Market Woes, Recalculations Exact Toll on Wealthiest
By RiSHAWN BIDDLE and NICOLE TAYLOR
Staff Reporters
Prolonged stock market losses plus some recalculations from a year ago contributed to a scrambling of the Business Journal’s list of the 50 wealthiest people in Los Angeles.
Overall, the trend was down. There are only 22 billionaires on this year’s list, down from 25 last year. Of the 47 returnees, 24 saw year-to-year declines in wealth, while only13 posted increases. The rest stayed the same or weren’t comparable.
Number one this year was investor/philanthropist Eli Broad, at $5.9 billion. The 50th position was $427 million, down from $450 million a year ago.
Few of L.A.’s wealthy have been immune from the stock market losses of the past year.
A 20 percent decline in American International Group’s stock price knocked 6 percent off Broad’s net worth as well as hurting fellow AIG shareholders Steven Udvar-Hazy ($1.8 billion) and father-son duo Leslie ($1.2 billion) and Louis Gonda ($1.4 billion).
“It’s not the company, it’s the market. Everything is going fine,” said Broad.
Kirk Kerkorian, tops on last year’s list, suffered double-digit declines in the share prices of casino powerhouse MGM Mirage and motion picture firm Metro-Goldwyn-Mayer. He’s now worth an estimated $3.4 billion, from a revised $5.5 billion.
The recalculation of Kerkorian’s net worth covers debt that existed last year but wasn’t counted. Using the revised numbers, he would have been third on last year’s list, not first, behind Marvin Davis and Broad. This year, Kerkorian remains in third position.
Adjustments
Others, including apartment baron Alan Casden, saw their previously published net worth estimates adjusted for 2002, nearly all of them downward, as a result of a new set of guidelines in setting valuations.
This includes more detailed tracking of past asset sales, as well as debt or ownership ratios. Previously published net worth figures for buyout artists Tom Gores ($1.7 billion) and brother Alec ($775 million), were sharply lowered. Television producer Norman Lear, whose wealth wasn’t verifiable, was taken off the list.
Also off is Selim Zilkha, former director of El Paso Corp., which has been plagued by federal and state investigations into energy trading business. El Paso has suffered a 90 percent share price decline, to $7.30. Now Zilkha is stuck with a stake worth just $92 million, from a high of $964 million; he’s trying to oust El Paso’s board in order to save his fortune.
Two more market victims, though not nearly as extreme, are Walt Disney Corp. Chairman and Chief Executive Michael Eisner ($520 million) and founding family member Roy Disney ($850 million). The embattled entertainment conglomerate’s 25 percent share price drop has whacked the asset value of the two titans, even as they feud in the boardroom.
Much of the gains from a year ago came from local real estate and development figures, whose fortunes have swelled with rising land prices.
Octogenarian investor John Anderson ($1.2 billion) was one of the few who saw an uptick in net worth; he went on a $70 million property buying spree in Westwood Village. Homebuilding czar John Shea and family, a new addition to the Business Journal list, came in at $1.1 billion.
Another new addition was construction baron Ronald Tutor. The builder of L.A.’s subway system and Las Vegas casinos, he is now promoting boxing matches. Software baron Aubrey Chernick ($481 million) returned after last making an appearance in 2000.
Not everyone involved in real estate fared well.
Guilford Glazer’s deal to sell the Del Amo Fashion Center to Mills Corp. for $440 million valued the mall at less than previous estimates of its worth by this and other publications. His net worth fell 35 percent, to $566 million.
Ranking the Rich
L.A. billionaire Eli Broad captured the top spot in the Business Journal’s annual ranking of the 50 richest Angelenos, with a net worth of $5.9 billion.
Overall, though, it was not a good year for L.A.’s moneyed class, largely the result of a plummeting stock market. The number of billionaires fell by three, to 22, while just 13 of the 47 returnees saw year-to-year increases and more than half posted declines. The floor for the 50 richest this year was $427 million, down from $450 million a year ago.
The decline includes Broad, the founder of Kaufman & Broad whose net worth fell 6 percent from a year earlier. Marvin Davis ranked second, at $5.5 billion, and Kirk Kerkorian was third, at $3.4 billion. Last year, Kerkorian was ranked first but his net worth fell sharply due to losses from MGM stock.
The highest number of members on the list are involved in the entertainment industry, followed by investing and real estate. As usual, money from inheritance is not as big a factor in Los Angeles as in Eastern cities.
