Oct. 5–Arnold Schwarzenegger brags that he is the only major candidate for governor who has started his own businesses and met a payroll.

Fair enough.

So how well did he do? And what does it tell us about how he might govern California?

The Orange County Register interviewed Schwarzenegger business associates and handed his financial disclosures to a trio of investment planners for analysis.

The consensus: Schwarzenegger has made a lot of money — but most of it was pay for his movie roles. Despite a willingness to bend business ethics, his independent ventures have not always been successful.

Many of those who have worked with him say his talent lies not so much in the nuts and bolts of business, but in selling a vision — and finding others to handle the details.

You could say that when it comes to business, he is more Delegator than Terminator.

“He is the idea man, the visionary,” said Jim Lorimer, Schwarzenegger’s partner in an annual fitness competition. “That kind of person needs somebody who can tolerate the details.”

Other associates agreed.

“I’d be shocked if he was a hands-on kind of guy,” said David Booth, chief executive officer of Dimensional Fund Advisers, a Santa Monica investment fund in which Schwarzenegger owns a small stake. “His strength is getting good people around him.”

A diverse portfolio

Schwarzenegger’s financial disclosures, plus a tax summary released by his campaign, show that 80 percent of the $57.2 million in income he reported in 2000 and 2001 came from wages as a motion picture actor.

Over the last 20 years he has invested his actor’s pay in a diverse portfolio that included real estate, blue chip stocks, venture capital and hedge funds. Most of those investments are managed by high-profile fund managers or real estate developers.

The advisers who reviewed Scharzenegger’s portfolio for the Register said they were limited in their analysis by the vague nature of the state disclosure form, which requires only a range of value for investments. Also missing is a history that would show how investments fared over time.

The financial advisers estimated his net worth as between $40 million and $100 million, but said it could be as high as $200 million.

“Over time he has amassed assets estimated at well over $100 million,” said Thomas F. Lydon, Jr., president of Global Trends Invements in Newport Beach. “Does that make him a good businessman? Maybe. Arnold is great at managing ‘Arnold Inc.”

His largest business, Oak Productions, which manages his movie revenues, has a staff that his campaign said was “more than 10.” That compares to a state workforce of 300,000 and a staff of 140 for the California governor.

Raphael Sonenshein, a political scientist at California State University, Fullerton, said Republican political leaders often favor the CEO or chairman of the board style of leadership — delegating day to day tasks to others.

Sonenshein noted that Los Angeles Mayor Richard Riordon faced the same doubts as a candidate. Despite his claim of being a businessman, he was actually more of an investor, and voters wondered if he would be able to lead.

“But being governor means being there. You have to deal with the legislators. You can’t really delegate your presence in Sacramento,” he said.

Schwarzenegger is never more creative than when he is selling himself.

As a young immigrant in the 1970s, he would later joke on the Johnny Carson Show, that he and a workout partner drummed up bricklaying business by scamming homeowners into believing their chimneys had been damaged by the Sylmar earthquake.

As a young Mr. Universe he bragged about orgies, smoking marijuana and the joy of flex to get exposure in magazines and film.

In 1979, Schwarzenegger received a marketing and business degree from the University of Wisconsin, Superior, after completing a correspondence program. The school says it was a special program tailored just for him that gave him credit for his Special Olympics work with developmentally disabled kids.

Schwarzenegger clearly learned something about business.

In the 1980s he began to branch out as an investor, making forays into real estate and restaurants.

He bought and redeveloped a rundown building on Main Street in Santa Monica, where his business office and campaign headquarters are located. It’s not clear how profitable that’s been for him. Schwarzenegger declared a loss of $2,756,356 on the commercial property in 2000.

Schwarzenegger also bought a site in lower downtown Denver, which he hoped to develop as a commercial center. Blocking his path was a rival developer already deep in negotiations with many tenants Schwarzenegger wanted.

Schwarzenegger flew the merchants in a private jet to Denver, where he dined them and took them on a walk through downtown.

“He basically was grabbing all my tenants that I had letters of intent from,” said rival developer Bill Denton, of Agoura Hills. “It’s very common to have two developers vying for a similar project. It’s very unusual, or what I would say, ‘unethical,’ to try and steal somebody’s tenants when they are already committed.”

Denton said he didn’t know whether it was Schwarzenegger or his people who decided to go after the tenants.

It took Denton six months of negotiations to win back his merchants. Schwarzenegger’s property was eventually developed as less-profitable office space. He sold his interest in the project in 2000.

“I do this for a living,” Denton said. “I’ll worry about Arnold Schwarzenegger in real estate when he starts worrying about me in action films.”

One thing, Denton said: Schwarzenegger “used his celebrity status extremely well.”

Karen Hanretty, spokeswoman for the Schwarzenegger campaign, found nothing wrong with his zeal.

“It sounds to me like Arnold Schwarzenegger is a competitive businessman and this is exactly what California needs,” Hanretty said.

Schwarzenegger’s best known business venture is the twice-bankrupt “Planet Hollywood.” Schwarzenegger never actually invested any of his own money in the restaurant chain, according to his campaign staff, but was given shares along with other celebrities to hawk the eatery.

He and other celebrities became the face of Planet Hollywood — which turned embarrassing when the restaurant tanked in the late 1990s.

“Not everything he has touched has turned to gold,” said Charles N. Rother, a financial analyst with American Strategic Capital in Los Alamitos. “He didn’t leave unscathed from Planet Hollywood. But it wasn’t a fatal business collision.”

Schwarzenegger set up his own restaurant, Schatzi’s on Main, in 1992. The Santa Monica restaurant employed some of the same people who worked on Planet Hollywood.

But the restaurant was immediately panned by critics as offering “freeway decor and boring food.” Despite Arnold’s star power, it never really took off. Schwarzenegger sold the business in 1998.

His failed eatery barely registers among supporters enamored with his talk of business experience and payroll management.

“He is the quickest guy on his feet I’ve ever known in my entire life,” said longtime friend Mike Uretz, chief executive officer of World Gym.

By Tony Saavedra and Chris Knap

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(c) 2003, The Orange County Register, Calif. Distributed by Knight Ridder/Tribune Business News.