Ovitz’s Partner Says He’s Owed Lots of Money

In Hollywood, the latest dance craze is a vindictive little Lindy done on the smoldering ruins of Michael S. Ovitz’s career. Since the announcement in early May that Mr. Ovitz was selling his star-crossed attempt at self-resurrection, Artists Management Group, to a similar company called the Firm, the former agent’s enemies-old and new-have kicked up a sandstorm of accusations, lawsuits and Schadenfreude over his professional conduct.

By some accounts, the 49-year-old supermarket tycoon Ron Burkle should be adding to the murk. Mr. Burkle, the press-shy managing partner of an investment firm called the Yucaipa Companies, has long been considered a financial backer of the 55-year-old Mr. Ovitz’s ill-fated entrepreneurial streak, but there’s been considerable speculation about the extent of his investment. But in the wake of Mr. Ovitz’s pending deal with the Firm, some details seem to be bubbling to the surface. Mr. Burkle told the Observer that as part of his dealings with Mr. Ovitz, he was given an option to purchase 10 percent of A.M.G. and was surprised to discover that Mr. Ovitz had not first consulted with him before agreeing to sell his company. In additon, a spokesman for Mr. Burkle who requested anonymity alleged that Mr. Ovitz owes Mr. Burkle in excess of $10 million as a result of business ventures they undertook.

Among those ventures were two Internet companies: Checkout.com, a now-defunct e-commerce portal, and Scour.Net Inc., a file-sharing network that was shut down for copyright infringement in the spring of 2000.

But two spokesmen for Mr. Ovitz-both of whom requested anonymity-denied that A.M.G.’s founder was indebted to Mr. Burkle. “That is absolutely, positively untrue,” said Ovitz spokesman No. 1. “That’s la-la land.”

Though Mr. Burkle has yet to take any legal action, those in his camp say he is currently weighing that option. Mr. Ovitz and A.M.G. are already the object of a $9.6 million breach-of-contract lawsuit filed by the head of the company’s late Artists Television Group.

Dear Mr. Ovitz

Mr. Burkle first learned about the A.M.G. sale by reading about it in the Los Angeles Times and quickly fired off a letter to Mr. Ovitz-with copies sent to his lawyers and principals of the Firm-asking that he be able to assess the value of his 10 percent option.

Reached by phone at his Beverly Hills home, Mr. Burkle confirmed the existence of the option, but declined to discuss the matter further. “We had an option on A.M.G., and we sent a letter to Mike and wanted to know if our option had died,” he told The Observer .

A spokesman for Mr. Burkle said that Mr. Ovitz never responded to the letter.

Mr. Ovitz’s camp confirmed the existence of the option, but vehemently denied that Mr. Burkle was owed money. “There have been discussions between the parties,” said Ovitz spokesman No. 2. “They haven’t shown us any evidence that Ovitz did not follow through on a commitment.”

Mr. Burkle’s camp countered that Mr. Ovitz had actually made a few offers to settle.

Given the infamous multimillion-dollar build-out on A.M.G.’s Wilshire Boulevard headquarters, and the estimated $8 million worth of art that was hanging on the office walls until Mr. Ovitz removed the paintings in late May, it might seem unusual that Mr. Burkle has not filed suit to reclaim some of the money.

The close associate of Yucaipa’s managing partner-who is also an acquaintance of Mr. Ovitz-said that laying back is just Mr. Burkle’s style. “The greatest revenge is that Ron doesn’t do anything,” said the associate. “Because you expect the shoe to drop, and it doesn’t; it just hangs out there. He’s saying, ‘You’re not worth it for me.'”

Mr. Ovitz and Mr. Burkle have been acquaintances since the early 1990’s, having met through political and charitable circuits. Mr. Burkle has long been active in California politics and is a frequent companion of Bill Clinton when the former President is in town. In 2000, Mr. Burkle was on the board of the UCLA Medical Center, later pledging $25 million to a $300 million Ovitz-led drive to build a new I.M. Pei–designed medical-research center. The status of Mr. Ovitz’s own $25 million pledge to the effort was the subject of some controversy earlier this year, though both the university and Mr. Ovitz insist that he will fulfill it.

