Academy Awards: The Big (Budget)

Academy Awards: The Big (Budget) Picture

Hoffmann's (2005) article discusses whether or not a film's budget is any indicator of if it will win the prestigious Oscar Award for Best Picture. Recent mega-block busters like, Titanic, the Lord of the Rings: Return of the King, and Gladiator, at first glance seem to show a correlation of dollars spent to likelihood of Oscar success. However, further investigation finds otherwise.

According to Hoffmann (2005), the average cost of the Best Winner pictures, over the last 20 years, adjusted for inflation, is a scant $47.2 million. When this is compared to a median budget of only $41.7 million for the average film released, one begins to see that perhaps dollars don't count. In fact, some believe just the opposite.

Hoffmann (2005) quotes Russ Leatherman, Mr. Moviephone, as noting that Hollywood "likes to reward smaller dramas rather than large blockbusters." As an example, Driving Miss Daisy was the cheapest winner at only $24.1 million.

Some contend that the size of a movie's budget does not really matter, when it comes to the Oscars. Yet, looking at the movie industry from a financial perspective, one cannot help to notice that sometimes the returns are quite lucrative on smaller budget films. Miramax's the English Patient cost just $46.7 million and grossed more than $230 million worldwide, along with capturing the Best Picture Oscar (Hoffman, 2005). Examples like this are significant to the financial management field, as they prove that even in Hollywood, where substance often counts for little, it is the substance behind a film that often matters more than the dollars backing it. Bigger is not always better, as box office flop Waterworld and many others can attest to. This translates into a plethora of other industries and should be something that every financial management professional should remember.