In his investment business Stephen Schwarzman spends most of his time dealing with what he calls "messes." Saving collapsing companies has made him one of the most successful financiers of his generation.
One reason he agreed to become the chairman of the board of the Kennedy Center, an appointment officially announced yesterday, was that the performing arts center isn't in shambles.
"I was attracted because it is not broken, so it doesn't have to be fixed. Things can always be developed and improved, but occasionally they have to be fixed. At this stage of my life, that task didn't appeal to me," said Schwarzman, 57, who quickly added, "It was a unique opportunity to be in a leadership role with a national institution with also international recognition."
Schwarzman, the president of the Blackstone Group, an international investment firm based in New York, instantly becomes a key player in Washington, taking over one of the city's most visible institutions -- the busiest performing arts center in the country, a living presidential memorial that attracts 3 million visitors and ticket-buyers a year. More than any other building except the White House, the center serves as a hub for social, as well as cultural, events in the nation's capital. Its day-to-day operations are managed by Michael Kaiser, a former business consultant and arts manager who signed onto the center three years ago, also because of its stability.
Schwarzman sat down in Kaiser's office yesterday afternoon and talked about his vision for the center and how he plans to work it into an already crammed life.
It doesn't hurt that he has a Sikorsky-76 helicopter that can ferry him from Manhattan's Upper East Side to Washington at up to 178 mph. "I'm lucky enough to have transportation that can leave after the shuttle," he said, smiling slightly. He has also proposed setting up videoconferencing between his office and Kaiser's.
A slim man with dark silver hair, he wore a dark pinstriped suit, striped shirt with white collar and red printed tie. He folded his hands on the desk as he talked about business, money, the arts, money, politics, money and his friends.
His Washington connections run deep and start at the top. He went to Yale at the same time as President Bush, and both were members of the secret Skull & Bones society. Schwarzman and Bush also lived in the same dorm, Davenport College. "I would see George at breakfast, lunch and dinner. George was no stranger," Schwarzman said. The Bush friendship continues; he is one of a cadre of major Bush campaign contributors known as Pioneers, meaning he raised at least $100,000 for the president. He also knows Democratic presidential contender John Kerry, another Yale graduate, who was three years ahead of him. They met in 1971 when Schwarzman invited Kerry, then a spokesman for the Vietnam Veterans Against the War, to speak at the Harvard Business School. "John came up and spent three hours with us, and it was really interesting."
From Harvard he went to Wall Street, joining Lehman Brothers and making partner at the investment firm at age 31.
"In 1984 after we sold Lehman Brothers to American Express, I thought of working in Washington full time and interviewed at the White House. I thought I was making good progress until Jim Baker," the White House chief of staff, "switched jobs with Don Regan," the treasury secretary. "That ended my job quest. Fortunately for me I didn't get that [White House] job, and started Blackstone," he said.
His success and connections have often put him on the shortlist for Cabinet posts. Right now some pundits think Schwarzman might make a good treasury secretary in a second Bush presidency. "I know nothing about that," he said. "I'm very happy with my life as it is."
Can a New Yorker run one of the cornerstones of Washington life? Tom Wheeler, co-chairman of the Kennedy Center search committee, says that was settled long ago. Jim Wolfensohn, the center's chairman from 1990 to 1996, "answered that question. He demonstrated that you can be a New Yorker, become immersed not only in the center but also in the Washington cultural scene," Wheeler said.
Kenneth M. Duberstein, a board member who served as interim co-chairman after Wolfensohn successor James A. Johnson left in January, said, "Steve is a terrific addition. He is a leader, he cares about the arts. He's from New York but loves Washington. He'll be a terrific ambassador."
Blackstone, which Schwarzman founded with former commerce secretary Peter G. Peterson, is a private investment firm that owns 31 companies with combined annual revenues in the tens of billions. Its real estate holdings include the Watergate Hotel; its clients include Enron (it's helping sell the fallen energy behemoth's assets).
"We are in the business of creating crisis. We do transactions and make decisions that involve large amounts of money, people and other resources in short time frames," Schwarzman said. Blackstone manages the world's biggest corporate buyout fund, with assets of $60 billion.
Looming ahead for the center is the plan to extend its plaza east, across the adjacent expressway, to connect it to Washington's monumental core, and to construct two buildings on the new space. In partnership with the Department of Transportation, the project will cost an estimated $650 million and the center needs to raise $250 million. The center has an annual operating budget of $135 million.
"The plaza project would be absolutely terrific. The center is space-constrained. . . . It would be very important for that to get done, if at all possible," he said. Getting the public money is critical but he is confident about the private funds. "The private sector tends to respond positively to wonderful projects. This project is too big for the private sector alone."
Schwarzman, whose name was suggested by a headhunting firm, was ready when the first Kennedy Center representative called to gauge his interest.
Wheeler, who led the search with attorney Catherine Stevens, said, "It was one of the more interesting calls I have ever had. For an hour he interviewed me. He said, 'I have thought about this. I have the annual report and here are my questions.' It was a tour de force."
Wheeler and Stevens were looking for someone who had the ability to work collegially not only with the center's 60-plus board members, but also with Kaiser. Kaiser said he got a sense of Schwarzman's leadership style from a friend who was on the board of the American Ballet Theatre when Kaiser was executive director and bailing out the group. The friend, Hamilton "Tony" James, is a Blackstone vice president. Schwarzman, meanwhile, was asking James about Kaiser.
"In terms of my due diligence it was made much easier by walking 15 feet," Schwarzman said.
"Steve arrived pre-sold on Michael Kaiser," Wheeler said.
Schwarzman is a native of Philadelphia whose father and grandfather were businessmen who ran a drapery and linen store. He has been on the board of the New York City Ballet for close to 10 years, as well as the boards of the New York Public Library and New York Film Society. He will not be second-guessing the dance offerings, though that is the art form he enjoys most. "Dance has been more of a thread," he said. "My wife is more partial to theater; she loves theater."
Schwarzman is married to Christine Hearst Schwarzman, an intellectual-property attorney, and has three children.
Kaiser said yesterday he was pleased with the selection.
"We are a national cultural organization, so having someone based in New York is a sign of our national status. He has access to people who have not been involved with the Kennedy Center," Kaiser said.
Besides the arts, and the art of business, the two men now have another bond. Kaiser learned yesterday that Schwarzman shares another one of his passions: He's a true-blue New York Yankees fan.