Kirk was never among the skeptics. He always thought the idea of Caesars Palace was a winner. At the same time, he wanted what he called “a back door” if anything went wrong. If the Sarno team blew it somehow, Kirk needed a Plan B to step in and operate the place . . . to protect his property investment. Construction was barely under way when Kirk reached out discreetly to the boss of the highly efficient and successful Sahara. Despite a prickly personality, Alex Shoofey was supposed to be the best operations man in Las Vegas. He wasn’t remotely flattered by Kirk’s interest.7
“I’m happy doing what I’m doing,” Shoofey said. “I’m not going anywhere else.”
Kirk patiently wooed him, but Shoofey understandably was a hard sell. Kirk was asking him to leave his $80,000 a year position (among the highest in town) at one of the Strip’s best hotels to stand by in case Caesars Palace flopped. And while awaiting that uncertain outcome, Kirk would pay him at the rate of $30,000 a year.
Shoofey wasn’t particularly sympathetic with Kirk and his fear that he might get the keys to Caesars. It wasn’t Shoofey’s problem if Kirk got into something he couldn’t handle. Shoofey certainly wasn’t dumb enough to take a $50,000-a-year pay cut to sit around keeping company with Kirk.
And then Kirk offered to loan him the $50,000 difference. “That’s a stupid proposition!” Shoofey snapped. “You’re gonna loan me what I’m already making? That’s ridiculous.”
Kirk decided it was about time to let the Sahara boss in on what was driving his persistent courtship. It turned out that Kirk’s Plan B was a disguise for a much grander scheme. Shoofey was invited on a private cruise of Lake Mead aboard Kirk’s new forty-five-foot yacht, the biggest party boat in the marina. It was Kirk doing his impersonation of the freshly minted tycoon. And it was impressive. But the secret he shared with the only other passenger on his boat was even more impressive.
“I intend to build a one-thousand-room hotel in this town,” Kirk confided.
A thousand rooms was unheard of on the Strip. Shoofey’s Sahara had only four hundred at that time. Caesars Palace would open with no more than seven hundred rooms. Kirk was proposing something to rival the biggest hotels in the world. Such a project could bring dramatic change to Las Vegas. He asked Shoofey to work up a financial analysis projecting the profitability of his dream resort.
“I suppose you want me to do this for what . . . for free?”
Kirk smiled. He knew he had finally reeled in Shoofey.
Alex Shoofey had grown up between orphanages in Montreal and Brooklyn. He was trained as an accountant and worked as the head of payroll for a Manhattan department store before going to war. He ended up in Las Vegas in the spring of 1947.
He was driving back to New York from Los Angeles when his old Buick blew its engine on Main Street. It was going to cost $1,000 to fix it. Shoofey had paid only $150 to buy it off a used car lot. He couldn’t afford to fix it or even to replace it. He checked into a cheap motel and took an accounting job at a new bingo and dice place. The job came with a free meal. He never left. And a Las Vegas hotel management career was born.
It was his self-reliance, blunt honesty, and up-from-the-bottom origins that a self-made millionaire from Weedpatch could especially appreciate.
The grand opening of Caesars Palace was one of the most anticipated events in Las Vegas history. Sarno planned to spare no extravagance. There would be scores of toga-clad women, champagne to fill fifty thousand glasses, Ukrainian caviar, three hundred pounds of Maryland crabmeat, and two tons of filet mignon. Then came bad news on the doorstep. Newspaper headlines from Chicago to Los Angeles alleged secret mob ownership of the newest star on the Strip. Caesars had hoods in the house.
One of the biggest challenges facing any of the legitimate gambling operations in Nevada was finding experienced casino managers without a criminal record. Many an able pit boss or credit manager got his early career experience in illegal gambling joints elsewhere in the country. Nevada offered them a chance “to go legit,” but it could be hard to escape their pasts. Then, too, since major mob organizations ran some of the biggest illegal gambling rings in the country, a lot of gamblers were likely to find themselves much closer than six degrees of separation from the unwelcome label “mob associate.”
Editions of the Los Angeles Times trucked across the Nevada state line on the morning of August 4, 1966, carried a big front-page headline: “Gang Ownership in Casino Charged.” The companion story quoted the Chicago Sun-Times, alleging not only that Caesars Palace had mob figures in high places, but also that hoodlums were skimming profits at casinos up and down the Strip.
