Harut spoke in Armenian, “It’s food—a gift from America.”
The man still didn’t move. But he started to weep. So did Harut. Suddenly, everyone in the tent was in tears. The package contained lifesaving cooking oil, powdered milk, canned foods, and winter clothes.
And so it went . . . from encampment to encampment. Upon his return to Los Angeles, Harut prepared an action report for Kirk. He described his encounters, the grateful reception by the people. He declared, “Mission Accomplished,” and asked what to do next.
Kirk’s one-sentence reply would launch a billion-dollar relief effort spanning two decades: “Keep sending airlifts as long as Armenia needs assistance.” His commitment would make the Armenian relief effort the largest to any single country since the historic U.S. government–backed Berlin Airlift of 1948–49.
The sheer size and duration of the Armenian airlift would make it impossible to keep Kerkorian’s role a secret. News of his philanthropy spread throughout Armenian American communities in the United States and Europe. The benefactor insisted on only two things: his name would never appear on a monument and Armenians would always work together.
Across their hard-hit homeland, Armenians regarded Kirk as a saint. His name was spoken with a mix of reverence and pride. Neighboring rival Azerbaijan may have oil, acknowledged some Armenians, “But we have Kerkorian.”
Kirk was also getting public attention throughout the international business world from his listing that year in Forbes magazine as one of the four hundred richest Americans. Like many moguls on that list, Kirk considered the popular magazine feature of questionable value, questionable accuracy, and an intrusion on his privacy. He saw no benefit to advertising his affluence. Kirk neither cooperated directly with Forbes researchers nor confirmed or corrected the magazine’s estimates of his wealth.
The 1989 Forbes list came with a Kerkorian bonus element. It showed he was now one of sixty-six American billionaires. His estimated net worth: $1.29 billion. Other first-time billionaires on the 1989 list included financier Michael Milken, Microsoft founder Bill Gates, TWA boss Carl Icahn, and the Tisch brothers with their hotel and casino holdings.
Larry Tisch, whose casino on the Riviera suffered the loss of $1 million to Kirk’s “one roll of the dice,” had been especially brusque and dismissive of the Forbes feature. He called the list useless, meaningless, and “completely unnecessary.” He acknowledged glancing through it but said he then hurled it aside.5
Donald Trump, on the other hand, broke into the upper tier of superrich that year based on a lobbying campaign. He was one of those who very much wanted to be listed as a billionaire, and in 1989 he was included with an estimated net worth of $1.7 billion.
But Forbes editors would summarily dump Trump from the billionaires’ list midway through the year, explaining in May 1990 that they had been misled by incomplete information provided by Trump. It turned out that the New Yorker’s properties were loaded with debt that drastically reduced their net value. And by the time its next list was issued in the fall of 1990, Forbes had dropped the New York developer completely from its list of four hundred richest Americans. The future U.S. president’s net worth was then, said the editors, “within hailing distance of zero.”
Trump took the Forbes demotion very badly. He lashed out at the magazine and accused its late publisher Malcolm Forbes of “finally getting back at me from the grave.”6
Some of the same economic factors depressing the value of Trump’s business interests at that time—notably faltering gaming returns and sagging real estate values—also affected Kerkorian’s net worth, but only marginally. Kirk remained solidly ensconced among the billionaires.
For Michael Milken, the billionaire list masked serious personal troubles. He was under indictment for alleged felonies involving securities violations. His company, Drexel Burnham Lambert, was being forced into bankruptcy. He would plead guilty to six lesser charges and pay a fine of about $600 million.
Future billionaire Ted Turner rose to Milken’s defense. In public statements he credited Milken with helping to pull off his MGM deal with Kirk and raved about Mike as a financial genius. “If this guy ever goes to jail, then I want to be right there in the cell next to him,” Turner said.
Milken served twenty-two months in federal custody, but without Ted’s companionship. After prison he resumed luncheons and occasional tennis dates with Kirk.
