Some of the highest-grossing films of all time are said to have actually lost money – thanks to creative Hollywood accounting.
Some of the greatest hits in Hollywood history are alleged to have made no financial profit. This is due to the so-called creative accounting practices of major film studios. According to this method, various costs are deducted from the revenues of a successful Hollywood film, so that no profit remains on paper.
As a result, film creators do not receive profit participations from the net proceeds of the theatrical release of a work, and the film studio saves considerable sums.
“Star Wars: Episode VI – Return of the Jedi”
With a budget ranging from $32 to $42 million, the 1983 trilogy conclusion “Star Wars: Episode VI – Return of the Jedi” grossed over $480 million at the global box office. This was a staggering figure for the early 1980s.
However, actor David Prowse (1935-2020), who portrayed Darth Vader in the “Star Wars” film in his iconic black costume, never received a check for his profit participation, as Lucasfilm claimed the highly profitable work never made a profit.
Prowse, who passed away in 2020, revealed to “Equity Magazine”: “I occasionally receive letters from Lucasfilm stating that unfortunately, we cannot send you anything because ‘Return of the Jedi’ never reached profitability. And we’re talking about one of the biggest releases of all time.”
“Harry Potter and the Order of the Phoenix”
Also ingrained in Hollywood history is an incident from 2010, which excellently illustrates the creative accounting of major film studios. The fifth “Harry Potter” installment, “Harry Potter and the Order of the Phoenix,” grossed over $940 million in 2007, with a budget of $150 million – nearly a billion dollars.
However, the producing studio Warner Bros., behind the successful film, claimed that the fifth “Harry Potter” entry actually incurred over $167 million in losses. This was revealed in a leaked net profit statement published by the prestigious film magazine “Deadline”. According to this, distribution and advertising costs of $211 million and $131 million respectively heavily impacted the profit calculation.
“The Lord of the Rings”
The “Lord of the Rings” film trilogy released between 2001 and 2003 also proved to be an incredible success at the box office. While the production of the films cost $281 million, they amassed $2.988 billion at the global box office – nearly $3 billion.
It is surprising that both director and producer Peter Jackson, 62, and the Tolkien estate sued the production company New Line Cinema. New Line claimed that the film series did not generate profits but produced “enormous losses.”
As reported by the British “Guardian,” the Tolkien heirs accused the film studio of “shameless and insatiable greed” in their lawsuit, describing the process as an example of the “notorious practice of creative ‘Hollywood accounting’.”
“Spider-Man,” “Forrest Gump,” “Bohemian Rhapsody”: More Examples of “Hollywood Accounting”
Even the venerable “Spider-Man” creator Stan Lee (1922-2018) fell victim to creative accounting in the dream factory. Although the live-action film “Spider-Man” from 2002 grossed over $825 million worldwide, Marvel claimed not to have made profits from the blockbuster. Lee sued and reportedly received a settlement of $10 million.
Tom Hanks’ 1994 hit film “Forrest Gump,” which grossed nearly $680 million, also allegedly did not generate profit. Paramount Pictures claimed that the highly profitable work instead incurred a loss of $62 million, as reported by the “New York Times.”
A more recent example is the 2018 Freddie Mercury biopic “Bohemian Rhapsody.” Despite grossing over $910 million worldwide with a budget of $55 million, director Bryan Singer’s work allegedly incurred a loss of $51 million.
