Today: How Kirk Kerkorian, a man with just an 8th grade education became a billionaire. [Part 2]
Born to Armenian immigrants in 1917, his family later had dire financial problems and Kirk began working when he was just 9 years old. His formal education ended with the 8th grade.
As a young man, Kirk learned to fly by working for his lessons. During World War ll, he delivered fighter planes for the British government, a mission so dangerous; they paid him a premium for every plane he delivered.
After the war ended in 1945, Kirk used some of that money to buy a little single engine Cessna airplane and began a charter flight service. It became so profitable; he bought a charter airline, TIA, and expanded it, as his income grew sharply.
Meanwhile, he also built a 2nd big business brokering war surplus aircraft for commercial use. By the time he was in his early 30’s, with these two businesses he had become a millionaire.
Now Kirk was ready for an even bolder challenge.
One of his most popular charter flights was between Los Angeles and Las Vegas and as a result, Kirk became familiar with Las Vegas. He saw the tremendous growth taking place as Hollywood entertainers lured huge numbers of visitors to see them perform.
As visitors came to see the shows, many stayed to gamble and casinos made enormous profits. The casinos grew rapidly, building ever bigger hotels and fancier gambling facilities.
Kirk saw a great opportunity, an opportunity others might think too risky but he found it irresistible. But it would take a lot of money, so in 1962 he sold TIA to Studebaker, a company best known for manufacturing cars.
He then took a large portion of the cash he received and bought an 80 acre parcel on the famous Las Vegas Strip. This was highly risky because desert lots on the Strip were plentiful, competition was heavy and Kirk could have been left with an empty pile of sand for years to come.
But he convinced the investors in Caesar’s Palace to build what was then a magnificent hotel on his property. From the rent they paid and then from selling them the property several years later, Kirk made many millions of dollars.
Meanwhile, Studebaker was struggling, and in 1965, with Caesar’s paying him so much rent, Kirk bought back TIA at a sharp discount. But rather than use much of his own cash to buy it, he sold TIA stock to the public, while still keeping control of the lion’s share of the ownership.
This taught him a valuable lesson about using other people’s money. It allowed him to reduce his risk and to have far more cash to invest. In 1968, he sold TIA to Transamerica Corp as he and his shareholders made a huge profit.
Kirk’s portion was $85 million, which he used to build the International Hotel in Las Vegas, at the time the biggest hotel in the world. Elvis Presley and Barbara Streisand packed in the crowds and very quickly, he had another winner.
From there, Kirk built, bought and/or traded Las Vegas and Reno hotels and became a billionaire. He used some of that money to buy and sell multiple times, Hollywood’s famed Metro-Goldwyn-Mayer film studio and its movie library, including “Gone with the Wind” and “The Wizard of Oz”, each time compounding the size of his fortune.
At this stage, you may be thinking that he had the golden touch and nothing could go wrong. But things did sometimes go terribly wrong, just as it does at times for each of us.
For example, it is widely believed Kirk had a gambling problem, a problem he conquered after spending millions of dollars to settle his gambling debts. It was a harsh lesson but from this point on, if he was going to gamble, it would be on his own abilities and not on the roll of the dice or the turn of a card.
But financially, his biggest trouble area has been the automobile industry. In 1995 and again in 2007, Kirk made a serious attempt to buy control of the Chrysler Corporation. Each time, after a costly and ugly fight, he failed and it cost him a fortune, as his shares dropped sharply in value.
In 2009, Chrysler went bankrupt and is now funded and largely owned by the U.S. taxpayer.
In 2000 Kirk bought a big position in General Motors, a grossly mismanaged firm with a vast base of assets. But after six years of trying to change the direction of the company, unable to persuade its management, Kirk finally let go.
In 2006, in frustration, he sold his shares at a huge loss. But the loss could have been far bigger for in 2009; General Motors went bankrupt. The U.S. taxpayer has now funded the company and owns control.
Still determined to succeed in the automobile business, in 2008 Kirk bought a billion dollars worth of Ford Motor Company stock. But before the year was out, Ford stock lost 2/3s of its value and he sold what was left of his ownership at a big loss.
Clearly, casinos and film studios love him, the auto industry does not.
In Kirk’s personal life, he has been married and divorced three times. But the marriage that really took was to Jean Maree Hardy (married 1954 – 1984). She was a top dance choreographer and has long been a successful businesswoman in her own right.
The couple has two daughters, Tracy and Linda and Kirk often does business using his holding company – Tracinda Corporation, the name being a combination of his daughters’ names.
There is another crucial side to Kirk and by his choice, it gets no publicity. Quietly, he spends a sizeable portion of his vast wealth on charitable causes, determined to help others in need as he at one time was. But he does so anonymously, taking no credit for his generosity.
At 92 years of age, Kirk remains active, often shuttling between Beverly Hills and Las Vegas and he oversees a vast business empire. He has come a very long way from the poor boy desperately trying to make a little money to help his family.
Success Tip of the Week:
Is there a bold challenge you’ve long dreamed of but were afraid to act on? Follow Kirk’s lead. You don’t have to bet everything you own as he did but you could take the first steps to make it a reality.
In the next KazanToday:
A man who built a wonderful business by doing what he loved.