 "JK Rowling")
In 2012, Forbes dropped J K Rowling after eight years on its authoritative billionaires list, saying high British taxes and large charitable contributions had eroded her fortune. Forbes may want to rethink that.
Last weekend, “Fantastic Beasts and Where to Find Them” — the first of a new, multifilm franchise, with a script by Rowling — opened in the United States to a strong $75 million weekend. Hugely popular Wizarding World of Harry Potter attractions have opened at Universal Studio theme parks in Orlando, Hollywood and Osaka, Japan, as well as a Potter attraction at Warner Bros Studio Tour London.
The two-part drama, “Harry Potter and the Cursed Child,” is a smash hit in London and is scheduled to open on Broadway next year. A book based on the play was an instant No. 1 best seller.
Any estimate of Rowling’s fortune is at best informed speculation. Rowling is famously private, especially about her financial and business affairs. She denied being a billionaire after Forbes first anointed her, telling the television interviewer Katie Couric in 2005 that “I’ve got plenty of money, more money than I ever dreamed I would have. But I am not a billionaire.”
So I set out this week to assess the size and scope of her fortune, not to invade her privacy but because she’s that all-too-rare commodity in the ranks of the ultra-wealthy — a role model. Not only has she made her fortune largely through her own wits and imagination, but she pays taxes and gives generously to charity.
“It’s an impressive story,” said Steven N Kaplan, a professor at the University of Chicago Booth School of Business.
“She struggled as a single mother,” he said. “Then, she created this amazing franchise. She had tremendous talent, and she’s reaping the rewards. People don’t mind that. What they resent is when chief executives get paid for failure.”
Rowling has also been backed by some high-powered negotiating and marketing muscle — Scholastic, which published the Potter books; Warner Bros, the studio behind the Potter films and now the “Fantastic Beasts” franchise.
A close look at Rowling’s sources of income suggests that she’s worth more than $1 billion, even allowing for a large margin of error. I came up with the estimates by interviewing a range of publishing and entertainment executives and agents. No one was willing to be identified because pretty much everyone hopes to do business with Rowling.
To start with the obvious, there’s the source of her wealth: The seven Harry Potter books have sold an estimated 450 million copies, with estimated total revenue of $7.7 billion. At a standard 15 percent author’s royalty, she would have earned $1.15 billion. Rowling has presumably been able to negotiate better deals for her subsequent books published by a Little Brown imprint, as well as numerous Potter spinoffs. These works probably contributed at least another $50 million.
Rowling’s deal with Warner Bros is a closely guarded secret, but it has been reported that she sold the film rights to the first four Potter films for just $2 million. Nearly all such deals, though, also include a percentage of the net profits. The first four films grossed close to $3.5 billion and generated an estimated $2.5 billion in profit. If she managed to achieve a 10 percent net profit participation, that’s $250 million.
The next four Potter films were far more lucrative, generating well over $4 billion in revenue. By then, she was one of the rare talents who probably had negotiated a deal providing her a percentage of a film’s gross revenue. At 10 percent, that’s another $400 million.
She almost certainly managed a similar deal for the “Fantastic Beasts” series. Even if the first film generates just $500 million, less than half the highest-grossing Potter films, that adds another $50 million to her fortune. Warner negotiated Rowling’s theme park deals on her behalf. That deal with NBCUniversal is also secret, but she is one of the unusual examples of someone who is also a “consultant” and gets a percentage of the gate. She also received a one-time licensing fee estimated at $60 million to $80 million and annual development fees. Last year, NBCUniversal’s parent, Comcast, said overall theme park revenue jumped more than 60 percent to $1.4 billion.
Since 2010, when the first attraction opened, I’d estimate she has earned at least $30 million on ticket sales, which would bring her total theme park earnings to $100 million.
NBCUniversal also bought exclusive television rights to the eight Harry Potter films this summer in a deal valued at as much as $250 million. That brings her total estimated earnings from books, movies, theme parks and television to over $2.2 billion. Assuming that she paid Britain’s top individual tax rate, she would have been left with $1.2 billion.
