The ubiquitous online media streaming company Netflix is on the verge of moving its primary production to New Mexico and purchasing the Albuquerque Studios facility in which several well-known movies have been filmed.
Despite the existence of a generous film subsidy program in which 25 or 30% of a film’s costs are reimbursed by New Mexico taxpayers, Netflix will be acquiring the studios for the bargain basement price of $30 million. The studios were privately built at a cost of $91 million and opened in 2007.
Netflix says it plans to “bring $1 billion in production to New Mexico over the next 10 years and create as many as 1,000 production jobs a year. The company also wants $10 million from New Mexico and up to $4.5 million from Albuquerque. This $14.5 million would be in the form of LEDA grants (a form of corporate welfare the Rio Grande Foundation has criticized in the past).
The $14.5 million in LEDA would be easily overlooked in exchange for $1 billion in Netflix investment over the next decade, but the REAL subsidy story is New Mexico’s film subsidy program. Right now payments are capped at $50 million annually, but Michelle Lujan-Grisham and many Democrats plan to eliminate that cap.
Opening the spigots to unlimited film subsidies would be a major money-loser for New Mexico. In fact, the cost to taxpayers would rise (possibly to hundreds of millions of dollars) as Netflix ramps up its investment.
So, the ultimate cost or worth of Netflix in New Mexico will hinge on future policy choices. All we can say at this point is “we’ll see.”
The silver lining is that a production company is putting down roots by purchasing property, even at a bargain price. That offsets an inherent weakness of film incentives: production companies are transient, have no investment in the local economy and can easily pull out. That makes the state vulnerable to the kind of political bullying we saw in North Carolina over transgender bathrooms.
Why wouldn’t a company planning $1 billion in spending, that would get $250 million of it paid for by the State of NM want to put down roots and hire 1,000 people. That means those 1,000 jobs will cost NM Taxpayers $39,000 EACH for the first year and $25,000 EACH every year after.
Can’t you do basic math?
IF the film cap is totally eliminated this would indeed be an accurate representation of the situation. Of course there are dollars spent by those film entities and the subsidy winds up generating about 33 cents for the state and 10 cents for local governments per dollar spent. That really wasn’t the point of this initial reaction piece.
That is true on both the positive and negative angles. It is quite plausible that Netflix, especially if the subsidy cap is raised, could drag our state even further to the left politically.
Paul, its an easy to calculate number, why didn’t you do the math?
25% subsidy of $1 billion is $250,000,000
Just how much is too much to give this company?????
Sounds like another wind farm to me. There is this mentality that the only way to get companies to move to New Mexico is through tax payer credits and subsidies. Will the business off set that cost with income for all? Yes, we’ll see.
However, there is a company that wants to invest in New Mexico with their own money and not through state subsidies. Holtec International wants to build an interim storage facility to store unused (spent) nuclear fuel. With the advancement in nuclear reactor technology this same facility could eventually become a fuel fabrication facility for all advanced nuclear fuel for the US Advance Fast Reactor Nuclear Fleet.
Of course, there are those that think this is a dangerous idea when in fact it is more environmentally safe than all other forms of energy, by far.