While the sale of Lucasfilm to Disney saw George Lucas take $4.02bn in exchange, half of that was in Disney stock, but to get to the place where the company was so desirable to buy was no accident. Celebrity Net Worth take a look at how Lucas struck the deal of the century before Star Wars was even made.
George Lucas wasn’t exactly a film industry titan back in the early 1970s. First off, he was just 28 years old in 1973 when he pitched a “western set in space” to 20th Century Fox executives. Secondly, what eventually became “Star Wars” was only the THIRD movie that would be directed by Lucas, following 1971’s “THX 1138” and 1973’s “American Graffiti”.
George did have a bit of clout though. “American Graffiti” wound up becoming one of the most-profitable movies of all time, eventually earning $140 million off its $777,000 budget.
But even with this enormous success in his pocket, George was still not in a position to tell 20th Century Fox executives that he needed $11 million – 15 times his previous budget – for a weird space movie, while also retaining complete and exclusive ownership of the franchise’s intellectual property rights.
Frankly, 20th Century Fox execs wanted him to go out and make “American Graffiti 2”, or some other teenage coming of age drama/comedy. But George wanted to make his space western. 20th Century Fox executives were on board, but nervous.
FYI, $11 million in 1973 is the same as around $65 million today. As a comparison, 2019’s “Joker” had a total production budget of $55 million.
To ease the studio’s nerves, George had a proposition.
After the success of “American Graffiti”, George was entitled to a salary of $500,000 for his next project, a 300% raise over the $150k he earned from “Graffiti”.
Instead of accepting $500,000, George proposed Fox keep his salary at $150,000 in exchange for two seemingly insignificant asks:
#1) That he retain all merchandising rights.
#2) That he retain the rights to any sequels.
As crazy as it sounds now, at the time this was actually a fantastic deal for the studio. Fox had recently lost a fortune in the merchandising business with monumental failure of 1967’s “Doctor Dolittle”, so they weren’t exactly dying to get back into that world. Moreover, merchandise was simply not a meaningful revenue stream for studios back then. As for sequel rights, considering the fact that no executive thought the movie had a snowball’s chance in hell of making money the first time around, the sequel rights were considered worthless.
So the deal was struck…
Decades later it would be looked backed on as the best deal in the history of Hollywood.
Pre-Disney “Star Wars” sequels would go on to generate $3.5 billion at the global box office. “Star Wars” DVDs generated $4 billion.
And then there’s the toys and merch.
Pre-Disney “Star Wars” generated an estimated $12 billion in merchandise revenue.
100% of profits from all these streams went to George Lucas.
Most importantly though, without retaining the IP rights, George wouldn’t have “owned” anything, and therefore wouldn’t have had anything to sell to Disney decades later.
