The Man Who Bought New York
Posted May 4, 2018 5:52 p.m. EDT
NEW YORK — Last May, a familiar routine took place on the steps of the Metropolitan Museum of Art.
Katy Perry ascended the red carpet at the Met’s annual Costume Institute Gala looking like the bride of Frankenstein in her red John Galliano dress and veil. Jennifer Lopez wafted by in sky blue Valentino, flanked by her favorite Yankee of all time and the founder of the design house responsible for making her gown.
By contrast, the entrance of private equity guru Stephen A. Schwarzman and his wife, Christine, was more inconspicuous.
He wore a simple black tuxedo. She had on a shimmering gray Versace gown.
Nevertheless, journalists called out their names. Cameras continued to flash. And obnoxious questions followed about which cost more, the party the couple was waltzing into or the one they’d recently held in Palm Beach, Florida, in honor of Stephen Schwarzman’s 70th birthday.
“I think this one,” Schwarzman said, although it was hard not to wonder if this guess was a measure of reality or wishful thinking. Certainly, the Met had no live camels in the entrance to the party space. Nor did Gwen Stefani serenade Anna Wintour to the reported tune of $500,000.
But all that’s neither here nor there.
Schwarzman’s birthday bash may have been cheaper than last year’s Costume Institute Gala, but it is thanks to his fortune ($12.3 billion, according to Forbes) that there’s a party happening this Monday.
He and his wife helped underwrite the exhibition “Heavenly Bodies: Fashion and the Catholic Imagination,” handing over a check that two sources close to the museum said was in the ballpark of $5 million.
“Much of the cultural vitality of New York has long been due to the benevolence of such great Americans as Brooke Astor and David Rockefeller,” Wintour said in a statement. “At the Met, we’ve been extraordinarily lucky to partner with Stephen and Christine Schwarzman, who, like the philanthropists who’ve gone before them, have always supported everything from arts and culture to education to Catholic charities. It’s their generosity — along with that of my friend Donatella Versace — that has made this brilliant and groundbreaking exhibition possible. When you work with the likes of Stephen and Christine, everyone benefits.”
So Stephen Schwarzman may be a flash point for income inequality, a man with more money than respect, but that seldom stops him from having the last laugh, or getting the multimillion-dollar tax write-off. (All the people involved declined interviews.)
There are several reasons Schwarzman inspires enmity.
First: New York City has more residents worth at least $30 million than any metropolis on planet Earth, but it still regards itself as a progressive enclave. An adviser to President Donald Trump who once compared Obama-era tax hikes on corporations to Hitler invading Poland is bound to have some enemies. (Schwarzman apologized, but still.)
Second: Schwarzman is unapologetically brash, a 5-foot-6-inch bundle of testosterone who in 2008 described his business philosophy by saying, “I want war — not a series of skirmishes.” This has extended not only to his rivals at competing firms but also at times to those closest to him.
His mentor at Lehman Bros., where Schwarzman worked in the earlier part of his career, was Peter G. Peterson, a much revered society and business world figure. After Peterson lost control of Lehman in 1984 and left the company, Schwarzman was behind the putsch that drove their enemies from power.
Together, Peterson and Schwarzman started the Blackstone Group, a private equity firm that grew into a financial colossus that dwarfed competitors like Kohlberg Kravis Roberts and the Carlyle Group.
In 2007, the Blackstone Group went public, and Schwarzman earned hundreds of millions of dollars through the IPO. But the subsequent negotiations around the retirement package of his mentor, then 81, were brutal. People who knew them both were shocked.
In March, Peterson died. At the memorial, numerous attendees took note that Peterson’s most famous protégé was not selected as a speaker.
Schwarzman’s charitable contributions have ignited controversy. This is partly because the gifts often come with conditions.
In 2015, Yale announced that Schwarzman was donating $150 million to the university for the construction of a student hub located smack in the middle of its campus. It is scheduled to open in 2020 and will be called the Schwarzman Center.
“I’m more than comfortable with that,” said Peter Salovey, Yale’s president. “It demonstrates our thankfulness to Steve.”
So whose idea was it to name the building in the donor’s honor?
“I can’t answer questions about the contractual negotiation," Salovey said in a phone interview that was supervised by a public relations representative from Schwarzman’s team. “It’s a matter of confidentiality.”
Anyway, Salovey pointed out, “there are hundreds of spaces on our campus named for donors.”
As well as at numerous other prominent nonprofits. The Fifth Avenue headquarters of the New York Public Library is now the Stephen A. Schwarzman building, thanks to a contribution of $100 million in 2008. And the National Library of Israel’s landmark building in Jerusalem will soon become the Stephen A. Schwarzman Education Center, after a contribution this year for $10 million.
Annette de la Renta, a board member at the Met and the New York Public Library, doesn’t get why all this inspires such fuss, such sanctimony.
“People should just be grateful,” she said.
Yet they’re not always.
Partly this is because there remains a select group of people (among them, de la Renta) who remember that Brooke Astor rescued the New York Public Library from financial ruin in the early ‘80s without making such demands. Additionally, the recent focus on capital improvements at New York’s most storied nonprofits is occurring at a time when their boards are chock-full of real estate barons and finance wizards who have voted to reduce services, lay off employees and offload assets.
In 2014, the Metropolitan Museum of Art cut the ribbon on a four-block-long plaza named after Schwarzman’s downstairs neighbor David Koch, who paid $65 million for the privilege. Shortly afterward, the Met’s leadership announced that the museum was eliminating the jobs of up to 100 people in administrative, conservationist and curatorial positions in an effort to address a ballooning $30 million deficit.
