The Gambler

by William C. Rempel

  Within a few hours after markets opened the following Monday, the hotel’s five-dollar stocks had jumped 600 percent to nearly $30 per share. And by summer they were trading as high as $50. Kirk’s winning streak was suddenly gaining national attention. It was Kirk’s “hello, world!” moment. Reporters from both coasts flocked to Kirk’s Las Vegas office for interviews.

  “Can an honest and ambitious Armenian boy start out in the Civilian Conservation Camps and wind up with nearly $200 million and everybody still his friend?” asked the New York Times.1 “He can, if he’s Kirk Kerkorian, biggest Las Vegas hotel and landowner next to Howard Hughes, and who is in a strategic position to control an airline that just received some lush rights to serve Hawaii.”

  The Los Angeles Times predicted that Kirk could end up a bigger player in Las Vegas development than leading landowner Howard Hughes and “controlling a whole lot more hotel space.” The newspaper called him “such an unobtrusive sort of guy it’s difficult to believe he’s built a $200 million fortune.”2

  From his office with a window on the hotel construction site, Kirk shared a key element of his investment strategy with the visiting Los Angeles Times financial editor, preferring a few “big ventures” to many smaller ones. “Something with a lot of meat on it.”3 In business, as in gambling, Kirk still relished the thrill of the biggest bets.

  Back in Los Angeles, the Kerkorian-Drinkwater feud was still boiling. With the approach of Western’s April 24 stockholders’ meeting Drinkwater continued his all-out resistance to anyone from the Kerkorian faction joining the board. His latest delaying tactic came with a demand that the CAB investigate Kirk and disqualify his WAL stock purchase over certain alleged conflicts of interest. Among other things, Drinkwater charged that Kirk’s holdings in Transamerica stock made him an owner of a competing airline in Trans International. The Western boss said Kirk’s ownership interests in the Flamingo also disqualified him since the hotel regularly employed charter services to provide junkets for high rollers.

  The CAB wasn’t buying any of it. Investigators found no evidence that Kirk asserted any influence over TIA and tossed out the Flamingo claim saying simply that the hotel was not in the aviation business. Kirk kept batting away Drinkwater’s challenges, but the relentless attacks and delays had pushed his patience to its limits. He finally demanded a list of stockholders, serving notice that a proxy fight was next.

  In the months since Kirk’s tender offer made him nearly one-third owner of WAL, the federal government had announced plans to award Hawaiian air routes to several airlines, including Western. Drinkwater had reacted aggressively, placing orders for a dozen new jets—including three Boeing 747 jumbo jets set for delivery in 1970. The bold play created a bad case of airline overcapacity, a jump in personnel costs, and further fueled the feud at the top.

  Kirk demanded that Western corporate officers turn over their plans for financing the fleet expansion. And he called for a suspension of new jetliner orders pending his review of the company’s financial status. Now he had poked Drinkwater in the eye. The enraged Western president made a second try to get the CAB to investigate Kerkorian. Again, it refused.4

  Drinkwater could see a proxy fight going badly against him. One clue was Art Woodley, the former Pacific Northern Airlines executive who considered Kirk one of the most honest businessmen he’d ever met. In response to Drinkwater asking him for his proxy in the Kerkorian fight, Woodley growled, “I’ll vote my own shares, Terry!”

  Drinkwater got the message. And if Woodley was not a reliable vote, he had to assume he might not have anything near full support from his own board. Besides, the entire board and Drinkwater combined controlled less than 5 percent of Western shares.

  Bank of America vice chairman Alden Clausen, with a stake in both sides of the Kerkorian-Drinkwater match, summoned the factions to a conciliation conference a few days ahead of their annual meeting showdown before shareholders. He proposed a compromise that required any three of Drinkwater’s directors to step aside in favor of three from Kerkorian’s group. It might preempt the proxy war, he suggested. And before Drinkwater could object, his closest friend and adviser, Stan Shatto, waved him out into the hall along with two other loyal directors. They offered to resign to end the feud, leaving Drinkwater unscathed by a devastating and likely vote against him and still running the company. He reluctantly agreed.

