ENCORE: Cruise Ship Wars | Making Waves | 2

Summary

Business Wars — ENCORE: Cruise Ship Wars | Making Waves | 2

Release Date: July 2, 2026
Host: David Brown

---

Episode Overview

This episode of Business Wars traces the fraught rise of Carnival Cruise Line from industry punchline to power player, exploring the intense competition among Carnival, Norwegian Cruise Line, and Royal Caribbean in the 1970s and early 1980s. Host David Brown dramatizes the industry’s high-stakes gambles, bitter rivalries, marketing reinventions, and daring leadership moves that set a course for the global cruise industry as we know it.

---

Key Discussion Points & Insights

1. Carnival's Rocky Maiden Voyage

• [00:00–04:29] Ted Arison launches Carnival’s first cruise on the dilapidated Mardi Gras, only to run aground in Miami harbor due to a botched navigation order.
  • The ship is old, infested, and barely habitable.
  • “Carnival seems doomed before it’s even made it to open water.” (David Brown, 04:07)

2. Survival Instincts and Scraping By

• [06:08–11:00] Struggling to even refuel after the disastrous start, Arison pays for diesel in Puerto Rico by scraping together nickels and dimes from every cash register and slot machine onboard.
  • Notable moment: The fuel company refuses credit after hearing about the Miami mishap, forcing Arison to improvise.
  • Quote: “Cash is cash.” (Ted Arison, 09:56)

3. Cut-Rate Strategy and Squalid Reality

• [11:00–13:00] Carnival, operating on a shoestring, hires low-paid workers, buys surplus (sometimes spoiled) food, and battles rats—offering relentless cost-cutting instead of luxury.
  • Arison attempts to undercut the competition with fares 20–30% lower than Norwegian and Royal Caribbean.
  • Despite bargain prices, the squalor keeps bookings low—Carnival loses $8 million in its first 18 months.

4. Bob Dickinson’s Marketing Revolution

• [13:00–15:20] Investor Moshoulam Ricklis brings in Bob Dickinson to overhaul Carnival’s stagnant marketing.
  • Dickinson critiques Carnival’s overblown brochures brutally:
    • Quote: “Your ship’s a turd...and it’s a turd people spend a lot of time on.” (Bob Dickinson, 13:57)
  • The breakthrough: Pivot to selling “fun” over luxury, coining “The Fun Ship” slogan.
    • Quote: “Fun. They want to have fun. We’ll be the fun ship.” (Ted Arison, 15:14)

5. The Casino Gamble and Full Ownership

• [16:36–18:07] Arison wants a full casino onboard to boost revenue, but his majority backer Ricklis can’t approve it due to Nevada gambling regulations. Ricklis instead sells Carnival (and its $5M debt) to Arison for $1.
  • Quote: “I really do [believe in this company].” (Ted Arison, 18:07)
• By 1975, Carnival posts its first profit.

6. Industry Expansion and Pop Culture Boon

• [19:39–21:32] Growth in the 1970s is capped by Hollywood’s “The Love Boat” (premiering in 1977), which glamorizes cruising, bringing mass-market attention.
  • Statistic: Cruises skyrocket from 500,000 passengers/year in 1970 to 5 million by the late 1990s.
  • “With its funny and sexy portrayal…[‘The Love Boat’] serves as millions of dollars’ worth of product placement...” (David Brown, 20:44)

7. Bold Fleet Expansion and the Cruise Wars Escalate

• [23:47–25:15] By 1978, Carnival (against all industry expectations) orders a brand new $100 million ship, “the Tropical.”
  • Notable moment: Industry rivals are stunned; Carnival isn’t even worth $100M.
  • Quote: “It will be the best, most advanced ship on the market.” (Ted Arison, 25:15)

8. Norwegian's Response: The Norway

• [25:15–29:25] Norwegian Cruise Line buys and retrofits the gigantic SS France, renaming it Norway—the world's largest cruise ship.
  • Focus: Onboard attractions—Broadway theater, disco, lounges, even a driving range.
  • “If we buy this ship, we’ll own about 40% of the passenger capacity that’s sailing to the Caribbean…” (Knut Kloster, 28:31)

9. Structural Stagnation at Royal Caribbean

• [29:25–34:24] Internal dysfunction stifles Royal Caribbean’s growth—its board structure requires unanimity, with bickering owners unable to agree on bold moves until a U.S. executive (Jack Seabrook) sends Richard Fain to force corporate reforms.
  • Quote: “I need you to be the adult in the room.” (Jack Seabrook, 34:09)

10. Labor Unrest and the "Mutiny" at Carnival

• [35:46–43:00] In 1981, crew members stage a spontaneous strike over poor pay and brutal conditions.
  • Chief executive Mickey Arison (Ted’s son) coldly orders a crackdown—striking workers are forcibly removed and deported by private security.
  • Moment: “Si se puede!” — Strikers chant for better conditions. (41:32)
  • Quote: “We should have been better about our crew relationships. But it’s too late now. And this isn’t how you go about making change.” (Mickey Arison, 39:28)
  • This incident cements Mickey’s reputation as a tough leader.

11. Carnival’s National TV Blitz and IPO

• [44:07–46:24] Carnival launches the first national cruise TV ad campaign as it rapidly expands to a true "golden fleet."
  • They seek even more capital, start planning for an IPO, and so do their main rivals.
  • “If this is what they need to do to be the biggest cruise company in the world, then that’s what they’re going to do.” (David Brown, 46:24)

---

Notable Quotes & Memorable Moments

• “Cash is cash.” — Ted Arison (09:56), when paying for fuel with bags of dimes and nickels.
• “Your ship’s a turd... and it’s a turd people spend a lot of time on.” — Bob Dickinson (13:57), pulling no punches about Carnival’s image problem.
• “Fun. They want to have fun. We’ll be the fun ship.” — Ted Arison (15:14), conceiving Carnival’s new identity.
• “I really do [believe in this company].” — Ted Arison (18:07), as he buys Carnival outright despite its debt.
• “Si se puede!” — Striking crew chant for fair treatment (41:32).
• “I need you to be the adult in the room.” — Jack Seabrook to Richard Fain at Royal Caribbean (34:09).
• “If this is what they need...then that’s what they’re going to do.” — David Brown (46:24), on Carnival’s go-public decision.

