20140106-NEWS--1-NAT-CCI-CL_--
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$2.00/JANUARY 6 - 12, 2014
Construction survey casts wide net
Commission aims to catalog all projects of $1 million or more
planned for next five years, with goal of benefiting community
By JAY MILLER
[email protected]
A long-awaited plan to ensure
that large construction projects in
Northeast Ohio have as broad an
economic impact as possible —
particularly by bringing more minorities and women into the con-
struction industry — is taking a big
step forward.
The Commission on Economic
Inclusion, an arm of the Greater
Cleveland Partnership, is seeking
out property owners, public agencies and others to report on their
long-term construction plans so
that it can prepare a forecast of
construction spending over the
next five years. A key goal of the
study is to create so-called “pre-apprenticeship” programs to train
minorities and women for work in
construction trades that will be in
demand.
Mohr Partners Inc., a national
real estate advisory firm with an of-
WANT TO PARTICIPATE?
To provide information for the survey, contact Doug Hoffman of Weber
Murphy Fox at [email protected],
or Jim Robey of Mohr at
[email protected].
fice in Cleveland, has been hired to
build a confidential database of
construction projects of $1 million
or more that are planned or contemplated for the next half decade.
Jim Robey, Mohr’s Cleveland man-
aging director, said data gathering
will continue until mid-February.
The Commission on Economic
Inclusion wants to create a clear
picture of the anticipated demand
for construction services and
employment
based
on
expectations for residential and
commercial construction and renovation, as well as construction of
roads, sewers, utilities and other
infrastructure.
See CONSTRUCTION Page 19
Paying a
fine is OK
with them
LOOKING AHEAD
Experts believe many
entrepreneurs will
choose to go without
health insurance
By CHUCK SODER
[email protected]
Notable Northeast Ohio leaders break out their crystal balls and tell you what
they think is in our near future. SPECIAL SECTION, Pages 13-17
Art Geigel hasn’t made plans to
buy health insurance — and he
doesn’t plan to look into it anytime
soon.
Health insurance is too expensive,
in his view, and at the moment he’s
more concerned about getting his
new social media company off the
ground.
So if the federal government asks
him to pay a fine, so be it.
He’s one of many uninsured entrepreneurs who likely will continue
on without coverage, even after the
federal government starts fining
people who don’t have health insurance, according to small business
experts who spoke with Crain’s.
Starting March 31, the government will require most adults who
make at least $10,000 to buy health
insurance or pay a fine.
The new rule — part of the Patient
Protection and Affordable Care Act,
also known as Obamacare — will
have a disproportionate impact on
small business owners.
01
See FINE Page 18
0
NEWSPAPER
74470 01032
6
SPORTS
STILL THE GATEWAY
The Cleveland Browns, Cavaliers and Indians say
everything is driven by gate revenues, even if
a national study indicates otherwise. ■ Page 3
Entire contents © 2014
by Crain Communications Inc.
Vol. 35, No. 1
20140106-NEWS--2-NAT-CCI-CL_--
2
1/3/2014
2:41 PM
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
COMING NEXT WEEK
Businesses
that break out
How do small companies get
on the shelves of big-box
stores? Crain’s will answer that
question and much more in
our Small Business section.
Classified ....................18
Editorial ........................8
From the Publisher ........8
Going Places ...............10
OFF THE PACE
Manufacturing workers in the United States are well-paid compared with
Americans in most fields, but compared with workers in industrial jobs in the
world’s most advanced economies, they’re about middle of the pack. The
federal government reports that average hourly compensation costs in U.S.
manufacturing, at $35.53 in 2011, the latest year for which data is available,
ranked 16th among 33 countries it examined, just behind Japan ($35.71) and
just ahead of England ($30.77). Here’s data on the top three countries, the
United States and the bottom three countries:
Country
REGULAR FEATURES
Reporters’ Notebook....19
Talk on the Web .............8
Tax Liens.......................7
The Week ....................19
JANUARY 6 - 12, 2014
x-Hourly compensation cost
2011
1997
Change, 1997-2011
Norway
$64.15
$25.84
+148.3%
Switzerland
$60.40
$30.42
+98.6%
Belgium
$54.77
$28.92
+89.4%
United States
$35.53
$23.04
+54.2%
Poland
$8.83
$3.15
+180.3%
Mexico
$6.48
$3.47
+86.7%
Philippines
$2.01
$1.28
+57.0%
■ Source: U.S. Bureau of Labor Statistics; Read the report at
tinyurl.com/ktkqywk; x-in U.S. dollars.
