Wednesday, December 29, 2010

The Same Old Song: College Athletes and $

Recent news that Ohio State football players have been suspended for five games next season for various offenses involving money reminds us that college athletics will never change. In fact, short of actually paying stipends, you can expect nuclear disarmament will come before the last college athlete takes the final buck under the table.

My father, usually not prone to animation, expressed extreme disgust with the aftermath of the “slush fund” scandal at his alma mater, University of Illinois, in late 1966. The university turned itself in after finding a grand total of $21,000 had been doled out to 7 football players and 5 basketball players over a 5 ½-year period. The basketball players included Rich Jones and Ron Dunlap, who had helped my friend Jim Dawson lead the Fighting Illini to a 98-97 road victory over NCAA runner-up Kentucky and Pat Riley in November. All were suspended and allowed to transfer. Assistant Athletic Director Mel Brewer, unhappy at not being promoted to AD, blew the whistle on his own school before resigning. Football coach Pete Elliott, basketball coach Harry Combes and assistant basketball coach Howard Braun were forced to resign. At least Braun’s resignation made my father happy; after winning an intramural doubles tennis match at the college, dad hopped the net to shake hands with Braun and his partner. Braun instead threw an errant punch at him.

Illinois until then had a clean program, and their punishment seemed hypocritical in the face of other Big 10 schools. Woody Hayes, for example, had been reprimanded for a “personal loan” fund in the mid-1950s, about the same time my father was auditing the Pick-Fort Hayes Hotel in Columbus, where he found several Ohio State football players on the payroll but none doing anything more than eating lunch. Michigan State, Indiana and Purdue had similar problems during this period.

One way around paying athletes used to be “jobs.” For example, Lew Alcindor (now Kareem Abdul-Jabbar) during his recruiting process was offered a job cleaning seaweed off a football field. The unnamed school was 1,000 miles inland. While at Ohio University, Walter Luckett (the highest chosen player in the 1975 NBA draft never to play a game) reportedly had a very visible summer job at a local auto dealership. Customers would see the star guard seated at a desk equipped with a telephone; the phone, however, wasn’t connected. A young colleague at my last company told me his father, a basketball player, had a job watering plants in the athletic department offices. Alas, the plants were all synthetic. At least the recently deceased Quintin Dailey was honest when asked what he did for his $1,000/month summer job at an electrical-supply company owned by a prominent University of San Francisco booster. “I don’t know,” Dailey said.  “I never had to go.”

Speaking about honesty, a friend traveling with the Chicago Bulls during the 1982-1983 season relates a humorous anecdote. The team was walking through an airport at the same time the Portland Trail Blazers were arriving. Bulls coach Paul Westhead spotted Maurice Lucas, who he’d tried to recruit to LaSalle University some ten years earlier when Lucas was a star at Pittsburgh’s Schenley High School. Westhead held up his LaSalle traveling bag, pointed to it and said, “Maurice, if you’d gone to LaSalle you could have had one of these.” “Yes,” Lucas replied, loud enough so everybody could hear him, “but the bag I got from Marquette had stuff in it.”

A most notable commentary about athletic slush funds came from a University of New Mexico basketball fan.  In 1979, coach Norm Ellenberger resigned after the NCAA found 57 rules violations, which resulted in a conviction on 21 counts of fraud two years later. “He did what he was supposed to do,” the fan said of Ellenberger. “He brought pro basketball to Albuquerque.”

Monday, December 27, 2010

The Gambling Pinball Wizard

My one and only trip to New Orleans in March 1970 revealed a little-known form of gambling: pinball machines.  I later discovered it involved an odd convergence of The Mob, a retired NFL football star and a famous district attorney.

I accompanied my parents to New Orleans during a spring break, which they spent with another couple and I spent with my friend Craig Weil, a student at Tulane.  We dined together at some great spots, including Brennan’s and Mosca’s.  Craig took some good-natured heat from his fraternity brothers for ditching his date to a dance at the last minute to hang out with me.

Craig was a gambler at heart.  The New Orleans Buccaneers of the old American Basketball Association (ABA) played their 1969-1970 season at the Tulane Gym, and one night the team was giving away tri-colored ABA basketballs at half-time to drawing winners.  Craig noticed that few people came forward after their names were called, so after a short time and yet another name, he jumped up, yelled “Yes” and ran down the aisle to the court.  The presenter simply tossed him the ball, which turned out to be a cheap imitation.  As he was walking back to his seat, a man offered to buy it for some outrageous price.  After he handed over the money, Craig tossed him the ball and ran out of the arena.  His friends wondered why he wasn’t around for the second half.

Pinball machines equipped for gambling were all the rage in New Orleans.  Craig had won some good money during his college days and was a pinball wizard of sorts.  We spent two nights at Eddie Price’s, a bar and restaurant next to the campus with an array of pinball machines.  These machines did not have flippers.  On the other hand, it was virtually impossible (or maybe totally so) to tilt the machine.  The player jostled the machine in all manners, including picking it up off the floor, to keep the ball in motion.

The former Eddie Price's
Broadway and Zimple, New Orleans

Eddie Price was a Tulane football legend.  He still holds the record for the most career rushing yards, and went on to become a Pro Bowl fullback with the New York Giants.  He led the NFL in rushing during his second season, with 971 yards in 1951, and finished second with 748 yard the following season.  After retiring in 1955, he opened a restaurant and bar at Broadway and Zimple and served as a broadcaster for Tulane football.

Eddie Price (#31) with the 1954 New York Giants
Charley Conerly (#42), Frank Gifford (#16) and Roosevelt Brown (2nd from right)

I saw the gambling aspect in action the second night, after Craig ran up a number of “free” games.  As he finished playing, Price walked by and asked, “Did you win tonight?”  After replying in the affirmative, Price told him he’d see him shortly.  To my surprise, Craig then cleared the machine.  “How will he know how much you won?” I asked.  “It registers in the back,” Craig replied.  We walked over to a door labeled “Darkroom” with a small, rectangular, obviously two-way mirror.  Craig went in, leaving me behind, and returned quickly with a wad of bills.

