Kirk Kerkorian has died

Kirk Kekorian

Kirk Kerkorian, one of the visionaries of the original Las Vegas Strip, has died. A middle-school dropout, he parlayed his common sense and knack of gambling at the right time in the right place, into a sizeable fortune.

He fell in love with flying in the 1939 and traveled to the Happy Bottom Ranch in the Mojave Desert to see if one time aviatrix Pancho Barnes would teach him to fly. In exchange for lessons, he shoveled cow and horse manure and milked the cows. Within six months, he had his pilot's license.

When World War II broke out, he went to Canada to help deliver planes for the R.A.F.

After the war, he used his savings to start a charter service to Las Vegas. He became a well-known figure on the developing Strip in those days. He had a knack for gambling but eventually gave up the gaming part.

From Ken Evans biography of Kekorian in The First 100:

In 1947, Kerkorian purchased a tiny charter line, Los Angeles Air Service. He later changed the name to Trans International Airlines, and offered the first jet service on a nonscheduled airline.

In 1965, Kerkorian took TIA public. Armenian-Americans knew of Kerkorian and bought his stock. It rose from a low of $9.75 to a high of $32.

"It brought the stock up to begin with, and then our earnings were great, too, and it kept going up until we sold to TransAmerica," says Kerkorian. In that 1968 deal, Kerkorian received about $85 million worth of stock in the TransAmerica conglomerate, making him its biggest shareholder.

In 1962, Kerkorian pulled off what Fortune magazine called "one of the most successful land speculations in Las Vegas' history." He bought 80 acres across the Strip from the Flamingo for $960,000. The price was low even then, and for good reason. A narrow band of property cut the 80 acres off from the Strip.

"It was landlocked," says Kerkorian, "We traded the owners four or five acres for all of this thin strip that they could never build on. Then I got a call from Jay Sarno, and that's how Caesars Palace got started."

Kerkorian collected $4 million in rent before selling the land to Caesars for another $5 million in 1968.

With the cash from the Caesars sale and his TransAmerica stock, Kerkorian was ready to build his first Las Vegas megaresort.

In early 1967, he had bought 82 acres on Paradise Road for $5 million and hired Fred Benninger.

"All I knew about Las Vegas came from the other side of the table -- the contributing end," Benninger recalled years later.

"I'm not a firm believer," says Kerkorian, "that you have to have 30 years of experience, if you've got good, common sense. I knew he could cut the mustard and he did. He helped, no, he built the International. He built the old MGM and he built this MGM. It was all Fred Benninger.

"I can't take much credit except for seeing the big picture; the amount of rooms, what kind of showrooms, I'm into that part of it. But when you get the nitty-gritty, I don't have the education to really get in there and dissect it."

Benninger suggested that given the size of the International, they should buy an existing hotel, and use it to train staff. The Flamingo Hotel fit the bill.

Benninger installed Sahara Hotel Vice President Alex Shoofey as Flamingo president. Shoofey then stole the cream of the Sahara's executives -- a total of 33 -- including casino manager James Newman and veteran entertainment director Bill Miller.

In February 1969, Kerkorian's International Leisure was given the go-ahead by the U.S. Securities and Exchange Commission to offer the public about 17 percent of the company's stock at $5 per share. This was not a routine approval, though. The Justice Department was investigating the Flamingo's previous owners.

Justice Department officials had identified Meyer Lansky, Bugsy Siegel's old partner in Murder Inc., as a hidden partner in the Flamingo. Skimming was suspected, and Kerkorian more or less proved it.

"The reason, I think, that they allowed us to go public," says Kerkorian, "was that I don't think the Flamingo ever showed anything more than $300,000 or $400,000 in profits. In our first year, 1968, we showed about $3 million."

The location Kerkorian chose for the International was criticized. It was off the Strip and, at 30 stories and 1,512 rooms, the biggest hotel in the world. Too big and too far out, they said.

"We had the same doomsday people when we were building the MGM Grand, same people, same doomsday," sighs Kerkorian. "You have to ask a lot of questions and listen to people, but eventually, you have to go by your own instincts."

The International had a "Youth Hostel," where kids could play and swim while their parents were doing grown-up stuff. The hostel organized field trips for the kids to Lake Mead, Mount Charleston and other local nongaming attractions.

"And that was before anybody's time," reminds Kerkorian.

"We opened that hotel with Barbra Streisand in the main showroom," says Kerkorian. "The rock musical 'Hair' was in the other showroom and the opening lounge act was Ike and Tina Turner. Elvis followed Barbra in the main showroom. I don't know of any hotel that went that big on entertainment."

