On June 5th Chicago’s Pritzker family, heirs to one of the world’s great fortunes, added luster to their long record of good works by giving $30 million to the University of Chicago for biomedical research. The Pritzkers were in a generous mood because they were celebrating a remarkable milestone of dynastic longevity: Exactly 100 years prior to that date, a Russian immigrant named Nicholas Pritzker had opened a Chicago law practice that would serve as the springboard for the family’s multibillion-dollar global business empire.

Because the Pritzkers felt a duty to give back to the community in which they had long “prospered,” noted Thomas Pritzker, Nicholas’s great-grandson and leader of the clan, it was “appropriate” to mark the anniversary with a donation-the largest ever received by the university.

The Pritzkers’ rise from penniless immigrants to gilded financiers is indeed one of the triumphant sagas of American capitalism. In the 100 years since Nicholas Pritzker hung out his shingle in the Loop, three succeeding generations of Pritzkers have built a fortune valued today at more than $15 billion, according to the latest Forbes ranking of the 400 richest Americans (in which Thomas Pritzker and his uncle Robert tied for 22nd place at $7.6 billion each, tops among Chicagoans). The Pritzkers are best known as owners and operators of the Hyatt chain of posh hotels. But they also preside over a vast array of other businesses, including scores of manufacturing operations around the world, casino gambling, upscale housing for seniors, credit reporting, cruise ship travel, and much more.

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The family balances these blessings through philanthropy, giving away millions of dollars to health care and educational causes and spreading the wealth to major local cultural institutions, from the Art Institute of Chicago (where you’ll find a Pritzker wing) to the Lincoln Park Zoo (home of the Pritzker Children’s Zoo). And it sponsors the annual $100,000 Pritzker Architecture Prize, the most prestigious award in architecture.

Beyond that, though, the family is loath to reveal much. Although not entirely reclusive-Pritzkers show up at charity events and sit on some civic and cultural boards in town-they are almost obsessively low-profile and publicity averse. For decades, family members have declined most interview requests, and no Pritzker would comment for this story. (Several sources close to the family did agree to talk, but only on the condition that their names not be used.) “They were always more interested in building an empire than in getting their name in the newspaper,” says Patrick Foley, formerly president of Hyatt Hotels Corporation. “They just didn’t enjoy that kind of notoriety.”

Last year, however, the Pritzkers found themselves most uncomfortably in the public eye after the stunning collapse of Superior Bank, the Oakbrook Terrace–based savings and loan they jointly owned with the New York real estate developer Alvin Dworman. The institution’s failure is “a tale of gross mismanagement,” says George Kaufman, a finance professor at Loyola University Chicago. “[Superior] was engaged in relatively unethical practices, fancy-footwork accounting, playing it very close to the edge.” Kaufman says many share in the blame for the mess-the bank’s managers, directors, and auditors, as well as banking regulators-but he also wonders how the Pritzkers, as co-owners, could have allowed it to happen. “One of the great mysteries to me is what the Pritzkers were up to, why they took these chances,” he says. “It makes no sense given their wealth and visibility.”

 

As the story of the largest thrift failure in almost a decade played out, a more private drama-of generational succession-continued to unfold within the Pritzker ranks. For many years, the undisputed head of the clan was Jay Pritzker, the legendary dealmaker whose financial genius had long turbocharged the Pritzker wealth machine. When he died in 1999 after years of heart trouble, power shifted to his son Tom, now 52, and two other relatives who, like Tom, already played leading roles within Hyatt: Nicholas Pritzker, 56, a cousin of Jay’s but a member of Tom’s generation by age, and Penny Pritzker, Tom’s 43-year-old cousin.

This past January, in a second major changing of the guard, Robert Pritzker, Jay’s 76-year-old brother, retired after 48 years as chief executive officer of Marmon Group, the manufacturing and services conglomerate he had built into one of the principal pillars of the family’s wealth. Now, for the first time ever, someone not named Pritzker-John Nichols, 72, the former chief executive of Illinois Tool Works-is in charge of Marmon. His mission is to revive a company whose earnings plunged 60 percent last year-from $301 million to $121 million on sales of $6.4 billion-possibly by paring away some of Marmon’s vast collection of smokestack businesses that make everything from gardening gloves and seat belts to railroad tank cars.

