Kirk Kerkorian

Kerk Kerkorian is one of the most experienced and sophisticated casino owners of the gambling industry. In fact, he can be considered as one of the living legends of the “fathers of Las Vegas”.

Kirk Kerkorian was born in 1917 in the family of Armenian emigrants in Fresno, California. A school drop-out in 8th grade, he picked up boxing and participated in single combats. He became a fairly skilled amateur boxer under the tutelage of his older brother, fighting under the name “Rifle Right Kerkorian” to win the Pacific amateur welterweight championship.

In 1939, at the age of 22, he installed wall furnaces that heated water for Ted O’Flaherty. One day, Ted O’Flaherty was taking flying lessons, and Kirk Kerkorian accompanied him to take a guest seat. He was inspired by the experience, in particular the views of the Californian coast and decided to quit boxing and made a switch to become a pilot.

Although he anticipated the oncoming of World War II, he was unwilling to join the military forces. Instead he took up a flying course at the Happy Bottom Riding Club in the Mojave Desert located adjacent to the USAF’s Muroc Field. This Happy Bottom Riding Club is the present Edwards Air Force Base that we all know today. In exchange for the flying lessons from pioneer aviatrix Pancho Barnes, he agreed to milk and look after her cattle.

Qualified as a commercial pilot in six months, Kirk Kerkorian became a pilot of British royal air force during World War II. Kirk Kerkorian learned that the British Royal Air Force was ferrying Canadian built de Havilland Mosquitos over the north Atlantic to Scotland. The Havilland Mosquito’s fuel tank carried enough fuel for 1,400 miles (2,300 km), while the trip directly was 2,200 miles (3,500 km). The safer route was the Montreal–Labrador–Greenland–Iceland–Scotland route while going further north with the direct “Iceland Wave” route could encounter the risk of the wings icing and distorting, and the plane crashing. Despite the danger, Kirk Kerkorian chose the perilous direct “Iceland Wave” route which blew the planes at jet-speed to Europe. The fee was US$1,000 per flight, but the statistics were that only one in four completed the journey. In May 1944, Kirk Kerkorian and his Wing Commander J.D. Woolridge flew the Iceland Wave and broke the old crossing record. Woolridge got to Scotland in six hours, 46 minutes while Kirk Kerkorian did it in seven hours and nine minutes. Working for two and a half years with RAF Ferry Command, Kirk Kerkorian delivered 33 planes, logged thousands of hours, travelled to four continents and flew his first four-engine plane.

After the war, and having saved most of his wages, Kirk Kerkorian bought a Cessna for US$5,000. He worked as a general aviation pilot, and made his first visit to Las Vegas in 1944. After spending much time in Las Vegas, Kirk Kerkorian quit gambling and in 1947 paid US$60,000 for Trans International Airlines, which was a small air-charter service which flew gamblers from Los Angeles to Las Vegas. This business was subsequently sold for US$108,000,000 in 1968.

Kirk Kerkorian was able to visualize the huge potential of Las Vegas. In 1962, he bought 80 acres of land on the famous Las Vegas Strip, not far from the legendary casino “Flamingo”. The land at that time cost him US$960,000. It was a wise investment because at that time gambling boom had just started and many companies became interested in gambling industry. The renowned casino “Caesars Palace” was built on his land, which he granted on lease. In 1969 he sold it with a net profit of more than 9 million dollars.

In 1967 Kirk Kerkorian bought 82 more acres of land on Paradise Road in Las Vegas for US$5 million. Together with architect Martin Stern, the partnership build an “International Hotel”, which was the largest hotel in the world during that time. In order to make the hotel popular and attractive, Kirk Kerkorian hired Elvis Presley for concerts. The first two performers to appear at the hotel’s enormous Showroom Internationale were Barbra Streisand and Elvis Presley. Presley brought in some 4,200 customers and potential gamblers, every day, for 30 days in a row, hence breaking all attendance records in the county’s history. At that time he also bought the casino “Flamingo”, which he subsequently sold in 1970 to the corporation “Hilton”.

1973 was a crucial year for Kirk Kerkorian. The Kerkorian-Martin Stern partnership practically put all the eggs in one basket when they bought the film maker “MGM Studio” and turned it into the casino-hotel “MGM Grand“. Larger than the Empire State Building, the MGM Grand became the biggest in the world for many years.

