Disney's Handling of Star Wars Lost Money

As usual, if you are going to discuss Disney finances, you start with Forbes, and Caroline Reid. Revealed: The ‘Star Wars’ Movie With The Highest Profits

Disney doesn't want anyone to know what they spend on movies, but they do want the tax credits offered the United Kingdom. As a result, Disney does produce a fair number of their movies in that country. This means that eventually a lot of the financial data comes to light, because the UK requires detailed accounting to prove whether or not you qualify for their tax credits. Caroline Reid does a great job of tracking down this information. This is not always the easiest thing to do, because Disney creates individual companies for each movie, with names that are creative.

Calculating the profit made by a movie requires knowing how much revenue it generated for the studio and how much it cost to make. The former is a matter of public knowledge through Amazon’s Box Office Mojo while the latter is usually a closely-guarded secret. That's because when movies are made in the United States, studios combine the cost of them in their overall expenses and don't disclose how much was spent on each one.

It’s a different story for movies which are filmed in the United Kingdom. Studios shooting in the U.K. get a reimbursement of up to 25.5% of the sum they spend in the country provided that at least 10% of the core cost of the production is incurred there. In order to demonstrate this to the U.K. authorities, studios set up separate production companies there to produce each movie they make in the country.

This is a long-ish article, but interesting. If you don't want to dive into it, see the video below.

There is a chart, about two thirds of the way in, that shows, for the 5 Star Wars movies Disney has released, what they spent on production, the credit received from the UK, net spend, global box office, and profit based on those numbers. Add it all together and profit approaches 0, plus or minus a few millions.

Those numbers do NOT include marketing the movies. The numbers do assume that studios get a blanket 50% of the box office. It it probably close enough for these estimates.

However, just as the production generates other income, it also incurs other costs, chief of which are marketing expenses which are not shown in the financial statements of the production companies. Accordingly, if the home entertainment and merchandise sales should be added to the theater takings, the marketing cost should be deducted from them and it is understood that blockbuster sums were spent on the Star Wars movies.

Disney doesn't say, but spending $150 million to $200 million to market each of these movies is not out of the question.

These also do not include $4 billion Disney spent in 2012 to buy Lucasfilm from George Lucas.

There are also some items not eligible for tax credits. I'm no expert on that, but it is my understanding that salaries for famous directors or stars are not included. (If you pay Tom Cruise $40 million for a movie shot in England, you won't get $10 million back from the government. The credit is for expenses incurred in the UK, that bolster the UK's economy.)

This is The Valliant Renegade video Forbes Confirms Disney Star Wars Money Pit Made Nothing

In addition to the numbers above, Valliant Renegade and WDW Pro consider what Disney spent on theme parks, the short-lived Star Wars themed hotel, and Disney+ shows, and what they have to show for it all.

The video is less than 10 minutes.