Subsequent research found, not surprisingly, that the pinball machines had been installed in the 1930s by New York Mob boss Frank Costello and overseen by associate Phil Kastel.  Mobster Carlos Marcello later took over this and other gambling across the New Orleans area.  Shortly after my visit, New Orleans District Attorney Jim Garrison (of Kennedy assassination fame) and three others were indicted on Federal corruption and tax-evasion charges for taking kickbacks from illegal pinball operators.  One can bet that Price was one of them.  The three pleaded guilty but Garrison was acquitted in 1973 in the corruption trial and a year later for the tax-evasion charges.  In my opinion, Oliver Stone shredded whatever sliver of credibility he had after his fabricated version of Garrison in “JFK.”

In 1972, a year after Craig graduated, one of Price’s managers was murdered in a robbery, and Price closed up the restaurant and opened one a few blocks away, most likely without pinball machines.  He died at age 53 in 1979.  His son, Eddie Price III, is currently serving a 5-year, 4-month sentence for corruption and tax evasion stemming from his service as mayor of Mandeville, Louisiana.

Monday, December 20, 2010

A Sudden Death in the Family

The death notice might read “suddenly” or one knows it was by inference from the decedent’s age. The story behind the tragedy is often never told because of the enormity of the event. This is my experience of losing a loved one with absolutely no warning.

It started at approximately 2:45 p.m. on March 29, 1973, when I was summoned from break for a phone call. Almost immediately, I sensed trouble, since the voice on the other end was Allan Clapp, the plant manager at my father’s company, Mills-American Envelope Company. My father and his partner sold American Envelope Company to a small conglomerate three years before, and the combination of a recession, the merger with Mills, a move to a larger production facility and the loss of all government contracts due to the sale had hurt the business. Clapp was hired by the new owners and may or may not have been helping their efforts to break my father’s contract and hire a lower-paid bookkeeper in his place. He figured he had weathered the storm after somebody inadvertently read a letter to him from one of the executives basically stating they’d given up on that. Although my father was only 55 and in good health as far as we knew, he was still extremely stressed.

Mom and Dad at our wedding, Jan. 1973

Clapp, at times stumbling for words, told me my father had been rushed by ambulance (back then basically a Cadillac hearse) to St. Anne’s Hospital at Division Street and Cicero Avenue, not far from the offices at 4400 W. Ohio Street. I never heard of that hospital – several victims from the tragic Our Lady of the Angels fire were treated there – and, knowing he would have gone to Northwestern Memorial if possible, sensed the worst. Clapp informed me that John Weil, his partner’s son, accompanied him to the hospital and I should get there as soon as possible. He couldn’t reach my mother, who was out with friends, or my brother, who I knew was in class at the University of Chicago Law School.

I was working at a small publishing company near Touhy Avenue and the Edens Expressway in Skokie.  Cicero Avenue was a short distance to the east; I could have taken the Edens partway but simply got on Cicero at Touhy and drove approximately eight miles south through heavy traffic. The near freezing rain conditions didn’t help matters. Many things raced through my mind, mainly being what would I say to him, knowing I may have very little time. A relative who knew my father and grandfather told me both played their emotions close to the vest and I was no exception. I would have to say things that I’d always felt but never expressed.

Some 45 minutes later, I arrived at the parking lot across the street from the emergency room and sprinted across Cicero Avenue. John met me virtually at the door with a rather surprised expression.  He’d obviously seen me running. John ushered me into a small, windowless room and got right to the point. “Your father has passed away,” he said, followed I’m sure by words of consolation. He thought I’d been told of the death.  I’m glad he was there, so I wouldn’t have faced the ordeal alone.

Shortly thereafter, John handed me an envelope with my father’s personal belongings. I probably should have taken a few deep breaths, composed myself or even put it aside for the time being, but I proceeded to empty it immediately. I knew I should have waited after seeing the “oh, oh, too late” look on John’s face as the contents hit the table. It started innocently enough: some change, his wallet and glasses, which he wore virtually all of the time. The full brunt hit when his ring rolled on to the table and kept rolling until I slammed my hand down to stop it. He never took that ring off, so this symbolized the end had indeed come. It was the proverbial ton of bricks and a shocking dose of reality.

My father's confirmation ring, 1932

Dad did not wear a wedding band (I never asked why), only the ring he received after confirmation from South Shore Temple in 1932. The silver ring, which he wore on his right hand, features gold hand-cut initials and a small diamond from a stickpin given to my grandfather for service to their previous temple, South Side Hebrew Congregation. I placed it on my left little finger (it was too small to fit on my ring finger) and later had it sized. Just like him, I didn’t have a wedding band – I’d only been married two months and could have changed my mind – and to this day I’ve worn it on my left hand. Although he and I weren’t particularly religious, I appreciate the transcendent nature of this single piece of jewelry. It’s the most valuable object I own.

Obviously, nobody planned for this, in addition to other complicating factors. Janet was a day-to-day substitute in the Chicago Public Schools, hoping to get a permanent assignment in the fall. She wasn’t working that day and was home alone. Before leaving the office, I told her I was going to a hospital on the West Side and why, but not much else. My mother still hadn’t been found after I reached St. Anne’s, so I lied and said it was serious and the doctors wouldn’t know the outcome. Janet took a seven-mile cab ride through her newly adopted city, still holding out hope. My uncle (my mother’s only sibling) worked for an advertising agency in the John Hancock Building, so he was sent to wait for my mother in the lobby of her building. Arriving shortly thereafter, she thought he was there about either their father or mother. I can only imagine the shock, for she was only 49 at the time. Clapp reached my brother later in the afternoon but wouldn’t tell him directly until Frank basically told him to give it to him straight, which he finally did.

Word got out I was at the hospital alone. John’s father, Les, a friend and fraternity brother from the late 1930s, drove down from Lake Forest and took charge. By then, everybody had been notified. Turning the corner to leave, I saw another Phi Ep brother, Gus Friesem, standing at the information desk. He said, “I heard Marv died and nobody was here so I came over.” The word “fraternity” really meant something that day. John drove us to my parents’ apartment (they’d moved back to the city three years earlier) in our Chevelle. He provided a bit of needed levity, noting he’d totaled every kind of Chevrolet except this model, which he’d lost in a recent divorce.

