September 2, 2009
The Brew That Makes Sam Nazarian
Drive, Daring and Family Legacy
Sam Nazarian, the 34-year-old real estate mogul, is stuck at a stoplight in the Pacific Palisades when three pre-adolescent boys start screaming from the sidewalk.
“Ohmigod! That’s so sexy!” one of them shouts, reacting to Nazarian’s car. “That’s so sexy!” the boy cries, over and over, sounding hysterical as he bounces up and down. “That’s a Bugatti!” he yells to his friends, “It’s the fastest car in the world!”
Nazarian grins and shrugs it off. He’s used to hoi polloi ogling and coveting his very expensive toys. Pretty much everywhere we had been that day — from his fancy hotel to his beachfront restaurant to friend and former L.A. Laker Rick Fox’s Malibu birthday party — people had been photographing his car. It is the Picasso of sports cars, a $1.8 million masterwork Nazarian says is “faster than a Formula One race car.” Certainly anyone with even a mild knowledge of mechanics can appreciate its 16 cylinders, four twin turbos and top speed of 254 miles per hour, even though it’s the kind of thing more likely to be found in a collector’s garage than on the road. (Just ask Jay Leno, who keeps his locked up.)
“What are you, A DRUG DEALER?” the kid yells across the street.
Nazarian lets out a raucous, full-bellied laugh that sounds thoroughly hoarse from smoking too many cigarettes. He’s been called less flattering names. He looks at the kid and shouts through the window, “Are you Persian?” There’s a moment of camaraderie, then he drives away.
Nazarian is one of those people who inspire a certain amount of awe. He is CEO of SBE, the Los Angeles-based restaurant-hotel-nightclub-and-film company he created that is fast becoming a real-estate empire. He also comes from one of the most prominent Persian Jewish families in the world — his father, Younes Nazarian, is a co-founder of Qualcomm, making Sam one of the heirs to a fortune estimated at as much as $2 billion. He owns three hotels: the SLS — for “style, luxury, service” — in Los Angeles, the Sahara in Las Vegas and the Ritz Plaza, being developed on Miami Beach. What made him famous, though, were his opulent nightclubs on whose dance floors Paris Hilton and Britney Spears created tabloid gold. Hyde Lounge and Area are the only two currently operating, but over the years he’s been constantly opening, closing and reinventing a steady stream of of-the-moment nightspots — Shelter, Prey, Privilege, S-Bar and Foxtail among them. He also owns a collection of restaurants: the Japanese Katsuya, with locations in Brentwood, Hollywood and Glendale and a fourth opening this fall in downtown Los Angeles; XIV by Michael Mina; The Abbey in West Hollywood and The Bazaar by Jose Andres.
Just this summer, SBE took over management of the Four Points Sheraton at LAX and the beachfront icon, Gladstone’s of Malibu, adding an additional 700 to the company’s 3,000 employees. Next month, Nazarian will open a 13,000-square-foot club in Hollywood, and he says he is beginning negotiations on a hush-hush deal that includes a 15-hotel portfolio.
You might say he’s poised to become the next Conrad Hilton.
Nazarian’s youth is part of his cachet. In late July, he celebrated his 34th birthday. Twice. There was the bacchanalian pool party with 150 people, organized by his friends and hosted at his Hollywood Hills manse, to fit his public image. And, a few days later, there was a quieter affair on the garden terrace at SLS, on La Cienega, for the inner circle only — Nazarian’s family and closest friends — at which L.A. Mayor Antonio Villaraigosa “just dropped by,” teenage daughter in tow, to roast his newly appointed airport commissioner. Nazarian is both the youngest and the only Iranian American to serve on that board.
That he’s amassed large swaths of real estate, Hollywood celebrity and political consideration at such a young age has won him lots of attention. His success has been chronicled by The New Yorker, the Wall Street Journal, Newsweek, Business Week, Fortune, W and The New York Times, among others. He was named one of the 100 most powerful people in Southern California by Los Angeles Times Magazine, one of “the influentials” by Los Angeles Magazine, and has been labeled “The Wizard of Oz,” “The Emperor of Cool,” “Mr. Big” and “The Nightlife King.”
Crisis, notably the economic one, is something Nazarian has deftly avoided. In the past year, as pretty much everyone — wealthy or working class — has been pinching their pennies, Nazarian has been snatching up a variety of new properties. For him, the lousy economy presents opportunities for profit, and sure enough, his business is booming beautifully while less resilient, or less talented, businessmen crash and burn beside him.
Nazarian arrives at SLS on the Saturday morning after his birthday in the Bugatti. (He collects the world’s supercars; he now has seven; he once had 15.) He is a towering figure, a husky, 6-foot-4 with fleshy cheeks and a prominent nose. His black hair is slicked back, and he wears Ray-Ban aviators, a polo shirt and cargo pants with the words “Stay Rude” monogrammed on one of the pockets. The bad-boy image is appealing, but deceptive. He walks in with a flurry of energy, greets his staff and his guests with handshakes and lands at a table in serene calm. He orders a latte.
