Revealed: The True Cost Of Disney’s Star Wars Spinoff ‘Solo’

Few of Disney's Star Wars films had as much going for them as 2018 spinoff movie Solo. The origin story of fan-favorite character Han Solo, the movie featured an A List cast including Emilia Clarke, Thandiwe Newton, Donald Glover, Woody Harrelson and Paul Bettany. It came just two years after Disney's first Star Wars spinoff Rogue One grossed $1.1 billion at the box office on net costs of just $269.6 million as we recently revealed. Then came a disturbance in the force.

During the production of Solo: A Star Wars Story its directors Phil Lord and Christopher Miller were abruptly replaced with Oscar-winner Ron Howard who reportedly carried out extensive reshoots. It failed to have a magic touch as Solo only grossed $392.9 million according to industry analyst Box Office Mojo. It was the lowest haul of any of Disney's five Star Wars movies and famously was the only one which made a loss in its theatrical run.

The reshoots caused costs to skyrocket setting the scene for the loss. Documents filed by Disney reveal that "the final cost was higher than the agreed budget" but the precise amount that the media giant spent on the movie has never been revealed. Until now.

The cost of making movies in the United States is usually a closely-guarded secret as studios tend to combine their spending on individual pictures in their overall expenses and don't itemize the budgets of each one. However, as we have often reported, productions filmed in the United Kingdom are exceptions to this and Solo was one of them.

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The movie was shot at the historic Pinewood Studios outside London and on location in the UK where a power station doubled for the planet Corellia, home of Han Solo's iconic space ship the Millennium Falcon.

Studios filming in the UK benefit from its Audio-Visual Expenditure Credit which gives them a cash reimbursement of up to 25.5% of the money they spend in the country.

To qualify for the reimbursement, movies must pass a points test based on factors such as how many members of the production team are from the UK and how much of the post-production work is done in the UK. Furthermore, at least 10% of the core costs of the production need to relate to activities in the UK and in order to demonstrate this to the government, studios set up a separate Film Production Company (FPC) there for each picture.

The terms of the reimbursement state that each FPC must be "responsible for pre-production, principal photography and post-production of the film; and for delivery of the completed film" as well as paying for "rights, goods and services in relation to the film." Studios can't hide costs in other companies as the terms also state "there can only be one FPC in relation to a film."

The funding mechanism differs slightly from film to film but generally they all follow a similar model which begins at the very start of production.

A Hollywood studio buys a script from a screenwriter and green lights a movie about it. If the studio decides to make the movie in the UK it then sets up a subsidiary company there which acquires the script from its US-based parent.

Acquiring the script gives the UK company the rights to the make a movie about it and the Hollywood studio usually pays it a small production services fee. As per the rules, the UK company must be responsible for everything from pre-production and principal photography to post-production, delivery of the finished film and payment of goods and services in relation to it. Then comes some financial sorcery.

If the UK company makes a profit, the financial benefit from the UK government comes in the form of a reduction to its tax bill. However, if it makes a loss, it receives a cash reimbursement so studios fund the companies in a way which engineers this.

As shown in the diagram below, the studio buys the rights to the film from the UK company but only gives it approximately 74.5% of the projected production cost. The remaining 25.5% is provided by the studio in the form of a loan. The loan and the revenue from the sale of the rights gives the UK company 100% of the production budget for the movie and this sets the scene for the cash reimbursement.

Loans are not counted as revenue because they need to be repaid. The UK company therefore makes a loss equivalent to around 25.5% of the movie's budget. That is when the UK government steps in as it reimburses this loss. As the amount of the reimbursement is equivalent to the loan that the company owes its parent, the cash can be passed to the Hollywood studio as repayment. Thanks to these twists and turns, the UK government covers 25.5% of a film's costs, thereby reducing the studio's net spending. It takes some detective work to get to the bottom of it.

The UK companies usually have code names so that they don’t raise attention with fans when filing for permits to film on location. Through industry research the company names can be tallied with names of the productions they are responsible for with Disney's subsidiary Stannum 50 Labs (UK) being the one behind Solo.

The company was reportedly originally set up to make a movie about Han Solo's arch-nemesis Boba Fett. Stannum is the Latin word for 'tin' and it is thought that this refers to his armored antagonist.

The Boba Fett movie was eventually canceled and changed instead to a streaming series. The character didn't appear in Solo but its legacy lived on through the name of the movie's production company which has to file annual financial statements. They reveal everything from the total costs of the movie right down to the headcount, salaries and even the social security payments for staff.

However, marketing costs are not shown on the financial statements, as they tend to be covered directly by by the studio. Likewise, revenue from theater ticket sales, merchandise and home entertainment, including streaming subscriptions, also goes directly to the studio.

The financial statements are just for the company which makes the movie and they are filed in stages. This starts during pre-production and goes on long after the premiere to give the company time to ensure it has collected all of its bills and received the money for them.

It can take a great deal of time for the FPC to ensure that all invoices have been paid and only then can the company be closed. For example, Pym Particles Productions UK, named after the technology which enables Disney's Ant-Man character to shrink, was only shut down in March this year, nine years after the release of its movie about the diminutive hero.

This means that the costs of a production can still rise years after release, though not usually by anywhere near as much as when it is being made. Six years after Solo was released, Stannum 50 Labs (UK) is still booking costs on its financial statements and just last month filed its latest results.

Disney does not discuss the costs of specific productions and did not respond to an opportunity to comment. It did not need to as the filings do the talking.

Its latest financial statements show that in the year to December 31, 2023, Stannum 50 Labs (UK) spent $1.1 million (£0.9 million) bringing Solo's total costs to $364.5 million (£278.25 million). Although it blew its budget that wasn't the end of the story.

As shown in the chart below, the company also banked a $65.7 million (£50.2 million) reimbursement from the UK government bringing Disney's net spending on Solo down to $298.7 million.

The cash that the studio pays for the rights to the movie is the revenue shown in the UK company's financial statements and, crucially, its expenses are the film's total costs. The biggest component of the production costs is usually shown on the financial statements under the category of cost of sales whilst the administrative expenses largely represent fees to auditors as well as a loss or gain from currency conversions. These maneuvers leave the UK company with a small net profit which is usually equivalent to the production services fee from the studio.

It is important to stress that this profit is booked by the production company which bears the costs of making the movie but does not receive the revenue from theater ticket sales. If that revenue doesn't cover the net spending by the production company, which is essentially equivalent to the revenue it receives from the studio, then the movie makes a loss. This creates the bizarre situation where a profit on paper is made by the production company behind a film which makes a loss in its theatrical run. This is precisely what happened with Solo.

It isn't a profit in the conventional sense as it isn't generated by external revenue. The UK company is entirely owned by the Hollywood studio so the profit is simply some of its money which remains in its right hand rather than the left.

The blockbuster returns for movies come from ticket sales with theaters typically retaining around 50% of the takings. The remainder is paid directly to the studio and if this offsets its net spending, the picture makes a profit in its theatrical run. Although Solo didn't do this, the profits from Disney's other Star Wars movies more than canceled out its loss.

It makes them classic tentpoles – big-budget movies which make enough income to compensate the studio for its less profitable productions. However, as we revealed, the profits from these movies still haven't covered the $4 billion that Disney spent in 2012 on buying Lucasfilm which owns the rights to Star Wars.

That calculation doesn't take streaming subscriptions or theme park tickets into account because users aren't specifically paying for Star Wars content. The star attraction could be the merchandise sales as a recent report by The Hollywood Reporter estimates that they generated $1 billion last year. So even when the movies aren't a dream ticket, the force can still be strong with Star Wars.