Kirk wanted the disaster forgotten as soon as possible. He pressed the insurance companies to speed negotiations and settle faster. Instead, they dragged their feet trying to prolong the process. Kirk took matters into his own hands, dispatching his own team of insurance adjusters with the same message he gave Christensen: the victims had been guests of the hotel and were not to be treated as adversaries. He put his own money where his priorities were, paying cash settlements out of his own pocket.3
The insurance companies were stunned. Kirk had paid $69 million to settle all pending death and personal injury claims against the MGM Grand. He did it in less than two years. But when he billed the insurance companies for reimbursement, they paid about $11 million, then stopped and refused to pay more. They accused Kirk’s side of not playing fair, of settling too fast for too much.
The MGM Grand sued its insurance broker and more than twenty carriers that shared various percentages of the risk. The insurance companies countersued the hotel and named a number of building contractors. One of the biggest and most complex legal cases in the history of insurance was launched.
But Kirk, ever the gambler, liked his odds. He would have a Las Vegas jury of ordinary people. And for all its complexity, the case would come down to one thing: the insurance companies’ principal gripe against Kirk would be his generosity and prompt response to fire victims and their families. Yes, he had settled too fast for too much. But what jury of ordinary citizens anywhere in the country would side with a greedy insurance company and find fault with Kirk’s generosity?
While Kirk had been pressing his insurance adjusters to settle the hotel fire claims, he also was trying to negotiate away the Columbia Pictures stalemate that had him blocked from buying outright control. His 25 percent ownership, if dumped on the market, could have depressed stock prices. Sold as a block it could have posed a threat to management—the same people who united to block his takeover.
Kirk figured he could get his best deal by offering to sell his shares back to the company. It would not only boost stock prices but also consolidate the power of the existing board and its management team. The Columbia team that had fought him so strenuously quickly agreed.
The sale of Kirk’s Columbia Pictures stock marked a rare capitulation at that stage in his investing history. But it was by no financial measure a failure. Kirk had purchased the stock at an average price per share of $17.50. Columbia Pictures bought it back at a $20 markup for $37.50. Kirk’s failure to take over the Columbia studio had resulted in a nifty net profit of $75.6 million.
With all that cash in his pocket, he went shopping again for another movie studio. It happened that United Artists—then owned by Transamerica, the financial services giant that made Kirk wealthy by buying his Trans International Airlines—was suffering through the bad press and internal recriminations of an artistic and box office disaster.
Its $44 million western epic Heaven’s Gate had been released the same weekend as the MGM Grand Hotel fire to near-empty theaters and sweeping critical rejection. Director Michael Cimino had become the poster boy for artistic excess and self-indulgence. The film’s paltry $3.5 million box office return made UA and “fiasco” companions in headlines across the country. So profound was the Heaven’s Gate flop it prompted existential fears that Hollywood itself might collapse.
By the spring of 1981, Transamerica wanted out—out of a relentless public relations debacle and out of the movie business. Kirk wanted a distribution arm and access to UA’s continuing franchise productions of James Bond, Pink Panther, and Rocky films. But he was also keenly interested in regaining rights to MGM productions distributed by UA, including Gone With the Wind, Doctor Zhivago, Ben-Hur, and 2001: A Space Odyssey.
The Kerkorian deal to bring UA and its classic movies library into the MGM family would cost $380 million in cash and a debenture offering. While awaiting antitrust clearance from the government, Kirk and Yvette took another vacation trip on his private jet—this time to Hawaii. The idyllic getaway was to Spanish-American singer-celebrity Charo’s seaside residence on the “garden island” of Kauai.
That’s where Scoshie bounded into Kirk’s life.4
Friends described Scoshie as a precocious, affectionate, and plain little dog with big droopy ears and soulful eyes. She was black and of indistinguishable pedigree. But she had one standout quality—she made Kirk laugh. And something about the pup reminded Kirk of a childhood pet.
This puppy belonged to the leasing agent who made daily stops to resupply the Charo rental, and he always brought along Scoshie. Kirk laid in his own secret stash of doggy treats for those occasions. After a week, the dog was leaping from the Jeep the moment it stopped and racing to Kirk’s side.
