Why Steven Spielberg And George Lucas Traded Their Star Wars And Close Encounters Profits
A long time ago, in a galaxy before "Star Wars," creator George Lucas was worried. He was in the middle of making "A New Hope" — an original space adventure he created after he was unable to get the rights to "Flash Gordon." It was a big risk for the filmmaker. Despite some success with his earlier film, "American Graffiti," he hadn't yet established himself. And all but one studio turned "Star Wars" down.
20th Century Fox eventually took a gamble on his ambitious sci-fi epic, at the request of producer Alan Ladd Jr. A lot was riding on it. But the production was soon plagued with location difficulties, scripting problems, and a studio that was eager to shut down production. All in all, "Star Wars" was not going well.
I've got a bad feeling about this
As we all know, "Star Wars" would go on to become a huge hit, kick-starting one of the biggest film franchises of all time. But back then, nobody saw it coming. Even Lucas himself thought "Star Wars" was going to be a flop.
"I didn't think the film was going to be successful," he said at a Q&A in 2015. "I showed it to all of my friends early on, but it was mostly stock footage of old war movies, and all kinds of stuff. They saw it and [said] 'Poor George ... what were you thinking?'"
Thankfully, not everyone agreed. But the only person who really thought "Star Wars" was going to be a huge hit was his close friend, Steven Spielberg.
"Steven had jumped up, and said, 'This is going to be the biggest movie of all time.' Everybody in the room looked up at Steven and [said], 'Poor Steven.'"
Spielberg was right, of course ... and he was ready to put his money where his mouth is.
Republic credits are no good out here
At the same time Lucas was filming "Star Wars," Spielberg was shooting his own sci-fi epic.
"Jaws" had made the young director a household name in 1975, and Spielberg enjoyed all the success that came with it. He followed it up with "Close Encounters of the Third Kind," and the studio was happy to throw money at him. Lucas wasn't so fortunate.
"George came back from Star Wars a nervous wreck," he told TCM. "He didn't feel Star Wars came up to the vision he initially had. He felt he had just made this little kid's movie."
During a break from filming "Star Wars," Lucas visited his pal's set. And it didn't help.
"He said, 'Oh my God, your movie is going to be so much more successful than 'Star Wars'! This is gonna be the biggest hit of all time. I can't believe this set. I can't believe what you're getting, and oh my goodness.'"
The more experienced director, Spielberg had managed to wrestle a $19.4 million budget from Columbia Pictures, while "Star Wars" eventually ended up costing around $11 million. 20th Century Fox didn't even want to spend that much.
The force is with you, George
Despite Spielberg's support, Lucas was more convinced than ever that "Star Wars" was going to lose money. But then a simple bet changed everything. During his visit to the "Close Encounters" set, he made Spielberg an offer.
"He said, 'All right, I'll tell you what. I'll trade some points with you. You want to trade some points? I'll give you 2.5% of 'Star Wars' if you give me 2.5% of 'Close Encounters.” So, I said, 'Sure, I'll gamble with that. Great.'"
Lucas had just pulled off the bargain of a lifetime. Convinced that "Close Encounters" was going to be a huge hit, he returned to the "Star Wars" set knowing that at least this movie wasn't going to sink him. But 20th Century Fox still wasn't convinced.
"The studio, the board [at Fox] didn't have any faith in it," explained Lucas. "Even when we showed it at [an] 'American Graffiti' screening and everybody loved it."
Of course, all that was about to change.
I find your lack of faith disturbing
"Star Wars: A New Hope" was released on May 25, 1977 ... but George Lucas wasn't watching the box office. Instead, he was preparing to head off to a beach in Hawaii with his pal, Steven.
"I don't read the reviews," he explained. "I just go, lay on a beach."
Clearly, Lucas was bracing himself for failure. He was still adamant that "Star Wars" was going to be a flop. But before he could leave on vacation, 20th Century Fox head Alan Ladd Jr. called with some good news.
"It's a fantastic hit!" he told Lucas. "Every single paper! There are lines around the block. You can't believe this!"
And Lucas didn't believe it. At least, not at first.
"Laddie, calm down," said Lucas. "It's a science fiction film. Science fiction films get a good old group of sci-fi fans. They'll go to anything the first week. Wait for a couple weeks, and you'll see what it's really gonna do."
Eventually, the good news sank in, but only once Lucas had seen a TV news bulletin about the overnight phenomenon that "Star Wars" had become.
"He called and said, 'George, turn on the news.' I said, 'What?' He said, 'Turn on CBS. Turn on the news. Walter Cronkite. You gotta see it.' I turned on the news, and they had this huge story on the sensation of Star Wars, and lines around the block. Everybody was going berserk about it. That was the first time I understood that it was a big hit."
That turned out to be a bit of an understatement.
Do or do not - there is no try
"Star Wars" eventually grossed a staggering $775.4 million according to Box Office Mojo, reportedly earning Spielberg a whopping $40 million.
Lucas, on the other hand, earned just $13 million from "Close Encounters."
And Spielberg couldn't have been happier:
"Both of our movies were wildly profitable. 'Close Encounters' made so much money, it rescued Columbia from bankruptcy. The most money I had ever made on a film before was from 'Close Encounters.' But 'Close Encounters' was just a meager success story. 'Star Wars' was a phenomenon. And of course, I was an acting beneficiary of a couple of net points on that movie, which I am still seeing money on today."
Remarkably, Lucas made good on his bet, and the two have remained firm friends despite this little imbalance in the Force.
"I think I came out on top of that bet," said Spielberg. "I did a lot better than George."
Of course, compared to the $4 billion Lucas made from the sale of Lucasfilm to Disney, $40 million seems like a drop in the ocean.