The Gambler

by William C. Rempel

  Oddly, the recluse loved the attention and the favors of fawning politicians that came with it. He created more headlines and more fans among the political elite when he vowed to fund a medical school, restore production to the state’s idle mines, build an ultramodern airport to accommodate commercial supersonic flight, and make Las Vegas as respectable as Lloyds of London. In memos intended for state officials who were receiving his financial support, Hughes wrote: “We can make a really super environmental ‘city of the future’ here. No smog, no contamination, efficient local government.”

  Hughes had come to see Nevada as a place where he could buy influence, so he expanded his shopping spree into heavy spending on vacant property along the Strip, tracts of ranch land outside of town, and mining rights all over the state. But he developed none of them. Rather, like a brooding mother hen, Hughes sat on his holdings and invested almost nothing in expanding or improving them.

  Kirk, by comparison, came to town eager to build and expand. The fact that he used the Flamingo as a training school for the future staff of his proposed International Hotel was no whim. It was a cold and brilliant calculation, part of a broader vision to develop Las Vegas as a mecca for the modern leisure lifestyle.

  “I thought it was going to become an adult Disneyland,” he said. And he put his wealth and reputation at risk to serve that vision, plunging into building the International even before he had the cash to complete it.

  An indecisive Hughes could never really compete with Kirk—and beyond plotting or committing sabotage, Hughes never really engaged head-to-head with Kerkorian. Their rivalry, to the extent there was one, existed mainly in the mind and ego of Howard Hughes.

  As Maheu would say: Hughes never wanted to be in the hotel and gaming business, but once he was in both he didn’t want anyone to be bigger than he was. So Kirk became a constant source of irritation, or worse.

  “That damned Kerkorian,” Hughes once complained to Maheu. “He’s the only guy I can’t buy.”8

  22

  Putting on the Moves

  October 24, 1971

  Los Angeles, California

  It appeared that Kirk had dodged a financial crisis that could have forced his early exit from the ranks of American tycoons and movie moguls. More than simply surviving, he had his swagger back. He was generating headlines again about bold plans and ambitious ventures. Another world’s-largest resort hotel was on the drawing board. His views on the economy and the future of Las Vegas were making national news. His choice of restaurants and his dining partners were making local society news . . . and the gossip columns.

  All that attention, most of it friendly and positive, had a downside. It finally exposed the previously private fact that Kirk was also dealing with a marital crisis at home. He and Jean—married nearly seventeen years and now with two daughters, Tracy and Linda—had already discussed divorce but neither had taken any action. A few friends knew there were serious strains in their relationship, but Kirk was openly seeing other women.

  Back in July, a gossip item in Parade magazine suggested that Kirk was seeing actress Claudine Longet, the ex-wife of singer Andy Williams. Kirk’s lawyer Greg Bautzer and actor Ryan O’Neal were also mentioned as recent companions of Ms. Longet. One Sunday morning a more prominent and suggestive piece appeared in Parade—in Walter Scott’s popular Q & A column “Personality Parade”—asking the very snarky question: When would Kirk Kerkorian be “trading in Mrs. Kerkorian for actress Yvette Mimieux?”1

  Photos of Kirk in his trademark pompadour-styled dark hair and the blond Yvette in a sultry publicity pose were published side by side with the nondenial answer: “Mr. Kerkorian and Miss Mimieux are friends and do not engage in trades of that type.”

  Kirk was the married fifty-four-year-old multimillionaire; the actress—who had starred a decade earlier in the films Where the Boys Are and Time Machine—was single and twenty-nine. Friends say they met in New York City, that romance led to talk of marriage, but that Kirk honored Jean’s pleas not to divorce.2

  Whatever was happening in his private life, Kirk felt strongly that it was none of the public’s business. He resented every word published about his family or his friendships. When a paparazzi photographer snapped a shot of Kirk with his daughters, he confronted the cameraman about his concerns as a father for the girls’ safety and security. He insisted on a promise that the pictures of his children would never be published. They weren’t.

