Los Angeles Times
June 8 2005
At 88, Kerkorian Continues to Bet on the Future
By David Streitfeld, Times Staff Writer
Ever since Kirk Kerkorian revealed last month that he was buying a
major stake in General Motors, people have been speculating about his
motives.
Here’s one safe bet: the multibillionaire is not acquiring shares in
the biggest and sickest automaker out of any special affection for
cars.
Unlike many wealthy folk, Kerkorian does not fill his garages with
lovingly shined roadsters. In a city where you are what you drive, he
drives a Jeep Grand Cherokee. Before that, he drove a Ford Taurus.
Long ago, he cared. When Kerkorian first became rich, he bought a
lavish Cadillac and outfitted it with spiffy wire wheels. Then he got
bored and got rid of the car.
For the wealthiest man in Los Angeles, this is a familiar pattern.
“I used to have beautiful watches,” he says, extending his right
wrist beyond the cuff of a crisp white shirt. It’s bare. “I’ve done
those things,” he adds, dismissing all sorts of luxury goods and
high-profile events. The man who owned the legendary Hollywood studio
MGM watches the Oscars on television.
There’s only one thing whose appeal has remained constant: doing
deals. For 60 years, Kerkorian has been buying and selling airplanes,
airlines, movie studios and Las Vegas casinos and hotels, trading his
way to what Forbes magazine estimates is a $9 billion fortune.
This week has been a big one, even for him. On Monday, Kerkorian
turned 88, an age when most moguls are either dead or taking it real
slow.
Tuesday, he was the ghost in the room as GM held its annual meeting
in Wilmington, Del. Trying to placate disgruntled shareholders who
saw the stock hit a 12-year low this spring, GM chief Rick Wagoner
announced the elimination of 25,000 jobs, about 16 percent of the
company’s U.S. workforce.
Wednesday, Kerkorian disclosed that he had acquired another 19
million GM shares in a tender offer, giving him a 7 percent stake.
He got only about two-thirds of the shares he had been seeking — an
indication that shareholders, in a sudden shift of sentiment, are now
expecting the price to go higher. Kerkorian’s investment has
dissipated some of the clouds over the stock, if not over the
company.
In Detroit, the reaction to Kerkorian has been half hope, half dread
and complete surprise. Even his onetime partner, former Chrysler
Chairman Lee Iacocca, says he was “stunned” that Kerkorian “had taken
such a position in a difficult time.”
Maybe, the optimists think, he can spark management into saving GM,
somehow pumping up its sales while slashing its healthcare costs. Or
perhaps, the pessimists counter, he’ll push for a breakup, splitting
the cash-rich financing arm from the ailing car-making part. That
might be the end of GM as we know it.
Kerkorian denies any plans to exert an influence. “I’m a very passive
investor,” he says.
“He’s a born gambler with a sixth sense for sniffing out value,” says
Iacocca, who joined in the ill-fated Chrysler bid. “Doing deals is
what keeps him alive.”
Doing them simply is what keeps him rich. “You get a checklist,”
Kerkorian explains, “and then you just sort of ride herd on it.” It’s
always just a few items on a single sheet of paper.
His lawyer, Terry Christensen, has watched him invest for 35 years.
One of Kerkorian’s strengths is his ability to screen out the
extraneous.
“He likes something on a clear table, where he can see what it is,”
says Christensen.
At the moment, Kerkorian’s desk is actually quite cluttered, but he
says this is atypical. He’s been away, at the Cannes Film Festival,
which he enjoyed from the deck of his 192-foot yacht, the October
Rose.
This office, on a Beverly Hills side street, makes an unlikely
command post. It’s discreet to the point of invisibility. The suite
isn’t listed in the building directory, and the nameplate on the
locked door is blank.
Inside, there are few personal touches beyond the photos of Tracy and
Linda, the children from his long-dissolved marriage to former dancer
Jean Hardy.
The girls, born in 1959 and ’65, provided the name for Kerkorian’s
holding company, Tracinda, and his foundation, Lincy, but have no
direct involvement with his business.
Also on the shelves are a scattering of books. Several are about
Armenia, the former Soviet republic that is Kerkorian’s ancestral
land.
A century ago, his father left Armenia for California. Kirk was born
in Fresno. The first language he learned was Armenian, and his
friends and colleagues have often been Armenian. Since the country
declared its independence in 1991, he has been its benefactor to the
tune of hundreds of millions of dollars.
He’s not reclusive, just quiet. Even in photographs, he says, you can
tell which one is him, because he’s got his mouth shut. Unlike folksy
Warren Buffett or geeky Bill Gates, Kerkorian casts no reflection in
popular culture. Mention his name to people and they tend to confuse
him with Jack Kevorkian, the suicide doctor.
Unlike many moguls, his ego isn’t stroked by appearing in the media
— this interview, which he did reluctantly but graciously, is a rare
exception. He’s not in the business of selling Kirk Kerkorian.
But there’s another explanation for his reticence: shame. His formal
education ended after the eighth grade, and he thinks his
conversation betrays it.
