Return of the great adventurer

The former Hollywood mogul is chasing Chrysler again. David Usborne tries to discover what is driving him to do it at the age of 77; profile

HOW to explain the phenomenon that is Kirk Kerkorian? What drives this son of an Armenian immigrant who, at the age of 77, has single-handedly sent one of the world's greatest business behemoths, the Chrysler Corporation, into a palpable tizzy with his quest if not to buy it then at least to control it? Greed might be an obvious answer, but that, surely, is not it.What then is it?

Fathoming the former Hollywood mogul and baron of the Las Vegas strip is made all the more difficult because of his obsession with privacy. He never attends public meetings and since being asked by a reporter 15 years ago about alleged mob ties to his business, he never gives interviews. Perhaps it was Lee Iacocca, the former chairman of Chrysler and close associate of Mr Kerkorian, who got closest to the truth when he said recently that the tycoon never rests because he wants to stay young.

Others who know Kerkorian testify to a drive that is exceptional for a septuagenarian. He still plays tennis daily, drives his own car and sports a perpetual tan. "He is young, that's a fact," says Patricia Glaser, a Los Angeles lawyer who has been a close friend and associate for many years. "And he is a businessman who right now is having a lot of fun." Ms Glaser describes a "wonderful and loyal friend", who is not at all like the oft-recycled image of a shy and unapproachable recluse and who is sometimes compared with an earlier icon of Las Vegas, Howard Hughes. "He is always straight with you," she says.

If wheeling and dealing is Kerkorian's secret elixir, then he is getting an especially good dose with his tangle with Chrysler. It began in April, when his Vegas-based investment corporation, Tracinda, made an astonishing $22.8bn (pounds 14.7bn) bid for the company, with Iacocca at his side as special adviser. Eventually, he was forced to withdraw after failing to persuade Wall Street of the offer's credibility. But last week, he was back in the ring after Tracinda recruited Jerome York, a former 14-year executive at Chrysler, from IBM. With York, Tracinda can now make a second run at the car maker.

"Frankly, I think he has been a little bored recently," ventures Peter Bart, the editor of Variety, who worked beneath Kerkorian at Metro-Goldwyn- Mayer in the 1980s. "He likes this kind of thing, It's an adventure to him." Mr Bart describes a man who operates by the seat of his pants, lunging for deals and sometimes showing little interest in the details. He recounts how Kerkorian once invited one of Hollywood's foremost figures on to his plane and impulsively suggested that the two of them buy the Rams, then an LA football team, for $60m. Is $60m right, the friend asked? "I just have a sense that that is the right number," came the reply. The Rams deal was one that did not happen.

After dropping out of what he once a called a "semi-reform" school for tearaways in east Los Angeles, Kerkor Kerkorian - his legal name - briefly flirted with amateur lightweight boxing, fighting under the name "Rifle Right" Kerkorian. In the Second World War, he served as a captain in Britain's Royal Air Force. When the fighting was over, he sold surplus war planes in North and South America before, in 1947, paying $60,000 for a single-aircraft charter service that ferried gamblers between Los Angeles and Las Vegas. He rapidly expanded the company, which he named Trans International Airlines and in 1968 sold it to Transamerica Corp for $104m.

By then, Kerkorian had embarked on his second passion: Vegas itself. An avid player at the craps table, he three times built what was then the world's largest hotel in Las Vegas. The first, the International, was opened in 1969 and sold two years later. In 1973, he opened the first MGM Grand, selling that finally to Bally's in 1986. Then only two years ago, he introduced his second MGM Grand, a 5,000-room monster with a theme park almost as large as Disneyland.

All the while, however, Kerkorian was extending his ambitions, primarily into Hollywood and the airline industry. In the 1960s and 1970s, he held a controlling interest in the now-defunct Western Airlines. He eventually sold back his stake in the carrier at a generous premium. And he made unsuccessful runs at TWA and Pan Am. His appetite for the former evaporated when it became clear that its prized routes to London were to be sold off to American Airlines.

It is Kerkorian's long stewardship of Metro-Goldwyn-Mayer, in which he bought a controlling stake in 1969 for $82m, that stirs most controversy and has arguably most tarnished his reputation. Many have not forgiven him for gutting the studio, to which he added United Artists in 1981. One of his greatest critics has been Bart of Variety, who chronicled MGM's demise in a book, Fade Out. In it, he criticises Kerkorian as a poor manager, rarely recognising those who worked for him and unwilling to confront difficult issues or to sack those he should have. Now he more or less forgives the tycoon. "He trusted an inner circle of lawyers who just gave him terrible advice. He kept hiring the wrong people." Only rarely did Kerkorian offer any creative advice.

In 1986, he sold the studio to Ted Turner of Turner Broadcasting for $1.5bn only to buy it back five months later, minus its film archives, for $480m. Finally in 1990, he offloaded what remained of MGM to Pathe. The studio subsequently folded.

It was also in 1990 that Kerkorian turned his sights on Chrysler, America's number three vehicle-maker, spending $272m to take a 9.8 per cent stake in the company. In November last year, he sought permission to increase his holding to 15 per cent and made public his concern that Iacocca's successor as chief executive, Bob Eaton, was not doing enough to return new-found profits to shareholders.

From then on, Kerkorian has held the Chrysler board in his thrall. Eaton attempted to appease him by announcing a $1bn buyback of company stocks. Undeterred, Kerkorian made his bid in April, when Chrysler shares had dipped below $40. On the news this week of Tracinda hiring York, Eaton was forced to move once again, revealing that he will double to $2bn the share buyback programme initiated last year.

If the low valuation of Chrysler's shares was Kerkorian's principle concern when he first made his bid, he should now be more or less satisfied. Last week, the company's shares were trading healthily well over $50. It may be that Kerkorian has abandoned any hope of buying the corporation. Few believe that he is done with Eaton, however. The next battle may be to win control of the Chrysler board through a proxy fight. If so, he may be able to position York to take the chief executive's seat from under Eaton. Like the best of gamblers, Kerkorian is keeping his cards close to his chest. But few imagine that he is done with Chrysler. It is just the kind of game he relishes. And it keeps the wrinkles at bay.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Accounts Payable

£12 - £15 per hour: Cameron Kennedy Recruitment: Excellent opportunity to join...

Technical BA - Banking - Bristol - £400pd

£400 per hour: Orgtel: Technical Business Analyst - Banking - Bristol - £400pd...

Account Management Strategy Manager

£38000 - £42000 per annum + competitive: Real Staffing: Required skills:Previo...

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice