— Ch. 1 · Production Development And Financing —
The Empire Strikes Back.
~8 min read · Ch. 1 of 6
George Lucas stood at a crossroads in 1978. The unexpected success of Star Wars had made him wealthy, but it also brought threats and unwelcome requests for financial backing. He considered selling the project to 20th Century-Fox in exchange for a profit percentage. Fox had already given Lucas a controlling interest in the series' merchandising and sequels because it thought Star Wars would be worthless. Terms were agreed quickly for the sequel compared to the original. A 100-page contract was signed on the 21st of September 1977. It dictated that Fox would distribute the film but have no creative input. In return, they received 50% of the gross profits on the first $20 million earned. If earnings exceeded $100 million, the percentage increased to 77.5% in the producers' favor. Filming had to begin by January 1979 for release on the 1st of May 1980. The deal offered significant financial gain for Lucas, but he risked financial ruin if the sequel failed. To mitigate some of the risk, Lucas founded The Chapter II Company to control the film's development and absorb its liabilities. He signed a contract between the company and Lucasfilm, granting himself 5% of the box office gross profits. He also founded Black Falcon to license Star Wars merchandising rights. Development for the sequel began in August 1977 under the title Star Wars Chapter II. Lucas considered replacing producer Gary Kurtz with Howard Kazanjian. Kurtz convinced him otherwise by trading on his longtime loyalty to Lucas and his knowledge of the Star Wars property. By late 1977, Kurtz began hiring key crew members including production designer Norman Reynolds and consultant John Barry. Lucas rehired artists Ralph McQuarrie and Joe Johnston to maintain visual consistency with Star Wars. They began conceptualizing the Hoth battle in December. By this point, the budget had increased to $10 million.