When it was time to fly back and deal with pressing business matters, Kirk opened negotiations with the leasing agent. He wanted to take Scoshie home to Beverly Hills. The leasing agent held out for an undisclosed amount of cash and an expenses-paid trip to Southern California, delivering Scoshie in person after a health department quarantine.
The puppy-love-smitten Kirk returned home to prepare his residence on Bedford Avenue for Scoshie’s pending arrival. To replicate a grassy expanse where they played at Charo’s place on the island, Kirk had his backyard swimming pool filled in and rolled with fresh sod. A month later Scoshie arrived to assume her new dog’s life as the cherished companion to one of America’s richest men.
In the weeks that followed, the renovated MGM Grand Hotel moved swiftly toward a summer reopening date. Like the original grand opening, it would again feature Dean Martin in the Celebrity Showroom introduced by Cary Grant. Local journalists knew it was coming, but there was virtually no advance publicity. No national media were invited.
The morning before its doors would open to guests and gamblers for the first time in eight months, Kirk joined the management team for a mass meeting with the entire hotel staff. They gathered in the jai alai fronton, a space big enough to accommodate nearly a thousand employees. Many of them wouldn’t have recognized Kirk if they were stuck in an elevator together.
According to one story, a young MGM Grand desk clerk once kept Kirk waiting to check in while she had a brief row over the phone with her boyfriend. She was very apologetic and then asked him for the name on his reservation. “Kirk Kerkorian,” he said. She gasped in horror, but he smiled and reassured her. “We all have our days.”
At the already unusual all-staff meeting, Kirk did something no one in the room had ever seen before. He got up and made a little speech.
“I told you we’d open the hotel again,” he said. “And we’d be bigger and better than ever. And now I just want you to know that there’s plenty of money in the bank to take care of this place. Nobody needs to worry.”
The next night, on Wednesday, July 29, 1981, the MGM Grand Hotel was back in business with state-of-the-art fire prevention and protection features everywhere. The reopening, however, was without fanfare. No klieg lights. No banners. No red carpet arrivals. A single sign over the reception desk in the lobby said welcome to the grand event, the only reference in the entire hotel to the grand reopening.
Advance local news coverage had characterized the new and improved MGM Grand as the safest hotel in the world, with built-in fire sprinklers everywhere and computerized smoke and fire monitors throughout all twenty-six floors. All of Las Vegas was undergoing upgrades and retrofitting to meet tough new standards for fire prevention and protection.
Cary Grant played official host for the evening, making a point of telling guests and reporters that he was staying on the twentieth floor “and happily so.” He was not at all afraid for his personal safety even on the highest of floors. And as a member of the MGM Grand board of directors, he said he doubted that the fire would do any lasting damage to the hotel’s reputation. “MGM has been a tremendous name. I don’t think it’s lost any aura,” he told the Reno Gazette-Journal.
Grant’s confident newspaper quote nicely summed up his friend Kirk’s
most ardent prayer for the future of his brand. Kirk still regarded it with almost mythic respect, calling MGM the “three magic letters.” And in the months following the MGM Grand’s understated reopening, the hotel’s return to profit seemed to answer those prayers.
Kirk and Jean filed for legal separation in June 1982 and started uncontested divorce proceedings in Los Angeles Superior Court at the end of the year. As the estranged couple opened divorce settlement negotiations, Kirk was named one of the richest men in America. A snapshot of his relative wealth was revealed in a new Forbes magazine feature called the Forbes 400 List. Kirk was number 224 out of 400 with an individual net worth in the fall of 1982 estimated to be $133 million.
Other names on that first list were Donald Trump, the New York real estate developer, and Ted Turner, the fortysomething owner of Atlanta-based television superstation WTBS and Turner Broadcasting System. He had introduced the world to the twenty-four-hour news cycle by launching CNN, the all-news cable channel.
Kirk already had an eye on Turner, considering his cable entertainment operation a potential market for the MGM/UA film library. In early 1983 Kirk flew out to Atlanta just to meet the brash entrepreneur who was twenty-one years his junior.
