The Hiltons: The True Story of an American Dynasty (65 page)

Steve Wynn seemed to want to use the tide in the media against Barron to help plead his case to the Hilton shareholders, telling
Fortune
’s Terry Moore that it didn’t bode well for Barron that he was run out of New Jersey without a gaming license and without clearing his name in regard to his association with Korshak, thereby making the Hilton chain much more vulnerable to a hostile takeover. “Here’s a company that gets 40 percent of its income from gambling and has been adjudicated as unsuitable in one of the biggest gambling markets in the world,” Wynn told Moore. “As a shareholder, I would be concerned.” (Wynn owned about 1 percent of Hilton’s stock.) He also told the
New York Times
, “It’s a black mark on Hilton.”

Then, much to the Hilton Corporation’s dismay, “John Van de Kamp, who was the California attorney general, took Steve Wynn’s side,” recalled Myron Harpole, “and tried to assist Wynn in his takeover attempt. Now there was an even greater chance that Barron could lose the entire pie.”

“Look, I have no sympathy for Barron Hilton,” Steve Wynn said candidly. “I felt comfortable making this offer; it is not a personal attack. And I’m not taking advantage of a tax loophole to take the company away from some charity.”

According to Myron Harpole, Barron Hilton was unhappy about some of the negative press and felt that Steve Wynn was at least partially responsible for it, even by just playing into it. Barron likely wasn’t sure what to make of Wynn. Wynn was slick and polished. Like Trump, he talked a good game. But he lacked Trump’s people skills. If he had that same skill set, he might have appealed to Barron on a more personal level and as a result might have fared better with him. “Barron was a lot like his father in that he was the type to sit down, make a call, shoot the shit, and find out what was what,” said one of his business associates at the time, “not just make a dramatic play for someone’s company. In that respect, Barron had more admiration for Trump. He appreciated Trump’s telephone call, for instance. Little things mean a lot, even in big business. The fact that Wynn was pushing so hard made Barron feel like, yeah, he’d probably rather to do business with Donald Trump.”

Trump Meets Hilton

I
n early March 1984, Benjamin Lambert, one of the Hilton board of directors with whom Donald Trump was friendly, suggested that Trump attend a party he was hosting for the Hilton board of directors at his New York home, just prior to its annual meeting in Manhattan. He suggested that Donald and Barron should take the opportunity to meet, and, he added, who knew what might result from such a meeting? “So I went to the party,” Trump recalled, “and I finally had the opportunity to meet Barron Hilton. Right away, I felt he was an amiable fellow, if not also extremely cautious. We went out onto the patio to chat.”

During their conversation, Barron confided in Trump that he was still frustrated by the Casino Commission’s decision. Though he had considered reapplying for a license, he wasn’t yet sure how to proceed. “I think there was a little bit of, ‘Screw ’em if they don’t want me’ kind of thinking going on,” Donald recalled. “He
was
Barron Hilton, after all. As we spoke, I stood there wondering what Conrad would have done in that situation. I knew for sure what I would’ve done. I would’ve fought. I think that’s how Barron felt, too. But I also think his fighting spirit was compromised due to the fact that he was facing battles on more than one front.”

“I’ve been squeezed in a vice a hundred times before,” Hilton told Trump, “but not like this.” He said that, on one side, he had his father’s estate fighting him “tooth-and-nail,” and on the other side, he had the New Jersey Casino Commission doing the same thing. Donald sympathized with Barron’s quandary. He asked exactly how much Barron had “soaked into this thing in Atlantic City?” Barron paused. “Three hundred and twenty million,” he answered abruptly. He waited for a reaction. Donald acted unfazed, but actually that was a lot of money at the time, even to Donald Trump. A year earlier, it had cost him $220 million to construct the Boardwalk, and that had been his biggest gamble to date. “Well, I would say that that’s a pretty good figure,” Donald remarked with raised eyebrows.

