Kirk Kerkorian

Kirk Kerkorian (b. June 6, 1917) is a Nevada billionaire and president/CEO of Tracinda Corporation, his private holding company based in Beverly Hills, California. Kerkorian is known as one of the important figures in shaping the city of Las Vegas, Nevada, and the "father of the megaresort."

Early life

Kerkor "Kirk" Kerkorian was born in 1917 in Fresno, California, to Armenian immigrant parents. The young Kerkorian, under the tutelage of his older brother, became a fairly skilled amateur boxer, fighting under the name "Rifle Right Kerkorian," but in 1939 shifted his focus to learn how to fly airplanes. During World War II, Kerkorian flew as a pilot in the British Royal Air Force. In 1947, he bought TransInternational Airlines for $60,000 which was a small air-charter service which flew gamblers from Los Angeles to Las Vegas. He operated the airline until 1968 when he sold it for $104 million to Trans-America Corporation. This transaction made him his first fortune.[1]

Kerkorian and Las Vegas

Kerkorian made his first visit to Las Vegas in 1944 as a Cessna pilot. After spending much time in Las Vegas during the 1940s and 1950s, Kerkorian quit gambling and founded a startup airline.

In 1962, Kerkorian bought 80 acres (32.3 hectares) in Las Vegas, across The Strip from the Flamingo, for $960,000. This purchase led to the building of Caesars Palace, which rented the land from Kerkorian; the rent and eventual sale of the land to Caesars in 1968 made Kerkorian $9 million.

In 1967, he bought 82 acres (33 hectares) of land on Paradise Road in Las Vegas for $5 million and built the International Hotel, which at the time was the largest hotel in the world; 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 straight, breaking in the process all attendance records in the city's history. Kerkorian's International Leisure also bought the Flamingo Hotel (which later sold the Flamingo to the Hilton Hotels Corporation in 1970). The International Hotel is known today as the Las Vegas Hilton. Until about 2000, the Flamingo was known as the Flamingo Hilton.

In 1973, having purchased MGM, the famous movie studio, Kerkorian and MGM opened the original MGM Grand Hotel and Casino, which was the largest hotel in the world at the time it was finished. On November 21, 1980, the original MGM Grand burned in a fire that was one of the worst disasters in Las Vegas history. The Las Vegas Fire Department reported 84 deaths in the fire; there were 87 deaths 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 caught fire, killing eight people.

In 1986, Kerkorian sold the MGM Grand hotels in Las Vegas and Reno for $594 million to Bally. Spun off from Metro-Goldwyn-Mayer, MGM MIRAGE owns and operates several properties, including the Bellagio, the current MGM Grand resort complex (where the Marina Hotel once stood), The Mirage, Treasure Island, the New York-New York, and the Boardwalk in Las Vegas, as well as the Beau Rivage Casino in Biloxi, Mississippi.

Kerkorian and MGM

In 1969, Kerkorian appointed James T. Aubrey, Jr. MGM's president. Aubrey downsized the struggling MGM and sold off massive amounts of historical memorabilia, including Dorothy's ruby slippers (from The Wizard of Oz), and several acres of MGM's backlots (which were razed to build houses). Kerkorian sold MGM's distribution system in 1973, and gradually distanced himself from the daily operation of the studio. In 1979, Kerkorian issued a statement claiming that MGM was now primarily a hotel company; however, he also managed to expand the overall film library and production system with the purchase of United Artists in 1981. In 1986 he sold the studios to Ted Turner.

Turner kept ownership of the combined MGM/UA for exactly 74 days. Both studios had huge debts and Turner simply could not afford to keep them under those circumstances; to recoup his investment, he sold all of United Artists and the MGM trademark back to Kerkorian. The studio lot was sold to Lorimar, which was later acquired by Warner Bros.; in 1990, the lot was sold to Sony Corporation's Columbia TriStar Pictures in exchange for the half of Warner's lot they'd rented since the 1970s. Also in 1990, the MGM studio was purchased by Italian financier Giancarlo Parretti, but Parretti defaulted on the loans he'd used to buy the studio and sold the studio back to Kerkorian in 1996.

In 2004 Kerkorian sold MGM once more to a consortium led by Sony. He retains a 55% stake in MGM Mirage.

Kerkorian and the automotive business

Kerkorian took a large stake in the Chrysler Corporation in the 1980s. As of 2006, he has a large stake in General Motors (NYSE:GM). With 10% of the outstanding shareholder's equity, he is the company's third-largest shareholder. Kerkorian has sought to appoint his advisor, Jerome York, a former IBM CFO, to GM's board. Kerkorian bought the stock at about $31. As of 2006, with the stock trading at about 20 dollars, he has therefore lost a significant part of his investment. At the end of 2005, Kerkorian reduced his stake in GM from 10 percent to 7.8 percent by selling 12 million shares in transactions on Dec. 15 and Dec. 19, 2005. In order for the sale to be treated as a capital loss for tax purposes, he could not repurchase the stock until after thirty days had passed from the date of sale. On January 25, 2006, it was announced that Kerkorian had acquired 5 million shares on the open market on January 23 and an additional 7 million shares in a private transaction expected to settle on January 27. This brought his total stake to 9.9 percent of outstanding shares. This maneuver to sell at a loss and to repurchase was anticipated by those on Wall Street and cited within Wikipedia before the late January disclosure.

Alleged connections to organized crime

The Caesars Palace land had previously been owned by Myford Irvine, heir to the Irvine Estate in Orange County. Irvine was shot to death after begging his estate for a large amount of cash within hours. This was ruled a suicide but many suspected it involved the Mafia, which was dominant in Las Vegas at the time. The same year Kerkorian was recorded by the Manhattan DA regarding a payment to a major Mafia figure whose phone was tapped. Kerkorian avoided New York for years so as not to have to cooperate with law enforcement. Kerkorian was asked about his Mafia ties by Forbes in his last major interview in 1970 and has avoided the press since. When he bought MGM he was again accused of having Mafia ties. The Flamingo had been controlled by Meyer Lansky since the murder of Bugsy Siegel. Because Kerkorian did not fully cooperate the government prevented MGM from selling stock, which forced Kerkorian to sell the International as well as the MGM back lot. In the 1980's Kerkorian worked closely with Michael Milken who was convicted of manipulating MGM's stock. Kerkorian later sold MGM to an Italian with known Mafia ties who jumped bail and has not returned to the United States. This also led to the collapse of the French bank Credit Lyonnais. The failure of Credit Lyonnais was said to have cost the French government 5 percent of their GDP that year.

Investment in General Motors

Kerkorian holds 9.9 percent of G.M. shares. According to press accounts from June 30, 2006, Kerkorian has suggested that Renault acquire a 20 percent stake in GM to rescue GM from itself . A private letter sent to Rick Wagoner was released to the public to add pressure upon the General Motors executive hierarchy.

Family

Kerkorian married professional tennis player Lisa Bonder, for one month in 1999. He was involved in a breach of privacy suit filed against him by Steve Bing. Kerkorian claimed Bing was the father of Lisa Bonder's daughter, which was later established via DNA testing. His corporation's nameis an amalgam of the names of his 2 daughters: Tracey and Linda..

Articles

*From Forbes.com: Fortunes that roared in 2004
*Kirk Kerkorian: master of the game - Gambling finance

Kirk Kerkorian: Encyclopedia BETA

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