The funeral was hastily put together the next day, a Friday, rather than waiting until Sunday. We had left our suburban temple, and a relative arranged for Rabbi Permutter of KAM Isaiah Israel to give the eulogy. Nobody else spoke. The funeral home was packed, as friends, relatives, employees and business associates came to offer their condolences. My mother said his wishes were to be cremated. Looking back I wouldn’t have done this but given the suddenness of it all, I don’t blame her. When visiting the First Roumanian Congregation cemetery at Jewish Waldheim, where my grandparents and great-grandparents (and now my cousin Jim) are buried, I feel his presence.

Two post-scripts. John Weil lost a valiant battle with colon cancer at age 57 in 2005. He and my father are forever linked from that day, and there are times I can’t think about one without the other.

The second happened 16 years later in Fond du Lac, Wisconsin. As I wrote in my “Machines That Make Machines: Giddings & Lewis,” I was completing a plant tour at the company with PR Manager Lindsay Ramsak and Ralph Winter, the Dow Jones manufacturing reporter based in the Cleveland bureau, when Winter asked what was behind a particular door. “It’s just the loading dock,” Lindsay said, to which he said jokingly, “Maybe I’d like to see the loading dock.” I chimed in, “I’ve worked on loading docks.” When asked what kind of company, I replied an envelope company. Lindsay said, “My father worked at an envelope company in Chicago; which one?” Right then I sensed something strange was coming. “American Envelope Company,” I replied, to which Lindsay said, “When you talk to your father, tell him you met Alan Clapp’s daughter.” I couldn’t say anything, for we still had to finish the tour and address certain account matters. Finally, after about 30 minutes, with a sense of drama I asked her, “Do you remember your father coming home from work some time ago and saying a man had died in the office?” Lindsay was only about 7 at the time, so she vaguely remembered. I told her I never faulted him for not telling me straightaway, for as a virtual stranger he’d been placed in a very difficult situation.

After John Weil passed away, I wrote his wife that he had the dubious distinction of spending the worst hour of my life with me. The second worst was the drive from Skokie to Chicago, trying to think of what to say; neither my mother nor brother faced this dilemma. I still don’t believe in closure for such instances (subject of a very early post), so I suppose I should finally write what I would have told him. I’m going to pass on that, at least for now, because everybody knows I wear my love for my father on my sleeve . . . and on my third finger, left hand.

Friday, December 17, 2010

Machines That Make Machines: Giddings & Lewis

My most interesting client in terms of product was Giddings & Lewis, Inc., based in Fond du Lac, Wisconsin.  The company was the largest U.S.-owned manufacturer and marketer of machine tools – machines that make machines – until it was acquired by Thyssen AG of Germany in 1997.  The plant tour alone, where various lathes and machining centers were manufactured, was worth the experience.

Giddings & Lewis (G&L) dates back to 1859, when it opened as a machine shop.  It manufactured its first machine tool in 1902 and became the leader in computer numerical controlled (CNC) products during the last half of the 20th century.  The company went public in 1989 after being spun-off from a Canadian company, AMCA International, and it became an agency client shortly thereafter.

CEO William Fife, Jr. embodied Giddings & Lewis.  He started his career sweeping floors at a steel mill and through brains, guts and determination eventually became the chairman and CEO of a publicly owned company.  Built like an interior lineman and tough as one as well, Fife turned around the newly independent company almost immediately.  He appeared on the cover of Fortune magazine as part of an article on manufacturing in the U.S.  I constantly reminded myself to not be intimidated by Fife and give him my best counsel.  He respected that and so did his other executives, including CFO Dick Kleinfeldt, Bob Kamphius and Doug Barnett.  After growing the business significantly, G&L hired an internal IR executive, Dale Norton, a former securities analyst, who quickly adapted to his new profession, thus limiting my role.

Fond du Lac was almost exactly 150 miles door-to-door from Chicago, which meant driving, not flying.  I always knew if I were making good time if I hit the Wisconsin border in an hour and the pedestrian overpass over Highway 41 north of Milwaukee after two hours.  In order to get a rental car back before closing, I once made it back in 2 ½ hours, on a Friday afternoon no less.

Like I said, the main Giddings & Lewis plant was amazing.  Machines in production had the customer’s names displayed, companies like the Caterpillar and Ingersoll-Rand and the U.S. Government.  I also learned an important civics lesson during a later plant tour.  On my first tour, I was told a machine labeled “Israel Defense Forces” would most likely be used for machining tank parts and take about nine months to build.  A little more than a year later, I saw the machine while walking through the plant and asked why it was taking so long to build.  An executive told me the U.S. Government has the right to requisition any piece of machinery it feels in the best interests of the nation’s defense, which it did in this case.  The IDF would have to wait for the second machine to be completed.

Giddings & Lewis continued to perform well in the early 1990s.  It acquired competitor Cross & Trecker, making the company the largest American-owned machine-tool company.  I was surprised, however, to get a heads-up call from Dick in early 1993: Bill Fife would be resigning and they needed my assistance.  The stock not surprisingly took a big hit on the day of the announcement but later recovered when investors realized the company was still in good shape.  One of the reasons for Fife’s departure involved bookings numbers.  For G&L, order numbers were more important to analysts than quarterly sales because they predicted future sales and profitability.  During conference calls, the company discussed the projected margin in the backlog, which would fluctuate based on volume and product mix.  Fife allegedly kept the order books open to the proverbial 35th day of the last month in the quarter.  Tried as it may, the Wall Street Journal, which ran a front-page story on Fife’s departure, was unable to get too deep into the reasons behind it, even though reporter Bob Rose resorted to stopping unannounced at employees’ homes in the evening.  I have no more to say on the subject.

Because of the sensitivity of Fife’s departure, the company was worried about its annual shareholders meeting.  I drove up the evening before and found a raucous crowd at the Sheraton Hotel.  Fond du Lac was hosting a darts tournament, and the festivities had already started.  A heavy-set woman in a too-tight “Body by Miller” t-shirt already living the High Life virtually blocked the entrance.  The noise literally lasted all night, along with two fire alarms, so I watched a Los Angeles Kings play-off game from the coast in order to be tired enough to fall asleep.  The annual meeting turned out completely uneventful.