On 21st November 1980, fire broke out in the the original MGM Grand. This was one of the worst disasters in Las Vegas history. The Clark County Fire Department reported 84 deaths in the fire. There were 87 deaths in total, including three which occurred later as a result of injuries sustained in the fire. Amazingly, the MGM Grand reopened after only 8 months. Almost three months after the MGM fire, the Las Vegas Hilton also caught fire, killing eight people.

In 1986, Kirk Kerkorian sold the MGM Grand hotels in Las Vegas and Reno for US$594 million to Bally Manufacturing. The Las Vegas property was subsequently renamed Bally. Spun off from Metro-Goldwyn-Mayer, MGM Resorts International owned and operated several properties, including the Bellagio, the current MGM Grand resort complex, The Mirage, the New York-New York, Circus Circus, Mandalay Bay, The Luxor, Excalibur and the newly completed CityCenter in Las Vegas.

In 1990, the MGM Studio was purchased by Italian financier Giancarlo Parretti. However, Parretti defaulted on the loans he’d used to buy the studio, leaving the studio in the hands of the French bank, Credit Lyonnais. Credit Lyonnais invested significant sums to revive the moribund MGM Studio and eventually sold it back to Kirk Kerkorian in 1996. Kirk Kerkorian soon expanded the company, purchasing Orion Pictures, The Samuel Goldwyn Company and Motion Picture Corporation of America from John Kluge’s Metromedia in 1998, and a majority to the pre-1996 PolyGram Filmed Entertainment from its parent Philips, which was in process to sell PolyGram to Seagram. Seagram eventually merged with PolyGram Filmed Entertainment into Universal Studios. In 1995 Universal Studios merged with Motion Picture Corporation of America.

In 2005, Kirk Kerkorian sold the MGM Grand once more to a consortium led by Sony. He retained a 55% stake in MGM Mirage.

Kirk Kerkorian also owned the corporation “Tracinda“, which has the controlling stock of “MGM Mirage” casinos in Nevada, New Jersey and Macao.

On 22nd November 2006, Kirk Kerkorian’s Tracinda investment corporation offered to buy 15 million shares of MGM Mirage to increase his stake in the gambling giant to 61.7% from 56.3%.

In May 2009, following the completion of a US$1 billion dollar stock offering by MGM Mirage, Kirk Kerkorian and Tracinda lost their majority ownership of the gaming company, dropping from 53.8 percent to 39 percent and even after pledging to purchase 10 percent of the new stock offering they now remain minority owners. Although they are minority owners, they are still controlling shareholders.

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Automobile industry

Kirk Kerkorian’s interests are not limited only to gambling industry. Kirk Kerkorian first involved in the automobile industry in 1995. Since then, his investment interests in automobile industry includes General Motors, Chrysler Corporation and Ford Motor Company.

He owned 10% of the shares of General Motors (GM). When GM ran into financial trouble, Kirk Kerkorian suggested a rescue proposal that Renault acquire a 20 percent stake in GM. A letter from Tracinda to Rick Wagoner was released to the public, to influence the board of GM’s executives. Unfortunately, the talks failed. On 22nd November 2006, Kirk Kerkorian sold 14 million shares of his GM stake. The sale resulted in GM’s share price falling 4.1% from its 20th November price, although it remained above US$30 per share. The sale lowered Kirk Kerkorian’s holding to around 7% of GM. On 30th November 2006 Tracinda said it had agreed to sell another 14 million shares of GM, cutting Kirk Kerkorian’s stake to half of what it had been earlier that year. By the end of November 2006, he had sold substantially all of his remaining GM shares. As a result of the sell off, GM lost more than 90% of its value, falling as low as US$1 per share by May 2009, and filed bankruptcy on 1st June, 2009.

In 1995, Kirk Kerkorian made his debut in the automobile industry by staging a takeover attempt on the Chrysler Corporation. Although he was assisted by retired Chrysler chairman and CEO Lee Iacocca, the Chrysler management treated the takeover as hostile, and after a lengthy battle, Kirk Kerkorian aborted his plans and sold his Chrysler stake in 1996. As part of the settlement, Iacocca was placed under a gag order forbidding him from discussing Chrysler in public or print for five years. However, two years later in 1998, Chrysler management agreed to sell the corporation to German automaker Daimler-Benz.