  Minutes later, back in the meeting room where the banker, Kerkorian, and the rest of the board waited, Shatto announced his resignation along with those of Art Kelly and J. Judson Taylor—each of them veteran insiders of Western. All eyes turned to Kirk.

  “I appreciate what you’re trying to do, Stan,” Kirk said in his soft, rumbling baritone. “But I won’t go along with any of you resigning from the board.” He considered the trio of insiders top aviation men and critical to Western’s future. He didn’t want to lose them.5

  Instead, after further discussion, all agreed that the WAL board would be expanded from eighteen to twenty-one members. Drinkwater would remove three outside directors of his choice. And Kirk would appoint nine representatives, giving him slightly less than 50 percent of the board.

  The proxy war was resolved before it could be waged, but peace did not reign in Western world. Recently inaugurated U.S. president Richard M. Nixon, responding to wage and price inflation and a teetering economy, had suspended all CAB-authorized route expansions for the airlines, among a number of executive actions. At Western, Hawaii service was delayed and then, when it started, the airline was competing with established carriers. Some had wide-bodied planes. Western didn’t. Others had in-flight movies over the wide Pacific Ocean. Western didn’t.

  “Absolutely not! There will be no movies on our flights. We don’t need them,” Drinkwater insisted.6

  Business was tanking. The Western shares that Kirk purchased for $45 had plunged to about $15 by June. Kirk turned to the Prussian. “Well, I guess you’re elected,” he told Benninger. “See if you can straighten things out.”

  Benninger had strong feelings about how to run an airline. He’d run Flying Tiger. And he wasn’t particularly happy to be pulled away from the late stages of the Las Vegas hotel project. He canceled Western’s orders for 747s. He also wanted other new plane orders suspended until airline financial health could be restored. He soon replaced Kirk as the most hated man in Drinkwater’s executive suite.

  If it bothered Benninger, he wasn’t going to show it. He acknowledged sometime later, “There was ill feeling right from the start and, as Kirk’s alter ego, I had to take the brunt of it.”

  In fact, Benninger reflected his boss’s values right down to the financier’s penchant for punctuality. Kirk was never late. His staff and business associates were never late twice. So, when Western’s on-time performance as an airline slipped badly, Benninger ordered daily 8 a.m. meetings involving all key departments to review what happened the day before. Howls of protest among the affected vice presidents were ignored. And Western’s on-time performance rankings soared to the top of the industry.

  The airline was in good hands, a tribute in no small measure to Kirk’s delegating skills. The recalcitrant President Drinkwater notwithstanding, Kirk and the Prussian also were starting to win admirers among Western’s executive team, especially as the company’s finances improved—along with its on-time record.

  Everywhere he looked, Kirk saw things humming along according to plan. The gambler was getting that itch again for another big bet. And in the summer of 1969 he was already looking around for the next challenge. But first, back in Las Vegas where the world’s biggest hotel was about to open, it was showtime!

  17

  Cary and Kirk and Barbra and Elvis

  Summer 1969

  Las Vegas, Nevada

  Kirk entered the packed International dinner theater on July 2, 1969, without an entourage, without a spotlight, without most in the crowd of two thousand even noticing as he slipped into a chair at his reserved table. It was near t
he stage but less than a prime location.

  It was opening night of his $60 million International Hotel, the world’s biggest hotel and casino, the one he built with borrowed money and cold-blooded daring. He’d made it happen. And he was proud of it. But instead of drawing attention to himself he was sticking to his comfort zone—in the background, basking in the shadows. This was singer-actress Barbra Streisand’s night, the richest opening act in the history of nightclubs. Kirk had lingered out of sight for as long as he could, avoiding the big crowd and small talk of the party scene. Now he waited for his close friend and actor Cary Grant who was about to step out and introduce the hotel’s much-anticipated headliner.

  Grant’s cultivated cool movie star persona belied the fact that he hated public speaking almost as much as Kirk did. It was a shared phobia that helped bond the friendship dating back seven years to their first introduction at the Dunes. Now they also shared the experience of being older fathers with young daughters of similar age. The girls brought them together for father-daughter horseback riding.

