What’s an Oscar Winner’s ROI?

S. Abraham Ravid on The Economic Impact of The Academy Awards

The upcoming Academy Awards ceremony has been engulfed in controversy over race and gender. But films are not just about values or even about art; they are a big business. However, research carried out with some colleagues over almost two decades has come to the surprising conclusion that the economic impact of the Academy Awards may be limited at best.

Sy Syms Professor of Finance S. Abraham Ravid

One might think, for example, that the winner of the best actor or actress award would be a trove of gold for future films. This turns out not to be true.

The statistics are not easy, since one has to take into account many variables which may affect the financial success of films, such as release dates, genres, reviews and ratings in addition to star participation. Then one has to tease out the value of decorated actors and actresses. In other words, just looking at the revenues of the latest film by Brad Pitt or Jennifer Lawrence means very little.

In fact, once the analysis is done, any correlation between star (past Academy Award winners and nominees) participation and the rate of return on film investment disappears. So, while having a big-name star headline a film does not hurt, film companies looking to strike gold with their next release should worry less about signing those A-listers. For example, “Monuments Men” (2014), with recent Oscar winners Jean Durjadin and Cate Blanchett, as well as with nominees George Clooney, Matt Damon and Bill Murray, ended up with tepid reviews and lackluster box office success.

If Academy Award winning actors do not matter, why do profit-oriented studios use stars? And should we look elsewhere in the award ceremony when it comes to ROI? Read the full op-ed at CNBC.

S. Abraham Ravid is the Sy Syms Professor of Finance and chairman of the finance department at the Syms School of Business at Yeshiva University.