---

Timestamps for Important Segments

| Timestamp | Segment | |------------|------------------------------------------------------------------------------| | 00:00–04:29| Carnival’s disastrous maiden voyage; ship runs aground | | 06:08–10:25| Economic struggles; refueling with coin; “cash is cash” scene | | 13:00–15:20| Dickinson overhauls Carnival’s marketing; “the Fun Ship” idea | | 16:36–18:07| Ownership handover from Ricklis to Arison | | 19:39–21:32| “The Love Boat” TV show and cruising’s image boom | | 23:47–25:15| Carnival stuns industry with $100M new ship announcement | | 25:15–29:25| Norwegian’s Norway; arms race for the largest, flashiest ships | | 29:25–34:24| Royal Caribbean’s board infighting and corporate restructuring | | 35:46–43:00| 1981 crew strike on Carnival; Mickey Arison’s decisive crackdown | | 44:07–46:24| Carnival’s national TV campaign, move toward IPO |

---

Tone and Style

David Brown maintains a brisk, dramatic, and occasionally wry tone, giving voice to rivalries, corporate bravado, and the desperation of scrappy entrepreneurs. Dialogue is sharp and often humorous, but real labor and ethical issues are not glossed over.

---

Episode Takeaways

• Carnival’s early story is one of survival, gamble, and bold reinvention in the face of disaster.
• Pure budget strategy wasn’t enough; shifting focus to “fun” and mass marketing beat luxury in creating a new market.
• Pop culture pivoted public perception, leading to an explosion in cruise demand.
• All three industry leaders (Carnival, Norwegian, Royal Caribbean) entered the 1980s with fresh ambitions, but not without internal strife, structural challenges, and unresolved ethical questions about working conditions.
• The stage is now set for even more aggressive competition—with huge new ships, public offerings, and an all-out war for dominance on the high seas.

---

Transcript

[Narrator (David Brown)]

Audible subscribers can listen to all episodes of Business wars ad free right now. Join Audible today by downloading the Audible app. It's March 1972 in Miami Harbor. Carnival Cruise Line founder Ted Arison stands on the bridge of his ship, the Mardi Gras, in front of him. The captain of the ship has his hand on the helm. Next to the captain, a harbor pilot gives him directions. This is standard operating procedure when a ship of significant size needs to make its way through the harbor into open sea. The harbor pilot barks out orders, all right, there's a stiff breeze from the east, so we're going to cut the rudder more aggressively than usual. Roger Arison's palms are sweaty as he watches the captain intently. This is Carnival Cruise Line's maiden voyage. A few months ago, Arison got into a dispute with Knut Kloster. Arison and Kloster co founded Norwegian Cruise Line. When their disagreement reached an impasse, Arison closed out Norwegian's US bank accounts and fled to Europe. With help from an old friend, he purchased the Mardi Gras and started Carnival. Through the porthole, Arison can see onlookers lining the shore and members of the press snapping photos. Arison thinks he sees smirks on the reporters faces. Compared to the sparkling new ships owned by rival companies like Norwegian and Royal Caribbean, the Mardi Gras is a clunker. It's old and dilapidated. Many of the cabins still don't have working toilets or electrical outlets and couldn't be booked. Large swaths of the ship are uninhabitable and closed off to passengers, and it's infested with both roaches and vermin, which Harrison hopes the guests won't notice. But Arison needs this first voyage to be a success. Kloster sued to get Norwegian's money back and Arison knows the courts will rule in Kloster's favor. Soon he's going to be forced to pay Closter back. Revenue from Carnival is the only way he'll be able to do that. The ship approaches the channel. The open sea is visible ahead. A jetty pokes out of the water to the right. The harbor pilot nods and a small smile comes over his face. Giario destre. Arison looks over at the captain. The harbor pilot had been giving all his commands in English, so Arison's not sure why he switched to Italian. But the captain is Italian and doesn't have any trouble following the harbor pilot's command. Arison feels the ship start turning to the right. Suddenly, the harbor pilot begins to shout, hey, what are you doing?

[Ted Arison]

Go left. Go left.

[Narrator (David Brown)]

The captain looks at him, confused. You said Destra.

[Ted Arison]

Yes, Left. Destra is right.

[Narrator (David Brown)]

The captain frantically tries to correct course, but it's too late. A loud groaning sound emanates up from the depths of the ship, and Arison finds himself jolting forward, almost falling over as the ship grinds to a stop.

[Ted Arison]

What just happened? What's going on?

[Narrator (David Brown)]

The captain glares at the harbor pilot. We've run aground on the sandbar due

[Ted Arison]

to an inaccurate command. Can we get off of it? I'm going to see if I can

[Narrator (David Brown)]

reverse the engines that might free us. He calls out orders, and crew members hurry to comply. The engines whir and sand flies up out of the water, hitting the sides of the ship. But the ship doesn't move. The captain looks back at Arison and shakes his head.

[Ted Arison]

It's not working. And now what? We're going to have to get the tugboats out here and see if they can pull us out. How long will it take to get us free? Hours, maybe days. And we'll have to examine the hull,

[Narrator (David Brown)]

make sure there's no damage before we sail.

[Ted Arison]

So we might have to cancel this entire cruise.

[Narrator (David Brown)]

Maybe Arison feels nauseous. If they cancel, he'll have to refund every passenger their fee, and Arison will be broke once again. Carnival seems doomed before it's even made it to open water.

