American financier Kirk Kerkorian (born 1917) parlayed a charter flight business consisting of a single $5,000 plane into one of the world's great fortunes. In 2007, Kerkorian ranked number 26 on the Forbes magazine list of the 400 richest Americans, with assets estimated at $9 billion.
Kerkorian's activities made headlines because, although his personal lifestyle was far from flamboyant, he made deals in high-profile industries: movies, Las Vegas hotels, and most recently automobile manufacturing. Sometimes stereotyped as a purely financial animal who stripped industries of their profits in his quest for ever-greater wealth, Kerkorian was a generous man who by one estimate gave away some 20 percent of his enormous fortune to charity. One of the most noteworthy aspects of Kerkorian's career was its longevity. As he approached his ninetieth year he shunned geriatric activities in favor of a widely publicized bid to increase his influence over General Motors, the world's largest automaker.
English Was Second Language
"When you're a self-made man you start very early in life," Kerkorian told K.J. Evans of the Las Vegas Review-Journal in one of his rare interviews (reproduced on the website The First 100 Persons Who Shaped Southern Nevada). "In my case it was at nine years old when I started bringing income into the family. You get a drive that's a little different, maybe a little stronger, than somebody who inherited." He was born Kerkor Kerkorian on June 6, 1917, to Ahron and Lily Kerkorian, Armenian immigrants who had settled in California's San Joaquin Valley farming region. The youngest of four children, he spoke Armenian at home, learning English on the streets and during his intermittent schooling.
Ahron Kerkorian, almost illiterate, was a watermelon and raisin farmer who aimed toward higher things; he bought several farms and amassed land holdings of 1,000 acres. But he lost them all during a recession in 1921 when banks foreclosed on his mortgages. The family ran into severe financial difficulties and was forced to move some 20 times, with Kerkorian helping bring in money as a newsboy and as a watermelon dealer in one of the city's produce markets. He spent more time out of school than in it, often getting into minor scrapes as a member of a neighborhood street gang. Kerkorian was sent to a disciplinary school and declared his education over after finishing eighth grade; he was 16 years old.
Applying lessons from learned from street fights, Kerkorian began training as a boxer with his older brother Nishon. At 20 he won his first fight by decision and went on to a Pacific amateur welterweight championship and a record of 33 wins and 4 losses, earning the nickname "Rifle Right." But Kerkorian soon found another activity that he enjoyed even more than boxing, after a friend with whom he worked installing furnaces took him on a ride in a single-engine airplane. Enthralled but lacking the money for the expensive hobby, he showed up at the Happy Bottom ranch of the celebrity female pilot Florence "Pancho" Barnes and proposed that he take on heavy barn duties, including milking cows and shoveling manure, for payment in flying lessons. The aviatrix agreed, and a flying instructor at the ranch helped Kerkorian get a letter stating, spuriously, that he had completed high school in Los Angeles.
That qualified Kerkorian to enter the military, but instead he spent World War II in a more profitable though no less hazardous position, as a civilian employee of Britain's Royal Air Force, flying Mosquito bombers from Canada, where they were built, to Scotland. The planes were easily destabilized by ice on the wings during their northerly crossing, and often dumped their pilots into the freezing North Atlantic. Kerkorian once ran out of gas just as the clouds parted to reveal his airstrip in Scotland, and glided in. He made 33 bomber deliveries for the R.A.F. and banked most of his generous earnings of $1,000 per run.
Founded Charter Airline
Back in Los Angeles in the summer of 1945, Kerkorian bought a single-engine Cessna plane for $5,000, planning to give flying lessons and operate an occasional charter service. The charter end of the business soon occupied most of his attention as he prospered by offering flights between Los Angeles and fast-growing Las Vegas, Nevada. Kerkorian began spending more and more time in the gambling capital, often gravitating toward the craps tables and gaining a reputation as unflappable even as he won or lost tens of thousands of dollars. He purchased Los Angeles Air Service, a small charter airline, and renamed it Trans International Airlines (TIA) in 1947. In buying and selling used planes he often emerged with healthy profits, and at one point he became the first entrepreneur to offer charter jet service. Married briefly once before, he met his second wife, showgirl Jean Maree Hardy, in Las Vegas. The pair had two daughters, Tracy and Linda, whose names inspired that of Kerkorian's holding company, Tracinda Corporation.
In 1962 Kerkorian made his first million dollars by selling TIA to the automaker Studebaker, investing most of it in an 80-acre plot of land near the growing Las Vegas strip. In 1965 he repurchased TIA and offered stock in the company for sale through a Fresno stockbroker of Armenian ancestry. These two decisions together raised Kerkorian from successful entrepreneur to tycoon. After he made another deal that joined his plot of land to the Strip itself, he leased it to the owners of what became the Caesar's Palace hotel and collected $4 million in rent before selling the land outright for $5 million more. After TIA's stock rose from $9.75 a share to $32, Kerkorian sold the company to the Transamerica Corporation in 1968, netting $85 million in Transamerica stock.