“I wish I could talk like Donald Trump or Steve Wynn,” he says.
“Hell, I’d love it.”
A final reason is simply impatience. Reminiscing is something he
doesn’t have time for.
That’s not because he’s 88. No matter how old you are, he once told a
friend, you’ve got to act as if you have 15 more good years.
Kerkorian could pass for a youth of 68. He’s being treated for
macular degeneration, the deterioration of the central portion of the
retina, so he sits out of the glare of the sun. But otherwise, thanks
in part to endless games of tennis, he’s in splendid shape.
“I think it’s in our genes,” says his sister Rose. “I’m 94, and I
still kick the dog around.”
Ahron, Kirk’s father, was an entrepreneur. He put together 1,000
acres of farmland near Bakersfield but a recession hit and he
couldn’t come up with $8,000 to stave off the bankers. Ahron moved
his family to Los Angeles, where he became a fruit broker but found
success elusive. “We had to move every three months because we
couldn’t pay our rent,” Rose remembers.
Kirk learned two things: First, don’t attach yourself too much to
anything you own, because it might be taken away from you. “I’m not
married to anything,” is the way he expresses it in “Kerkorian: An
American Success Story,” a 1974 book by the late Los Angeles Times
reporter Dial Torgerson that is the key source on the tycoon’s early
life.
A second lesson absorbed from his father’s travails: Don’t bet
everything you have on one roll of the dice, because if you fail you
won’t have anything left to bet next time.
Kirk first wanted to be a boxer, like his older brother Nish. At
nearly six feet, he was taller than opponents in his weight class,
giving his arms a longer reach. At his second fight, in Bakersfield,
he flattened the other fighter with one quick shot. The press
nicknamed him Rifle Right Kerkorian. In 33 bouts, he only lost four
times.
His ambition was to fight in Madison Square Garden but he got
diverted — luckily, he says now. “My brother got really damaged
fighting, and it probably would have happened to me. I’d be a
punch-drunk fighter someplace.”
What intervened was flying. Kerkorian was working with a friend,
installing furnaces. During lunch, the friend would stop at Alhambra
Airport, where he was accumulating enough air time to obtain his
pilot’s license.
“I watched him do it three or four times,” says Kerkorian. “I said,
`You’re wasting three bucks on this?’ But I took a ride, and got
hooked.”
He became a student, paying for the lesson but not the extra 50 cents
to rent a parachute. He became an instructor, then a military
instructor. During World War II, he was a ferry pilot for the Royal
Air Force, earning $1,000 a month transporting planes from their
Canadian factories to England. The work was incredibly dangerous,
because the bombers weren’t designed for the North Atlantic’s bad
weather or the long distance.
In 1947, Kerkorian bought a C-47 transport in Hawaii for $10,000. He
knew he could sell it for nearly twice that on the mainland. The
trick was getting it there. The 2,400-mile journey from Honolulu to
San Francisco greatly exceeded the plane’s range.
Kerkorian’s solution was to install eight additional fuel tanks. But
there wasn’t enough margin of error, and the plane was draining the
last of its fuel with nothing visible but ocean. Kerkorian and his
three-man crew threw their luggage and everything else that wasn’t
nailed down off the plane, trying to lighten it. That wasn’t enough.
They were preparing to ditch when the coast, and the airfield,
finally came in sight.
A few weeks later, Kerkorian took the plane’s sole life raft to the
beach and tried to inflate it. Thanks to a hole, the raft was as
seaworthy as a piece of paper. “I should have died and I didn’t,” he
says.
His friends and associates differ on the label, but all agree that
Kerkorian has a unique ability to make successful bets on the future.
To hear him tell it, though, it’s often just a happy accident.
“I’ve had more people tell me, did you envision this or that?”
Kerkorian says. “It would be bullshit if I said anything. I just
lucked into things. I used to think that if I made $50,000 I’d be the
happiest guy in the world.”
Kerkorian has always been loyal to his friends, and they’ve always
been loyal to him. When young Kirk was sent to reform school, his
best friend Norman Hungerford intentionally misbehaved so he would be
sent there too. After 80 years, the two still keep up.
If his friends help keep his life in balance, tennis is what gives
him energy. He was a late convert to the game, not picking up a
racket until he was 50. Now he plays several times a week, often in a
doubles competition with buddies affectionately named “the grudge
match.” They play, eat lunch, play again.
“We used to have such fun teasing each other about it,” says Joe
Sugerman, one of the players. “It was a terrific escape from all the
pressures of the week.”
Sugerman is speaking in the past tense because some of the fun has
gone. Kerkorian’s regular partner was ICM agent Mort Viner. During a
game two years ago, the players were changing sides when Viner
fainted. The heart attack killed him. In his memory, the players keep
his chair at lunch vacant.
Recently, Kerkorian has been playing in senior tournaments for those
85 and up. The United States Tennis Association ranked him and his
doubles partner, 88-year-old Irving Converse, 11th in their age
category.
“Some old guys get pretty upset about losing. Kirk’s not like that,”
says Converse. “He enjoys the game, win or lose. Of course, the more
he wins, the better.”