Throughout the 1990s, Kirk and the Lincy Foundation became major supporters of the American Red Cross with the ascension of Elizabeth Dole as its president. Her husband, U.S. senator Bob Dole (R-Kan.), was a leading congressional advocate of Armenian causes—including official U.S. recognition of the Armenian genocide.
The senator was also very close to a prominent Armenian American surgeon in Chicago. Doctor Hampar Kelikian had saved Dole’s mangled arm from amputation after he was wounded in Italy near the end of World War II. The immigrant doctor became like a father to the young soldier. By the time Dole was in the Senate, both Kelikian and Kerkorian had become important figures in the Armenian American community.
“I want you to know each other,” Dole said in bringing them together.7
Kirk gave only sparingly over the years to politicians, but he made exceptions for his friends. Two of them were Senate rivals—Dole on the GOP side and Harry Reid of Nevada on the Democratic side.
The absence of any direct political agenda made the American Red Cross a favorite target for Kirk’s giving. And Elizabeth Dole learned early that he preferred a very straightforward approach to gift solicitations. Her first direct appeal to Kirk came in a phone call. She explained that the American Red Cross was raising an emergency fund to help Rwanda genocide survivors.
“What do you need from me?” Kirk asked. It was his standard response to such calls.
“We need two million dollars,” she said.
“You’ve got it.”
That was so easy! The Red Cross president gushed with gratitude. And then she said, “Kirk, you have other wealthy friends that might be willing to help us. Would you mind asking whether—”
“Wait—” he interrupted. “It sounds to me like you need more than two million. How much do you really need?”
“Well, we really need four million,” she said.
“You got it.”8
One thing Kirk would never do: ask a friend to make a contribution to anything.
“Kirk would contribute millions of dollars himself,” said his attorney friend Christensen. “But he’d cut off his right arm before he’d ask someone else to give a dime.”9
III
The Making of a Legend
“To win without risk is a triumph without glory.”
—Pierre Corneille, French playwright
32
Babe Ruth at Bat
September 1990
Beverly Hills
It was a Sunday morning and Kirk had a new investment strategy he wanted to launch as soon as possible. He had asked Alex Yemenidjian to summon his team of financial and legal advisers to the cottage at Wanda Park. It was all very mysterious. But business would be followed by lunch and tennis. Only Alex had a clue what was coming, and he was sworn to secrecy.1
Michael Tennenbaum, head of the Bear, Stearns & Co. offices in Century City, would have to drive in from Malibu. He was already Kirk’s point man on major Las Vegas projects. Among those, Tennenbaum and Bear Stearns were trying to raise $700 million to fund construction of Kirk’s next megaresort in Las Vegas, an all-new, bigger-than-ever MGM Grand Hotel.
Of course, Tennenbaum had time—even on a Sunday morning—for his richest client. He relished any chance to get to know the billionaire better, especially in the casual atmosphere of tennis at the hilltop estate. He brought along his wife and two large dogs.
Tennenbaum was in his early fifties and, like Kirk, an avid tennis player. He was also a skier who commissioned an avant-garde five-story “glass castle” in Vail, Colorado. Unlike his eighth-grade dropout
client, he held a master of business administration degree (with honors) from Harvard University.
As usual, Kirk didn’t waste time with small talk. With everyone seated around the lunch table he opened the session at one minute past the 11 a.m. start time.
“I suppose you all know why we’re here,” he said—to universal frowns and a chorus of “No!”
“Hey, you told me not to tell anyone, so I didn’t,” Yemenidjian quickly interjected.
“Oh, of course,” Kirk resumed. “We’re here because I’m going to buy nine point nine percent of Chrysler.” He planned to start buying the carmaker’s stock immediately. His ultimate goal was 22 million shares.
For six months Yemenidjian had been secretly monitoring Chrysler’s financial statistics on Kirk’s orders. The data gathering was so confidential and Kirk’s interest so sensitive that Alex wasn’t even to talk generally about the car business with anyone during those six months. “And don’t even fly over Michigan,” Kirk told him.
Stunned silence greeted Kirk’s announcement in the dining room. Kirk waited for reaction. Tennenbaum ventured the first tentative response: “Gee, they’re in pretty bad shape.”
