By Steve Rhodes
I made the mistake of thinking Money Talks, Bullsh*t Walks: Inside The Contrarian Mind Of Billionaire Mogul Sam Zell this was a real book, instead of quickie hagiography. Nonetheless, let’s take a look at some of the interesting and relevant items and passages. See if you can spot the bullshit walking.
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“Once in the States, [Zell’s father] settled into the wholesale jewelry business, moving the family to Albany Park, Illinois, a community dominated by immigrant Jews just northwest of Chicago.”
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“Even at the tender age of twelve, it was no stretch of the imagination to see that Sam Zell had ‘entrepreneur’ written all over his psyche. During his daily train rides to Chicago [from Highland Park, for Hebrew school], Zell’s inquisitive mind often worked in overdrive. One day in 1953, he was scanning the magazines on sale at the train station. There he found the first issue of a brand-new Chicago publication unlike any he had seen, or should have seen at his tender age. The magazine was aptly titled Playboy and founded by a little-known Chicago entrepreneur named Hugh Marston Hefner. At the time, Playboy was not the mainstream media product that it would become years later. In fact, it was considered so nefarious that its circulation was limited only to certain sections of the inner city.
“Zell acted on his impulse, sensing an untapped commercial aspect to this exotic commodity. He bought Playboys for fifty cents a copy and sold them to his suburban chums later in the day for three dollars.”
At age 12 he was a smut peddler! And that markup – what a prick.
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“The caption under his 1959 Highland Park High School yearbook photo says much about those formative years: ‘I’m not asking you, I’m telling you.'”
Like I said, Prick City.
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While in law school, Zell became a landlord to college students.
“With only $1,500 in savings, Zell parlayed the meager sum to purchase a land contract on a small apartment property. After a fresh coat of paint and some new furniture, he doubled rents and went in search of more buildings to buy.”
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“One morning in 1993, while consuming his usual five newspapers over breakfast, Zell chanced upon a Cincinnati-based owner of radio stations called Jacor Communications. For months, Congress had shown a proclivity for easing regulations on the tightly controlled telecommunications industry. Though still mired in his debt issues, Zell decided to take a flyer on the company when he thought Congress would do even more, snapping up Jacor for the pittance of $50 million. As an opportunistic play, his timing was on the mark. Thanks to the U.S. Telecommunications Act of 1996, the broadcasting business was regulated overnight.
“Zell and Jacor CEO Randy Michaels cranked up the volume and went on a buying spree, growing the company from only 17 radio stations in 1996 to 234 by 1999, spending $2 billion over a single two-year period.
“Zell then delivered on his promise to cash out at the peak of the market, selling Jacor to Clear Channel Communications for $4.4 billion after it won a bidding war with CBS Radio. Zell’s initial investment of $50 million turned into a $1.3 billion payday in only six years.”
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“As far back as the mid-1980s, Zell and his partner Robert Lurie had started Mobile Home Communities Inc. (MHC),which owned and operated forty-one manufactured housing communities, mainly in fast-growing Sun Belt cities. Their love of rental units came during their formative years as college landlords, but Zell recognized the growth potential of this decidedly unglamorous but low-cost alternative to site-built single-family housing.”
I wonder how many Chicagoans would give the Lurie Gardens back knowing Robert’s fortune was built on part on the backs of mobile home owners. See the “Zell’s Bells” item here.
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“By 2004, based on his own analysis of the manufactured housing market, Zell sensed a new opportunity to grow the business organically rather than by acquisition . . .
“First came a much-needed rebranding exercise, replacing the perfunctory Manufactured Housing Communities name with one of his tried-and-true ‘equity’ monikers. Overnight, MHC became Equity Lifestyle Properties, traded on the New York Stock Exchange under the new symbol ELS.”
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“Overnight, it seemed, Sam Zell had become a business icon. Thanks to the blockbuster [Blackstone] deal, his name appeared in headlines on the front pages of every major daily newspaper. Suddenly he was regarded with adulation. He saw what others could not. One pundit even noted that his reputation had suddenly been elevated to super-hero status and that he could leap over his own tall buildings with a single bound. The only thing missing was a costume change – Zell could easily wear a ‘Super Sam’ outfit complete with a red S on his chest.