Giddings & Lewis unfortunately was one of my two clients that suffered from administrative foul-ups.  The company knew it wasn’t going to meet quarterly analysts projections, so we agreed to issue a news release and conduct a conference call since the setback would be temporary.  All my good work crafting the communications was ruined by an administrative assistant who sent out the news release before the close of trading at 3 p.m. Central.  The stock got hammered, and I felt like an idiot.  That too was patched up by a forgiving management.

I would have one last contact with Giddings & Lewis after leaving the agency in 1996.  One year later, a board member called me and asked about capabilities and requested we meet at the big machine-tool show at McCormick Place.  The head of our corporate practice group, the leader of the public-affairs practice and I found the company was facing a hostile takeover, which it eventually avoided by turning down Milwaukee-based Harnischfeger and being acquired by Thyssen.

Finally, a strange, small-world experience.  I was completing a plant tour with PR Manager Lindsay Ramsak and Ralph Winter, the Dow Jones manufacturing reporter based in the Cleveland bureau.  When told a door was to the loading dock, Winter said jokingly that he’d like to see the loading dock, and I chimed in that I’d worked summers on a loading dock at an envelope company.  Lindsay said, “My father worked at an envelope company in Chicago; which one?”  Right then I sensed something strange and sure enough (to shorten the story), not only was it the same company, but her father was the plant manager who called and told me my father had been rushed to the hospital, some 15 years earlier.   We still had the tour to finish and account matters to address, so finally after about 30 minutes I told her the whole story.  It will be recounted in another post.

Wednesday, December 15, 2010

My Good Clients

Contrary to my “Clients from Hell” series, I enjoyed working with most of the companies.  Here are commentaries on some of the best.

  • Old Republic International.  The agency tried to land the diversified insurance company as a client for 15 years before finally succeeding in 1990.  I worked directly much of the time with CEO A.C. Zucaro, a straightforward, no-nonsense guy who told investors the unvarnished truth, not what he thought they wanted to hear.  Al is still CEO but will be retiring within the next few years.

  • Budget Rent-a-Car.  Budget had just gone public when I joined The Financial Relations Board (FRB) and was assigned to the account team.  CEO Clif Haley was another great leader, respected by employees and investors alike.  Together, PR Director Jody Wilson and I published their only annual report before Budget went private again, for which we won the Financial World award for the best IPO annual report of the year, as voted on by professional investors.

  • Chandler Insurance Company.  Although the reinsurance company was headquartered in the Cayman Islands, its operations were run by its captive primary insurance company in Chandler, Oklahoma (sorry, no trips to the Caymans).  This was the only client I worked for over my entire 8 ½-year tenure at FRB.  CEO Brent LaGere, President Ben Walkingstick and CFO Mark Paden were easy to work with; for my efforts, I was rewarded with tickets to one of the great Orange Bowl games, Oklahoma vs. Miami, in 1988.

  • Malan Realty Investors.  After leaving FRB in 1996, I picked up Malan again shortly thereafter and represented the Detroit-based real estate investment trust (REIT) until the company was liquidated in 2004.  My contact was Michael Kaline, Al’s son, and we managed to squeeze in some business after talking baseball.  He’s now my insurance agent, having left real estate after the liquidation.

  • The Toro Company.  Despite having a well-known brand, most investors did not know the company had diversified beyond snowthrowers to high-growth areas of the irrigation and golf-course management businesses.  My contact, Dennis Himan, was a finance guy, and he welcomed my suggestions on communications.  He called me once rather sheepishly to ask whether one of the women working on the account was single; the CEO (divorced) wanted to know.

  • Fourth Financial Corporation.  Once there were strong regional banking companies in the U.S., and Wichita-based Fourth Financial was one of them.  They requested a new account team and were about to go out the door.  CFO Mike Shonka and I figured how to navigate around some of the internal craziness and forged a successful program.  I knew the end was coming when he cancelled their East Coast investor meetings, and shortly thereafter the company was acquired by Boatmen’s Bancshares, a St. Louis-based bank holding company.  Mike went on to serve as CFO at Cessna Aircraft for several years.

  • Valassis Communications.  Detroit-based Valassis would only be a one-year client.  CEO Dave Brandon (later CEO of Domino’s Pizza and current athletic director at the University of Michigan) told VP Corporate Communications and Investor Relations Lynn Liddle that she could hire an IR agency for one year to learn the ropes, then she was on her own.  Because of industry dynamics, Valassis’ main business – freestanding inserts in the Sunday editions of daily newspapers across the country – always consisted of two companies with 50 percent market shares.  Several companies tried and failed to enter and one of them was trying during our tenure, backed by massive debt from Morgan Stanley.  This prompted one of the great replies to an analyst’s conference-call question.  Asked if he ever envisioned a three-company industry, each with a 33 percent market share, Dave answered, “The planets will collide before that happens.”  Some thought he was being arrogant but he proved to be correct.  Lynn followed Dave to Domino’s, where she is currently an executive vice president.

  • Summcorp.  Another regional banking company, Fort Wayne-based Summcorp had signed up as client but accepted a buyout offer before backing out and remaining independent.  CEO Richard Doermer, who passed away this year, epitomized the old-time banker: soft spoken, gentlemanly and honest.  My contact, Beth Miller, always made everything simple.  The company had the most unique annual meeting in the United States: a sit-down dinner in the basement of the Allen County War Memorial Coliseum following the legal business.  Beth took me upstairs so I could see where the Fort Wayne Pistons had played (ice was down for the minor-league Fort Wayne Komets).  Like Fourth Financial, Summcorp was gobbled up by Detroit-based NBD Bancorp.

  • Giddings & Lewis.  I never minded the three-hour drive to Fond du Lac, Wisconsin, to meet with the executives of what was once the largest American-owned machine-tool company.  There are enough interesting things about the company, its executives and the town to merit a separate post.

