In Hong Kong, we build a global business empire

Kirk Kerkorian picked up his whiskey glass, took a sip, then looked at Lin Haoran and said in a calm tone, "I won't say much about the film business, but it is indeed losing money, I admit it."

But in the hotel business, you can see it with your own eyes—how many people come and go every day? The occupancy rate is over 80% even in the off-season, and it's fully booked in the peak season. Last year, the net profit exceeded one hundred million US dollars.

Mr. Lin, do the math yourself. With my 52% share, I only need 12 years to earn back the money I made from the hotel's annual profits.

This doesn't even take into account the value of the film studio's library, its brand value, or its future potential for appreciation. Offering $6 million, frankly speaking, is profiteering.

Lin Haoran smiled slightly, unmoved by the other party's tough attitude.

He knew that in business negotiations, such statements were often half-truths.

Since the other party has already said that, they must have the intention to sell; now they are just trying to get a higher price.

Saying $6 million is taking advantage of someone's misfortune is ridiculous; if he really wasn't going to sell, he wouldn't have sat down to discuss the price at all.

“Mr. Kerkorian, I have no objection to your statement that the net profit exceeds one hundred million US dollars,” Lin Haoran said calmly. “But don’t forget, how much of this ‘more than one hundred million US dollars’ comes from the hotel’s own operating profits, and how much comes from the casino?”

MGM's casino license is indeed valuable, but casino revenue fluctuates greatly. This year it might be 100 million, next year only 80 million, and the year after that it could drop to 50 million.

He paused, then continued, "Moreover, as you know, the competition in Las Vegas is getting fiercer. Caesars Palace is expanding, Hilton is building new buildings, even the smaller casinos are upgrading and renovating, and you yourself are planning to build a new casino."

Although MGM is the largest, its market share is being eroded. No one can guarantee whether it can maintain its current profit levels in a few years.

Kirk Kerkorian's eyes flickered slightly, but he did not refute.

He knew, of course, that this was true.

He knew better than anyone else what Lin Haoran was saying.

Competition in Las Vegas is indeed getting fiercer. Although MGM is still the leader, its position is not secure.

This is one of the reasons why he wants to build a larger and newer casino to consolidate his position.

The old empire is being eroded, and he needs a new fortress.

"And then there's the film industry." Lin Haoran pressed on, his tone steady but relentlessly pressing, "You said the film library is valuable, and I admit it. 'Gone with the Wind,' 'The Wizard of Oz,' and the '007' series—these IPs are indeed priceless."

But Mr. Kerkorian, as you also know, the value of an IP needs to be realized through operation.

He paused for a moment and continued, "You know MGM's current financial situation better than I do. How much has it invested in production each year? Thirty million US dollars. With thirty million US dollars, how can you make three or four movies? What good stuff can you produce?"

The reason for such a small investment is simply because MGM Studios is short of money. Its debt is as high as $750 million, and the annual interest alone is nearly $100 million.

Financially weak, production quality poor, box office performance naturally suffers; poor box office means the value of the intellectual property cannot be realized. What has MGM Studios done all these years besides living off its past glories? Nothing.

“I’m not going to take over MGM by just buying the rights to a bunch of old movies and sitting back and waiting to make money. I’m going to invest real money to restructure the film division. I need to invest at least $100 million a year in film production and continue to invest for three to five years to have any chance of turning the film division around.”

These investments also represent costs, and significant costs at that.

Kirk Koccorian held his wine glass, his eyes flickering slightly, but he did not refute.

Every word Lin Haoran said was true, and he couldn't find a way to refute it.

The meeting room was silent for a few seconds, with only the ticking of the wall clock echoing in the background.

John Reed sat to the side, holding a coffee cup, saying nothing, his gaze shifting back and forth between the two.

He knew that he didn't need to say anything at this point; Lin Haoran could handle it all by himself.

His purpose here was simply to endorse Lin Haoran on behalf of Citibank, to let Kirk Kocorian know that this deal was backed by Citibank's credit, and that Lin Haoran was not the kind of speculator who would try to get something for nothing.

