Bryan Burrough (57 page)

John’s lawyers repeatedly warned that in a nightmare scenario, Clint could drag them both under; all Clint’s deals involved both brothers’ money. John was away from the office so much that his brother had long ago given up seeking his approval for new investments, often the deals that were now facing trouble. John warned Clint to stop it. Clint promised he would, then didn’t, then like a child caught in a lie would promise that his next deal would make them whole. As a Murchison Brothers executive recalled, “Clint would say, ‘John, just give me a little more time. We’re going to have a Hail Mary pass. If this next deal works, it will clean up all the bad deals of the whole year.’ ”
⁴

By 1977 Clint’s assurances were ringing increasingly hollow. Too many Murchison Brothers investments were going south. Wall Street was stuck in the fourth year of a dreadful bear market, and the handful of public companies John and Clint controlled had been eviscerated. They had taken one of Tecon’s subsidiaries, Centex Construction, public in 1969, and the stock had soared. Amid the wreckage on Wall Street its value had plummeted from $146 million to $22 million. The stress, as it had during Alleghany, wore on John; he took up smoking again. At night in the Big House, Lupe watched him stare out the window, lost in thought. Nothing he could say or do would change his brother, John knew that. It was too late anyway. The damage had been done. His chief counsel begged John to give him a single reason he wouldn’t dissolve the partnership with Clint. “Well,” John said, “he
is
my brother.”

More than once John warned Clint he would break up Murchison Brothers. Clint begged him not to. But their investment styles had diverged so thoroughly, they were no longer able to agree on much of anything. The final straw appears to have been John’s refusal to plow another cent into Clint’s computer company, Optimum Systems. Not long after Clint refused to abandon it, John demanded out. The lawyers began drafting what they called a dissolution agreement. Completed in mid-1978, it called for Clint to take sole control of their riskiest investments, removing their debt from John’s balance sheet. It began the extraordinarily complex unraveling of Murchison Brothers, hundreds of investments that each had to go to either John or Clint. The lawyers guessed the process might take three years. In the final agreement both brothers promised to have the partnership dissolved by October 1981.

Afterward they shook hands and promised nothing would change between them. Yet John was wracked with guilt. Big Clint had formed Murchison Brothers for his sons all the way back in 1942, and John and Clint Jr. had operated it as equal partners their entire business lives. John felt he had destroyed his father’s greatest creation, his legacy, and he worried that Clint, left to his own devices, would implode. Clint looked forward to the freedom of making his own decisions, but one look at his financial statements told him they wouldn’t be much fun. His capital pool had been halved. Of the assets he would take—Optimum Systems, Tony Roma, Tecon—much of it was spiderwebbed with entangling bank liens. He could still wheel and deal, but the game was no longer about fun. It was about survival.

The breakup of Murchison Brothers should have eased the family crisis. Instead it provoked another. It arose from, of all places, the third generation, John’s and Clint’s children, who had grown tired of waiting for their inheritances. Their money was held in trusts. Beginning in 1949, Big Clint had created three funds for seven of his eight grandchildren. John and Clint, as the executors, had stuffed the trusts with stock, 80 percent of it in their Centex construction company, worth $150 million before the stock’s collapse and still valued in the tens of millions. The trusts were to begin throwing off cash to each of the grandchildren as they turned twenty-five. But Clint’s oldest son, Clint III, hadn’t gotten anything when he turned twenty-five in 1971, and neither had John’s oldest, John Dabney Jr. Six of the seven grandchildren were now twenty-five or older, and not one had seen a cent from their trusts.

The problem, it turned out, was that Murchison Brothers had been using the trusts as a piggy bank. Any time John or Clint needed a loan, he dipped into the trusts for Centex stock to use as collateral—an ethically questionable practice, and perhaps illegal. When the firm’s attorneys had realized what was happening—a review was performed when Clint III reached twenty-five—they sought to cover the Murchison brothers by drafting a legal paper all the grandchildren were obliged to sign. Broadly speaking, the document said what John and Clint had done was okay with them. With the matter cleared up, at least in their own minds, John and Clint kept using stock in the trusts as collateral for loans all through the 1970s.

