Monday, August 11, 2003 - Page updated at 12:00 AM

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Schwarzenegger controls vast assets

LOS ANGELES — About 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 plans for a new international airport and freeways were about to trigger a land rush in California's Antelope Valley, the two scraped together cash from their 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.

While many celebrities prefer passive and 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.

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

Far-flung investments

Under California 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 jet-leasing business, the form shows that he owns stakes in movie theaters and an Internet software business, and stock in companies as varied as media giant Gannett, IBM, International Speedways, Roto-Rooter and Weight Watchers International.

Yen for riches

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, he was taken under the wing of real-estate magnate Albert Ehringer, who helped him invest in commercial properties.

Schwarzenegger's financial disclosure form shows a number of sophisticated investment ventures initiated in the past 10 years. Those occurred as the actor began to orient 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.

Schwarzenegger also holds a significant ownership stake in Dimensional Fund Advisors, a Santa Monica-based mutual fund company that manages $40 billion. The highly rated fund management is unusual in that it is overseen by academic theorists, including University of Chicago economist Eugene Fama and two Nobel Prize-winning economists, Myron Scholes and Robert Merton. The majority of Dimensional's clients are corporate pension plans, state and local governments, universities and charities.

Schwarzenegger also is a partner in Easton Town Center, a million-square-foot mall in Columbus, Ohio.

Calculating Schwarzenegger's net worth is virtually impossible based on Saturday's disclosure. The state requires only that candidates check boxes that provide a range to the amount of their investment, with the highest being "over $1,000,000." The unexpectedly wide range of holdings makes previously published estimates of a fortune of about $200 million seem conservative.

Betting on himself

Clearly, the primary engine behind Schwarzenegger's fortune, whatever its size, was a huge upswing in his movie earnings, beginning with "Twins," released by Universal Pictures in 1988. The comedy, the action star's first, is a testament to his business instinct. In what was then a highly unusual deal, he decided to forgo any upfront fee in return for 15 percent of the studio's receipts — an arrangement that boosted his take to an enormous $30 million when the audiences bought in.

"Arnold bet on himself," said producer Tom Pollock, who ran Universal at the time. "If the movie went out and bombed, he would have made much less."

Schwarzenegger appears to have received at least $300 million from his next 13 films, culminating with this year's "Terminator 3: Rise of the Machines."

Some who have done business with Schwarzenegger maintain that his grasp of complex numbers and deal points is impressive.

"He's not a Terminator when it comes to how he handles complex situations. He's more an analyzer than a Terminator," said Mario Camara, a Los Angeles real-estate attorney who has negotiated with Schwarzenegger several times on behalf of developers with properties for sale.

Camara is one of several people who said Schwarzenegger tends to restrict his non-Hollywood dealings to those with whom he is familiar. In Camara's words: "Arnold only does business with people that he's known for a while. It's a form of due diligence."

Thus, Schwarzenegger has remained involved with Jim Lorimer, a decades-long associate, with whom he operates Columbus' Fitness Expo. "Our 28-year partnership was made on a handshake, and we've never had a contract," Lorimer said.

Copyright © 2003 The Seattle Times Company


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