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20140106-NEWS--3-NAT-CCI-CL_--
1/3/2014
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Page 1
JANUARY 6 - 12, 2014
WWW.CRAINSCLEVELAND.COM
CRAIN’S CLEVELAND BUSINESS
3
Lenders ‘scrambling’ to meet deadline
Federal mortgage regulations that take effect Jan. 10 have ‘a lot of tentacles’
By MICHELLE PARK LAZETTE
[email protected]
Local mortgage lenders are ringing in 2014 with staff training and
system changes so they are ready for
this Friday, Jan. 10, when a federal
rule goes into effect that requires
them to assess whether a borrower
can repay a home loan and offers
them legal protections if they make
so-called “qualified mortgages.”
Most observers say this rule
should spell the formal end to liar
loans — or loans secured by borrowers who lie about income — and to
“NINJA” loans, an acronym for
loans made to borrowers with no in-
come, no job and no assets. Others,
though, worry it could squeeze access to financing for people on both
ends of the wealth spectrum.
First Federal Lakewood last week
and this week has had a team providing a “last wave” of mandatory
training to its entire lending division,
though it has been preparing for the
change for roughly 18 months, according to Rich Swerbinsky, vice
president of residential lending.
“There’s a lot of different tentacles to the Jan. 10 changes,” Mr.
Swerbinsky said. “I think a lot of
lenders are implementing all of the
change over the next couple of
weeks. The general sense we’re get-
INSIGHT
GET UP TO SPEED
For more information on the federal
mortgage rules that will take effect
Jan. 10, go to:
tinyurl.com/kxhu9zm
ting (is) there’s a lot of scrambling
to the finish line. In fairness, there’s
been a lot of moving parts to these
regulations.”
See LENDERS Page 6
THE WEEK
IN QUOTES
“It (minority
participation) is
something that is
foreign to some
people. Right now,
you need a document
to push this. If
everybody buys into
it, it’s great.”
— John Todd, president
of John W. Todd & Associates
and a member of the Black
Contractors Association
of Cleveland. Page One
“Most any owner in
the industry is happy
to share advice, and I
feel Cleveland in
particular is more
of a supportive
community than any
other.”
GETTY IMAGES
Fans enter Progressive Field for the Cleveland Indians’ American League wild-card game against Tampa Bay on Oct. 2.
GATE OPENS ALL OTHER DOORS
Revenue from ticket sales remains crucial
‘driver’ for Cleveland’s pro sports teams
By KEVIN KLEPS
[email protected]
Media rights and sponsorships
continue to grow as huge sources of
revenue in sports. However, highlevel executives of Cleveland’s
three major sports franchises say
their teams’ success at the gate remains the key conduit for success
in every aspect of their businesses.
The local sports executives made
that observation after reviewing
copies of “At the gate and beyond.”
That’s the title of PricewaterhouseCoopers’ 2013 Sports Outlook — a
comprehensive analysis of the
sports industry that breaks down
revenues produced by ticket sales,
media rights, sponsorships and
MONEY MATTERS
A look at the estimated revenue
generated, in billions, for each segment
of the North American sports market
in 2013, along with the projected
revenues for each in 2017:
Segment
2013
2017
Gate revenues
$17.221 $19.092
Media rights
$12.401 $17.094
Sponsorships
$14.086 $17.709
Merchandising
$13.213 $13.823
merchandising.
The annual study by PwC, one of
the world’s largest accounting and
INSIDE: A year-by-year look at the
compound annual growth percentages
for the four biggest segments of the
sports market. Page 11
consulting firms, projects significant growth for media rights and
sponsorships. However, it sees
smaller gains for the two segments
of the sports industry — gate revenues and merchandising — that as
recently as three years ago dwarfed
media rights and sponsorships in
terms of annual dollars generated.
See GATE Page 11
Cleveland Foundation is upping ante on arts
In final phase of its initiative, group is
increasing grants for promising projects
By TIMOTHY MAGAW
[email protected]
A Cleveland Foundation effort
aimed at helping local arts organizations find new ways of drumming
up business appears to be working,
and the foundation is putting more
money behind the initiative.
In 2012, the foundation awarded
$15,000 grants — risk capital, if you
will — to several cash-strapped non-
profits to experiment with audience-engagement efforts they otherwise couldn’t have afforded. Now,
the foundation is doling out even
larger grants to scale the initiatives
that have shown the most promise.
Last month, the foundation
awarded $200,000 to Cleveland
Public Theatre and $80,000 to
DANCECleveland for their respective projects, and other sizable
grants could be on the way.
“All of these non-attenders, if
you will, that we’re trying to attract
haven’t seen the arts as something
they participate in,” said Kathleen
Cerveny, the foundation’s director
of institutional learning and arts
initiatives. “We saw that as one of
the biggest challenges of the arts
going forward.”
See FOUNDATION Page 4
— Stefan Was, operator
of Porco Lounge & Tiki Room
in Ohio City. Page 9
“After the National
Senior Games last
year, I think a lot of
people around the
country have noticed
how well that event
went. A lot of major
rights holders are now
seeing Cleveland as a
destination city for
big events.”
