(Reuters) - John Avildsen, the Oscar-winning director who made Hollywood's quintessential underdog story in 1976 boxing saga "Rocky" with a then-unknown Sylvester Stallone, and crafted another inspiring tale in "The Karate Kid," died on Friday at age 81, his family said.
Avildsen had been suffering pancreatic cancer at Cedars-Sinai Medical Center, his son, Anthony, said by phone.
Avildsen won the Academy Award for best director for "Rocky" while the film was named best picture and other successes included the "The Karate Kid" series in the 1980s. He directed seven actors to Oscar nominations.
In the years before "Rocky," Avildsen won praise for two dark character studies: "Joe" (1970) with Peter Boyle and Susan Sarandon and "Save the Tiger" (1973) starring Jack Lemmon, who won the Academy Award for best actor for the role.
He also had his share of career setbacks, directing some clunkers and being fired as director of 1970s classics "Saturday Night Fever" and "Serpico" because of disputes with producers.
"Rocky" proved to be as much of an underdog success story as the fictional Philadelphia boxer Rocky Balboa portrayed by Stallone, who wrote the screenplay. Stallone was an obscure actor at the time but stubbornly refused to allow studios to cast anyone but himself in the role. Producers Robert Chartoff and Irwin Winkler consented to let him take the role under Avildsen's guidance.
"Rocky" was made for a modest $1 million and generated $225 million in ticket sales to became a cultural phenomenon, with a series of unforgettable characters and scenes and a blend of romance with pugilistic action.
The film centers on charismatic champion Apollo Creed, played by Carl Weathers, plucking Balboa, known as "The Italian Stallion," from obscurity for a dream shot at the world heavyweight boxing title.
Rocky, who earns money as a collector for a loan shark, falls in love with the mousy Adrian (Talia Shire), the sister of his miserable friend Paulie (Burt Young), and gets help from a gruff trainer named Mickey (Burgess Meredith) who long felt Rocky had wasted his considerable potential.
Avildsen took the "Rocky" job only because funding fell through for another movie he was set to direct.
"My friend sent me this ("Rocky") script and got me to read it," Avildsen told the Birmingham, Alabama, News in 2000. "And on the third page, this guy is talking to his turtles, and I was hooked. It was a great character study."
There were low expectations.
"It had to be done in 28 days for less than a million bucks, and nobody bothered you because there was so little money involved," Avildsen said. "There was no anticipation of it being anything but on the bottom bill of a drive-in in East Podunk."
"Rocky" was nominated for 10 Oscars and won three, with Stallone taking the best actor award.
In accepting the Oscar for best director in March 1977, Avildsen told the audience, "I guess what 'Rocky' did was give a lot of people hope and there was never a better feeling than doing that."
Avildsen's professional stumbles included tangling with stars John Belushi and Dan Aykroyd on the comedy "Neighbors" (1981), then made the crass male-stripper movie "A Night in Heaven" (1983).
His next film, "The Karate Kid" in 1984, triumphed with an underdog theme similar to "Rocky" as a bullied teenager played by Ralph Macchio overcame the odds with the help of a wise martial arts master, played by Pat Morita. He also directed "Karate Kid" sequels in 1986 and 1989.
Avildsen returned to the "Rocky" franchise to direct the critically panned "Rocky V" (1990) about a protégé who turns on Rocky. Avildsen intended for the Rocky character to die in the film but studio bosses disagreed.
"They told me James Bond doesn't die. Superman doesn't die. Rocky doesn't die," Avildsen told USA Today in 2014. "So Rocky didn't die. But the movie died."
Avildsen also directed Burt Reynolds in the likable caper "W.W. and the Dixie Dancekings" (1975), George C. Scott and Marlon Brando in the thriller "The Formula" (1980), Morgan Freeman in school drama "Lean on Me" (1989) and the apartheid tale "The Power of One" (1992).
Avildsen was born on Dec. 21, 1935, in Oak Park, Illinois. After serving in the military, he made industrial films for companies and worked as an assistant to directors, including Otto Preminger before directing his first film in 1969, "Turn On to Love."
Additional reporting by Alex Dobuzinskis in Los Angeles; Editing by Bill Trott