Did Steven Spielberg Win a Percentage of the Profits of the First Star Wars in a Bet?

Here is the latest in a series of examinations into urban legends about movies and whether they are true or false. Click here to view an archive of the movie urban legends featured so far.

MOVIE URBAN LEGEND: Steven Spielberg won a percentage of the profits of the original Star Wars film in a bet.

One of the most difficult periods in the creative process for a filmmaker is the period after filming is completed but before the film is released. Once the film comes out, whether it is a hit or not, the creator at least knows where he or she stands. Before it comes out, though, their mind just races with the possibilities. You would be surprised at the massive hit films where their directors were freaking out after the filming was finished about all the things that had gone wrong and how no one was going to go watch the movie that they had just spent months of their life making. It was just this sort of reaction by director George Lucas in 1976 that led to one of the craziest bets in film history.

As many Star Wars fans know, the filming of the first Star Wars movie was about as close to a disaster as you can get. The film was originally scheduled for a Christmas 1976 release but delays in the filming pushed it all the way to the Summer of 1977. The film was about 40% over budget. There was very little buzz about the film ahead of its release, as science fiction films were not exactly known for being box office successes at the time. Moreover, due to the delays, the editing and special effects of the film were also pushed back and since some of the special effects were unlike any seen in films before, it was very risky to be working on this stuff on such a cramped deadline. At an advance screening in February 1977, just three months before the film’s release, many of the film’s special effects (including the climactic battle at the Death Star between the Rebel starships and the Imperial TIE Fighters) had not yet been finished. So Lucas was a bit of a wreck in the months leading up the film’s release. Once completed, 20th Century Fox actually seemed to be quite impressed with the final picture, but Lucas was still wary. When one film executive remarked, “You’re drunk and crazy – this picture’s going to be the biggest hit ever made,” Lucas retorted, “Oh no. It won’t make more than fifteen million.”

So, keeping Lucas’ mindset in mind, imagine what happened when he went to visit the set of his good friend Steven Spielberg’s movie, Close Encounters of the Third Kind after filming of Star Wars had wrapped in 1976. Spielberg, remember, was just coming off directing one of the biggest moneymakers in movie history at the time, 1975’s Jaws. So in Spielberg, Lucas saw someone who really had this “making a hit film” stuff down. In the 2007 Turner Classic Movies documentary Spielberg on Spielberg, Spielberg recalled Lucas’ visit to the set:

George came back from Star Wars a nervous wreck. He didn’t feel Star Wars came up to the vision he initially had. He felt he had just made this little kids’ movie. He came to Mobile, Alabama where I was shooting Close Encounters on this humongous set and hung out with me for a couple of days. 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.’

This is where the bet came in. Spielberg continues:

He said, ‘You want to trade some points? I’ll give you two and a half per cent of Star Wars if you give me two and a half per cent of Close Encounters.’ “I said, ‘Sure, I’ll gamble with that, great.’

So the “bet” is that each filmmaker would have two and a half percent of the other guy’s film (“points” are a term of art for percentage points). Therefore, they are each betting that their friend’s film will do better than their own film. Obviously, specifically it is Lucas feeling that his film will not do particularly well. So it seems pretty clear that Spielberg was more being nice to his friend than anything else. That said, I think that it still counts as a bet, even if it was a bet meant more as a good will gesture than anything else (Spielberg was good enough friends with Lucas that he joined Lucas and Lucas’ wife on a trip to Hawaii after Star Wars was released. He and Lucas amusingly built an elaborate sand castle together to celebrate the film’s success. While there, they worked out plans to do a movie together, with said film turning out to be Raiders of the Lost Ark). Naturally, even though Close Encounters of the Third Kind was a major success, Star Wars was a phenomenon and took in over $400 million at the box office worldwide by the end of 1978.

A significant part of the story, though, (and one that Spielberg clarifies in the documentary) is that what was at issue here was NET points, not gross points. Gross points mean that you get a percentage of whatever the film makes. If the film makes $400 million, you get a percentage of $400 million. Net points, however, are a percentage of whatever the film makes after expenses are deducted and as you might imagine, there are a whoooooooooole lot of expenses when it comes to making a film. In a previous Movie Urban Legends Revealed, I detailed how Paramount Pictures was reporting a net loss of over $60 million nearly a year after the release of the blockbuster hit film Forrest Gump (much to the chagrin to the fellow who wrote the book on which the film was based, who had agreed to 3% of the film’s net). So while Spielberg certainly has made some money from the staggering success of Star Wars, you’d probably be surprised by just how little he made from his 2.5% of the net profits of the film. Still, even if it is not a ton of money, it remains a cool story!

The legend is…

STATUS: Essentially True

Thanks to Steven Spielberg and Turner Classic Movies for the information!

Feel free (heck, I implore you!) to write in with your suggestions for future installments! My e-mail address is bcronin@legendsrevealed.com.


One Response to “Did Steven Spielberg Win a Percentage of the Profits of the First Star Wars in a Bet?”

  1. Growing up in Mobile, Alabama, I had heard as a child in the 80’s that Close Encounters was filmed in a hanger there but I’ve never seen it confirmed before.

Leave a Reply