Oscar crowned a Best Picture winner two weeks ago, but which 2013 film deserves to be called the profitability champ? This is hard to ascertain. We can reliably track box office grosses domestic and offshore, but studios routinely spin cost factors like production, P&A budgets, and talent participation. Capturing the spirit of the NCAA men’s college basketball tournament that just got underway, Deadline has bracketed 2013’s 16 highest-grossing films and they will play off against one another. Our tournament will play out over five rounds. As is the case with the NCAA, the top-earning films face the bottom earners in the first round, leaving room for upsets for setting up brutal behemoth collisions later in the bracket.
Instead of relying on numbers from studios that would make us susceptible to spin, we instead confidentially engaged two separate experts from entities that regularly create revenue models. We assure you, these are top-level insiders. We have used the results to create a formula that encompasses the wisdom of both. Films that advance to the next round will do so partly by the profit they create for their sponsoring studios, but other intangibles will be considered on close call decisions. Those include films that launch or grow franchises and create ancillary revenues, variables that have become the core of the studio business these days. The detailed descriptions and analysis of the revenue and cost projections of each film will be brought out in the second round.
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We hope you find all this entertaining as the first round plays out today in four separate posts of two “games” each, with subsequent rounds starting Monday. But we are really doing this because it is informative, with data in the revenue models that is normally proprietary.
Does an Oscar film like Gravity have a chance playing against tentpoles like #1 seed Iron Man 3, #4’s The Hobbit: The Desolation Of Smaug, or the animated juggernauts #2 Frozen or #3 Despicable Me 2?
Play ball!
Other Matchups:
#2 ‘Frozen’ Vs. #15 ‘The Great Gatsby’
#3 ‘Despicable Me 2′ Vs. #14 Star Trek Into Darkness’
#4 ‘Hobbit: Desolation Of Smaug’ Vs. #13 ‘Oz The Great And Powerful’
#5 ‘The Hunger Games: Catching Fire’ Vs. #12 ‘World War Z’
#6 ‘Fast & Furious 6′ Vs. #11 ‘The Croods’
#7 ‘Monsters University’ Vs. #10 ‘Thor: The Dark World’
SWEET 16
#1 IRON MAN 3 Vs. #16 THE CONJURING
How They Got Here: Disney/Marvel’s Iron Man 3 did everything a studio could have asked of a sequel. It was the year’s top-grossing film with $1.2 billion in worldwide gross, on a $200 million budget. The clear underdog here is The Conjuring, but there is a lot to like about this movie and any studio would salivate to have a few of these on their slates. Warner Bros’ The Conjuring turned in the biggest opening for an original R-rated horror movie ever, and it went on to become the fifth-highest-grossing fright film of all time. Here’s the real benefit of these genre films, when they bust out like Conjuring did. The film cost $19.5 million to make, 
and the only meaningful backend on the film went to director James Wan, who was one of the architects of these low-cost/high-profit horror films when he turned his short film into the first installment of Saw in 2004 — the $1.2 million budget film that grossed $55 million. Given the disparity in global gross here, the amount of profit the New Line-generated The Conjuring turned in at Warners is staggering.
The Bottom Line: Per our model, Iron Man 3’s profit is $391.8 million, vs $161.7 million for The Conjuring. That’s an incredible profit ratio for Conjuring, considering that Iron Man 3 grossed four times its rival on a global level. But the superhero movie cost a fortune to make, and it cost $131 million for its worldwide marketing spend. Marvel also dished out a big payday for Robert Downey Jr. Our estimates are that Downey got $10 million against 10% gross which puts his take at around $75 million.
The Winner: Despite the profit ratio, Iron Man 3 is the clear winner here, and moves on. The Conjuring is eliminated, but a film that pours off that kind of cash at such a low risk, and hatches a new franchise, is hardly forgettable. It just got the tough end of the bracket.
#8 GRAVITY Vs. #9 MAN OF STEEL
How They Got Here: It’s a Warner Bros battle in this tough first-round matchup. Man Of Steel, the film that introduced Henry Cavill as Superman against Gravity, the biggest anomaly of a hit film we’ve seen in years. Man Of Steel was the fifth-biggest domestic grosser, and survived the suffocating heat of summer for a global gross of $668 million. I would argue that with less competition, it might have done much better and Warner Bros surely hoped it would have done just that. Then we have Gravity, which Universal kicked to the curb after Angelina Jolie decided not to star. It had its share of fits and starts at Warner Bros, with Robert Downey Jr stepping in and then out, with actresses from Natalie Portman to Blake Lively testing before the studio finally decided to go with Sandra Bullock, with George Clooney stepping in to play the other onscreen role in the two-hander by visionary director Alfonso Cuaron, who won the Oscar. Everybody is jumping to take credit for this now, but it was no easy decision.
The Bottom Line: Gravity cost $100 million and grossed $714 million. A generous gross payday to Sandra Bullock added another $70 million or so, a figure boosted a bit by Clooney, though he took a reduced deal for his important but short burst of screen time. Man Of Steel was a much different cost proposition. Our experts peg the budget at $258 million, and add another $58 million in participations that went to everyone from producer Chris Nolan to Kevin Costner, Russell Crowe, Amy Adams, producer Charles Roven, Zack Snyder and Cavill, DC Comics and Jon Peters.
The Winner: Gravity pays a price simply for being a one-off. The reason Universal was reticent and so was every other studio before Warner Bros stepped up was, studios exist to build franchises and there is no alien here to go back and battle in future films. All it had going for it was the simple tale of a woman’s survival in deep space and the promise of the most immersive 3D seen since Life Of Pi and Avatar. Still, I’ve got to give this round to Gravity because Man Of Steel just didn’t make enough money. According to our experts, Gravity poured off $209.2 million to Warner Bros and RatPac, the latter of which got kissed into this movie on eve of release, after all of Warner Bros’ other financiers turned it down at earlier stages. Man Of Steel, meanwhile, returned $42.7 million to Warner Bros. Considering the cost and creative brainiacs who hatched that project, that is underwhelming. Here, it is this film’s kryptonite. Gravity advances.
