Filmmakers keep eye on Bank of North Dakota movie deal

Northwestern Financial Review, Nov 18, 2000 by Olmsted, Monte

Searching for ways to encourage new business activity in the state, the Bank of North Dakota - the country's only state-owned financial institution-has turned to an unlikely source: Hollywood.

The Bismarck bank financed the entire $3.9 million fall filming of "Wooly Boys," the first major feature film to be shot in North Dakota and set in the western Badlands. Bank executives, economic development proponents and film industry folks hope the movie about an old sheep rancher played by Peter Fonda, his best friend (Kris Kristofferson) and his grandson will put North Dakota on the film industry map.

In a state with an over-reliance on agriculture, making movies provides an attractive, yet, untested alternative. Bank of North Dakota president Eric Hardmeyer is a believer, and hopeful "Wooly Boys" will lead to a flurry of film projects. The bank gets a boost, too.

"Our benefit is we are involved in promoting an industry in North Dakota that could generate new wealth to the state and open up new avenues of revenue," Hardmeyer said.

"Dances With Wolves" did just that in South Dakota, where the film was shot, and tourism in that state increased 25 percent the year after the film's release.

The "Wooly Boys" financing marks a first for Bank of North Dakota, primarily known as a business lender. Hardmeyer said Bank of North Dakota leaders have contemplated movie financing for more than a decade, but the right project, right timing and right players didn't come up until "Wooly Boys."

Due to client confidentiality agreements, Bank of North Dakota cannot disclose the terms of the loan, nor how the loan was collateralized, Hardmeyer said.

Although Bank of North Dakota provided the money for the low-budget flick, it did not serve as the primary lender. For that, the bank teamed with National Westminster Bank in London, an experienced film financier with offices in Los Angeles.

Hardmeyer said Bank of North Dakota wanted to make sure everything was "absolutely proper."

"Our thoughts were, 'We don't want to get involved in a market risk in which the movie will flop and lose money.' But we wanted to do it right, and leaned heavily on National Westminster Bank because that's their expertise. They guided us on how to properly finance the film," Hardmeyer said.

Film producers Ken

Promersberger and Robert Schwartz-the men behind the 1994 film "Iron Will" -are the other players in the project. For the past six years, the pair had tried to finance "Wooly Boys," and been in negotiations with Bank of North Dakota officials.

"We had some knowledge in film financing, but it's a fickle industry in which you have to line up everything.

It's not easy to get everything in place, and get a bank that is comfortable," said Hardmeyer, who inherited the project from Bank of North Dakota's former president, John Hoeven, who resigned in June and was elected the state's governor on Nov. 7.

The bank committed, and the "Wooly Boys" loan was approved in July 1999 by North Dakota's Industrial Commission - the trio of the governor, attorney general and agriculture commissioner that serves as the bank's board.

Shooting began on Sept. 18 on a ranch about 25 miles south of Medora, N.D., a tourist haven put on the map by Theodore Roosevelt. The North Dakota filming wrapped up more than three weeks later, and the 100-member cast and crew moved to Minneapolis for additional shooting before completing on Oct. 22. Promersberger expects "Wooly Boys" will be released in fall 2001.

The curveball in the "Wooly Boys" package remains the Bank of North Dakota's status as a state-owned institution. Money earned by the bank goes toward the state's general fund, and for the most recent biennium, Bank of North Dakota will contribute at least $50 million. The bank has become North Dakota's fifth-largest source of revenue.

In other words, the $3.9 million investment in "Wooly Boys" is public money. That's why film industry advocates and other state governments are watching closely. Some say a successful venture could change the way films are financed in the United States.

Randy Adamsick, executive director of the Minnesota Film Board in Minneapolis, is among the careful observers. He noted the Bank of North Dakota loan likely represents the most public money invested in a film project in America. "I believe all film commissions are anxious to see the progress of [Wooly Boys]," said Adamsick. "The importance of the North Dakota project is, if it is successful, it will open many other opportunities."

"Wooly Boys" may lead to greater tourism benefits for North Dakota. Ed Schafer, the state's governor through the end of the year, has said the economic impact of the production is estimated at $2.6 million and could boost the state's image. Hardmeyer agreed and pointed to neighboring South Dakota and Minnesota as having capitalized on the movie industry. Adamsick noted that in the last decade, 70 films have been made in Minnesota, bringing $110 million to the state.

"If the Bank of North Dakota is putting up $3 million, it needs to show, through a combination of economic returns and tourism benefits, it will have that value to the state. I definitely think it will," Adamsick said.