— David Gilbert, president,
Greater Cleveland Sports
Commission. Page 14
“I was going to say it
would be a slightly
better year, but the
way it’s starting off,
I’m going to say it’s
going to be a much
better year.”
— Jerry Zeitler, president,
Die-Matic Corp. Page 17
20140106-NEWS--4-NAT-CCI-CL_--
4
1/3/2014
2:41 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
Accounting firm starts
year with a fresh look
SOLD
9060 TYLER BLVD, MENTOR, OHIO
By MICHELLE PARK LAZETTE
[email protected]
Newmark Grubb Knight Frank
is pleased to announce the sale
of 9060 Tyler Blvd., in Mentor.
The 45,600 square foot industrial
building sold for $1,900,000.
Terry Coyne represented the Seller,
SGM Acquisition, LLC.
JANUARY 6 - 12, 2014
Visit
TerryCoyne.com
Or Call Terry at
216.453.3001
1350 Euclid Avenue, Suite 300
Cleveland, Ohio 44115
SOCIAL MEDIA STARS
Walthall, Drake & Wallace LLP is
beginning the new year with two
fewer names, a redone website and
a new logo, following a sevenmonth rebranding effort.
From here on out, just call it
Walthall — if you haven’t been doing that already.
Following two acquisitions a year
ago and motivated, too, by its 70th
anniversary in 2014, the accounting
firm has spent nearly six figures to
survey clients and employees and
to overhaul its website and develop
a “refreshed and modern” logo to
replace its “dated” one, executives
said. The process began in May;
changes are slated to go live in midJanuary.
“We are the outgrowth of a
bunch of mergers and acquisitions,” managing partner Richard
T. Lash said of the firm. “We have
grown from a 25-person firm about
15 years ago to a 65-person firm today. We’re using the rebranding as
a rebirth of our Walthall family.”
There was a need for more consistency internally and externally,
Ms. Lash said.
Given the firm’s
growth by acquisition, he said
there were “various mini cultures”
within
Walthall, and executives wanted Lash
more cohesiveness.
Both Mr. Lash and Michele R.
Linton, who joined Walthall as director of marketing last February,
hope the rebranding elevates people’s awareness about the firm.
“We should be better known,”
Ms. Linton said. “This is our stomping ground, and this is where they
want to build.”
The firm, with about 50 accountants, is keeping its Independence
headquarters, where new signage
displaying the shortened name is
due up shortly. The name had become “long and somewhat hard to
pronounce,” Mr. Lash said.
Plus, surveys of clients and employees revealed that some already
referred to the firm as Walthall,
while others still called the firm by
predecessor names, Mr. Lash said.
Thought leaders in NE Ohio’s Social Media Realm
Issue date: 1/27 • Ad close: 1/16 • Materials due: 1/21
This year will mark the final
phase the foundation’s Engaging
the Future initiative, which the
foundation quietly launched in
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Walthall is among many accounting firms shortening their
brands to one word, according to
Jeffrey S. Pawlow, CEO and managing member of The Growth Partnership Inc., a St. Louis firm that
consults exclusively with accounting firms nationwide and in Canada on positioning, which involves
branding. As baby boomer partners
retire, the next generation is questioning preserving names that reflect people who no longer work for
its firms, Mr. Pawlow said. Keeping
part of a name, though, maintains
identity and brand equity, he noted.
Walthall’s new logo abandons
the previous one’s serif font for sans
serif and features a crooked letter,
W, enclosed in two circles. One circle signifies the circle of life, as the
firm often counsels business owners from their businesses’ infancy
to exit, and the other, the firm’s diverse services and its pledge to go
“full circle” for clients, Ms. Linton
said.
■
Foundation: Plan is ‘rare’ and ‘visionary’
continued from PAGE 3
Book your ad today! Contact Michelle Sustar at
216-522-1383 or [email protected]
Walthall’s new logo
2011 as a way to cultivate new audiences in order to keep arts organizations vital for years to come.
The initial phase focused on providing operating support to the 11
organizations involved and workshops designed to help them adapt
their business models to the current economic climate. The second
phase was focused on providing
seed money for the engagement efforts. Now, the foundation is looking to build up some of those projects.
“What’s happening at the Cleveland Foundation around Engaging
the Future is incredibly rare, and
it’s visionary,” said Raymond Bobgan, Cleveland Public Theatre’s executive artistic director. “One of the
biggest problems with the arts
across the country is the lack of
ability to borrow money for innovation and the entrepreneurial side of
things. This allows us to the make
the kind of investment a for-profit
would already be making.”
Cleveland Public Theatre’s initiative — dubbed Cultural Engagement Continuum — is a training
and outreach program for specific
cultural communities. The idea is to
grow actors from the community
who are of the ethnic population
represented on stage.