  But Kirk was fighting a losing battle if he expected to keep the gossip and celebrity writers completely at bay. As the wealthy owner of a movie studio he was infinitely more interesting to such columnists than he had been as the head of a charter airline. Now his lunches at Ma Maison, often with lawyer friend Bautzer, rated regular notice in gossip columns—as did his trips to Acapulco, whether with family or pal Cary Grant. When he danced with “ball of fire” Jacqueline Bisset in her “clingy white halter top jersey dress”3 or came alone to a party or failed to show up at a black tie affair, it made ink somewhere.4

  The world was suddenly a fishbowl for the very private Kirk Kerkorian. He was intrigued and insecure all at the same time. The shy tycoon turned increasingly to Bautzer for help navigating what were for Kirk the unfamiliar realms of Hollywood and celebrity. Bautzer’s history as divorce lawyer and romancing playboy to the stars made him a staple in Hollywood gossip items, pictured with such beauties as Lana Turner, Ginger Rogers, and Joan Crawford. Bautzer knew how to handle celebrity. He knew the moves, and Kirk needed a mentor.

  “We hit it off,” Kirk said. “I like to talk to Greg whether it’s about business, politics, or just about anything.” Another lawyer at Bautzer’s firm said “Kirk worshipped Greg” and that the playboy lawyer would often make dates and reservations to show Kirk “how to have a good time.”5

  After getting his various foreign loans paid off, paid down, or renegotiated, Kirk was once again building up cash reserves in 1971—topped by the summer sale of his last million shares of stock in International Leisure. Even MGM was accumulating cash rather than bleeding it—not so much from making movies as from moving real estate. The company sold off another piece of its back lot earlier in the year for $20 million. Movie production costs had been slashed. And the box office flop rate of recent film releases had been improved from 70 percent duds to 50 percent. President Aubrey was predicting MGM’s best revenue numbers in many years.

  Things looked sufficiently promising to Kirk that earlier in October he had convened a private meeting of his closest advisers and MGM executives for a strategic brainstorming session. How could the studio survive and thrive making movies in an entertainment market dominated by free consumer programs on television? How could it hedge its bets? Where could it go for a more reliable, steady, and growing stream of revenue?

  Kirk had an idea: modified diversification of sorts. Combine the movie side of the entertainment business with the gaming side. This could be achieved if MGM borrowed about $75 million and built its own grand new Las Vegas hotel and casino. Fill it with movie memorabilia. Name the rooms, restaurants, and menu items after the stars. And call it the MGM Grand Hotel, after the 1933 classic Grand Hotel featuring Greta Garbo telling the world: “I want to be alone.”

  In disclosures that set off dire predictions from movie nostalgia buffs, Jim Aubrey came out of Kerkorian’s brainstorming session to announce that Leo the Lion was moving to the Strip. He would preside, one wag suggested, as the new “king of the green felt jungle.” Aubrey put it in business management terms: “We’ve reached the conclusion that it’s silly to rely on the motion picture business as the only business that a corporation of this size should be in.”6

  MGM, the film studio, was going to build the hotel, own it, and operate it as a subsidiary. It would need stockholder approval, but that was never in doubt. Kirk owned 40 percent and was buying additional shares. And Edgar Bronfman, the second-largest shareholder, announced wholehearted support for the plan. MGM would take on debt for construction
costs through debentures, interest-bearing unsecured bonds. Unlike public offerings of stock, debenture funding would not dilute share values.

  The hotel would be built on prime Strip-fronting property—sixteen acres already occupied by the then-defunct Bonanza Hotel at the same intersection shared by Caesars Palace, the Dunes, and the Flamingo. Kirk owned the Bonanza, so MGM would pay him about $5 million, based on an independent appraisal. MGM would also purchase an adjacent twenty-six acres for $1.75 million, making room for another big Kerkorian footprint in Vegas gaming.

  The MGM Grand would be even bigger than Kirk’s International Hotel. For the second time in a couple of years, he was launching construction of the world’s-biggest resort hotel—twenty-six floors with more than two thousand rooms, a casino 140 yards long with more than a thousand slot machines, ninety blackjack tables, and ten oversized craps tables, and trimmed with real imported Italian marble and genuine crystal chandeliers. And once again Fred Benninger would wear the hard hat as Kirk’s man on the site.

