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Profile: Family Affair

From a casino-hotel and an NBA franchise, to a beer distributorship and a record label, the Maloofs have built a billion-dollar empire of fun and games

By Bruce Schoenfeld

A few hours ago, George Maloof was sitting with Sheryl Crow on one side of him, Kid Rock on the other, and an assortment of Miss Septembers and Miss Julys wandering by with nothing on their minds but fun. Now, chewing on his third hamburger of the day at a banquette in N9NE, the steak house inside his hotel and casino, Maloof looks the worse for wear. "You have to discipline yourself in this city," he says. "I've seen people go to the edge. It's a great city, but if you abuse it, it can abuse you."

Maloof is tired. The party for Playboy magazine's 50th anniversary that he hosted at the Palms lasted all weekend and spilled into the workweek. Once he had seen off all the guests, including Hef, George barely had time to change his clothes before attending a calendar girl search and a poolside photo shoot for Stuff magazine.

As a co-owner and virtual bachelor-in-residence of the hottest hotel in Las Vegas, entertaining celebrities and meeting gorgeous women in bikinis is all in Maloof's job description. "I'm going to take advantage of every opportunity I can, until there are no more opportunities," he says.

As he takes a bite of his burger, a shadow falls over the table. It's 6-foot-5 Jeremy Shockey, the New York Giants' colorful All-Pro tight end. Shockey has taken advantage of an off week to act like any other 23-year-old less than two years out of college who would love to meet Britney Spears. He's no stranger to the Palms, nor to George, who serves as his tour guide each time he comes in. Shockey greets George with a handshake and a slap on the back. "What are you doing later?" he asks, sounding as eager as a seaman on a weekend's furlough.

Though he'd like nothing more than a warm bath and a good night's sleep; though he still has the scent of a Playmate's perfume in his nose and all those aspiring swimsuit models on his mind, George doesn't hesitate. "Going out with you," he says.

At 39, Maloof has the responsibilities of a 50-year-old and the lifestyle of a college student. Except that at the Palms, every hour is happy hour for somebody, and every night could be Friday night. "I see it as loyalty to my family and my job," he says now. He pauses. "And, to some extent, to myself."

From a distance, the four sons of the late George Maloof Sr. are living a fantasy life. Along with their mother, Colleen, and their sister, Adrienne, who resides in Beverly Hills with her husband and infant son, they are equal partners in Maloof Enterprises, a billion-dollar empire of fun and games.

The Maloofs own the Palms, the National Basketball Association's Sacramento Kings, a huge liquor distributorship in their home state of New Mexico, and various other entities. Their newest venture is a record label that they're starting in conjunction with legendary producer and talent spotter Jimmy Iovine.

Name a teenage daydream, and at least one of the Maloofs is probably making it a reality. Phil, the youngest at 36, is a state senator-turned-actor who abandoned his political career to star in the new NBC series "Las Vegas." Joe, 48, and Gavin, 47, who happens to be dating the 2002 Miss Utah, have built the Kings into the sport's most exciting franchise. George has been romantically linked with Spears, and all but anointed as Hugh Hefner's successor by Hef himself.

Their fantasy lives haven't gone unnoticed. Last year, Joe Maloof found himself seated beside the actor Brad Pitt at an NBA game. Pitt turned to him without a preamble. "Let me get this straight," he said. "You and your brothers, you're single. Never been married. You own a pro basketball team, the hottest casino and a beer distributorship." Joe nodded.

"And then he just looked at me," Joe recalls, "and I said, ‘Yeah, you're right. Yeah, we do.' And I'm thinking to myself, ‘You know what? We have a pretty good life.

But it hasn't come without a price. The Maloofs have a work ethic inherited from their father -- who died of a heart attack in 1980 at age 56 -- that preaches utter accessibility. That was fine when work meant the general store in a small New Mexico town that Joe Maloof, a Lebanese immigrant, founded in the 1890s, but these days George Sr.'s four sons hand out their private phone numbers as if they were stereo-equipment flyers. "A day doesn't pass that I don't open a newspaper and see an interview Joe or Gavin has given that I knew absolutely nothing about," says Troy Hanson, the Kings' director of media relations.

George alone gets more than 100 calls on his cell phone each day and answers every one. Joe, who admits he "put his head down the day my father died" and hasn't had time to lift it in the decades since, is obsessive about his obligations to business partners, customers, even the media. "It drives me crazy to not return a phone call," he says. "I try to get to every one before the sun sets."