The prototype for the initiative
was Teatro Publico de Cleveland,
which cultivated actors from Cleveland’s Latino community. The first
production, “Cuando Cierras Your
Eyes,” debuted in November to sellout crowds. The recent grant will let
the theater expand the project, al-
“We’re opening up to
a whole new audience.”
– Raymond Bobgan, executive
artistic director, Cleveland
Public Theatre
lowing for a full production schedule for its 2014-2015 season, which
will expand into highlighting other
ethnic communities.
“We have to diversify our audience,” Mr. Bobgan said. “We know
that people come to see a show because they’re being represented or
they can relate to what’s on stage.
We’re opening up to a whole new
audience.”
DANCECleveland’s project created a 15-member street team of sorts
for the local dance company. The
team was comprised of dancers,
choreographers, teachers and other dance professionals who worked
their own personal networks to
publicize
DANCECleveland’s
events.
Besides the latest influx of Cleveland Foundation money, the project attracted dollars from the Doris
Duke Foundation to help dance
companies across the country replicate it.
“Most people don’t have a personal relationship with dance,” said
Pamela Young, DANCECleveland’s
executive director. “Our own community of dancers, dance educators
and choreographers are so dedicated and any information they share
more broadly with the community
is going to build a new respect for
this art form.”
■
Volume 35, Number 1 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-
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CRAIN’S CLEVELAND BUSINESS
75 YEARS
Commercial Real
Estate Expertise
216.861.7200 | www.ostendorf-morris.com
WWW.CRAINSCLEVELAND.COM
JANUARY 6 - 12, 2014
Lenders: Regulations will give banks
legal protections if a loan defaults
continued from PAGE 3
While executives with the Lakewood-based mutual bank say it will
be mostly business as usual in
terms of the institution’s underwriting, there also is new paperwork needed for verifying a borrower’s ability to repay and for
documenting that loans labeled as
qualified mortgages have been, indeed, qualified by the lender.
Internal reporting will need to be
more “robust,” Mr. Swerbinsky
said. About 70% of First Federal
Lakewood’s loan balance consists
of single-family mortgages.
Also gearing up for the change is
Detroit-based Quicken Loans,
which employs more than 400 people in Cleveland.
“We’ve had a team of attorneys
in-house working on this around
the clock for the better part of 2013,
especially the latter half,” said Bob
Walters, Quicken Loans chief economist. “(The) whole team in technology (is) doing nothing else but
changing systems, working with legal and regulatory people to make
sure these rules are squared away.”
Mr. Walters said Quicken Loans
is building computer systems so
that they will identify whether loans
meet the regulatory requirements.
It’s all “very expensive,” he added,
though he declined to reveal the
price.
Tom Fraser, president and CEO
of First Federal Lakewood, said the
new compliance mandates do raise
the cost of writing mortgages,
which could be passed along to the
borrower.
Safety first
Driven by The Dodd–Frank Wall
Street Reform and Consumer Protection Act of 2010, the Ability-toRepay rule that takes effect this
week was written by the federal
Consumer Financial Protection Bureau.
Bottom line: Lenders must make
a reasonable, good-faith determination that the consumer is able to
repay a residential mortgage loan,
based in part on income, credit history and assets and debts.
The bureau’s rule also defines a
class of mortgage called a qualified
mortgage. The carrot for issuing
mortgages to borrowers that are
“qualified” is that the lender enjoys
certain legal protections, even if the
loans default.
“That safe harbor provision limits a borrower’s ability to make a
claim that they were put into an unsafe mortgage,” Mr. Fraser said.
Beyond verifying a borrower’s
ability to repay, one requirement of
qualified mortgages is that, generally, a borrower’s monthly debt, including the mortgage, cannot be
more than 43% of his or her monthly pre-tax income. To be labeled a
qualified mortgage, loans also cannot entail interest-only periods or
negative amortization.
The Consumer Financial Protection Bureau estimates that roughly
95% of existing mortgages will meet
the requirements of qualified mortgages, a bureau spokeswoman said.
Though First Federal Lakewood
executives stressed they will comply with the Ability-to-Repay rule,
they said they will consider issuing
nonqualified mortgages, too. For
instance, a borrower may demonstrate the ability to repay, may own
a home and want to build another
and subsequently may need a nonqualified loan because they’ll have
too much debt to income under the
rule as they carry both the home
loan and the construction debt for
a period of time, Mr. Fraser said.
“There may be fewer banks willing to make that nonqualified mortgage to a borrower who can afford
that mortgage,” he said.
The call that may not come
Lenders agree these new requirements will benefit borrowers by protecting them from risky products
blamed for the foreclosure crisis.
But some local real estate agents
say the changes could result in less
access to financing for some, namely first-time and low-income home
buyers. That’s because under the
requirements, the points and fees a
lender may charge for qualified
mortgages are limited — generally
to 3% of a loan amount, though
higher thresholds are allowed for
loans of less than $100,000.