  Critics accused Kerkorian of disrespect toward a national treasure. Ann Rutherford, who played Scarlett O’Hara’s little sister in Gone With the Wind, likened MGM’s financial shift into Las Vegas gaming to selling superstar racehorse Secretariat for dog food. It made Debbie Reynolds sad all over again. “It’s like going back to your old hometown and it’s been torn down,” she told gossip columnist Joyce Haber, herself an ardent critic of the MGM Vegas move.7

  Kirk was emerging as a man with conflicting reputations—as a cad in Hollywood where he stood accused of dismantling a sacred icon of the arts, but as a class act in Las Vegas where his new hotel would create more than three thousand new jobs and advance the city’s stature as a leading resort destination.

  More than that, the Kerkorian-directed MGM Grand investment represented a very big bet—the kind of high-roller wager that a gambling town like Las Vegas especially admired.

  On the evening of April 15, 1972, traffic to groundbreaking ceremonies for the future hotel created limousine gridlock around the intersection of Flamingo Road and the Strip. Cary Grant was back like a good-luck talisman to support his friend’s latest and greatest hotel venture. Actress and sex symbol Raquel Welch, Aubrey’s girlfriend at the time, was in charge of detonations.

  Among the crowd entering a big red-and-white circus tent erected for the champagne and caviar party, Kirk and wife Jean slipped in barely noticed. As usual they were without an entourage, accompanied only by Kirk’s personal secretary—the bald and tattooed ex-cop Bob Garn. He nursed a beer in a bottle and stayed close to Kirk.

  In a room full of tuxedos, Kirk was dressed in black slacks and a black blazer over a white turtleneck that emphasized his trim physique. Jean wore a black dress with an open back revealing her well-maintained tan, perhaps a remnant from the family’s recent stay in Acapulco. The couple’s personal troubles were not in sight.

  Aubrey and most of the MGM board of directors, already in town for an earlier closed-door meeting to review prospective plans and architectural renderings, stayed for their MGM-hosted party. Though Aubrey was publicly supportive of the hotel project, his enthusiasm seemed more reserved. The studio chief was still trying to restore MGM as a profitable filmmaker, an act of wizardry that relied mostly on cost-cutting and asset sales. But this was not the night for such talk.

  Kirk’s brother Nish was there, too, in his working tuxedo. He ran Nishon’s, a Las Vegas restaurant and nightclub that he operated in a brotherly partnership with Kirk. The wealthy little brother had bought stakes in Circus Circus and made other Las Vegas investments for all his siblings.

  Outside the big tent, security for celebrities and the business elite was provided by a brigade of uniformed Clark County sheriff’s deputies, all under the supervision of Kirk’s close friend—now the sheriff—Ralph Lamb. On this night in a crowd of VIPs and strangers, Kirk was also surrounded by family and friends. Still, he was hard to find.

  When Cary Grant tried to invite him up on a makeshift stage to take a bow, Kirk was nowhere to be found. When Raquel Welch detonated the fireworks, Kirk was chatting near the bar with a young woman in a designer dress. She said he was fortunate to be so rich. For Kirk, who considered small talk something close to torture, her comments were ironic.

  “What good does it do being rich?” he said, consulting his scotch, no ice. “I can’t do what I want to do. I don’t like getting dressed up and going to see bankers. I hate that sort of thing.”

  He surveyed the boisterous crowd around him with big, sad eyes and added, “I don’t want to be here right now. I’d rather be someplace else.”

  “Where?”

  “I honestly don’t know. Just someplace else.”8

  It really didn’t matter that Kirk wasn’t enjoying his own party. On this night, he owned Las Vegas.

  23

  A View to the Abyss

  Late Fall, 1973

  Culver City, California

  As it turned out, Kirk still had a few loose ends to worry about in his financial world—a six-million-dollar German bank loan, for one, left over from his borrowing spree to build the International Hotel. It was a loan secured only by the Kerkorian signature. Past renegotiations had already exhausted the bank’s long-running patience. There was no ill will, but it was time to settle the account. The bank had formally demanded payment in full under terms of their original agreement.

