House of Versace: The Untold Story of Genius, Murder, and Survival

by Deborah Ball

  Other fashion brands jumped on the accessories bandwagon. They came up with sticky, easy-to-remember names and then spun them off into different versions—a baby one priced at a few hundred dollars for twenty-somethings and larger bags in precious materials such as lizard or ostrich costing thousands of dollars for wealthier shoppers. The brand owners placed their bags of the season prominently in shopwindows, sent them down the runway over and over again, and devoted millions to advertising them. All the hype worked. Women who would normally have owned just one handbag now bought a whole collection to match every mood, occasion, and outfit.

  The profits in leather goods were huge because they cost relatively little to make but sold for thousands of dollars each. Unlike clothes, they didn’t come in sizes, and so there was far less unsold stock. Louis Vuitton’s performance showed just how lucrative the accessories business could be. Between 1990 and 1996, its sales doubled to hit eight billion francs ($1.4 billion), and that figure doubled again within five years. Arnault used rich profits to open scores of impeccable new shops worldwide that became heady shopping meccas for fashionistas. Women lined up for hours just to get inside Vuitton’s flagship boutique on the Avenue des Champs-Élysées in Paris. By the late 1990s, its cavernous Tokyo store was drawing four thousand customers a day.

  Similarly, Gucci was finding that leather bags, wallets, and belts would prove to be a desperately needed lifeline. Laid low by years of family squabbles, Gucci was practically bust when Domenico De Sole and Tom Ford took over in 1994. The pair made an odd couple. De Sole was born in a tiny town in Calabria to a peripatetic military family but immigrated in his twenties to the United States, where he earned a law degree at Harvard University. Ford was the son of a real estate developer in Santa Fe, New Mexico, who went into design after an early career as a commercial actor foundered.

  Backed by De Sole’s business acumen, Ford proved a master at channeling the 1990s zeitgeist. His first collection of velvet hip-huggers, fringed and beaded jackets, and slinky gowns evoked the 1970s jet set. More important, he had an uncanny knack for designing the purse that would be the season’s “it” bag. In 1997, not long before Gianni’s death, Ford designed a $300 G-string held together by a metal Gucci logo. It was pure marketing genius. Costing virtually nothing to make, the garment was all profit. Moreover, it conjured up enormous hype that boosted sales of more conventional items. By 1998, Gucci’s sales were $1 billion, five times the level of 1994, when Ford and De Sole—by then dubbed the “Dom-Tom Bomb”—took over the company.

  Ford understood the power of personality in the new media-driven era. With an actor’s sense of presence, he exploited his smoldering good looks to the hilt. Before a show, he went to a tanning salon and shaved with an electric razor set to leave a stylish two-day stubble. On the runway, he cut a striking figure in his black suit, open-collar shirt, and longish sideburns. Journalists came away from interviews feeling slightly starstruck. For modern women who found European designers of yore self-important and intimidating, Ford offered a bracing, refreshingly wicked new presence.

  “When the customer puts on a pair of pants, she doesn’t care what the original inspiration was,” he once told a journalist. “She cares about whether her butt looks good.”

  The boom in fashion was transforming shopping thoroughfares in the world’s capitals. In Milan, luxury powerhouses swept the city’s old-line shops off Via Montenapoleone. Rents rose by double digits each year, and the big brands began offering as much as 15 million euros in “key money” to convince the street’s traditional shopkeepers to break their long leases. Marketing budgets were also soaring as the big brands battled for the attention of shoppers. By the end of the 1990s, when the biggest issues of Vogue included more than seven hundred pages (and weighed more than four pounds), nothing less than a high-production, ten-page advertising spread would do. Ad campaigns also had to be global as the brands opened shop after shop in new cities.

