Chicago’s Transformers Business Experience

Posted on Jul 27, 2010

From explosions and gunbattles on Wacker Drive to parachutists plummeting from Trump Tower and celebrity sightings on Michigan Avenue, the “Transformers 3” film shoot provided plenty of free entertainment in downtown Chicago last week.

It also has caused more disruption than any previous movie filmed in the city — snarling commutes, clogging sidewalks, distracting office workers and cutting off retailers from foot traffic.

So is it worth it?

Steve Shern, general manager of Hotel 71 on Wacker, says yes: “We’ve been sold out each of the past seven nights,” largely due to “Transformers.” The hotel, located on the block where battle scenes were filmed last week, peddled “Transformers”-themed packages that included screenings of the first two installments and promises of some live action out the front door.

Next door, Bella Bacino’s restaurant closed down for most customers Monday, Tuesday and Wednesday, serving only those with previous reservations and Hotel 71 guests. But co-owner Linda Bacin says film crew members “filled the bar for a couple of nights. Michael Bay came in, ate pizza, said ‘thank you,’ tipped appropriately.”

She says film company Paramount Pictures has agreed to reimburse her for lost business. She hasn’t yet calculated the total.

THE LOCAL ANGLE

Figuring the overall financial impact on Chicago is trickier. Movie productions hire local workers, buy from local companies and generate publicity for the city. They also collect tax credits from the state and interrupt the normal flow of downtown commerce.

Paramount says “Transformers” will bring in $20 million and 200 jobs; Betsy Steinberg of the Illinois Film Office says the job number will be closer to 400.

So far, “Transformers” has hired 184 locals as production assistants and 27 Illinois National Guard members to play soldiers, a spokeswoman for the movie says.

“We try to hire as many local crew members as possible, but we did run into the issue that a lot of crews here were already working on other projects,” she says, including a Ron Howard-directed comedy starring Vince Vaughn that’s been shooting in the city since the end of May.

The caliber of those jobs, which range from a few days of on-set work to months of set-building, has been debated. An experienced camera operator can earn more than $900 a day, while low-level production assistants make about $100 to $200 a day.

“Even though some of these camera crews might be working 16-hour days for six weeks and then not working for a month, they’re still taking home enough to support their families,” says Tom Fletcher, an executive at Chicago-based Fletcher Camera & Lenses, which rents camera equipment to film crews.

Location scouts for the movie struck deals with local business owners such as Ms. Bacin, promising to compensate them for lost business and damage caused by the filming. Damage appears to have been minimal: Bella Bacino’s lost a few patio chairs and a carpet ruined by debris. An explosion blew out a window in the business offices of Crain’s Chicago Business, which overlooks one of the film sites. No one was injured.

The Ron Howard movie, tentatively titled “What You Don’t Know,” has actually spent “significantly more” here than “Transformers,” Ms. Steinberg says. The movie didn’t release a local spending estimate, but its overall budget is $79 million. It will shoot for more than three months in Chicago, compared with six weeks for “Transformers.”

Chicago Film Office chief Rich Moskal says the city won’t bear any of the costs of shooting “Transformers.” The studio pays for all security personnel (including about 15 off-duty police officers and firefighters hired at $30 per hour) and cleanup expenses. A spokeswoman at the Chicago Transit Authority says the rerouting of 27 buses to accommodate filming has had no financial impact on the agency.

TAX INCENTIVES

According to the Illinois Film Office, movie studios spent $476 million in Illinois from 2005 to 2008. The state returned $39 million under a tax credit program enacted in 2004 to help Illinois compete for Hollywood productions.

Some 42 states offer film tax credits, often more generous than Illinois’. Here, the 30% credit applies only to spending with local companies and wages for Illinois residents up to $100,000 each.

Michigan offers a 40% rebate with no residency requirement. That tax break applies to the huge salaries for non-Michigan-based actors, directors and producers. Michigan Gov. Jennifer Granholm estimates the state will pay $155 million in tax credits to the film industry in 2010, causing some state officials to question the value of the program.

Experts say tax credits can be worthwhile if they help a state establish a permanent local film industry. Illinois is third behind California and New York in terms of having a strong local crew presence, says Cornell University professor Susan Christopherson, who studies film tax credits.

“Chicago might be able to make a go of the film credits because it does have a strong production presence related to advertising,” Ms. Christopherson says. “But in other states, you have to ask why you’re giving subsidies to movie workers coming in from other places.”

Source: Crain’s Chicago Business

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