The Gambler

by William C. Rempel

  Hundreds of layoffs made parking easy even without reserved spots. And the entire top floor of the Thalberg Building, now called the Administration Building, was left vacant. Maintenance workers were instructed to turn off the heat on that empty floor, proving that no expense was too small to save.

  The company sold its theaters in South Africa, Australia, and Europe for more than $6 million. Its Boreham Wood studio in London went for $4.3 million. Sixty-eight acres of back lot—the setting for numerous westerns and Judy Garland’s home in Meet Me in St. Louis—went the way of bulldozers via developers Levitt & Sons.

  Jim Aubrey got a fast start spreading heartbreak and fury with a flurry of canceled film notices. The Smiling Cobra showed no sentimental biases. It was a matter of dollars and sense. MGM was in financial shambles. Its library of classic movies was hugely valuable. The rest was expendable. “Kirk and I decided we had to get rid of everything else. We really had to claw our way back,” he said.

  Among his earliest cancellations was the $10 million Man’s Fate film project of the revered Fred Zinnemann—director of such earlier classics as High Noon, From Here to Eternity, and A Man for All Seasons. Beyond its then-astronomical budget, Aubrey didn’t see box office potential, either. Man’s Fate was a story of existential quandaries based on a French novel about a failed Communist insurrection in 1927 Shanghai.

  Aubrey flew to London a week before the movie’s first day of principal photography. In a meeting at the Dorchester Hotel he disclosed MGM’s grave financial state and explored ways that Zinnemann might be able to cut costs—like taking a large pay cut and convincing his actors and production crews to do the same. That was a nonstarter. Nonetheless, Zinnemann left that evening feeling cautiously optimistic he could complete the project that he had been developing for nearly three years.

  Three days later the director received a cable from the Smiling Cobra—Man’s Fate was dead. The stunned company of actors that included Peter Finch, David Niven, Liv Ullmann, and Max von Sydow insisted on completing the last week of dress rehearsals—knowing no film was to be made—“just for the satisfaction of seeing how it was going to go,” recalled Zinnemann. “Then, we all went home.”2

  Adding insult to indignities, Aubrey refused to reimburse Zinnemann or producer Carlo Ponti for nearly four million in preproduction costs. And there were guaranteed salaries to actors that were suddenly not guaranteed. Taipan, another Asia-set period piece produced by Ponti and Martin Ransohoff, was among another dozen film projects that Aubrey axed in rapid order, wiping away at least $45 million in prior commitments.

  Ransohoff confronted Aubrey, accusing the MGM executive of reneging on time-honored pay-or-play deals. That was how Hollywood had always guaranteed payments to big-name stars and A-list directors. This was betrayal, he complained.

  “Marty, you’re missing the point,” Aubrey interrupted.

  “What’s the goddamned point? You have a firm pay-or-play deal.”

  “The goddamned point is that we have no goddamned money!”

  The most immediate result was litigation—in the end, a lot of litigation. The long-term effects of such drastic steps were more complicated. For a time, MGM was distrusted and shunned. It became the studio of last resort. Up until Aubrey rewrote the rules that Kirk’s lawyers then had to litigate, Hollywood had been a place where handshakes and verbal assurances were considered ironclad contracts. Those days were changing, driven in part by financial crisis but also in this case by Aubrey’s ruthless enforcement of Kerkorian’s directive to pull MGM out of its dive.

  Still, there was bitter irony in the fact that Kirk Kerkorian of all people would turn out to be such an important agent of that change. Kirk himself never changed. His signature would always be worth millions of dollars. His handshake and a promise would always be sacred.

  Handed responsibility for protecting MGM from the messy fallout from Aubrey’s last-minute cancellation of Man’s Fate was a scrappy young associate at the Bautzer law firm, a recent ex-Marine named Terry Christensen. He was, as he liked to say, “just minutes out of the Marine Corps” when he was taking on some of the biggest names in show business.

  Contract law hadn’t been a big part of his military experience as a lawyer in the judge advocate general’s office at Quantico, but Hollywood deal memos were notoriously imprecise and larded with special favors—as he soon discovered for himself: “Even a newbie like me could find a dozen holes in those thirty-page memos.”3

  Kirk left Aubrey alone to run and rescue MGM. As delegator-in-chief, he was mindful of results, not process. And like Shoofey at the Flamingo and the International, Kirk trusted Aubrey to manage the details at MGM. That meant no muddied chain of command, no interference from above.

