Martin Scorsese's forthcoming Gangs of New York is the most expensive art-house movie ever made, says Peter Murphy. It's enough to make any auteur anxious

It's a Hollywood horror story as old as Cleopatra. A visionary director nurses his pet project through years of development, assembles a cast of gifted but idiosyncratic actors, spends millions of dollars on a troubled shoot, and ends up with the most expensive art-house movie of all time.

Amongst the New Hollywood generation of the Seventies, it's known as the Heaven's Gate syndrome, and such dreams come with a very expensive price tag. Martin Scorsese epitomises that auteur generation, and his forthcoming Gangs of New York has become the subject of no end of film industry rumour, gossip and doom-crying.

The director first latched on to the story in the late Seventies, but when Michael Cimino's Heaven's Gate debacle effectively ended the heyday of the director-driven film and ushered in the age of "high-concept" no-brainers such as Top Gun and Lethal Weapon, he wisely decided to put it on hold.

From its very genesis, Gangs has had a troubled history the script, written by critic and screenwriter Jay Cocks, had been passed on so many times many believed it to be jinxed. The main problem stemmed from its setting in New York at the time of the Civil War draft riots of the mid-19th century, a period which remains something of a grey area in the public consciousness. Sure, everyone knows where they were when the Titanic went down or JFK was shot, but 150-year-old religious tensions and class wars between Protestant settlers and roughneck Irish Catholic immigrants are somewhat harder for movie-goers much less executives to grasp. Nobody seemed sure whether to pitch this as a gang war flick or a sweeping period piece.

Bearing this in mind, Scorsese must have been a worried man when he began principal photography outside Rome last September without full studio backing in place (making Gangs, with its budget of at least $85m, arguably the most expensive independently financed shoot of all time). After all, Terry Gilliam's own labour of love, Don Quixote, starring Johnny Depp, had fallen apart weeks into shooting in 1999 due to a combination of scheduling complications, natural disasters and illnesses amongst the cast.

Furthermore, it's worth remembering that Martin Scorsese is not what you might call a sure-fire hit director. For every box-office smash (Goodfellas, Cape Fear), he's also had under-achievers such as New York, New York and King of Comedy. Even his most celebrated works, Taxi Driver and Raging Bull, fared far better in terms of reviews than receipts. Of the director's more recent efforts, Casino was regarded as a solid but unspectacular retread of Goodfellas, Kundun a beautiful but uncommercial enterprise, while Bringing out the Dead, despite strong source matter and a bankable lead actor in the form of Nicolas Cage, didn't exactly set the world alight.

Still, Gangs of New York has the backing of Harvey Weinstein, co-chief of Miramax, a company renowned for making box-office hits out of relatively highbrow films like The English Patient and The Crying Game. Weinstein is that Hollywood rarity, a man who is as knowledgeable about French new-wave directors as he is hard-nosed in his financial dealings. Similarly, Scorsese is old school, and knows it.

According to an American GQ article written by Variety editor and former Paramount executive Peter Bart, when Star Wars mogul George Lucas visited the director on set, he noted the elaborate (and expensive) period-piece sets and quipped that he could've done the whole thing much cheaper with his special effects company Industrial Light and Magic. So Gangs' overall tone, plus Scorsese's refusal to go for the jugular in terms of screen violence, has the accountants twitching. Set designer Dante Ferretti might have painstakingly recreated the slums, tenements and cathedrals of 1850s Manhattan, but his director is evidently shooting for the smoky surrealism of Fellini rather than the gritty realism of Mean Streets.

Reading back through Peter Biskind's excellent book about the New Hollywood generation, Easy Riders, Raging Bulls, it becomes apparent that precious few factors separate a film shoot from being a triumph of the will and an unmitigated disaster. Eleanor Coppola's Heart of Darkness documentary of the absolute lunacy of her husband's Apocalypse Now shoot, which was plagued by a Biblical scourge of fires, famines and floods (not to mention Martin Sheen's heart attack), is instructive viewing in this respect.

Gangs of New York may not be quite as risky an endeavour, but worries abound that lead actor Leonardo DiCaprio is not the bankable prospect he used to be. Pre-Titanic, DiCaprio had established himself as a ferociously instinctive actor in films like What's up with Gilbert Grape? James Cameron's blockbuster made him a teen idol, but also did significant damage to his credibility, and the actor spent the aftermath dithering over roles that might redress the balance, famously pulling out of a lead part in American Psycho. His subsequent comeback in the Generation X backpacker flick The Beach received a lukewarm response, and there has been talk of too many pasta dinners putting paid to his pretty-boy looks.

Of the rest of the Gangs cast, Cameron Diaz remains far more than just a pretty face, but Daniel Day-Lewis, once dubbed the new De Niro, had to be coaxed out of retirement (or rather, his new vocation as a cobbler in Florence, believe it or not) to fill the bad-guy role initially offered to old Bob himself.

Then, of course, there are ever-present whisperings about script problems on top of all the development difficulties, plus the odd lawsuit for good measure.

No doubt, Scorsese's financiers would prefer it if he dumped big ideas like Gangs of New York and proceeded with more concrete prospects such as Dino, the mooted Dean Martin biopic based on Nick Tosches' brilliant biography and starring Tom Hanks. That latter film may yet happen, but right now, for better or worse, it seems that Scorsese's long-cherished pipe dream is finally about to be realised.