“That bit of fun might be over the top for most corporate executives, but put nothing past Sam Zell. To be sure, philosophy 101 teaches that a razor-thin line exists between genius and madness. Which characterization best fits Zell? That depends on whom you ask, but he is sanguine, and downright comfortable, within his quirky persona. He proudly admits to an abundance of self-confidence, which allows him to continually push the limits of what he views as possible.
“One thing that can be said of Zell with absolute certainty – you always know where he stands and what he’s thinking. And just in case you don’t, he often reminds you with a curt ‘Do you want me to speak slower?’ followed by a quick and condescending smirk.”
Yes, Superman, please speak slower. We want to savor your every word.
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“For many, however, taking on Sam Zell, the man of many contradictions, has proven anything but a pleasant experience. ‘At the L.A. Times, he brought people together and said they could ask him anything, but as soon as anybody did, he flew off,’ said Kevin Roderick, a twenty-year veteran of the Los Angeles Times and founder of an all-things-L.A. Web site called L.A. Observed. ‘That was a very deflating moment at the L.A. Times, because then they saw that he was not a guy who had their best interests at heart. He was not very interested in journalism. He was not there to make the newspapers better or improve journalism. But also there was a sense that he was . . . not what he seems to be. He’s just an angry little man to some people.’
“Angry or not, the business record, at least, indicates that Zell has been right a lot more often than he has been wrong.”
And this being a biography, it’s not my job to find the source of that anger! (Maybe it’s because he has to keep speaking slower.)
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“Sam Zell is proud of the fact that his office door has never been closed. ‘Open kimono!’ he shouted, referring to his insistence on clear and visible transparency in business dealings and sharing of information within his own company.”
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“L.A. Times editor John Arthur expounded on Zell’s comments with his own brief note to the editorial staff. In it, he downplayed Zell’s remarks and reminded his minions that they should not follow his example when it came to the use of colorful speech in the newsroom.”
How backwards: Swearing allowed only in the corporate suite, not in the newsroom!
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“Throughout its storied history, the Wrigley family, of chewing gum fame, never paid a dime to have its name prominently associated with one of baseball’s shrines, even after Tribune bought the team and stadium from the Wrigley family in 1981 for only $20.5 million.
“Could it be that Zell would trample on that heritage? You bet. Naming rights are big business – Citicorp poned up $20 million for the naming rights to the new New York Mets stadium in Queens. Once again, Zell showed his audacity in asking Wrigley to pay up, even thought the firm does not directly market the stadium to sell its products. To Zell, this was another untapped revenue source. And again, he was asking the questions that few were willing to ask.”
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“After twenty-eight years of corporate ownership, the Cubs were back in the hands of a local family. And Zell achieved yet another notch in his legend – largest sale of a sports franchise in history – despite the naysayers and a badly burned economy.”
Naysayers? Who thought what, that the Cubs just couldn’t be sold? Zell’s adventure selling the team was actually disastrous as he stumbled about for, what, two years trying to separate Wrigley from the deal, get the state involved (Hello, Blago!) and alienated bidders. One of the worst sales of a marquee property ever.
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“Once asked if there was one investment he would make if money were no object, Zell quickly replied, ‘I’d buy Brazil.'”
And now he’s trying to do just that.
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“The eleventh commandment is Thou Shalt Not Take Oneself Seriously.”
Hence the condescending smirk?
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“Extremism in the pursuit of opportunity is not a vice.”
In other words, greed is good. No matter how many people get hurt.
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“The best thing to have in the world is a monopoly, and if you can’t have a monopoly, you want an oligopoly. I’m more than willing to leave all the rest of the highly competitive world to everybody else.”
Not exactly John Galt, but funny how many unabashed advocates of capitalism feel the same way.
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“Ben Johnson first encountered Sam Zell while leading two of the real estate industry’s most respected trade publications, National Real Estate Investor and Shopping Center World. He previously directed the custom publishing division at American Airlines, ran a division of real estate researcher CoStar Group, and was the director of marketing for Wells Real Estate Funds. He lives in Plano, Texas.”
Ben now writes butt-kissing “biographies.”
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See also:
* The [Sam Zell] Papers
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Comments welcome.
Posted on February 11, 2010