Chrysler was at the time on no one else’s list of recommended stock buys. Not for conservative investors. Not for billionaires. Not for anyone interested in a return on investment. The nation’s number three automaker had billions in debt, billions in unfunded pension liabilities, and no apparent prospects for improving its standing.
Tennenbaum thought it was a terrible investment idea, but in deference to Kirk he eagerly offered up “all the resources of Bear Stearns. We will have a huge team comb through the entire country, turn it upside down, and give you our best opinion on Chrysler.” They would start first thing the next morning.
Kirk’s poker face showed neither pleasure nor impatience. He leaned closer to Tennenbaum and put his hand on the banker’s forearm.
“I want you to do me a favor,” Kirk said.
“Kirk, whatever you want,” Tennenbaum assured him.
“If Bear Stearns does develop an opinion about Chrysler, would you please just . . . keep it?”
Kerkorian’s gentle rejection struck Tennenbaum like a slap in the face and a repudiation of prudent counsel. Later, in a phone conversation with his boss—brokerage chairman Alan “Ace” Greenberg—Tennenbaum complained about Kirk’s effrontery. Instead of sympathy, Greenberg chided his senior executive. “You don’t tell Babe Ruth how to hold the bat.”2
Kirk’s campaign to acquire Chrysler shares began slowly and under the radar in October. It continued through November. When news broke in December that Tracinda Corp. had paid $272 million for 9.8 percent of the automaker, it sent shock waves through Detroit and Wall Street.
Chrysler directors called an emergency meeting to enact safeguards against a takeover. Stock prices jumped 62 cents overnight. Kirk’s one-day paper profit was $12.65 million.
Much of the investment world was befuddled. What was Kerkorian up to, anyway? The seventy-three-year-old insisted that he was buying as a passive investor with no intention to take over management of the company. He did not, however, rule out buying more stock.
Just as Kirk was moving into automobile manufacturing as a major investor, he was also making arrangements to move out of the movie business. Italian financier Giancarlo Parretti and his Pathé Communications, the oldest film company in France, had agreed to pay $1.3 billion cash for MGM/UA. His source of funds was a mystery and it took Parretti nearly a year to put together his financing package. Even then the news wasn’t exactly welcomed.
By that time in the fall of 1990, Hollywood pundits were wringing their hands about foreign intrusions into the American film industry. Already Sony controlled Columbia and Rupert Murdoch’s News Corp. owned Fox. Hollywood critics of Kirk’s stewardship at MGM/UA now bemoaned the studio’s sale to another foreigner.
After rattling Hollywood, Wall Street, and Detroit, Kirk headed back to Las Vegas where he was getting his affairs in order for yet another big move. He was, as usual, sharing little about his long-term goals.
Hints of Kirk’s newest megascheme had appeared years earlier with a little-noted side deal appended to his sale of the MGM Grand to Bally. Like a chess master, Kirk had been looking many moves ahead. Bally would retain the MGM name for no more than three years. Then, Kirk wanted it back. He had written a check for $1.4 million to preserve his rights to the hotel name, the logo, and the lion.3
After a three-year hiatus, Kirk also moved back into the Vegas hotel and casino business. His first acquisition was a pair of prized properties from the Howard Hughes collection—the Sands and the Desert Inn. He paid $167 million for the two together in 1987, taking over the last remnants of the late billionaire’s Las Vegas holdings. There was something personally satisfying to Kirk about owning the penthouse hideaway where his reclusive rival had waged such a bizarre battle to run him out of town two decades earlier.
With the MGM Grand logo and two Hughes properties, Kirk had formed MGM Grand, Inc. He opened investment in the new company to any MGM Grand stockholders of record when the original hotel was sold to Bally. Only a few took advantage of the offer. Once again Kirk saw value in the MGM brand itself—even as most investors continued to miss the lure of his “three magic letters.”
He sold the Sands to Sheldon Adelson for $110 million in 1989 and turned to Bear Stearns to shop the Desert Inn with a price tag of $200 million. A Japanese consortium stepped up with a strong offer, and Alex Yemenidjian took over negotiations on Kirk’s behalf.