Jay’s death and Bob’s retirement brought to a close a remarkable era for the Pritzker family. These two grandsons of Nicholas Pritzker took a fledgling empire built principally by their father, A. N., and expanded it exponentially through the building of Hyatt and Marmon Group. Taking over for them now is a generation of cousins who have played their own roles in building the empire, but who also are noteworthy for what they have done outside the office. Tom Pritzker spent two decades presiding over the day-to-day operations of Hyatt Corporation, but he is also a respected scholar and collector of Himalayan art. Nick has developed lucrative hotel, resort, and casino projects for Hyatt while also pursuing a keen interest in cosmology and hobnobbing with the likes of Paul Sereno, the University of Chicago paleontologist. Penny, who has built a fast-growing chain of upscale retirement communities, is also a long-distance runner and former chairman of the Museum of Contemporary Art.

“The combination of Tom and Nick and Penny is unique, because you never would have thought a family could continue to operate as both a family and a business,” says Darryl Hartley-Leonard, a former Hyatt president. “You’re talking about the fourth generation [of Pritzkers]. By the time most family dynasties get to this point, it’s all breaking apart.”

The question is, how long can the Pritzkers defy the odds?

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Managing the vast Pritzker empire probably would have tested the mettle of a new generation under any circumstances. But the sluggish economy has only added to the challenge. Besides a slump in the manufacturing sector, which creamed profits at Marmon, a slowdown in travel has pressured earnings at hotel chains like Hyatt. Meanwhile, several ventures initiated by the new leadership have not quite turned to gold-at least not yet. Tom sank $150 million into the launch of Reliant Pharmaceuticals, a drug marketing company, but a deal to sell it for $934 million in stock to the drug maker Alkermes unraveled in August. In Boston, Nick Pritzker has had to downsize plans for the development of Fan Pier, a hotel, office, and shopping complex on the city’s south waterfront, and he has yet to break ground on the project. And in Chicago, Penny’s plans to build a showcase skyscraper to house the Pritzker Organization and Hyatt have also been scaled back in a soft commercial real estate market.

The family’s most agonizing setback, however, was the stunning collapse last year of the once high-flying Superior Bank. The thrift had come into the Pritzker fold in 1988, when Jay Pritzker and Alvin Dworman-old social friends and partners in several past business ventures-put up $42.5 million for the insolvent Lyons Savings Bank, as it was then called, in return for an estimated $645 million in federal tax credits and loan guarantees. (By one estimate, it would have cost the government $200 million less simply to shut Lyons down.) Although Dworman had agreed to run the renamed Superior Bank out of his New York office, Jay deputized his niece Penny-a Harvard educated go-getter who had just earned her law degree and M.B.A. from Stanford-to help keep tabs on the investment. She served as chairman of Superior from 1989 to 1994, long enough for the bank to regain its financial health and embark on an aggressive new strategy, making high-interest home and auto loans to people with bad credit. For a time, that strategy appeared to work like a charm, yielding big profits-and large dividends for the Pritzkers and Dworman.

 

In reality, Superior was spiraling into ruin. Although the details are complicated, the bank’s fall stemmed from a risky business strategy and from poor oversight by the bank’s directors, according to investigations by banking regulators. Superior became heavily concentrated in high-risk assets connected with its subprime lending business, and then used “unrealistic and overly optimistic assumptions” to record the value of those assets, according to a report by the inspector general of the Federal Deposit Insurance Corporation. In language redolent of the corporate accounting scandals that have rocked Wall Street recently, the report adds that by using “liberal interpretations of accounting principles” Superior was able to “report impressive net income figures that masked the net operating losses the institution was actually experiencing.” Those phony “profits,” by the way, allowed Coast-to-Coast Financial Corporation, the holding company owned jointly by the Pritzkers and Dworman, to collect more than $200 million in dividends from 1993 to 1999-money the bank desperately could have used as it tottered toward insolvency.

After the Pritzkers and Dworman failed in July of last year to follow through on a plan to inject $270 million into the bank, Superior was seized by the Office of Thrift Supervision and eventually placed in receivership under the FDIC. Last December, to avoid being punished for Superior’s failure, the Pritzkers agreed to pay the FDIC $460 million while admitting no wrongdoing. Because $360 million of that payment was to be spread out interest free over 15 years, the settlement was worth an estimated $335 million in today’s dollars. But that won’t cover all the damage. Even with the settlement, Superior’s failure is expected to cost the federal thrift insurance fund an estimated $440 million.