One month before the hotel opened, International Leisure common stock, which had opened at $5 per share, was selling over the counter for $50. But Kerkorian had some expensive European loans to pay off. He was confident he could retire them with a second offering of International Leisure stock.

The SEC refused to allow the sale on the grounds that Kerkorian had failed to disclose financial information about the Flamingo's previous owners. Kerkorian's people believe this information was not important to the SEC, but to a Justice Department investigation. "They employed a form of economic blackmail to try and get information out of us," said a Kerkorian lawyer.

To pay off his debts, Kerkorian was forced to sell half of his own shares in International Leisure to Hilton Hotels. He got $16.5 million for stock worth $180 million only six months earlier.

Despite this, Kerkorian said he was proud of what he and his people had created in Las Vegas, and had no regrets. He sold his Las Vegas home, his private plane and his yacht. Colleagues were amazed at his calm during this time. But he had learned to always "keep a back door open." To Kerkorian, that means it's acceptable to lose most of what you have, as long as you can raise seed money for another enterprise.

At the same time he was making his splash in Las Vegas, Kerkorian was studying the Hollywood film industry and, in 1969 began buying stock in ailing MGM studios. By the end of the year, he would have working control of MGM, which he would operate, reorganize, merge, sell and resell over the years. Most recently, he repurchased MGM/UA in 1996.

He was at the helm in 1971, less than a year after the sale of the International, when MGM announced it would "embark on a significant and far-reaching diversification into the leisure field by building ... the world's largest resort hotel in Las Vegas." Now known as Bally's, it was originally known as the MGM Grand. Today's MGM Grand is a different property.

At its 1972 groundbreaking ceremony champagne flowed, celebrities mingled, and executives networked. In a corner, nursing a J&B Scotch and trying not to be noticed, was the man whose project was being celebrated.

The new $107 million megaresort was named for a 1932 MGM film, "Grand Hotel." At 26 stories, the MGM Grand had 2,084 rooms, a 1,200-seat showroom and amenities like a shopping arcade, movie theater and jai alai fronton.

When it opened December 5, 1973, it was the largest hotel in the world -- just as the International had been. Some saw a pattern developing, but Kerkorian denies he has ever built a hotel just for the sake of size. His hotels, he explains, are built on a grand scale to house a variety of diversions for guests.

The biggest hotel in Las Vegas was the site of the city's biggest disaster in November 1980, when a fire, ignited by an electrical problem, raged through the casino and upper floors of the MGM, killing 87 and injuring hundreds.

The great poker face softens and the brown eyes lower when the catastrophe is mentioned.

"It's something I rarely ever talk about, because how do you talk about it?" he says quietly. "I was in New York in a meeting with people from Columbia Studios, and I had an emergency call telling me that the hotel was on television, on fire, and in less than two hours I was at the airport and on my way to Las Vegas.

"The two people I really felt for at the time were Fred Benninger and Al Benedict, because they were on the front lines through everything that happened." Benedict was hotel president.

Benedict later told Review-Journal reporter Dave Palermo that when Kerkorian arrived a few hours after the blaze, his first question was, "Where do we start?"

"I figured there was no way we could come out of this." said Benedict. "I think the idea of walking away and forgetting about rebuilding the property was in the back of everybody's mind. That's what most people would have done."

But not Kerkorian. Eight months later, the MGM Grand re-opened.

"How could I walk away while that whole team was out there, taking the brunt from everybody? I had to be a part of it, I couldn't walk away, I just couldn't." In 1986, he sold the Las Vegas and Reno MGMs to Bally Manufacturing Corp. for $594 million.

The current MGM Grand, which opened in 1993, has 5,000 rooms, eight restaurants, a health club, a monorail, the 15,000-seat MGM Grand Garden and a theme park as big as Disneyland when it opened in 1955.

As for the health of the Las Vegas resort industry, Kerkorian remains as bullish as he was back in 1945.

"Personally, I wouldn't say it's headed for a fall," says Kerkorian, "except that there will be a leveling-out time, and the best hotels and the best operators are going to suffer less than the others."


Kerkorian built and lost and rebuilt a couple of fortunes over the years. HIs purchase of MGM Studios in Culver City, CA gave him access to the storied dream factory's assets but he ultimately sold the studio's assets to Ted Turner.

He will long be remembered as the father of the megaresort in Las Vegas. Kerkorian had just turned 98.