How to pocket a million in Hollywood without lifting a finger

Let us say that you are "creative". You are old-fashioned, so you determine to write a novel. This is so hard that you do not like to talk about it, but in mechanical terms it is tauntingly easy: you need a word processor, plus time, ideas and something called calm. Or you think you do. Maybe all you need to do is get up two hours earlier every day. Sleep is, if not the enemy to art, then its profound alternative. But all you need is you.

Let us say that you are "creative". You are old-fashioned, so you determine to write a novel. This is so hard that you do not like to talk about it, but in mechanical terms it is tauntingly easy: you need a word processor, plus time, ideas and something called calm. Or you think you do. Maybe all you need to do is get up two hours earlier every day. Sleep is, if not the enemy to art, then its profound alternative. But all you need is you.

Now suppose you want to make a movie – a kind of abdication from responsibility, a self-pity, sets in immediately. Because now you need so much more than you and an idea. Granted that yours is just a small story about a few people, you need people skilled at photography, sound, editing etc. You need some people who will be characters in front of the camera. Sometimes these are actors, but they can easily be friends. They will do it for free, or for some kind of goods in kind.

You work out similar deals with your crew. Money hardly need change hands, which is good since you need whatever money you have to hire a camera and other equipment; to purchase filmstock and pay for its processing; to hire a basic editing room. And if you foresee yourself as this great work's director, why, with pain, grumbles and high self-pity, you pile on the tasks of a producer: making sure you have the actors on the right day; arranging for travel to your location; getting coffee and sandwiches.

In these latter areas, I fear, money is going to have to change hands. Let us say you're going to need $20,000. You can get a movie for that – it might be a good one. Yet the would-be novelist is horrified at the numbers and quietly predicts capitalist compromise.

In the loftier world of professional film-making, those costs are known as "below the line". They cover the machinery, its turning over, the minimal crew (there are union regulations often), the per diems of all involved (their living costs). On a small feature film, this will run to $100,000 a day – below the line. Such bills are paid promptly (as a rule), and they ensure that even a very quick (20-day schedule) picture is a guaranteed $2m below.

What is above? Heaven, infinity, the reason for being in pictures, and the reason why they are impossible. Above the line you get the idea, the material – and, at last, the script. Our novelist gets those things (or she doesn't) on day one, or a little bit extra every day on the sentence that is the work. She takes it for granted as her load. On movies, this is not the way. A guy can say, "Suppose you did Rain Man meets Fatal Attraction." That alone can mean $1m up front, five per cent of everything, and a co-producer credit. If his girlfriend was in the room at the time, she may be in on the deal. They will need lawyers to secure these deals – at $250 an hour minimum.

The gathering of producers will swell. A big star – a Cruise, a Gibson – may appear, pushing in their own interpretation, and getting another five per cent of the gross. There will come scriptwriters and directors. Not a foot of film has been run yet; not a below-the-line dollar has been spent.

But the above-the-line costs are swelling: $2m for the idea; then $3m on getting the scripts right. Two other producers are on board – there's another $4m. You have two stars – and they haggle their take up to $15m each. What are you going to do without bankable stars?

To cut a long story short, with a director on a pay-or-play deal for $2m (you pay him whether or not the project goes ahead), you are up to $40m above the line. You are going to studios for the "funding". The studios say $40m above. "Twenty weeks to shoot? That's another $50m. Interest and insurance, we are looking at $100m. To cover that, you need a gross of, say, $250m? Are we on the same page?"

So the project is stopped. But not before something like $10m has gone in unrecoverable "development" money – above the line, originating stuff. And that is an overhead that hangs over the business as a whole, or gets cunningly shuffled off on a few other innocent movies in the next few years.

Yes, it's intricate. Revolting, even. But above the line is the place to be; the people there live up in the hills, above the smog and urban violence. They make things happen. And sometimes (this is the real trick, the true horror), they are the people who were dealing in friends and sandwiches five years ago.

d.thomson@independent.co.uk