That drive to service has made the Maloofs rich. In the last years of his life, having already grown the general store into a statewide liquor distributorship based in Albuquerque, George Sr. bought all the branches of the First National Bank of New Mexico, a hotel in Anaheim, California, and, in 1979, the NBA's Houston Rockets. By then, Joe and Gavin were in their twenties and George Sr. was bringing them along in the business.

He'd been pulling them out of classes to accompany him on business trips since high school, telling them they'd learn more from the University of George Maloof than they would from any book. Along the way, he filled them with aphorisms. Your word is your bond, he'd say. Don't fall in love with things, fall in love with people. Take care of your employees, and they'll take care of you. And, most tellingly: the customer is always right.

All of that prepared them to take over when he died, yet in truth, none of it did. Joe and Gavin were kids, just finished with college football careers, looking for girls, caring little about the future. Over a weekend, their lives changed. "He died on a Friday night, and my brother and my mom and I were at the office on Monday morning," Joe says. "His office. We didn't even have time to grieve. Interest rates were high and we were leveraged. It was a tremendous responsibility."

Along with his wife and children, George Sr.'s two sisters also inherited part of the empire when he died. What did they know about making money? They wanted everyone to cash out, live at the beach. But his sons refused. "We had a lot of pride and wanted to carry on his legacy," Joe says. "And we were willing to work very hard to do it."

Two weeks after George's death, Joe, Gavin and Colleen were in Colorado, trying to convince Joseph Coors that their beer distributorship was in good hands. Their earnestness impressed him. "Go back and run your business and don't worry about it," he told them. Armed with that sanction, they convinced other suppliers, including Bacardi and Mondavi, of the same.

With alcohol as their core business and a large enough load to shoulder, the Maloofs had to decide which enterprises were expendable. Shortly after the Rockets  lost the 1981 NBA Finals to the Boston Celtics in a series that wasn't telecast nationally during prime time, the Maloofs sold the team. This was pre–Michael Jordan and pre–David Stern, and the family couldn't afford to be distracted by anything that wasn't making money. "We'd bought the team for nine million and we sold it for ten," Gavin says. "Who would have guessed that one day a basketball team would be our biggest asset?"

Yet even as they were cashing the checks, Joe and Gavin were wishing they hadn't sold. They were born competitors, like their father, and they'd come to realize that professional sports is the ultimate manifestation of competition in American business. The Rockets were barely gone when the brothers began plotting a way to get back in.

Attending the University of Nevada-Las Vegas in the late 1980s, the younger George Maloof was not a typical undergraduate. His life consisted of football practice, homework and haunting the city's casinos until daybreak. "I didn't know anyone in town," he says. "I was a lone wanderer, going from casino to casino." Three months after he graduated, he came to his family with a plan to build a Las Vegas casino that catered to locals. At the time, there were only three of them and they had far fewer amenities than the tourist properties. Nobody in town would admit to gambling, yet those three casinos were filled all night.

"He didn't come to us and say, 'Let's build a casino, Joe says now. "He had a good story and he did his homework. He had everything planned. We all sat down and listened and agreed to it. All but our crazy aunts."

The aunts worried about Mafia involvement. "Get your facts," Joe told them. The casino business is as regulated as any in the country, Aunt Helen. They go back to seventh grade to make sure you're not connected with any of that, Aunt Mary Jean. But the women wouldn't capitulate. "They were scared," Joe recalls. "But we knew how to treat customers." Confident of success, Colleen and her sons bought them out.

Looking back, it was a turning point. "I know what we paid them," Gavin says, "and I know what that share is worth today. We couldn't buy them out today for eight times what we paid." At the time, though, it just extended the family even further. It meant longer hours and harder work. The Maloofs bought land in north Las Vegas, then tried to convince lenders that their business plan made sense. For four years they made their pitches, and they even opened a small casino in Colorado to prove they could do it. But the banks didn't bite. Las Vegas was a tourist attraction, they said. Locals didn't gamble. And how did four boys and their platinum-haired mother have the know-how to run a Las Vegas casino?