  Kirk gathered his team of personal advisers, his inner circle from the private holding company Tracinda Investment that he named for his daughters, Tracy and Linda. Fred Benninger and accountant Jim Aljian came down the hall to Kirk’s modest MGM office. Lawyers Frank Rothman and Terry Christensen from Bautzer’s law firm drove over from Beverly Hills.

  What they saw in Kirk’s new predicament was the abyss.

  He had plenty of assets, most of them tied up as collateral for other loans. But he had nowhere near six million in cash. He was weeks away from defaulting on the German loan. And that was just for starters.

  A perfectly sound $50 million Bank of America loan, fully secured by MGM stock, contained a clause that if Kirk were to default on any other credit agreements, it would trigger default on the Bank of America loan. That in turn would put Kirk’s controlling shares of MGM stock securing the B of A loan in immediate peril.

  It was a nightmare version of the domino theory. Kirk needed something close to $6 million in short order or he faced the very real possibility that he and his team could be run right out of the MGM building. Risking default would be like playing Russian roulette. Not that Kirk’s demeanor gave away any trepidation. The Perry Como of the craps table was holding court, discussing options, as if he were playing for chump change.

  Someone in the room did some quick calculations. If MGM were to declare a special dividend of $1.75, Kirk’s share of a $10.5 million payout to all shareholders would amount to $5.25 million—enough that he could pay off the German loan. But it would also be controversial.

  Diversification into the hotel and casino business had yet to prove itself. The MGM Grand wasn’t set to open until December and was already running at least $20 million over budget. There remained substantial resistance, inside and outside MGM, to what was perceived as the cannibalization of a beloved filmmaking studio. Its financial recovery was based mostly on revenue from onetime sales of assets. And recent revenue numbers offered little to brag about.

  Kirk turned to Christensen, the junior lawyer in the room, who was already handling a nettlesome shareholder’s suit. It stemmed from MGM’s purchase of Kirk’s Bonanza Hotel property where the MGM Grand was going up. Kirk liked the thirty-one-year-old former military lawyer and referred to him regularly as “that cocky Marine.” About that dividend idea, he wanted to know: “Can we handle that?”

  “Absolutely,” said Christensen without hesitation. “We will be sued. We’ll probably settle somewhere along the way. But it should be reasonably inexpensive.”1

  And it would buy time.

  Benn
inger and Aljian endorsed the idea and went to work on a full-blown financial analysis to present to the board of directors. It was obviously good for Kirk. But it also had to be good for shareholders generally.

  Outside of periods during intense negotiations, Kirk tended to keep regular hours at the MGM headquarters at that time. He was comfortable working nine to four, then retiring for an hour or so of vigorous exercise—tennis or jogging most likely—and then a shower and a cocktail before dinner. He rarely took work home with him. That’s why when he summoned Greg Bautzer unexpectedly to his Benedict Canyon home one evening just before Halloween, the lawyer arrived already sensing trouble.

  It had been a busy several weeks for everyone on Team Kerkorian, but especially for Kirk. Quite apart from dealing with his own very private cash flow issues, he had been heavily engaged in direct negotiations to sell MGM’s foreign distribution operations to a consortium that included Paramount and Universal. The final terms were worked out at the Bistro on Canon Drive, across a table from Paramount power lawyer Sidney Korshak. Kirk had earlier made a deal with United Artists, turning over all MGM domestic distribution to UA for the next ten years. MGM was now the only big studio in Hollywood without its own distribution arm.

  The back-to-back transactions brought in more than $20 million for MGM but came with a substantial downgrade of status in the entertainment world. Los Angeles Times columnist Joyce Haber declared the studio “all but closed.” What was once among “the major-major” players in Hollywood, she wrote, “is now a mini-minor.”2 Similar sentiment came from the New York Times, where Vincent Canby reported that MGM as a feature filmmaker had all but “ceased to exist.”