In June 1995, Jay Pritzker called an important family meeting in the apartment of his eldest son, Tom, to lay out his vision for his clan's multibillion-dollar fortune. Pritzker, a brilliant dealmaker best known as the founder of the Hyatt hotel chain, was 72 and suffering from heart disease. His purpose that day was to hand over the reins of the family business to a new generation of Pritzkers who had long been groomed for succession Â— the triumvirate of his son Tom, his cousin Nick, and his niece Penny Â— and to emphasize to the 11 Pritzker heirs gathered before him the long-held principle of pooling and sharing the family's wealth. By operating as a collective over several generations, the Pritzkers had built an enormous fortune Â— today worth $15 billion, according to Forbes Â— and if they maintained that cohesion, the empire Jay Pritzker had helped build could remain intact, thriving as a family affair long after he was gone.
But after Pritzker's death from a heart attack in 1999, the centrifugal forces that have atomized many an American dynasty started tugging at the Pritzkers. Disagreements among the 11 cousins soon morphed into deep divisions, pitting the new ruling triumvirate against those who weren't involved in the family business but wanted greater control over their share of the wealth. In 2001, the sparring factions tossed aside Jay Pritzker's blueprint for collective ownership and reached a secret agreement to carve up the empire over the next decade, dividing the whole pie into individual slices that could be worth more than $1 billion to each cousin. To do that would likely involve selling off major assets, including the family's crown jewel, Hyatt, and Marmon Group, an industrial and service conglomerate built by Jay's younger brother Bob, 76. But the plan to break up the empire grew more complicated in mid-December when it was disclosed that another member of the family who was excluded from the arrangement, 18-year-old Liesel Pritzker Â— Bob Pritzker's daughter by his second marriage Â— had filed suit alleging that $1 billion had been looted from her trust funds and spread to other Pritzker entities.
Beyond the salacious spectacle of it, the disintegration of one of America's wealthiest families would likely be of little interest to Bostonians were it not for potential ramifications that hit very close to home: The Pritzkers are the owners of Fan Pier in South Boston, the parcel on which their Hyatt Development Corporation, after a years-long permit process, won approval to transform 21 acres of muddy harborside parking lots into nearly 3 million square feet of hotel, office, and residential space Â— the largest waterfront development in this city's history. The $1.2 billion project has already been stalled for more than two years because of financing difficulties amid a recession-triggered glut of office and hotel space. Now the family wrangling adds to the uncertainties that surround Fan Pier. Although city officials have publicly expressed confidence that the Pritzkers' internal dispute will not derail the development, even the Pritzkers probably can't say for sure any more what lies in store for this prime Boston property. They have other things on their minds. And for now, Fan Pier is still a parking lot.
Although most Bostonians know little about the Pritzkers besides their name, the Boston area has long played a role in molding this all-important family's star players. Two-thirds of the current trio of family leaders Â— Nick Pritzker, who is spearheading the Fan Pier project, and Penny Pritzker Â— went to Harvard. Key members of previous Pritzker generations also passed through the hallowed quads in Cambridge Â— testament, in part, to the intelligence and ambition that seem encoded in the family genes.
The family's founding patriarch, Nicholas Pritzker, did not boast such a pedigree. He arrived penniless in the United States in 1881 after fleeing with his family from the Jewish ghetto near Kiev in what is now Ukraine. Settling in Chicago, the 10-year-old boy taught himself English by reading the Chicago Tribune, worked menial jobs, and eventually became a licensed druggist. While supporting a wife and three sons on his pharmacist's pay, he went to law school at night, opening his own practice in 1902. All three of his sons eventually joined him, though the most gifted, Harvard Law School graduate A. N. Pritzker, realized he could make more money by doing his own business deals than by billing law clients. As the Depression unfolded, A. N. bought companies on the cheap and with his brother Jack Â— an expert in real estate law Â— invested in bargain properties.
As successful as A. N. was, his eldest son, Jay, would surpass him Â— and most other business moguls Â— as a dealmaker. On a business trip to Los Angeles in 1957, the 35-year-old Jay noticed that Hyatt House was far nicer Â— and busier Â— than most other hotels he had visited near airports. On the spur of the moment, he bought the place. Realizing that business travelers would pay good money for classy lodging close to airports, Pritzker opened new Hyatts near the San Francisco and Seattle airports. After Hyatt had grown to six hotels, Jay dispatched his youngest brother, Donald, to run the fledgling chain. Portly and gregarious Â— and another Harvard grad Â— Don soon had Hyatt growing like kudzu. By the time he died of a heart attack in 1972, at just 39, Don had expanded Hyatt into the country's fifth-largest and fastest-growing hotel chain. Today there are 207 Hyatt hotels and resorts around the world, and the privately held company is worth an estimated $10 billion to $15 billion.
