Critics might say New Mexico's state government bombed at the box office.
In the nine years before Susana Martinez became governor in 2011, New Mexico invested $239 million in 22 movies and television series. The State Investment Council provided mostly interest-free loans of up to $15 million per movie or series in return for a share of the profits.
This enterprise may have been heady and glamorous, helping bring Denzel Washington, Jennifer Lopez and a galaxy of other stars to New Mexico.
Profitable it was not.
Only one of the movies — “The Book of Eli,” starring Washington — actually turned a profit for the state. It has provided $517,017 for New Mexico and continues to produce revenue through rental fees and play on premium channels.
The other 21 movies and television series all reported the same number — zero — for the state’s share of profits.
Three of those movies eventually provided modest financial returns to the state for a variety of reasons, including the threat of a lawsuit in one case.
Members of the State Investment Council, which oversaw loans to moviemakers, received the statistical breakdown last week. If the results they saw were unspectacular, at least they were not disastrous.
New Mexico did not lose money on any of the movies and shows. Every production company that received a state loan paid back the principal.
Still, the State Investment Council under Republican Martinez’s administration decided the rewards of the program were too paltry, the risks too great.
It has given up on financial partnerships with filmmakers.
The interest-free loans are gone, though the state remains open for business with producers, directors and screenwriters.
A moviemaker doing a project in New Mexico can still seek a loan from the State Investment Council, but the terms would be similar to those of a bank. The state would receive interest for providing millions upfront to launch a production.
Not a single moviemaker has signed up for a state loan requiring interest payments, said Charles Wollmann, a spokesman for the Investment Council.
He said the council changed its position on movie loans to maximize investment returns to the New Mexico permanent funds.
Wollmann was referring to accounts totaling $15 billion that the Investment Council manages.
By the state’s estimate, it could have made $30 million for its funds had it put money in safe investments, rather than allocating $239 million in loans for movies.
In addition, to risking that money, the state spent $2.37 million to manage the film investment program.
The state hired an attorney from California named Peter Dekom to critically examine which movie projects were good candidates for the state’s interest-free loan program and profit sharing.
An intangible part of this story is whether any of the producers shot their movies in New Mexico because of the state’s loan program.
State Rep. Brian Egolf, D-Santa Fe, said he was a fan of the incentive program because it helped attract moviemakers and gave state residents a shot at jobs in the industry.
“We hear a lot about New Mexico being one of the poorest states. But one of the things that makes us different is that we have one of the largest endowments in the country, and we’re not doing enough with that money to create economic benefits,” Egolf said.
Movie loans, he said, were an exception until the Martinez administration reversed course.
The state risked relatively little of its $15 billion fund on movies, and rightfully took a chance that the projects improve the state’s economy, Egolf said.
By the State Investment Council’s count, a total of 4,649 New Mexico-based crew members worked on the 22 movies.
But state Rep. Dennis Kintigh, R-Roswell, said the number of jobs created was far less.
“If I work three weeks on the set of one movie, then a month later I work a couple weeks on a different movie, is that one job, two jobs or a part-time job? One problem is we don’t know what the accurate number is,” Kintigh said.
Kintigh is the strongest voice in the Legislature against another program involving Hollywood. In it, the state pays a 25 percent rebate to moviemakers for qualified production expenses on projects filmed in New Mexico.
“ ‘The Avengers’ spent $88 million and we had temporary jobs. The producers got back $22 million of that money, right out of the state treasury. It could have gone for roads or to build a school,” Kintigh said.
He said he agreed with ending interest-free loans to moviemakers and would like to “wean the industry from the rebates.”
Kintigh said a government program subsidizing movies is not sustainable when the state has so many other needs.
But the governor, though initially critical of movie rebates, has softened her stand since a fundamental change to the program.
Rebates to moviemakers are now limited to $50 million a year.
Most states provide similar incentives to attract moviemakers. Studio executives in New Mexico say the state has a foothold in the movie industry because of the rebate program.
The idea of offering interest-free loans to moviemakers began under another Republican governor, Gary Johnson, in 2002. Then Democrat Bill Richardson pushed it, seeing movies as a clean, high-profile industry that New Mexico should pursue.
But the interest-free loans led to no breakthrough performances in revenues, only a few erratic payoffs in addition to “The Book of Eli.”
The makers of “Employee of the Month,” released in 2006, paid the state $500,000 as an advance on anticipated profits.
Makers of “Bordertown,” a 2006 movie about murders in Juarez that starred Jennifer Lopez, received an interest-bearing loan from the state.
They ended up paying the state what amounted to a penalty of $304,717 in addition to the principal on a $15 million loan.
“We had to threaten litigation against ‘Bordertown’ producers but never filed,” Wollmann said. “... While it was a technical default, it was later reconciled to the state’s benefit at more than double the contracted rate.”
“The Flock,” a 2007 movie starring Richard Gere, paid back the state early on an interest-bearing loan. Taxpayers made $93,000 on that deal.
But in the end, of the 22 movies and TV shows to which the state loaned money, “The Book of Eli” was the only one that showed a profit the state shared in.
Wollmann said the State Investment Council is aware of “Hollywood’s less than stellar reputation for fuzzy bookkeeping.” So the council has hired an independent auditor with a long record in the film industry.
He will audit “The Book of Eli” to make sure the state keeps collecting its share of profits.
Wollmann said none of the other movies the state loaned money to warrant audits. There will be no belated profits or residuals from them.
Movies or television shows that received loans from the State Investment Council
“Blind Horizon” — $4.78 million approved in 2002.
“Suspect Zero” — $7.5 million approved in 2002.
“Elvis Has Left the Building” — $7.5 million approved in 2003.
“Wildfire” — $4.09 million approved in 2004.
“Cruel World” (aka “The Experiment”) — $1.7 million approved in 2004.
“Bordertown” — $15 million approved in 2004 and ‘05.
“First Snow” — $7.3 million approved in 2005.
“The Flock” — $2.3 million approved in 2005.
“Seraphim Falls” — $15 million approved in 2005.
“Wildfire” the series, Season 1 — $15 million approved in 2005.
“Wildfire” Season 2 — $15 million approved in 2005.
“Intervention” (aka “Funny Farm”) — $12.42 million approved in 2005.
“Buried Alive” (“The Horror Chronicles”) — $3.45 million approved in 2006.
“Undead or Alive: A Zombedy” (aka “Wanted: Undead or Alive”) — $3.79 million approved in 2006.
“Living Hell” (“The Horror Chronicles”) — $3.85 million approved in 2006.
“Employee of the Month” — $13 million approved in 2006.
“In the Valley of Elah” — $15 million approved in 2006.
“Wildfire” Season 3 — $15 million approved in 2006.
“Wildfire” Season 4 — $15 million approved in 2006.
“Swing Vote” — $15 million approved in 2007.
“Gamer” (aka “Game”) — $15 million approved in 2007.
“Burrowers” — $7.03 million approved in 2007.