[Jabron (Diabetes patient testimonial)]

We all have routines. I'm Jabron and with diabetes. Mine was finger sticks. Sometimes I skipped them because they hurt. The Freestyle Libre 3 CGM changed that. It gives me glucose insights without finger sticks. Learn more @freestylelibre US fingersticks are required

[Freestyle Libre 3 CGM Advertiser]

if your glucose alarms and readings do not match symptoms or when you see Check blood glucose symbol for the first 12 hours. The views expressed should not be used for medical diagnosis or treatment as a substitute for professional medical advice. Individual circumstances may vary. For prescription only safety info found @freestyleibre us

[Leon Naifak (OnlyFantasy podcast promo)]

I'm Leon Naifak. What happens when OnlyFans becomes more than just a side hustle? OnlyFantasy is an in depth look at the world's newest profession and how the rules of human intimacy are being rewritten online. Listen wherever you get your podcasts or binge all episodes of Only Fantasy ad free only on audible

[Narrator (David Brown)]

from wondering. I'm David Brown and this is Business wars. On our last episode in 1966, businessman Ted Arison and shipbuilder Knut Kloster teamed up to start Norwegian Cruise Line and together they took Caribbean Cruising from a niche travel option for retired Floridians to

[Ted Arison]

a national vacation trend.

[Narrator (David Brown)]

Seeing their success, hotel veteran Ed Stephan wanted in on the action. He partnered with two Norwegian shipping families to start Royal Caribbean cruise line in 1968. With ships designed specifically for cruising and the goal of becoming the highest quality cruise company, Royal Caribbean made a quick splash. Both cruise companies were seeing their ships fully booked and predicted years of growth. But in 1971, Arison and Kloster had a falling out when Arison cleaned out the company's coffers. Using stolen funds from Norwegian Cruise Line, Arison started a new company and named it Carnival. Arison was determined to make Carnival the top cruise line in the world. But with only one rickety ship in his fleet and a disastrous start to its maiden voyage, Arison would need the wind at his back to catch up to his rivals. This is Episode two Making Waves. It's March 1972 in San Juan, Puerto Rico. Ted Arison stands on the dock with his arms crossed. Across from him is a fuel company employee. His shoulders heave as he laughs uproariously. Arison scowls. I don't understand what's so funny. Let me get this straight. You want us to extend you thousands of dollars of credit when your very first voyage grounded getting out of Miami and you barely even made it here? The Mardi Gras was stuck in the harbor for 24 hours after it ran aground. They had to remove thousands of gallons of fuel from the ship's tanks to lighten the wait and wait for high tide in order to free her. Unfortunately, the freighter which had siphoned out their gas was not certified to refuel the ship. There was enough fuel in the tank to get the Mardi Gras to San Juan, but not enough to get it back. Arison needs to get this gas or he and his passengers will be stranded in Puerto Rico and he'll have yet another disaster on his hands.

[Ted Arison]

Look, I'm good for it.

[Narrator (David Brown)]

With respect, there isn't a person alive who thinks your company is going to last the month. If you want this diesel, you need to pay cash up front.

[Ted Arison]

Fine.

[Narrator (David Brown)]

I'll be back with the money soon. But as Arison walks away, his brave front fades. He doesn't have the thousands of dollars he needs to purchase tons of diesel. He spent everything he had on the ship. Ted Arison makes his way back onto the ship where his son Mickey waits at the bar. They speak in hushed voices.

[Ted Arison]

So, are they going to sell you the gas?

[Narrator (David Brown)]

Ted shakes his head and explains the situation. Are we going to get that kind of cash?

[Ted Arison]

I don't know.

[Narrator (David Brown)]

He cuts himself off watching a bartender give a customer change. An idea occurring to him.

[Ted Arison]

Tonight, after closing time, get a team together and empty every cash register and every slot machine on this ship. You got it?

[Mickey Arison]

Do you think that'll be enough?

[Ted Arison]

It has to be.

[Narrator (David Brown)]

Mickey nods. That night, Mickey and other members of the Carnival crew spend the whole night going through the ship, rounding up every spare penny they can find. The next morning, Ted returns to the refueling office carrying bags full of cash. He sets the bags down in front of the fuel company employee who'd laughed in Ted's face the day before. Ted smirks. The cash you asked for. The employee peers into one of the bags and looks up in disbelief.

[Ted Arison]

These are dimes and nickels. Cash is cash.

[Narrator (David Brown)]

The employee glares at Ted.

[Ted Arison]

We're counting every last penny. Literally. Do what you have to do.

[Narrator (David Brown)]

To Ted's relief, he's scrounged up enough to buy the diesel he needs. The Mardi Gras is refueled and completes its maiden voyage. Carnival Cruise Line lives to fight another day.

[Ted Arison]

Barely.

[Narrator (David Brown)]