Kerkorian once again plowed his profits back into new enterprises, opening the International Hotel in 1969 and pioneering the idea of Las Vegas as a family vacation destination instead of an illicit adult playground. The hotel had a "youth hostel" kids' activities area and offered family tours to nearby attractions such as Lake Mead. Kerkorian offered stock in the hotel's parent company, International Leisure. He had to sell some of his own stock in order to pay heavy European gambling debts, and he eventually gave up gambling completely. In 1970 he sold the International, as well as the Flamingo Hotel, which he had turned into an unofficial employee training ground for the swank new International, to the Hilton hotel chain.
By that time, Kerkorian had begun what Money magazine termed "an epic Hollywood-Wall Street romance": his ongoing relationship with the MGM film studios. Borrowing $42 million from European banks, he wrested control of the company from its existing large stockholders in 1969 with an outlay of about $650 million. He opened the MGM Grand Hotel in Las Vegas in 1973. The MGM studio did not prosper artistically during the period of Kerkorian's leadership, but his financial wizardry was unimpeded. He acquired the United Artists studio for $380 million, formed the conglomerate MGM/UA, and sold the new entity to cable television magnate Ted Turner in 1985 for $1.5 billion. Turner ran into financial problems in the late 1980s, and Kerkorian obligingly repurchased the company for $780 million, selling it once again to controversial Italian financier Giancarlo Parretti for $1.3 billion in 1990. Parretti, under investigation by European financial authorities, submitted in turn to a Kerkorian buyback, whereupon Kerkorian finally cashed out with a $2.9 billion sale to Sony in 2004.
Paid for Own Movie Tickets
Two things were noteworthy about this financial odyssey. The first was that upon Kerkorian's departure, MGM was in much the same financially shaky condition as it was when he acquired it; he did not succeed in creating a global colossus like Turner's CNN. And second, even as he pocketed billions, Kerkorian was legendary for his refusal to accept free passes to MGM-owned movie theaters; he lined up and bought tickets along with other patrons. He acquired a Beverly Hills mansion but lived alone in its small guest house. Kerkorian acquired a reputation as a recluse, but he was regularly seen in Los Angeles and Las Vegas restaurants and bars, wielding a $10,000 bankroll and preferring cash to credit cards. After his second marriage dissolved, he dated several actresses and then married tennis star Lisa Bonder in 1999 after living with her for several years. In 2002 the marriage broke up and spawned a divorce and paternity suit in which Bonder asked for $320,000 a month in alimony and child support. In nonmarital matters he was generous without dispute; he gave hundreds of millions of dollars to charities, particularly in Armenia.
During the last stages of his involvement with MGM, Kerkorian turned to a larger industry still. In 1990 he began buying shares in the Chrysler Corporation, performing a variety of maneuvers designed to increase the value of the company's stock, and in 1994 he and former Chrysler chairman Lee Iacocca launched a hostile takeover of the company. Their plan was beaten back, but Kerkorian reaped billions in profits from several Chrysler stock buybacks. A $5 billion windfall from Chrysler's incorporation into German automaker Daimler-Benz in 1998 was not enough for Kerkorian, who filed suit (unsuccessfully) against the company for misrepresenting the new DaimlerChrysler entity as a merger of equals; chairman Juergen Schrempp, in comments made in 2000, characterized it instead as a takeover, which would have resulted in additional profits for stockholders.
In 2005 Kerkorian set his sights still higher. He acquired a 9.9 percent stake in General Motors and seated one of his representatives on the company's board, then urged GM to investigate a merger with the already existing partnership of French automaker Renault and Japan's Nissan. Press reports at the time suggested that Kerkorian envisioned high-flying Nissan head Carlos Ghosn as GM's new chairman. These efforts, too, were beaten back by GM's existing management in 2006—with difficulty, for Kerkorian's net worth by this time amounted to more than half of GM's total market valuation of some $16.4 billion. In November of 2006 Kerkorian's Tracinda Corp. sold most of its GM stock.
An inspiration to senior citizens everywhere, Kerkorian made his high finance automotive transactions while he was in his late 80s. He reportedly jogged every morning, and friends reported that his tennis game was improving. Still frugal in his personal habits, he allowed himself the luxury of $150 haircuts for his still-thick mane of gray hair. In an era when finance was increasingly the province of young movers and shakers with advanced degrees, he was a self-made man who outperformed competitors one-third his age.
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