The Consumer Financial Protection Bureau says that restriction is
in response to “extremely high
points and fees some borrowers
paid during the mortgage crisis.”
From where Ron Russell sits, the
cap on points and fees could result
in less incentive for lenders to do
smaller loans. That’s because in today’s low interest rate environment, which limits what lenders
make on mortgages, those fees are
arguably more important.
“The lower-end buyer … is not
probably going to get a return
phone call from the (mortgage)
broker because they’re not going to
make any money” on the loan, said
Mr. Russell, CEO of Russell Real Estate Services, which is based in
Strongsville and has eight locations.
“It is going to make a big impact on
people’s lives that the government
is actually trying to help.”
The fee cap also may result in
lenders charging borrowers higher
interest rates if they find themselves
up against the limit, predicted Mr.
Walters of Quicken Loans, where
executives have decided they will
not lend outside qualified mortgage
standards.
“I have absolutely no doubt that
some attorneys are going to test this
law in the years to come through
class-action lawsuits, and so lenders
like us are cautious,” he said.
“We’ve already seen some people
begin to exit mortgage lending” in
the last three or four months because of the added compliance
risks, Mr. Walters said. “I think
you’ll see more of that in 2014.”
Where there’s a will …
John Ludwick fears the government has swung the pendulum too
far to the other side from the “wild,
wild west” when mortgages were
“very free and easy to get.” The operating principal of Keller Williams
Greater Cleveland predicts money
again will become tight and agrees
some mortgage companies will exit
certain parts of the business.
Charles Bromley, though, is confident the Ability-to-Repay rule will
make for an improved environment
for lenders, borrowers and taxpayers.
“I really don’t see a downside to
it,” said Mr. Bromley, director of the
Ohio Fair Lending Coalition, which
works to support fair lending activities in Ohio. “It’s going to require
the lenders (to do) what they should
have been doing all along.
“It will be a safer marketplace for
consumers, it will be a place that
will offer some guarantees to the
lenders that consumers aren’t going to come back to them, (and) it
should be a safer environment for
taxpayers not to be hit for another
bill for the lenders, a la TARP,” Mr.
Bromley said, referring to the Troubled Asset Relief Program many refer to as the bank bailout.
Mr. Bromley did concede the
debt-to-income ratio required for
qualified mortgages may be a difficult bar for many first-time home
buyers to clear, given the “astronomical” college loan debt so many
have. That situation may result in
adult children hitting up baby
boomer parents for down payment
assistance, he said.
“I think people will figure out
ways to qualify for these loans,” Mr.
Bromley said.
■
MetroHealth extends Care Plus insurance program through April 30
MetroHealth's experimental waiver program that extended health insurance to
thousands of people in Cuyahoga
County has been extended through
April 30, 2014, to give the health
system some breathing room as it
works to transition the program's
enrollees to the state's recently expanded Medicaid program.
The MetroHealth waiver — branded as MetroHealth Care Plus — was
designed to give the county and the
health system a head start of sorts
on an expansion in Medicaid
ON THE WEB Story from
www.crainscleveland.com
eligibility, which was one of the key
provisions of the Affordable Care
Act. The Care Plus program, which
was scheduled to expire on Tuesday, Dec. 31, was the only one of
its kind in the state of Ohio. As of
Dec. 31, 28,294 people were enrolled in the program.
“We are grateful to (The Centers
for Medicare and Medicaid Services)
and the state of Ohio's Department
of Medicaid for providing this impor-
tant extension so that MetroHealth
Care Plus beneficiaries will avoid a
lapse in health care coverage while
we actively assist them in transitioning that coverage to Ohio's Medicaid program,” MetroHealth CEO Dr.
Akram Boutros said in a news release.
Thanks to the waiver, MetroHealth
was able to use its $36 million annual subsidy from Cuyahoga County to
draw an additional $64 million from
the federal government to finance
the coverage expansion.
— Timothy Magaw
20140106-NEWS--7-NAT-CCI-CL_--
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JANUARY 6 - 12, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
7
TAX LIENS
The Internal Revenue Service filed tax
liens against the following businesses
in the Cuyahoga County Recorder’s
Office. The IRS files a tax lien to
protect the interests of the federal
government. The lien is a public
notice to creditors that the
government has a claim against a
company’s property. Liens reported
here are $5,000 and higher. Dates
listed are the dates the documents
were filed in the Recorder’s Office.
LIENS FILED
Community Quality Care Inc.
1571 W. 117 St., Cleveland
ID: 82-0540177
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $183,827
Green Rock Lighting LLC
3715 W. 33 St., Cleveland
ID: 45-2703858
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $72,276
Paul F. Smith Jr. DDS Inc.
20119 Farnsleigh Road, Shaker
Heights
ID: 34-1337892
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $49,087
Cameron 64th St. Inc.