The Argentina-born Armenian and UCLA-educated accountant had moved quickly since joining Team Kerkorian in mid-1989 to become one of Kirk’s frontline negotiators. But he still had a lot to learn. And Alex was new enough to feel at least a little insecure, so he was relieved and pleased to report reaching a deal with those Japanese buyers. Contract formalities would be worked out the next day, he told a delighted Kirk.
First thing in the morning, however, things got complicated. New buyers appeared with a much better deal—an extra $15 million in cash and no contract contingencies. Suddenly, the Japanese deal was looking second rate. Alex called Kirk.
“What should we do?”
“Did you make a promise to the Japanese buyers?” Kirk asked.
“Nothing’s been signed, it’s still . . .”
“I didn’t ask if you’d signed anything,” Kirk interrupted. “Did you agree to a deal?”
“Well, I guess I did,” said Alex.
“Then why are we even discussing it?”
The phone call ended abruptly.
The Japanese deal fell apart later that day. In fact, both deals evaporated in the face of an abrupt economic downturn blamed on the First Gulf War. A national recession would further slow business and real estate markets around the country for well over a year.
The Desert Inn sale would languish into 1993 when it was finally sold to ITT for $160 million—nearly the same price Kirk had paid for both hotels in 1986. For a billionaire, it was a modest profit. For Yemenidjian, the real prize was an invaluable lesson. It wasn’t the first or the last.
After Alex once negotiated a severance deal with a fired MGM Grand executive, Kirk ordered him to reopen settlement talks. “It’s not enough,” Kirk said. “You made too good a deal.”
To Kirk, Yemenidjian said, “It was never about the money. It was about what was fair.” But Alex did acknowledge some personal chagrin at being sent back to ask if they would accept double his hard-fought original terms.
Meanwhile, Kirk was investing elsewhere on the Strip. He bought the Marina Hotel and Casino in 1989, and then he added a hundred acres to the property by acquiring the Tropicana Country Club and golf course. Kirk’s grand vision was revealed at a press conference more than a year later. For the third time in twenty-five years he would be building the world’s biggest resort hotel.
Kirk attended the press briefing held at the Marina Hotel but let his executive team ans
wer all the questions. When the session ended, however, reporters swarmed around Kirk. “Are you really building the world’s largest hotel?” Kirk smiled and tried to wave off the question. “Are you worried about a glut of rooms?” Kirk seemed uncomfortable, even frightened, by the crowd, the microphones, and the cameras. He maneuvered toward a door and finally lunged to push it open and escape. It was locked.
United Press International bureau chief Myram Borders, a veteran gaming reporter, turned to Howard Stutz of the Las Vegas Review-Journal and predicted: “He’ll never do one of these press events again.” She was right.4
The first building to go up on the construction site was huge. And it was only the parking garage. Still to come was a very real version of the fictional Emerald City—the green glass-wrapped and all-new MGM Grand Hotel, this one with a Wizard of Oz motif and an adjacent Hollywood theme park.
How big was the new MGM Grand? The casino alone was bigger than the playing field in Yankee Stadium. It would open with 5,005 guest rooms, eight restaurants, five bars and cocktail lounges, twenty-three retail shops, and the MGM Garden Arena—a Madison Square Garden West, built specifically to host major concerts and boxing matches. Construction costs averaged $1 million a day and the hotel’s final price tag was a cool $1 billion.
Cary Grant was gone, but Streisand was back. Her 1993 opening night New Year’s Eve act was the hottest ticket in the desert. It was her first concert in more than twenty years, and she sold out the Grand Garden Arena.
By the time his new MGM Grand opened on the Strip, Kirk had also resumed buying Chrysler shares—what he referred to in a Fortune magazine interview as his “chips.” He had already added another $400 million in Chrysler stocks. Kirk had started pressing Chrysler to put one of his people on its board of directors. And he was urging the company to be more aggressive in boosting its stock value.
The Gambler Page 25