'Heads of State' had a big budget which propelled it to number one on Amazon's chart.

Chiabella James/Prime

Hollywood is famous for its profligacy. A List actors, shoots in exotic locations and glitzy launch parties all come at quite a cost. Indeed, it has now come to light that production costs continued to rise even when the curtain came down on the entire industry.

It is no exaggeration to say that the 2023 WGA and SAG-AFTRA industrial action was one of the most momentous events in the modern era of cinema. The Writers Guild of America (WGA) was the first to down its tools in May and was followed by the Screen Actors Guild and the American Federation of Television and Radio Artists (SAG-AFTRA). The strikes affected members of both bodies regardless of where they were located so productions all over the world ground to a halt.

It marked the first time that both parties had been on strike since 1960 and although they had different demands, the key area of common ground concerned residuals – the royalties paid to actors and crews when reruns are shown or when Blu-rays are sold. The advent of streaming called this model into question as subscribers usually pay a monthly or annual fee and get access to a studio's entire library which they can watch as many times as they like for no additional cost.

After six months, the dispute was eventually resolved with studios agreeing to pay out higher compensation. That wasn't the only sting in the tail. While the strikes were taking place, reports emerged that they would increase the cost of productions which had been put on hold. This may seem counter-intuitive but it is absolutely correct.

Confirmation comes in recently-released filings for the production company behind action movie Heads of State which was released in July last year by Amazon MGM Studios. The premise of the the action comedy comes straight out of the 1980s as it stars Idris Elba and John Cena as leaders of rival nations who are reluctantly forced to team up to take on an evil adversary.

Elba has the role of Britain's Prime Minister while Cena is his counterpart in the United States. They team up with an MI6 agent played by Priyanka Chopra and are joined by Paddy Considine, Jack Quaid, Stephen Root and Carla Gugino. Unsurprisingly, Cena and Elba save the day and end up friends. It wasn't so simple to win over critics.

Heads of State only earned an average rating of 68% from critics on review aggregator Rotten Tomatoes while its audience score was just one percentage point higher. That didn’t stop the film from surging straight to the number one spot on Nielsen's movie chart during its debut week with 1.1 billion minutes streamed as Deadline reported. It then headed to Amazon's Prime Video streaming platform where it was also the number one movie for four weeks attracting more than 75 million viewers worldwide in its first month. No expense was spared on it.

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 Heads of State.

The film was shot in summer 2023 at London's historic Shepperton Studios and on location throughout the U.K. It even showcased actual businesses on screen with Elba and Cena seen at the end of the movie celebrating their newfound friendship over a pint of beer and fish and chips in east London's Morgan Arms pub. The location lifted the curtain on how much it cost to make.

Studios filming in the U.K. benefit from the government's Audio-Visual Expenditure Credit (AVEC) which gives them a reimbursement of up to 25.5% of the money that 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 shines a spotlight on precisely how much it costs to make movies as each FPC has to file legally-binding financial statements. It takes a bit of detective work to get to the bottom of them.

The FPCs usually have code names so that they don’t raise attention with fans when filing permits to film on location. Fittingly, the company behind Heads of State is called Stately Productions. As with all U.K. companies, its financial statements are released in stages long after the period they relate to. It explains why the latest set of filings is for the 18 months to April 30, 2025, just two months before the premiere of Heads of State which appropriately took place at an event themed to Downing Street, home of the U.K. Prime Minister.

The filings state that "the final costs are forecasted to exceed the production budget primarily due to delays in production caused by the SAG/WGA strikes. The directors do not consider this to be an indicator of poor performance."

It may seem hard to imagine how delays in production could cause costs to rise when production isn't taking place but there is actually good reason for it.

Studios incurred massive costs maintaining productions in a state of readiness during the strikes. For example, some had to continue paying for soundstages and leased equipment that sat idle and could not be returned without risking losing the access window to it. Maintaining sets, props and costumes already in use also required ongoing storage and security fees while some high-level producers and department heads were paid retainers to ensure that they were available once the strike ended.

It isn't clear exactly which factors caused Heads of State to go over budget but there is no doubt about the impact it had. The filings show that its production company spent a total of $189.7 million (£152 million) though it doesn't stop there.

The reimbursement cast a powerful spell on the picture's bottom line as it is calculated on up to 80% of core expenditure. This means that 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. Heads of State made the most of that as it shot some car chase scenes in Trieste in late summer 2023 followed by further filming in Belgrade, Serbia, in May 2024.

It had a magic touch as the filings show that Stately Productions was reimbursed a total of $31.3 million (£25.4 million) bringing its net spending down to $158.4 million which is still extremely low for a blockbuster action flick. One of the biggest single costs shown in the filings was the $12.2 million (£9.9 million) spent on production staff with the company's employees rising to a monthly average of 184. That doesn't even include freelancers, contractors and temporary workers as they aren't listed as employees on the books of U.K. companies even though they often represent the majority of the crew on a film shoot.

The reimbursement scheme has made the U.K. a hub for Hollywood studios and according to the latest data from the British Film Institute (BFI), spending on feature film production in the country rose 31% to a record $3.8 billion (£2.8 billion) last year. It remains to be seen how long this glow will last.

Almost exactly a year ago President Trump rocked Hollywood with the announcement that a 100% tariff would be applied to movies entering the U.S. that are produced in "foreign lands". It was an attempt to bring film making back to the U.S. and although it has yet to be implemented, it hasn't been forgotten.

Five months after the initial announcement, Trump wrote on social media that "in order to solve this long time, never ending problem, I will be imposing a 100% Tariff on any and all movies that are made outside of the United States." This still hasn't been introduced and if Trump doesn't follow through with this threat to force studios back to the U.S., he may have to instead roll out the red carpet with incentives in order to compete with the U.K.