  But then the phone rang. It was attorney Sidney Korshak, a noted Hollywood fixer with particularly close ties to Paramount Studio bosses. He was also a social friend to Kirk—and to every other studio chief in town. Kirk and Jean were on the elite guest list for Korshak’s who’s-who-of-Hollywood annual Christmas party.

  He was calling for a favor on behalf of Robert Evans, the president of Paramount. “Bobby” wanted to cast some unknown thirty-year-old actor in a big movie with Marlon Brando. The problem: Jim Aubrey had just signed the guy to a contract for some MGM fluff—a mobster comedy called The Gang That Couldn’t Shoot Straight.

  “This schmuck Aubrey won’t let him go,” Korshak said.4

  Could Kirk please get Aubrey to release the guy?

  “Sidney, I’d do anything for you,” Kirk replied. “You know that, but my deal with Aubrey is he’s got total control. It’s Aubrey’s call. I’ve got no say in it.”

  Korshak, who cultivated a tough-guy image and encouraged speculation about his supposed ties to Chicago mobsters, liked to joke that he made Kirk an offer he couldn’t refuse—“I asked if he wanted to finish building his hotel,” he told Evans. But Kirk wasn’t building a hotel at the time. The International was already two years old and no other project was even on the drawing boards.

  Whatever Korshak said, and it’s just as likely that he simply played the good friend card, Kirk folded. “Who’s the actor?” he asked. It was an unfamiliar name. He asked Korshak to spell it.

  “Capital A, punk l, capital P, punk a-c-i-n-o.”

  “Who is he?”

  “How the fuck do I know,” Korshak said. “All I know, Bobby wants him.”

  A short time after the Korshak-Kerkorian conversation, an irate Aubrey got through to Evans at his Paramount office. The Smiling Cobra had just heard from Kirk and was spewing epithets. According to Evans’s account in his book The Kid Stays in the Picture, he could only listen in silence. Aubrey’s tirade lasted only a few seconds and ended with, “I’ll get you for this!” And the phone went dead.

  Kirk’s rare intervention changed history. The unknown Al Pacino was released from his MGM contract, permitting him to break into superstardom playing Michael Corleone in Paramount’s instant film classic The Godfather.

  Under Aubrey’s continued cold-blooded economizing, Kirk still got precisely what he wanted for MGM. The financial hemorrhaging slowed. Strict budget and spending limits were established and aggressively enforced. Aubrey kept selling off MGM assets, but in the process he was also retiring debt.

  So, with MGM no longer in free fall, Kirk focused on the other pieces of his leisure empire, the Vegas hotels and Western Air Lines.

  Kirk had been getting what he considered bad press since early in 1970 for standing in the way of a possible merger between Western and American Airlines. He did oppose it at a time when Western was struggling. He preferred talking merger from a position of strength, not weakness. But to many it appeared that he was simply holding out until American paid him more money for his 30 percent.

  At the company’s annual meeting in April at the Beverly Hilton, shareholder Flint Rainey asked about published reports that Kerkorian was standing in the way of a share-for-share deal with American. He held the floor for several m
inutes, noting:

  “It seems to me this would be a very good merger for Western at this time . . . because American is profitable and Western is not. American pays a dividend and Western does not. American stock is about twenty-five dollars and Western’s is about . . . thirteen dollars. American possesses the ability to modernize their fleet of aircraft to compete in today’s market and Western apparently does not.”

  He concluded with more personal remarks directed at Kirk.

  “If Mr. Kerkorian is the stumbling block here—and that’s been reported in the press—then I think he is gambling not only with his own money, which is fine with me, but also with the investments of the other seventy percent stockholders in Western, and I think that’s wrong.”5

  Behind the scenes it was deposed president Terrell Drinkwater, now the titular chairman of the board, who was stirring up stockholder unrest. He had continued meeting secretly with American president George Spader and stoking press speculation about a possible merger.