“Ever heard the myth you can’t freeze alcohol?” Nazarian asks me, referring to a production taking place at the next table. “Well, we do.” The waiter comes over, pours a mix of vodka and orange juice into a bowl and tosses in a heap of liquid nitrogen. Smoke billows out in a frivolous display and then I’m eating blood-orange screwdriver sorbet with espresso-bean garnish.
Nazarian takes a moment to marvel at his creation. “You spend your life trying to build a brand, and then it all comes together,” he says. “All the insecurities, all the nightmares, the not knowing, the struggles, deciding on a property that everyone said was the worst property in town.”
He lists their objections: “‘It’s across from a body shop; it’s on the wrong part of La Cienega.’ Like what the hell were we doing, right?” He looks around at the hotel’s outlandish decor. “It’s, like, so out there. Are people really going to embrace it? The people I want?” Then, “Opening at the worst possible time in human history, Dec. 4, 2008 ... now, here it is, eight months later, and, literally, we’re the best performing hotel in L.A.”
Not everyone can open a hotel amid one of the worst economic crisis since the Great Depression and then boast that it’s trumping the Four Seasons in occupancy.
“If this was 2007, we’d be killing it,” he says, admitting that reduced room rates at SLS have somewhat offset profit margins — a standard room is currently priced at $300 per night, when it might otherwise be $425. Then he declares that SLS’s restaurant, The Bazaar, which takes up the entire ground floor of the hotel, is “the best performing restaurant in L.A.” He has a penchant for hyperbole — almost everything he owns or admires is described in glowing terms: A restaurant is “iconic”; an idea “groundbreaking.” And lots of the time his claims are validated: The Bazaar was awarded four stars by L.A. Times food critic S. Irene Virbila last February, who wrote, “In the midst of this gloomy climate, The Bazaar arrives like fireworks bursting in the night.”
Right before the economy tanked, Nazarian shelled out somewhere between $300 million and $400 million to purchase the Sahara, a down-on-its-luck Vegas landmark he says he hopes to resurrect. Although it’s been eclipsed by more glamorous, modern hotels like the Bellagio and the Wynn, the Sahara remains legendary on the Strip — it was the sixth hotel to open there, in 1952, and once hosted The Rat Pack, Judy Garland, Marlene Dietrich and Bobby Darin. Many in the business world thought Nazarian’s purchase naive, doubting that the newly minted developer could compete with Vegas tycoons like Steve Wynn, Sheldon Adelson and Kirk Kerkorian.
“I don’t have $3 billion to play with,” he admits. “I’m repositioning an asset, and everybody thinks I’m crazy, in an area of the Strip that everyone says is completely dead. But as soon as we went non-refundable on our deposit, MGM-Mirage bought the 26 acres across the street, and the whole area just exploded — so you look like a genius.”
Nazarian says it didn’t bother him that right after the purchase, Las Vegas was crushed by the downturn. “I bought Sahara more for the asset, for the bones, so it really didn’t matter to me what Sahara was doing; I bought it for what it was going to do.” In fact, he says he had a hunch that the economy was headed south — people were being seduced by “stupid deals,” he said, and in 2007, he sold his family’s interest in 11 hotels.
“You know, they say in real estate, ‘You’re only as good as the deals you didn’t do, not the deals you did.’”
Nazarian was born in 1975 in Tehran, the youngest of four siblings. With the eruption of the revolution in Iran, his family moved briefly to Israel, then came to Los Angeles when Sam was 3. Younes had grown up poor in Tehran’s Jewish ghetto, worked in Israel in the 1950s, and then returned to Iran, where he and his brother, Parvis, made a fortune importing construction equipment. In Los Angeles, using money from their savings accounts in Israel, the Nazarian brothers purchased Standard Tool & Die. But their big break came when they invested in a communications company called Omninet, which later merged with the technology outfit Qualcomm. When Qualcomm went public in 1991, the Nazarian brothers, Qualcomm’s fifth and sixth largest shareholders, became billionaires.
Sam starting working when he was 12. Instead of summer camp, he worked the floor at his father’s factory, and throughout his youth held a variety of odd jobs: cleaning toilets at a deli in Century City, selling tickets to Ripley’s on Hollywood Boulevard and, as a teen, selling antiques at his maternal uncle’s Manhattan store.
For Nazarian, these experiences were so formative that in his mind he didn’t grow up pampered, he grew up working class.
“I’d work with Dominicans and get disgustingly dirty and sweaty, and I loved it,” he says, as we zip past the estates on Sunset Boulevard. “I didn’t grow up in posh Beverly Hills mansions; I grew up with guys from Staten Island — Domingo, Santiago, Isaac — guys making $50 a day, wearing the same clothes three days in a row. Day laborers,” he says resolutely. “Those were my summer playmates.”
Yet, the rest of the year he went to Beverly Hills High School, where he made a name for himself as a sports bookie and a jock. Deals, more than academics, were his calling, and in college, he bounced from NYU to University of Denver and finally USC, before dropping out.
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