Empire: A Tale of Obsession, Betrayal, and the Battle for an American Icon [Audio Download]

Rockefeller Center was a 1.4 billion dollar loss to creditors; Pebble Beach Golf Course was taken back by banks and resold for approximately 50 cents on the dollar. Beachfront hotels in Hawaii fell into disrepair as the economy in Japan crumbled when their stock market fell some 44 percent almost overnight, and has still come nowhere near to recovering. The other willingness to spend without any regard for value was on art, primarily that of the great impressionists. The market both simultaneously hit its high and began dying in the three days one Tokyo businessman paid almost 80 million for a Van Gough, and then set the all time record for a painting a day later when buying a Renoir for 82.5 million. Both paintings were repossessed by the auction houses that sold them for non-payment, so whether they truly set records is open to debate. Even the third highest amount paid for a painting, some 50+ million, again a Van Gough, which was bought by an Australian, was again repossessed for failure to pay, and eventually sold to The Getty Museum in California for a number rumored to be half what it brought at auction.

Until I read, "Empire", by Mitchell Pacelle I thought that the "enthusiasm" that drove these purchases had ended, not unlike the dot.com hysteria our markets created and then destroyed. However Mr. Yokoi was to carry through the 1990's the same financially unjustifiable buying that his countrymen had been destroyed by earlier. In the process he and two other family members spent time in jail, and ultimately his unusual family was left in the same devastated state as the financial assets he once held.

Placing a value on the baseball that was the 70th homerun ball is purely subjective. The same case can be made for art; a given piece is worth what a given individual will pay on a given day. Real estate, especially commercial real estate has very defined methodologies for determining value, for determining the return a buyer or buyers are willing to accept. Oversimplified, an entity that is buying a piece of real estate is buying the income that it is producing, and what it is reasonably expected to produce in a definable future. When an investor makes a purchase the return expected and the risk taken are key elements in any rational decision.

The focus of the book includes residential homes that were bought as well as The Empire State Building. Residential real estate is again defined primarily by what a willing and capable buyer will spend, and in the case of the buying this man did based only on pictures of homes that resided in countries he had never visited, suffice to say the deals were all questionable and many were marked by no thought at all.

The New York Landmark clearly was a textbook example of emotional behavior. The building itself and the land it sits on is own by one group of people. The right to "occupy" the entire building is owned by two people until the year 2076. The rent they pay the owners of the building would give Mr. Yokoi about a 2.5 percent return on his money, or about the same as a checking account. Had he bought Treasury Bills of The US, he could have made double that return with zero risk. The real mind bender comes when one reads that those who hold the lease until 2076, NEVER have an increase in the rent they must pay; it actually goes down for a significant portion of the lease! Take into account inflation or net present value of the value of money in decades to come, and the only real income is the psychic value an owner feels from owning the property. One of the two holders of that lease is none other than Leona Helmsley, a woman not known for her diplomacy and for playing well with others. The quotes attributed to her in this book would make a longshoreman blush.

None of the family members/friends that made these deals were competent to do so. I have or hold several real estate licenses, and not one of these people could have passed the state exam for New York, however they were negotiating on their own for The Empire State Building! As I mentioned, the destruction of this family is a major part of the tale. The travails include the Patriarch Mr. Yokoi spending almost 3 years in a Japanese Jail, his daughter spending a similar time either in a French Prison or confined to France, and her husband spent over 3 years in a US Prison. All of these incarcerations occurred while the battle for control of this building was taking place.

If my comments sound like a stretch, they are mild in comparison to what all of the details of this folly entailed. As you read this book, at some point you will be reminded of P.T. Barnum and his famous take on people, "there is one born every minute".

That history is presented in "Empire, A Tale of Obsession, Betrayal, and the Battle for an American Icon," Mitchell Pacelle's biography of the world's most famous skyscraper, and the book skillfully delivers all that its long title promises. The framework is the decade-long battle waged in the Nineties for ownership and control of the building, but there are ample asides that chronicle its entire history. The cast of players include unscrupulous Japanese billionaire Hideki Yokoi, double-crossed by his daughter and son-in-law, Kiiko Nakahara and Jean-Paul Renoir, who claimed Yokoi gave Nakahara the building as a gift; real estate magnate Harry Helmsley and his partner Lawrence Wein and their heirs, Peter Malkin and the reviled Leona Helmsley, who hold a 114 year lease on the property; and Donald Trump, determined to break that lease.

This is a big story about a big building, a big family, big fortunes, big egos and big deals. There are occasions when the details of the deals become confusing (like a set of nesting Russian dolls there are holding companies within holding companies within still more holding companies), but by and large the book is a page turner. "Empire" reads like fiction, except that if it were fiction you'd probably never believe it. The Leona parts are a particularly sinful pleasure, but read it without guilt. This is a well-researched and documented account by a respected reporter of The Wall Street Journal.