They are the unlikeliest of adversaries: On one side is Ty Warner, the billionaire founder of the decidedly low-tech Beanie Babies and Beanie Boos plush-toy empire. He’s worth nearly $4 billion. On the other is Bill Gates, the co-founder of the decidedly high-tech software behemoth Microsoft and one of the world’s richest men, with a fortune estimated these days at around $100 billion.
They are not duking it out over stuffed animals or computer code, though. Instead, they are fighting about luxury hotels, in both Manhattan and Santa Barbara.
In a portfolio-diversification move some two decades ago, Warner, now 78 years old, got into the real-estate business. “He was someone who created Happy Meal toys,” explains a source who knows Warner well. Even though few realize it—or even know who he is in the first place—Warner owns a portfolio of seven high-end hotels and resorts, including the legendary San Ysidro Ranch, in Santa Barbara. Formerly owned by the actor Ronald Colman, it’s where John and Jackie Kennedy spent part of their honeymoon, in 1953. It was nearly wiped out by the massive mudslides in Santa Barbara in January 2018 but has since been rebuilt and reopened.
Four more of Warner’s properties are also located in and around Santa Barbara: the Montecito Club, a private golf and social club; the Coral Casino Beach and Cabana Club, in Montecito; the Sandpiper Golf Club, in Santa Barbara; and the awkwardly named Four Seasons Resort: The Biltmore Santa Barbara. (The unmarried, childless Warner also owns a home in Montecito, overlooking the Pacific Ocean, which one estimate values at around $400 million.) Down in Cabo San Lucas, Warner owns the Las Ventanas al Paraíso resort.
Then there’s the Four Seasons Hotel on 57th Street between Madison and Park Avenues, Warner’s lone hotel in Manhattan, and for a time one of the city’s crown jewels. Not so much anymore. Unlike most of the other high-end hotels in Midtown, which have reopened since they shuttered at the beginning of the pandemic, in March 2020, the Four Seasons remains closed, with metal barricades around its entrances on 57th and 58th Streets.
Toying with an Idea
Warner is nothing if not quirky and idiosyncratic, a fact that’s made clear in Zac Bissonnette’s 2015 book, The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute. Producer Ron Howard is finishing up a movie about Warner based on the book, with Zach Galifianakis playing the lead—talk about a quirky choice—and also starring Elizabeth Banks and Sarah Snook. Apple TV+ has acquired the rights to distribute the film.
The now billionaire dropped out of Kalamazoo College after one year. Then, after spending five years in Los Angeles trying to make it as an actor, he gave up and moved back to his hometown of Chicago. He got fired from his first job as a salesman at Dakin, a manufacturer of plush toys, because he was selling his own products on the side, competing with his employer.
In 1999, once he had hit it big with Beanie Babies, Warner parlayed part of his fortune into the Manhattan Four Seasons, designed by the architect I. M. Pei, purchasing the hotel from its Hong Kong–based owners for $275 million. Only three years earlier, they had paid just $191 million for the hotel. The story goes that Warner was seated on a flight next to Greg Rice, a principal at the Solid Rock Group, who was once known as “Mr. Hotels.” (His e-mail address used to be MrHotels@aol.com.)
Warner, a great lover of hotels—“He always stole pillows from hotels,” says someone who knows him well—knew of Rice’s expertise and chatted with him about where the best hotels to stay were. After Warner mentioned the Four Seasons in Manhattan, Rice said he knew the owners of the hotel and that they were looking to sell it. After inquiring about various of the property’s financial metrics, Warner said he’d be interested in buying the Four Seasons and asked Rice to follow up. He did, and Warner bought the place six months later. At the time, it was the highest price ever paid for a hotel on a per-room basis, almost $750,000 for each of the hotel’s 368 rooms.
In the years since, the plush-toy king has named after himself the hotel’s premier suite, also designed by Pei. Prior to its closing during the pandemic, the Ty Warner Penthouse was available for rent at a non-negotiable rate of $50,000 per night. His attachment to the place is so great, it would seem, that in 2012, when he was offered $900 million for the hotel, he turned down a deal that would have netted him more than three times his initial investment. Explained one longtime hotel executive, “In my 51 years of experience in real estate, there is no one I know of that has a better instinctive feel for quality of property and location than Ty.”