Hyatt is only a part of the Pritzker business empire. Another pillar of the family wealth is Marmon Group, a conglomerate that includes the credit reporting giant TransUnion as well as manufacturing companies that churn out everything from gardening gloves to railroad cars. Marmon evolved from a partnership between Jay Pritzker and his other brother, Bob. Jay scoured the landscape for companies he could get on the cheap, structuring deals he could exploit for tax advantages. That often meant acquiring companies that were on the verge of bankruptcy and no one else wanted. The ailing enterprises were then handed off to Bob, the engineer of the family, who would whip them into sound financial and operating shape. Last year, Marmon had sales of $6.5 billion.
With Bob tending to Marmon, the next generation of Pritzkers started making their bones within the Hyatt Corporation while also developing interests outside the office. In the 1980s and '90s, Tom Pritzker, now 52, oversaw day-to-day operations of Hyatt hotels. He also found time to become an internationally regarded scholar and collector of Himalayan art. When Jay died, Tom took his place as the head of the family. Penny Pritzker, the 43-year-old daughter of the late Don Pritzker, meanwhile, launched Classic Residence by Hyatt, a thriving chain of upscale senior housing communities. Today she is leading the development of a 47-story skyscraper in Chicago to house the Hyatt Corporation.
One of Tom's closest confidants over the years has been Jay's cousin Nick, 57, the real estate whiz of his generation just as his father, Jack, was in a previous era. A vegetarian, staunch environmentalist, and rock-and-roll enthusiast, Nick devours information on paleontology and cosmology and has been known to hobnob with the likes of Stephen Hawking and the band U2. As the head of Hyatt Development Corporation, Nick builds hotels, resorts, and casinos. He has also been the family representative in charge of developing Fan Pier, initial plans for which envisioned a development so tall and dense that environmental groups fought it. Eventually, the Pritzkers agreed to scale back those plans and include more public space, enabling them to land the necessary state and city permits. The Pritzkers' aggressive negotiating did not win them many friends here. “It was more of an uphill battle than it should have been,” says Stephanie Pollack, a senior attorney with the Conservation Law Foundation, which fought to get more space set aside for public use. And while the Pritzkers seemed to be in an urgent hurry to win approval for the project, which they finally got in December 2000, they have still not broken ground. Moreover, as Pollack points out, “there has been no statement from [Nick] Pritzker or his team about when they intend to proceed.”
With the family's business interests in the capable hands of Tom, Nick, and Penny, Jay Pritzker may have died believing that the empire he helped build could defy the odds and remain intact for at least another generation, bound by the family code of cohesion, collective ownership, and mutual interest. What he may not have counted on was the potential of human nature, of individual self-interest, to wreck his best laid plans.
The other members of the fourth generation of Pritzkers, though not involved in the family business, have their own diverse interests and ambitions. Tom's brother, Dan, 43, heads the alternative rock band Sonia Dada. Their sister, Gigi, 40, co-owns a movie production company and was a coproducer of the Adam Sandler film The Wedding Singer.
J. B. Pritzker, the younger of Penny's two kid brothers, made an unsuccessful bid for Congress in 1998 and runs a venture capital fund.
The Pritzkers who were not in positions of family power came to resent being paper billionaires with little access to their wealth, the bulk of which was tied up in the Hyatt Corporation, Marmon Group, and other Pritzker enterprises run by Tom, Nick, and Penny. What's more, several cousins chafed at the way those businesses were being managed. In 2001, the Pritzkers were deeply embarrassed when Superior Bank, a savings and loan they co-owned, failed because of mismanagement, prompting the family to pay a $460 million settlement. Some cousins were also miffed when their beloved Uncle Bob was unceremoniously asked to step down as CEO of Marmon Group after 48 years, which he reluctantly did. There were other grievances, other slights Â— real or perceived. The wonder isn't that the unhappy cousins demanded to take their share of the money and go their own way; it's that Jay Pritzker, who had such a knack for reading people, somehow imagined that the center could still hold after he was gone.
The world would probably still be unaware of the looming disintegration of the Pritzker fortune had Bob Pritzker's two children by his second marriage, Liesel, 18, and Matthew, 20, not been excluded from the secret deal in 2001 to divvy up the family wealth. When Liesel Pritzker learned of the new arrangement and that substantial assets had been shifted out of the trust funds benefiting her and Matthew, she sued. Surely Liesel Â— a freshman at Columbia University and a budding actress who as Liesel Matthews starred in the movie A Little Princess and played the daughter of the president (Harrison Ford) in Air Force One Â— knew the suit would bring unwanted attention to a family whose reclusive members have long eschewed interviews and steered clear of publicity.
It's yet another sign that the old ways are changing for the Pritzker family.