The Washington PostDemocracy Dies in Darkness

Sam Zell, real estate tycoon who led Tribune Co. to bankruptcy, dies at 81

Mr. Zell made billions of dollars investing in distressed properties, but his takeover of the storied newspaper chain turned disastrous

Sam Zell speaks during the Milken Institute Global Conference in Beverly Hills, Calif., in 2017. (Lucy Nicholson/Reuters)
6 min

Sam Zell, the proudly foul-mouthed real estate tycoon whose daring buyout of the Tribune Co., the publisher of the Los Angeles Times and Chicago Tribune, was riddled by mismanagement, allegations of sexual harassment and financial calamity that ultimately sent the company into bankruptcy, died May 18 at 81.

Equity Group Investments, his Chicago-based company, said he died following complications from a brief illness. No other details were provided.

Known as the Grave Dancer, a nickname he bestowed on himself, Mr. Zell made his fortune — estimated at $5.2 billion by Forbes magazine — buying financially distressed apartment buildings, office towers and other properties, then raising rents after fixing them up.

“Some might see buying and creating value from others’ mistakes as a form of exploitation, but I see it as giving neglected or devalued assets, in any industry, new life,” he wrote in his autobiography “Am I Being Too Subtle?” “I’m not claiming to be altruistic — just optimistic, and confident that I can turn those assets around.”

Mr. Zell wore jeans to work, zoomed around on motorcycles and fired off f-bombs like mortars. His colossal, blunt personality made him an entertaining guest on CNBC, but his swagger set off the BS-detectors of the Tribune Co.’s uneasy and skeptical journalists almost immediately after his $8.2 billion leveraged buyout of the publisher was completed in 2007.

Despite his experience with newspapers being limited to reading them, Mr. Zell told his new employees he wanted to reinvigorate the corporate culture to be more daring and nimble.

“The challenge is, how do we get somebody 126 years old to get it up?” he told Times employees at a staff meeting. “I’m your Viagra, OK?”

At another get-to-know-him meeting at the Orlando Sentinel, another Tribune Co. outlet, Mr. Zell disagreed with a photographer’s question and finished his response with, “F--- you.” At the Tribune Co.’s Washington bureau, he told reporters: “This is the first unit of the Tribune that I’ve talked to that doesn’t generate any revenue. So all of you are overhead.”

Mr. Zell’s newly installed executives proved equally problematic.

The New York Times reported that Randy Michaels, a former disc jockey hired to oversee the company’s publications, had offered a waitress $100 to show her breasts during an informal gathering with other Tribune employees at a hotel. Michaels denied the allegation. Employees also told the New York Times that executives used crude innuendo and discussed the “sexual suitability of various employees.”

The company, already teetering like other newspapers because of the internet’s disruption of the news business, was saddled with another problem: a staggering amount of debt. As part of the deal, Mr. Zell only put up $315 million of his own money, covering the rest of the buyout in a complicated debt scheme that collapsed during the Great Recession of 2008.

On Dec. 8, 2008, about a year after Mr. Zell’s buyout deal closed, the Tribune Co. filed for bankruptcy. The company emerged from bankruptcy in 2012 controlled by several investment companies and was later broken up.

Samuel Zielonka was born Chicago on Sept. 28, 1941, four months after his parents, who were Jewish, immigrated from Poland during the Nazi invasion and shortened their last name to Zell. His father worked in the jewelry business.

Growing up in Highland Park, a prosperous suburb north of Chicago, Mr. Zell displayed an early entrepreneurial streak. He bought old Playboy magazines for 50 cents and sold them $3. The caption he wrote for his senior yearbook photo hinted at his future persona: “I am not arguing with you. I am telling you.”

He majored in political science at the University of Michigan, graduating in 1963. In Ann Arbor, he managed a 15-unit apartment building in exchange for free room and board.

Mr. Zell stayed in town for law school, though his classes were an afterthought to his nascent real estate business. In 1965, he bought a three-unit apartment for $19,500, putting down $1,500 that he made from managing other apartments.

“I repainted the interior, replaced all the furniture, and doubled the rents,” he wrote in “Am I Being Too Subtle?” “A couple of months later, I bought another building nearly next door, and then I bought the house in between.”

By the time he graduated from law school, Mr. Zell, now working with his fraternity brother Bob Lurie, managed 4,000 apartments and owned upward of 200.

In 1968, he founded Equity Group Investments, the private investment company that managed his many entities. Mr. Zell also invested in radio stations, cruise ships, mattresses and Schwinn bicycles.

He explained his investment strategy in a 2004 interview with the Columbia University business school’s newsletter, “The Bottom Line.”

“I’ve always thought simply,” he said. “I look at situations and act when I think the problems are temporary. I believed if you could buy assets with sufficient ability to carry them, then over time you could not lose.”

In the 1970s, he said, apartment buildings cost $20,000 to build but only $10,000 to buy.

“My thesis was that if it was a good location and reasonably built, then I was competing in the market at $10,000 and new people would have to compete at $20,000 or $25,000,” he said. “I didn’t believe there was any way you could lose assuming you had the ability to carry it.”

Mr. Zell was divorced twice. Survivors include his third wife, the former Helen Herzog Fadim; three children; two sisters; and nine grandchildren.

In his autobiography, Mr. Zell admitted to not being a saint.

“I have an embedded sense of urgency,” he wrote. “What I can’t figure out is why so many other people don’t have it. But from an early age I realized that I had a fundamentally different perspective from my peers. And I was willing to trade conformity for authenticity — even when that meant being an outlier, which it usually did, and even if it meant being on my own.”