  It had been the International’s new president, Alex Shoofey, not Kirk himself, who pestered Grant to take the stage that night. “Whadaya mean, you don’t give speeches?” said an incredulous Shoofey when Grant declined his first request.1 But it was for Kirk that Grant had come to Las Vegas for the opening-night celebrations, and it was to honor his friend that Cary Grant agreed finally to Shoofey’s request.

  The audience of invited guests and celebrities was settled at their dinner tables, most of them greeted personally by the hotel’s music director, Bobby Morris. They included Raquel Welch, Natalie Wood, Rita Hayworth, Red Skelton, the Smothers Brothers, and basketball legend Wilt “the Stilt” Chamberlain. Bobby Morris already loved his job as Kirk’s celebrity greeter. Whenever Kirk was in the house, Bobby could count on getting his first hug of the evening from Kirk himself. Tonight he was wearing his first custom-made tuxedo, a gift from Kirk and fashioned by his personal tailor.2

  The Bobby Morris Orchestra had taken its place onstage. A standing-room-only crowd of VIPs watched from the cocktails-only balcony level as the tuxedoed Cary Grant strode out to an explosion of applause. As the ovation subsided, he spotted his friend out in the shadows.

  “Kirk,” he began. “I know you don’t like this kind of thing, but . . .”

  Grant’s introductory detour immediately alarmed Kirk, who cringed at any kind of public attention. His custom-made tuxedo was suddenly feeling tight around the collar. His face felt hot as Grant continued, “I want everybody here to see the guy who made this spectacular hotel possible.” A spotlight followed Grant’s wave toward Kirk’s table.3

  Kirk could have savored the moment, taken a bow, waved to the dinner crowd on his left and right, maybe even joined Cary onstage to welcome everyone now offering another ovation for him. Instead, Kirk stood up, smiled sheepishly at his friend, and sat right back down again. People in the room later swore that, despite Kerkorian’s deep tan, they could see he was blushing.

  Grant then introduced Streisand, who swept onstage in a fuchsia chiffon gown to officially open the world’s biggest and most expensive resort hotel with her opening song, “I Got Plenty of Nothin.’” Her pay for that four-week run actually set its own records for that time. Besides a weekly fee widely reported to be more than $100,000, Kirk presented her with stock in his International Leisure Corp., which soared from $5 a share to $100 immediately after the hotel’s strong opening. She could have made at least $2 million depending upon the timing of her stock sales—a sum, by any form of accounting, that added up to plenty of somethin’ for Streisand who remained a good friend of Kirk’s through the years.

  While Streisand’s opening-night performance received mixed reviews, she continued to sell out the dinner theater as she tweaked and refined her act. She went on to set Vegas showroom attendance and box office records, finally leaving to effusive reviews by some of the same reviewers who had been most critical of her before the International showroom performances.

  For Kerkorian it was one unmitigated success—big, profitable, and filled with class and glamour. And that was before Elvis Presley arrived at the end of July to rewrite all those same attendance and revenue records again.

  Across the street at the $20 million Howard Hughes Landmark Hotel, opening night one night earlier had been a bit slapdash and seemed pulled together at the last minute.4 In fact, Hughes didn’t approve the July 1 date for his grand opening until June 29. Hughes had won the race to open first by twenty-four hours—but no one else seemed to care. And the billionaire recluse didn’t even attend his own grand opening. In the public relations contest over who had the biggest whatever, Kirk dominated in press coverage, star power, and cash flow.

  It was probably best that Hughes missed his own grand opening because the casino lost money from day one,5 and his celebrity comedians mocked him, though ever so gently. Singer-actor and noted boozer Dean Martin said he could be just as rich as Hughes: “All I got to do is return my empties.”6

  Hughes top aide Robert Maheu delivered best wishes to rival Kerkorian and good luck at his grand opening, prompting television and nightclub comedian Danny Thomas to quip, “It’s so touching to see money congratulating money.”