Ted was excited about the prospect, at least in his mind, of a 50–50 partnership with the film studio. He put together an enthusiastic pitch. He emphasized the benefits of joining forces—WTBS could promote new MGM releases and the studio could provide a guaranteed supply of entertainment programming for the station. He talked about big plans and grand schemes, accentuating the positive—ignoring the fact that his CNN newsroom was having some trouble keeping its lights on.
Kirk came away impressed with Turner’s ideas and forceful personality, but also uncomfortable with his youth and unpredictability. He decided not to rush into any sort of business relationship with Turner. But he liked the kid. He next noticed Turner a couple of years later when press reports disclosed that the Atlanta cable developer was making a hostile takeover run at television giant CBS. Now, that was brash.
Turner’s very public battle for CBS captured Kirk’s renewed attention in 1984–85. At the same time, Kirk’s legal battles were coming to a head in Las Vegas. At the urging of Greg Bautzer, the MGM Grand retained a Southern California lawyer specializing in bad-faith insurance cases, a hired gun famed for winning large jury verdicts.
Kirk’s preference from day one was a quick settlement. He hated depositions. He hated testifying. He would gladly leave dollars on the table—possibly millions of dollars—to avoid the personal stress and lost time of litigation. Bringing in hired gun William M. Shernoff was almost certainly Kirk’s way of adding pressure on the insurance companies to cut their losses and settle.
The trial itself was expected to cost millions—at least $350,000 a day, including the lawyer fees—and last eight to ten months. The complex litigation wrapped together a conglomeration of suits and countersuits involving scores of litigants and forty-nine separate legal teams. No courtroom in Las Vegas could hold that many lawyers and interested parties. Federal court officials assessed fees against all sides to finance construction of a temporary courtroom on the campus of University of Nevada, Las Vegas. It was built and furnished near the school’s new basketball arena. Monthly rent was assessed against all parties. On the eve of jury selection, before a single witness had testified, the cost to build and operate the campus courtroom had already reached $500,000.
It was Shernoff’s position that the recalcitrant insurance companies were disgruntled gamblers. “They guessed wrong,” he said, about everything.5 For about six weeks before the trial was to begin, he occupied a seventeenth-floor suite that included a “war room” for the legal team. It housed more than a million pages of documents. His co-counsel was hard-charging young Bautzer partner Patricia Glaser.
Kirk never went anywhere near the special courtroom, but he occasionally took the legal team to lunch. “He never asked about details. If he brought up the case, it was only to ask: ‘Are we gonna win?’”6
Behind the scenes, efforts to head off the costly trial and avoid an uncertain jury verdict had prompted various settlement offers from the insurance company side, each one stubbornly stuck in the vicinity of $20 million. Kirk’s team never even bothered to check with the boss. Kirk had a settlement price in mind. He spelled it out to his management team and confidants, like his favorite ex-Marine, Terry Christensen.
Kirk wanted at least another $50 million from the insurance companies. Not a dime less. Kirk wasn’t bluffing.7
In the special courtroom presided over by Las Vegas judge Paul Goldman—who packed a handgun under his robe—jury selection began in early March 1985. Settlement offers started to edge up. Shernoff wasn’t part of those talks. He was focused on trial preparation. He was confident of a jury verdict that could come in well over $100 million. The publicity would be good for his practice.
But lawyers for the insurance companies were still insisting that Kirk’s payments to the victims were “astronomical” and disguised to hide the fact that taxable punitive damages had been figured into the payments. They weren’t. And the insurers’ defense was looking weaker by the hour.
The insurance companies were going to be hammered in front of a jury of ordinary citizens for trying to underpay and delay what was due to a host of sympathetic fire victims. Shernoff couldn’t wait to start the trial. He polished his opening arguments.
The weekend before trial was to begin, Kirk called co-counsel Patty Glaser. “Do you have a minute?” He never assumed that his lawyers had time to speak with him, even if it was the fifth call of the hour. In this instance, the gambler wanted one last check on the odds for a favorable verdict.
