Ted Arison was born Theodore Arisohn in 1924, in Tel Aviv, then part of Palestine. He fought in the Israeli Army during that nation's 1948 war of independence, rising to the rank of colonel. When Israel nationalized its shipping industry (Ted's father Meir owned part of a shipping company and Ted worked in the family business), Ted Arison immigrated to the United States. He spent ten years in the air cargo business, including a stint with El Al Airlines, then moved from New York to Miami in 1966.
After only a few months in the subtropics, Arison hooked up with Knut Kloster, a Norwegian cruise-industry executive, to form Norwegian Caribbean Lines. With but one ship, the Sunward, the firm employed a new strategy that would redefine the industry: scheduling short Caribbean cruises rather than transatlantic hauls; marketing to middle America; and advertising the ships, rather than islands, as the destination.
Mississippi congressman Gene Taylor has witnessed Carnival's lobbying might in action
courtesy Historical Museum of Southern Florida
The Mardi Gras, sans sandbar
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In 1971 the Arison-Kloster partnership ended in an ugly lawsuit. When Kloster's share of the profits failed to reach $1.5 million two years in a row, he cancelled his contract. Arison then sued, alleging Kloster's Norwegian employees had caused the shortfall, at least partially, by purchasing furniture for the ships, then dumping it overboard. The dispute is described in Selling the Sea: An Inside Look at the Cruise Industry, a 1997 book by Carnival Cruise Lines president Bob Dickinson and former Florida International University professor Andrew Vladimir. The volume describes Ted Arison's next move as a gambit for financial survival: "Arison quickly moved to protect himself by seizing all advance money on hand at the various NCL sales offices around the country. He believed that the cancellation of his contract was not valid...." The lawsuit was eventually settled out of court, with Arison agreeing to return half of the funds he had seized.
Even before this settlement was reached, Arison put one million dollars in "seized" money to work starting a new cruise line, which he called Carnival. He joined forces with an Israeli friend, Meshulam Riklis, who put up seven million dollars to buy a ship called Empress of Canada. The vessel, renamed the Mardi Gras, was registered in Panama, which has no corporate income tax and does little to regulate labor practices.
On March 7, 1972, Ted took the Mardi Gras on its maiden voyage with 300 travel-industry professionals aboard. The boat immediately ran aground at Government Cut and remained there for a day. After being refloated the next day, she headed for San Juan, Puerto Rico, where Ted Arison made an alarming discovery: He didn't have enough money to pay for gas. Eventually he cleaned out some onboard cash registers to settle his bill.
The rough waters didn't end there. Mardi Gras's operating losses and other financial strife led Riklis to give Ted Arison the ship and its five-million-dollar mortgage in 1974 for one dollar. Arison slashed prices, then opened casinos and discos on board. Although Dickinson, who joined the company in 1973, is often credited with refining the "fun ship" concept that dominates Carnival's sales pitches, Micky Arison has stated necessity birthed that particular invention: "I'd love to say it was a grand strategy," Micky Arison told Florida Trend in 1989, "but in the early days, our only strategy was how do we make payroll?"
Carnival's idea caught on. "They attracted a generation who would not have chosen cruises, when the industry was geared toward people who wanted to play shuffleboard on the afterdeck," Malcolm Noden says. The wheeling and dealing that surrounded Carnival's birth, though, left Arison with a reputation. "The industry perception was that Ted was one of the smartest folks around and, in all candor, you'd have to sit on your wallet when you were talking to him. He was not considered to be someone whose ethics or morals you would take home to mother. It was a hand-to-mouth business, and he was one of the more slippery exponents of it."
In the mid-Seventies the company turned a profit for the first time and added a second ship, the Carnivale (another retread, formerly known as the Empress of Britain). In 1983 Carnival Corp.'s gross revenues were $221 million, and profits were $47.3 million. Except for a slight dip the following year, both total revenue and net income began a steady increase. In 1985 the company bought its first of three new, larger ships, adding one per year thereafter.
In 1989 gross revenues exceeded one billion dollars for the first time. Carnival's inexorable growth, at least in part, stemmed from labor efficiencies. "They achieved productivity through high-intensity effort, getting cabin attendants and food-and-beverage people to help do everything from moving baggage and loading ship's stores to polishing brass," Noden explains. Also helping the bottom line: Employees often worked 60 to 70 hours per week, were paid subminimum wages, and received minimal benefits.
Arison spread around some of his newfound liquidity during the Eighties. In 1989 he bought the seven-ship Holland America Line for $625 million, as well as three new $200 million superliners. On land he acquired two casino hotels in the Bahamas (the first of which he bought in 1983); an airline, which was added in 1988; and a hotel chain that spread from Alaska to Canada's Yukon Territory. Some of those holdings required Arison, for the first time in years, to shoulder a significant U.S. tax burden.
