Warner Bros. pledges massive Nevada expansion if lawmakers expand film tax credit
By Tabitha Mueller | The Nevada Independant | Published August 20, 2024
The entertainment studio promised $8.5 billion in investments over 17 years, contingent upon the expansion of film tax credits in the Silver State.
State Sen. Roberta Lange (D-Las Vegas) presents the film tax credit bill alongside lobbyist Greg Ferraro in Carson City on May 31, 2023. (David Calvert/The Nevada Independent)
Warner Bros. Discovery is pledging a massive expansion into Southern Nevada that would see the media conglomerate commit half a billion dollars annually toward productions as part of a film studio partnership with UNLV and Birtcher Development — contingent on state lawmakers approving a massive expansion of the state’s film tax credit program next year.
Warner Bros. Studios Chief Operating Officer Simon Robinson on Tuesday promised that the publicly traded media company would commit to a minimum of $500 million in annual content spending during the next 17 years — the length of time proposed by one of the legislative efforts to expand the state’s tax credit — totaling $8.5 billion.
“The important thing for us is the ability to effectively become a producer with our own site in and around Las Vegas,” Robinson told The Nevada Independent in a Monday interview. “We're committed to both the bill and the state. We're going to be around a long time. Hopefully, they can make this happen.”
The announcement comes about a month and a half after Assembly Majority Leader Sandra Jauregui (D-Las Vegas) announced she would introduce similar legislation to establish a Las Vegas-based production studio and workforce training program in partnership with Sony Pictures, another one of the country’s “Big Five” major film studios, and developer Howard Hughes Corp.
Both efforts arrived after a similar proposal to massively expand the state’s film tax credit program in the 2023 Legislature fizzled despite a star-studded push from actors Mark Wahlberg and Jeremy Renner. Economists have also largely downplayed the economic benefits of film tax credits, with programs in other states not providing much return on investment.
Warner Bros.' emergence — the company was not involved in the 2023 legislation — further complicates the narrative heading into the 2025 legislative session by attaching two of the top five major film studios to opposing proposals in a state with a limited budget. The entertainment company’s commitment of $8.5 billion over 17 years is also more investment funding than any studio has pledged to the Silver State, raising the stakes for lawmakers facing a decision about where (or if) to invest the state’s tax credits.
Nevada law limits the state from providing more than $10 million in transferable tax credits for all film productions in a single year, and credits are capped at $6 million per production.
The proposed 2023 bill initially planned to offer as much as $190 million in annual film tax credits, but bill sponsor Sen. Roberta Lange (D-Las Vegas) now plans to lower that amount to $95 million annually over 17 years. The bill would still require that tax credits be available only after private companies set up a minimum amount of infrastructure, with production processes being prequalified by the state and then audited before receiving credits.
Warner Bros. spends more than $20 billion annually on content around the globe, with the $500 million commitment representing a small fraction of that budget, Robinson said, adding that if the program goes beyond the proposed 17 years, the company could be willing to expand its financial investment as well.
Robinson and representatives of Southern California-based developer Birtcher Development said if Lange’s measure passes in 2025, the film industry would integrate with UNLV through the university’s Harry Reid Research and Technology Park. A proposed “Nevada Media and Technology Lab” would serve as a film and television educational and vocational training center, and a “Warner Bros. Studios Nevada” would be the main studio complex on the proposed 34-acre campus.
They added that workforce development will include vocational training, internships and research opportunities for K-12 and higher education programs in the Silver State. Birtcher would develop the project.
“It's in our interest to partner with UNLV and build up a deep bench of talented, skilled professionals who can service our productions,” Robinson said. “Our expectation is the first year or so, we'd have to bring some people in, but certainly by second, third year, we'd look to be mostly starting our productions with people here.”