Despite its inauspicious start, Ted Arison beats the industry's prediction and keeps Carnival going. He's operating the cruise line on a shoestring, and every month he faces bankruptcy. But Arison keeps costs low. To survive, he hires workers willing to work for the cheapest pay, often people from developing nations with few employment options, he orders food from military surplus suppliers. Sometimes it's rotting by the time it arrives on board, and the crew is forced to throw it overboard. The vermin problem is tough to solve, and more than once, rats make their way into passenger areas. This is not the glamorous experience offered by Norwegian Cruise Line and Royal Caribbean. So to entice any passenger to take a voyage on a ship with such squalid conditions, Arison prices his cruises 20 to 30% cheaper than his competitors. But even with lower prices, Carnival isn't selling out. Its sailings and cruises only make money when they sail with a full ship. Within the first 18 months, Carnival loses $8 million. Meanwhile, Norwegian Cruise Line and Royal Caribbean are continuing to sell out, earning tidy profits. But Erisen's old friend Moshoulam Ricklis, who's invested heavily in Carnival, isn't going to stand by and watch as Carnival loses money. So in the summer of 1973, Ricklis installs Bob Dickinson, an executive who works for one of his other companies, as the second in command at Carnival. Rickless tasks Dickinson with figuring out how to sell out Carnival Cruises. So the company starts making a profit asap. Arison isn't happy about having a new colleague foisted upon him, but Dickinson soon proves himself. It's August 1973 in Miami, Florida. Ted Arison walks into a conference room in Carnival Cruise Line headquarters. His new second in command, Bob Dickinson, stands at the head of the table. He wears large glasses, sports a thin mustache and a jacket that looks like it should be picnic cloth. Arison bites his lip. There's an entertainer who performs on board the Mardi Gras with a puppet who wears the exact same jacket. Arison can't believe he has to work with someone who dresses like a marionette. Across the table are brochures from every cruise line operating out of the United States. The big ones like Norwegian Cruise Line and Royal Caribbean, but also many of the smaller ones which have popped up, like Holland America, which sails to Alaska, and Princess, which goes to Mexico. Arison takes in the array of bright colors and glossy paper.

[Ted Arison]

What's all this?

[Narrator (David Brown)]

Inspiration. Arison looks at him, confused. Dickinson doesn't mince words. Your marketing stinks. He picks up a carnival brochure from the table and reads from it. Sail aboard the Mardi Gras, the flagship of our golden fleet. He lowers the brochure and gives Arison a withering look. Give me a break.

[Ted Arison]

You have no fleet, and your one

[Narrator (David Brown)]

ship sure isn't golden.

[Ted Arison]

It's called advertising.

[Narrator (David Brown)]

You dress up your product to convince

[Ted Arison]

people to buy it.

[Narrator (David Brown)]

Sure, but your ship's a turd. And it's a turd people spend a

[Ted Arison]

lot of time on since it sailed very slowly. Do you know how much fuel costs? Sailing slowly is how we conserve costs. Besides, we've made a lot of improvements. We figured out the rat problem. For instance, what do you want, a gold star? Have you seen Royal Caribbean ships? They're so clean you could eat off the floor.

[Narrator (David Brown)]

Now they have a golden fleet.

[Ted Arison]

All right, all right.

[Narrator (David Brown)]

So what's your grand idea?

[Ted Arison]

Just say, hey, hey, here's crappy boat. Come on board? No, of course not.

[Narrator (David Brown)]

We need something that's not so easily disprovable. I mean, people step on board the

[Ted Arison]

Mardi Gras and they know right away

[Narrator (David Brown)]

they were sold a load of goods. Dickinson surveys the brochures he has spread out on the table. His eyes gravitate toward one for a small cruise company called Commodore. He picks it up. The Happy Ship.

[Ted Arison]

I like that we need something like that. Besides being happy, what else do people

[Narrator (David Brown)]

want to feel when they're on vacation?

[Ted Arison]

Relaxed.

[Narrator (David Brown)]

The relaxing ship? No, that's weak.

[Ted Arison]

Let's see.

[Narrator (David Brown)]

He drums his fingers on the table and looks up at the ceiling, thinking, I got it.

[Ted Arison]

Fun they want to have Fun will

[Narrator (David Brown)]

be the fun ship. We can turn the fact that we're less stuffy than Royal Caribbean and Norwegian Cruise Line into a good thing. Also, if the ship's fun, people won't mind that they spend more time at sea than they do aboard the other cruise lines. Arison nods. He hates to admit it, but it's not a bad slogan. Dickinson looks back at Arison. Of course, you'll have to make the ship actually fun. Harrison and Dickinson decide that what the Mardi Gras needs in order to live up to its new title as the fun Ship is more attractions on board. They go about adding a disco lounges and more bars, but what they think it really needs is a full casino. The ship has slot machines on board, but they want it to have a wider array of games, including blackjack and roulette. But they soon run into a roadblock. It's late 1974 in Miami, Florida. Ted Arison paces his office, extending the cord of his phone until it's taught before turning and watching it spiral again. He's talking to his old friend Mishulam Rickless. Carnival is a subsidiary of Rickless's company, American International Travel Service. Harrison pleads his case.

[Ted Arison]

We need this, Rick. A full casino is going to take Carnival to the next level. Come on, you're a businessman. You have to see the sense in this. Besides, it was your man Bob Dickinson, who came up with the whole funship slogan, and that's I'm not saying it doesn't make sense.

[Narrator (David Brown)]

I'm saying I can't do it. I just bought a casino in Vegas. Yeah, the. The Riviera.

[Ted Arison]

I know.

[Narrator (David Brown)]

Well, I'm still doing my hearings with

[Ted Arison]

the Nevada Game Commission, and it's going to complicate things if I have to say I own a cruise ship that has an unregulated casino on it.

[Narrator (David Brown)]

Harrison sighs, frustrated. He's pretty sure that Rickless primarily bought the Riviera to provide a stage for his wife, the singer and actress Pia Zadora. And now Arison's business is going to suffer because of it.

[Ted Arison]

So where does this leave us? If we don't get this casino, I truly believe that Carnival will stay in the red.

[Narrator (David Brown)]

To be frank with you, I think Carnival's going to stay in the red,

[Ted Arison]

with or without the casino. I know Bob's made some improvements, but you're still not turning a profit.

[Narrator (David Brown)]

And the price of Fuel is through the roof.

[Ted Arison]

Okay, so what do we do? Well, I want out.

[Narrator (David Brown)]

So I tell you what.

[Ted Arison]

I'll sell Carnival to you for a dollar. But you have to take on the 5 million dollar debt load.

[Narrator (David Brown)]

Arison leaps at the opportunity to be in full control of the company.

[Ted Arison]

Deal.

[Narrator (David Brown)]

You really believe in this company, huh?

