Universal’s $1.1 Billion ‘Fast & Furious’ Decision

‘Fast X’ was a costly movie but the franchise has diminishing box office returns

Universal Pictures

Universal Pictures has reportedly insisted that it will only give the green light to the final part in its popular Fast & Furious franchise if its costs come down to $200 million after the studio spent a staggering $1.1 billion on the last three films in the series.

Fast X, the latest instalment in the series, was released in 2023 and ended on a cliffhanger that set up what is expected to be the last ride for Vin Diesel, John Cena and co.

Fast X: Part 2 was expected to be released this year but the release date was pushed back with Diesel saying in June that Universal had asked him to gear up for the movie coming out in April 2027. However, the studio hasn’t officially announced the movie and a report in the Wall Street Journal yesterday cast doubt on its future.

It claimed that although the film lacks a completed script, Universal has allocated a budget to it and this could be a sticking point. According to the report, the latest draft of the script requires a budget of about $250 million but Universal wants to cut it by 20%.

This would be a significant feat given that Fast X cost a staggering $436.6 million (£365 million) as this report revealed. Filings from Universal in 2023 showed that the movie was expected “to exceed the planned budget” and in order to cut the sequel’s costs, Universal is reportedly looking to reduce appearances from some cast members and limit the filming locations.

Fast & Furious is famous for its globe-trotting with scenes set everywhere from Tokyo to Los Angeles. Fast X was no exception with the crew getting passport stamps from Portugal and Italy. However, production took place at Leavesden Studios in the United Kingdom and this lifted the curtain on its colossal costs.

Studios filming in the U.K. get a tax credit of up to 25.5% of the money they spend in the country provided that at least 10% of their core costs are incurred there. In order to demonstrate this to the authorities, studios set up separate companies to produce each film in the U.K. and they are obliged to file legally-binding financial statements.

The filings for the Universal subsidiary behind Fast X show that it banked a $71.8 million (£60.2 million) credit bringing the studio’s net spending on the picture down to $364.8 million.

The reimbursement is calculated on up to 80% of core expenditure so 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. Universal made the most of this by filming Fast X in Rome and Lisbon. The incentives on offer there are not as generous as in the U.K. so their impact on the bottom line tends not to be material, especially as they can only account for up to 20% of core expenditure without studios losing out on the more lucrative reimbursement.

Even that wasn’t enough to give Fast X a happy ending in theaters. The movie only had the sixth-highest gross of the Fast & Furious series with takings of $704.9 million.

The amount that theaters pay to studios is known in the trade as a rental fee and an indication of the typical level comes from film industry consultant Stephen Follows who interviewed 1,235 film professionals in 2014 and concluded that, according to studios, theaters keep 49% of the takings on average.

This research lends weight to the widely-established 50-50 split which would give Universal $352.5 million from Fast X and a $12.3 million loss at the box office after deducting the $364.8 million net spending on the movie. As the chart below shows, it is believed to be the only one of the last three instalments which made a loss at the box office.

The share of theater takings isn’t a studio’s only return from a movie so offsetting it from the costs shown in the financial statements does not show whether it made a profit or a loss overall, just at the box office. Studios also receive revenue from other sources, such as home entertainment, however they also have to foot the bill for other expenses, such as marketing, which aren’t shown in the production company’s financial statements.

The filings do however show the cost of the production and that comes to $1.1 billion (£891.2 million) for the last three films in the Fast & Furious series which were all made in the U.K. It gives an average cost of $367 million per picture which shows how high the hurdle is to bring the finale’s expenses down to $200 million. If anyone can pull off that maneuver it’s the stars of this franchise.

They have everything to play for although Fast X wasn’t a high-octane success, the last three films still fueled combined net profits of $156 million. Overall, the series has made a massive $7.3 billion at the box office peaking at $1.5 billion with 2015’s Furious 7. If the finale’s takings can come close to that it would be a fitting way for the franchise to ride off into the sunset.