This was troubling news to Kirk. It wasn’t news at all to Sarno.
When Nate Jacobson was raising the final $9 million to fund Caesars’ construction, he had encountered investors willing to make substantial contributions but only if the casino hired their friends and associates, people trusted to protect the investors’ interests. Teamsters president Hoffa and the union’s heavily invested Central States Pension Fund had their favorites, too. Certain special people were expected to come along with the money, as a condition of investment.
That’s how Jerome (Jerry) Zarowitz became Caesars’ credit manager and Elliott Paul Price landed a job as a casino host. Zarowitz was a former bookie and noted oddsmaker who did prison time for trying to fix the 1946 National Football League championship game between the New York Giants and Chicago Bears.
Without investing a dime of his own, Zarowitz controlled one-third of Caesars Palace, and he handpicked the entire casino crew—giving the place a certain ambiance that comedian Alan King once said was less Roman than “early Sicilian.”8 Sarno got the clear message that Mr. Z ruled the gaming floor and that he had dangerous friends.
In the face of news reports, Caesars partner Stanley Mallin expressed alarm about Zarowitz and what hidden interests he might represent. The harried Sarno cut him off. He didn’t care, he said.
“We need the money. We’ve got to make some concessions.”
Mallin persisted, noting that Zarowitz tried to fix games: “He’s a crook.”
“We’re not betting against him,” Sarno said. “Relax.”9
But Mallin didn’t relax, and neither did Kirk. More bad headlines were coming. But then a more immediate crisis threatened their grand opening—a nationwide airline strike. High rollers and investors alike were grounded. Kirk dispatched one of his Trans International jetliners to the East Coast. It collected gamblers and financiers and invited guests from New York and Baltimore and delivered them to the Caesars gaming tables in time for a strong opening-night take.10
One of those who hopped a ride on the TIA DC-8 was a University of Pennsylvania frat brother of Nate Jacobson’s son—a precocious gaming entrepreneur named Steve Wynn. At the age of twenty-four, Wynn was already running his late father’s illegal bingo parlors in Maryland. And in Las Vegas, he owned a small interest in the troubled Frontier Hotel, then closed for major renovation. Wynn was married to Elaine Pascal, the daughter of a prominent Miami hotel operator.
The Caesars Palace opening was Wynn’s chance to schmooze and mingle with important gaming associates. Jacobson provided the formal invitation and a room behind the pool area. It wasn’t quite finished. There were rolls of carpeting in the halls. Wynn’s bathroom had no shower curtain. He got a seat at the big opening show with headliner Andy Williams. His was the seat farthest from the stage. But his fortunes turned after tracking down Zarowitz in the casino and introducing himself.11
Mr. Z knew Elaine’s father, Sonny Pascal. He was also a friend of top management over at the Frontier. And the kid impressed him. They had a drink together. The next day Zarowitz moved Wynn into bigger and better accommodations, complete with a shower curtain. It was room 1066—Jimmy Hoffa’s just-vacated suite.
For the quiet and reserved Kirk, who regarded big public events with the same dread that he did funerals, the Caesars grand opening had to be an ordeal to endure. He was especially uncomfortable bein
g the focus of attention. As the landlord and one of the licensed gaming partners, it would have been difficult to avoid introductions to strangers, the inevitable small talk, and the awkward silences.
His usual haunt on such occasions was a corner in the back of a room. But Kirk in this case had a handy retreat—his own private two-bedroom suite. He had it outfitted as an office. It was his favorite perk. But it wasn’t comped. It was negotiated under their original lease and partnership contract.
Kirk made it a rule never to accept complimentary food, drink, or other gifts from any company in which he was invested. He had the money. He paid his own way. That’s why in private he was more bothered than most by the continuing stream of media stories about casino mob links. He was no prude about gamblers having criminal pasts or nefarious friends. He disapproved of guilt by association. He figured a man should not be held responsible for the mistakes of his friends. But all the press reports about skimming to pay off mobsters posed a threat to public confidence in Nevada gaming generally—and to Kirk and his fellow legitimate investors quite directly.
