5 'Dumb Bets' That Eventually Made the Bettors Insanely Rich

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Star Wars toys at the LEGO office in the toy district of NYC on Monday Feb. 13, 2006 as part of the American International Toy F
David Rogowski/AOL
Viewers of the TV show "Shark Tank" may sometimes wonder who got the better end of the deals -- the sharks or their prey. Often, contestants who walk out of the tank empty-handed are thought of as foolish for not accepting the terms that they were offered.

But history has shown us that what may seem in the short term as a bad deal can turn out to be highly profitable in the long run.

1. A Long Time Ago

In 1976, George Lucas was a young director who had just come off of "American Graffiti," his first successful film. Though Lucas had high hopes for his next project -- which he described as a "western set in space" -- studio executives didn't feel the same way. Lucas took advantage of this skepticism and offered to cut his $500,000 directing fee down to $150,000 in exchange for two concessions. He wanted to retain all merchandising rights, plus the rights to all sequels.

It seemed at the time a good deal for the studio. Movie merchandising up until that point had been a break-even business at best, and the studio didn't think his space western had any chance to be successful, let alone spawn sequels. Of course, "Star Wars" did both. The movies and their merchandise have generated more than $27 billion in revenue, and in 2012 Disney (DIS) bought the franchise from Lucas for $4 billion.

2. Could You Use a Navy Blue Background?

In 2003, underground artist David Choe arrived in Tokyo and within 24 hours found himself sitting in a prison cell, the result of punching an undercover security guard. It was not a particularly unusual series of events for Choe, who was known a rebellious nonconformist in his art and his life.

A high school dropout who had spent much of his youth drifting across the U.S. and Europe, later in life Choe became known for presenting edgy and often obscene exhibitions of his work in nontraditional settings such as ice cream stores.

In 2005, Choe was approached by a young company to paint murals at its corporate headquarters. Despite the fact that he thought this Internet startup's focus was "ridiculous and pointless," he opted, when given the choice, to get paid in stock options instead of $60,000 in cash.

Seven year later, when Facebook (FB) went public, Choe's stock was worth roughly $200 million. Ironically, the murals Choe did were not initially a hit with Facebook executives. Sean Parker, then president of Facebook, called them "schizophrenically distracting" and even asked Choe when he was finished, "there's nothing more you can add to it?"

3. D'oh! Why Didn't I Consider Streaming Video?

Since debuting in 1989, "The Simpsons" has become one of the longest-running shows in the history of television. Thanks to a shrewd move, co-creator Sam Simon is still making a mint off it even though he has had no involvement with it since 1993.

Simon, a writer and producer on hits like "Taxi" and "Cheers," created "The Simpsons" with Matt Groening and James L. Brooks. Simon famously predicted to a "Simpsons" staffer that it would be "13 and out," meaning after 13 episodes, the network would cancel the show. Though Simon now claims he only said that to "take the pressure off" the writing staff, at the time it rubbed Groening the wrong way and led to a progressively more contentious working relationship.

Eventually Simon was asked to leave the show. But in negotiating his exit, Simon asked for and received profit points and an executive producer credit on the show in perpetuity.

But perhaps his most profitable move was his demand that he receive a percentage of all home video sales. In 1993, during the era of videotape ,when the idea of downloading video would have been science fiction, this seemed like a minor concession. Times change. The deal has earned Simon $500 million and generates between $20 million to $30 million annually.

4. The $800 Million Shot from Beyond Half-Court

The American Basketball Association was an upstart hoops league created in 1967 to challenge the venerable NBA, and originally consisted of 11 franchises. Although the ABA brought an exciting attitude toward the game –- among other things, it invented the slam-dunk contest -- most of its teams struggled to stay viable.

By 1976, only seven ABA teams were left when the NBA agreed to merge leagues: the Indiana Pacers, New York Nets, Denver Nuggets, San Antonio Spurs, Kentucky Colonels, Virginia Squires and the Spirits of St. Louis.

However, the NBA only wanted the Pacers, Nets, Nuggets and Spurs, which meant that those teams had to settle with the remaining three -– per the ABA owners' agreement -– as a condition of a merger. The Squires went out of business weeks before the merger was completed, and the Colonels agreed to a lump sum payment of $3 million.

"Perpetuity is a long time." - Donnie Walsh

Dan and Ozzie Silna, the owners of the Spirits, recognized their now-advantageous position and negotiated a one-time payment of $2.2 million cash and a one-seventh share of the television revenues from the four surviving ABA teams, in perpetuity.

Televised basketball wasn't considered a very valuable commodity in the 1970s, and even playoff games were often aired on a tape delay. But, as Pacers president Donnie Walsh has since commented, "Perpetuity is a long time."

With former ABA players like Julius "Dr. J" Erving showcasing a new type of basketball theatrics, the viewing public began to take notice. In subsequent years, the Larry Bird-Magic Johnson rivalry and the emergence of basketball phenom Michael Jordan drove the NBA's Nielsen ratings to unprecedented heights.