On 5th April 2007, Kirk Kerkorian made a US$4.58 billion bid for the Chrysler Group, the U.S. arm of Daimler-Chrysler. After Daimler-Chrysler announced they were interested in selling the Chrysler division on 14th February 2007, large investors such as Cerberus Capital Management, The Blackstone Group and Magna International each announced intentions to bid on the company. Kerkorian’s bid, while not expected, was not surprising given his long involvement in the U.S. automobile industry. During the bidding process, he sought the aid of his close associate Jerome York who was a former Chief Financial Officer at both Chrysler and IBM. On 14th May 2007, 80% of the Chrysler arm of Daimler-Chrysler was sold to Cerberus for US$7.4 billion.

Kirk Kerkorian began buying Ford Motor Company stock in April 2008, and spent about US$1 billion to accumulate a 6% stake in the automaker. By October 2008, the investment had lost two thirds of its value, and he began selling. Tracinda explained, “In light of current economic and market conditions, it sees unique value in the gaming and hospitality and oil and gas industries and has, therefore, decided to re-allocate its resources and to focus on those industries. On 21st October, Tracinda sold the 7.3 million Ford shares at an average price of US$2.43, and said it planned to cut further its existing 6.1 percent stake in Ford, for a potential total loss of more than half a billion dollars. Kirk Kerkorian sold his remaining stake in Ford on 29th December 2008.

Personal life

Married three times, Kirk Kerkorian met his second wife Jean Maree Harbour-Hardy by chance at the Thunderbird, in Las Vegas. Ms. Harbour-Hardy, an accomplished choreographer and dancer from England, travelled the world instructing dance troupes. By chance, they met and fell in love while she was sent to check opportunities to choreograph a performance in Las Vegas. The second marriage was his most enduring marriage lasting thirty years from 1954 to 1984. Kirk Kerkorian’s two daughters, Tracy and Linda were the legacies of this marriage. The name of Kirk Kerkorian’s personal holding company, Tracinda Corporation and The Lincy Foundation are hybrids of the two daughters’ names. Although divorced in 1984, they remain close friends. Ms. Harbour-Hardy Kerkorian is financially successful in her own right.

Kirk Kerkorian was in fact blackmailed by woman conspiracy in his short-lived third marriage in 1999. He married a professional tennis player Lisa Bonder, 48 years his junior, which under a prenuptial agreement lasted only one month. He subsequently was blackmailed in a breach of privacy suit filed against him by Steve Bing. Fortunately, Kirk Kerkorian had the resources to hire Anthony Pellicano to wiretap telephone calls illegally between Kirk Kerkorian and Lisa Blonder in order to gain a tactical advantage in the divorce proceedings. Kirk Kerkorian claimed Bing was the father of Bonder’s daughter, which was later established by DNA testing.

On August 10, 2006, the Los Angeles Times reported that Kirk Kerkorian’s attorneys were being sued by Lisa Bonder because of their connection to former high-profile private investigator Anthony Pellicano, who is currently serving a fifteen-year prison sentence for running an illegal wiretapping scheme.

Kirk Kerkorian often plays tennis with Alex Yemenidjian, a former MGM executive but is now co-owner of the Tropicana Las Vegas resort. He has a penchant for expensive clothes especially the custom-made outfits by Italian designer Brioni, but drives relatively low cost vehicles such as a Pontiac Firebird, Jeep Grand Cherokee and a Ford Taurus.

Kirk Kerkorian splits his time between his residences in Beverly Hills, California and Las Vegas. Although he is the richest person in Los Angeles, he almost never gave interviews and seldom appeared in public. Even though his charitable foundation has dispensed more than US$200 million and a school, he had never allowed anything to be named in his honour. On 14th February 2011, Kirk Kerkorian donated The Lincy Foundation to the University of California, Los Angeles, UCLA, to create the “Dream Fund at UCLA”. The Lincy Foundation is worth about US$200 million. He received the Mesrob Mashdots Medal from the Republic of Armenia for his services to Armenia and its people in 2001.

Wealth

His net worth in 2008, according to Forbes magazine, was US$16.0 billion, making him the world’s 41st richest person at that time. By 2011, Kirk Kerkorian was among those hardest hit by stock market recession as his net worth tumbled to US$3.2 billion. He is currently listed as the 310th richest person.

Conclusion

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