The late pop superstar Michael Jackson, celebrity photographer Annie Leibovitz, and U-T San Diego publisher Douglas Manchester don't appear to have that much in common.
Now, however, they share a famous source of cash — Los Angeles distressed-lending king Thomas Barrack, billionaire proprietor of Colony Capital, who got a law degree in 1972 from the University of San Diego.
On October 24, Manchester's paper announced that his long-proposed convention hotel in Austin, Texas, believed by many to have been stalled by issues of financing, is finally going to break ground.
"The combined equity contribution of the developer and the financing from Colony Capital will allow construction to get under way Nov. 3," said the story. "Colony is a private international investment firm that has made investments in some 4,300 hotels in more than 100 countries."
The piece continued with a quote from Barrack:
"'Having had the privilege of working with both "Papa" Doug Manchester and the Manchester Group for over a decade, we see this as a continuation of a great and valued relationship,’ Thomas J. Barrack Jr., CEO and founder of Colony Capital, said in a prepared statement. 'We are looking forward to yet again working with "Papa" Doug, his son Doug and Fairmont [Hotels] in the dynamic, growing city of Austin.'”
In what other ventures Barrack has worked with Manchester was not disclosed, nor were details of the Texas hotel's financing, but the Colony chief has long made a name for himself by bailing out so-called distressed celebrities. In November 2008, he took over the financially troubled Jackson's Neverland Ranch.
"Barrack built his fortune making deals, and in some ways, Neverland began as just another one—a contrarian bet on a troubled asset, an operating business backed by real estate," wrote New York Magazine in October 2010 .
"Only in this case, the operating business was a person. Colony would bail Jackson out of his substantial debt; in return, the firm would assume ownership of Neverland, and Jackson, after a thirteen-year hiatus, would go back to work to generate new revenue."
According to the piece, "The inaugural Colony transactions mined the S&L crisis by buying packages of bad loans from the FDIC at bargain prices….
"As a rule, Barrack is drawn to distressed situations. One of the adages in a list of 'rules for success' that he sometimes distributes to employees is 'befriend the bewildered.' And when you start applying the thought process of a vulture investor to pop culture, suddenly the world can seem dizzy with opportunity."
In the case of celebrity photographer Leibovitz, Barrack came up with a $40 million bailout. "Leibovitz got the rights to her photographs back; in typical Colony fashion, her real estate would serve as the collateral on the new loan," the story says.
"Whereas her previous lender was set to make money foreclosing on a loan gone bad, Barrack saw profit potential in facilitating a longer-term turnaround."
According to his online biography, "Mr. Barrack also served in the Reagan administration as Deputy Undersecretary of the Department of the Interior."
What all this means for Manchester, a San Diego political celebrity of sorts, remains to be seen. The Republican kingpin is reportedly wrestling with the notion, initiated by local financier and real estate mogul Malin Burnham, of donating the U-T to a non-profit foundation, which would run the paper, trying to wring whatever profits can be had from the diminishing operation.
But giving up the paper would evaporate much of the real estate and hotel mogul's political clout when he is still battling the state California Coastal Commission over plans to develop a massive office and commercial complex on Navy-owned land at the foot of Broadway.
Whether or not the U-T is currently running in the black is unknown, but a distressed asset moneyman such as Barrack could ultimately turn out to be a key Manchester friend in need.