“Patty, are we gonna win or are we gonna lose?” he asked as she saw her life flash before her eyes. Glaser knew that any judgment short of $50 million meant failure. “We’re gonna win,” she said, trying not to leave any hint of doubt.8
Privately, the legal team was equally certain. From Shernoff to the clerks at the Bautzer office, they bet their chances of winning at 70–30. Apparently the insurance companies saw it the same way.
When Shernoff strode into court rested, ready, and eager for opening arguments, Glaser broke the news that they had an overnight settlement.9 The insurance companies would reimburse a total of $87.5 million—including the $11.5 million they had repaid earlier. Kirk’s hardline negotiating position had added a full $76 million to the settlement.
Attorneys for all sides partied with Judge Goldman in the special courtroom the next day accompanied by free-flowing champagne and rock music. Some wore commemorative T-shirts bearing the Latin phrase nusquam tibi nimium insurance—“You can never have too much insurance.” Shernoff was wistful. A jury verdict could have been worth millions of dollars more.10 Kirk was delighted. His date with a witness stand had been canceled.
Despite the postsettlement camaraderie, Kirk certainly hadn’t made any friends in the insurance business. But he had just won another very big bet—and nothing gave the gambler a bigger charge than that.
28
One Roll of the Dice
Spring 1983
The French Riviera
Kirk was in Cannes for the annual International Film Festival. It was the year Martin Scorsese’s The King of Comedy starring Robert De Niro and Jerry Lewis was the featured new release, and Bette Davis was among the honored legends of the screen. Kirk was traveling with his wealthy TV producer friend Jerry Perenchio, the pair of former California farm boys living large. Both had come a long way from the San Joaquin Valley. They liked to call themselves “the Fresno Kids.”1
The film festival coincided with the grand opening of a casino at the new Loews Hotel in nearby La Napoule, touted as a major addition to gambling on the Côte d’Azur. The owners were Jerry’s American friends Preston and Laurence Tisch. He knew them as Bob and Larry.
Kirk wanted to see the new casino and offer the Tisch brothers what amounted to the casino owner
s’ secret handshake. “Why don’t we go down there?” he suggested.
The ritual widely observed within the exclusive league of casino owners involved making a visit to the other guy’s establishment on opening night and wishing him good luck by losing a load of cash at his gaming tables. It was a polite thing to do, an expression of goodwill, like a housewarming gift.
At the casino that night, Perenchio introduced his friend Kirk and let him explain to his friend Larry Tisch what he had in mind.
“I want to make a bet,” Kirk said. “I want to bet a million at the craps table on one roll of the dice.”
Tisch, a naturally courteous man and eager to please, wasn’t sure what to say. Kirk continued, “I’ll either win or lose. I hope I lose, because I want to do this as a goodwill gesture for the hotel.”
Of course, everyone knew how the odds favored the House. But the proposed million-dollar risk for Kirk was also a million-dollar risk for the casino. That’s why the ever-polite Kerkorian asked permission. Tisch and his casino manager excused themselves to speak privately.
The House decision to accept the bet seemed less than enthusiastic.
“We’re willing to do this, Kirk—but only for you,” Tisch said. “And because Jerry is a friend of ours.”
The casino manager handed Kirk a small orange chip. It bore no numerical markings. But for the next half hour or so, it would be worth exactly $1 million.
The casino floor had a cluster of four craps tables. Kirk accepted a lowball of scotch and stepped up to the first table accompanied by Perenchio, Tisch, and the very attentive casino manager. Kirk wanted to observe the table action before picking his spot for The Bet.
Perenchio had known Kirk for years. The Fresno Kids shared many common interests. Both were aviators who loved boxing and tennis. Perenchio had been a U.S. Air Force jet pilot in the 1950s. As a sports promoter he had arranged the “Fight of the Century” at Madison Square Garden in 1971 pitting the undefeated heavyweights Muhammad Ali and George Frazier against each other. And Perenchio was the promoter behind the 1973 “Battle of the Sexes” at Houston’s Astrodome where Billie Jean King beat Bobby Riggs in what was then the most watched TV tennis match in history. One thing Jerry Perenchio had never seen was Kirk the casino owner on the gambler’s side of the table.
The Gambler Page 22