[Ted Arison]

I really do. All right, then it's yours. If you ever make any money with it, send me a present. You got it.

[Narrator (David Brown)]

Arison grins from ear to ear. For once, he feels like fortune is on his side. Arison's belief in Carnival is proved right. In January 1975, three years after its ill fated maiden voyage, Carnival turns its first profit. And by the mid-1970s, Carnival, Norwegian cruise Line and Royal Caribbean are all turning a profit. But several other cruise companies have popped up in Miami and in various ports along the west coast. Industry experts are starting to get nervous about just how many ships the market can support. The majority of cruise customers come from Florida, California and New York. And none of the companies feel like they are profitable enough to launch a major nationwide marketing campaign. Fortunately, Hollywood decided to launch one for them. It's early 1975 in Los Angeles, California television producer Douglas Kramer walks into a crowded restaurant and scans the room until he finds Aaron Spelling, the producer he's meeting. Kramer nods and weaves through the crowded restaurant until he reaches Spelling's table. Kramer drops a book on the table.

[Ted Arison]

Say hello to your next hit TV show.

[Narrator (David Brown)]

I read the review in the LA

[Ted Arison]

Times yesterday and sent my assistant out to the nearest bookstore to buy me a copy. I stayed up all night reading it.

[Narrator (David Brown)]

I read that review. The author certainly made it sound like cruise ships are sordid affairs.

[Ted Arison]

Yeah, the Times didn't print the half of it. She talks about them like they're just giant floating sex parties.

[Narrator (David Brown)]

Okay, so tell me, how do you turn a giant floating sex party into a hit network television show?

[Ted Arison]

It's a weekly series where we follow the crew of the ship. We create a dynamic cast of characters including the Pepe cruise director, the playboy doctor, the fatherly captain and so on. And every week we meet a new set of passengers with problems that will be solved. You know, marriages will be reconciled, family feuds will come to a head. There'll be a wide array of romantic entanglements between the crew and the passengers.

[Narrator (David Brown)]

He leans back in his seat.

[Ted Arison]

We'll call it the Love Boat, huh? You know, I think it's gonna be a smash.

[Narrator (David Brown)]

The Love Boat premieres first as a made for TV movie in 1960, and then as a weekly show in 1977. With its funny and sexy portrayal of life on board a cruise ship, it serves as millions of dollars worth of product placement for the cruise industry. At the start of the 1970s, around 500,000 people go on cruises each year. But by the end of the 90s, it's around 5 million. And the love Boat gets credit for much of that boost. And with this new boom, Carnival, Norwegian Cruise Line and Royal Caribbean enter into fierce competition over who will entice the most passengers on board.

[Raza Jaffrey (The Spy Who podcast promo)]

I'm Raza Jaffrey, and in the new season of the Spy who We open the file on Benedict Arnold, the Spy who Betrayed the American Revolution. America is fighting to free itself from the British Empire and one of its foremost generals is Benedict Arnold. He's a smuggler turned battlefield hero and admired for his aggressive tactics. But when a war wound, a new wife, debts and politics test his loyalty to the mags, he turns spy and devises a plot to shatter the revolution and help Britain capture rebel commander in chief General George Washington. And that plot would make him the most infamous traitor in U.S. history. Follow the Spy who Now Wherever you listen to podcasts, you can also listen to the full season of the Spy who Betrayed the American Revolution early and ad free on Audible.

[Michelle Obama (Higher Ground podcast promo)]

As Americans, we're constantly grappling with a fundamental question. Do we settle for the world as it is or do we strive to create the world as it should be? Our answers tend to ebb and flow through the decades, but once, just after a war that nearly tore us apart, we came as close as we've come to answering it. And it's a story worth a closer look. I'm Michelle Obama and I'm proud to announce Higher Ground's new podcast, Reconstruction the Unfinished Promise. Guided by best selling author Malcolm Gladwell and featuring my husband, Barack Obama, this limited series uncovers the untold stories of Reconstruction, what they mean for us today, and how our past can shape the future we choose to build. The Unfinished Promise is available now on Audible or wherever you get your podcasts.

[Narrator (David Brown)]

It's 1978 in Miami, Florida. Please welcome to the stage carnival CEO Ted Arison. Ted Harrison makes his way through a small convention room. He's attending an industry conference and all of his competitors are here. Arison hopes that what he's about to say is going to strike fear in their hearts. With Bob Dickinson's help, and bolstered by the success of the Love Boat, Arison has struck on a winning formula for Carnival. They offer cheaper fares and a more casual wilder experience on board. They host events like belly flop contests and beer pong competitions and have dropped the formal dress code for dinner. Since 1975, Carnival has turned a profit. Harrison paid back what he owed to Norwegian Cruise Line and invested the rest of the money back into Carnival. And as soon as he had the funds, he bought two more ships to expand Carnival's fleet. They were older ships that Arison was able to get a good deal on, but that's about to change. Arison steps in front of the microphone.

[Ted Arison]

Good afternoon. It's good to see everyone. I'm here today to make an historic announcement. Just a short while ago, Carnival signed an agreement to build a brand new $100 million cruise ship. It will be called the Tropical and it will be the best, most advanced ship on the market.

[Narrator (David Brown)]

A man in the front row is so surprised by Arison's announcement, he chokes on his drink, causing himself to cough. Arison looks out into the stunned crowd and grins. He understands the shock. Carnival isn't even worth $100 million. Arison is taking a big risk building this ship. He's going to be juggling bills and stalling suppliers for years to pay for it. But he's convinced this is the only way forward, as new passengers are tempted to test out cruising after watching the Love Boat on tv. Bigger, better ships are going to be essential to winning them over and becoming the largest cruise company in the world. Harrison's big bet on the Tropical may seem brazen to the leaders of other cruise companies, but it kicks them into action. It's 1979 in Oslo, Norway. Knut Kloster paces inside an executive's office in Norwegian Cruise Line headquarters. I think we need to do it. It's risky, but look at her. He points to a black and white photo of a ginormous ocean liner called the SS France. The sleek white ship dwarfs everything around her. She's a beauty as long as six city blocks. If we bought it, we'd have the largest cruise ship in the world.