Brandon Birtcher, center, co-owner and CEO of Birtcher Development and consultant Victor Wei, left, greet Senator Roberta Lange (D-Las Vegas) inside the Senate Leadership office at the Legislature on May 11, 2023, in Carson City. (David Calvert/The Nevada Independent)
Legislative history
Lange introduced SB496 in May 2023, unveiling a massive proposed expansion to the film tax credit program in the final month of the legislative session. The proposed $190 million price tag would be almost four times the amount of all other tax credits offered by the state each fiscal year.
Under the current film tax credit program, the amount of credits issued for production is primarily based on a percentage of wages and qualified production costs.
The tax credits could be used to offset a company’s tax liability, reducing the amount of taxes owed by the amount of the credits. In 2023, the proposed credits could be applied to the Modified Business Tax (a payroll tax), insurance premium tax or gaming license fees. The credits are transferable, meaning a company could sell them for cash.
When Lange’s bill was first heard, Sony, Birtcher, Howard Hughes Corp. — the developer behind the Summerlin community in the Las Vegas Valley — and an unnamed studio partner all worked together to support the bill. Howard Hughes Corp. and Sony were pushing for a studio project in Summerlin, while Birtcher and UNLV advocated for the educational training center and broader studio campus. At that time, Hughes had committed $700 million to developing the Summerlin project.
Renner and former governor and UNR President Brian Sandoval had also gotten involved and advocated for establishing film studio infrastructure at UNR and tax credits for the northern part of the state, noting that Northern Nevada needed to be included.
After the bill failed to move forward, the entities split, with Sony and Hughes working with Jauregui and Birtcher staying with Lange.
Read More: Nevada lawmaker vows to revisit film tax credit expansion after bill fizzled in 2023
Lange has said the death of the proposed film tax expansion bill in 2023 was due to a lack of time, noting that she is providing ample time this time around for lawmakers to review her proposal, including sending a letter outlining her plans for the legislation to her colleagues in the state Senate in February.
Another significant difference, Lange said, is the now-public financial commitment from Warner Bros.
When lawmakers considered expanding film tax credits in 2023, Birtcher did not have a publicly announced studio partner, and Lange said having Warner Bros. on the project could be a “key difference maker” in diversifying Nevada’s economy and developing its workforce.
What’s next?
Even with one of the largest entertainment companies in the world signing on to the project, nothing is guaranteed in Carson City.
Jauregui and Lange will need to gain support from other state lawmakers and Republican Gov. Joe Lombardo if they hope to pass their proposals. Given the competing proposals and state budget constraints in a state with no income tax and limited budget, it’s likely only one proposal will move forward, with the potential for a compromise.
Both lawmakers will also need to overcome criticisms of the proposed legislation from progressive groups and the Republican Party. Those unexpected allies were heavily critical of the amount of tax credits proposed in the bill, with progressive groups pointing to the need to support other critical services that lawmakers have long described as underfunded, including education, child care, health care, affordable housing and mental health services.
“This bill is a truly astonishing proposal to give handouts to the already wealthy and well-connected, while ignoring the small businesses that are the heartbeat of our economy,” Republican National Committeeman Jim DeGraffenreid wrote in an opposition statement.
Opponents have also pointed to studies showing that the benefits of major film tax credits do not outweigh the costs. That included a 2010 analysis of film subsidies from the progressive-leaning Center on Budget and Policy Priorities, which found that subsidies result in “not much bang for too many bucks.”
Robinson acknowledged research showing that film tax credits may not be beneficial for states or lead to disinvestment when credits dry up, but said Warner Bros. is making a long-term commitment.
“Our intention here is to become part of the community and build a sustainable, successful business for us,” he said. “This is a very serious endeavor for us.”
The Nevada Independent is a 501(c)3 nonprofit news organization. We are committed to transparency and disclose all our donors. The following people or entities mentioned in this article are financial supporters of our work:
Roberta Lange - $3,512
Brian Sandoval - $2,685
Joe Lombardo - $1,800
Sandra Jauregui - $500
Article source: https://thenevadaindependent.com/article/warner-bros-pledges-massive-nevada-expansion-if-lawmakers-expand-film-tax-credit