If John and Lupe had been more attentive parents, the question of the trusts might have worked itself out. But they weren’t. For twenty years they had spent far more time traveling the world than raising their four children. The children resented it—deeply. “John had a very Victorian view of his children,” a friend recalled. “He thought of them as the absolute and complete responsibility of governesses and he did not want his life disturbed in any way by them.”
⁵
No one resented John more than his eldest son, John Jr., a tightly strung young man. Like his siblings, John wasn’t even sure his father loved him; he never said so. “When my parents were home, which was seldom, they never wanted to be alone with us,” he recalled. “They always had to have a lot of friends and famous people around, people who would entertain them constantly.”

John Jr.’s simmering anger grew when, after graduating from the University of Colorado, he returned to work at Murchison Brothers in 1975. If he thought this would draw him closer to his father, he was mistaken. “Basically John put his son in a room and said, ‘Here, look over these files and see what businesses we’re involved in,’ ” recalled a Murchison Brothers executive. “That was about all the business instruction John Junior got.” While his father lived at the Big House and toured the world, John Jr. was forced to make do on a salary of only eighteen thousand dollars. He talked it over with his cousin, Clint III, and in 1977 the two simultaneously sat their fathers down, politely pointed out that they were misusing the trusts, and asked for their inheritances. When John Jr. finished his presentation, John simply rose from his chair and walked out of the room. He abhorred family conflict, and couldn’t understand why his children couldn’t do as he and Clint had done, and follow their parents’ wishes. Clint had a more visceral reaction; he thought the boys were ingrates and said so, loudly. For the moment, John Jr. and Clint III were powerless to change things.

All this—the faltering businesses, the mushrooming debt, the breakup of Murchison Brothers, the challenge from the children—was still unresolved on the evening of June 14, 1979, when John, who had returned to Dallas just that day from a week with Lupe at the Paris Air Show, suffered an asthma attack while delivering a speech during a Boy Scouts fund-raiser at the home of Texas governor William Clements. Coughing and choking, he stepped away from the podium. As he began gasping for air, the governor guided him into a state patrolman’s car and asked the officer to take him to the emergency room. When the attack worsened en route, John climbed into the backseat to lie down—just as the officer ran a red light and was struck broadside by an onrushing car. John suffered a heart attack and lost consciousness. An ambulance rushed him to a nearby hospital. An hour later he was dead.

He was fifty-seven. In his last months John had been studying to convert to Catholicism, and after being baptized on his deathbed, he was buried in a Catholic ceremony beside his father in Athens. Every single obituary referred to him as the brother of the man who owned the Dallas Cowboys; not one mentioned what few in Dallas knew, that John owned exactly as much of the team as Clint. No one wrote, because no one really understood, that John had been the cement holding together the family empire, and that without him the Murchisons were doomed.

If the Murchisons were Exhibit A in any discussion of how
not
to diversify, a Texas businessman didn’t have to look far to find a shining example of diversification done correctly. It loomed just to the west, in Fort Worth, where Sid Richardson’s nephew Perry Bass and his sons had begun transforming their smallish fortune into something special. The 1960s had been grim for the Basses. Perry, who lived quietly with his wife, Nancy Lee, in the suburb of Westover Hills, had left the reading of his uncle’s will with a 25 percent share of all the oil fields they had found since 1939, including the massive Cox Bay and Pointe a la Hache fields south of New Orleans. An internal financial statement Perry generated in 1968 put his net worth at twenty-five million dollars, less than 5 percent that of the Murchison brothers. Perry’s four sons had shares of the fields as well, valued in total around twenty-five million dollars, making the Basses worth maybe fifty million dollars—barely half “a unit,” as wealthy Texans termed a hundred million dollars. They were certainly wealthy, but by Texas standards they were no longer Big Rich.

By the 1960s, while Perry Bass had lost interest in oil, he had found something of himself. Coming of age in Sid Richardson’s shadow, he had grown up a quiet, serious, inarticulate man, but after Richardson’s death he began to relax and open up. His sons, returning from Andover and Yale, found him a new man, one who was now pleasant, comfortable with small talk, and had even begun giving speeches to local charity groups. “I had no idea how important it was to be glib,” Perry remarked over dinner one night on St. Joe’s, which had become the Bass family’s private retreat. Perry and Nancy Lee enjoyed riding out every major storm in the seaside home Perry had built so many years before, including Hurricane Carla in 1961; the only serious damage Uncle Sid’s house ever sustained, he was proud to say, was the time high winds blew a seagull through one of the windows.