  Now Kirk was furious. He had moved slowly against Drinkwater’s insults and recalcitrance. The man was Mr. Western Air Lines, the unchallenged boss for twenty years. Kirk valued his experience, his loyalty to the company, and his leadership. But an insurgency against Kirk’s agenda was intolerable.

  He had tried to warn Terry. “You know what I’m going to have to do, and you know I can do it. I don’t want to, but you’re forcing me.”6 As corporate raiders go, Kirk had to be among the most polite.

  After the stormy annual meeting, however, Drinkwater was doomed. Kirk called a special meeting of the board and summoned Terry home from a trip to Hawaii and Asia. As the last hours of the MGM auction were ticking down in Culver City, Kirk was a few miles away at Western’s headquarters near LAX negotiating generous terms of Drinkwater’s forced resignation.

  Kirk’s good friend Cary Grant replaced Drinkwater on the Western Air Lines board of directors.

  Back in Las Vegas, Kirk was losing interest in the hotel and casino business. Or so it seemed. The Hilton “H” had gone up on the side of the International building, and Kirk’s enthusiasm for management decisions had evaporated. He left everything to Benninger.

  A year after selling off the first half of his holdings to pay down European loans, Kirk sold the rest of his shares. It wasn’t out of financial necessity this time. He simply wasn’t interested in being a partner. Hilton got a bargain. But Kirk profited, too—despite bad timing and lost paper value. The Hilton stock sales and the $5 million dividend brought Kirk a total of $50 million, a two-year profit of more than $30 million.

  Kirk refused to look back at what might have been. He told a reporter: “We built the number one hotel in the world. It was an excellent enterprise. I have no regrets.”7

  21

  The Rival Vanishes

  November 25, 1970

  Las Vegas, Nevada

  A twin-engine Lockheed JetStar swooped down out of a moonless black sky, banked to the north skirting the neon glitter of the Strip and downtown gambling houses, and lined up for an approach into Nellis Air Force Base. It was a blustery night, Thanksgiving eve. The civilian JetStar, the largest class of business jet in the air, was avoiding busy McCarran International about sixteen miles south. Its mission was secret. And its 8:00 p.m. touchdown at the military airfield immediately set in motion a sequence of actions across town that would end the four-year Howard Hughes Era in Las Vegas—and his one-sided rivalry with Kirk Kerkorian.

  The historic importance of bold investments in the city by both men was already altering the future of Las Vegas. Individually, and sometimes at odds with each other, Hughes and Kerkorian had started the transformation of Las Vegas from a mob-influenced gambling town to a corporate-controlled gaming resort. State licensing laws had been changed overnight to accommodate them and what Governor Paul Laxalt considered their “showpiece” corporations. Casino investing, though still dominated by the Teamsters Central States Pension Fund and other mobbed-up “East Coast investors,” was nonetheless going mainstream as federally insured banks shed their inhibitions over lending to Nevada gaming operations. Stockholders were soon to be the modern Vegas heavies, demanding profits instead of kickbacks.

  But on that night a small crowd gathering nine floors up in the Desert Inn was not there to contemplate Hughes’s contributions to Las Vegas. They were there to spirit him away—part of an internal power struggle led by the Hughes faction known as “the Mormons.” With confirmation of the JetStar’s arrival, they went into action getting the sickly man secured on a stretcher, his emaciated six-foot, four-inch frame clad in blue pajamas and wrapped in blankets.

  To avoid his own security guards and any witnesses, Hughes was lifted through an open window and then carried down an exterior fire escape—nine flights of narrow stairs exposed to gusting winds and frigid temperatures, his stretcher maneuvered like a sultan’s sedan chair.1

  If the scene looked like a prison break, the similarities started with Hughes becoming his own drug-addled jailer. In four years he had never been seen outside the confines of the 255-square-foot bedroom in his sprawling penthouse apartment.

  Waiting in the shadows behind the hotel that night were two getaway cars and a minivan to accommodate six passengers and the escaping invalid. When the little caravan reached Nellis Air Force Base, Hughes was quickly transferred into the ten-seat JetStar. Minutes later, no more than an hour after its landing, the private jet was back in the sky, leaving behind the lights of Las Vegas.

