Thursday, August 17, 2006

RajinifansDiscussions : Message: Sivaji Economics

RajinifansDiscussions : Message: Sivaji Economics

1. Estimated cost of production of Sivaji: Rs. 40 crores (Does
not include Rajini's & Shankar's fees)

Anniyan, the last film directed by Shankar, rumoured to have costed
around Rs. 20 – Rs. 25 crores in 2004/5. This includes the complete
pre-production costs (like story discussion, hotel stay, etc),
production costs (incl. shooting, artistes fees, technicians fees
(incl Director's & MD's fees), travel, boarding & lodging exps.,
communication exps., etc) and post-production costs (editing, re-
recording, dubbing, graphics, film printing, & distribution & advt.

If 50% is added to Anniyan's production cost to account for
inflation/price escalation in 2006, higher remuneration for ARR in
Sivaji than what was paid to HJ in Anniyan and some contingency
production expenses, the production cost for Sivaji works out to Rs.
40 crores. Please remember that this figure does not include the
remuneration payable to Thalaivar & Shankar.

2. Estimated Gross Revenue of Sivaji: Rs. 100 crores (at first
level distribution only)

Assuming the recent media reports (which has subsequently been
denied by the people concerned) to be true, then Sivaji's
distribution (India and overseas), dubbing, audio, video/DVD,
satellite rights have been sold for an astronomical sum of about Rs.
100 crores. Going by the recent box office record of Rs. 100 crores
worldwide collection created by Thalaivar's Chandramukhi, it would
not be a surprise if the above reports about Sivaji turn out to be
true. Remember, this is only the first line sale in the
distribution chain & the distribution price for any film is normally
arrived at based on the business of the last movie of the
hero/director & also the expected potential collection at the box-

3. Estimated profit for producers of Sivaji: Rs. 60 crores

Thus, the film Sivaji is estimated to rake in a profit of about Rs.
60 crores to the producers based on the above figures.

Profit/Revenue Sharing model

Since Thalaivar & Shankar have not been paid any upfront
remuneration for Sivaji, it is likely that they may be sharing the
net profit along with the producers. For eg., the profit-sharing
could be, say, 45% to AVM (because they have invested hard cash
worth about Rs. 40 Crores for producing the movie) which works out
to Rs. 27 crores, another 45% to Rajini (Rs. 27 crores) and
remaining 10% to Shankar, which works out to Rs. 6 crores. This
split is only an assumption & the actual percentages of split could

The above formula of sharing the profits among AVM, Rajini & Shankar
is to ensure that Shankar, who has been given the complete freedom
to make the movie fully according to his wishes & vision, has a
stake in the ultimate profitability of the project by controlling
the costs without compromising on the quality. This way, the
producers can rein in Shankar by making sure that he does not
fritter away the precious capital being invested by AVM towards
unnecessary expenditure.

As far as Thalaivar is concerned, it is well known in the industry
that he takes his remuneration partly as fees and partly as
distribution rights for certain territories. It is also rumoured in
media that in CM, Thalaivar also had a share in revenue thus making
him the highest paid actor in India & second highest paid actor in
Asia next only to Jackie Chan.

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