And there was likely some déjà vu from the decade-old Dunes investment. Kirk never blamed anyone but himself for that bad investment in 1955, but others faulted a toxic combination of mobsters, kickbacks, hidden interest, and poor management. The headlines of 1966 were reminders to Kirk of the perils that arise when management is in someone else’s control. At Caesars Palace he was again at the mercy of forces and managers beyond his control.
It had taken Alex Shoofey more than a month to work out financial projections on Kirk’s hypothetical one-thousand-room hotel and casino operation. They met to compare notes after the triumphant grand opening at Caesars Palace. It was unchallenged as the hottest spot in town and exceeding all financial expectations.
“I guess you got no worries about Caesars,” Shoofey joked. Kirk smiled. He never shared his private worries. The only item on their agenda that day was a rundown on the numbers. Shoofey cut immediately to the bottom line. “It comes to about ten million dollars . . . a year,” he said.
Old poker face broke into a big grin. For the next several minutes they bantered about the implications, about economies of scale, about how the numbers would look if the room count was even bigger, about how it might change the hotel business, Las Vegas, and the gambling world at large. Shoofey was swept up in Kirk’s enthusiasm. He was surprised to realize that he, too, was getting excited.
“Where would you put a hotel like this?” Kirk asked.
There were possibilities on the Strip, near the airport, downtown—and one that seemed to intrigue Kirk the most. It was about sixty-five acres on the site of a defunct horse track off Paradise Road, well off the Strip but adjacent to the new Las Vegas Convention Center. Ominously, the ill-conceived Landmark Hotel stood empty and uncompleted across the road, but a golf course and country club were planned nearby. Shoofey strongly endorsed Kirk’s instincts. A big hotel and the convention center would be natural allies.
A few weeks later, Caesars Palace was back in the news with a front-page report in the Los Angeles Times about a new federal grand jury investigation. The U.S. Justice Department was looking into an October 1965 gathering of mobsters in Palm Springs. Two of those named in the account were Caesars executives Jerry Zarowitz and Elliott Paul Price. Others included Anthony (Fat Tony) Salerno and Vincent (Jimmy Blue Eyes) Alo, alleged members of the Vito Genovese crime family in New York.12
Mob lawyer Oscar Goodman, the future mayor of Las Vegas, would step in to defend Zarowitz, and no criminal sanctions were ever imposed. But Kirk had already seen enough. Shortly after the grand jury investigation was disclosed in Los Angeles, Kirk moved out of his Caesars Palace office. He still had more than a year on his free lease. Mallin knew what troubled Kirk was “the Mafia, or whatever.” He and Sarno understood completely. It was their problem, too.
Kirk was now ready to take full control of his very own Vegas hotel and casino. He hadn’t shared the news with anyone but Shoofey and his most intimate insiders. But on the day they buried Nick the Greek, Kirk embraced another confidant—a fellow pallbearer. He asked Las Vegas Sun publisher Hank Greenspun to take a ride around town with him. It became a tour of hotel building sites.13
The tour ended on Paradise Road by the convention center. Kirk was going to change the face of Las Vegas and he wanted his friend the newspaperman to know what was coming. A month later the news was a headline: “$30 Million Vegas Hotel Near Convention Center.”
According to published accounts, Kirk had paid $5 million cash for about sixty-five acres. He planned to break ground on the city’s tallest high-rise hotel project later in 1967. The casino would feature the largest gaming floor in Nevada. The hotel would have fifteen hundred guest rooms—making it the world’s biggest at the time. Hotel guests would have access to an adjacent country club and eighteen-hole golf course then under development. And at $30 million, Kirk’s International Hotel would eclipse Caesars Palace.
The news seemed to wake a sleeping recluse. From seclusion in his penthouse suite at the Desert Inn, billionaire Howard Hughes made his own headlines a few weeks later when he bought the entire hotel for $13.2 million in cash and loans. Then he bought the Sands . . . and the Frontier . . . and more. A buying spree was on.
Kirk had gambled big on Las Vegas real estate and on the gambling business itself. It didn’t bother him to have another player at the table. He still held Hughes in high regard. And the superrich businessman’s interest reinforced Kirk’s own hunch that Las Vegas was a very smart bet.