  • Patterson Dental.   Now the Patterson Companies after diversifying outside the dental industry, this company is a wonderful success story.  As Patterson Dental, it was just another one of the Beatrice Company’s far-flung acquisitions.  Rather than letting investment bankers take a large percentage of the company, President and CEO Peter Frechette and CFO Ron Ezerski purchased St. Paul-based Patterson from Beatrice with their own money.  Patterson became a client shortly after its IPO, and the stock performed very well, making Pete and Ron’s bet pay off big time.  It couldn’t happen to two more deserving guys.  Ron, who retired early to play tennis and enjoy life, still owns about 1 million shares.  Pete retired as CEO a few years back and is chairman of the board. He owns 1.5 million shares.

  • Aeroquip-Vickers, Inc.  My most notable Golin-Harris client was Trinova before it changed its name to its two operating units.  The third – thus the “tri” – had been sold years before.  Although we never progressed far with the Maumee, Ohio-based company due to circumstances from both parties, I enjoyed working with IR director Warren Bimblick, a real pro and coincidentally one year behind Janet at Erasmus Hall High School in Brooklyn (didn’t know each other).  After Aeroquip-Vickers was acquired by Eaton, Warren took a job with a magazine publisher in New York.  We had a memorable dinner together at CafĂ© Luxembourg, where shortly after we were seated, GE CEO Jack Welch sat down at the next table. 

Monday, December 13, 2010

Blizzard Football in Chicago

I wisely decided not to use my ticket for Sunday’s Bears-Patriots game after hearing a prediction for 8 inches of snow and gale-force winds. My father attended a Bears game in a blizzard 55 years ago, and the Bears were beaten badly in that game too. He, however, was happy about the outcome.

For almost 40 years, Chicago was a two-team NFL town. The Bears were the North Side team and the Cardinals, who played most of their seasons at Comiskey Park, were the South Side team. In fact, an unwritten agreement marked Madison Street as the border for where each team could play their home games. From the 1920s through 1952, the teams played home-and-home during the season; from 1953 to 1958, the game alternated between Wrigley Field and Comiskey Park (the final game was played at Soldier Field in 1959).

Chicago Cardinals logo

On November 27, 1955, our family piled into the car and headed to our aunt and uncle’s house in South Shore. My brother, mother and I stayed there while my father and uncle went to Comiskey Park for the Bears-Cardinals game. As South Siders, we were Cardinals fans as well as White Sox fans.

Comiskey Park, configured for football

The Bears entered the game on a six-game winning streak after losing their first three games. The Cardinals, under first-year coach Ray Richards, were having their usual poor season at 3 wins, 5 losses and 1 tie. With only three games left until the end of the season, the Bears needed a win to keep pace in the Western Conference with the first-place Los Angeles Rams.

The Cardinals scored a touchdown on their first series on a 28-yard deflected pass from Lamar McHan to Don Stonesifer. Forcing the Bears to punt on their first series, Ollie Matson returned the punt for a 77-yard touchdown. The Cardinals pushed their lead to 27-0 on runs by Dave Mann and Johnny Olszewski before George Blanda’s 1-yard run put the Bears on the board to end the first half. In the meantime, the snow became progressively heavy, reaching blizzard conditions. 

Gern Negler blocks as Dave Mann runs past Ken Gorgal for a 19-yard touchdown

The Bears would fumble on their first two series of the second half, leading to two Pat Summerall field goals. Touchdown runs of 61 yards and 1 yard by Mann and Matson, respectively, and a second touchdown pass to Stonesifer closed out the Cardinals scoring before the Bears put a touchdown on the board to make the final score 53-14. Two Bears and a Cardinal were ejected for fighting near the end of the game. The Cardinals outgained the Bears 474 yards to 211 yards, and their defense, led by Dick "Night Train" Lane, forced four interceptions and a fumble recovery. The attendance was 47,314, a good crowd for the Cardinals but not a full house.

Ollie Matson

One of the worst losses in Bears history knocked them out of contention, despite winning their last two games, and they finished 8-4, just behind the 8-3-1 Rams. George Halas would retire as the only Bears head coach after the season, but he returned to the helm in 1958 before retiring again after the 1967 season. The Cardinals lost the next two games for a 4-7-1 season, barely avoiding last place.

The Cardinals, always Chicago’s other football team, hung on for four uneventful seasons before moving to St. Louis. I attended their second-to-last game at Comiskey Park in 1958 (they played their final season at Soldier Field and two games in Minneapolis) vs. the Pittsburgh Steelers. Although Ollie Matson returned the opening kickoff 101 yards, the Cardinals lost, 27-21, as the Steelers pulled out the victory with a 78-yard touchdown pass in the fourth quarter from Bobby Layne to Jimmy Orr before slightly fewer than 16,000 fans.

Ticket stub, Pittsburgh Steelers vs. Chicago Cardinals
Nov. 23, 1958

My uncle, who turns 99 next month, told me they got the tickets from his father-in-law, an executive with Sears. Other than the Cardinals clobbering the Bears  (they were happy about the outcome) and the weather being terrible, he didn’t remember much after that. I remember as a 6-year-old fearing I’d never see my father again. I was extremely happy to see the snow-covered brothers come through the front door that day, 55 years ago.

Saturday, December 11, 2010

Clients From Hell: Part 3

The company that was wacky from day one and a client with whom I almost engaged in a cussing match conclude the series.

  • Operation Combat Fairy Dust.  The client seemed normal enough. The maker of back-up power-supply systems, traded on the Nasdaq National Market System, was an industry leader. Formerly family owned, the company had recently gone public, which didn’t sit well with some family members. In fact, the IPO made matters worse rather than better.

The account-team orientation presented difficult logistics. The company is located in a small town, 75 miles north of Madison, Wisconsin. There is a shift change at the plant in the early afternoon, and the lone road leading into and out of the plant/company headquarters was only one lane wide. If we didn’t get there before the shift change, we wouldn’t be able to enter for about an hour  We flew to Madison and checked into the hotel before proceeding north, allowing us to miss the “rush hour.” 

The hotel would be busy that evening  A fraternal organization (which I won’t name but obviously not the B’nai Brith) was holding an event in the evening, and liquor was arriving in cases  After a long day of flying, driving and conferencing, Diane, Bob and I knew we wouldn’t get much sleep that night. We didn’t, but for an entirely different reason.

