‘The Marvels’ was one of Disney’s most expensive MCU productions © 2023 MARVEL.
Courtesy of Marvel Studios
Disney has revealed that the cost of its 2023 superhero film The Marvels rose by $13.3 million (£9.9 million) in the year after it was released though this was still “in line with the production budget.”
Helmed by Nia DaCosta, director of 2021 horror hit Candyman, the movie stars Oscar-winner Brie Larson as Captain Marvel – a former fighter pilot who gets super powers from an alien artefact. She was joined by 21 year-old newcomer Iman Vellani and Teyonah Parris, stars of Disney’s acclaimed streaming shows, Ms. Marvel and Wandavision.
Despite having everything going for it, The Marvels grossed just $206.1 million giving it the lowest takings of the 37 movies in the inter-connected Marvel Cinematic Universe (MCU). Indeed, its haul was so low that Disney’s boss Bob Iger had to comment on why it seemed that the series had lost its magic.
Talking to CNBC, Iger suggested that the underwhelming outcome may have been caused by lack of oversight. “The Marvels was shot during Covid,” he explained. “There wasn’t as much supervision on the set, so to speak, where we have executives [that are] really looking over what’s being done day after day after day.” Surprisingly, their absence didn’t mean that The Marvels was a cut price picture.
The cost of making movies in the United States is a closely-guarded secret as studios typically combine their spending on separate films in their overall expenses and don’t itemize them individually. It is a different story for movies made in the United Kingdom like The Marvels.
The sci-fi film was largely shot at Pinewood Studios using the historic 38,000 square feet Roger Moore stage. It was the logical choice as Disney signed a deal with Pinewood in 2019 which gave it use of almost all of the studio for a decade to ensure that it had enough space to produce its burgeoning pipeline of streaming content.
As Marvel Studios president Kevin Feige recently explained to Variety, “five or six years ago, where everybody was fighting for stage space in the great expansion…we had the opportunity to lock up Pinewood, which is why many of our movies will be there for the foreseeable future.”
Pinewood’s lavish facilities were far from the only benefit for Disney. Studios filming in the U.K. benefit from the government’s Audio-Visual Expenditure Credit (AVEC) which gives them a cash reimbursement of up to 25.5% of the money they spend in the country. It comes with a catch.
To qualify for the reimbursement, movies must pass a points test based on factors such as how many of the lead actors are from the U.K. and how much of the production work is done there. Furthermore, at least 10% of their core costs need to relate to activities in the U.K. and in order to demonstrate this to the government, studios set up a separate Film Production Company (FPC) there for each picture.
This lifts the curtain on precisely how much it costs to make movies as each FPC has to file annual financial statements. It takes a bit of detective work to get to the bottom of them.
Despite its sci-fi setting, ‘The Marvels’ was filmed in the U.K. © 2023 MARVEL.
Courtesy of Marvel Studios
The FPCs usually have code names so that they don’t raise attention with fans when filing permits to film on location. Tallying the code names with the productions they are responsible for requires deep industry knowledge which my colleague and I have built up over nearly 15 years of reporting. We are the only journalists worldwide who specialize in covering the financial statements of U.K. film production companies for national media and we have reported on them for more than 10 leading titles including The Times of London, The Guardian, The Daily Telegraph, The Independent and the London Evening Standard.
Once the code names have been correctly tallied with the films, the financial statements of the relevant FPC can be consulted to reveal how much the movie cost to make. That’s because the terms of the reimbursement state that each FPC must be “responsible for pre-production, principal photography/shooting and post-production of the film; and for delivery of the completed film.” In short, the FPC’s financial statements have to show the production’s entire costs, not just those incurred in the U.K. Studios aren’t allowed to hide costs in other companies as the terms also state “there can only be one FPC in relation to a film.”
The Disney subsidiary behind The Marvels is called Warbird Productions II UK in a nod to the name of Larson’s character in the comics that the movie is based on. As with all U.K. companies, its financial statements are released in stages long after the period they relate to. This starts during pre-production and continues after the premiere to give the production team time to ensure that all the bills are paid.
It explains why the cost of the movie continued to rise in the latest set of filings for the year to September 30, 2024 even though the movie was released almost 11 months before then. The filings show that Warbird Productions II UK spent $13.3 million during that period bringing the total cost to $387.3 million (£317.8 million) making it the third most-expensive MCU movie filmed in the U.K.