Meanwhile, the Pritzkers still have not put their Superior troubles entirely behind them. Tom and Penny Pritzker are defendants (along with Dworman, several officers and directors, and the bank’s auditor, Ernst & Young) in a federal civil racketeering suit brought on behalf of Superior’s uninsured depositors (those with deposits in excess of the federally insured $100,000). Although the 1,400 uninsured depositors so far have recovered about 55 percent of the more than $65 million they lost in the collapse, they are still out almost $30 million, according to Clint Krislov, the lawyer for the plaintiffs. By contrast, the Pritzkers may not have fared so badly. Counting the tax credits and deductions they originally received and the dividends they collected over the years, “they appear not to have lost money on the deal,” Krislov says. (A source close to the family says the Pritzkers did lose money in Superior, and asserts that the lawsuit is without merit.)

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The Superior scandal stained virtually everyone connected with it-the bank’s managers and directors, the accountants who signed off on its financial statements, the banking regulators who failed to act aggressively as early as the mid-nineties, when Superior’s problems were fast becoming apparent, and, of course, the owners. As the fallout spread, the Pritzkers worked feverishly to control the damage. They claimed that they had been “passive investors” while Dworman’s people ran the show (Dworman said the Pritzkers shared in the blame). They also made the case that Superior’s auditor had continued to give favorable opinions on the bank’s accounting over the years. On that score, the Pritzkers appeared to gain some vindication in early November of this year when the FDIC sued Ernst & Young for fraud in its audit of Superior, and sought at least $2.19 billion in punitive and compensatory damages. (Ernst & Young denied responsibility for Superior’s collapse and said it would vigorously fight the charges.)

To some, however, the Pritzkers were hardly the innocents they made themselves out to be. The family, after all, controlled half the board seats of the bank’s holding company, which benefited from all that dividend income, and the Pritzker Organization’s chief financial officer, Glen Miller, chaired the bank’s audit committee. Although Penny had stepped down as the bank’s chairman in 1994, she remained a director of its holding company.

 

“No one should have had any illusions about what was going on,” says Bert Ely, a banking consultant in Alexandria, Virginia, who tracked the Superior story. “[Superior] was reporting gains that were unrealistically high, which allowed [it] to pay big dividends [to the Pritzkers and Dworman]. It was a lot like Enron and WorldCom-reporting profitability that wasn’t there. Their financial people should have been able to figure that out. If they truly didn’t understand the bank’s fundamentally unworkable business model, then the Pritzkers have bigger problems than Superior.”

The Pritzkers said in a statement that the settlement was simply “the right thing to do,” reflecting the family’s “historical commitment to stand behind their investments.” That may have been true. But it also entitles them to 25 percent of any sum the government collects in its $2.19-billion suit against Ernst & Young. Beyond that, the settlement made an ugly story go away. “I am convinced that the Pritzkers wanted to get their name off the front page,” says Ely. “They had stepped into a pile of horse manure, and they were highly embarrassed.”

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It is easy to think of the tight-knit Pritzkers as a monolith, a collective of wealthy blood relatives thinking and acting as one. In reality, though, they are a diverse collection of individuals with widely divergent interests and aspirations. Most of the 11 adult Pritzker cousins (two more are under 21) are not even involved in the family business. Dan Pritzker, 43, one of Tom’s two younger brothers, owns a record label and is the leader of the alternative rock band Sonia Dada. Gigi Pritzker, 40, Tom’s kid sister, is a co-owner of an entertainment production company that makes feature films and documentaries, and she was a producer of the movie The Wedding Singer. Jay Robert “J. B.” Pritzker, 37, the younger of Penny’s two kid brothers, made an unsuccessful run for Congress in the 1998 Democratic primary. Now he heads a venture capital fund and is also partnered with his older brother, Tony, 41, of Orange County, California, in a firm that invests in small to medium-sized industrial companies.

Yet whatever paths they have followed, all of the cousins share ownership of the family assets through a complex web of private trusts, and so they have an abiding interest in how those assets are managed. When Jay was alive and his children and nieces and nephews were younger, finding consensus was relatively simple. “He was the head of the family, and it was clear that he was in charge,” says a former Marmon Group executive who is familiar with the family. “If he said, ‘Let’s do this,’ then that’s what was done. If there was a deadlock, he was the tiebreaker. No one questioned his authority.”

When Jay died, that authority passed to his eldest son, Tom, who had built a career within Hyatt Corporation. “No longer can everyone look at the leader and say, ‘You’re 30 years older than I am; I’m going to listen to you because you’ve been around longer and understand things better than me,'” the former Marmon executive says. “You have Tom and Nick and Penny, who are contemporaries and are all successful, smart, good people, deeply involved in the business. And you have this other group of thirty- and fortysomethings who are also contemporaries but not involved in the business. The question becomes: ‘What happens to this big, far-flung family empire? What do we do with all of it?’ And it’s only natural for everyone to have an opinion.”

