Hollywood's hottest investments

By BusinessWeek

As a movie star, Adam Sandler has been a walking -- make that stumbling -- anomaly. His comic bits are, well, dopey to the point of distraction. He does his best work when he's mumbling, often in a faux hillbilly accent. And the critics darn near hate him.

But his films work where it counts, with the folks who plunk down their $9 or so for his films. His latest, "Click," a shameless takeoff on the old holiday chestnut "It's a Wonderful Life," uses a remote control that allows a workaholic architect to fast forward and rewind his life. It was skewered by critics ("It's not worth wasting money on," wrote Claudia Puig in USA Today), but it opened strongly on June 23 with a $40 million first weekend.

That marks the continuation of a remarkable streak for the 39-year-old Sandler, who also has had big-league hits in recent years with dope-fests like "Mr. Deeds" and "50 First Dates." The former "Saturday Night Live" cast member is among the most bankable actors in Hollywood, a guy who usually posts hefty returns for the studio brass who trust millions to put him, and his antics, on the big screen.

Still, Sandler is not the leader among the most bankable guys to mug for the camera and see their name up in lights. That distinction goes to a little-known comedian named Tyler Perry, who has burst out of nowhere with a couple of midsize hits in the past two years –- "Diary of a Mad Black Woman" in 2005 and "Madea's Family Reunion" this year.

Neither film passed the magic $100 million mark reserved for blockbusters, but neither cost more than $6 million to produce. The result: the 37-year-old writer and comedian takes top honors in BusinessWeek.com's ROI Award for Hollywood's big earner.

How the math works

The ROI Award goes to the actor who enjoys the highest return on investment for Hollywood studios who pay the freight. As any first-year business student knows, a return on investment is a measure of benefit a company gets for the money it spends to do business. Expressed as a percentage or ratio, it is derived by dividing the benefit of the investment (i.e. the return) by the cost of the investment.

In Hollywood terms, that's like trying to catch water in your hand. Costs are hard to get and even harder to decipher in the fantasy world of Hollywood accounting, while the returns are often shared with everyone from producers who once worked on the project to actors with enough pull to demand it.

For the purposes of BusinessWeek.com's ROI award, we relied on published reports of cost estimates, provided by the Web site IMDb.com, and applied the 2005 average marketing cost of $36 million a film. (Marketing costs are, of course, higher for larger films, but in many cases sponsors help defray those costs.)

We also applied the rule of thumb that a studio typically gets the proceeds from approximately half the tickets sold at the U.S. box office and the overall take from the box office is roughly one-third of the money a studio earns after a film has gone to play overseas and becomes a DVD or movie on pay TV.

Female actors need not apply?

BusinessWeek.com attempted to assess female stars, but validated one of Hollywood's darkest secrets: Women stars don't necessarily help boost ticket sales.

Certainly, some actresses are sure things at the box office, especially Julia Roberts. But Roberts and Angelina Jolie have been virtual no-shows since 2004, headlining only one movie apiece as both started families. And some other major actresses had wildly uneven years: Reese Witherspoon helped turn "Walk the Line" into a huge hit last year, but didn't do much for "Just Like Heaven."

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