[Ted Arison]

Not Ted Arison.

[Narrator (David Brown)]

Kloster agreed to a settlement in his suit against Ted Arison. He in which Arison would pay back 60% of what he owed Cloister. Harrison made good on that agreement, but Cloister still harbors bad blood toward his old friend and partner. Kloster worked hard to save his company after arison emptied its U.S. accounts and through careful management, Cluster kept the company going and eventually expanded Norwegian Cruise Line to a fleet of four ships. But Royal Caribbean has surpassed them. And now Closter fields Arison's Carnival nipping at his heels. Part of the issue is that Norwegian Cruise Line ships are relatively small. They only hold 700 passengers. Arison's Tropical will be able to hold over 1,000 passengers. And Royal Caribbean is lengthening its flagship, the Song of Norway, so it too will be able to hold over 1,000 passengers. Kloster leans forward. You know, I got into this business to be an industry leader and we're not. Royal Caribbean made a splash by designing its own boats. Carnival owns the largest cruise ship in the world and we just keep chugging along slow and steady.

[Ted Arison]

With respect, slow and steady is what wins the race. Fuel prices are astronomical. Economists are worried about a recession. I remind you we have no idea if Arison's bet is even going to pay off. He could lose his entire company.

[Narrator (David Brown)]

At least he's trying to do something big. The executive points to the photo of the SS France.

[Ted Arison]

This ship can hold over 2,000 passengers, correct?

[Narrator (David Brown)]

Yes.

[Ted Arison]

Okay, so this is back of the envelope math, but if we buy this ship, we'll own about 40% of the passenger capacity that's sailing to the Caribbean. You think we can fill that?

[Narrator (David Brown)]

Kloster is quiet for a moment, thinking. He stares at the photo of the enormous ship. I honestly don't know. But I do know that I've always been frustrated by how timid people are in this country. Everyone is so conservative, scared to rock the boat, so to speak. Well, what right do I have to cast aspersions on my countrymen if I make the same cowardly choices? If I want to be a revolutionary, I need to take some risks. Yeah, we're buying the SS France and we'll see if we can fill it. The executive does his best to hide his worried expression.

[Ted Arison]

All right, we'll start the process.

[Narrator (David Brown)]

Norwegian Cruise Line buys the SS France and begins refurbishing it. The company makes full use of its size. They install a 500 seat theater which can mount shows straight from Broadway. They build out a host of bars and lounges to appeal to a variety of tastes. From those who want to live out their disco dreams to others who would prefer to sit in a library lined with leather bound books or they even put in a driving range. When the renovations are complete, they rename it the Norway and when it launches in 1980, it's an immediate sensation. The ship is so massive that some passengers claim they completely forget they're on a ship at all. Between Carnival's focus on creating fun ships and the extravagance of the Norway, the attraction of cruises is becoming more about the ships themselves than the destinations. And with Carnival and Norwegian Cruise Line making splashes with their new ships, Royal Caribbean realizes it's time to make a change themselves. Instead of buying new ships, Royal Caribbean had decided to take a more cautious approach to extend the length of the ships in its current fleet. And while that expanded their capacity, it didn't make passengers excited about the change. It also didn't end up saving them much money in the long run. Royal Caribbean remains the industry leader, but the others, especially Carnival, are gaining ground. But the two main families who own Royal Caribbean stubbornly believe their superior product will continue to outperform the competition. And their business structure makes it hard for them to make changes even if they wanted to. Their charter requires unanimity on every every board decision. Two of the three partners in the company, Sigurd Skogin and Arne Wilhelmsson, just don't like each other. They disagree on the smallest of details, making unanimity impossible to achieve. Royal Caribbean is stuck in neutral. But then the third partner in Royal Caribbean, another Norwegian shipping company called Gotas Larsen, is sold to a U.S. holding company. first, Royal Caribbean is such a small part of the holding company's portfolio that the executives don't pay it much attention. But in 1979, the holding company spins Gothas Larsen off into its own company. And when Gotas Larsen's new CEO, Jack Seabrook, learns that Royal Caribbean is burning through cash and is on its way to having less than a million dollars in the bank, he realizes that he needs to take action. It's 1979 in London, England. Jack Seabrook follows a receptionist through the London offices of Gotas Larsen. Seabrook is based out of the U.S. but the conversation he's about to have is so important, he's flown to England to have it in person. The receptionist leads Seabrook to the corner office and knocks on the door. A young executive named Richard Fane opens it. He has broad shoulders and bushy eyebrows. He greets Seabrook with a wide grin. Jack, so good to see you. How was the flight? Seabrook hired Fane several years ago at a previous company as a favor to an important business contact. But Fane has proved himself to be a sharp businessman with a diplomatic touch. He's exactly who Seabrook needs for this important assignment. Seabrook follows Fane into his office, and the two men sit. Well, the flight was long, but it's good to be here. I have something important to discuss.

[Ted Arison]

I'm making you our main point of

[Narrator (David Brown)]

contact with Royal Caribbean.

[Ted Arison]

That company is a complete mess and I need you to fix it. Okay.

[Narrator (David Brown)]

How do you think they're going to react?

[Ted Arison]

Not well.

[Narrator (David Brown)]

They're used to the owner of these

[Ted Arison]

shares acting as a silent partner. But I need you to start talking.

[Narrator (David Brown)]

I do like to talk.

[Ted Arison]

They have a great product. Their service is top notch. You go into a Royal Caribbean cabin and there are 52 complimentary items. You feel taken care of on their ships. Completely catered to. But Sigurd Skoggin and Arn Williamson just do not give one iota about making money.