Kirk Kocorian was silent for a moment, then laughed.

The laughter wasn't loud, but it conveyed a genuine sense of appreciation.

“Mr. Lin, you speak to the point, without beating around the bush or making empty boasts. I like that.” He placed his wine glass on the table and crossed his hands in front of his abdomen. “Alright, then tell me, how much would be appropriate?”
Don't talk to me about $6 million, I'm not interested in that number.

Lin Haoran exchanged a glance with John Reed, then slowly extended a hand with his five fingers spread.

"Okay, everyone, let's be straightforward. I'll add another $50 million, bringing the total price to $650 million, to acquire all of your shares in MGM Studios and MGM Grand Hotels."

This price is nearly 20% higher than the market valuation, and I'm paying in full in cash, with no strings attached. You don't need to provide any financing guarantees, and you don't need to retain any shares. It's clean, cash on delivery.

He looked directly into Kirk Kirkorian's eyes and continued in a steady tone, "Mr. Kirkorian, you should be able to feel this sincerity."

$6.5 million was a figure that Citigroup considered to be the most likely to be a deal. For Lin Haoran, this figure would neither offend Kirk Koccorian nor make him feel like he was being taken advantage of; it was a price that both parties could accept.

Kirk Kerkorian leaned back in his chair, his fingers interlaced in front of his abdomen, his gaze shifting back and forth between his whiskey glass and Lin Haoran.

$6.5 million is indeed a very reasonable price.

The increase of $50 million over $600 million made him feel the other party's sincerity; they weren't there to take advantage, but genuinely wanted to make the deal.

Moreover, this number hit his psychological defenses perfectly.

He would definitely refuse if Lin Haoran only offered $6 million.

He would agree without hesitation if offered $7 million.

$6.5 million was a price that he needed to think about carefully, but wouldn't refuse.

More importantly, the fact that he was paid in full in cash was especially important to him.

His new project in the north urgently needs funding, but the bank loan approval process has been dragging on, and the interest rates are frighteningly high.

The amount of interest MGM pays each year shows just how terrifying interest rates are now.

If this deal brings in a large amount of cash, his new project can start immediately without having to wait for the bank's approval or bear high interest rates.

In this era of high interest rates, cash is king.

Moreover, his new project in the north is not simply about making minor repairs to the MGM Grand, but about creating a brand new, super integrated tourism resort that surpasses the MGM Grand Hotel.

In comparison, losing the existing MGM Grand Hotel is not unacceptable.

After all, in his view, out with the old, in with the new.

With the US backing them up, it's practically impossible for me to get a big advantage from them.

The situation at MGM is practically the same as Citibank's – they're practically streaking.

“$6.5 million…” Kirk Kocorian’s gaze lingered on Lin Haoran’s face for a few seconds, but he did not respond immediately.

He picked up his whiskey glass, took another sip, then leaned back in his chair, his fingers tapping lightly on the armrest of the sofa—once, twice, three times—his gaze fixed on the distant desert through the floor-to-ceiling window, as if he were looking at something, or perhaps calculating something.

This price is neither high nor low.

He was indeed tempted.

It wasn't because of the $6.5 million itself; while that amount was significant for him, it wasn't something he'd never seen before.

What moved him was Lin Haoran's payment method: full cash payment, with no additional conditions.

Bank loan interest rates have already risen to over 10% or even 20%, and the Federal Reserve is still raising interest rates. Who knows how high they will rise next year?

If his new project in the north relies on bank loans, the interest alone could eat up a large portion of the profits, potentially bankrupting the entire project. Lin Haoran's cash, however, allows him to bypass banks and begin construction directly.

No need to be at the mercy of banks, no need to pay exorbitant interest rates, and no need to worry about loan approval.

This cash is his source of confidence.

He bought that land almost a year ago; it's 3,000 acres, many times larger than the MGM land he owns now.