“All that money for a bunch of useless fountains,” said Michael M. Thomas, the best-selling author who preceded Schwarzman both as a student at Yale and as a partner at Lehman Bros. According to Thomas, Salovey is right to argue that Schwarzman is one of many people at Yale with a space named in their honor. But that reveals the extent of the problem with modern philanthropy, he said.
“That’s why I’m not going to my 60th reunion,” he said. “Yale is Whoresville, U.S.A. You can quote me on that.”
Earlier this year, Schwarzman gave $25 million to the high school he had attended in Abington, Pennsylvania. But plans to rename it after him were scrapped when people in the town nearly had a conniption.
To the delight of Thomas, the donation still went through. “It took a little high school in Pennsylvania to do what Yale would not,” he said, chuckling.
Jimmy Lee, a friend of Schwarzman’s, has joked that Schwarzman has given more money to the archdiocese than any Jew in New York. Partly, this is because his wife, Christine, is Catholic.
Schwarzman met her sometime around 1994. “I fixed them up,” said Debbie Bancroft, a party scene fixture and a contributor to Avenue Magazine. He had previously been married to Ellen Philips, the daughter of a wealthy Ohio industrialist, whom he met during his graduate work at Harvard Business School.
Christine, a corporate lawyer who specialized in intellectual property, had recently separated from Austin Hearst, the grandson of media baron William Randolph Hearst. Schwarzman’s courtship did not take long. In November 1995, the couple married in Manhattan and gave a party to celebrate at the Frick Museum, where Schwarzman is a longtime board member. Five years later, the Schwarzmans made their first real mark as a society couple by buying a 17,000-square-foot, three-floor penthouse apartment at 740 Park Ave. That was its own kind of leveraged buyout.
The apartment once belonged to John D. Rockefeller, but Schwarzman bought it from Saul Steinberg after Steinberg’s company, the Reliance Group, went into bankruptcy.
Off went Steinberg’s billiard tables. Down came the red vinyl walls, which really would not have been the way to showcase Stephen Schwarzman’s Monets and Cy Twomblys.
Soon, the Schwarzmans began dining tête-à-tête with Cardinal Edward Egan, the late archbishop of New York. Stephen Schwarzman happily gave financial advice for Egan to take back to the archdiocese.
The Schwarzmans also became fixtures on the charity circuit. “They’re peas in a pod,” said Bancroft, who often gets a Valentine’s Day card from Stephen Schwarzman thanking her for the introduction that has made him the happiest man in the world. “They’re Energizer Bunnies. They love dancing, and they love watching people.”
In 2007, Schwarzman held his birthday party at the Park Avenue Armory. Knickerbockers guided guests to their tables, which were in a space designed to replicate the couple’s living room. Martin Short served as the emcee and made jokes about guests like Trump. Rod Stewart and Patti LaBelle performed.
Mere months after Schwarzman spent $100 million to have his name plunked across the facade of the New York Public Library, Koch paid $100 million to have his name put on the facade of Lincoln Center.
Residents at 740 Park Ave. began to float the theory that the conservative billionaire on the fourth floor was trying to one-up the conservative billionaire on 15.
How does a man people are inclined to make fun of usually wind up with the upper hand? Well, having money helps a lot.
Just look at Schwarzman’s relationship with the president.
Schwarzman didn’t endorse Trump during the campaign. Instead, he donated to Jeb Bush. (He even once compared Trump to P.T. Barnum, when speaking to CNN in 2015.)
But the Blackstone Group is an enormously powerful real estate investor. Between 2013 and 2017, it provided more than $400 million to the troubled real estate projects of Trump’s son-in-law, Jared Kushner. Trump was unusually solicitous about Schwarzman during the campaign and reportedly asked aides numerous times if there had been any luck getting him to pledge allegiance.
That did not happen until after Trump won the election, at which point Schwarzman agreed to come aboard his team of business advisers and began raising money for his re-election. When Schwarzman celebrated his 70th birthday in Florida in February last year, Kushner and his wife, Ivanka Trump, were among the guests.
As was Donatella Versace.
In 2014 the Blackstone Group bought a minority stake in her company for $287 million. So when Versace was approached to sponsor the Costume Institute Gala but didn’t have enough money, calling Schwarzman made sense.
In September 2017, Egan’s successor at the archdiocese, Cardinal Timothy Dolan, received a visit from a couple of people representing the Metropolitan Museum of Art. Dolan still can’t entirely remember who they were.
“There was a guy named Andrew and this lady who edits a magazine,” Dolan said in an interview.
Still, it was clear to him she was a pretty big deal, an “admired” person, he said, because “all these people” in his office got bizarrely star-struck when she walked in.
As Dolan’s visitors explained it to him, the theme for the Costume Institute’s big exhibition for 2018 was to be “Heavenly Bodies,” a tribute to the Catholic imagination.
Not all the publicity the church receives is positive, so it came as a relief to hear that the show was being underwritten by his old friend Schwarzman.
“That’s when I said, ‘Bingo,'” Dolan recalled. Over the last few weeks, friends of the Schwarzmans have been slightly surprised that his check underwriting the exhibition didn’t translate into invitations for them. “I’m still holding out for the possibility they may get a cancellation from J.Lo,” Bancroft joked.
People close to the museum and to Wintour have been a little surprised that requests made of the Schwarzmans occasionally get turned down. Ultimately, though, it’s a win-win.
The Costume Institute has the money it needed for the exhibition.
The Schwarzmans will be the first couple to co-host the gala since 1997, when none other than Koch and his wife, Julia, had their names on the invitation. The Schwarzman’s friends at the archdiocese are happy. Versace’s clothes are prominently featured in the galleries. And the investment cost less than 1 percent of Schwarzman’s 2017 income.