Arison, Ted

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Arison, Ted

(1924-)
Carnival Cruise Lines Inc.

Overview

In 1973 Ted Arison retired from his commercial shipping operation in New York City and moved to Miami, Florida. There he bought an old, outdated ship called the Mardi Gras for $1. Although the ship soon ran aground, Arison turned the debt-ridden vessel into the flagship of his Carnival Cruise Lines. By 1988, Carnival had become the biggest cruise operation in the world and Arison himself had become one of the world's richest men, with net assets of more than $1.5 billion.

Personal Life

Ted Arison was born in Tel Aviv in 1924, the son of Meir, a multi-millionaire magnate who operated the largest shipping company in Palestine, and Vera Arisohn. "He and his family were on vacation in Yugoslavia in 1939 when World War II broke out," writes Estelle Lander in New York Newsday. "Arison's father secured live seats on a flight out of Rome, stuffed his relatives into a cab for a 600-mile ride, and escaped." Arison married Mina Wasserman in April, 1948. The marriage, however, ended in divorce and Arison married again in 1968, this time to Marilyn B. Hersh Lin. He has two children, Mickey and Sharon, from his first marriage, and a son, Michael, from his second.

Arison began his career working as a manager for the firm M. Dizengoff & Company in Tel Aviv from 1946 to 1951. He had served in the British army during World War II and he interrupted his position with Dizengoff to serve with the Israeli Army during the 1948 war for independence. In 1952 he liquidated the family business, according to David Nickell in South Florida Business Journal, and relocated to the United States. He "formed a syndicate to organize a cargo line," explained Lander, but "went broke after buying too many ships during the Korean War; when the war ended, the ships' value dropped." By 1959 he had reversed his misfortunes, becoming owner, chairman and president of Tran-Air, an air freight transportation company in New York. In 1966, at the age of 42, he retired from Tran-Air, sold the company, and moved to Miami, Florida.

Career Details

Arison's career as a cruise line executive really began after his retirement. Only two weeks after selling Tran-Air, said Nickell, returned to the shipping business as owner and operator of the Arison Shipping Company. His connections in Miami brought him in touch with Meshulam Riklis, with whom Arison founded Carnival Cruise Lines in 1972. The often-repeated story of the company's beginnings is that Arison paid Riklis a total of $1 for a retired transatlantic ocean liner, which he renamed the Mardi Gras. Arison also assumed the new company's $5 million in debts.

Although there were some early failures—the most spectacular of which was the running aground of the Mardi Gras on its first trip with a passenger list made almost entirely of travel agents—business quickly picked up. Arison bought Riklis's share of the company in 1974, and by the early 1980s he was showing profits in the millions of dollars. In 1985 Carnival Cruise Lines was rated the top private company of the year by the South Florida Business Journal, and the following year, Arison sold shares of Carnival to the public, but retained about 80 percent of the company's stock.

In the early 1980s Arison began to diversify his holdings. He surrendered the presidency of Carnival Cruise Lines to his eldest son Mickey in 1980 and began to enter other lines of business. Arison created Carnival Leisure Company to run a casino and hotel facilities in the Bahamas, and Nosira Shipping Ltd., a freight-transport company operating out of the United Kingdom. He also acquired New York City-based Ensign Bank, a small thrift institution, and began cautiously looking for opportunities to merge it with other small banks. "In 1984 and 1987," wrote Susan Harrigan in New York Newsday, "he withdrew offers to buy Freedom Savings & Loan Association of Tampa, Fla., and the Miami-based American Savings & Loan Association when talks entered the detail stage." Attempts to merge the institution with Anchor Savings Bank in 1988 and Centrust Bank of Miami in 1990 were also abandoned. Finally, in September of 1990, the federal government had to seize control of the bank because of severe losses, costing Arison about $11 million. The bank, explained Newsday contributor Greg Steinmetz, "had $1.79 billion in assets before the failure and lost $34 million since the beginning of the year."

Ensign was not Arison's only problematic investment in the late 1980s and early 1990s. He owned about 50 percent of the Miami Heat, a National Basketball Association (NBA) team that suffered the league's worst season-opening losing streak in its first 18 games played. In Miami he also owned a 27-story luxury condominium property, Harrigan added, which went mostly unoccupied during the late 1980s because of a downturn in the local real estate market.

Arison retired from active daily service with Carnival in 1991, turning management of the company over to his son Mickey. Since that time, he has divided his time and money between supporting the arts and contributing to philanthropic foundations in Israel, especially providing housing for new immigrants, said Betsy Mullins in the South Florida Business Journal.

Social and Economic Impact

With projected yearly incomes in the hundreds of millions of dollars, Carnival has become a major force in the South Florida economy. "Company officials," stated the South Florida Business Journal in 1985, "estimate that its cruise business pumped $60 million into the local economy last year in the form of hotel stays, meals and local transportation utilized by Carnival passengers before and after their cruises." The company pays no U.S. taxes because its ships are registered in Panama. Arison's policy of keeping a fairly large part of the profits in the company, also helps keep Carnival almost debt-free.

Carnival experienced regular growth during the 1970s, but it was during the 1980s that the line saw large-scale success. Arison, said Lander, "developed the seven-day cruise package while working with what is today Carnival's major competitor—Norwegian Cruise Lines. After buying Carnival . . . he turned it around by promoting free cruises for airline personnel and cutting prices." "The company follows a policy of strict expense control and lean management," stated Harrigan, "but heavy service aimed at keeping passengers happy."

Chronology: Ted Arison

1924: Born in Tel Aviv.

1946: Began working as manager for M. Dizengoff & Company.

1948: Served in Israeli army.

1952: Emmigrated to United States.

1959: Became president of Tran-Air Company in New York City.

1966: Moved to Miami, Florida, and founded Arison Shipping Company.

1972: Founded Carnival Cruise Lines in partnership with Meshulam Riklis.

1983: Created Ensign Bank.

1988: Carnival becomes largest cruise line in the world.

1991: Retired from Carnival, turning the business over to his son Mickey.

Carnival is credited with pioneering the modern notion of a vacation cruise for average people. By the 1970s the passenger shipping industry was viewed by many as a dying business because flying had become a more convenient and popular mode of travel. What made Carnival Cruise Lines special was Arison's concept of marketing cruises—once reserved for the wealthy and retired—to young, single people. Arison lowered prices in order to attract these professionals. Cruises in 1989, said Susan Salter in Newsmakers, could start as low as $425 for three days on board, including airfare to and from the point of departure. The magnate also launched an aggressive advertising campaign that emphasized fun and excitement. Carnival ships regularly carry casinos, discos, movie theaters, and nightclubs in order to keep their clientele entertained. This was due, said Harrigan, "more to serendipity than to studies. In order to save money, the Mardi Gras had to cruise slowly, and Arison filled it with entertainment such as discos and casinos in order to distract the passengers." Such measures made the cruise itself an attraction rather than just transportation to a vacation spot, as had been true before Carnival entered the business.

Arison has made the "fun cruise" concept work in several different markets, providing destination cruises to resorts and casinos in the Bahamas and elsewhere. In partnership with developer Douglas Spohn he also created the Olde Towne Athletic Club, a business and social club that was aimed at middle and upper-class families. Olde Towne Athletic Clubs Inc. opened several branches in Georgia in the late 1980s.

Arison's desire to remain in the business swirl never ceased. Retirement never held him back from pursuing other interests. Failed ventures did little to dampen his business spirits. He is a prime example of how good business skills can be transferred, reshaped and updated to address a variety of business needs.