Ushered into the conference room after arriving, we were told it would be a few minutes. The minutes turned out to be about an hour, with virtually nothing to do but check in at the office. Company management, a nice group who were very apologetic, finally arrived. The investor-relations program had a simple objective: get the stock price high enough so the wacky family members would sell out. The nuttiest one was a woman (possibly the founder’s widow) who would drop by the office and sprinkle “fairy dust” on those she thought needed to see her way of thinking.

Needless to say, we spent very little time learning about the company before it was time for dinner. This necessitated a 10-mile drive south to a supper club in the next biggest town, where the quantity of food vastly surpassed the quality. We finished up around 10 o’clock, and still had the ride back to Madison  Diane and Bob wanted to drive directly home, which was fine with me so long as I didn’t have to drive. After stopping at the hotel (the revelers were still in high gear) to pick up our belongings and call Janet to tell her of my impending wee-hour arrival, we headed out on I-90/94, with Bob expertly piloting the Lincoln Town Car.  My sound sleep was interrupted by noise from the rumble strips at the Rockford Toll Plaza, and I walked through the front door about 3 a.m.

Luckily for all involved, the company didn’t even make it to the next quarterly earnings announcement before being acquired. We no longer had to play catch-up on learning the company’s investment merits or worry about telltale fallout from fairy dust.

  • When Keeping Quiet is the Best Strategy.  Real-estate investment trusts (REITs) were all the rage in the early 1990s, with every property classification going to the public markets to raise capital.  I represented a number of them (shameless plug: I was the co-author of the chapter on investor relations in Real Estate Investment Trusts: Structure, Analysis and Strategy, Richard T. Garrigan and John F.C. Parsons, eds.). Because this company’s classification has a limited number of public entities, I won’t provide any more information, which will make the discussion rather cryptic.

Early into the client relationship, the company acquired a development consisting of several properties. The news release was distributed before the market opened; back in the pre-Internet days, one had to manually check the Dow Jones and Reuters news wires, cut and paste the clips, check them for accuracy and fax them to the client. The news was slow hitting the wires, and Wayne, who worked on the account with me, and I headed off to another client’s investor presentation at noon  In hindsight, we should have had someone other than an administrative assistant read the clips before sending them out.

I returned from lunch with two urgent notes: call the client CFO and call my mother  My first call informed me that Janet’s mother had suffered another stroke, but my mother didn’t know to which hospital she would be admitted. Since I couldn’t reach Janet, I called the CFO next.  I’d already seen that the clip from Dow Jones inaccurately reported the wrong real-estate classification was acquired, which didn’t make sense because the company wasn’t diversified and wouldn’t have bought such property. Because of expansions at Dow Jones, Reuters and Bloomberg, the companies were hiring recent college graduates for their news desks, and many of them were clearly not qualified to handle and report breaking news. The client’s investment banker had called the CFO in a tizzy, asking what was going on and, to make matters worse, our administrative assistant had sent the clip to the client without any note other than the basic FYI. 

Upon reaching him, I was greeted with a barrage of profanity and threats I’ve not heard from a client either before or since. While listening to his f-bombs and “Wait until the CEO hears about this,” I thought, “My mother-in-law might very well be dead (she survived but passed away a few months later), and I have to listen to this crap?”  I was just about to unload on him as he finished (o.k., he didn’t know, but that doesn’t excuse his poor manners) but I held my breath. After about three seconds of silence, I heard the click on the other end. I’m glad I kept my mouth shut. 

Not unexpectedly, I was booted off the account the next day and shortly thereafter assigned to one of their competitors (the agency had a loose definition of conflicts). The company’s managements couldn’t have been more different: all the officers of the first company were Jewish, while the new client was very WASPy. Wayne and I got along fine with the new people, tackling their annual report right away. The chairman [“Jack Bell”] arranged for the board of directors photo to be taken at his yacht club. When the designer arrived with the photographer and announced himself, the man at the front desk, said, “You must be Commodore Bell’s boy.” I still call him that.

Thursday, December 9, 2010

Clients From Hell: Part 2

The work for a suddenly spun-off company started out interestingly enough until it hired a client contact. If this were a drama, I would be the murder victim, done in to cover up a series of lies.

The original client was a real-estate syndication company, which at one time controlled properties worth more than $9 billion. The company also had six publicly traded real-estate investment trust (REIT) funds, for which I handled quarterly dividend news releases. After experiencing significant financial troubles in late 1989, one of its major investors forced the resignation of the CEO and president and appointed one of its executives to run the company. We were out, and a high-powered New York agency was in. I kept in touch with my client contact, who told me the new account team was clueless  “If this were an car company, it would be like having to explain rack-and-pinion steering to them,” he related. 

Four months later, seemingly out of the blue, I received a phone call from another person I’d worked with at the company. The new guy was out, the former president was back in, and they needed me ASAP to write the news release and handle the media relations  I cabbed it over to company headquarters, where we wrote the release and set it up for next-day distribution  Strangely, I wasn’t finished yet. A young man tapped me on the shoulder and told me he needed a news release too.

Because of the parent company’s financial problems, the boards of directors of the six publicly traded funds had decided to sever their ties and administer the funds themselves through a new entity. Working with the lawyers for this new company, we drafted a news release that evening that would be distributed during the next few days  For a brief period of time, the agency oddly represented the parent company and the new company  Given the bulk of the work would be with the latter, we ceased working for the parent and started with the new client, which I’ll call The Funds.

The Funds kept us busy, and after about a month it hired a contact person. He had been laid off from the parent company months earlier – along with 500 other people – and was home collecting unemployment compensation and helping take care of a newborn daughter. The Funds were nervous about being viewed as a clone of the parent company, so its president and our agency president worked out an arrangement whereby he would be paid by the agency and The Funds would reimburse us. Because of doubts about The Funds’ financial stability, my boss told me never to hand over the check unless we got one in return.