Even though the Four Seasons Hotels and Resorts name is on Warner’s hotels in Manhattan and Santa Barbara, as well as on 122 other hotels around the world, the group doesn’t actually own any hotels. Instead, it manages hotels for others, hiring the employees who run and maintain the properties, as well as the various restaurants inside. Owners such as Ty Warner enter long-term management contracts with Four Seasons Hotels and Resorts, which gets paid annual fees for lending its name and rendering its services, often regardless of whether the individual property is thriving.
In 2007, just before the 2008 financial crisis upended Four Seasons Hotels and Resorts’ business, Bill Gates and his private investment firm, Cascade Investment, joined with an unlikely partner, Saudi prince Alwaleed bin Talal, to take the luxury-hotel management company private in a $3.8 billion deal, with the company’s Canadian founder, Isadore Sharp, retaining a 5 percent stake.
Four Seasons Hotels and Resorts slowly but surely recovered from the financial crisis, and in September 2021, Gates agreed to buy half of bin Talal’s stake for $2.21 billion in a deal that valued the whole company at $10 billion. As a result, Gates now owns 71.25 percent of the hotel operator while bin Talal retains 23.75 percent. Sharp still owns the remaining 5 percent.
The pandemic once again upended the calculi of both Warner’s small hotel group and the Four Seasons’ larger group. Warner’s hotel on 57th Street closed in March 2020, and according to a notice at the top of its Web site, the hotel is “undergoing substantial infrastructure and maintenance work that is expected to last well into 2023.” Warner’s Four Seasons hotel in Santa Barbara also remains shuttered, with a similar closure notice on its Web site.
Warner’s attachment to the place is so great, it would seem, that in 2012 he turned down a deal that would have netted him more than three times his initial investment.
According to sources familiar with what’s really going on, Warner and Four Seasons are at loggerheads because Warner is unhappy with the long-term contract he has with Gates’s company in both Manhattan and Santa Barbara. He’s said to prefer to keep the hotels closed and lose money on the minimal upkeep than continue to pay Four Seasons’ annual fees. It makes money, but he doesn’t. One former employee in Warner’s hotel group told me that Warner “really likes to make money” and that until the coronavirus hit, his hotel in Manhattan “was highly profitable,” although some of that profitability was eroded over time through competition in the luxury-hotel market, by union labor costs and by the Four Seasons contract. (Rich Maroko, the president of the Hotel and Gaming Trades Council, A.F.L.-C.I.O., did not respond to a request for comment.)
It’s the equivalent of a strike action between two billionaires. “If I were in Ty’s head,” the person familiar with him says of his fight with Four Seasons, “I’d be thinking, Look, I put up all the capital. I own these iconic properties. I have this company that manages it for me, which basically means putting a sign on the front and hiring the staff. I’m taking all the risk. I’m losing money on it, and they’re getting rich every year.”
Sources say Four Seasons has rejected Warner’s request that their contract be restructured to account for the hotels’ profitability or losses. According to the source, regarding the New York location, “[Warner’s] like, ‘O.K., fuck you. I won’t open it and I won’t pay you.’” It’s not quite a David versus Goliath situation, but it has that feel. (Multiple attempts to reach Warner for comment were unsuccessful.)
This past August, the hotel’s employees filed a class-action lawsuit in a Manhattan federal court against both Warner and the New York Four Seasons, claiming they have “purposefully stalled the reopening” of the hotel to avoid paying unpaid wages and severance. A similar lawsuit was filed this March in California against the closed Santa Barbara Four Seasons; employees there claim they are owed at least $6 million in severance. (Neither Four Seasons nor Cascade, its majority owner, responded to requests for comment.)
Although he has invested hundreds of millions of dollars in his hotel properties, Warner is said not to care much about them or the day-to-day details. He focuses much of his energy on the plush-toy business that created his fortune, and which he still owns exclusively. The company continues to pump out the cute stuffed animals, albeit not nearly to the degree it did during the Beanie Babies boom of the 1990s.
“If he’s traveling, he does stop by the hotel in the city,” the source continues. “But he doesn’t eat at the restaurant or go look at the rooms. What he actually does, believe it or not, is he goes into the gift shop and he checks the Beanie Baby display to make sure that they look good. That’s probably the purest distillation of Ty Warner.”