  The recluse billionaire’s sudden and stealthy departure remained a secret for several days, until copies of the Las Vegas Sun hit the streets in early December. “Howard Hughes Vanishes!” headlined a front-page story by publisher Hank Greenspun. “Mystery Baffles Close Associates.”

  It took close associate and chief aide Robert Maheu more than a week to track his boss to Nassau in the Bahamas—only to learn then that Hughes had fired him as part of an abrupt reorganization elevating “the Mormons” at Maheu’s expense. It was in the aftermath of his dismissal that Maheu finally shared with Kirk the secret that Hughes had been working behind the scenes all along trying to scuttle the International Hotel.

  Proof was in the Hughes memos. Maheu turned over copies to Kirk. “Dear Bob, we’ve got to address the Kerkorian situation again,” began a typical handwritten note. For Kirk, who had always dismissed suggestions that Hughes was trying to sabotage his hotel project, the memos seemed to be a big disappointment. “I didn’t realize this . . . not at the time. No.”2

  But he also didn’t seem to hold any sort of grudge against either Hughes or Maheu. Kirk expressed sadness and sympathy for Hughes, whose bizarre behavior was widely blamed on an addiction to pain medications from injuries suffered in various plane accidents. “I had a lot of respect for him,” Kirk said. “That was before he went bad with drugs and got hooked on that stuff . . . because of all the crashes.”3

  He called Maheu “a sweetheart of a guy” even after discovering the misleading roles the aide sometimes played trying to manipulate him at the behest of Hughes. The former Hughes man continued to be a frequent tennis partner with Kirk. They were neighbors for a time, living across a fairway from each other at the Las Vegas Country Club, in the shadow of the old International Hotel, soon to be renamed the Hilton Las Vegas. By whatever name, it would always be the hotel that Kirk built.

  Lawyer Bautzer, who represented both Hughes and Kerkorian, had always reassured Kirk that there was nothing to the rumors of Hughes’s animosity toward him. The attorney was more ambiguous in his public statements, telling the New York Times that the two men “neither hate each other nor are they partners.”4

  On the surface Kerkorian and Hughes presented similar profiles as aviators and gamblers. Both pilots had operated airlines, though Kirk’s Trans International charter company was hardly comparable to the Hughes-run commercial giant Trans World Airlines (TWA). But Kirk’s controlling interest in Western, a major regional airline, was an impressive acquisition. And K
irk’s takeover of the struggling but venerable MGM film studio mirrored Hughes’s former control of RKO Pictures.

  “Our lives had a lot of parallels,” Kirk acknowledged to close friends. “I even understand some of his phobias and paranoia. I have a little of that myself.”

  It was a bit of self-awareness that acknowledged his sometimes debilitating shyness and certain increasingly obvious obsessive-compulsive traits. He was fixated on punctuality. His closets were as orderly as the racks at a fine men’s boutique. A tissue box left in the wrong place could get the cleaning staff a stern reprimand. But he hated to be compared to Hughes as a recluse, once chiding friend and business colleague Lee Iacocca as “that no good son of a bitch” for making just such a comparison about him in public. His closest friends called him a homebody with a touch of social anxiety, but all agreed emphatically that “he’s no Howard Hughes.” Not even close.5

  When provoked enough to talk about it, Kirk was defensive: “I’m far from being reclusive. Just because I don’t go to a lot of social events, it doesn’t mean I’m antisocial. I have old friends—thirty-and forty-year friendships. I go out to dinner three or four nights a week.”6

  Legal gambling brought both Kerkorian and Hughes to Las Vegas as early as the 1940s. But they later returned and invested their millions of dollars for very different reasons—Kirk’s was a dream, a plan to build a company around the leisure lifestyle boom; Howard’s was a whim that morphed into a tax break and then enticed him with opportunities for political influence.

  Hughes didn’t come to Las Vegas to get into the hotel and casino business. He started his four-year occupation of the Desert Inn simply looking for privacy and a temporary place to sleep. When he overstayed his reservation and his welcome, of course, he had to buy the place.7 In avoiding eviction, he stumbled upon an unanticipated tax windfall. And that, in turn, ignited a spending spree on hotels and casinos that brought him widespread media attention.