Marvel’s Most Expensive Productions
MSM
However, that’s not the end of the story as the government reimbursement packed a powerful punch. The reimbursement is calculated on up to 80% of core expenditure so in order to get back the maximum 25.5% of the money they spend in the U.K., production companies need to ensure that 20% of their core costs are spent outside the country.
Disney made the most of this as it also filmed The Marvels on location in Italy and the U.S. The incentives on offer there are nowhere near as generous as in the U.K. so their impact on the bottom line tends not to be material, especially as they can only account for up to 20% of core expenditure without losing out on the more lucrative reimbursement.
The U.K. hasn’t just become a popular filming location because of the high level of its reimbursement but also because there is no limit to the amount that can be paid out. That’s not all.
In addition to claiming on direct spending in the U.K., studios can also get a pro rata reimbursement on what are known as neutral costs throughout the production such as insurance and payment to senior producers, writers and directors.
These costs can be claimed in proportion to the amount of the activity in the U.K. so, for example, if the spending there only represents 22% of the total budget then 22% of the neutral costs will also qualify for reimbursement. Accordingly, the level of reimbursement can rise close to a third of the total costs which is a staggering sum.
The filings for Warbird Productions II UK show that it had banked a total reimbursement of $68.4 million (£56.3 million) by September 30, 2024. This comes to 17.7% of the total costs and brings Disney’s net spending on The Marvels down to $318.9 million. It still wasn’t enough to give it a happy ending in theaters.
The amount that theaters pay to studios is known in the trade as a rental fee and an indication of the typical level comes from film industry consultant Stephen Follows who interviewed 1,235 film professionals in 2014 and concluded that, according to studios, theaters keep 49% of the takings on average.
This research lends weight to the widely-established 50-50 split which would give Disney just $103.05 million from The Marvels and a $215.9 million loss at the box office after deducting the $318.9 million net spending on the movie.
‘The Marvels’ At A Glance
MSM
The share of the box office isn’t the studio’s only return from a movie so offsetting it from the costs in the financial statements does not show whether it made a profit or a loss overall. As a Disney spokesperson told this author last year, “there will be other income generated by the production (such as DVD/Blu Ray sales, merchandising, etc.). It’s not reflecting a true account of whether the film was overall profitable.”
However, just as the production generates other income, it also incurs other costs, chief of which are the marketing expenses. Accordingly, if the home entertainment and merchandise sales should be added to the theater takings, the marketing cost should be deducted from them. It is believed that the marketing spend on The Marvels far outweighed the home entertainment and merchandise income though Disney doesn’t disclose either amount for individual pictures.
It is understood that the vast majority of the spending on The Marvels has now been booked in its financial statements so its estimated $215.9 million box office loss shouldn’t widen significantly. Although this may seem like an unmitigated failure, it is actually all part of the movie-making process.
All major movie studios view productions in the same way that private equity firms treat investments. They use the blockbuster profits from the safest and biggest investments to buy businesses which are smaller and riskier but may deliver a higher level of return if all goes well.
Movie studios even have a name for films which serve this purpose. Called tentpoles, they are films which make so much profit that they can outweigh the losses generated by by riskier, but often more critically-acclaimed, productions.
Many of Disney’s recent box office successes have been movies aimed at younger audiences such as ‘Lilo & Stitch’ © 2025 Disney Enterprises Inc. All Rights Reserved.
DISNEY
Although Marvel movies have typically been tentpoles, there is no reason why they have to be. The Marvels may not be an acclaimed picture, as it has a critics’ score of 63% on review aggregator Rotten Tomatoes, but its losses were nevertheless offset by more profitable productions such as Guardians of the Galaxy Vol. 3 which was released six months earlier and grossed $845.6 million.
As theater viewing habits have changed, films aimed at a younger audience have surged in popularity. It explains why the live action remake of Lilo & Stitch grossed a staggering $1 billion this year whilst Marvel’s Thunderbolts and The Fantastic Four: First Steps underperformed.
The stakes will be raised next year with the release of Avengers: Doomsday which is expected to be one of the most-expensive Marvel movies ever made. That makes it much harder to generate a profit at the box office and, in turn, sets a high bar for another picture to mop up any red ink. More than ever before, Disney’s fortunes rest on the shoulders of earth’s mightiest heroes.
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