Someone who worked for Warner for a few years in his hotel group says that though the billionaire does appreciate what a hotel management company does, he is frustrated by the high fees and how they suck up the hotel profitability. For instance, the San Ysidro Ranch used to be managed by Rosewood, a Four Seasons competitor. “Ty was struggling with that,” this person continues. In 2010, Warner decided to manage the hotel himself.
But he’s struggled with that too. There are only 38 bungalows at the San Ysidro, but it takes three or four hours to “turn” them, or clean them and get them ready for the next guests. The staff at a Marriott can get the same task done in closer to 20 minutes. “It’s just a break-even proposition,” this person says of San Ysidro Ranch.
Warner’s legal troubles aren’t confined to the world of hospitality, though. He is also in an ugly dispute with his former longtime lover, artist Kathryn Zimmie. According to a lawsuit she brought against Warner in state court in California in September 2021—with the inimitable Los Angeles divorce attorney Robert M. Cohen at her side—the two made an oral agreement in 2006 that Warner “would always provide for her and financially support her,” as they had been a couple—albeit unmarried, despite the wedding ring Warner wore—on and off since 1977. (In his answer to the lawsuit, Warner acknowledged they met in the late 1970s and had a “personal relationship” at “certain times.” But he denied he had agreed to support her financially.)
According to Zimmie’s lawsuit, the relationship was “rekindled” in the late 1990s, continued to be “serious and significant” in the 2000s, and lasted until November 2020, when Zimmie, now 85 years old, left Warner because of “fear for her safety and well-being.” (Warner agreed that they had a relationship at various times but denied that it ended because she feared for her safety.)
She alleges that in 2012, in a bathroom at Warner’s New York Four Seasons Hotel, she said she was going to leave him because of “broken promises.” In response, she claims, Warner “put his hands around Zimmie’s throat and stated ‘I wouldn’t do that if I were you.’” According to the complaint, Warner, who was once convicted of tax evasion, “had squeezed her throat so hard that she realized her life was in danger if she ever left.” (Warner denied the allegation that he put his hands around Zimmie’s throat and that he threatened her.)
Zimmie also alleges that Warner made fun of her after an ankle injury left her somewhat hobbled and using a cane—he denies doing this—and that he made off with a number of her paintings without paying for them. Allegedly, 26 of her paintings are in the Montecito home they shared while seven of them are in the Four Seasons Hotel in Manhattan. (Warner agreed he has had “certain paintings” by Zimmie in the Montecito home, but he denied that any of her paintings were at the Four Seasons Hotel in New York.)
He responded, she claims, by putting “his hands” around her “throat” and telling her, “I wouldn’t do that if I were you.”
In her complaint, Zimmie asked for a half-ownership interest in the Montecito estate (potentially worth as much as $200 million to her) and that Warner return her artwork. The two sides tried to mediate the dispute in September, without success, with more settlement discussions expected. In March 2021, Warner filed a countersuit against Zimmie in federal court in Illinois, asking for a declaratory judgment against Zimmie and her claims against him. But that suit has been tossed.
Meanwhile, there seems to be no end in sight for Warner’s dispute with Four Seasons. A consensus seems to be growing that it could go on for years.
Roberta Griffin, a C.P.A., worked for Warner for nearly eight years, ending in 2012. She has only worked for millionaires and billionaires, including the hotelier André Balazs. Griffin shared, in an e-mail, her conclusions about the struggles of the super-wealthy.
“Their world is not easy,” she wrote. “They end up questioning everything and everyone. I’ve seen so many times where ‘trusted’ friends end up wanting something from them. And guess what? It’s always [about money]—it could be for an investment, or they figured they deserved it, etc. And their ‘friends’ circle gets smaller and smaller as they age. Family might be the only respite for them and then even that turns out wrong. While I’m not making an excuse for them, this has been a similar pattern with every billionaire for whom I’ve worked.”
And sometimes, like Ty Warner, they are left with only their wealth, their exclusive homes, and a bunch of lawsuits against other millionaires and billionaires.
“He wants to cultivate a kind of Howard Hughes thing,” says someone who knows Warner well. Truthfully, he’s on his way.
To hear William D. Cohan reveal more about his story, listen to him on AIR MAIL’s Morning Meeting podcast
William D. Cohan is a Writer at Large for AIR MAIL and the author of such best-selling books as The Last Tycoons, House of Cards, and The Price of Silence. He is a founding partner of Puck. His new book, Power Failure, will be published in November