production THIS IS FOR PAGE 23….
By HOWARD FINE
Just how rich is L.A. these days?
Consider that 18 of the 50 people on the Business Journal’s richest Angelenos list are billionaires.
That cumulatively, the 50 are worth $52.4 billion, up 47 percent from $35.6 billion for those on last year’s list.
That the average net worth this year is $1.05 billion, up from $712 million a year ago.
That the median net worth also has increased, from $515 million to $750 million.
That the minimum net worth to qualify for the list has shot up 67 percent from last year, to $500 million.
“The rich have definitely been getting richer,” said Alison Winter, president and chief executive of Northern Trust Bank of California, a private bank that offers financial services to high-net-worth individuals. “The value of their financial assets has increased. There has been a record level of acquisitions. And there has been a rebound in real estate.”
Among those posting large increases were SunAmerica Inc. Chairman Eli Broad, insurance magnate George Joseph of Mercury General Corp., and Charles Munger, vice chairman of Berkshire Hathaway Inc.
Many of these jumps have been driven by the ever-increasing equity markets, according to Esmael Adibi, director of the Anderson Center for Economic Research at Chapman University.
“The phrase ‘The rich are getting richer’ has to be qualified here: Because so much of their wealth is tied to the stock market, they are also exposed more when stocks turn down,” Adibi said.
A case in point: Al Checchi. Two months ago, the ex-gubernatorial candidate was worth at least $900 million. But today, primarily because of a steep drop in the share price of Northwest Airlines stock (and the $40 million he splurged on his failed primary campaign), Checchi is worth about $600 million, virtually unchanged from last year.
But Checchi is the exception to the rule. Only a handful of those on the list saw little or no upward movement in net worth. Many of these people dropped several notches as a result. Others on the list last year fell off, as they were surpassed by suddenly flush newcomers.
Once again, media and sports mogul Rupert Murdoch is the richest person in Los Angeles, with a net worth of $4.9 billion, up 53 percent from $3.2 billion a year ago. In the last year, he has made even more of an impact in his new home. He bought the Los Angeles Dodgers for $311 million. He also bought a 40 percent stake in the proposed downtown Staples Center sports arena, and he has options for stakes in the Lakers and Kings.
Oil and real estate baron Marvin Davis is second, with $3.9 billion, up nearly 50 percent from last year, while the Chandler family comes in third, with $2.7 billion, up from $2.1 billion last year.
Making a big jump, to $2.1 billion, is Broad, thanks to the success of SunAmerica and its ability to capitalize on baby boomers’ retirement plans.
Rounding out the top five is music mogul David Geffen, with a net worth of $2.1 billion.
As in the larger L.A. business world, no one industry dominates the list. However, three industry groups taken together have created the bulk of the fortunes: media and entertainment; investments and finance; and real estate.
A dozen of the 50 richest Angelenos made their money in entertainment, including Geffen, Murdoch, Steven Spielberg, Michael Eisner and Norman Lear.
Nine of the top 50 have been concentrated in investments and money mangement helped along, no doubt, by Wall Street’s boom. They are Munger, Gary Winnick, Robert Addison Day Jr., and Michael Milken and his brother Lowell.
“These finance people are the deal makers, not the traditional banking folks who used to dominate the landscape,” Adibi said.
Real estate accounts for all or part of the fortunes of another 10, including Donald Sterling, David Murdock, Ed Roski Sr. and Jr., and the Watson family. That’s up from seven last year and is likely testimony to the recovery of the region’s real estate market.
One line of business that has surprisingly generated significant wealth is leasing. Five of the 50 made the bulk of their money through this sector: Steven Udvar-Hazy and Leslie and Louis Gonda (aircraft), Richard Colburn (construction equipment) and Bradley Wayne Hughes (public storage units).
Unlike Silicon Valley, whose surging economy is being driven by high tech, technology entrepreneurs in Los Angeles have not generally broken into the ranks of the richest at least not yet. Only software entrepreneur Aubrey Chernick and biotech magnate Alfred Mann managed to make the top 50.
Also, despite L.A.’s claim as the most ethnically diverse metropolitan area in the world, the 50 richest Angelenos remain largely a white male domain. Only one woman Hearst heiress Milicent Boudjakji is on the list. There are no Latinos, Asians or African Americans.
“The barrier of $500 million is very high,” Winter said. “If you took that down to $100 million or $200 million, I have no doubt you would capture much more of the women and minority-owned businesses that have thrived here in L.A. in recent years.”
Also, Adibi suggested there may be minority individuals who have a net worth of at least $500 million, but who have managed to escape detection.
Several immigrants did make the Richest 50: Murdoch, Arnon Milchan, Leslie Gonda and Selim Zilkha, just to name a few.
And more than ever, Los Angeles is a new-money town; fully 43 of the 50 richest Angelenos have made most of their own fortunes. Only seven have inherited the bulk of their net worth.