A billion for your thoughts

Why billionaire Ron Burkle's interests should interest you

Ron Burkle
Undated photo courtesy www.freerepublic.com

By Daniela Kirshenbaum and Kepa Askenasy, Fog City Journal I-Team

December 1, 2006

A billionaire's biggest problem is that a billion dollars aren't enough. In a natural quest for ever-greater sums of money, Billionaire Ron Burkle intends to bankroll Treasure Island development - and maybe gain some hefty media control, too.

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Billionaire Ron Burkle once bagged groceries for his father's chain of supermarkets. Now he can expect more than just riches and celebrity friends. He stands to gather yet more riches with the aptly named Treasure Island. Perhaps more ominously, he could also start gaining some control over the media industry should he win the battle for the Tribune companies.

To San Franciscans, his business interests are worth following. In what has been called a "sweetheart deal," Burkle is set to be the premier profit-maker at Treasure Island by financing its development. This would likely be on account of his astonishing resources, and, more strategically, the connections of his former employee, Darius Anderson. (Anderson has appeared previously in a Fog City I-Team story on Treasure Island.)

Anderson is a very high-stakes player in some of the most lucrative Bay Area land deals. It must have seemed logical to shut out other interested parties and bring Burkle, and his sizable fortune, into the exclusive partnership called Treasure Island Community Development, LLC.

Calls to Platinum Advisors, Anderson's firm, were not returned. It would have been worth asking why anyone, particularly a billionaire, would tempt negative attention by entering into the kind of deal that requires assistance from local politicians.

Like many ultra-wealthy individuals, Burkle doesn't keep a particularly high profile. But attention comes with all that money; some of it is the kind few people deserve.

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Ron Burkle lives in Los Angeles and engages in the sort of activity that's reported mostly in business pages. His investment firm, Yucaipa Companies, is known mainly for masterful acquisitions and mergers of grocery and retail chains: Pathmark, Fred Meyer, Kroger, and the like.

Burkle's La Jolla pleasure dome
Photo by John Walkenbach

Since former military bases present such rare and golden development opportunities, a land use deal like Treasure Island might have been hard to pass up, even for an individual normally associated with grocery stores. But what of Burkle's more recent moves into the media business? How did Burkle's current bids for ownership of the Tribune Co., a giant media conglomerate comprised of 25 TV stations, several important newspapers, and a baseball team, come about?

Burkle's spokesperson at the Yucaipa Companies, Frank Quintero, was vague on all matters. He said he did "not know that we could be described as a major investor" at Treasure Island. (Burkle is a principle investor.)

And then Quintero dismissed questions on the move from grocery stores to media chains: "It's not a new area of investment for us. We have a very diversified portfolio that we've developed over the past 20 years." But besides Burkle's being named to the board of Yahoo! Inc. in 2001, there is no discernable trace of his involvement in media businesses.

Linda Foley, President of the Newspaper Guild based in Washington, D.C., acknowledged that Yucaipa "had only dabbled before in a peripheral way" with media companies. But she said that earlier this year, Burkle and Yucaipa seemed to understand not just the profit in a potential separate take-over of several Knight -Ridder newspapers, but the needs of the workforce as well. (Yucaipa did not wind up with the Knight-Ridder papers.)

And, regardless of Yucaipa's lack of experience in any press room, Josh Silver, Executive Director of the non-profit Free Press,[www.freepress.net] noted that Burkle could be considered a much better owner than a huge, profits-only media corporation like Gannett or Clear Channel. Being a Los Angeles local, Burkle might have more of an interest in competent local news coverage by the Los Angeles Times, one of the dozens of "properties" belonging to the Tribune Co.

Or not: Silver added that ownership of a newspaper or media outlet gives one an enormous amount of political influence. "The owner will set the tone for the paper," he said. "Look at Rupert Murdoch at the New York Post."

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Burkle is familiar with politics, beyond the influence-wielding that led to the Treasure Island booty. He is often referred to as a friend of Bill Clinton, and has been known to throw a big-ticket political fundraiser or make sizable political donations.

News reports suggest that not all of Burkle's political motives are altruistic. His venture capital funds were filled with $700 million of cash from CalPERS, the California state employee pension funds. This was after Burkle made campaign donations to Willie Brown, Phil Angelides, and over half a million dollars to the campaign of then-Governor Gray Davis. Once Schwarzenegger looked like the next governor of California, Burkle donated $121,000 to his campaign.

Other billionaires have found themselves in the similar position of operating easily in financial and political circles, to the benefit of both. And often they come to the same conclusion: the missing ingredient of power is the media.

Silvio Berlusconi, until recently Italy's prime minister, took this lesson to extremes. A billionaire with vast holdings and limitless arrogance, he methodically set about gaining financial control of so much of Italy's press that he eventually owned most of Italy's viewership outlets. And that influence, critics say, led to political influence that retroactively changed laws, keeping him out of legal trouble and prison.

This isn't terribly unusual these days. Very recently, Billionaire Maurice Greenberg decided to make a play for the New York Times Co. itself. It would seem that fury over the way he was covered in the Times led to this interest in journalism.

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And what could have led to Ron Burkle's journalistic interest? In April, there was a nasty extortion case that got splashed in the papers; a gossip columnist tried to shake down Burkle in exchange for keeping unplesant items about him out of the New York Post.

And over the past few years, there has been a lot of back-and-forth in Burkle's messy divorce. Gossip columnists might love to get hold of a billionaire's legal divorce proceedings; that's always been a traditional agony with a high-profile divorce. But no - in 2004, Governor Schwarzenegger signed new legislation sealing the divorce papers.

Mr. Burkle's spokesperson declined to answer further questions, but it would appear that there is ample motivation for Burkle to delve more firmly into the media industry. And a new delay in the auction process for the ever-more-desirable Tribune Co., reveals he may have lined up the Carlyle Group, one of the heaviest hitters of them all, to join his Dream Team in acquiring it.

The Tribune Co., and readers of the Chicago Tribune, the Los Angeles Times, the Baltimore Sun, and so many others, may be consumers of Burkle's news and media vision whether they care to be or not. The Carlyle Group, affectionately known as an investment club for former U.S. presidents, doesn't play around. Based in Washington, they are experts at profiting from the intersection of military, industrial, and political winds.

And to think San Franciscans were focused only on whether there would be affordable housing units built on Treasure Island, lulled into complacency by the plans for organic gardens to be set amidst the 40-story condo towers.

Political Players: Treasure Island

(click on the image below to see a larger version of the chart)

Additional Information:

Palm trees, views, art deco buildings… Virtual tour of Treasure Island

What happens in Ron Burkle's life is serious business news

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