The film adaptation was trapped in a complicated chain of corporate deals long before cameras rolled. Universal Pictures acquired the rights for $5.5 million and agreed to pay the stage musical's creators royalties equal to 20 percent of distributor gross rentals above $30 million. Michael Bennett, the original Broadway director, was hired to produce and direct, but withdrew after the producers rejected his plan to use the film as an audition-like process for casting the movie's dancers rather than simply translating the stage play. Universal then sold the rights to PolyGram for $7.8 million in 1982, while Embassy Pictures joined as a co-producer and invested in Embassy Film Associates, the company financing the production.
The corporate maze became even more unstable six months before release, when Embassy was sold to The Coca-Cola Company, which also owned Columbia Pictures. Five months later, Dino De Laurentiis acquired Embassy but not its 20 percent interest in Embassy Film Associates, leaving confusion over who actually controlled the film and how Columbia would distribute it. Screenwriter Arnold Schulman later described the production as a battle between Columbia, Embassy, producers Norman Lear and Jerry Perenchio, and competing interests over casting and creative decisions. The financial structure also discouraged studios: the royalty obligation began only after $30 million in rentals, a threshold at which the picture might still not have recovered its costs.
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