The contact (“Dave”) and I started well together, tackling multiple projects for each of the six funds. After a short time, however, he and his group became increasingly demanding. He complained about completing a large print job after opting to save money by not using a high-speed offset press. At a meeting discussing another project, one of their smart-ass lawyers said I might require my assistant to work on Easter Sunday to get it completed. Since there was no such urgency, I told him that wasn’t going to happen.  He replied, “I’ll bet if I called [our agency president] he’d order her to come in.” In a split-second, I replied angrily, “No he wouldn’t and I don’t suggest you try.” Dave never said a word.

Here’s where the trouble started. I began seeing quotes from him about how he was present at The Funds’ creation and played a major role in separating it from the parent company. In fact, he didn’t make the scene until at least a month later. From there he graduated to speaking engagements on the subject, both in town and across the company. By then, I was off the account, as he told the agency president any number of lies (he didn’t believe them) and had me removed. For example, the agency had its annual summer party on a Friday, when The Funds were thinking about announcing their dividend declarations. I told Dave to let me know if that would be the case so we could have somebody at the office to handle it. Dave reported I said, “We have our summer party on Friday, so if you want to distribute the releases you’re out of luck.”

Like many things in life, it worked out for the best.  I no longer had to put up with his passive-aggressive behavior and still received the commission for bringing in the account (it helped pay for our daughter’s bat mitzvah). So Dave, although you now run a seemingly successful real-estate business, remember this: you are a liar, a coward and an ingrate. I’m sure you’ve conveniently forgotten about how you begged me like a child for your paycheck because The Funds didn’t have our check ready, citing how badly you needed it after being unemployed and having a new baby (wish I hadn’t given it to you). I’m sure you still believe you were a major mover in the formation of The Funds, even though you didn’t show up until much of the heavy lifting was done. And I’m sure you’ve forgotten how gutless you were to make up those lies, when all you had to do was ask for somebody else to run the account so you could keep up your fairy-tale saga.

This is one instance where I strongly believe in karma.  End of rant.

Tuesday, December 7, 2010

Clients From Hell: Part 1

Everyone in the professional services industry – law, accounting, public relations, et al. – has had at least one: The Client From Hell.  Whether it was a poor performing business and/or lousy business plan, a clueless and/or tyrannical client contact or any number of adverse circumstances, working with these companies could make any great day unpleasant and always resulted in too much time spent for little or even no compensation.  I’ve had my share, and here are a few.

  • The Postage-Stamp Takeover Artist.  In the mid-1980s, I joined an account team working for a former hospital executive (“Larry Pierce” for these purposes) who was attempting the hostile takeover of a major New York Stock Exchange hospital company.  He was better known for being the son-in-law of one of the wealthiest Chicagoans.  After a previous leveraged buyout, financed in part by Drexel Burnham Lambert junk bonds, went south earlier in the decade, Pierce organized another hospital company and expanded it through an LBO.  In the meantime, he set up an investment company with proceeds from the estate of his wife, who passed away around that time.

We kept busy churning out news releases and answering media calls ranging from the Wall Street Journal to daily newspapers in the target’s home city.  When asked about financing for the deal, I would reply the company is “highly confident” it would find investors to help it proceed.  That language was ripped off directly from deals financed by Drexel junk, although when asked if Drexel were involved, the answer always was “no comment.”

The target company’s response was basically, “Anybody with a postage stamp and an envelope can initiate a hostile takeover,” and it steadfastly rebuffed all efforts.  They were, of course, correct.  Pierce sent out the initial news release to gauge interest in joining him, for he did not have sufficient capital to mount a battle.  In fact, his investment company had more support staff than operating officers and almost no cash in the bank.  This didn’t stop it from continuing the aggressive PR work and starting a corporate-identify program.  I left the agency in mid-1987, after which Pierce tossed in the towel and left both my former agency and the design firm with a few hundred thousand dollars in unpaid invoices.

Pierce also had another project, a smart card with a person’s encrypted medical history, which really would be used by hospitals to discern quickly the extent of the patient’s insurance.  The problem: there was no card reader, and one was nowhere on the horizon.  Suffice to say, this was another project with much work and no compensation.

  • From Sewer Plugs to Heart Disease Detection.  Firms often take on clients they have no business even pursuing, either because they are too small and undercapitalized, have a shaky business model, lack proper management or all of the above.  This one circled the bases.

The Midwest-based company had a steady business since the 1950s of selling sewer plugs, which were used in testing systems across the U.S.  It was publicly traded on one of the markets below the Nasdaq National Market System, which meant no analysts followed it and no major institutions invested in it.  The company, however, hired us because it now had a new blockbuster product having nothing to do with waste disposal.

The company president (“Lance Cherry”), who invented the sewer plug, had purchased the rights to an algorithm that supposedly could detect heart disease in a-symptomatic patients.  The company would retain the sewer-plug business to generate enough cash to fund the testing and manufacture of the Cherry System, thus leaving limited funds to spend on projects like investor relations.

The introductory meeting was a disaster.  I accompanied two other top agency executives for a one-day orientation that began with Cherry reading and questioning our boilerplate-laden contract word-for-word, wasting precious time better used for learning about operations.  The heart-disease detection system was seemingly years away and, given the limited budget and management’s absolute ignorance about hospital equipment, this client was a recipe for disaster.  Cherry barely let us leave, and we would have missed our flight home on a Friday night but the incoming crew luckily was delayed.   Later, I noticed the back of Cherry’s business card read, “If you died tomorrow, do you know where your soul would go?”

It didn’t take long for the budget to dry up and our patience to wear thin.  I did my best to avoid working on the account, which dropped us in less than one year.  The Cherry System never made it to market.

  • Open ‘Em Where They A’int.  When a retailing company’s strategy is to put stores in cities where the industry leaders have not yet entered, you can be pretty sure that advantage won’t last long.  This is especially true if the company is undercapitalized and offers absolutely no differentiation. 

Having successfully opened an office-products superstore chain for a major retailer, the organizers of this Texas-based company did an IPO before opening a single store.  The agency should have seen the red flag right way – the underwriter was the well-known bucket shop D.H. Blair – but client selectivity was often lacking.  I left the orientation meeting with the president totally unimpressed, given my previous experience with the nation’s largest office-products distributor.  He was one of these “If you don’t get this, you’ll never get it” types.

