George Lucas' stroke of genius decision from first Star Wars has earned him $10 billion
Almost 50 years ago George Lucas made an utterly brilliant decision that would earn him billions from the biggest gamble he ever took in his career.
Back in 1976 in a world before Star Wars, George Lucas was trying to get his landmark movie made. He eventually struck a deal many thought was mad at the time, but turned out to be a stroke of genius.
The deal on the table would see Lucas get paid a total of $165,000 for developing the film, its script and directing Star Wars, plus he'd be in line for 40 percent of the film's net profits.
That doesn't sound terrible, but the director had ploughed $400,000 of his own money into making Star Wars, and there was a clause in the agreement that meant Fox could pull the plug at any time.
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While the studio would appear to hold all the power, Lucas funding much of the pre-production himself meant he could take Star Wars elsewhere if they walked away from the table.
This is where the stroke of genius comes in, as the director renegotiated his contract not to score himself more money or a bigger slice of the profits but instead to have control over the film, its sequels and ancillary rights.
It's the famous deal you may have heard of where Lucas kept the merchandising rights to Star Wars, not because he foresaw the money it would make, but because he wanted control over his vision.
It might have seemed strange in the short term, but in the long run it let Lucas maintain control of Star Wars as a franchise and rake in billions of dollars.
He believed that while lots of people would buy a movie ticket to see Star Wars, over the years they'd spend even more on toys and games and all sorts of other merchandise, and he made sure those proceeds would go to him.
Striking this deal had another knock-on effect for Lucas, as Star Wars being his meant that when the time came to sell it off to Disney he made even more money, and yet another stroke of genius.
See, when Lucas first sold Star Wars and everything that goes with it to Disney it was reported that it'd earned Lucas a nifty $4 billion.
However, according to a new blog from Disney's InsideTheMagic.net, that deal is now worth more like $10 billion as Lucas took his payment in part-cash, part-stock and the value of that stock is four times larger now than when he got it.
At the time, Lucas ended up with 55 percent cash, 45 percent stock – around $2.21 billion in cash and 37,076,679 shares in Disney. At the time of the deal, Disney stock was $50 a share.
Now, however, the report says Disney stock is up to $200 a share, so if Lucas still has his 37 million shares (around 2.1 percent stake in the company), he's bagged himself around $7.4 billion, which, when added to the cash he took when he struck the deal, adds up to a pretty penny.
Not a bad payoff considering it all came from one crucial decision.
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Topics: Star Wars, Money, Film and TV
Joe Harker