[Narrator (David Brown)]

Yeah, I've seen some interactions between Sigurd and Arn. They do seem to prioritize one upping each other over anything else.

[Ted Arison]

Yes.

[Narrator (David Brown)]

So I need you to be the adult in the room.

[Ted Arison]

There's no way a company doing as much business as Royal Caribbean should have less than a million in the bank. There needs to be guardrails against that.

[Narrator (David Brown)]

Fane nods. Understood. I will drag these squabbling Norwegians into a functional corporation.

[Ted Arison]

You're the best man for the job. I'm counting on you.

[Narrator (David Brown)]

Soon after Jack Seabrook's mandate, Richard Fane finds the leverage he needs to start making changes at Royal Caribbean. The company finally decides it wants to build a new ship, and Fane tells Scoggin and Wilhelmson, who that Gotas Larsen will only commit their portion of the financing if the company makes changes to its structure. They require that the company keep $3 million on reserve before it pays dividends to the partners, allowing for a rainy day fund. He also convinces them to change the charter so that a simple majority is all that's needed to make decisions, rather than requiring unanimity to move forward. As the decade turns to the 1980s, Royal Caribbean is making changes that will allow it to continue to lead the pack while Carnival faces a stumbling block. It's the afternoon of April 19, 1981. On board the SS Carnival, a carnival cruise ship, newlywed Suzanne Boone unpacks her suitcase inside her small cabin. Behind her, her husband flips through a brochure of all the amenities on the boat. All the food looks scrumptious. We have to try everything.

[Suzanne Boone]

Well, it's a good thing we have a whole week at sea to work our way through the menu.

[Narrator (David Brown)]

All passengers are to disembark from the ship immediately. I repeat, all passengers are to disembark from the ship immediately. Boone looks at her husband, confused.

[Suzanne Boone]

What? What's going on? We're supposed to set sail in an hour.

[Narrator (David Brown)]

I don't know, but hopefully it's Just a small blip. I wouldn't worry too much. Trust me, we're gonna have the best honeymoon. They make their way out of their cabin and join other passengers making their way off the ship. As they reach the gangway, they see a large group of crew members gathered on the bow of the ship. Boone stares at them. They look like deckhands, cooks, porters, launderers. They're shouting strike over and over again. Boone looks at her husband nervously. She doesn't think this is going to blow over quickly. It sure looks like her honeymoon is on hold. And that carnival has a major problem on its hands. It's Sunday, April 19, 1981 in Miami, Florida. Mickey Arison marches through Carnival's headquarters until he finds a group of executives huddled together in an office. Two years ago, Ted Arison announced that Mickey would take on the role of president of Carnival and would oversee the day to day operation of the company. Ted would remain as chairman and focus on the long term vision. Many Carnival executives were surprised by the move, thinking Mickey was still a few years away from such a promotion. So when Mickey received the call that Sunday afternoon that there was a crisis, he knew his response would be seen as a test of his leadership capabilities. He wants to prove himself as the rightful leader of Carnival. As Mickey approaches the executives, he whips off his large sunglasses and hooks them on his shirt, which is unbuttoned, exposing quite a bit of his chest.

[Mickey Arison]

Okay, tell me exactly what's going on.

[Narrator (David Brown)]

An older executive turns to him. Roughly three hours ago, crew members on board the Carnival called for a strike. They convinced the crew of the Mardi Gras to join them. They've tied the ships together and are insisting that the ships won't sail until their demands are met. The instigators seem to be primarily the deckhands and the porters.

[Mickey Arison]

Okay, and what exactly are their demands?

[Ted Arison]

Well, that's not entirely clear. From what we can gather, this was a fairly spontaneous action, so there doesn't seem to be much of a plan. But we're hearing they want two employees who were fired this morning reinstated. There's also vague talk about better working conditions.

[Narrator (David Brown)]

A young executive hovering around the edges clears his throat.

[Ted Arison]

If I may, they may have a point. Our crew sleeps six to a cabin. They work 12 hours a day for months with no time off.

[Narrator (David Brown)]

The older executive interjects, that's perfectly legal. If they don't like it, they can

[Ted Arison]

go find a job in their home countries.

[Narrator (David Brown)]

Because Carnival ships sail under the Panama flag, the company does not have to follow US Law and minimum wage and working conditions. Most of their below deck positions are filled with workers from developing nations. Mickey runs his hand through his long hair.

[Mickey Arison]

Yeah, I admit. You're not wrong. We should have been better about our crew relationships. But it's too late now. And this isn't how you go about making change.

[Narrator (David Brown)]

The older executive nods.

[Ted Arison]

Exactly. We need to end this soon. We've already had to cancel two cruises. That means we've refunded seven figures worth of fees. We don't know what these people have planned. I mean, they can light our ships on fire, destroy pipes on board, or some other kind of sabotage.

[Narrator (David Brown)]

Mickey bites his lips.

[Mickey Arison]

I need everyone thinking about how we can end this mutiny immediately. All right.

[Narrator (David Brown)]

It takes three days for Mickey and the other executive to put together a plan. On the fourth day of the strike, Carnival executives make their move. It's April 22, 1981, in Miami, Florida. The striking crew members gather below decks. They're tired, both physically and mentally. They've held the ships for four days, but since this was a spontaneous action and not backed by any union, they've had little support. No strike fund, no one arranging food. And many strikers are wondering if they've made a mistake. One of the ringleaders comes in, grinning. He works his way to the front of the room and climbs on top of a chair.

[Ted Arison]

I just got word from Mickey Arison. He's ready to negotiate.

[Narrator (David Brown)]

The gathered workers cheer. Some cry while others look up, thanking God for answering their prayers.

[Ted Arison]

He's asked me and the other leaders to meet with him.