Political leaders were delighted. Neither Howard Hughes nor Kirk needed unconventional lending sources such as Meyer Lansky or the mobbed-up Teamsters Central States Pension Fund. With illustrious captains of industry investing heavily in the state’s gaming business, Nevada was getting what some leading citizens likened to “the Good Housekeeping seal of approval.”
But in shadows behind those perpetually drawn curtains in his penthouse, Hughes was plotting a one-sided rivalry to undermine Kirk’s grand plans. To the hermit billionaire, Las Vegas wasn’t big enough for two kings of gambling.
14
A Clash of Tycoons
January 15, 1968
Fairmont Hotel, San Francisco
Kirk Kerkorian’s business fortunes had just taken a sudden turn toward complicated. Not bad. Not yet. Back on Nob Hill in San Francisco he was in secret negotiations for the sale of his airline, Trans International. The deal that a day earlier had promised to put $150 million into the pockets of TIA shareholders—about $100 million of that into Kirk’s own—was teetering on the verge of collapse. Kirk and his small team of advisers retreated to his suite at the Fairmont to consider their options.
At the same time in Las Vegas, Kirk was several million dollars into what was widely seen as a risky hotel and casino venture. His plan to build the International Hotel a half mile off the Strip on Paradise Road had old-timers shaking their heads. Common wisdom regarded the project as a potential flop. And not just any flop, but the biggest-hotel-in-the-world kind of flop. Already he was having unexpected trouble getting construction loans. And groundbreaking ceremonies were barely three weeks away. The project needed his full-time attention.
And then there was Howard Hughes.
Kirk tried to ignore the feeling, but he sensed an onerous weight from the famous industrialist’s unspoken disapproval of the superlative-rich International Hotel. It would be the biggest, the tallest, the plushest, the costliest . . . and a prominent challenge to Hughes’s status as the giant of the Strip. A yearlong $100 million buying spree had made Hughes the owner of five gaming resorts and most of the vacant land along the Strip. And he was still shopping.1 No one challenged him for the biggest of anything in Las Vegas—except Kirk Kerkorian and his world’s biggest hotel with its world’s biggest gaming floor. Even its swimming pool promised to be the state’s largest man-made body of water after Lake Mead.
No one told Kirk directly that Howard�
�s ego was in a twist. But there were signs. Some local bankers would barely talk to Kirk for fear of offending Hughes.2 Even Kirk’s well-earned loyalty at Bank of America had its limits. The bank declined to finance the International. It didn’t make loans to casinos. But Kirk’s aides always suspected it was Hughes and a threat to move his billions that chilled those prospects.
Kirk learned from Hughes aide Robert A. Maheu that the billionaire wanted his help lobbying the U.S. Atomic Energy Commission (AEC). Hughes was intent on halting underground nuclear testing in neighboring Nye County, and he had sent off letters of protest and alarm to the AEC and President Lyndon Johnson, among others. Kirk, however, didn’t share Hughes’s fears or obsession. He simply ignored the Hughes entreaties. In the process, what Kirk still considered a friendly rivalry turned into something darker.
With lending uncertainty plaguing the hotel project, Kirk was under mounting pressure in Las Vegas to delay construction—maybe indefinitely. It was getting late, but no concrete had been poured yet. Kirk had, however, raised expectations. And not just in headlines. He also bought the Flamingo for $12.5 million to use as a training ground for management and staff moving into the International.
Still, without financing for the hotel’s construction, he had to reconsider whether he was betting a losing hand. He tried not to let ego cloud his judgment, but even “the Perry Como of the craps tables” would be hard-pressed to conceal the humiliation of a very public bust.
Now, through a quirk of fate, Kirk was gambling on two fronts simultaneously over separate deals, either one of which was big enough to make or break any ordinary financier.
Intermittent rain and patches of fog outside fit the dreary mood inside the Fairmont Hotel suite where Kirk and five advisers conferred in January 1968. The $150 million sale of Trans International Airlines to financial services giant Transamerica had been so close that lawyers on both sides had been summoned to oversee final conditions and formal signatures. Then the New York Stock Exchange (NYSE) refused to recognize a new class of stock central to the Kerkorian side of the deal.3
The Gambler Page 11