“Yeah, tell me about it,” Barron agreed. The two men spoke for a little while longer before ending their impromptu meeting. “It’s a real honor to meet you,” Trump told Hilton, and he meant it. He added that he had a great deal of respect for both Barron and Conrad, and for what they had done for the hotel business. “I’m impressed with what you’ve done, too,” Barron told Donald. Shaking hands, the two famous hoteliers agreed to stay in touch.

Many years later, Donald Trump would observe, “My experience is that sometimes in business it’s good to just sort of lay back and see where the tide can take you. So that’s what I did with Barron. Later, my friend Ben Lambert told me that Barron felt comfortable around me.

“I understood Barron,” Trump continued. “I know that kind of guy because I
am
that kind of guy. For Barron, personality and character are important. It’s not just the deal that matters, it’s the people in it. In fact, the best of deals fall apart because the people in them have a deficit of character. Barron and I were on the same page in that regard, and I also felt that this was probably how Conrad Hilton did business as well.”

Trump to the Rescue

M
any industry observers believed that Steve Wynn had a hidden agenda, that he didn’t really want the entire Hilton company but rather just Barron Hilton’s Atlantic City property. It was thought that maybe by making preliminary moves toward a hostile takeover, Wynn was hoping to set the stage for a negotiation somewhere along the lines of, “I’ll set aside my offer to move in on your company if you’ll just sell me that one valuable hotel in Atlantic City.” It would seem that Barron Hilton was one of those who sensed this agenda. It wasn’t long before he decided to do something about it. Donald Trump recalled, “I got a call from Barron’s people saying, ‘Guess what? Barron is interested in selling the Atlantic City property to you.’ I was delighted.”

Trump’s first offer was about $250 million. Barron had already told him that he’d invested $320 million in the hotel, so Donald didn’t really think he would go for the offer; he wasn’t going to take that much of a loss. Trump then did the sensible thing—he raised his offer to a full $320 million. In cash. Manufacturers Hanover Trust would lend him the money; he would have it in hand in a week.

Maybe the Atlantic City property really was on Steve Wynn’s mind, because the day after he learned that Hilton was considering selling it to Trump, he filed a lawsuit against Hilton charging securities violations. Meanwhile, one of Wynn’s Golden Nugget executives stated to the press that “Hilton is putting his tail between his legs and running away from New Jersey without vindicating his name.” Then Wynn made an offer for the Atlantic City Hilton—$344 million. That was even more than Trump’s bid! Maybe not surprisingly, Barron rejected it. Beyond any personal feelings, Trump’s offer was all cash, whereas Wynn’s was a package of promissory notes and an undeveloped parcel of land in Atlantic City. Barron wasn’t that impressed with it. One thing was also certain—Barron knew that, sans the valuable Atlantic City property, the Hilton company had just become a little less attractive to Steve Wynn. Wynn’s attorney Bruce Levin confirmed that Trump’s purchase, if consummated, would most definitely force Steve Wynn to reevaluate his offer.

“I like this guy, Trump,” Barron told the foundation’s attorney, Myron Harpole. “He reminds me of my father. He’s a salesman, like Conrad Hilton, isn’t he?”

“I agree,” said Myron. “I think maybe he’s got something Wynn doesn’t have. I don’t know what it is…”

Both men had been influenced by Conrad’s credo that relationships, as well as business, mattered. Many in the Hilton group sensed that Donald Trump was of a similar philosophy. Trump, for all of his well-known braggadocio, seemed like an upright man.

The next day, Barron Hilton accepted Donald Trump’s offer. Trump then had no trouble getting a license for his new hotel and casino, which was called Trump’s Castle and would open on June 17, 1985. “I bought Barron Hilton’s Atlantic City hotel sight unseen, meaning I didn’t do the usual walk-through to see what I was getting myself into. The good Hilton name of quality workmanship is what I was counting on, and I was not disappointed.