  At the same time, Versace’s rivals were taking the celebrity game that Donatella and Gianni had pioneered to new heights. When Gianni was still alive, it was enough for Donatella to buttonhole a celebrity friend and send her assistant out to Los Angeles with a dress for the requisite red-carpet event. The stars were flattered just to be wearing Versace couture. But just around the time of Gianni’s death, the game changed entirely, as stylists elbowed their way between the stars and the designers. Given the massive increase in media coverage of celebrities and the huge money at stake for their films, the stars couldn’t risk looking frumpy, whether on a red carpet or on the playground with their kids. They hired stylists from the magazine or retail world to give them advice on hair, makeup, and clothes. In turn, the stylists quickly leveraged their clients’ star power with the fashion houses. They wheedled racks of freebie designer clothes—including couture dresses costing thousands of dollars each—for their celebrity clients, often demanding outfits for their entourages as well. The houses complied, knowing that reams of press coverage awaited the brands that managed to dress the A-list stars. In the end, the top actresses received dozens of free designer gowns just for the Oscars. Some celebrities called in multiple dresses only to decide at the very last minute which one to wear, making it difficult for the house’s public relations team to disseminate the news to the press. It also meant that a house’s best evening gowns might never see the outside of a star’s closet. Exasperated designers finally resorted to simply paying the stars. Fashion houses began shelling out six-figure fees to convince top stars to sit in the front row of their runway shows, in addition to the requisite private jets, five-star hotels, and free clothes. Donatella and Gianni had helped create an expensive, greedy monster.

  Fashion’s new business model required deep pockets and deft managers. Naturally, the companies that could tap the riches proffered by the decade’s bull run in the stock market would have a huge edge. An IPO not only brought in a wave of fresh money, but a company’s stock options were juicy bait in recruiting talented executives. Companies such as Bulgari and Gucci had seen their stock prices soar since going public in the mid-1990s, and they succeeded in attracting some of the best managers in the business. In 1997, 30 percent of luxury products were made by publicly traded companies. Within two years, that figure would double.

  Just as Versace’s rivals were hitting the accelerator, however, Santo was putting on the brakes. He was the first to understand that his plans to take Versace public went up in smoke the moment Andrew Cunanan shot Gianni. With 50 percent of the company in the hands of an eleven-year-old girl, an IPO would be virtually out of the question. While Donatella was free to vote Allegra’s share in routine shareholder meetings, any major decisions affecting the girl’s patrimony—including the sale of a piece of the company to outside investors—had to win the blessing of an Italian court that protected the interests of minors. And even if a judge approved an IPO, stock market investors would be reluctant to buy shares until they felt sure the company could thrive without Gianni.

  Santo had another worry. In bequeathing his fortune to Allegra, Gianni also left her with an enormous tax bill. Had Gianni consulted the company’s lawyers before scribbling out his will, they might have found a way to shield Allegra from at least part of the enormous inheritance taxes the Italian state levied. Instead, Allegra had to come up with as much as 70 billion lire ($36 million). To find the cash, she would have to draw very large dividends from the company—draining the house of money that could have been invested in the brand—or sell part of her stake. Versace lawyers quickly appealed the estimate produced by Italian tax authorities, hoping to scale the figure back. In the meantime, the tax bill hung like a sword over the house.

  Donatella’s second show in March 1998 did little to allay Santo’s concerns. It was a mishmash of looks: pinstriped skirts, Goth-inspired dresses, romantic flower-print skirts, and pastel halter-top dresses. While Gianni had always been careful to update the suits, jackets, and pants that made up the bulk of the house’s sales
, Donatella sent out just a few lackluster day clothes. She had little patience for everyday outfits. She wanted glitzy, red-carpet clothes. Santo sat in the audience, solemnly watching his sister take her bow. While Donatella was far more at ease than she had been at her debut show, the audience was clearly underwhelmed, mustering a weak round of applause as the models filed out.

  In the weeks that followed, the semiannual reports from Versace’s sales team—detailing what sold and what didn’t, along with feedback from the stores—landed on Santo’s desk. They made for difficult reading. Many of the big American stores sliced their orders in half—a drastic move for such a prominent brand. Some, reluctant to remove Versace entirely from their sales floor, cherry-picked just a handful of classic pieces, often in neutral black. But a few retailers had lost all confidence in Donatella’s designs. Neiman Marcus, which had bought about $20 million of Versace clothes the year before Gianni’s death, didn’t purchase a stitch from Donatella’s March collection.

