Hollywood's high-risk projects -- From Michael Jackson's latest album to "Waterworld," we look at the biggest gambles for 1995

By Bruce FrettsBenjamin Svetkey and Gregg Kilday
Updated June 25, 2009 at 04:00 AM EDT

It’s enough to give Federal Reserve Board chairman Alan Greenspan a panic attack. For even as Greenspan monitors the national economy to ensure against an inflation outbreak, Hollywood’s big-time gamblers are grabbing their checkbooks for one of the biggest spending sprees in years.

Talk about high stakes. With the disastrous example of 1980’s $44 million Heaven’s Gate a fading memory, Hollywood is once again going for broke. And the astronomical sums that will be at risk in 1995 are already setting records.

After five months of torturous filming in Hawaii and an additional seven weeks of principal photography now shooting in Los Angeles, Universal’s futuristic thriller Waterworld is estimated to be costing $130 million to $150 million. By the time it’s released next July, it will be the most expensive movie ever made — and its budget is likely to be twice as much as what Costner’s last three movies combined made at the box office in the U.S.

Speed director Jan De Bont has just abandoned TriStar Pictures’ planned remake of Godzilla over budgetary disputes. De Bont argued that bringing the venerable Japanese monster to full computer-graphic life would cost at least $130 million. But TriStar is holding the line at $100 million. ”It was only yesterday that $70 million and $80 million movies were considered extravagant,” says Twentieth Century Fox president Bill Mechanic. ”Now, it’s lunacy that $100 million is considered acceptable.”

Embattled Carolco Pictures is betting its continued existence on the success of director Renny Harlin’s Cutthroat Island, starring his wife, Geena Davis. At a mere $70 million, it might look like a relative bargain — except that Davis’ last two movies, Angie and Speechless”, had opening weekends of $2.8 million and $4 million, respectively.

Savoy Pictures, more or less hitless after two years in business, stunned the industry by signing Sylvester Stallone to star in an as-yet-unchosen film in 1996 for $20 million. Trumping the $15 million given to stars like Arnold Schwarzenegger, Stallone’s payday is sure to trigger a new round of salary escalation.

Hollywood’s frenzied pursuit of the next $100 million blockbuster can be blamed for much of the risk-taking. But each project also has its own particular problems. In the case of Waterworld, director Kevin Reynolds (Robin Hood: Prince of Thieves) made the fateful decision to shoot most of the movie in the middle of the Pacific Ocean off Hawaii — a decision that Steven Spielberg, who encountered similar cost overruns filming 1975’s Jaws in the choppy Atlantic, warned Reynolds against, according to one source. ”Sure, we wish it were less costly, but we still think it can be highly profitable,” says Universal Pictures spokesman Bruce Feldman. ”We believe it has substantial commercial potential — not merely theatrically, but internationally, in merchandising, in our theme parks. It’s the kind of property that allows a highly integrated company like MCA/Universal to do well.”

With Godzilla, cutting-edge computer graphics are the culprit. ”Effects like morphing don’t cost what they did a few years ago,” observes Mechanic. ”But now that morphing is used in every other TV commercial, filmmakers keep looking to push the envelope with something new, and that’s always going to be expensive.”

With Cutthroat Island, Harlin simply had Carolco over a barrel: Facing bankruptcy, the company had already sold off the rights to many of its high- profile projects, including Paul Verhoeven’s Showgirls. Eager to sign Harlin after the 1993 success of his Cliffhanger, it accepted his casting of Davis. Similarly, Savoy Pictures, desperate to raise its marketplace profile, grabbed Stallone, dollars be damned.

All of which has execs shaking their heads, even as they shovel more money out the door. But if filmmakers are feeling the strain, they’re not admitting it. On the set of his African adventure Congo — a steal at $50 million-director Frank Marshall joked, ”I talked to Kevin Reynolds today and we made a pact that our next movies would not cost more than $10 million each.” Which means that only one thing is certain: They won’t be starring Stallone.