The design has been revised four or five times, and the budget has increased from the initial one billion US dollars to two billion US dollars.

He wanted to build not just a hotel, but a comprehensive resort integrating a casino, hotel, shopping mall, theater, convention center, and golf course.

It is twice the size of MGM, has more luxurious facilities, and offers a wider variety of entertainment options.

He wants the whole world to know that Las Vegas not only has MGM, but also a new landmark in the Kerkorian.

He wanted everyone who came here to remember one name—Kirk Kirkkorian, not MGM.

As people get older, their ambitions change; they no longer pursue money itself, but rather the pursuit of leaving a lasting legacy.

What he wanted was for the name "Kirk Kercorian" to become a new synonym for Las Vegas, rather than living forever in the shadow of that golden lion.

What he wants is for people to think of him first when they talk about Las Vegas.

MGM was indeed the empire he built from scratch, but no matter how glorious the empire was, it was ultimately a thing of the past.

He wants to build a brand new, unprecedented super resort city that will make the whole world take notice.

For him, this deal was not just about cashing out, but also a strategic transformation.

Abandoning an aging empire to create a brand new legend—it's a worthwhile trade-off no matter how you look at it.

With $650 million, plus the more than $100 million in cash he currently holds, and funds recouped from various other investments, he should have enough money to build the dream he envisions.

Even if it's not quite enough, given his influence in Las Vegas, it would be easy for him to raise funds by offering a small portion of his equity.

In this way, he doesn't need to borrow a single penny from the bank, minimizing his own risk!
With this in mind, Kirk Kocorian made up his mind.

“Mr. Lin.” Kirk Koccorian put down his wine glass, crossed his legs, and his gaze no longer held the previous probing and hesitation, but instead showed the decisiveness of a ruthless leader. “$6.5 million, I accept.”

Lin Haoran remained calm, nodded slightly, and waited for what was to come.

“However, I have two conditions.” Kirk Kocorian held up two fingers, his tone leaving no room for negotiation.

"First, I need the full payment within a week of signing the contract, not a penny less, not a day late. My new project will start next year, and the construction team, building materials, and design team are all waiting. All I need is this start-up capital. Your cash makes me feel more at ease than a bank loan."

"Secondly, in addition to serving as an advisor for three months, I hope to serve as the lifetime honorary chairman of MGM, so that I can come back occasionally, sit in the office and have a cup of coffee, and look at the guests downstairs. That would be a way to put a period to the past thirty years."

Upon hearing this, Lin Haoran breathed a sigh of relief.

He had initially thought the two conditions proposed by the other party were somewhat difficult to meet, but after hearing them now, they didn't seem like such a big deal.

He didn't care about the honorary chairman title at all. The other party was already the founder of MGM Grand Hotel, so giving him this honorary position was no problem at all.

“Mr. Kecorian, I have no problem with either of your conditions. First, the full amount of $6.5 million will be in my account within a week of signing the contract, not a day later. My funds are available for immediate use.”

"Secondly, I can give you the title of Honorary Chairman for Life, but I have a small condition: the Honorary Chairman will not participate in any day-to-day management decisions, will not interfere with the operation of the management team, and you will not use your influence at MGM to interfere with any of MGM's decisions."

"You're welcome to come back anytime you like. I can even reserve a private office for you so you can come back for tea whenever you have time. How does that sound?"

Lin Haoran paused for a moment, then said sincerely, "Mr. Kecorian, I completely understand your feelings for MGM. MGM's success today is inseparable from your hard work over the past thirty years."

But since you sold the company to me, you should let me run it. Honorary chairman is an honorary title, a recognition of your past contributions, but it should not be a factor affecting the company's future operations.
I hope you can understand this.

Upon hearing that the other party had reserved their current office for him, Kirk Kocorian's eyes flashed with satisfaction and gratitude.

This young man is meticulous in his work, providing both a way out and dignity.

As for not interfering with MGM's decisions, he naturally has no problem with that. After all, once he sells his shares, the company is no longer related to him. It would be excessive for him to use his status as the founder to interfere.