6316 Harvard Ave., Cleveland
ID: 20-4236307
Date filed: Nov. 22, 2013
Type: Employer’s withholding,
unemployment
Amount: $40,415
Paul F. Smith Jr. DDS Inc.
20119 Farnsleigh Road, Shaker
Heights
ID: 34-1337892
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $37,829
D & O Leasing Inc.
883 Addison Road, Cleveland
ID: 34-1297801
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $23,364
DMS Menswear Corp.
4069 Richmond Road, Warrensville
Heights
ID: 34-1286202
Date filed: Nov. 22, 2013
Type: Employer’s withholding, failure
to file complete return
Amount: $19,837
Nida Enterprises Inc.
17480 Lorain Ave., Cleveland
ID: 34-1759848
Date filed: Nov. 22, 2013
Type: Employer’s withholding,
unemployment
Amount: $17,441
T A P on Tap Inc.
23573 Delmere Drive, North Olmsted
ID: 34-1769372
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $15,543
ID: 90-0783151
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $13,338
Tree of Life Daddys Daycare
14701 Detroit Ave., Suite 555,
Lakewood
ID: 20-8354916
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $12,476
Jasmine Beverage Inc.
3832 Martin Luther King Jr. Drive,
Cleveland
ID: 34-1902350
Date filed: Nov. 22, 2013
Type: Employer’s withholding
Amount: $5,680
LIENS RELEASED
Amount: $7,546
Michael & Sons Landscaping Inc.
P.O. Box 26133, Fairview Park
ID: 34-1507239
Date filed: Nov. 19, 2010
Date released: Nov. 22, 2013
Type: Employer’s withholding
Amount: $46,347
Allied International Sales Co.
18224 Fernway Road, Shaker
Heights
ID: 34-1613053
Date filed: Nov. 30, 2009
Date released: Nov. 22, 2013
Type: Employer’s withholding
Amount: $7,747
Stiber Fabricating Inc.
3829 Hamilton Ave., Cleveland
ID: 34-1774978
Date filed: Feb. 21, 2008
Date released: Nov. 22, 2013
Type: Employer’s withholding,
unemployment
Amount: $75,999
Leff Insurance Agency Inc.
16300 Academy Drive, Strongsville
ID: 87-0738635
Date filed: Nov. 22, 2013
Type: Employer’s withholding,
corporate income
Amount: $7,805
Ehle Morrison Group Ltd.
820 W. Superior Ave., Suite 230,
Cleveland
ID: 34-1799106
Date filed: April 13, 2009
Date released: Nov. 22, 2013
Type: Employer’s withholding
Amount: $9,654
United Transportation Union
24950 Country Club Blvd., Suite
340, North Olmsted
ID: 34-1031303
Date filed: Dec. 26, 2012
Date released: Nov. 22, 2013
Type: Employer’s withholding
Amount: $10,331
Little Blessings Enrichment
Center Inc.
3230 E. 90 St., Cleveland
ID: 61-1512189
Date filed: Nov. 22, 2013
Type: Employer’s withholding,
unemployment
Amount: $7,143
Ehle Morrison Group Ltd.
820 W. Superior Ave., Suite 230,
Cleveland
ID: 34-1799106
Date filed: Feb. 4, 2009
Date released: Nov. 22, 2013
Type: Employer’s withholding,
partnership income
Van Ness Law Ltd.
6181 Mayfield Road, Suite 104,
Mayfield Heights
ID: 20-1310062
Date filed: Nov. 13, 2007
Date released: Nov. 22, 2013
Type: Employer’s withholding
Amount: $22,360
Techland Research Inc.
28895 Lorain Road, North Olmsted
ID: 31-1565119
Date filed: Nov. 22, 2013
Type: Employer’s withholding,
unemployment
Amount: $8,759
Bunker Bar and Grill LLC
6824 Bunker Road, North Royalton
STAY CONNECTED
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20140106-NEWS--8-NAT-CCI-CL_--
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JANUARY 6 - 12, 2014
PUBLISHER/EDITORIAL DIRECTOR:
John Campanelli ([email protected])
EDITOR:
Mark Dodosh ([email protected])
MANAGING EDITOR:
Scott Suttell ([email protected])
OPINION
Hole story
I
n the business of professional sports, there is
an unspoken contract between the communities that pay for the arenas, ballparks and stadiums where their hometown teams play and
owners of the franchises that benefit from those
huge investments. It is this:
We, the community, will front you the money for
the factories where your businesses operate, and
you, the owners, will put in those factories quality
products that are at least enjoyable, even if they
aren’t championship caliber each season.
In Cleveland, the people of Cuyahoga County
who have forked over nearly $1 billion for the arena,
ballpark and stadium where their teams play — and
are on the hook for mllions more for maintenance
of those properties — haven’t gotten much of a return on their investment in recent years. But there is
one franchise that stands out from the others in failing to live up to its side of the unspoken contract.