Speculation about the family’s plans has sparked reports that the Pritzkers were considering selling their core asset, Hyatt, which could be worth $10 billion. Forbes reported in September that the Pritzkers had gone so far as to hire an investment banker for the purpose of taking Hyatt public and, presumably, distributing the proceeds to family members’ trusts. But a source close to the family, calling the Forbes report “irresponsible,” denies that Hyatt is going public or that anything resembling a carving up of the Pritzker empire is imminent.

 

Still, that person acknowledges, the 11 cousins are now in discussions about how best to order-or reorder-their fortune, and they are considering all options. “The family members are getting together,” the source says. “They have looked at all their assets, and are rethinking it, because there’s new people in charge . . . and there’s a lot of [family members] who are not active in the business. . . . They’re looking at everything since Jay died, thinking about generational issues and working for a common strategy of succession and generational transition.”

Even if the empire is to remain intact, apparently some of the 11 cousins question several moves their business leaders have made. Forbes suggested in September that Penny had become a “locus of discontent,” in part because of her perceived role in the Superior mess. But a friend and business associate of the family says that was not quite right. “I’m not saying Penny didn’t do a bad job,” that person says. “But Penny doesn’t run the family business. Nothing that happens within the family enterprises-the Pritzker Organization or Hyatt-is done without Tom’s approval. The CFO of the Pritzker Organization was on the board [of Superior], and he reports to Tom. If there is any discontent from family members, you’ve got to look at who’s running the thing.”

Another sore spot among some of the cousins appears to arise from the circumstances of Bob’s retirement from Marmon Group, which he built from scratch into the country’s 19th-largest privately held company. For as long as Jay was alive, Bob had been free to run Marmon as he saw fit. In the years since Jay’s death, Bob has had health problems, according to sources close to the family, and when Marmon’s profits slumped in 2000 and 2001, he apparently came under increasing scrutiny from the new Pritzker brain trust. Finally he was persuaded to step down in January of this year, though he still retains a limited role running half a dozen Marmon operations. “Jay was no longer there to say, ‘That’s Bob’s-stay out of it,'” says the former Marmon executive. “It got to a point where Bob was saying, ‘Is this all worth it? I’ve been successful all these years. How much do I have to defend myself?'”

Whatever the extent of familial discord over these and other matters, Tom, Nick, and Penny remain “very tight,” says the family friend and business associate. “To suggest a strong alliance between the three would be accurate.” But, that person adds, “whenever you have generational change, you have moving parts that may move in different directions than they did before. Jay is not here anymore. Tom, Nick, and Penny probably have different notions about the direction they should take than Jay did. And it wouldn’t be crazy to suggest that other family members have ideas not completely consistent with what Tom and Nick and Penny believe.”

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Many years before there was a $15-billion empire to fret over, there was a ten-year-old immigrant boy with little more than a sharp mind and an unyielding will to succeed. Nicholas Pritzker arrived in Chicago in 1881 after his family had fled the Jewish ghetto near Kiev, Russia. The boy taught himself English by translating the Chicago Tribune into his native tongue using first an English-German and then a German-Russian dictionary. He found menial work, as a newsboy, a bootblack, a tailor’s assistant. Eventually he studied pharmacy and became a druggist. Later, while supporting a wife and three young sons on his pharmacist’s salary, he enrolled in evening classes at DePaul’s law school. Finally, at age 30, he earned his law degree and opened his own practice.

When Nicholas’s sons-Harry, Abram, and Jack-grew up, they too earned law degrees and joined their dad at his law office. Harry, the eldest, specialized in criminal law. Jack, the youngest, was a whiz with real estate. The star of the group, though, was the middle son, Abram Nicholas. Graduating from Harvard Law School in 1920, A. N., as he preferred to be called, was Pritzker & Pritzker’s expert in corporate law, though he had little patience for the law and lawyers. As the twenties progressed, it became increasingly apparent that A. N. could make more money from piecing together his own business deals than from representing legal clients. In time, he stopped practicing law altogether to focus on investing in real estate and small companies. It was the start of the empire. By the 1930s, A. N.’s business interests had multiplied to such an extent that Pritzker & Pritzker ceased serving outside clients altogether. From then on it would cater only to Pritzker interests.

 

A. N. has been described as a compulsive negotiator, a man who always had an envelope handy on which to scrawl an offer. During the Depression he excelled at snapping up distressed real estate, often in league with his brother Jack, or troubled companies he could buy on the cheap. A. N. made his best investment in 1942, when he and a friend bought a maker of coffeepots for $25,000; they sold the company 25 years later for $23 million.