Perry discovered no significant oil reserves during the 1960s, but according to family associates, he laid the groundwork for what came later with a single deal. All of Sid Richardson’s oil reserves—the Keystone Field, sundry West Texas wells, plus the big Louisiana fields—now rested in the control of the Sid Richardson Foundation, which doled out an occasional scholarship but little else. Perry, who had never been pleased with his inheritance, badly wanted his Uncle Sid’s oil fields back. In the mid-1960s the family’s bank, Chase Manhattan, proposed loaning him the money he needed to buy them, in the range of fifty million dollars; the reserves themselves would be the collateral. Perry sat on the foundation’s board—in fact, he was its dominant figure—and any transaction between the family and the foundation, especially one so large, risked being viewed as blatant self-dealing. Perry put the proposal to his fellow board members, found them amenable, then sought a fairness opinion from the Texas attorney general. Once the attorney general approved the deal, Perry, backed by Chase’s cash, purchased all of Sid Richardson’s oil fields. And not a minute too soon. Several years later, in 1970, Congress passed a law outlawing just this kind of insider dealing.

Paying off the Chase debt, however, took every last cent of the Bass family’s cash flow during the late 1960s. By April 1969, when Perry’s eldest son, twenty-seven-year-old Sid, arrived back in Fort Worth after graduating from Stanford Business School, the debt had finally been paid off. It was then that Perry called Sid into his corner office on the twelfth floor of the new Fort Worth National Bank Building. Everything they had, Perry told his son, was now his to manage. The oil company, renamed Bass Brothers Enterprises, was worth $120 million. With the Chase debt repaid, it was throwing off $1 million in pretax cash flow. “Do what you want,” Perry told Sid. “I’m going sailing.” And he did exactly that, serving as navigator the next several years on his friend Ted Turner’s attempts to win the America’s Cup. Never again would Perry Bass have a significant say in the family’s finances.

On paper, Sid Richardson Bass was hardly the rough-and-tumble oilman his great-uncle Sid Richardson might have selected to guide the family fortune. Slender, blond, and intellectual, what Sid Bass liked to do with oil was paint; a number of his canvasses hung beside the Monets in his parents’ home. (“That one?” Perry liked to josh. “Oh, that’s a Sid Bass.”) But Sid’s second passion was the stock market; he had begun trading stocks as a boy, and he was certain that the kind of modern securities investing he studied at Stanford held the key to the family’s future. His conviction deepened when he finished his first task, a top-to-bottom review of the Bass oil business. It was a godforsaken time to be a Texas oilman. Low-priced Middle Eastern crude was killing them. Bass Brothers, which had five hundred employees in West Texas and Louisiana, was barely breaking even.

If he was going to invest, Sid knew he needed talented people around him; he envisioned a group of five advisers swapping ideas around a conference table. One of his first hires was an energetic Stanford classmate, a twenty-five-year-old Fort Worth kid named Richard Rainwater. Rainwater had grown up middle-class in the city’s Lebanese community; his father had Indian blood, hence the name. Rainwater was hawking stocks for Goldman Sachs in Dallas when Bass hired him. It was the single smartest decision Sid Bass ever made. Rainwater, he soon realized, was the ultimate stock-market nerd, an investing dynamo brimming with ideas. “I wanted to hire five guys,” Sid joked to friends. “But after bringing in Richard, it was pretty clear I wouldn’t need the other four.”

They became a mismatched team, working in adjoining offices and sharing a secretary. Sid, trim and erudite, wore Saville Row suits; Rainwater, tall, swarthy, and painfully blunt, favored weatherbeaten work shirts and collected baseball caps with funny sayings. Sid was uncomfortably aware of both their responsibility and their inexperience. They didn’t know how to do a business deal. They didn’t know how to negotiate. They chose another Stanford classmate, John Scully, to handle their stock trading, shoveling him roughly twenty million dollars in those first few years; their largest investment, several million dollars, was in the Church’s Fried Chicken chain.