SHRUB'S KEEN BUSINESS ACUMEN
The following tale of the genius of Shrub in business matters
is condensed from a significantly longer version that appeared
in the ultra-liberal
American Spectator in June 1999. Check the original
version by those bomb-throwing radicals for further details
(as well as Joe Conason's Notes on a Native Son from the Feb. 2000
issue of Harper's Magazine).
After passing up stuffy academic pretension for more real-world,
down-to-earth matters (keggers, bordellos, etc.) at Andover, Yale and
Harvard, Shrub returned to Texas in 1975 and scraped together
$20,000 of trust fund money to start an oil and gas exploration
company called Arbusto - Spanish for "bush." After consulting
daddy's friends about what to do after picking up his trust
fund check, he was told to sign up for classes at the Permian
Basin Graduate Center, a school teaching the oil business.
Three years later he decided to attempt to win the vacated
House seat from his district and lost big time, so it was back to
Arbusto. Further cash infusions from Uncle John, grandma,
and several more of daddy's friends left him with well over
$500,000.
By the early 1980s Arbusto was losing money and - when the price
of oil dropped significantly in 1982 - Shrub was close to losing
everything. Fortunately for him, a wealthy friend of James
Baker - daddy's chief aide de camp for several decades - came
up with a $1 million dollar investment to buy 10% of a company
that was worth less than $500,000. Shrub also changed the name
of the company to Bush Exploration in case any of daddy's friends
couldn't read Spanish. By 1984 Shrub's assets were once again
disappearing as fast as a keg at a frat house.
Fortune again reared its smiling head in the guise of an oil exploration
company named Spectrum 7 - owned by a businessman named
William DeWitt, Jr. - that stepped in and bought out Bush Exploration.
Family friend Paul Rea - a top executive in Spectrum 7 - has stated that
they didn't really want Bush Exploration as much as a new business manager
for Spectrum 7. Something about Shrub's performance as daddy's son, er,
head of Bush Exploration had apparently impressed the folks at
Spectrum 7.
By 1985 Spectrum 7 was in trouble. Even Shrub's business genius
couldn't guide them successfully through another drop
in the price of oil. Shrub and Rea looked to merge Spectrum 7 with
another company. Dame Fortune came calling this time in the
guise of a Dallas company called Harken Energy, but not because
they thought Spectrum a great deal. According to Rea, "One of the
reasons Harken was interested was because of George's name. They
wanted to get George on their board."
A former Harken director named Stuart Watson has stated that, "George
was very useful to Harken. He could have been more so if he had had
funds, but as far as contacts were concerned, he was terrific ... It
seemed like George, he knew everybody in the U.S. who was worth
knowing." All that hard work being born with the name Bush was
beginning to pay off. Despite his keen business acumen, Harken
wanted him on the board instead of running the company. The 1986 deal
brought him Harken stock worth $500,000 at the time as well as a
consulting contract worth $120,000 per year. I'll wager that the
consultations didn't involve his sharp nose for oil.
Shrub helped out in daddy's Presidential campaign in 1987 and 1988
while still employed by Harken. After the election he returned to
Texas to await opportunity's familiar knock. After an anxious
several days, he was contacted by William DeWitt, the owner of
Spectrum 7 during Shrub's unsuccessful administration thereof.
DeWitt was attempting to buy the Texas Rangers baseball team but
had been told by the baseball commissioner that he needed more
money from local, i.e. Texas, investors. Knowing that Shrub was
a baseball fan in addition to being one hell of a son, er,
keen businessman, DeWitt immediately thought of him as a likely
candidate.
The very small problem of Shrub not having that kind of scratch
was smoothed over by a couple of fortunate coincidences. First,
then Rangers owner Eddie Chiles was an old, old friend of daddy's,
and after he found out Shrub was interested he lost interest
in all other bidders for his team. Second, Shrub happened to
run into a couple of daddy's rich friends in Dallas as well as
a wealthy old college buddy who all, upon realizing the wisdom
of investing in his keen business sense, ponied up the $46 million
asking price. Shrub borrowed $500,000 to put up a total of
$606,000 for a 1.8% interest in the team. Realizing that this
was a sorry pittance for the man who'd brilliantly brought
together the whole deal via the tireless effort of making a few
phone calls, the partners decided to give him an additional 10%
once they'd recouped their investment. Thus he would own 11.8%
of a $46 million team (i.e. $5.4 million) for his investment of
a little more than $100,000 of his own money.
Shrub needed to pay off the $500,000 loan, though. His largest
asset was the Harken stock he'd received upon officially linking
his name with the company, so he decided to sell that off to
pay off the loan. His keen business acumen once again paid off
as he sold 2/3 of his Harken stock for $850,000 just a few weeks
before the company announced a quarterly loss and its stock
price declined to a quarter of what it had been when he sold it.
Daddy's SEC investigated this transaction since not only was Shrub
a member of the board, but also on the committee assigned
to study Harken's financial situation. It is usually illegal
to use insider information for such purposes, but dad's SEC
took no action, undoubtedly because they realized that Shrub
had already been given a severe talking-to by the Old Man and
humbly realized the appearance of impropriety of his ways.
Putting his close brush with having to abide by the same laws
as everyone else behind him, Shrub turned his keen business
acumen to turning the Rangers - not the most profitable of
baseball teams - into a winning proposition, and if not on the field
then at least at the bank. Bush and his fellow owners (i.e. the
guys that owned the other 99% of the team) decided that a new
stadium with luxury boxes was the quickest and best way to
cash city, especially if they got others to pay for it.
They came up with the brilliant idea of telling the city of
Arlington to pony up $135 million or they'd take their team
elsewhere. They and the mayor decided to finance the stadium
via a tax referendum, with the mayor heavily promoting the deal
as one that would bring $100 million a year into the city's
economy. They mayor also promised the taxpayers that the Rangers
would put up the first $30 million for the stadium. The referendum
passed easily.
Afterwards the taxpayers were informed
that the Rangers (i.e. Shrub et al.) would
not produce the $30 million up front but rather over time in the
form of a $1 per ticket surcharge to be paid by the fans. Shrub
et al. additionally got a loan from the Arlington Sports Facilities
Development Authority (ASFDA), a quasi-governmental body created to handle
the financing as well as other matters, to cover most of the rest of the
cost. They also negotiated a rent-to-buy agreement wherein they'd
pay $5 million in rent and maintenance each year for 12 years. This
would be applied each year to a total price of $60 million, i.e.
they'd own the stadium outright after 12 years for only the cost of
rent and maintenance over that time.
Another of the matters handled by the ASFDA was the condemning of
200 acres adjacent to the new stadium so Shrub et al. could use them
for commercial development. That is, the power of eminent domain - usually
used for taking land for some compelling need - was used to grab 200
acres so Shrub et al. could profit from developing it.
In 1998 Shrub et al. sold the team for $250 million, with Shrub's
take coming to over $15 million for his original $106,000 pre-loan
investment. Eat your heart out, Hillary. By the way, the increase
in the value of the team is attributable almost completely to the
value added by the new stadium.
This is the sort of tale of keen business acumen that would turn
even George Soros green with envy. A young man achieves great
success after starting out with with nothing more
than a trust fund, a dad who was President, and the willingness
to work hard to take advantage of his connections.
Not to mention fighting his way past substance abuse and
addiction and the onerous demands of the National Guard.
If this story doesn't just scream integrity, courage, hard work
and dignity, then what does?
posted by Steven Baum
10/24/2000 05:42:24 PM |
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