Tulsa Commercial Real Estate Experts – How Rich Was J. Paul Getty?

Tulsa Commercial Real Estate Experts – How Rich Was J. Paul Getty?

by U.S. SBA Entrepreneur of the Year & Cofounder of Fears & Clark Tulsa Commercial Real Estate Group – Clay Clark

Recently, I had the opportunity to read the autobiography of the late great oil tycoon J. Paul Getty. As I was reading it, I thought it was very interesting that he actually devoted a large portion of the first chapter of his book to discussing his networth with complete candor and transparency. Apparently people of his day were obsessed with knowing exactly how much he was worth because he had been named as the world’s wealthiest man. As he attempts to describe how much value and networth he has on paper, I think his immense intelligence and wit is displayed. Essentially he felt that it would be impossible to ever determine his networth unless he were to actually dissolve his assets by selling them. However he realized that if he sold his assets they then would not be worth very much because he was “selling them.” And government’s love to tax people when they “sell things,” while businessmen like to get a great deal from people that are “selling things” in large quantity.

“An oilman seeking to compute his wealth in terms of below ground crude reserves is dealing with imponderables. Another unpredictable factor is the policy and attitude of governments. Some countries have greatly increased taxes on crude production or have sharply reduced their allowances. Others plan to follow suit. Yet others have imposed or say they intend to impose restrictions on the quantity of oil that may be produced. Some governments have simply nationalized the holdings of privately owned oil companies, while more indicate they are moving in the same direction. And, but I see no need to continue the recital.

The best any businessman – especially any oilman – can hope to obtain from his accountants is an approximate paper-estimate of his worth as represented by his invested wealth. On the other hand, in these days of government agencies, powerful taxation authorities, securities analysts and investigative reporters, it is impossible for a legitimate, active businessman to keep his rated wealth secret.

For example, the Getty Oil Company – of which I am president – issues detailed reports and financial statements. Its 46th annual report, covering the calender year of 1974, showed the company and its subsidaries as having a shade less than $2 billion in stockholder’s equity. Before anyone seizes on that figure, he should remember what I tried to make clear earlier. The net realizable assets of any company may be less (even far less) or, for that matter, more (even far more) than what is reflected by figures prepared according to standard accounting procedures. He should also remember that assets – save for the total that is in cash – are “spendable” only if and when they are sold (and, again, it is the market and innumerable other factors that determine what price they bring at sale).

I can say that, of this writing, my personal, all-in rated net worth is certainly above a billion dollars. The additional rated net worth of the Getty Family interests – including that of the Sarah Getty Trust, of which I am the trustee – is about twice again as much.

There is only one means by which the true, cash-in-hand-money-value of my and the Getty Family holdings could ever be established. Ths would involve the dissolution of the Getty companies and sale of their assets.

Before carrying this line of reasoning further, I must point out that disposing of the four million shares owned by me or the nearly eight million shares of Getty Oil Company stock in the Sarah C. Getty Trust by sale in the open market or otherwise would be foolish. The current market prices per share probably would not be attained and any such sale would take more years than I have left (alive). Also, the underlying asset value per share is undoubtedly more than the market price. Then there would be the problem of finding good new investments. Events current at this writing show that tax-exempt bonds are risky. Other bonds are too. Again, it would take many years to reinvest properly and the end result would be the payment of tremendous expenses plus taxes ending with a much smaller trust. History on the other hand shows that over the years, the present assets in the Trust have done rather well.”

by U.S. SBA Entrepreneur of the Year & Cofounder of Fears & Clark Tulsa Commercial Real Estate Group – Clay Clark

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posted Thursday, October 7th, 2010
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