Ultimately, the Maloofs agreed to guarantee a $30 million loan themselves. If the casino went bust, they'd be left with nothing except the echoing laughter of the two aunts. The day the Fiesta opened, in 1994, Colleen flew in from Albuquerque to see what George had wrought. She took one look and said, "You made it too small." George wrapped her in a hug, then went out to prove her right.

The Fiesta made its reputation with the loosest slots in town. It wasn't about winning; the local clientele were too savvy for that. But higher payouts meant the money you'd allotted for losses lasted you deeper into the night. In 2001, the Maloofs sold the Fiesta for $185 million. Then George decided to take what he'd learned and apply it to a property just off the Strip that would capture the glamour of Las Vegas; a property that would attract locals and visitors alike. In his head, he was already calling it the Palms.

By then, Joe and Gavin had returned to sports. From 1990 to 1992, they'd owned the Birmingham, Alabama, franchise in the World League of American Football. "It was a way for us to get back in," Gavin says. "It seemed like a good idea; the NFL was behind it, but it didn't work out. After that, we started getting serious."

It helped that NBA commissioner Stern, who had nursed the wheezing sport to life since the Maloofs had sold the Rockets, was doing everything he could to find them a team. "I had an enormous respect for George Sr. and for Colleen," he says now, "and a warm spot in my heart for the boys, who used to accompany George to my offices and showed a real enthusiasm for the game."

The Maloofs kicked the tires when the San Antonio Spurs came up for sale, but didn't buy. They almost closed on the National Hockey League's Tampa Bay Lightning, but saw no way to make money, even in a sold-out building. They negotiated for Sacramento's Kings throughout 1997, but remained millions of dollars apart from the seller. Then Phil, the youngest, called Joe, the oldest, taking advantage of that Maloof family dynamic in which all voices count the same.

Phil told him, "We've lost too many of these deals. Pay this guy more than he wants. Pay him $10 million more. Get the job done." Joe immediately called Gavin, then spent $247 million for the Kings and the arena they play in.

At first, it seemed obvious that the Maloofs would move the team to Las Vegas. Rich kids with no local connection, they were the ultimate absentee owners. But Joe and Gavin were Albuquerque boys at heart, and Sacramento was a perfect fit. In a glitzier city, their brand of retail marketing would have seemed quaint, even pathetic. In Sacramento, they became the best-known businessmen in town.

"They're very unpretentious people," says Darrell Steinberg, a lawyer and state legislator who has lived in the city since 1984. "You can call them on the phone or say hello at a game, and you don't feel like you're approaching some celebrity who is anxious for the conversation to end. That's very, very important here."

The league had been altered beyond recognition since 1981, but the Maloofs' customer-service skills served them well. With every complaint, Joe and Gavin made a new friend -- and a fan for life. "The Maloof family are experts at treating customers well," Stern says. "Whether it's a bank, a hotel, or serving retail stores in a beer distributorship, they understand what drives customers. Their game experience has been dissected and used as an example in our marketing meetings. It's at the very top."

The Maloofs showed a willingness to spend the money to build a winner and the savvy to make that clear to their customer base. When the contract of star forward Chris Webber expired, Gavin put up a billboard. "Dear Chris," it read. "If you stay, Joe will mow your lawn." It wasn't New York, or even Las Vegas. All of Sacramento knew who these people were and exactly what it meant.

Webber stayed, Mike Bibby was acquired, and the Kings won the first of two Pacific Division championships, beating out the Lakers. Simultaneously, George was opening the Palms just off the Strip in Las Vegas. The family agreed to give up basketball betting, a profit center for the casino but a small price to pay.

Even before it opened, the Palms was the talk of Las Vegas. MTV agreed to base its "Real World" series in the hotel for a season. The contestants, whose entire lives were videotaped, worked at bars and restaurants on the property and lived out their twentysomething soap opera on the 28th floor. Afterward, George kept the 29,000-square-foot circular suite just as it was and now rents it out for a starting price of $5,000 a night. (He's doing the same with the custom suite Hefner stayed in last September.)

At the Palms' gala opening, socialite Paris Hilton wore a dress festooned with $1 million in casino chips. That, you might say, set the tone. The hotel has a 14-screen movie theater and a three-story dance club with cabanas and skyboxes, but the real star is George. "People identify the Palms with me, which is what you want to have happen," he says. VIPs are issued his phone number and 24-hour access. One called and asked for a late-night snack from In-N-Out Burger; George jumped in his car and filled the order himself.

