dyre said:
everything I've learned from accounting indicates that if your project has a net present value of zero, then you've broken even
I might just confuse the situation more with this answer, so feel free to move on.
1. Hollywood doesn't do math, or in this specific case accounting. It does what it says is accounting and what it can prove is accounting for tax purposes but almost every production coming out a major studio is wrapped in such a byzantine blanket of unpredictable expenses and outsourcing that the production company itself often won't know how much money it has actually spent for almost a year or two later, maybe even more.
Rather than seeing this problem fade away as your production gets a larger budget, the logic being that with more money being spent there is more accountability
D) for that money, it actually increases dramatically because of the size of the production warranted by your now 8-9 figure budget. This is why the film industry generally uses the term "budget" instead of the term "cost". I can think of too many instances where a budget has been steadily revised upward as the production continues, often just to catch up or be within a few million of what was actually spent. It suffices to say, Hollywood doesn't do math.
2. Hollywood likes contracts. They are an absolute in all matters from what kind of shower facilities people get access to on set to the kind of shoes they can wear at events. That said these contracts rarely do much in the way of helping to track money, particularly when you have four or five different small digital studios doing post-effects work largely contracted by a primary company that you actually hold the contract with, who themselves have a contract that includes plenty of monetary leeway without actually allowing that kind of money to filter down to anyone outside of management
D).
The problem with this is that often contracts result in very strange expenses. I heard tell once of an actor who, by right of their contract, was entitled to coffee house quality coffee. Anytime. Anywhere. On a production that'd take said actor to several international locations. So they had the catering company hire three baristas to work in round the clock shifts, shipping the necessary equipment and consumables with the set.
Who paid for this? Fuck knows. The catering company didn't, so likely someone high up in the production picked it up, who'd charge it to the company, who'd pay him then check the contract, then get the money from the budget. Maybe.
3. Hollywood likes advertising. Often another company, separate to the production, will be hired to manage advertising. That company would then subcontract with advertising companies across the globe, who would in turn do work with local companies, to get the advertising they wanted out. The full cost of which might not reach the clients, the production company, books for almost a year or maybe more depending on how far flung the advertising went.
This is all before you consider that often advertisers will get specific directions from producers regarding certain material etc., the extra cost of which couldn't be initially accounted for.
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Almost all of this is subject to deliberate manipulation on every level to keep expectations in range without scaring any investors with things like cost projections. With a fight happening between the companies at the end of the line who want to get paid and the people interacting with investors and "industry analysts" who want to look like they've hit jackpot.
Bottom line, Hollywood accounting is witchcraft.
