Even after all of the news concerning the upheavel and uncertainty of Hollywood, ignorant money managers are continuing to waste their money on Hollywood films.
Hedge funds are pouring hundreds of millions into films. For example, a bunch of hedge funds have created a company called Legendary Pictures to use as a vehicle to fund films. They alone have offered $500 million to finance production of 25 Warner Brothers' films, according to Law.com.
Others, including Relativity Media has invested even more: $600 million to co-finance 18 film projects at Sony and Universal through its Gun Hill subsidiary.
Mark Litvack, an entertainment partner at Manatt, Phelps & Phillips said, "At the end of the day, whether it be in the legal practice or in the financial world, there's a magnetism to the entertainment business that attracts people, there's a certain glory and glamour in Hollywood."
That's the huge problem when being seduced by the entertainment industry. People are looking for stardom through association with Hollywood projects. The problem is that an extraordinary high percentage are money losers; far worse than stock market risk.
The main thing investors need to know is that the money they put down for film production will probably be lost and give no returns whatsoever. Very few make money; let alone big money on these deals. It's no different than investing in options or commodities; make sure it's your play money, not money you need.
Investing in Hollywood is nothing more than a vanity play: nothing more.
Next post: More on the inside of investing in Hollywood films.
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