  At the same time, Santo’s boom-time business decisions were coming back to haunt him: Versace’s company-owned boutiques were struggling. The cavernous flagships that Gianni had opened over the previous few years were the first to crumble. Even in the best of times it had been a stretch to make a profit from the shops. Leather goods brands such as Gucci, Prada, and Louis Vuitton could afford to open flagships because the profits on accessories were so high. The margins on clothing brands were lower, and accessories made up less than 5 percent of Versace sales. Furthermore, Gianni’s clothing designs, with their bold patterns and close cuts, required extra help from well-trained saleswomen, so the number of staff at Versace boutiques was often higher.

  As a result, stores such as the huge Fifth Avenue boutique in New York began to lose money almost as soon as sales fell. The Fifth Avenue store was an extraordinarily expensive shop, with its staff of about fifty salespeople, seamstresses, and security guards. Worse still, it competed with an older Versace store a few blocks away on Madison Avenue. With Gianni alive and the company thriving, Santo could afford to bet that two boutiques so close together would add up to more sales. Instead, like the two shops on Via Montenapoleone in Milan, they only cannibalized each other while doubling costs. Santo had overplayed his hand elsewhere in Italy as well. Versace had forty shops there, and many—particularly in conservative cities such as Turin, where shoppers turned their noses up at Versace’s outré style—had struggled even when Gianni was alive.

  More dismaying news came in June 1998. Prada had bought 10 percent of Gucci, making it the fashion house’s largest shareholder. By the end of the year, Prada would flip the holding to Bernard Arnault, who had been eyeing a takeover of Gucci for months and began building up his stake further. De Sole and Ford aggressively resisted LVMH’s hostile-takeover attempt, thus laying the groundwork for one of the longest and most bitter corporate battles Europe had ever seen.

  The news was an enormous blow for Santo. Less than a year earlier, he had contemplated a Versace-Gucci merger that might have created a multibrand luxury conglomerate strong enough to compete with LVMH. Now he could do little but sit on the sidelines and watch the drama unfold, the outcome of which would reshape the global fashion business.

  sixteen

  Siblings at War

  iN JULY 1998, WITH THE NEWS OF THE ATTEMPTED TAKEOVER of Gucci still ricocheting in the press, Santo and Donatella traveled to Paris for her first haute couture show. The memory of Gianni’s final show at the Ritz, almost exactly a year before, haunted them. Some fashionistas were surprised that Donatella had decided to go ahead with a couture collection at all. A designer takes on haute couture at the peak of his or her skills, after years of work in the atelier. Donatella was going up against the likes of Karl Lagerfeld and Valentino, two masters who had learned how to craft handmade dresses during the golden years of couture in the 1950s.

  By the time he flew to Paris, Santo was despairing over his sister’s collections. To be sure, Donatella faced a daunting challenge. If Gianni had found it vexing to adapt his de trop style to the new minimalist era, it would surely be an immense challenge for Donatella. Other houses that had lost their founders had survived—even thrived. But brands such as Chanel or Dior had a signature style that was instantly identifiable, whereas Gianni had dipped into so many different themes and references over twenty years that Donatella was left without a single clear path to follow. But when Santo saw his sister’s couture collection in the pool area at the Ritz, the very room where Gianni had staged his final show, he was horrified.

  Donatella wanted to make Versace couture modern and hip, but her stab at innovation was so gimmicky that it resembled something conjured up by a fashion student for an experimental show. The clothes had neither the refinement of old-line couture nor the brilliant creativity that John Galliano and Alexander McQueen could conjure. Prodded by her new team of callow, iconoclastic Brits and Americans fresh out of fashion school, she based the collection on new fabrics: tulle mixed with copper fibers, aluminum knit into lace and cashmere, metal wires crocheted with glass beads. Versace seamstresses struggled to work with the odd new materials.

