The Extra 2% (6 page)

Vince Naimoli was the polar opposite of Dennis Kozlowski. Rather than blow company funds on luxuries, Naimoli defined austerity as owner of the Tampa Bay Devil Rays. Instead of taking a callous approach to public perception, Naimoli obsessed over it. Instead of delegating tasks to underlings while he lived the high life, Naimoli weighed in on even the smallest decisions. Yet despite avoiding the oh-so-public pitfalls that doomed Kozlowski’s tenure as Tyco chief executive, Naimoli would also run his organization into the ground. Just as Kozlowski’s downfall became fodder for a million MBA-level management classes, Naimoli’s reign as managing partner of the Devil Rays offers a cautionary tale for businesses of all kinds and sizes, a perfect primer on how not to run a company. In very different ways, both men were classic examples of “the Wrong CEO.”

Naimoli’s failures are stunning to behold today, given what transpired after he left. A new management team, plucked straight from Wall Street, would later take over, effecting huge change in every facet of the Devil Rays’ operations. Friendlier marketing and community outreach turned the D-Rays from pariahs into local darlings. Savvier business plans jump-started a once-flaccid revenue stream. Most obviously, the team itself went from league doormats to two-time AL East champions much faster than anyone expected. It’s instructive to break down the Naimoli era piece by regrettable piece. Only then can you truly appreciate the sheer competence that followed as soon as he left.

Naimoli’s career in business started far more auspiciously than the way it ended up with the D-Rays. Trained in mechanical engineering before acquiring an MBA and a degree from Harvard Business School’s advanced management program, Naimoli made his fortune in manufacturing. His trademark skill was his ability to pull a company out of a hole. Executing an effective corporate turnaround typically requires a level of thriftiness that borders on cruelty. Inventories are slashed to the bone. Payrolls too.

In 1983, Naimoli sought a $75 million takeover of Anchor Hocking’s faltering glass division. To make the deal work, he needed investors. Naimoli approached Wesray Capital, a private equity firm that became known as one of the first to specialize in leveraged buyouts. In a leveraged buyout, the buyer borrows heavily to acquire controlling interest in the targeted company. This deal, which took all of three weeks to consummate, seemed ill advised at first, with the rebranded Anchor Glass Container Corporation losing $1 million a year. After consolidating operations and firing a bunch of people, Naimoli moved the company and its remaining 120 employees from Lancaster, Ohio, to Tampa. He held the line on salaries after the move, hoping that Florida’s lack of state income tax might forestall complaints. That initial thriftiness kept Anchor afloat as the economy emerged from recession, allowing the company to benefit when conditions turned for the better. Naimoli’s cost savings would pay off in a big way. A hostile takeover plucked the company away in 1989, at a huge profit for Naimoli that included a $20 million golden parachute and $14 million more from a leaseback deal on Anchor’s facilities.

Naimoli would build a streak of successful turnaround stories over the next few years. He took over auto parts maker Doehler-Jarvis when the company was teetering on the brink of bankruptcy. Naimoli again took a hatchet to any assets that struck him as non-essential. The company then convinced its biggest customer, Ford, to pay more for its transmission cases, boosting Doehler-Jarvis’s margins and enabling a return to profitability. At another auto parts
firm, Harvard Industries, Naimoli took over a month after bankruptcy, sliced and diced operations and personnel, and again reaped profits in short stead.

He went to extremes to cut costs. All expenses had to go through him, including office supplies. Are you done writing that memo? Good, now use the other side of the paper for the next one. If you were one of his executives traveling to a company branch, you could expect to bring a satchel full of mail with you—stamps weren’t free, after all. Vince Naimoli was Ebenezer Scrooge, and he was damn proud of it.

“People ask how I turned these companies around,” wrote Naimoli in his 2009 vanity press book
Business, Baseball, and Beyond
. “All had one thing in common: too much fat. If you skim the fat, much as you would do to a pot of chicken soup, you will have a healthier product.”

A CEO who aggressively cuts costs can earn all kinds of glowing adjectives. Thrifty. Aggressive. Shrewd. But as Naimoli would find out, the baseball world had a different word for an owner obsessed with pinching pennies: cheap.

