From Bold Gamble to Billionaire Triumph: George Lucas’ 1973 Game-Changer That Shaped His Billion-Dollar Empire

George Lucas is a very wealthy man. With an impressive net worth of $7 billion, George is the third-richest celebrity globally, behind Jami Gertz and Steven Spielberg. What is maybe most interesting about the Lucas Fortune, at least when compared to other entertainment billionaires, is that it was earned nearly all of it from one idea: Star Wars.

George Lucas, despite being a director, boasts a rather modest resume. To put it in perspective, Lucas has helmed a mere six feature films in his entire career, with a noteworthy caveat: four of these belong to the iconic Star Wars franchise.

In contrast, the prolific Steven Spielberg has an impressive track record of over 30 distinct feature films, several of which have achieved legendary status as some of the most successful and enduring classics in cinematic history. The question then arises: how did George Lucas amass an enormous personal fortune from a solitary movie franchise?

Everything boils down to one simple, but quite brilliant billion-dollar decision in 1973…

Before the year 1973, George Lucas faced considerable challenges in his pursuit of success within Hollywood. His initial foray into major directorial work came in the form of “THX 1138” in 1971, a film featuring Robert Duvall set in a dystopian future dominated by android robots who maintain control over society through the use of emotion-suppressing drugs.

George Lucas And His "Poor" Friend Steven Spielberg,

Subsequently, Lucas released “American Graffiti” in 1973, a film that stood in stark contrast to “THX 1138.” Notably, “American Graffiti” achieved massive commercial success.

Ultimately, it became one of the most profitable movies of all time, earning $200 million with a relatively modest budget of only $775,000. Notably, it was nominated for an Academy Award for Best Director, Best Original Screenplay, Best Picture, Best Editing, and Best Supporting Actress. Lucas now became a hot commodity.

In 1971, George Lucas conceived the idea for “The Star Wars,” a space-set western. Over two years, he worked on the script amidst personal debt and career challenges. After the triumph of “American Graffiti,” Lucas was in a strong negotiating position, having earned $150,000 for directing it.

Advised by his managers to seek a substantial salary increase, he also encountered Alan Ladd, Jr., an executive at 20th Century Fox who admired “American Graffiti” but was skeptical of “Star Wars.” Despite widespread skepticism at Fox, Ladd secured Lucas a 1976 directing deal with an initial budget of $8.25 million, which ultimately expanded to $11 million.

The Brilliant Decision

Following the triumph of “American Graffiti,” George Lucas was poised to earn $500,000 for directing what had been simplified to “Star Wars.” However, rather than accepting this substantial 300% pay increase, Lucas presented a proposition to Fox executives.

In a remarkable gesture, he agreed to maintain his salary at $150,000, with just two seemingly minor conditions: first, the retention of all merchandising rights, and second, the rights to any potential sequels. This proposal, although it may sound unbelievable today, was highly advantageous for the studio at the time.

Fox had previously experienced a significant financial setback with the merchandise-related failure of 1967’s “Doctor Dolittle,” and the merchandise market was not a lucrative revenue stream in those days. Furthermore, sequel rights held little importance for Fox, given the prevailing belief among executives that the initial film had little chance of success. With $150,000 and a seemingly naiïve contract in hand, George Lucas embarked on finalizing his script.

As we are well aware today, “Star Wars” was an enormous success upon its 1977 release, establishing itself as one of the highest-grossing films ever. When accounting for inflation, “Star Wars” ranks as the second highest-grossing movie in history.

Remarkably, within six months of its release, the film had amassed an astounding $220 million in the United States alone, equivalent to $830 million in today’s inflation-adjusted currency. To date, “Star Wars” has generated a staggering $775 million at the box office, an impressive $2.5 billion when adjusted for inflation.

However, the lion’s share of George’s wealth didn’t stem from box office earnings. Between 1977 and 1978, “Star Wars” merchandise sales reached an astonishing $100 million. Fast forward 35 years, and the revenue from “Star Wars” themed toys alone has skyrocketed to a staggering $12 billion. Presently, licensed Star Wars toys consistently generate an annual revenue of $3 billion.

It’s crucial to note that, following the release of the initial film, George Lucas retained 100% ownership of the entire franchise.

The subsequent five Star Wars movies collectively added an extra $3.5 billion to the box office coffers. In total, the Star Wars Empire has reaped $4 billion from DVD and VHS sales, $3 billion from video games, $2 billion from books, and another $1.3 billion through various licensing agreements.

When you tally it all up, the cumulative revenue from 35 years of Star Wars licensing reaches an astonishing $27 billion. After accounting for expenses, taxes, and fees, George Lucas had amassed a remarkable net worth of $3.3 billion by 2012. Then, Disney came knocking.

In 2012, Disney paid George a cool $4 billion to buy the whole franchise outright.

With the sale, George Lucas got $2.21 billion in cash and 37 million shares (37,076,679) of stock. At the time, the shares were valued at $50 each. So by the time the deal closed, he got $1.85 billion worth of Disney shares. Before the sale, he was already worth an impressive $3.3 billion.

In March 2021, with Disney’s share price almost $200, the 37 million shares, had grown to be worth around $7.4 billion. At that time George was worth $10 billion. Currently, these shares are worth nearly $3.2 billion and with Disney’s semi-annual $0.88 dividend, George Lucas gets nearly $64 million annually in dividend payments.

Without retaining all these rights, Lucas would have done quite well, but his earnings would have been a small portion of what they have now become. The windfall would not have been possible if it was not for the brilliant decision executed in 1973.

George Lucas effectively exchanged $350,000 for over $7 billion, marking one of the most astute business decisions in history. The key takeaway here is that if you have an unwavering belief in your vision, hold onto your rights tenaciously!

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