Film Accounting Glossary
Presale
What is a presale?
Also called pre-sale, or territory presale.
A presale is a license of distribution rights in a territory or medium agreed before the picture is finished, usually for a minimum guarantee payable on delivery.
Presale contracts are the core collateral for independent film financing: a lender advances against them at a discount, so their aggregate value and the buyers' credit quality determine how much of the budget they can fund. Territories left unsold are what gap financing has to cover.
Example
Six territories presell for $3.2M of minimum guarantees payable on delivery. A lender advances $2.8M against those contracts. The 14 unsold territories, estimated at $2.7M, are what a gap loan would have to lend against instead.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Negotiated by the sales agent at markets, then delivered to the lender as the core collateral for the production loan.
Common mistake
Counting presale value at face when sizing the loan. Lenders discount for collection risk, timing, and buyer credit, so the financeable amount is lower.
Related questions
- How do presales finance a film?
- Signed licence contracts with minimum guarantees payable on delivery are used as collateral, and a lender advances against them at a discount.
- What happens to territories that do not presell?
- They are what gap financing lends against, at estimated value and a much higher cost, or they are sold after completion at whatever the market pays.