The BaxStarr Consulting Group (BSCG) was hired by Louisiana Economic Development (LED) to conduct an economic and fiscal assessment of the State’s entertainment incentives between 2008 and 2010. Accordingly, BSCG staff compiled and analyzed data provided by the State
1 and data collected from its own field research with business and economic development specialists throughout the state. This document reflects not only the current state of the entertainment industry, but takes both a historical look to show how far Louisiana has come, and a forward view to highlight growth opportunities. The economic impact data and analysis contained in the following pages are not intended as a thorough economic assessment of the state’s entire entertainment industry, merely of activity associated with the incentives.
The key findings from BSCG’s economic and fiscal impact analysis are
2. Every $1 of tax credits issued generates the following estimated total economic output: • Film production - $5.71
• Sound recording - $6.47
• Digital media - $6.90
• Live performance - $7.41
2.Louisiana Entertainment Industry Economic Impact • An average of about $710 million per year in economic output for 2008 and 2009
• Approximately $1.08 billion statewide in economic output for 2010 alone, representing a 52 percent increase above the annual average for years 2008 and 2009
1 Data provided by LED and the Legislative Fiscal Office – collectively hereafter referred to as the "State".
2 Based upon actual data from 2008 and 2009, and estimated data for 2010.
National trends in the motion picture industry are not entirely reflected in Louisiana, which presents something of a positive anomaly. While wages and production numbers shrank nationally, Louisiana saw overall increases since the previous impact analysis.
(The last analysis, covering 2005-2007, was released in 2009 and will hereafter be referred to as either "the previous analysis" or "the 2009 analysis.")
The digital media and sound recording industries have continued to grow since the previous impact analysis was completed. Sound has grown relatively slowly, while the digital interactive media sector is beginning to take hold with an increasing and diversifying demand and market for these products. Digital interactive has also now gone beyond the primary focus of video games.
As the newest sector for Louisiana’s entertainment industry development efforts, live performance represents the least developed industry, although interest in the program is growing, and the credits for infrastructure have been the basis for almost $100 million in investment.
Motion Picture Industry
Louisiana’s flagship incentive program has been a catalyst for substantial film production growth statewide. This increase is reflected in four key areas:
1) number of certified productions (i.e. films/TV series etc. being shot in Louisiana),
2) percentage of overall budgets spent in Louisiana,
3) dollars spent in Louisiana (aka in-state "spend") and
Only 200 productions qualified for tax credits in the six year period between 2002 and 2007, representing an average of about 33 per year. This increased to 275 productions in the three year period 2008-2010, an average of about 92 productions per year.
This represents an increase of 175 percent in the annual volume of films being produced in Louisiana.
Likewise, the proportion of total film production budgets spent in Louisiana has also increased significantly, from 34 percent in 2006 to 64-80 percent in 2010. In 2006 when the law changed to specify that only in-state spending would qualify for tax credits, productions spent approximately 34 percent of their budgets on in-state goods and services. By year-end 2010, that number is estimated to have hit 64 percent, indicating a widespread proliferation of Louisiana-based businesses servicing the industry. When the total spending is adjusted to eliminate mega-productions which tend to import more crew and vendors into Louisiana, and focuses on Louisiana projects budgeted at $20 million or less (90 percent of all film projects in the state), which use more Louisiana goods and services, the in-state spend average climbs even higher, to about 80 percent.
This shift in spending is significant because it reflects the growing maturity of the film industry in Louisiana. For example, services that once had to be performed in Los Angeles can now be secured in Shreveport, and jobs that were once found only in Burbank, CA are now based in New Orleans. Thus the brain drain is slowly being reversed in this sector, with Louisiana natives and their families returning to the Pelican State.
Similarly, the amount of spend in Louisiana increased by 30 percent from 2008-2010. LED estimates that production expenditures occurring in Louisiana reached $474.2 million in 2008; $361.5 million in 2009; and an estimated $674.1 million in 2010, a number BSCG considers conservative. (A number of factors may have created the 2009 decrease including the recession, potential industry strikes and temporary uncertainty about the future of Louisiana’s tax incentives.) These expenditures produced an estimated annual total economic impact – also known as economic output or economic benefit – in Louisiana of approximately $812 million in 2008, $593 million in 2009, and $1.1 billion in 2010. State of Louisiana – Fiscal and Economic Impacts of the Entertainment Incentives The BaxStarr Consulting Group
4 Finally, during a time of nationwide recession, rising unemployment and falling wages, average annual industry wages actually rose by $3,000 between 2008-2010. Although the U.S. Bureau of Labor Statistics does not have industry employment data for 2008-2010, data from IATSE Local 478, the film industry’s predominant trade union, demonstrates that Louisiana membership has grown from 776 in 2008 to more than 850 in 2010. An additional 200 professionals now work in other associated trades. Direct in-state wages for film projects have grown from approximately $163 million in 2008 to $106 million in 2009 to a conservative estimate for 2010 of $213 million (calculated by taking only 75 percent of those reported on initial certifications). According to IATSE figures, its members’ average annual wages have now hit approximately $55,000 plus benefits, compared to more than $52,000 in 2008.