Off Balance Sheet - OBS

It's not tracked. It's not directly part of the assets and liabilities column on your balance sheet.

How can this be? Isn't that illegal?

Nope. Hollywood movie studios use off balance sheet financing all the time. Individual producers create their own production companies. Movie studio distribution companies softly commit to financing a picture if and only if it conforms to their schedules and whims. And then only maybe.

So when you have 300 maybes, there's a lot of value there when, statistically, say they actually make 10% of those 300 producer deal films. There's value, but the studios virtually ignore there being any real asset there; they only recognize it as a balance sheet asset when there is certainty that the film will get made. That way, they don't have to manage and track and worry about every detail; they're only on the hook for the modest salary they pay the producer, called a Housekeeping Deal, where the producer gets an office, a nice looking secretary who wants to act, and all of the now-legal-in-California things she wants to smoke.

The status as being off balance sheet is thus more conservative than not...so it's not something the IRS or anyone else comes down negatively on the studios for keeping. So they do.