Despite numerous attempts over the years by the four franchises to buy out the contract, the Brothers Silna refused to budge. Finally, in early 2014, after amassing more than $300 million in revenue since 1976, they agreed to terminate their contract for a final payment of $500 million.

5. Complicated Collar Was Well Worth It

Mark Cuban is widely known as the outspoken owner of the Dallas Mavericks, as well as one of the "sharks" on "Shark Tank." But what many people may not know is that Cuban made most of his money thanks to a business decision that at first appeared to have cost him a fortune.

First, the backstory: Cuban co-founded Broadcast.com, an Internet radio company, in 1995. It was eventually bought in an all-stock deal by Yahoo! (YHOO) for $5.7 billion. Cuban's stake netted him $1.4 billion in Yahoo! stock, then trading at $95 per share. The terms of the deal included a three-year lock-up period during which Cuban was forbidden to sell his stock.

What Cuban did next is the stuff of legend. Not content to let the whims of the market determine his fate, Cuban created a complex option strategy, known as a collar, which capped both the upside and downside values of his stock for those three years.

Initially, it looked like a bad move as Yahoo shares soared as high as $237 a share in January 2000, but then the bubble burst, and shares dropped as low as $13. The collar ensured that the lowest price he would get when he sold would be $85 a share, which meant he captured almost 90 percent of his position's value and retained his "billionaire" title.

Rumors at the time said that constructing the collar cost Cuban a cool $50 million, though Cuban now disputes that, saying the cost was negligible. Either way, it certainly was a move worthy of a shark.

Brian Lund's blog offers more on small business, the stock market, investing and the secret to eternal life.

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weilunion

The whole stinking capitalist economy is a Casino economy. This 'news' is really part and parcel of the propaganda that the system jerks out so people will believe in it.

While the jobless, the indebted, the marginalized and the disposable people suffer misery and ahrdship under this decaying system of go it alone morals and insipid inequality and individualism, the rich play.

It doesn't have to be this way if we rise up!

May 26 2014 at 7:23 PM Report abuse rate up rate down Reply
OBee

How about IBM and Bill Gates?
Way back when IBM let Gates keep ownership of the floppy disk. IBM's thinking was a 'personal computer' was a waste of time, hence the 'floppy' came under the waste of time umbrella! THAT little patent and subsequent ones led to Gates being the richest man in the world.

May 26 2014 at 11:23 AM Report abuse +1 rate up rate down Reply
1 reply to OBee's comment
weilunion

Wow, you should post this at Wikipedia! Or better, go to WalGreens, Waqlmart, or any fast food joint and tell the workers. How inspiring

May 26 2014 at 7:39 PM Report abuse rate up rate down Reply
dicktracy2500

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May 26 2014 at 7:59 AM Report abuse -2 rate up rate down Reply
1 reply to dicktracy2500's comment
weilunion

Thanks for the ad on the website that is itself an ad for immoral capitalism and the pursuit of profit over love and people

May 26 2014 at 7:38 PM Report abuse rate up rate down Reply
Chris

So Sam Simon is making money off of episodes he's never worked on.

Wikipedia, quoting an interview:

"When I was there I thought I was underpaid. I thought I wasn't getting enough credit for it. Now, I think it's completely the opposite. I get too much credit for it. And the money is ridiculous."

Well... you could stop taking it, Sammy.

May 24 2014 at 6:35 PM Report abuse -1 rate up rate down Reply
1 reply to Chris's comment
weilunion

It is power they want and they think power is money. they equate success with the acquisition of more. These one percenters are not only immoral, but they celebrate their immorality as ayn Rand did hers. Of course she was on Medicare when she died, after disgracing everything government, and the one percenters feast at the public trough that the American people fill each day for their feeding.

Sammy will not stop taking the money for he worships all that is materialistic and nothing that is human. This is one moral of capitalism: to love things that are dead. ***********

May 26 2014 at 7:37 PM Report abuse rate up rate down Reply
Magic

Years ago i bought stock in (LUX) Luxotica, it is a company based on anything to do with EYES. I foresaw people staring at computers and cell phones, and the more you stare or used your eyes, the worst they got resulting in glasses, contact lenses or lasic eye surgery. All resulting in needs for other eyewear, such as sunglasses..LUX has got it all covered as far as eyes are concerned and continues to make profits....Magic

May 24 2014 at 12:24 PM Report abuse -2 rate up rate down Reply
thomashollman19

---------SOULDA----------COULDA ---------WOULDA------AND----- IFIDA

May 24 2014 at 9:26 AM Report abuse +1 rate up rate down Reply
1 reply to thomashollman19's comment
weilunion

Yes, this Magic guy has embraced the love of money. Bet he says he is a Christian too

May 26 2014 at 7:35 PM Report abuse rate up rate down Reply
drmike15

I'm sure these stories are of great inspiration to the tens and tens of millions unemployed, semi-employed, and Mc-employed.

May 23 2014 at 1:28 PM Report abuse -2 rate up rate down Reply
3 replies to drmike15's comment