  On its big opening night, the Landmark suffered by comparison to the International in almost every way. The popular but overmatched Danny Thomas couldn’t possibly compete with Streisand and Peggy Lee, the International’s secondary act in its five-hundred-seat casino lounge. An indecisive Hughes had failed to approve a VIP guest list until two days before the event—and then provided only forty-four names. Maheu added four hundred at the last minute, most of them in town already as guests of Kerkorian.7

  Cary Grant, for one, also made it across Paradise Road to the Landmark opening. He had no formal role, but he did draw inadvertent attention when he boarded the tower’s glass elevator for the ride thirty-one floors to the upper-level casino. A distracted elevator operator swooning over Grant in such close proximity reached a gloved hand for the up button but instead she accidentally set off a loud alarm.

  July turned out to be one incredibly hot month in town, temperatures in triple digits outside and standing-room-only crowds inside the International as Elvis Presley—Streisand’s follow-up act—blew the lid off every expectation. He was selling out every show twice a night seven nights a week, including the big showroom’s balcony. He was pulling in gamblers and hotel reservations from around the world.

  After Presley’s opening night, Kirk’s man in charge of the International took one look at the overnight numbers and the exploding reservations switchboard and went hunting for the rock ’n’ roll star’s manager, Colonel Tom Parker. Shoofey and the colonel ended up together huddled over cups of coffee at a quiet table.

  There had been internal debate months earlier about whether to open with Streisand or Elvis. Colonel Parker himself had expressed reluctance to put that kind of pressure on his kid to carry the opening after being off the road doing movies for a dozen years. Kirk’s team shared that same doubt. And Kirk himself said he believed that “Streisand would be a bigger opening act than Elvis.”

  But a stunning surge in ticket sales and public excitement was obvious to everyone without a hangover first thing in the morning after Streisand gave her closing performance. Guy Hudson reported for his regular 8 a.m. to 4 p.m. shift in the International cashiers’ office and stopped dead in his tracks. “What the hell!” A line had formed outside the showroom box office that wouldn’t even open for another two hours—a line out the door “that never stopped.”8

  “We made a mistake,” Kirk had to admit. “Streisand didn’t do quite as well as we thought. And Elvis tore the hotel apart.”9

  Shoofey was determined to correct that mistake even before all the ashtrays were emptied the morning after Presley’s debut. The man with Kirk’s carte blanche to “spend five dollars or five million” for the hotel, immediately shot the wad—all five million.10

&
nbsp; “Listen, I want to extend your contract,” Shoofey told Presley’s manager.

  “Let’s wait,” the colonel cautioned. “It’s too early. Let’s find out whether he can make it or not. There’s no telling if Elvis is going to collapse.”

  In fact, Elvis had taken on a grueling schedule—two shows a night every night for two weeks—for which he was being paid $100,000 a week, plus incentives. Presley’s stamina was certain to be tested in the days ahead.

  “Well, I’ll take that gamble,” Shoofey said without hesitation. “Right now.”

  Parker eyed the International’s president and finally asked, “What do you want?”

  “Five more years. Twice a year. A month each year. Five hundred thousand per engagement. Five million dollars.” He threw in unspecified advertising expenses and a $100,000 bonus to sign immediately.

  “You’re crazy!”

  Parker was dumbfounded. But when Shoofey made no move to back down or qualify his offer, Parker moved quickly. Clearing aside half-empty cups and saucers, the colonel asked Shoofey to repeat the terms of the Elvis deal so he could jot them down on the rose-colored tablecloth. The coffee-splotched restaurant linen covered with crumbs and random spots and smears would become the official record of their negotiations.

  When he was finished, Parker rolled up the tablecloth, stood up, and tucked it under his arm. “You’ve got a deal,” he said and walked off to confer with Elvis.

  That masterstroke of deal making would do more than guarantee the International’s long-term entertainment dominance in town. It would also clinch Las Vegas as the Elvis performance capital of the world.

  One notable side effect would only become clear decades later with the rise of a timeless entertainment niche: the Las Vegas–styled Elvis impersonator. Untold thousands of performers with black pompadours and white jumpsuits probably owe their gigs from birthday parties to nightclub acts directly to Kirk Kerkorian, Alex Shoofey, and the deal consummated on that pink tablecloth.