Old Hollywood didn’t pay stars well by modern standards but Kirk had the wisdom to own his most iconic films and pour the profit into property. Soon philanthropy will force tough choices.
The death of any giant produces shockwaves. Where Kirk Douglas is concerned, those ripples reveal how much the entertainment landscape changed in his lifetime and how much the numbers have grown.
After all, when he greenlit Spartacus for a 1960 release, the movie famously cost more than its distributor was worth. That record-breaking budget: $12 million.
We’re a long way from that world. Top TV stars earn that much per weekly episode.
But that’s the world Douglas grew up in. In the 1940s, the studios paid top talent a princely $500,000 a year. Stretch that across four decades of fame and you’re still only looking at $20 million in career earning power.
Douglas worked a lot in that four-decade period but slowed down a lot after the early 1980s. That’s nearly 40 years ago, so we would ordinarily expect a modest legacy by modern standards as a long life whittled down the assets.
It turns out the truth played out far differently. Kirk Douglas didn’t die “genteel” or “comfortable” at all. This isn’t one of those Old Hollywood stories where the glamour just doesn’t translate into what we consider wealth.
Kirk Douglas died extremely rich after all, despite a long life and decades of what amounts to semi-retirement.
And now that he’s gone, unwinding his wealth may ultimately reshape the Los Angeles skyline.
Big Ambition, Steady Sailing
As we’ve seen time and time again, simply cashing a studio check was never the route to the kind of wealth that stretches to impress future generations.
But Kirk Douglas wanted to participate in the profit as well, so he was one of the first stars to form his own production company. It wasn’t a vanity project. It made money.
According to my math, Spartacus was big enough to gross $30 million on its $12 million budget. And as his widow of 66 years Anne pointed out a few years ago, The Vikings also made money.
Douglas launched the company by refusing to pay himself for that film. He took 60% of the profit instead and ended up about $3 million ahead.
The company owned the films and sold off distribution rights. It still exists today. Anne is now the only shareholder of record.
But she rolled the money into a family trust that over the decades spawned layer after layer of holding companies and joint ventures.
One of those joint ventures ended up owning half the land under Marina Del Rey’s high-rise Shores apartment complex, a property that cost a reported $165 million to build.
The acreage is close to priceless. Partner Jerry Epstein was a local legend until his death last year.
Now that only Anne is left behind, the successor trustees will one day need to decide what to do with the land. Maybe it generates enough income to satisfy the estate plan.
If not, a buyer needs to be found, raising the question of redevelopment. In that scenario, these acres will once again be in play.
Philanthropy And Financial Genius
Anne called the shots on the accounting side. Kirk claimed he didn’t even know where the money was.
When he found out, he got eager to give it all away. Tens of millions have already been committed to hospitals, schools and theaters.
But as yet, the family charitable foundation is still largely a pass-through entity with under $300,000 in assets on its last public tax return.
When Anne passes on, the foundation may receive the trust’s assets. Estate tax isn’t an issue.
And whatever wealth goes to the family will also transfer via the trust. Again, they’ll get a share of the income without triggering estate tax concerns.
In the meantime, she maintains control as trustee. The production company, trust and foundation are all run out of the same office.
It’s hard to point at any inherent flaws in the structure. Maybe it would have been nice to set up the trust in a more sympathetic state, but the financial landscape was very different in the late 1950s.
A lot of innovation has happened since then. I can’t fault Anne one bit for opting to lock down the best conditions she could get six decades ago and then build on that base.
It’s a tribute to the power of long-term thinking. Douglas money has remained intact for generations and will undoubtedly keep changing the world for decades to come.
Ultimately the copyrights will need to be assigned. Someone needs to own these movies, and if it’s the trust, intellectual property laws may keep them out of the public domain a long time.
Presumably they make money. The distributors get a big slice of the streaming and DVD revenue, but Spartacus and other films are suddenly in demand again. Nostalgia has become a cash machine for more than one star estate.
And thanks to those movies, various financial statements reveal that the Douglases have amassed tens of millions of dollars in cash and stock in their lives.
That’s in addition to the real estate. Naturally a lot of that stock has passed through the foundation to fund charitable bequests.
We’ll see where the rest goes. For now, however, the long view wins.
Just think of how differently the story would have gone if Kirk and Anne had gotten a divorce during his peak earning years. No trust, no fortune, no high-rise crown jewel.
Close to seven decades of marital bliss adds up to a lot of marital property. A good life and good things to come.
