panic exists in US financial markets, properly structured commercials generate more revenue overseas, contributing to larger distributor buying with the Euro versus the USD.

Aside from Elliott Associates, other investors including billionaires, family offices from Wall Street to Silicon Valley and the Middle East to Russia have parked their money in Hollywood

Larry Ellison from Oracle, Paul Allen from Microsoft, Steven Rales, Fred Smith from Federal Express, Norman Waitt, the co-founder of Gateway Computers, Jeff Skoll from Ebay, Marc Turtletaub from The Money Store, Roger Marino from EMC Corp, Sidney Kimmel From the Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real estate developers Tom Rosenberg and Bob Yari, and financiers Sheikh Waleed Al Ibrahim, Michel Litvak and Philip Anschutz are all behind the financing of many films ranging from box office hits to Oscar-winning films.

While the glamor of the film business may appeal to most, at the end of the day it’s still an unknown business that many try to gamble on, and only a handful emerge victorious. The real key is minimizing risk, maximizing rewards, and offering a steadier stream of income than other alternative investments such as real estate, oil and gas, commodities, hedge funds, or virtually any other investment in the market today.

Instead of dazzling investors with fog-and-mirror Monte Carlo simulation models that offer various IRRs and scenarios based on unpredictable film revenues, the key is to offer an absolute return on investment by taking advantage of international and U.S. government tax incentives that exist in certain cases can guarantee 100%. or more of invested capital ahead of earnings by leveraging stock positions with non-recourse leverage.

Investors who wish to claim either a 100% federal deduction from their ordinary income under Section 181 or the American Jobs Creations Act will receive an additional 20-40% tradable and monetized state tax credit or cash refund and have income protection a series of films, as well as stimulating local and international economic development and creating jobs, including for women and minorities.

Sounds too good to be true?

Not too many other alternative investments can offer tax incentives, multiple exit strategies, the potential to guarantee 100% of the capital, giving back to the American economy and workforce while still being involved in the film production process, which would also add to the long line of recent history Film funds structured with numerous hedge funds, private equity investors, corporate tax credit buyers and institutions.

In today’s shaky financial markets, not too many businesses can be started that can have an almost predictable ROI before operations and profit.