“What I remember most was that first inspection after it was truly mine. I was amazed at the quality of the work Barron had put into it. Everything was tip-top shape, the best of the best, money being no object. It was spectacular. I remember thinking, ‘All right, I get it, now. What I am seeing here is the Conrad Hilton influence, and it’s impressive.’ All of those many years later, you could still feel the presence of the old man.” (In March 2006, Donald Trump paid what might be considered the greatest of compliments to his friend, Conrad’s son Barron. He named his third son after him—Barron Trump.)
^*

On April 25, 1985, the threat of Steve Wynn’s takeover of the Hilton company receded when James E. Bates and a majority of other foundation board members rejected his bid, calling it “inadequate.” There was never much of a groundswell for Wynn, anyway. He had never mounted a successful public relations program, other than one that involved making critical pronouncements about Barron. Therefore, the other Hilton board members didn’t see how he could do much better with the company; he never laid out a good strategy for them. The bottom line was that it had been a red-hot matter for a few weeks, and then, just as quickly, it cooled.

Barron Hilton had managed to avoid a hostile takeover of the company from someone who at the time apparently didn’t have the financial wherewithal or the persuasive power to pull it off. But who knew what the future might hold with a more influential opponent? As long as the in-house battle existed over Conrad Hilton’s stock in the Conrad N. Hilton Foundation, there was always a chance that someone else could enter the picture, attempt to purchase that block, and also entice a majority of shareholders with a better offer, thereby managing a complete takeover. Barron realized that in order to protect his (and his father’s) best interests, he needed to find some way to end his battle with the foundation as soon as possible.

Resolution

I
t would not be until the spring of 1986, after a three-week trial before Los Angeles Superior Court judge Robert Weil, that a final—and surprising—order would be issued in the matter of Conrad Hilton’s will. Judge Weil ruled in favor of the Conrad N. Hilton Foundation. His harsh ruling read, “The entire residue of the estate is distributable to the Foundation, and
no part
of said residue is subject to the option contained in Paragraph Eight (a) of decedent’s will in favor of William Barron Hilton.”

In his decision, Judge Weil found that when the option permitting Barron to purchase excess stock was included in Conrad’s will, no one, including James E. Bates or Donald Hubbs, “perceived or realized that by creating this option it was possible that Barron Hilton could receive 100 percent of the shares of the estate.” The judge observed that Conrad Hilton was a “very wise man” and that “if he had intended to give Barron Hilton all his stock, he would have done so.”

Myron Harpole recalled, “I had succeeded 100 percent in protecting what I believed to be the interests of Conrad Hilton and of the foundation bearing his name—at least for the moment.”

The foundation, now victorious, was anxious to move forward and let bygones be bygones. Barron wasn’t quite so eager. He decided to take his case to the U.S. district court in the spring of 1986, and it was there that he would finally prevail. “The presiding judge, Thomas J. Whelan, was very much on the side of Barron and his lawyers,” recalled Myron Harpole. “He decided to nullify the decision of the superior court. So Barron managed to get the whole thing reversed; excellent lawyering, one could say, on the parts of his attorneys.”

At the core of the court ruling in Barron’s favor was the foundation’s conversion to a public support organization, which the judge ultimately decided was invalid. His decision concluded that the foundation could not take those kinds of dramatic actions after Conrad’s death to change its status, thereby invalidating Barron’s Option.

“We think this is a shocking opinion,” said foundation lawyer Thomas J. Brorby at the time, “and is clearly contrary to Conrad Hilton’s will.”

Barron countered by saying, “I regard this as a significant victory.”

With that nullification in hand, Barron Hilton then formally appealed the original ruling. At long last, he would win his case in the court of appeals in California in March 1988.

Finally, in November 1988, this battle—almost ten years long—would conclude with a settlement that would see the foundation give Barron Hilton the bulk of the disputed shares of stock, about two-thirds of them. “By this time, the total wealth on the table was about $2 billion,” recalled Myron Harpole. “In the end, Barron ended up with four million shares, worth about three-quarters of a billion dollars. The foundation received 3.5 million shares [placed in the Conrad N. Hilton Fund], and the remaining shares [about five million] were placed in the W. Barron Hilton Charitable Remainder Unitrust. According to the arrangement, Barron then received 60 percent of the W. Barron Hilton Charitable Remainder Unitrust’s share dividends and the foundation received 40 percent until 2009, after which those trust assets reverted to the foundation.”