To his credit, Naimoli’s merciless approach proved invaluable in bringing a team to St. Petersburg. City officials recruited him to head up the city’s efforts to land a team after used-car dealer Frank Morsani dropped out. Why the city chose Naimoli remains a bit of a mystery. Some say he benefited from the recommendation of Tampa resident and New York Yankees owner George Steinbrenner, who was a friend. Whatever the case, Naimoli was enthused about the task of bringing baseball to Tampa Bay. He’d seen the overtures made by the Twins, White Sox, and other teams toward the area, as well as the region’s failed attempt at an expansion team. But when he failed to lure the Giants out of San Francisco, Naimoli went into full ball-breaking mode.

Joining forces with the St. Petersburg city attorney, he filed lawsuits against the city and county of San Francisco and MLB. The risks for the league went well beyond simple financial damages. Two things terrified the Lords of Baseball: the opening of their
books and the repeal of MLB’s antitrust exemption. As long as the status quo endured, team owners could cry poverty and bully local municipalities into building palatial new stadiums on the public dime. With St. Pete and also Florida’s attorney general filing suit, the Lords of the Realm knew the threats wouldn’t go away quietly. In his own way, Naimoli posed an even bigger threat.

“He was the right guy to get the team here, unquestionably,” said
St. Petersburg Times
columnist Marc Topkin. “The city had been used so much. It took threatening lawsuits, it took screaming, it took stomping around. It took all that to finally get the team.”

After years of waiting, and eight years’ sitting on a stadium with no anchor tenant, St. Pete residents were ready to embrace the Devil Rays and the owner who’d helped land their major league franchise. Fans lined up outside Tropicana Field on a Thursday night, clamoring to claim tickets for the inaugural season when they went on sale that Saturday morning. When the ticket windows opened, the line stretched more than four blocks. The home opener sold out within minutes, and Naimoli predicted twenty more games would do the same that day.

That first opening day would be the highlight of the Naimoli era.

The first hints of trouble appeared well before the first pitch was thrown at the Trop. The local media’s first dose of Naimoli skepticism dated back to the city’s attempt to land the Giants. Reporters knew Rick Dodge had led a mysterious group to San Francisco, met with Bob Lurie, and were now positioned to move the Giants to St. Pete. But no one in the sports world had heard of Naimoli, who’d kept a low profile. This wasn’t a big problem per se. Plenty of sports team owners had run successful operations by staying out of the spotlight. But Naimoli took secrecy to a new level. The plane that shuttled the San Francisco delegation back to Florida that fateful night made a late-night stop in Dallas. Naimoli hopped off there, ahead of next-day business meetings for his other enterprises. When the plane touched down in Tampa at dawn, Dodge was left to answer all the obvious questions. Naimoli wouldn’t have any contact with the media for more than a week.

“That was kind of the first sign that this isn’t someone used to a high-profile position,” said Topkin.

The next wave of questions popped up in the months and weeks leading up to the inaugural 1998 season. Naimoli had been through multiple situations in his career where he held the upper hand, and he had aggressively used that leverage to his advantage. That approach backfired with the Devil Rays. He solicited multiple bids from vendors for everything. If Tropicana Field needed carpets, he would demand fourteen bids from carpet providers. Merely to be in the running, each vendor had to buy Devil Rays season tickets. One vendor would prevail. The other thirteen would cancel their tickets at season’s end and make hash of Naimoli’s name and his organization in the community.

In the summer before the Rays’ first season, the St. Petersburg/Clearwater Area Convention and Visitors Bureau printed a visitor’s guide showing the Devil Rays logo and promoting the future team. It could only help the Devil Rays. Naimoli didn’t care. He demanded $750,000 for the right to use the team’s logo on the cover of the guide. Then there was the infamous Dillard’s snafu of 1998: Naimoli demanded that the department store pay for the right to sell Devil Rays gear. Dillard’s figured the D-Rays needed them more than they needed the D-Rays and yanked all team merchandise from their shelves.

