Why Is This Man Smiling : Once Again, Kirk Kerkorian Rolls the Dice on the World’s Biggest Hotel. Will His $1-Billion Bet Pay Off?

In this town, never draw to an inside straight. Know when to walk away from the table. And when you build on The Strip, make it so big and gaudy that they forget the name of the last place that went up.

On Friday night, enigmatic billionaire Kerkor (Kirk) Kerkorian raises the ante when he unveils the MGM Grand, the largest hotel and casino in the world with 5,005 rooms, 170,000 square feet of casinos, a 15,000-seat arena, a seven-story gold lion that serves as an entrance and a 33-acre theme park.

Former Secretary of State Alexander M. Haig Jr., who sits on the MGM Grand Inc., board, predicts with Vegas-level hyperbole that it will be “one of the wonders of the United States.”

The opening of the 112-acre, 30-story, emerald green complex is a $1-billion roll of the dice by Kerkorian amid an unprecedented Las Vegas building boom.

Two other huge projects--the $475-million, pirate-themed Treasure Island and the nearly $400-million, pyramid-shaped Luxor--opened within the last two months. At least three others are planned over the next few years, including yet another Kerkorian project across the street from the MGM Grand. Citywide hotel occupancy rates approaching 90% breed that kind of optimism.

This is the third time in 24 years that Kerkorian has built what at the time was the world’s largest hotel here. In 1969, he opened the International--now the Las Vegas Hilton--selling it in 1971. In 1973, Kerkorian erected the first MGM Grand, probably best known as the site of a deadly high-rise fire in November, 1980, that killed 85. He sold that 26-story giant in 1986 to Bally’s, which re-christened it with the corporate name.

Figuring out why the obsessively private Kerkorian--a junior high school dropout whose net worth is estimated at $3.1 billion by Forbes magazine--wants to one-up the hotel business again at age 76 is a puzzle even to friends. “That’s Kirk,” is usually the most detailed explanation they offer.

“He doesn’t do it for the money. He has more money than he’ll need in five lifetimes,” says retired Chrysler Corp. CEO Lee A. Iacocca, a personal friend of Kerkorian’s who is also an MGM Grand board member. “He does it because he gets bug-eyed like a little kid when he goes through the place.”

Explaining himself is something Kerkorian, who owns 73% of MGM Grand, doesn’t like to do. He routinely turns down almost all interview requests--as he did for this story--opting to let his team of executives speak for him.

“He doesn’t have much interest in small investments, because they can take as much time as the big ones,” says MGM Grand executive vice president and Kerkorian right-hand man Alex Yemenidjian. “You can grab his attention with a $500-million project, but not with a $25-million riverboat.”

The MGM Grand, which cost a shade more than $1 billion, arrives amid a paradoxical transformation of this booming town.

The adult gambling playground that began with mobster Bugsy Siegel’s vision is now trying to sell itself as a family vacation mecca. Some analysts doubt the shift will take hold to any great extent. Still, the betting is that Las Vegas and its relatively cheap hotel rooms will convince some tourists to spurn Mickey and Donald for Siegfried and Roy.

“It’s a big change from 30 years ago,” says Richard Etter, chairman of Bank of America-Nevada. “Now it’s Mr. and Mrs. America in an adult Disneyland, and they want to bring the family.”

The MGM Grand--which has no corporate ties now to the Metro-Goldwyn-Mayer studio Kerkorian once owned--also opens as legal gambling explodes across the country, leading some observers to speculate about an inevitable glut in the gaming market. It’s a warning Las Vegas has heard before--one that boosters note has usually been wrong.

There are some glitches emerging as opening night nears--mainly a nasty public battle Kerkorian’s managers are locked in with unions representing hotel and restaurant workers.

The unions are aiming to organize “cast members,” as workers at the movie-themed hotel will be called, amid stiff resistance from the MGM Grand and its chief executive, Robert Maxey. In the wake of union pressure, virtually all the top state and local politicians are planning to skip Friday night’s opening ceremonies, when a loud union demonstration is planned as Kerkorian and his team smash a yard-tall bottle of champagne to christen the hotel.

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Kerkorian himself bears a resemblance to Bert Lahr, the actor who played the Cowardly Lion in the MGM film “Wizard of Oz.” Friends describe him as unpretentious despite his wealth. Kerkorian drives himself, insists that everyone call him “Kirk” and rises from his seat to personally serve visitors at his homes in Las Vegas and Los Angeles.