I can’t remember doing much for the company except for the aftermath of a call at home around 6:30 p.m. from our dullard client contact.  He wanted to issue a news release about some relatively useless subject.  I tried to dissuade him but he seemed persistent, so I told him “fine” to get him off the phone.  Before long (much to my unacknowledged joy), I was booted off the account and it was moved to the New York office, since the company’s first store would be opened in Baltimore.  Staples and Office Depot quickly saturated the company’s territories, and it soon went straight to Chapter 7 and liquidation.  The agency stopped taking D.H. Blair clients shortly thereafter.

To be continued.

Saturday, December 4, 2010

The Brawl

I’ve mentioned former Detroit Tiger Murray Franklin, my father’s Phi Epsilon Pi fraternity brother, in a few of my posts. “The Brawl” is about the incident for which he’s known best and was featured in Life magazine. I had considered writing about his interesting career but his son Dell has penned an unpublished memoir on the subject, which would basically end up with my poaching much of his work. You can read some of it online in The Rouge Voice (http://www.theroguevoice.blogspot.com/) and in copies of the Voice (now unfortunately no longer published) he was nice enough to send me with a very interesting typewriter-composed cover letter two years ago.

Murray Franklin

Some biographical information first.  Murray Franklin was born on April 1, 1914, and grew up on the northwest side of Chicago. According to Dell, the neighborhood had few Jews, so young Murray often fought his way between school and home, a skill that would come in handy at the end of his professional baseball career. He lettered in soccer and baseball at Schurz High School, then entered the University of Illinois after turning down a scholarship to Northwestern University. He teamed up in the infield at Illinois with Hall of Famer Lou Boudreau and signed a contract with the Detroit Tigers after graduating in 1937.

Franklin made his Major League debut with the Tigers on August 12, 1941, and his first hit, a double as a pinch-hitter for pitcher Tommy Bridges, came two days later at Comiskey Park. My father and fellow Phi Eps were among the 6,434 fans attending the doubleheader. He walked after coming into the game to play shortstop in the nightcap. Franklin played sporadically in 1941 and 1942, then entered the Navy, where he played on the Norfolk Naval Air Station team with Pee Wee Reese before heading for the South Pacific.

Phi Epsilon Pi, 1937
Franklin is 3rd from right, 1st row
My father is 5th from right, 2nd row

Franklin was discharged from the Navy in time for the 1946 season. According to Phi Ep Gus Friesem, the Tigers did not offer Franklin a contract because it gave one to the aging Pinky Higgins, who would be dealt to the Red Sox early in the season after George Kell came over from the Philadelphia A’s. Dell Franklin thinks it might have been due to owner Walter “Spike” Briggs, a devout Catholic who sent rosaries to the clubhouse (but not to Hank Greenberg), keeping some lesser lights over his Jewish father. Taking advantage of the newly formed Mexican League, Franklin signed with Tampico. The Friesems saw him play while on their honeymoon. Gus said crowd control during the game was administered by high-powered water hoses. Franklin also played for Marianao in the Cuban League, where his teammates were Minnie Minoso and Sandy Consuegra and his opponents included Buck O’Neill, Max Lanier, Luis Tiant Sr., Hank Thompson and Connie Marrero (see my earlier blog posts on Thompson  http://brulelaker.blogspot.com/2010/10/hank-thompson-third-man.html and Marrero   http://brulelaker.blogspot.com/2010/11/going-on-100-connie-marrero.html). 

Murray Franklin's Cuban baseball card
Oddly, it is marked "Jewish" on the back

Major League Baseball had barred players who jumped to the Mexican League from returning, but a lawsuit that threatened to overturn MLB’s antitrust exemption resulted in amnesty for all. Franklin turned down an offer to return to the Tigers in 1950 after playing with the Hollywood Stars of the Pacific Coast League (PCL) during the previous season. He had moved his family to California and started a shoe-supply business, Dell Franklin wrote me, and was making decent money playing for the Stars. With only 16 American League and National League teams back then, the PCL featured a very good brand of baseball to say the least.

After playing for the Stars and San Diego Padres, Franklin joined the Los Angeles Angels in time for the August 2, 1953, doubleheader vs. the Stars at the Stars’ Gilmore Field (now the site of the CBS studios on Beverly Boulevard). In the 6th inning, Angels pitcher Joe Hatten, who had brushed back Frank Kelleher in the 4th inning, plunked him on the back. Kelleher charged the mound and was ejected, replaced by pinch-runner Ted Beard. After advancing to second base, Beard attempted to steal third, where reports say he was out by at least 10 feet. He went spikes up, cutting the 3rd baseman Franklin in several places and dislodging the ball. Possibly remembering his northwest side days, Franklin came up swinging and the benches emptied.

Ted Beard dislodges the ball from Murry Franklin
Hollywood Stars vs. Los Angeles Angels, Aug. 2, 1953

This ended up as “The Brawl,” later featured in Life’s August 17 issue. Franklin and Beard pummeled each other, and numerous fights broke out. The Angels roster included Gene Baker (who came with the Cubs to be Ernie Banks’ roommate), Bobby Usher (now 85 and a recent interviewee on The Brawl), Cal McLish, Randy Gumpert and Dixie Upright (possibly the most obscure player for the final edition of the St. Louis Browns). The Stars featured Dale Long, Lee Walls, Mel Queen and Bobby Bragan. Eventually, 50 Los Angeles policemen arrived to quell the disturbance, which lasted about 30 minutes. The Stars went on to win the first game, 4-1, and the Angels came back to win game 2, 5-3, despite two errors by Franklin. Beard, who will be 90 in January, did not play in the second game.

The Brawl
Hollywood Stars vs. Los Angeles Angels, Aug. 2, 1953

Murray Franklin retired from baseball after the 1953 season. He passed away on March 16, 1978.  It’s a shame Dell’s A Ballplayer’s Son remains unpublished. It’s a refreshing look at what baseball used to be, when players busted their butts and played injured, even though the stakes were so small. Again, check out the excerpts on The Rogue Voice Web site listed previously.