  As they raced in the final days before the show to finish the collection, Donatella became more and more frightened at the prospect of facing a couture audience. She was also feeling overwhelmed by the approach of the first anniversary of Gianni’s death, just days away. She numbed the pain and fear with a three-day cocaine binge, finding an enthusiastic partner once again in Christopher Ciccone, who was trailing her around the Ritz with a camera crew for a documentary about the new face of Versace. (It was never completed.)1

  Finally, just hours before the show, Gianni’s seamstresses finished the designs Donatella had ordered up: dresses with lopped-off hemlines and frayed edges that made for a tough, heavy-metal look. On the day of the show, Donatella rallied enough to play hostess to the celebrities—Robin Williams, Matt Dillon, Jon Bon Jovi, and Isabella Rossellini—whom she’d flown in for the event.

  The following day, Donatella utterly crashed, holed up in her suite. The reviews were scathing. Fashion’s most influential critics had cut Gianni’s kid sister a break for almost a year, but now the gloves were off. The New York Times wrote that the show “exposed the gulf that lay between Ms. Versace’s esthetic and her brother’s,” the frayed clothes betraying “a hint of madness.”2 Sales of Versace couture plummeted immediately.

  As the year wore on, Donatella appeared blithely unaware of the fact that Versace was starting to founder under her watch. Instead of curtailing expenses, she spent the company’s money with abandon. When Lilly Tartikoff, the widow of television producer Brandon Tartikoff, asked Versace to sponsor a fashion show for her annual Fire & Ice cancer benefit in December, Donatella immediately said yes. The dinner was the hottest event of the season in Los Angeles, and the socialite outdid herself each year with a more and more elaborate spectacle. This time, the ball would be held on a soundstage at Universal Studios and hosted by comedian Jerry Seinfeld. Tables went for up to fifty thousand dollars each. The Versace name, hotter than ever after Gianni’s murder, was a huge draw. Eighteen months after the murder in Miami, Fire & Ice would be a sort of coming-out for Donatella as the new public face of Versace.

  The house had agreed to cover most of the cost of the fashion show, and the bill quickly ran to hundreds of thousands of dollars. The company flew a dozen seamstresses to L.A. to fit more than one hundred models in everything from couture gowns to rhinestone bikinis. About fifteen dresses were new creations, and a number of frocks were to be donated for auction that evening. Donatella hired the house’s signature supermodels for the evening, including Naomi Campbell, Amber Valletta, and Stephanie Seymour. Tens of thousands of Swarovski crystals were embedded in a runway that snaked in between the tables. On the evening of the gala, the models strolled amid an audience of 1,500, including Dennis Hopper, Dustin Hoffman, Carolyn Bessette Kennedy, and Goldie Hawn. The guests ate off colorful Versace plates.

  A
t one point during the party, Donatella slipped away to a private room with some other friends. When they were alone, she pulled out a bag of cocaine and a key. Seasoned users do “key bumps”—inhaling a bit of the powder off the tip of a key—when they don’t want to indulge in a full line. A friend took the key from Donatella and dipped it into the bag, snorting it quickly. Donatella followed him, savoring her evening with the stars.3

  At the start of 1999, Versace’s troubles worsened, driven in no small part by a destructive turn in Donatella’s personality. As long as Gianni was alive, everyone laughed off Donatella’s excesses. Her own sense of irony about her grandiose lifestyle tempered the friction that such prodigal habits might have created with someone else, and her wild personal habits could hardly do the company much harm. But after Gianni’s death, Donatella developed the lethal mix of egomania and self-loathing that is so common in addicts, which the stress of her situation only exacerbated. For years, she had badly wanted to be respected for her own ability, to be more than just a helpmeet to her virtuosic big brother. Now that she had the chance to prove herself, she was failing miserably.

  Her family life was unraveling quickly. After years of deterioration, her marriage to Paul finally crumbled. In June 1999, the day before Allegra’s thirteenth birthday, the couple officially separated.