A. N. had little patience for reporters. “They don’t care what damage they do, and the stuff they find just embarrasses somebody,” he told a Tribune reporter a few months before he died in 1986, at the ripe age of 90. And he preferred to make his money in private as well, free of the pressure to please shareholders with ever rising profits. “We don’t believe in public companies,” he once said. “You can kill a deal revealing information.” To this day, most of the family’s assets are tied up in privately held companies, joint ventures, and partnerships that do not report detailed financial information.

A. N. detested the idea of seeing the government get rich off the fruits of his labor. In 1935 he began setting up a series of offshore trusts to shelter his income and transfer his wealth to his heirs-a move, he later said, that “cemented the family and made us one.” By the time he died, he had shifted virtually all of his assets into trusts in the Bahamas on behalf of his children and grandchildren, leaving a personal estate of just $25,000. Four years later, the IRS challenged the legality of those trusts and sent the Pritzkers a $53.2-million bill for estate taxes. The Pritzkers fought the case, and in 1994 the IRS-unable to arrive at an accurate valuation of A. N.’s holdings due to the Bahamas’ strict secrecy laws-settled with the Pritzkers for just $9.5 million plus interest. The old dealmaker had scored his last coup.

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Although all three of A. N.’s sons possessed the Pritzker wit and acute intelligence, Jay, the eldest, was the prodigy of his generation. He finished high school at 14 and enrolled at Northwestern University, where he majored in accounting. When World War II broke out, his poor eyesight prevented him from becoming a fighter pilot, so he served as a naval flight instructor. His assignment to the Glenview Naval Air Station allowed him to enroll in law school at Northwestern and to court Cindy Friend, the daughter of a prominent appellate judge. Jay earned his law degree in two years, and soon he too was a partner at Pritzker & Pritzker.
Like his father, though, Jay was not destined to make his mark as a lawyer. His métier-his genius-would be as a dealmaker. In 1953, he borrowed most of the $95,000 he needed to buy Colson Company, a troubled maker of metal goods with a dilapidated factory in Elyria, Ohio, that was beset by labor problems. Jay’s 26-year-old brother, Bob, the engineer of the family, went to Ohio, jettisoned Colson’s laggard operations, pared down inventory, and moved the company’s fast growing caster business to a modern plant in Arkansas. Soon enough, Colson was churning out casters for carts and dollies and cranking out profits.

Jay and Bob had hit upon a formula that would fuel an extraordinary and symbiotic partnership. “With Colson, Bob wanted to run a manufacturing company he could turn around,” says the Pritzker family friend and business associate. “But what made the deal was the tax plan that Jay came up with. He found a completely legal way to buy a company and, even though it was in desperate straits, make money just on the deal, through tax credits. That’s the way they ran: Bob figured out what company he wanted, Jay figured out how to make the deal work, and then Bob would run the company successfully.”

Over the years the two brothers repeated the formula again and again. One basic strategy was to merge a newly acquired company that carried extensive operating losses on its books with a profitable enterprise the Pritzkers already owned, using the tax losses from one to minimize the taxable income for the other.

“Jay’s challenge in life was to make a deal,” says Patrick Foley, the former president of Hyatt. “That’s what he lived for.” The complexity of some of Jay’s deals was something Foley compares to a plate of spaghetti: Most people could look at them and see only a tangled mess; Jay, on the other hand, saw something akin to beauty. “He had the ability to find that one strand that made everything else fall into place,” says Foley, who left Hyatt to serve as CEO of Braniff after Jay bought the troubled airline in 1983. “He had the personality, the skills, and above all the imagination to find ways to make deals work.”

 

Once he bought a company, Jay preferred to hold on to it. Many acquisitions became part of Marmon Group, where Bob, the engineer and pragmatic manager, could focus relentlessly on improving efficiency and controlling costs. Darryl Hartley-Leonard, another former Hyatt president, recalls that Marmon managers often stayed at Holiday Inns when they traveled; he once asked Bob why the employees didn’t stay at Hyatt instead. “Because it’s too expensive,” Bob replied.

