Nobody Finances the Land

Editor’s note: This is the tenth chapter of “A Producer’s Path,” an ongoing column for IndieWire’s Future of Filmmaking from independent producer Daren Smith. Read previous chapters here.

On my previous film, “Faith of Angels,” on the very last day of filming, the crew stood in the middle of the Provo River capturing the opening sequence of the film. The sunset glistened across the water, we watched fly-fishermen catch a few trout, and a handful of college students floated by on inflated rafts and tubes between takes.

Chatting with the owners of the Provo River Resort, I was surprised to hear that, while they owned the land, they didn’t own the water. No one owns the water here; the state holds it for everyone. They had purchased thousands of acres in Provo Canyon, and people float through their property all day, freely. The only place their land is worth paying money to stand on is where the water flows through it.

This is normal out here. Water and land are two different assets — owned, priced, traded, and borrowed against separately. Imagine two identical parcels of land — same acreage, same view, but one carries senior water rights. These two parcels are not even close in price. Everyone here knows that the dirt is not the asset. The water rights are everything.

Nobody finances the land. They finance the water.

Hollywood has spent a century financing the land.

A few weeks ago I read a piece called The Film Bond by Josh Stein, and then smiled when I saw his guest post on IndieWire and had to meet him. We did chat last week, leading to what we’re covering in today’s column. Josh writes from the desk, with a career in leveraged finance and media businesses informing his analysis. I write from inside the deal, with a movie in post-production that hits theaters this fall.

Josh’s argument: the audience is the collateral. He’s right. This is a companion piece, not a rebuttal.

We sit down in a room across from an investor. The pitch deck and pitch are both polished. What we normally do is pitch the land — the creative, the cast and crew with a long list of credentials, the tax credit, the film festival strategy. We talk about the attachments and the comps. Every item on that list is acreage — square footage, the view, the barn in the corner of the property.

The person sitting across from us wants to know about the water: who is hungry for this, who is actively waiting to buy a ticket? How do you reach them without a gatekeeper or an eight-figure marketing budget? And we answer with more land — bigger and better comps, a bigger attachment (if they’re willing to put up more money).

When they inevitably pass, we act insulted.

Every ask carries an appraisal of what we think the land is worth. The yeses we do get feel predatory. The equity gets called “too risky.” Lending against what we do hold — distribution contracts, tax credits — comes at expensive terms, and the only people calling back are offering 30 percent. They aren’t wrong; they are pricing a dry parcel of land correctly.

Take two films of mine, “What Comes Around“ and “Faith of Angels.” Same producer, same craft, same budget level. “What Comes Around” didn’t have an audience or a plan to reach them. “Faith of Angels” did, and the difference between their value in the marketplace was 100x.

Josh writes, “For 40 years, the equity layer priced as toxic waste because audience conversion was unknowable until release. Studios used famous talent, recognizable IP, and marketing spend as proxies for behavioral demand.” Your track record as a producer — or the track record of your package — underwrites whether you can build a ranch. Only water proves that anything can live on it.

He shared a story of a pair of filmmakers whose first feature was underwritten on their documented audience — they came in off a huge YouTube following, and the film returned roughly 20x. Their follow-up got greenlit on their track record (same filmmakers, now with a hit) and it returned 2.6x. The first deal was priced on water, the second on the rancher’s reputation without retesting the water table.

Producers walk in with credits and think they’ve answered both questions; they’ve answered one. Josh gives us four questions to help identify whether there is existing audience demand: Does your audience come back, has your audience converted, do you own or rent them, and what haven’t you given away?

On our call, Josh talked to me about his experience with creators who can set up a ring light and stream all day but wouldn’t know where to start when it comes to budgeting, producing, and distributing a feature film. And they know it. Kids sitting on aquifers who don’t know how to build anything.

We have a generation of ranchers with no water, and an entire industry structured so that the two worlds never meet, and decades of habit repeating “it’s just the way it’s done.”

The part that stings is we want to be paid for the land because the land is us — our experience, our craft, our artistic taste. It’s the thing we made. The water is just… people. Admitting that the water is the asset means admitting that the film is not the point — the audience is. That’s the part we cannot say out loud, and it’s why so many of us would rather be broke and pure. Audience-building feels like it’s beneath the art because it forces us to find out whether anyone was ever waiting. I had to find out. The first four hires on “Brotherhood” were marketing hires, told to “go dig for water” before we ever rolled a single camera.

One thing that stopped me in my tracks on my call with Josh: “digging the well is not the producer’s job.” In his view, audience building is not something we should spend our time on. “Build it yourself, and you’ve imported luck, and luck doesn’t underwrite.” His prescription is: don’t dig — buy land where the water already is. He called me out: the audience at Craftsman Films is my job, on purpose. He’s right about most of the market. I’d already dug because there was no “values-based, family-friendly” aquifer to buy.

“Brotherhood” is the test for both of our models. We’re in post production now, and have a month-long tour — the well test — leading to our October 2 theatrical release. The goal is one million people watching the film in theaters.

Do we have a well or a dry hole? I’ll publish the results either way.

The water was always the asset. The industry spent the last forty years pricing dirt, and we can’t unsee it now.