A look at the recent findings from our study, Economic Impacts of the Content Industry in Northern Minnesota
The Upper Midwest Film Office (UMFO) works to attract and integrate film and TV production in Northeast Minnesota. They are in charge of different stackable incentives in Northeast Minnesota with the goal of developing Northern Minnesota as a hub for the film production industry. UMFO contacted us, the Bureau of Business and Economic Research (BBER), to study the economic impact of the film and content industry in St. Louis County and to educate policy makers and the broader public on the importance of this burgeoning industry. With our study coming to an end, here are the numbers that stand out.
There are multiple production incentives within the state of Minnesota for the film industry. In St. Louis County, there is a 25% rebate available to the film industry with a cap of $1 million per year, meaning the industry is limited to roughly $4 million before they max out on the available incentives.
In 2022, the rebate incentive program brought nearly $3.2 million in production to St. Louis County. From this $3.2 million, there were eight completed projects, with three more in the works at the time of the report.
The spending from these productions was spent at local businesses and on employee compensation for residents of St. Louis County. Of the $3.2 million of spending that occurred in 2022, $1.2 million (40%) was spent on wages. The remaining $1.9 million was spent on inputs and supplies from local businesses. Of that, hotels and other lodging saw the largest share (35% of the spending). Restaurants also saw sizable benefits, as did equipment rental services, food and catering, and more.
According to the results of economic impact modeling, spending on the part of the film and content industry created 106 jobs in St. Louis County in 2022 and provided $2.5 million in labor income. From the productions, St. Louis County saw $3.2 million in value added spending and $6.9 million in total output.
3 growth scenarios
UMFO hopes to increase the incentive in the coming years to further develop the film and content industry in Northeast Minnesota. To see the economic impact these incentive increases would produce, we modeled three different growth scenarios. Our small-growth scenario assumed an increase in the rebate limit to $3.25 million, which would allow for $13 million in spending on the part of the film and content industry in St. Louis County. A medium-growth scenario assumed a $6.25 million rebate limit and $25 million in film and production industry spending, and a large-growth scenario assumed a rebate limit of $12.5 million and $50 in local spending on the part of the film industry.
Under the small growth scenario—assuming a rebate of $3.25 million annually—the BBER estimated that the industry could create about 485 additional jobs in the study area. Under the most ambitious scenario—assuming a rebate of $12.5 annually—the film production industry could add roughly 2,200 jobs to the local economy.
Depending on the growth in the film and content industry in St. Louis County in the coming years, the area could see between $2.5 million and $46.2 million in additional labor income, between $3.2 and $57.1 million in additional value added spending, and between $6.9 and $100.5 million in total output.
In addition to the current scenario and the three growth scenarios, a fifth scenario—soundstage construction—assumed a one-time, temporary impact from the construction of a soundstage, something that UMFO indicates would be necessary to support growth in the industry. Modeling found that if the industry expanded to warrant the construction of a soundstage, that project could create a one-time, temporary impact of 439 jobs, $27.4 million in wages and benefits, $33.9 million in value added spending, and $63.5 million in overall spending.
$8.00 return on investment
It is helpful to consider the results of modeling as they relate to the initial rebate. For example, in the case of the current rebate, a $1 million investment (i.e., the rebate) led to 106 jobs and $6.9 million output, or a return on investment of $6.90 for every dollar invested. If UMFO were successful at increasing the incentive, higher rebate values could provide a return on investment of more than $8.00 for every one dollar invested, and in some scenarios as much as $8.83 per dollar.
Read the full report here.