Production is stirring in the Windy City. Feature film lensing in the area is up, in part because of a tax credit incentive that went into effect at the beginning of the year; it is expected to have an impact on spot production as well. On the commercial front, many note that the creative coming out of area ad shops continues to improve, and production is up.
Last year, the Illinois state legislature passed a bill implementing the Film Production Services Tax Credit Act. The incentive, which went into effect on Jan. 1, offers a 25 percent tax credit that applies to the first $25,000 in wages per worker per production. Workers must be Illinois residents employed on qualified features, TV shows, spots or branded content pieces filmed in the state.
Shops based outside of the state can also take advantage of the tax credit if they have state tax liabilities in Illinois. Additionally, out-of-state outfits can partner with in-state companies to establish limited liability corporations for specific projects.
Incentive Buzz
The Story Companies, a production company with offices in Chicago, New York and Santa Monica, has already felt the effects of the tax credit. "It has had a tremendous impact on production in Chicago," says owner/executive producer Mark Androw, who is also national chairman of the Association of Independent Commercial Producers (AICP), and serves on the board of the Illinois Production Alliance, a group formed in 2002 that helped bring about the Tax Credit Act.
"[The incentive] has brought a lot of work in," states Androw. "It’s made shooting in Chicago a lot more affordable and makes it a good cost alternative to Canada. The first wave of projects for us has been [for] existing clients [who] would normally have us film out of the country [but are] now filming in Illinois."
Androw was in New York recently to educate ad agencies about the incentive, and the response was strong, he says. New York shops such as Ogilvy & Mather, Publicis, Saatchi & Saatchi, Kirshenbaum Bond + Partners and Young & Rubicam expressed interest in taking advantage of the tax credit. Androw has also spread the word to Chicago shops, including Leo Burnett USA, BBDO and Foote Cone & Belding (FCB), all of which were receptive.
Dan Lundmark, executive producer at Manarchy Films, Chicago, says he won’t be able to assess the impact of the tax credit on his production company until the end of the year, but adds that he has seen at least one immediate effect. "An ancillary benefit that I see in Chicago is that the tax credit program has absolutely reinvigorated the feature film industry," he says, pointing out that the influx of feature work helps to shore up Chicago’s production infrastructure, which is good for everybody. "It’s important to me and to everybody in our industry that there is equipment and facilities and crew people available. If a feature comes into town and has a positive economic impact on a camera house or a grip/electric house from which I also rent, and that feature is helping them keep the doors open, that’s a gigantic benefit to me."
Lundmark notes that the Chicago spot business is in a better place than it was a couple of years ago. "There’s better board flow and it seems like there are more projects happening," he says. "More importantly, projects that are started within the agencies are actually coming to fruition as production. A lot of what was happening the last two years [were] projects [that were] put out to bid, but when the time came to sign the estimate, the client decided they didn’t want to spend the money. That seems to have abated a bit."
Recent Manarchy jobs include a Levitra spot featuring former NFL coach and player Mike Ditka, via Quantum Group, Parsippany, N.J.; a Panasonic project through The Ocean Group, New York; and an Alberto VO5 package via Element 79 Partners, Chicago. Dennis Manarchy, partner/director at the shop, helmed all of the spots.
Bob Ebel, owner/director at Ebel Productions, Chicago, says the incentive has generated buzz. "There’s a lot of talk going on about it," he relates. "You hear it from the other production companies, and I’ve got wind of a number of features coming into town. I think that’s going to have a nice effect. As far as our company is concerned, I don’t think it’s had an effect yet, but we’re all hoping it’s going to kick in soon."
Ebel, who frequently works on kid-oriented fare, says his company has been busy. He recently directed a pair of Friendly’s spots, "Choices" and "Tall/Short," out of Laughlin Constable, Chicago; Gerber’s "Got the Giggles," via Noble/BBDS, Chicago; and Little Tike’s "Playroom Pirates" and "Theme Park" out of The Geppetto Group, New York.