His vision with the 455-room property, he says, was to create a place that represents Las Vegas at its hottest and hippest. "In order to completely fulfill that, I have to be in a position to live that lifestyle. If you don't live it, you can't sell it. If I was married and had kids, I couldn't do this job." George's appeal is aspirational; even celebrities want his life. Like Miss America, he has to be single and available, at least in theory.

One banquette down from her son, Colleen Maloof is eating dinner at N9NE with a friend from Albuquerque. She has long blonde hair and is of indeterminate age. She's probably close to 70, what with a 48-year-old son, but in a certain light she could pass for 48 herself. She's polite, almost deferential, and she offers up her cell-phone number almost before she's asked. That apple hasn't fallen far from the tree.

She eloped at 16, then suffered through a failed marriage and the death of a son to leukemia. She raised five children while her second husband, George Sr., worked almost around the clock. Now she sees the rewards of her sons' industriousness and it makes her proud. The food is good here, the music is loud and the customers are enjoying themselves. "Maybe one day one of the boys will get married," she says. For the moment, she doesn't seem too concerned.

A few days later and a few hundred miles north, Joe and Gavin are sitting in their suite at Sacramento's Arco Arena before a Kings preseason game, doing one of the things they do best: eating. Prodigious amounts of food are needed to fuel the brothers' work ethic. When they moved to Sacramento, they found they couldn't get meals when they wanted, which is all the time. They hired a French chef, Christophe Cornet, previously of Michel Rostang in Paris, who accompanies them wherever they go.

Why they need such an exalted chef is a mystery to everyone, Cornet included. Their tastes run from hamburgers to chicken breast to steak. "No onions, no garlic," a frustrated Christophe reports. "Food as simple as they are."

Gavin is wearing a baseball shirt with Webber's name on the back, a new product available at the arena gift shop -- and also at the gift shop inside the Palms. Time Warner and Disney never figured out how to properly use their sports teams to cross-promote, but the Maloofs have. "In the Kings, we have a marketing tool that other casinos can't compete with," Gavin says. When LeBron James, the high school phenom who became the property of the Cleveland Cavaliers in the NBA draft, made his regular-season debut in Sacramento, the Maloofs flew in 100 high rollers for the game.

At the same time, the Palms connection adds to the mystique of the Kings, which went from being the NBA's wasteland to perhaps the most appealing team in the league. Having the likes of Penny Marshall jet in from Hollywood for home games doesn't hurt.

Their eating over, the Maloofs can't stay in their suite. "The way you kill a Maloof, put us on a deserted island," Gavin says as he makes his way down the steps to his courtside seat. "You should see Joe try to lie on a beach by himself. He can't do it! He has to be with people. I'm the same way." As if to prove his brother's point, Joe isn't on the floor for five minutes before he's buying two kids all the popcorn they can hold, paying for it with a $20 bill out of his own pocket. "Take care of your customers," he says. "That's what it's all about."

But who is taking care of the Maloofs? They have nobody to come home to but one another. "Their personal life is their business life, which is also their family life," says Mark Kreidler, a sports columnist for the Sacramento Bee. "It's the oddest thing in the world. They treat everybody, and I mean everybody, exactly the same."  

As Joe and Gavin near 50, it's tempting to wonder if a midlife crisis is looming. But how might that crisis manifest itself? They already own fast cars and date younger women. They have all the toys that twenty-first-century America has devised and are thinking up new ones themselves. "I think that Joe, at least, is right on the verge of an amazing discovery that all of this is not enough," Kreidler says. "But what happens then, I have no idea."

For now, Joe's goal is an NBA championship. Watching the first half of the game, he swoons over the Kings' newest acquisition, Brad Miller. "He's deadly with that jump shot, Gavin," he tells his brother over the din of the capacity crowd. With early meetings to attend in the morning, Joe departs, but follows up with a flurry of phone calls to discuss with Gavin what he's hearing on the car radio.

The Kings win easily. After the game, Gavin stays in his seat at center court, talking on the phone to friends elsewhere in the building, shaking hands with fans, watching the crowd file out. It's a Tuesday night in Sacramento, and the folding chair is his office, his barstool, his throne. Miss Utah is in Utah, and he's in no hurry to get home. v 

Bruce Schoenfeld is a frequent contributor to Cigar Aficionado.

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