“Kirk is an unusual man,” says Iacocca. “He’s not reclusive. He’s a very private guy, but not like Howard Hughes was. But he’s a good guy to be out with.”

In his 1974 biography of Kerkorian, the late Times staff writer Dial Torgerson described how uncomfortably shy Kerkorian is in public gatherings, where he usually can be found retreating to a corner.

“What good does it do being rich?” Torgerson quoted Kerkorian as saying at the 1972 groundbreaking of his first MGM Grand Hotel. “I can’t do what I want to do. I don’t like to get dressed up and go to see bankers. I hate that kind of thing. You know, I don’t want to be here. I don’t want to be here right now.”

Kerkorian doesn’t need to gamble at the tables or slot machines when he can bet his chips in a style of corporate gaming that nearly always seem to pay off big for him. Says Iacocca: “He’s a born trader.”

Indeed, Iacocca got to know Kerkorian starting in 1990, when the investor began accumulating Chrysler shares through his Tracinda Corp., named for daughters Tracy and Linda.

“He said he’d like to bet $300 million on us,” Iacocca says. “I’d been around the world on road shows trying to raise $285 million. You can’t begrudge a guy like that.”

It’s a gamble that paid off in spades. Kerkorian’s paper profit on his Chrysler shares is nearing $1.5 billion. He now owns 32 million shares, or 9.2% of the company, making him the company’s largest stockholder.

With Iacocca no longer at the helm, speculation has periodically surfaced that Kerkorian might try to increase his influence at the No. 3 auto maker.

But while Chrysler President Robert Lutz says CEO Robert J. Eaton lays out the firm’s direction for Kerkorian a few weeks before the annual meeting, Lutz insists that “three or four months at a time go by where we completely forget we have a stockholder named Kerkorian.”

Says Lutz: “We just hope he’s as happy as any other shareholder.”

The man who now has the clout to command private briefings from top corporate executives grew up dirt-poor in the 1920s and 1930s, the son of Armenians who had immigrated to the San Joaquin Valley. Kerkorian lasted through eighth grade in what he once described as a “semi-reform school” in Los Angeles, followed by six months in trade school.

After stints as a boxer and then as a trainer of pilots in World War II, Kerkorian landed in the airline business, eventually owning a charter company. During the 1960s and early 1970s, he controlled the now-defunct Western Airlines.

Kerkorian became a major Hollywood figure in 1969, when--in a hostile deal--he gained control of Metro-Goldwyn-Mayer. He later made an unsuccessful try to gain control of Columbia Pictures.

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Although he has no direct investments in Hollywood now and lives most of the time here in Las Vegas, Kerkorian’s presence can still be felt in the entertainment industry, with which he has always had a love-hate relationship.

Many are still bitter that he gutted the venerable MGM studio, selling off assets built up by the likes of Irving Thalberg and Louis B. Mayer as if they were steel mills on a balance sheet. MGM’s historic Culver City lot was sold by Kerkorian, changing hands twice; it is currently owned by Sony Pictures Entertainment. MGM’s library of classic films such as “Gone With The Wind,” “The Wizard of Oz” and “Singin’ in the Rain” were sold to cable entrepreneur Ted Turner.

In his book “Fade Out,” former MGM executive Peter Bart, now the editor of Variety, wrote: ‘There I was, scratching around for relics of past greatness, and all I found was Kirk Kerkorian, playing poker in the ruins.”

Even so, many in Hollywood still treat Kerkorian with deference--in part because they suspect he may return as a major player someday. On Thursday, Variety is scheduled to publish a special report pegged to the opening of the MGM Grand, giving Hollywood the chance to buy ads to “congratulate Kerkorian on an incredible achievement.”

Kerkorian was close friends with the late actor Cary Grant and counts as friends today such entertainers as Frank Sinatra. For New Year’s Eve at the MGM Grand, Kerkorian will boast Sinatra in one room, singer Kenny Loggins in another and Barbra Streisand in the hotel arena--her first for-profit concert in more than two decades.

