When George Lucas Negotiated the Rights to Star Wars, the Force Was With Him

To date myself, I remember seeing the preview for Star Wars in 1976 with my dad. And I still remember his reaction: “Well, that’s a stinker.” Ha!

In 1973, George Lucas walked into 20th Century Fox with a script about space samurai and a secret he was desperately hoping they would not figure out.

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After American Graffiti turned $750,000 into $100 million at the box office, Lucas had something rare for a young filmmaker: leverage. Fox had greenlit his next project – a science fiction film about space and an energy field called the Force that most executives at the studio had not read past the first page.

Now they were sitting down to talk money. His agent told him he could command $500,000 to direct. Maybe more.

Lucas looked across the table at the most powerful studio in Hollywood and made a different kind of move.

He Knew Something They Did Not

He offered to take $150,000 instead of $500,000 – $350,000 less than he was owed – in exchange for two things Fox thought were essentially worthless:

1. All the sequel rights to Star Wars, and

2. All the merchandising rights

Fox’s executives looked at this and felt a pleasant warmth spread through the room.

Lucas was cutting his fee and they got the movie. The merchandise rights? Who cares? Movie merchandise was, at that point in history, a novelty. Novelizations. Keychains.

Nothing that moved the needle on a balance sheet.

They leaned back, talked it over, and said, “Sure, George, whatever you want!”

Lucas kept his face carefully neutral the whole time. Inside, he was hoping they would not do the math.

(I was a lawyer for years. This was always my favorite moment. You know something the other side does not know. All you need is for them not to figure it out before they sign. 🤞)

They Signed

Lucas shook hands, walked to his car, and allowed himself one small exhale.

He had bet on something Fox could not see yet: That if Star Wars worked the way he believed it might, the real money was not the movie. It was the everything else. The toys, the sequels, the expanded universe, the characters.

He bet on himself and saw a possible game changer.

They saw a cute film.

The Payoff

Star Wars opened on May 25, 1977. The demand for merchandise was so explosive that Kenner – the toy company that had licensed the rights for $100,000 flat plus five cents on every dollar from Lucas – could not get action figures made fast enough.

By Christmas 1977, they were selling an empty box. Literally – a cardboard envelope called the “Early Bird Certificate Package,” for $7.99, containing a certificate promising the figures would arrive in spring.

Hundreds of thousands of parents bought the empty box.

In the first year, Star Wars merchandise grossed $100 million. Over the next three decades, it generated $12 billion. In 2012, Lucas sold Lucasfilm to Disney for $4.05 billion.

Fox got the movie.

Lucas got the rest.

The Takeaway

So often, when I coach entrepreneurs going up against a bigger company or a bigger negotiating partner, I hear the same worry: “They have more money, more lawyers, more leverage. How do I win?”

Here is how. You need to know things they do not.

The big company across the table is slow. It is looking at this quarter, not the next decade. It cannot see around corners the way you can, because it is too big to turn quickly even if it does. Lucas was not smarter than the Fox executives. He was just closer to the future than they were. He lived and breathed this world. They managed a portfolio.

Negotiating can be genuinely fun, by the way. Don’t take it too seriously; it’s a game.

That is the Force. And may it be with you!

Steal This Strategy

📖 Read: How George Lucas Bet on Himself – and Won Big With ‘Star Wars’. The full story of the deal, the rights, and the business mind behind the blockbuster.

📖 Book: Never Split the Difference by Chris Voss. Former FBI hostage negotiator teaches you how to win any negotiation – including the ones where the other side has all the apparent leverage.

🛠️ Tool: Accio – AI Product Sourcing by Alibaba. Lucas made his real empire from physical products. My pals at Alibaba built this AI tool so you can do the same – find suppliers, validate products, and move from idea to shelf in minutes.

📅 Meet: Want Me to Create and/or Write Your Newsletter For You? Book a free discovery call with me.

About Steve

Steve Strauss is the best-selling author of The Small Business Bible (and 17 other books), Inc.’s small business columnist, a lawyer (non-practicing), and an entrepreneur. He sold his last venture, TheSelfEmployed.com to Mark Cuban & Zen Business. Need a ghostwriter or a newsletter for your business? Contact Steve!