[Narrator (David Brown)]

On shore, the group can hear the faint whir of a helicopter overhead. News crews have been covering the strike and have been repeated repeatedly, sending helicopters to gather footage. Every time they hear one, the strikers take the opportunity to gather on the bow to wave their signs and show the strength of their numbers and try to gain public support. The ringleader yells out, go show the

[Ted Arison]

world that we're standing strong. Si se puede. Si se puede. Si se puede.

[Narrator (David Brown)]

The crew members hurry to the bow while the leaders make their way onshore. The crew members cluster at the front of the ship, waving to the camera that they can see from the door of the helicopter. There's renewed energy among the crowd.

[Ted Arison]

What do we want?

[Suzanne Boone]

Air pay.

[Ted Arison]

When do we want it? Why do we want air pay?

[Narrator (David Brown)]

Off the boat now. Let's move. The group turns and sees dozens of armed men decked out in full tactical gear marching toward them, funneling the workers toward the exit. The crew members start to panic, running, screaming but the armed men have them surrounded.

[Ted Arison]

I'm gonna blow your head off if you don't move right now. Let's go.

[Narrator (David Brown)]

One of the crew members, scared but defiant, confronts one of the armed men.

[Ted Arison]

Who are you? Police.

[Narrator (David Brown)]

Private security, courtesy of Mickey Arison. The crew member is initially confused. Mickey Arison had agreed to negotiate. Why would he do this now? But before he can think about it too hard, he hears the sound of the helicopter flying away. He looks up and realizes that the helicopter was not a news chopper at all. It was just a decoy. And all of this was just one giant trap. He and the other crew members are forced off the ship onto buses, where immigration officers begin the process of deporting the striking workers back to their home countries. Mickey Arison and Carnival have their ships back and the striking workers are left with nothing to show for their actions. They've lost their jobs and are facing deportation. To Mickey Arison, his response to the strike is a definitive show of strength. Executives who thought he was a lightweight, more of a party boy than a CEO, now his medal. And with the strike behind him, Mickey decides to make another show of strength. In 1982, the day the tropical, the 100 million dollar ship his father Ted ordered arrives in port, the Arisons make another announcement that stuns the industry. They're not stopping with the Tropical. They're ordering three more massive ships. Carnival is on its way to building the golden fleet Ted always said he would own. And to fill those ships, Carnival launches the first national TV commercial for cruising.

[Suzanne Boone]

If they could see you now out on a bunch of cruise eating fancy food and doing what you choose. I'd like your friends back home together. Good looks at the first rate Carnival cruise that you took.

[Freestyle Libre 3 CGM Advertiser]

Carnival can take you where the fun is on a free four or seven day cruise vacation to the Bahamas, Caribbean or Mexican Riviera. Once you've sailed aboard a fun ship, you'll know why Carnival's the most popular cruise line in the world.

[Narrator (David Brown)]

Carnival is growing and growing fast. But all of their endeavors require capital. And soon it becomes clear that there's only one way to raise the money they need to reach the heights that Mickey and Ted aspire to. It's 1986 in Miami, Florida. Ted and Mickey Arison sit in Mickey's office at Carnival headquarters. A high ranking executive has requested a meeting with the two of them. Mickey untwists a paperclip as he waits.

[Mickey Arison]

What do you think John wants to meet about?

[Ted Arison]

Why try to predict he'll be here in a second to tell us himself. Speak of the devil. Come in.

[Narrator (David Brown)]

The door opens and the executive walks in, greeting Ted and Mickey before taking a seat. Thank you both for meeting with me. I have some exciting news I wanted to share with you right away. My team and I have been doing the analysis and we think it's time to take Carnival public. Mickey blanches.

[Mickey Arison]

Doesn't that involve a roadshow where you travel the country pitching your company to investors?

[Narrator (David Brown)]

That's a standard part of the process, yes. Mickey nods, his lips pursed. While Mickey can be outgoing and direct with his employees, he's painfully shy around people he doesn't know. Ted shakes his head.

[Ted Arison]

The road show's not the problem. Mickey will step up and do what he needs to do if they that's the best path forward, but I'm not convinced that it is. Some of our best moves have been financially dicey. I don't know if we could have built the Tropical or ordered three more ships after the Tropical was delivered if we had to answer to shareholders.

[Narrator (David Brown)]

That's true. It would change the way you do business. But you two are ambitious and the only way you're going to become the biggest cruise ship company in the world is to go public now. If you don't, well, then I think Carnival's probably reached its top level. Ted and Mickey exchange a glance. They don't need to say anything. If this is what they need to do to be the biggest cruise company in the world, then that's what they're going to do. But they're not the only cruise company going public. Norwegian Cruise Line has come to the same decision, and soon the two companies and longtime rivals will be going head to head for investor money and only one will come out as the master of the high seas. Follow Business wars on the Audible app or wherever you get your podcasts. You can listen to all episodes of Business wars ad free by joining Audible from wondering. This is episode two of Cruise Ship Wars. For Business Wars, a quick note about recreations you've been hearing in most cases, we can't know exactly what was said. Those scenes are dramatizations, but they're based on historical research. If you'd like to read more, we recommend Devils on the Deep Blue Sea by Christopher A. Guerin and Selling the Sea by Bob Dickinson and Andy Vladimir. I'm your host, David Brown. Austin Rachlis wrote this story. Sound design by Josh Morales Fact checking by Gabrielle Joliet Voice acting by Michelle Phillippe and Kieran Regan. Our producers are Emily Frost and Grant Rutter. Our managing producer is Matt Gant. Our coordinating producer is Desi Blalock. Our senior managing producer is Ryan Lohr. Our senior producers are Karen Lowe and Dave Schilling. Our executive producers are Jenny Lauer, Beckman and Martin Marshall. Louie for Wondery.