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Jay was just 35 in 1957 when he pulled off the deal that made him a business legend-buying the Hyatt House, a bustling hotel with a busy coffee shop situated near the Los Angeles airport, for $2.2 million. At first Jay may have seen Hyatt simply as a real estate play. But in the late fifties and early sixties, jet travel was coming to the masses, and Jay came to realize that business travelers would pay good money to stay at nice hotels near airports. Hyatt House was “simply the first first-class hotel I had ever seen at an airport,” he later told the Chicago Daily News. Within two years a second Hyatt House had opened in Burlingame, near the San Francisco airport, and then a third near the Seattle airport.

By 1961, Hyatt had expanded into a chain of six hotels, with headquarters in Burlingame. That year Donald Pritzker, Jay and Bob’s gregarious, 28-year-old kid brother, who had gone to Harvard and recently graduated from law school at the University of Chicago, lit out for California to run the fledgling chain. Don settled in Atherton, where he and his wife, Sue, would raise their three children, Penny, Tony, and J. B. Heavier-set than the other Pritzker men, with a round face and double chin, Don suffered from high blood pressure. But he, too, could focus on a deal. “He set the tone for the culture and philosophy at Hyatt,” says Patrick Foley.

With Don in charge, Hyatt began to expand rapidly. In 1967, Jay bought a newly built hotel in downtown Atlanta whose developer had gone bankrupt; Don turned it into the Hyatt Regency Atlanta. With its glass elevators, lobby fountains, caged tropical birds, and, most notably, an atrium lobby that soared upward an exuberant 21 stories, it was unlike any hotel anyone had seen. The property became a runaway smash, propelling Hyatt’s transformation from hotel chain to hospitality colossus. Soon new Hyatts, with their distinctive (and later widely copied) atrium lobbies, were opening across the country and eventually around the world.
On a hot day in 1972, Don was playing tennis at a Hyatt in Hawaii when he suddenly felt dizzy and excused himself from the court. Moments later he collapsed and died of a massive heart attack. By the time of his death, at age 39, he had built Hyatt into the country’s fifth largest-and fastest growing-hotel chain. Today Hyatt has management contracts on 204 hotels worldwide, and owns an additional 40 hotels outright. It also has interests in casinos and senior housing communities.

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In the years after Don’s death, Hyatt Corporation became the incubator for the next generation of Pritzker business talent. Tom Pritzker, the eldest and most cerebral of Jay’s five children, seemed the best bet to inherit Jay’s crown. When he was seven, Tom started tagging along with his dad to business meetings. Later he earned law and business degrees at the University of Chicago in preparation for one day running the empire.

Before he settled into the duties of an apprentice tycoon, though, Tom and his wife, Margot, in 1976 went on a 400-mile trek through the Himalayas, whose culture had first captivated him on a visit five years earlier. Although he joined Pritzker & Pritzker in 1977, and became president of Hyatt three years later, he also found time to nurture a scholarly interest in the art, history, and philosophy of the Himalayas. Arguably America’s foremost collector of Himalayan art, Tom maintains a home in Kathmandu, Nepal, and counts the Dalai Lama among his friends.

“He buys works of the highest quality, and he has gone into an area-particularly in early Tibetan painting from the 11th through the 15th century-that is very difficult in terms of connoisseurship and knowledge,” says Stephen Little, a former curator of Asian art at the Art Institute (a position endowed by Pritzker, who chairs the museum’s committee on Asian art). In March, the Art Institute will mount a major exhibition of Himalayan art that will draw heavily from Pritzker’s collection.

All the while, Tom remained immersed in the family business, learning at the knee of the master. Jay Pritzker, in his later years, rarely made a deal without consulting his son. “The father-son combination was remarkable,” says Darryl Hartley-Leonard. “Their offices were next to each other. I once asked Jay who was the best businessperson he ever came across, and he said it was Tom.”

“From a business perspective, Tom and Jay had a real symbiotic relationship,” says Tom Begel, chairman of TMB Industries, a leveraged buyout group that has done deals with the Pritzkers. “They would often literally complete each other’s sentences. Their mannerisms and figures of speech were the same.”

But Tom Pritzker was not a clone of his father; Jay’s genius could not be replicated. “Tommy has a lot of the same characteristics that Jay had-the same humor, the same sense of responsibility,” says Patrick Foley. “He sets his priorities as well as Jay did. But Jay had that imagination for dealmaking that very few have.”

“Tom doesn’t have the flamboyance of his father, but he has the ambition,” says Laurence Geller, CEO of Strategic Hotel Capital, which owns several Hyatt-managed properties. “Jay was ahead of his time, but the world was a less sophisticated place when he built the empire. Tom is the right man to run the Pritzker business in today’s more complicated world.”