Not Like Mike

Eventually, Mr. Ovitz’s famously exuberant salesmanship lured the low-key supermarket guy into a number of projects, but the associate of Mr. Burkle said the self-made billionaire began to resent the way in which Mr. Ovitz seemed to be trading very publicly-with bankers and the press-on Mr. Burkle’s name and reputation.

According to the associate of Mr. Burkle, Mr. Ovitz first spoke to Mr. Burkle about a bid to bring a National Football League expansion team to Los Angeles on May 6, 1998. Mr. Ovitz received a tentative “maybe” as an answer, he said, but the very next day, May 7, the Los Angeles Times reported that Mr. Burkle was a potential partner. Mr. Ovitz, the associate said, had effectively roped Mr. Burkle into the deal.

The following year, as the N.F.L. bidding war dragged on, Mr. Burkle lent his Sikorsky helicopter to a group of potential investors and N.F.L. officials-lead by Mr. Ovitz-so they could do a fly-over of a potential site in Carson, Calif., for a new football stadium. To Mr. Burkle’s alleged horror, when the group landed at the site, just a few miles southwest of Los Angeles, a large press conference awaited them. “Ron said, ‘Don’t introduce me. I want to be as low-key as possible,’ recalled the associate close to Mr. Burkle. But Mr. Ovitz didn’t listen. “Much to Mr. Burkle’s chagrin,” the source recalled, “he was introduced by Mr. Ovitz to say a few words.”

Thougha spokesman for Mr. Ovitz claimed that Mr. Burkle knew full well that there would be a press conference awaiting the group, the close associate of Mr. Burkle’s said the event led to a turning point in the friendship.

“It definitely soured him,” he said.

That same year, Mr. Ovitz launched A.M.G. and Mr. Burkle, declining to invest directly, apparently accepted an option to own a stake in the company. Meanwhile, Mr. Burkle allegedly continued to ask for the money he felt he was owed from his other ventures with Mr. Ovitz. According to the source close to Mr. Burkle, Mr. Ovitz’s remaining debt to Mr. Burkle “was understood all along.”

“Ron Burkle is an easygoing guy and a very rich guy,” observed a high-ranking film-industry executive, who knows both men. “He realized he made a mistake. Originally, I think the relationship was important, not the money. I would guess now the money is more important than the relationship.”

Another mutual acquaintance of Messrs. Burkle and Ovitz told The Observer that Mr. Burkle remains cordial but wary with Mr. Ovitz. He also said that Mr. Burkle feels that, under the guise of friendship, Mr. Ovitz used him in his quest for post-C.A.A. credibility.

Sun Tzu & Jiujitsu

For Mr. Ovitz, it would seem like a good time to make like Mr. Burkle and stay below the radar. But that’s not what has happened. According to a number of sources, Vanity Fair ‘s special correspondent Bryan Burrough has filed a lengthy feature on Mr. Ovitz that is slated to run in a forthcoming issue of the monthly. Though Mr. Burrough was originally assigned to write about Mr. Ovitz in light of the A.M.G./Firm episode, both companies declined to participate, according to an executive at one of the companies. But Mr. Ovitz, who did not fare well last January when he attempted to talk about A.M.G. and his controversial history in Hollywood on the Charlie Rose show, eventually agreed to speak to Mr. Burrough. A spokeswoman for the magazine declined to comment.

Mr. Ovitz’s attempts at damage control regarding A.M.G. have not always taken such a traditional path. According to three former employees of A.M.G., shortly before the company’s television division collapsed, Mr. Ovitz held a retreat in June 2001 at the Pacific Palisades in which he regaled employees with Chinese proverbs from Sun Tzu’s Art of War . The book, which Mr. Ovitz kept handy during his reign at C.A.A, is full of ancient wisdom about how a smaller opponent can leverage power over a stronger one. At that same retreat, A.M.G. employees sat on yoga mats and watched a demonstration by jiujitsu expert Rickson Gracie.

But many in Hollywood doubt that any combination of fancy Eastern philosophies can help Mr. Ovitz now. “He probably could have saved himself after Disney,” said the associate close to Mr. Burkle. “He doesn’t understand the value of having people wishing you well. It’s really a shame, because I don’t know how he pulls it back together now.”