Sink or Swim? Another Hollywood Boat Sails

Steve Carrell in Evan Almighty. Photograph by Universal/courtesy Everett Collection

Last year, the Wisconsin hedge fund Stark Investments lost a boatload of money on the Warner Bros. remake Poseidon, about a luxury oceanliner capsized by a rogue wave.

Today, another Stark-backed ship movie sets sail: the Universal Pictures comedy Evan Almighty, starring Steven Carell as a Congressman who is ordered by God to build an ark.

Negative buzz surrounding Evan Almighty's big budget and muddled marketing campaign raises a question Portfolio.com has asked before: How many movies must drown before Stark goes looking for a lifeboat?

As reported on Portfolio.com on June 15, Stark is a major investor in a $700 million film financing fund called Gun Hill II, a 19-picture deal with Universal Pictures and Sony Pictures. Evan Almighty is a Gun Hill II picture, and according to at least one Hollywood blogger, Nikki Finke, it may not float.

Finke reports this week that Evan Almighty's hefty $210 million budget means it must do $500 million in worldwide ticket sales to make a profit.

(Universal execs counter that the budget is only $175 million, and that the lack of first-dollar gross participants means the movie will be in profit after $250 million in ticket sales).

That can't be welcome news to Stark, whose executives cite a policy that prohibits commenting to the press about investments. Condé Nast Portfolio reported in May 2007 that when Gun Hill II was brokered last year by Ryan Kavanaugh, a 32-year-old middleman, he convinced Stark to buy into the deal's riskiest slice -- the so-called equity layer.

According to two people familiar with the terms of the Gun Hill II deal, Stark stands to lose more than $60 million if its movies don't perform.

by Amy Wallace