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While Tom was in charge of the day-to-day running of Hyatt hotels in the eighties and nineties, his activities often overlapped with those of his close confidant Nick Pritzker, whose father, Jack, was the real estate guru of his generation. “When you look back at the different personalities in the family, it’s easy to see that Nick is Jack’s son,” says Darryl Hartley-Leonard. “Jack was very outgoing. He loved life. Nick has the same personality. And Nick loves the real estate business.” Nick is the chairman of Hyatt Development Corporation, which builds new hotel and resort properties, and Hyatt Equities, which he formed in 1997 to manage the family’s portfolio of hotel properties and to embark on an ambitious $1-billion hotel acquisition binge.

A vegetarian and major supporter of environmental causes, Nick is “the most restless and curious intellect I’ve ever met,” says Geller. “He loves music, art, photography, science. He’ll follow U2 around, dragging his kids to see them and not the other way around.” Nick has also dragged U2 themselves around-having flown with the band’s singer Bono and guitarist the Edge on his corporate jet.

Nick goes for stars in a more literal way, through his fervent interest in cosmology, the study of the origin and evolution of the universe. He provided funding for the cosmology gallery at Adler Planetarium, and in 1999 sponsored a cosmology symposium that drew some of the world’s leading astronomers and astrophysicists to Chicago. “He’s a very serious student of cosmology,” says Michael Turner, a professor of astrophysics at the University of Chicago. “He actually reads very technical scientific papers and is willing to put in the hard work.” One measure of Nick’s profile in that brainy world: Last year he was invited to the 60th birthday party for the physicist Stephen Hawking.

Among Nick’s other friends in the academic world is the U. of C. paleontologist Paul Sereno, who credits Nick as a key player in landing Sue, the famed T. rex skeleton, for the Field Museum, and who calls Nick “the patron saint of paleontology in Chicago” for his support of academic research and museum programs. The two have been friends for a decade, and sometimes Sereno gives Nick peeks at fossil discoveries long before the rest of the world hears about them. “When you show him the skull of a SuperCroc that you’ve just brushed off, he’s like a kid, enthusiasm bubbling over,” says Sereno.

On the business side, Nick took a personal interest in the building of the Park Hyatt, the family’s flagship boutique hotel at the corner of Chicago and Michigan Avenues-insisting, for example, that pricey black leather Eames chairs and footstools be standard in nearly all of the hotel’s 202 rooms. The hotel is in the 67-story Park Tower, which contains some of the city’s most expensive condominiums.

Nick has also been a force behind the family’s growing presence in cash-rich casino gambling. Among the more than half a dozen casinos in which the Pritzkers own an interest is the Grand Victoria in Elgin, one of the most successful riverboat casinos in the country. Last year the Grand Victoria generated $417 million in adjusted gross receipts. If the Pritzkers’ 50-percent ownership (with Circus Circus) entitled them to half the profits, then the family may have earned half as much from that single boat (assuming operating margins of 30 percent) as they netted from Marmon Group’s $6.4 billion in worldwide sales the same year. These days Nick is busy building what should be another gold mine when it opens in spring 2004: a new casino on the Canadian side of Niagara Falls in which the Pritzkers own a 35-percent stake.

Meanwhile, another project spearheaded by Nick called Fan Pier, a proposed nine-building mixed-use development on South Boston’s waterfront, appears to be languishing. After pushing aggressively a few years ago to get permits quickly, and clashing with Boston area conservation and environmental groups over the size and density of the project, Nick finally agreed to scale it back. Plans now call for one Hyatt hotel instead of two, fewer and smaller office buildings, and more public space for parks and a museum. Those compromises enabled Nick to secure the necessary permits to begin construction, but no plans have been announced to start the project, perhaps because of inadequate bank financing due to slack demand for office space in Boston.

The lack of progress coupled with the controversies that surrounded the negotiating process have left a “bad taste” locally, says Stephanie Pollack, senior attorney with the Conservation Law Foundation, which successfully fought to get more space set aside for public use. “The Pritzkers were so adamant about being on this fast timetable,” she says. “And now that they’ve got the regulatory go-ahead, they haven’t really done much.”

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Although Nick has long been regarded as the Pritzkers’ expert in developing hotel, resort, and casino properties, Penny-head of the family’s non-hotel real estate arm, Pritzker Realty Group-has given him a run for his money as a developer. In 1987, a few years after joining the family business, she started a new Hyatt division to develop upscale housing for seniors. Today that division, Classic Residence by Hyatt, is a thriving chain of 16 luxury retirement communities, with two more in development. It was also “the first group [of retirement homes] that was upscale, catering to upper middle-class seniors,” says Jonathan Kempner, president of the Mortgage Bankers Association and a decade-long acquaintance of Penny’s. “Before, the industry was typified more by a nursing home ilk.”