That franchise is the Cleveland Browns.
The aerial shots on game day of FirstEnergy Stadium tell the whole — or should we say “hole” — story: Thousands upon thousands of empty orange
seats, the numbers of which increase as each season
trudges on to another dismal conclusion.
It has been this way for almost every one of the 15
seasons since the return of an NFL franchise to
Cleveland in 1999. Thirteen losing seasons. Six
straight seasons — and counting — with at least 11
losses.
Once upon a time, Cleveland was a proud football
city where losing was the exception, not the rule. In
the 49 years of the original Browns, the team recorded only 12 seasons where it was under .500.
Now, the Browns are a league doormat, a franchise synonymous with ineptitude.
It is against this backdrop that the men who last
year took over the franchise from the Lerner family
announced last week the stunning decision to boot
after just one season the head coach of their own
choosing, Rob Chudzinski.
Fans are hard-pressed to see the firing as something other than ongoing instability within the
Browns organization, even though owner Jimmy
Haslam and his right-hand man, CEO Joe Banner,
tried hard at a news conference last Monday to convince the public otherwise.
“We understand the importance of continuity,”
Mr. Haslam said. “But we also understand the importance of getting it right.”
Mr. Haslam said he gets why fans are skeptical,
though he also admitted it galls him when people say
“same old Browns” despite the change in regimes.
“It’s our single misssion to change that,” Mr.
Haslam said.
Almost two decades after Art Modell took the
original Browns to Baltimore — where the team
known as the Ravens has won two Super Bowls —
only one thing will erase the negative thinking, and
that’s winning.
You can enhance the fan experience by installing
big new scoreboards, improving the stadium’s
sound system and holding weiner dog races, but it
all means squat if the losing continues.
As they say during the NFL Draft, you’re on the
clock, gentlemen.
FROM THE PUBLISHER
Business faces a new balancing act
legalizing marijuana.
was asked by a reader recently how
■ A majority of Americans now agree
much of my personal political ideolthat the United States should
ogy will creep into the
“mind its own business internew publisher’s column.
JOHN
nationally.”
I told him probably not
CAMPANELLI
■ The number of Amerimuch. My political leanings —
cans who want to fire their
whether left of Ted Kennedy,
representative in Congress is
right of Ted Cruz or as amat an all-time high (38%).
biguous as Ted Koppel — are
■ For the first time ever, a
not really important to Greater
majority of Americans now
Cleveland’s business commusay the federal government
nity (they’re pretty boring, too,
threatens their personal rights
aside from my fervent support
and freedoms.
of federal legislation to legalize
In other words, libertarianbackyard chickens).
ism is the new black.
Unless it affects local busiIf either party can recognize this and,
ness, I’ll leave the bellowing to the blogs
more importantly, take advantage of it,
and blowhards on cable TV.
victory likely awaits in 2014 and beyond.
But political trends that might have an
Will the Dems abandon their core beeffect on business? I’m interested.
lief in the value of government? Will the
The Pew Research Center, a nonpartiGOP walk away from social issues? Will
san outfit that does a wonderful job of
either party move to end government
measuring the vital signs of society, resurveillance? I’m not even going to try to
cently released its top 13 data milestones
lay odds on those questions.
of 2013. Here are the top five:
But I do think there’s an important
■ A majority of Americans now favor
message here for businesses, especially
same-sex marriage.
for managers and HR professionals.
■ A majority of Americans now favor
I
While the country as a whole is leaning libertarian, the millennials are already there en masse. And their political
attitudes transfer to the workplace.
In general, they want employers — in
a way their “mini government” — to afford them more freedom. This means
much more than casual Fridays. They
want flexible schedules, the ability to
work from home, the chance to jump on
Twitter for a moment without the boss
looking over their shoulder, and privacy
away from work.
But, of course, they also need a paycheck.
An employer might counter by reminding workers that a job needs to be
done and that they are getting paid to
work, not update their social media status. But bosses who can recognize their
workers’ desires and scratch the libertarian itch without jeopardizing productivity and morale, well, they’ll get — and retain — the best talent.
Which will give them more time to focus on other parts of the business, boost
productivity … or simply sit back and
talk politics.
■
TALK ON THE WEB
Re: Chud’s firing,
Browns’ future
■ Chud did nothing wrong. His players did. I understand the “man at the
top” goes first, but I think firing him was
WRONG!!!! — Tim Gribben
■ This is as poor a decision as I have
seen from a professional organization.
To hire a coach, as you would hire any
manager for any organization, then set
him up for failure, as the Browns did in
the most recent draft and in-season
trades, then blame him for the failure to
immediately reverse a 14-year record of
abysmal performance? What kind of organization does that?
Obviously the owner failed to learn the
lessons taught by his previous pro football team; that is, to choose leaders wisely and then back them up through adversity, expecting long term success. It was
understood that after purchasing the
team he would be expected to bring in
Reader responses to stories
and blogs that appeared on:
www.crainscleveland.com
his own choices to run the program.
