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Schwarzenegger Built a Vast Business Empire

Disclosure forms reveal unusually wide range of interests that extend far beyond passion projects.

August 10, 2003|Michael Cieply, Gary Cohn, Claudia Eller and Roger Vincent | Times Staff Writers

Some three decades back, young Arnold Schwarzenegger and a bodybuilder friend, Franco Columbu, came up with a get-rich-quick scheme.

Tipped by an acquaintance that a planned new international airport and freeways were about to trigger a land rush in the Antelope Valley, the two scraped together cash from their joint bricklaying business and bought parcels in the desert.

But the jets never came, nor did the real estate stampede. In fact, the promised land turned out to be nothing more than dirt.

Still, Schwarzenegger was undaunted. "You know what?" Columbu quoted his buddy as saying. "We're going to start buying."

Since then, Schwarzenegger has indeed bought a lot, a bounty thrown open to public inspection Saturday in financial disclosure statements the gubernatorial candidate filed with the Los Angeles County registrar-recorder.

For The Record
Los Angeles Times Wednesday August 20, 2003 Home Edition Main News Part A Page 2 National Desk 1 inches; 51 words Type of Material: Correction
Warren Buffett -- The last name of investor Warren Buffett, financial advisor to gubernatorial candidate Arnold Schwarzenegger, was misspelled as "Buffet" in James Flanigan's column in Sunday's Business section. Two previous articles about the campaign, in the California section on Friday and Section A on Aug. 10, also used the misspelling.

While many celebrities prefer passive and extremely conservative investments, Schwarzenegger's 100-plus ventures -- 19 of which are valued at more than $1 million -- include individual stocks, managed stock accounts, private investment funds, venture funds, bonds, a number of direct stakes in operating businesses, and even a high-end mutual fund company overseen by Nobel laureates.

"In my opinion, it's very different from the normal Hollywood portfolio," said Paul Wachter, co-owner of Main Street Advisors, which manages Schwarzenegger's investments.

Saturday's disclosure also lists dozens of assets in a family trust set up by the mother of his wife, Maria Shriver, who is a member of the Kennedy family.

Schwarzenegger's business acumen and history are likely to move center stage in the campaign because of the state's deep budget crisis and his own minimalist political resume.

Already, his campaign is working to downplay Schwarzenegger's acting career while touting his business skills.

In the process, he's scrambling to tap the expertise and cachet of his most prominent friends in the corporate world.

"He was on the phone yesterday with Warren Buffet," said Bonnie Reiss, chief executive of the Inner City Games Foundation, with which the actor has been closely associated.

Speaking in an interview Friday, Reiss said the legendary investor was one of several business contacts whom Schwarzenegger is trying to enlist.

Under state law, Schwarzenegger isn't required to reveal his net worth or even the precise percentage he owns in various ventures.

But the 63-page disclosure form, interviews and a review of the public record reveal an unusually wide range of business interests that extend far beyond passion projects, such as his highly profitable annual Fitness Expo in Columbus, Ohio, or the far-flung real estate ventures for which he has long been known.

In addition to Schwarzenegger's widely publicized fitness industry interests and his personal jet-leasing business -- the actor for years has leased a Boeing 747 to Singapore Airlines -- the form shows that he owns stakes in movie theaters and an Internet software business, and stocks in companies as varied as media giant Gannett Co., IBM, International Speedways, Roto-Rooter Inc. and Weight Watchers International.

Throughout his career, Schwarzenegger has displayed a powerful urge to make money. In 1968, the 21-year-old Austrian-born bodybuilder already was peddling fitness products by mail under the brand name "Arnold Strong."

Later, real estate magnate Albert Ehringer took Schwarzenegger under his wing, helping the actor invest in commercial properties along Santa Monica's Main Street, where the film star's ventures remain largely centered.

At times, the restless entrepreneur made spectacular mistakes: In the mid-1990s, he and Ehringer were badly beaten in a showdown with Agoura Hills-based developer Bill Denton over dueling projects in Denver's trendy "Lo-Do" section.

"We were adversaries," said Denton, who headed off an attempt by the Schwarzenegger-Ehringer group to poach his tenants.

Denton ultimately wound up with a thriving entertainment and retail center, while the actor's project languished.

Schwarzenegger has prospered, on balance, thanks sometimes to his own gut calls and frequently to the counsel of advisors and associates, who, like Ehringer, have often worked with him for decades.

"Arnold's one of the greatest instinctive businessmen I've ever met," said Wachter, a former investment banker with Wertheim Schroder & Co., who has known the actor for 25 years and expects to oversee his assets in a blind trust should Schwarzenegger be elected.

Schwarzenegger's financial disclosure form shows a number of sophisticated investment ventures initiated in the last 10 years.

Those occurred as the actor began to shift away from his more visible enterprises -- including his involvement with Planet Hollywood, with which he cut ties after the restaurant chain's Chapter 11 reorganization -- toward quieter but far richer investments.

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