Film Accounting Glossary
Sales estimate
What is a sales estimate?
Also called sales projections, or territory estimates.
A sales estimate is a projection of what a picture can license for in each territory and medium, prepared by a sales agent and used to support gap financing and investor pro formas.
Lenders discount estimates heavily and usually require unsold territories to cover a gap loan by a multiple rather than one to one. Estimates are opinions with a track record attached, so whose estimates they are matters as much as the numbers.
Example
An agent estimates 14 unsold territories at $2.7M. A gap lender wanting 2x cover will lend around $1.35M against them, not $2.7M. Whose estimates they are matters as much as the numbers, because the lender is pricing a track record.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Prepared by the sales agent, used to support gap financing and investor pro formas, and discounted heavily by anyone lending against them.
Common mistake
Treating estimates as values. A lender discounts them heavily and wants cover at a multiple, so estimated value never equals financeable amount.
Related questions
- What are film sales estimates used for?
- Supporting gap financing and investor pro formas by projecting what a picture can licence for in each territory and medium.
- How much will a lender advance against sales estimates?
- Considerably less than the estimate. Lenders typically require unsold territories to cover a gap loan by a multiple rather than one to one.