At the heart of Naimoli’s hardball approach was a sense that local government, businesses, and baseball fans owed him for bringing the Devil Rays to life. There was no questioning the hard work and enthusiasm he’d put into the job. Naimoli had used the same powers of persuasion that once helped him buy auto parts companies to round up a group of partners who’d help bankroll the Devil Rays’ operations. He attended to every little detail leading up to that first opening day, showing the same micromanager’s technique that had paid off in his previous endeavors. But observers wondered why he couldn’t share the credit with others or be a little more self-aware. A few weeks before opening day, speculation began spreading over who would throw out the first pitch for the
first game. The Devil Rays recruited a group of Hall of Famers for the honor. One reporter suggested that Naimoli also tap a civic leader like Jack Lake or Rick Dodge, men who’d spent many years stumping for baseball in St. Petersburg.

Naimoli scoffed. “There is no one but me who got the team.”

Another major problem was the team’s string of broken promises. Sponsors paid heavily for the right to display signage at the Trop or associate themselves with the Devil Rays in any way during the inaugural season. Naimoli spread the word throughout the organization and throughout the region: the Devil Rays were going to draw 4 million fans in their first season, so business partners would have to pay a premium to get a piece of the action. The strategy worked at first, as Tampa Bay ranked among the major league leaders in sponsorship revenue in 1998. But when the team drew 2.5 million fans—seventh in the American League but 1.5 million fans short of Naimoli’s prediction—sponsors were irate.

“I spent the first ninety days playing rope-a-dope,” said baseball marketing maven Mike Veeck, who worked for four major league teams and several minor league clubs. Veeck joined the Devil Rays at the end of their first season and constantly dealt with the anger fostered by broken promises. “I called every sponsor, heard every horror story. Every meeting started horribly. Never had I been subjected to such animosity. My plan was just to go in and lead with, ‘Here I am, take a shot,’ and literally let people punch themselves out until they got exhausted.”

Though Mike Veeck inherited his dad’s showman’s touch, he was also far more patient and tolerant than Bill ever was. Bill Veeck, a longtime major league owner and author of the classic baseball autobiography
Veeck—As in Wreck
, would’ve had major problems with Naimoli. The Devil Rays’ first owner was a humorless dictator, loath to experiment with new ideas or promote any fun in the workplace—the antithesis of the Veeck philosophy. By stark contrast, Bill Veeck would’ve loved what the new guard later did in Naimoli’s stead: bringing in attractions ranging from a touch tank full of rays to an old-school video arcade, promoting theme nights like “Baseball
Nightclub” and “Senior Prom for Senior Citizens,” and stacking the schedule with postgame concerts.

Mike Veeck could at least close his eyes and try to put himself in Naimoli’s shoes. But empathy was often a monumental task. The huge attendance shortfall, the pissed-off sponsors, and a 99-loss opening season made Naimoli madder than anyone around the team had seen to that point. In February 1999, he led a lawsuit against Danka Business Systems, alleging that Danka owed sponsorship fees and suite payments. A few weeks into the team’s second season, Naimoli took a meeting with St. Pete’s mayor and other city officials, with Veeck by his side. The goal was to figure out a way to pay for a $65 million renovation of the Trop; while the team was brand-new, the stadium had been around for a decade. The talks didn’t go very far before Naimoli dropped a bombshell: if the Devil Rays didn’t get better attendance soon, he would move the team out of town.

“He said to me, ‘I guess I showed ’em!’ ” recalled Veeck. “I said, ‘You just signed your death warrant.’ ”

St. Pete wasn’t New York or Boston. The local media had given Naimoli a wide berth to that point, and the owner’s reputation, while flagging among some in the business community, remained mostly positive among the broader public. But marching into the mayor’s office and threatening to leave town before the Devil Rays played their hundredth home game? This would not stand. The following Sunday, the
St. Petersburg Times
ran a two-page spread of letters from readers—all of them inviting Naimoli to stick his threat somewhere uncomfortable.

The Naimolisms escalated. In December 1999, after a slightly improved Devil Rays team lost 93 games in its second season, Naimoli again showed off his litigious side, suing the Pinellas County property appraiser—over a $38,571 tax bill.

A few months later, the Devil Rays backed out of supporting a fund-raiser for the medically needy because the event was held at the St. Petersburg Coliseum instead of the Trop.

Speaking before the Chamber of Commerce in what his hosts
believed was a friendly meet-and-greet, Naimoli laced into local businessmen for not supporting the team. He then slammed the host hotel, the Hyatt Regency Westshore, for canceling its season tickets. The audience reacted with silence. (Shockingly, an uptick in ticket sales did not follow.)