Theatre Capital Improvement Fee?

[Scott John]

I come from a live theatre background and many of them charge a separate capital improvement fee on their tickets to be used for upgrades/capital projects.

Does anyone do this in the cinema world? We are going to be re-opening a historic 1938 cinema and running it as a non profit.

I am just wondering about it and whether making the extra charge separately on the tickets would mean that it is excluded from the percent that goes to the distributors just like taxes.

Eg.
$7.57 admission
$1.00 capital improvement fee
$0.43 taxes
=$9 ticket

The distributor fee would be based on the $7.57 admission portion of the ticket price (ideally). The funds from that capital improvement fund would be held separately and be used only for capital improvements (new equipment purchases, etc).

[Frank Cox]

The distribution contracts say something like "the percentage owing will be calculated from any mandatory charges", which includes stuff like parking and the like so I think a "capital improvement fee" would also need to be included.

In short, no. That won't work like you think it will.

[Scott John]

The distribution contracts say something like "the percentage owing will be calculated from any mandatory charges", which includes stuff like parking and the like so I think a "capital improvement fee" would also need to be included.

In short, no. That won't work like you think it will.

Thanks... I figured there must be something like that. We will just add it to the live events and private rentals then.

[Scott John]

The distribution contracts say something like "the percentage owing will be calculated from any mandatory charges", which includes stuff like parking and the like so I think a "capital improvement fee" would also need to be included.

In short, no. That won't work like you think it will.

How about credit card processing fees for online tickets and taxes?

[Frank Cox]

Taxes (sales tax, amusement tax, etc) are the only thing that is allowed as a deduction from the gross receipts.

I just looked at a couple of the MLA's that I have here and they pretty much all say the same thing: Gross Receipts include any and all monies paid for promotions, upgrades or services incident to or related to admission, exclusive of Admission Taxes.

You should ask the various movie companies to be absolutely sure, but it appears to me that you can't deduct credit card fees, since use of the credit card is a "service incident to or related to admission" and it is not an "Admission Tax".

Again, their calculation includes any non-optional fee paid for admission and the only allowed deduction from the gross is sales tax and amusement tax. Upcharges paid for anything like dbox seats would also have to be included in the gross.

[Marcel Birgelen]

I guess the studios have figured that one out.

One way around it would be incorporating a new corporation that exploits just the lobby. Have this corporation charge a $1 entry fee for everybody coming through the door.

[Mark Gulbrandsen]

I never heard of that here, but it is likely they bury it in the ticket price. I was the Strand and Colortran/Leviton area service tech in Salt Lake City for a number of years, and the folks running these places were always trying to figure out how to upgrade.

[Lyle Romer]

I guess the studios have figured that one out.

One way around it would be incorporating a new corporation that exploits just the lobby. Have this corporation charge a $1 entry fee for everybody coming through the door.

Now that's creative thinking. You purchase two tickets simultaneously. One for the lobby and one for the movie! Put some chairs in the lobby to justify to the studios that people can have a concession dining experience in the lobby.

[Martin McCaffery]

Some municipalities allow businesses to tax themselves. It's usually for something like a business area improvement project (put in some trees or something). Maybe you can talk your city council into applying a tax on your customers that comes back to you, that way it would not be reportable as gross. Complicated and messy, but out of the box;>

[Frank Cox]

Maybe it's just me, but all of this scheming to get around paying the agreed amount for movie rentals bothers me a bit.

The movie companies put the deal on the table; if you don't like the terms you can either try to negotiate them down or play a different movie from another company.

Anything else just seems.... unseemly. Would you try to find an excuse to pay the plumber who just fixed your toilets less than the agreed amount as well?

[Marcel Birgelen]

Maybe it's just me, but all of this scheming to get around paying the agreed amount for movie rentals bothers me a bit.

The movie companies put the deal on the table; if you don't like the terms you can either try to negotiate them down or play a different movie from another company.

Anything else just seems.... unseemly. Would you try to find an excuse to pay the plumber who just fixed your toilets less than the agreed amount as well?

1. It's just for fun and giggles.
2. The Hollywood studios have a whole accounting scheme named after them...
3. They put the deal on the table, how much room did they give you to renegotiate?
4. How many big movie studios are there left to play movies from again?
5. Who's driving the big cars and living the high-life from their 20-bedroom villa somewhere in the Hollywood hills while complaining about how unfair the world is? You?
6. Do you pay your plumber in percentages of what you make?

[Mike Blakesley]

Well, whether you like the "deal" they offer or not, they hold the high card: If you don't play by their rules, they won't sell you movies. They don't owe you content. That's been proven all the more with the new virus model we're all living with.

That said -- for a fund-raiser, how about just tacking on an additional buck to all the popcorn prices or something? Put up a prominent sign saying "$1 from every popcorn sold will go toward remodeling and improvments to our building." Then put up a graphic showing how much money has been raised. People love that kind of stuff and it might even result in some additional donations.

[Marcel Birgelen]

There is nothing wrong with being a bit creative and in the end, you're running a business. As long as you're not cheating your customer out of money and you're not infringing the contract of those studios, I don't see anything wrong with "schemes" to get a bit more income that isn't going to be "taxed" away by the studios.

Making your lobby a separate destination worth paying for may be such one. Obviously, it was more of a joke than anything else, but if you'd do it this way, I doubt the studios will have any means to complain. After all, Disney still charges you a hefty entry fee if you want to go out and just have a dinner at one of their restaurants at one of their theme parks.

And thinking about theme parks: here's another scheme of making money without paying the studios a dime:

Open up a gift shop and route all your outgoing traffic through that gift shop. Even better: hold them hostage until they buy at least one crappy, useless, overpriced thingamabob from that store. Well, maybe that's cheating your customers... but that's exactly how I felt after buying something from such a store.

[Jack Ondracek]

I tend to agree with Frank & think Mike probably has a good idea here, so-far.

When some drive-ins started charging a fee to allow people to bring in outside food, I'm aware of one that was contacted by a studio regarding the practice. There was a certain amount of mutual spitting, growling and general unpleasantness, but the owner stood his ground and it got worked out. I think they got around it by convincing the studio that the fee wasn't required to watch the movie or even come in, so long as you didn't bring your own food with you.

Otherwise, you can call the money whatever you want, or even change it after the fact (a questionable practice). At the ticket tooth, a capital improvement fee looks the same as a health insurance fee (charged by some in California), looks the same as a mandatory tip fee. If you have to pay it to get in, you're supposed to pay percentages on it. It might be possible to put out an optional donation box... something a customer could drop the extra change into... but I think I'd probably put that in the snack bar, just to avoid unnecessary problems.

That said, I used to spend time on a predominately fan-based discussion board, where a common thread was how to present movies, either to make money directly or use the content to attract customers to other products, without having to pay the studios for their use.

As Frank alluded; we all know what the game is going in. The studios may seem greedy, but they did (sometimes) front upwards of a couple hundred million to make (hopefully) a hit, also knowing that a decent percentage of their films don't do all that well. If you can't respect the cost of your major content like you would your other overhead, perhaps this isn't the career you seek. Screwing the studios after the fact is a bit like bypassing the power meter or hooking up to someone else's cable drop, IMO.

I'm not sure what to make of the current practices surrounding credit card usage. The contracts I signed (long ago) specifically forbade upcharging. We jokingly considered a "discount for cash", something we actually did see out there, but upcharges are commonly displayed these days. I bake the card fees into my prices, like any other ingredient, so it's all covered. If someone pays cash, that's a bonus for me. If someone buys more because they tend to when they hand over plastic... that's also a bonus for me.

[Mitchell Dvoskin]

Duplicate Post.