A 43-year-old mother of two, Penny is the first female Pritzker to crash the previously male bastion of Pritzker & Pritzker. She is also said to be sweet and disarming-the easiest of the new generation to talk to. But no one should doubt her bull-by-the-horns toughness, earned perhaps in part through personal adversity. Penny was just 13 when her father, Donald, died; her mother, Sue, died a decade later in an auto accident. More evidence of her grit: A few years ago, Penny participated in Hawaii’s Ironman competition. She completed the swimming and biking, but early in the run she slipped and injured her leg on a shard of lava. Rather than drop out, she continued the race, finishing the last 22 miles in pain. “That’s Penny,” says Laurence Geller, who acted as a mentor of sorts to her when he was an executive at Hyatt. “She is a bulldog and won’t let anything get in her way.”

That goes for her other extracurricular involvements as well. As a respected collector of contemporary art, Penny has played a major role in the development of the Museum of Contemporary Art, on whose board of trustees she sits. During her tenure there as chairman, a former chairman and noted art collector named Paul Oliver-Hoffman balked at making good on a $5-million pledge. As Oliver-Hoffman lay dying of a terminal illness, the board took the unusual step of suing to make him fulfill his pledge. “I am the last person to think litigation is the best way to solve a problem,” Penny said at the time. But the suit accomplished its purpose: In July 1998, after Oliver-Hoffman had died, Pritzker negotiated a settlement in which the collector’s widow agreed to donate two paintings to the museum instead of cash.

A look at just one deal Penny has cut, for one of the choicest pieces of real estate in Florida-the former Orlando Naval Training Center, now called Baldwin Park-demonstrates her agility at the negotiating table. The Pritzkers secured title to the 1,100-acre site in the heart of booming Orlando for just $7.6 million, or about $6,900 an acre-“close to what you would pay for good muck land in the Everglades,” wrote an Orlando Sentinel columnist critical of the deal the city struck. As if practically giving away such valuable land weren’t bad enough, the city threw in a multimillion-dollar package of loans and other breaks that further sweetened the deal. For example, the Pritzkers get to sell the land that cannot be developed-wetlands, land slated for roads-to the Baldwin Park community for $26 million, to be paid for by assessments on future homeowners. In other words, the Pritzkers will get more for the unmarketable land than they paid for the entire property. Presumably they will make a lot more money once they have finished developing the planned 3,158 pricey homes, condos, and apartments, 1.5 million square feet of office space, and 350,000 square feet of space for shops.

The Pritzkers “walked in with a team of analysts and financial people and totally outnegotiated the city of Orlando team, who had never been involved in a negotiation of this magnitude,” says Barry Render, a professor at the graduate school of business at Rollins College in Winter Park. “It was like the Bears playing a high school team. The land was given to the Pritzkers at probably one-tenth of its value, and they will make a fortune on it.”

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If there is a symbol today of the changing times within the Pritzker family, it can be found in another project Penny is orchestrating in the west Loop, at the corner of Wacker and Monroe. Right now it’s nothing but a parcel of bare ground, but it is the future site of the Hyatt Center, the planned 47-story, $300-million skyscraper she wants to house Hyatt Corporation and the Pritzker Organization along with some non-Pritzker tenants. Like several other recent Pritzker ventures, the project has had a difficult gestation. The Pritzkers caused a stir last year when they announced their plan to build a lavish tower designed by the renowned British architect Lord Norman Foster. But the downturn in the economy rendered Foster’s design, which called for expensive materials and unusual floor configurations, too extravagant for the times, and the plan was canceled.

Later, the Pritzkers turned to the architecture firm Pei Cobb Freed & Partners-home of the famed architect I. M. Pei-to develop a design that would be less expensive but also worthy of the family that sponsors the Pritzker Architecture Prize. In October, Penny succeeded in wooing the Chicago law firm Mayer, Brown, Rowe & Maw and the investment bank Goldman Sachs as tenants.

To a previous generation of Pritzkers-the understated billionaire Jay, who drove a Ford, and the frugal Bob, who always flew in coach-the idea of sinking money into a trophy downtown skyscraper to house the family business might have seemed a tad unnecessary, if not unthinkably showy. The new tower, though, can serve as a monument to the success of that generation and their predecessors even as it boldly declares that a new generation is now in charge-and that this is no longer their fathers’ empire.