"Of course, I just can't bear to part with this company that I founded and developed from scratch, and I have a deep affection for it, but I, Kirk Kirkkorian, am not the kind of person who doesn't know when to back down."

He waved his hand, his tone frank, "The company has been sold to you, so it's yours. I have no right to interfere, nor will I. Honorary chairman is just a title, enough for me to come back and visit occasionally, so I have something to look forward to."

Lin Haoran smiled and nodded: "Then it's settled."

“Good.” Kirk Kocorian picked up his glass, downed the remaining whiskey in one gulp, and placed the glass on the table with a crisp sound. “Mr. Lin, it’s been a pleasure doing business with you!”

"Happy cooperation!"

Their hands clasped together again.

John Reed, who had been observing from the sidelines, stood up at the opportune moment, smiling broadly as he extended his hand: "Congratulations on reaching an agreement! Mr. Kirkkorian, Citibank will provide the highest level of guarantee for this transaction."

We will assign our most professional teams to handle fund supervision, legal compliance, and equity transfer to ensure everything goes smoothly.

Kirk Kocorian shook hands with John Reed and said with a smile, "Mr. Reed, thank you for making this connection. I'll treat you to dinner another day, New York or Las Vegas, you choose."

John Reed laughed heartily and said, "Mr. Kirkkorian, you're too kind. Citibank and you have always enjoyed a pleasant working relationship, and we hope to have more opportunities to cooperate in the future."

The three sat down again, and the atmosphere was more relaxed and harmonious than before.

Kirk Kerkorian leaned back in his chair and let out a long sigh, as if a heavy burden had been lifted from his shoulders.

Clearly, after John Reed informed him a few days ago that Lin Haoran wanted to acquire MGM, he had considered various possibilities in the past few days, including selling the MGM Grand Hotel as well.

Perhaps this is why the two sides were able to reach a deal so quickly.

“Mr. Lin, to be honest, MGM has been in my hands for nearly 14 years. I’ve watched it grow from small to large, from weak to strong.” His tone was tinged with emotion. “From a pure film studio to investing in resort hotels, I’ve walked this path for 14 years.”

"Although there were some twists and turns along the way, and the fire in 1980 almost destroyed everything, overall, I have done right by this company and every employee who has worked here. Now, handing it over to you, I feel both reluctant and relieved."

Lin Haoran didn't reply, but just listened quietly.

Kirk Kocorian's gaze drifted into the distance as he continued, "When I acquired the film studio, I was full of confidence and ambition. I wanted to combine Hollywood's largest film company with Las Vegas's largest hotel to create a unique entertainment empire."

Unfortunately, I have absolutely no interest in movies, so the film business was truly neglected while I was in charge.

He turned to look at Lin Haoran, his gaze earnest and sincere: "But you are different. I have seen your information. You have a film company in Hong Kong, I think it is called Media Asia Films."

Although Media Asia Films can't compare to Hollywood in scale, it shows you're interested in this industry, have experience, and possess capital, connections, and vision. I believe MGM will develop better under your leadership than it did under my.

Lin Haoran nodded and said solemnly, "Mr. Kecorian, rest assured, I will run MGM well and will not let you down."

Kirk Kocorian waved his hand and laughed, "Whether you're disappointed or not, I can't care that much anymore. Anyway, I've already got the money. If you run it well, that's your skill; if you don't, that's your problem."

His expression turned serious, and he said earnestly, "However, Mr. Lin, there's something I still need to remind you: Hollywood is a very complex place, and money alone can't guarantee success."

Those big film studios may seem glamorous on the surface, but in reality, they are all engaged in fierce competition behind the scenes. I have been involved in the acquisition of MGM Studios for more than ten years, so I have a deep understanding of this!

"It's not easy for a Chinese-American businessman like you to establish yourself in Hollywood. You need to be more careful."

Lin Haoran nodded solemnly: "Thank you for the reminder, Mr. Kerkorian. I will pay attention." (End of Chapter)