Soon after the release of The Empire Strikes Back during the summer of 1980, the decision was made to release the third installment in the Star Wars saga in the summer of 1983. Obviously the story for Empire was conceived with a sequel in mind and certain production requirements for a sequel were implicit in the production values for both Star Wars and The Empire Strikes Back, but the selection of a release date was the first commitment from which all the other production decisions flowed.

One of the first things Howard Kazanjian did as producer of The Return of the Jedi was to lay out a calendar for the production starting with a release day of May 27, 1983, and working backwards. (the release date was subsequently changed to May 25 to coincide with the sixth anniversary of the initial release of Star Wars.) The calendar set dates not only for the major steps in the preproduction process (start of creature design, selection of director, completion of shooting script, etc.) but also for start and completion of principal photography and the major phases of postproduction—all the way down to the scoring and the timing of an answer print. According to Kazanjian some people thought he was crazy to set dates for all the production and post-production phases before he had the script, but he insists that such a calendar is the only feasible way to approach a production of this magnitude. As the production progressed, he flushed out the calendar with some specific dates; but he says that the original calendar remained accurate to within a day or two throughout production and post-production. His calendar was the key to completing the film on schedule and it was also the key to staying on budget. As he puts it, "If you don't follow the calendar, you're not following the budget. If—you're a week late starting the mix, it means you have a week more of offices and cutting equipment or whatever."

Kazanjian's background as an assistant director is evident in his approach to the scheduling and budgeting of Return of the Jedi. After attending USC film school where he first met Lucas, Kazanjian went through the Directors guild training program and began working as an assistant director. Lucas asked him to work on THX-1138 as an assistant director, but he was unable to take the job because it was a non-DGA production. Eventually he joined Lucas as producer of More American Graffiti and as an executive producer on Raiders of the Lost Ark. He is a firm believer in detailed pre-production planning. In describing how he budgeted the post-production sound work, for instance, he says, "We knew exactly how many sound effects cutters we would need and what their salaries would be and how many trips to Los Angeles people would have to make to do the ADR. Everything was mapped out. That's how we got our budget in the sound effects and not by saying 7% of the overall budget should go to post-production or some such." As a result 15 months after the commencement of principal photography Kazanjian calculated that the production was running about $500,000 under budget—although he was quick to concede that the final stages of the special effects work might well eat up the surplus so that the film would in fact finish on budget.

The budget for Return of the Jedi was $32.5 million. Because of the amount of special effects work done at Lucas's own effects facility, Industrial Light and Magic, (ILM), Kazanjian estimates that the film would have cost $50 million if anyone else had tried to make it. Given the fact that the film is following in the wake of two of the biggest grossing pictures of all time and seems virtually assured of earning $100 million at the box office, it might seem that there need be little concern for cost cutting in the production. Kazanjian insists however that he was always cost conscious: "You have to think in terms of money all the time. Should we build this set or should we use miniatures or a matte painting? If we just move the vehicles over this way a little bit more, we don't need that big a set and we can paint that in. You know it might cost $20,000 at ILM to composite a blue screen shot with a matte painting, but it's going to cost you $28,000 to build a set, money to strike it and more money to fill it with a bunch of extras. And maybe you're taking space on the stage that you could use for something else. At one point we were going to move the Millenium Falcon from the big Star Wars stage to another location for a scene; but, when I told George it was going to cost $40,000 to move it, he said, 'Let's paint it in. Let ILM paint it in.' So it became a blue screen shot, and I don't think anyone will realize it is a painting when they see it in the movie. So that was a way we saved money and that was George's idea."

A the same time Kazanjian emphasizes that there were times when he had to think less like a typical production manager who is trying to keep a picture on budget at all costs and more like the producer who is trying to get the best possible picture onto the screen. "You have to know when to forget about the budget and spend more money on the set, or for an actor or on the shooting schedule or on a hundred different areas where you might spend more money. Then you have to look at it and say, 'Now where can I save money? If I give an extra $15,000 to a particular actor that wasn't budgeted, is it possible to save by having 12 less extras in a particular scene?'—or whatever."

The parameters of the budget were determined by two things: the level of production value achieved in Star Wars and The Empire Strikes Back and the amount of time available to make the film. Kazanjian figures that the $10 million budget for Star Wars is the equivalent of $22 million or $25 million today. Empire cost approximately $25 million as well, so the starting point for Jedi was to write a script which could be made for $25 or $30 million. "If we have a script and we see that a set we want to build is going to cost $950,000 and we only have a minute and a half of screen time in it, we're either going to make the set smaller, combine it with another set or rewrite that particular page," says Kazanjian. When pressed on this, Kazanjian concedes that it was done more in principle on the production than in actual fact. A rebel briefing room and the rebel bridge were combined into one set and other sets were scaled down, but for the most part there was not that much need to redesign sets in order to cut costs. In fact some of the sets built for Return of the Jedi are as large and as elaborate as any set ever constructed for a movie.

While the accumulated experience of the production personnel who had worked on both the previous films and the advances in technology at ILM enabled the production of Jedi to get more production value per dollar than had been possible before, it was also clear to the filmmakers that Return of the Jedi would have to top both Star Wars and The Empire Strikes Back if it was to live up to the expectation of the audience. Some of this was achieved by the 30% increase in the budget over that of Empire but most of it was probably achieved through imagination and extra effort.

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