His MGM Grand Air charter service shuttles the likes of Guns N’ Roses singer Axl Rose to concerts. Indeed, MGM Grand Air was the airline of choice for stars and Hollywood executives traveling between New York and Los Angeles before it scaled down to a charter business at the end of last year--a rare business retreat for Kerkorian.

Despite withdrawing from the movie business, Kerkorian remains locked in a legal battle with MGM’s current owner, the French bank Credit Lyonnais. The bank is suing Kerkorian for $1.25 billion, alleging that he left the studio’s finances a mess when he agreed to an ill-fated sale in 1990 to Italian businessman Giancarlo Parretti.

Recently, the bank accused Kerkorian’s camp of trying to disrupt MGM by spreading rumors about possible bids for the studio--a charge they strongly deny.

For his part, Kerkorian is countersuing Credit Lyonnais for $675 million, alleging it engaged in a “shell game” when it financed Parretti, from whom the studio eventually was seized when he defaulted on his loan payments.

In another Hollywood court battle, Kerkorian defeated Walt Disney Co. last year, gaining the right to use the name MGM for his hotel theme park. Disney--which holds rights to the name for studio theme parks like the one it operates near Disney World in Florida--tried unsuccessfully to stop him.

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The $25-a-head theme park that Kerkorian has built in Las Vegas was a long-held dream finally set in motion in 1989. The park--which still is being finished this week--is the size of Disneyland when it opened in 1955 and includes 12 attractions, some clearly borrowed from other parks.

There is a water raft ride, a space adventure similar to Disneyland’s Space Mountain and a special effects show that puts audience members in movie scenes, like Universal Studios’ “E.T.” attraction. A section of the park designed to resemble New York has no muggers--but it does include two express wedding chapels. There is also an old English village street with a not-so-quaint Burger King.

Given Las Vegas’ warm climate and the area’s soaring population, some observers are asking why it took so long for someone to develop a theme park.

Yemenidjian’s explanation: “This is typical of Kirk. He does things, and then people ask how come no one thought of it before.” He cites as another example Kerkorian’s decision to attract conventions to the International in the 1960s, before Las Vegas became a major convention player.

Kerkorian’s personal stamp is also clear on the MGM Grand’s arena, built to lure major attractions--such as the championship boxing matches which now take place in other casinos’ parking lots, amid sometimes-chilly weather and unplanned interruptions by parachutists and the like.

At one point, sources say, an executive suggested that the arena be eliminated from the resort’s plans to bring the budget under $1 billion, figuring that would look better to the public.

“I didn’t know the arena was negotiable,” Kerkorian is said to have responded.

To start, the MGM Grand has arranged a three-fight deal with boxing champion Julio Cesar Chavez.

Running MGM Grand Inc. is Robert Maxey, a 20-year gaming industry veteran credited with bringing the project in six weeks ahead of schedule and within budget.

To Maxey, the basic operation of a hotel and casino hasn’t changed much since a casino operator summed it up for him years ago: “The goal is to get a whole bunch of people to walk by a whole bunch of slot machines.”

As a result, the 15,000 high rollers who are paying up to $1,000 each to see Streisand on New Year’s Eve will pour through a long hallway into the MGM Grand’s casino. With major championship fights, the gambling take in a single night could approach $20 million, some sources estimate.

Few analysts are betting against Kerkorian for now. There are estimates that the MGM Grand’s 3,500 slot machines each may clear as much as $135 a day--part of an overall operation that analysts expect in its first full year to generate some $130 million in cash flow, profits of more than $80 million and revenue approaching $700 million.

“I think it will be wildly profitable,” says gaming analyst James Murren of C.J. Lawrence, a New York investment firm. “It’s in the right location where most of the action is happening right now. If you could pick a place on The Strip to be, this is it.”

Murren sees two major challenges for the hotel: attracting the “virgin customer” to Las Vegas and making sure all the bugs are worked out. “This is an unprecedented undertaking,” Murren says. “Nobody has done anything close to this scale.”

As for Kerkorian’s next move, Yemenidjian suggests a hotel and casino separate in style from the MGM Grand probably will follow on an 18-acre lot across the street. Later could come MGM Grand hotels and casinos in Asia, South America and Europe.

Whatever projects Kerkorian launches no doubt will succeed, Yemenidjian says.

“Anyone could argue with Kirk’s decisions,” he says. “But if you are going to bet against him, you had better hold onto your wallet.”