Post Picture
Digital Kitchen is a motion graphics shop with offices in Seattle, Chicago and Los Angeles, which works on spots, features and television shows. Recent credits out of the shop include Budweiser’s "True Music," "True Refreshment" and "True Escape," via DDB Chicago; and "Nocturnal" for McDonald’s through Burrell Communications Group, Chicago. The company created the main titles for the feature films Mona Lisa Smile and Secondhand Lions, and did graphic work on the upcoming remake of The Stepford Wives. In addition, Digital Kitchen also worked on two HBO promos, "Tony" and "Carmela," for The Sopranos.
Don McNeill, president, says that when Digital Kitchen’s Chicago office opened in 2000, most of its jobs came from New York and Los Angeles, not Chicago. "[But now,] over the last eighteen months, it’s been unbelievable how cool the boards are that are coming out of Chicago," he says. "It seems to me that at least sixty percent of the best work we have—entertainment or advertising—is coming out of Chicago or the surrounding Midwest area."
McNeill thinks it will take time for the tax credit to affect business. "I would expect we might be seeing some benefit in the next twelve months," he says. "I love the idea; I think it was so great of the state and the city and everybody that worked on it to do that. I think it’s really foresighted."
Tom Duff, president of Optimus, Chicago (the post shop has a Santa Monica office called CO-OP), is on the board of the Illinois Production Alliance, and says that the tax credit has had a major impact on feature film production, but not necessarily on spots yet. "It’s not set up yet to work well for commercial post, but we’re working on it," Duff shares. "We’ve been working with agencies and the Illinois Film Office to come up with a model to make it work. And we’re also still lobbying the Illinois legislature to pass some addendums to the bill to make it work for post."
While the tax credit is not yet impacting his business, Duff states that work is definitely on the upswing. "[In] late fall it started turning around, and it’s actually stayed pretty steady," he notes. Optimus counts the Chicago offices of Leo Burnett USA, DDB, FCB, Young & Rubicam and Ogilvy & Mather among its main clients.
While Duff reports an increase in business, Marc Lichtenstein, producer at post house Avenue, Chicago and Santa Monica, says business has been slow, and attributes it to account losses by area agencies. "This is a very interesting time in the advertising business in general, and in particular, in Chicago," he says. "The business in general is going through a contraction that probably started a couple of years ago. The contraction is hitting the agencies first and foremost, but that all sprinkles out to their suppliers."
Lichtenstein says that a number of clients have left or are leaving Chicago agencies, including Red Lobster—the account shifted from Euro RSCG Tatham Partners, Chicago, to The Richards Group, Dallas—whose spots were posted at Avenue. "Those things have a direct effect on all of the post houses in town, regardless of whether they are your client or not, because when any big piece of business leaves town it leaves a hole," he reflects. "I look at the Chicago scene as a pond: any ripple that happens in one part of the pond is going to affect the rest of the pond."
Currently, Avenue is looking for work out of town, in cities such as Detroit, Milwaukee and Minneapolis. "With a T-1 line, you could do real-time editing, where you edit here and your client could be sitting in front of a monitor in Detroit," says Lichtenstein. "That’s something we’re taking a look at possibly doing as a better draw for our out-of-town clients that we’re trying to grow. I see things like that as natural progressions of what we have to do in this situation that I think especially Chicago is finding itself in." Recent Avenue jobs include "Fuel" for McDonald’s, directed by Nzingha Stewart of DNA, Santa Monica, via Burrell Communications Group; and the branded content project, "Sears Extreme Homes Makeover," through Ogilvy & Mather, Chicago.
Stan Glapa, sales manager at Chicago-based motion picture camera rental house Schumacher Camera, says that his company was busy in the first quarter. Lately, however, business at Schumacher, which specializes in catering to the spot industry, has been slow, but that doesn’t concern the shop. "Even though it’s quiet, producers are telling me no one’s really panicked because there’s a lot of bidding that’s occurring," he explains. "The feeling out there is that everybody is expecting an onslaught of work."
Has business been affected by the incentive? "That remains to be seen at this point," Glapa says. "I think you’ll get a better handle on it at the end of year, after the numbers are tallied." Glapa adds that some Chicago producers have applied for the incentive, but it’s too soon to tell if out-of-state companies will try to take advantage of the program (about half of Schumacher’s clients are from outside of Chicago). "Whether that will transfer to the New York and L.A. production companies [who might shoot in the city or state] remains to be seen," he says.