What was not expected was that he
would fail to back his choice for more
than one-fourth of the length of his contract.
What prospective football coach,
faced with any other options, would
choose to take his chances with this
team after such a demonstrated lack of
organizational support?
Good luck Mr. Haslam. — Jim Ryan
■ What really strikes me as odd is the
lack of clear leadership from this organization since 1999, even though it has
been led by several different people.
It is hard to get good talent when the
environment is not stable. I am waiting
to see the movie “Draft Day” — it must
be a dark comedy. — Walt Avdey
■ I stopped paying any attention to
the Browns several years ago.
I think they should just leave town.
Pittsburgh is only two hours away, and
anyone who needs an NFL fix can just go
there. — Robert Fritz
■ The team needs a change. Let’s start
with new uniforms for a new motivational appearance factor.
How long have the Browns been wearing those awful orange helmets? They
belong with the orange barrels throughout Cleveland.
What about a new logo for those helmets? And could we somehow change
the team’s name while we’re at it?
When the team came back in 1999, it
would have been the ideal time to make
these improvements. — David Jaros
Re: Vitamix’s growth
■ Congratulations to Vitamix on its
expansion.
See WEB Page 9
20140106-NEWS--9-NAT-CCI-CL_--
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JANUARY 6 - 12, 2014
Local restaurant owners have
enticing jobs in other fields, too
N
iko Frangos spent nine
years as an animator for
Walt Disney Studios,
drawing characters for
films such as “Hercules” and
“Tarzan.” The job certainly was
cool, but months of working double
time became unsustainable, so Mr.
Frangos jettisoned the gig for another interest — the Rascal House
pizza operation that his parents
launched in 1980, when he was 9
years old.
“I saw guys
who were 17, 18
years old grow
with the company and become
franchise owners,” Mr. Frangos
said. “I saw Rascal House as a Frangos
real success vehicle.”
So in 2005 he took more ownership of the five-store business —
which recently relocated a storefront from its flagship location at
2064 Euclid Ave. near Cleveland
State University to 1836 Euclid Ave.
in the Union Building — and has
plans to grow the brand nationally.
Mr. Frangos is among a bevy of
local restaurant owners and food
entrepreneurs who either fled corporate life to pursue their culinary
passion, or balance an unrelated
day job with their food or beverage
industry pursuit.
Harley Magden is one of those
individuals. The co-founder and
president of Maryland-based Window Nation also serves as proprietor Society Lounge, a throwback
cocktail establishment he opened
in 2013 on East Fourth Street in
downtown Cleveland.
“Creating an experience unlike
any other has always been the foundation for our success in other businesses we have been involved in, be
it windows, food or vintage cocktails,” Mr. Magden said. “At Window
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
KATHYAMESCARR
WHAT’S COOKING
Nation, we were able to open a business from ground zero in 2006 and
grow it during the worst economic
time period since the Great Depression because of the experience and
focus we offer. Our goal has been the
same for Society Lounge.”
Mr. Magden isn’t alone in straddling business lines. Consider the
following:
■ Adrian Bota, co-owner of Piccadilly Artisan Yogurt in Cleveland’s Coventry and Ohio City
neighborhoods, also works with the
Cleveland Clinic’s strategic partnerships and acquisitions group.
■ Jillian Davis, owner of Toast
wine bar in Cleveland’s Gordon
Square Arts District, is a federal
public defender for U.S. District
Court Northern District of Ohio.
She does a lot of research and writing on cases involving habeas corpus (a legal procedure that keeps
the government from holding individuals indefinitely without showing cause).
■ Robert Ivanov, president,
Touch Supper Club, also is an engineering program manager at Cuyahoga Community College. Mr.
Ivanov was a former design engineer at Ford Motor Co. before leaving the giant automaker in 2005 to
open the Ohio City restaurant.
■ John Tutolo, operator of Biga
Wood Fired Pizzeria in Kirtland,
also is national sales manager of
food service and retail at Solonbased King Nut Cos., a nut and
ON THE WEB Read Kathy
Ames Carr’s What’s
Cooking blog at:
www.crainscleveland.com
snack processor.
■ Sean Watterson, co-owner of
Happy Dog in Cleveland’s Detroit
Shoreway neighborhood, is a former director at both Bank of America and Merrill Lynch. Mr. Watterson also worked for four years at the
U.S. Securities and Exchange Commission in Washington, D.C., beginning Sept. 10, 2001. According to
Cleveland Magazine, he was recruited in 2013 by the World Bank
to be part of a contingent working
with the Securities and Exchange
Commission of Pakistan.
■ Stefan Was, operator of Porco
Lounge & Tiki Room in Ohio City,
also is president of AC Shutters Inc.,
a maker of aluminum rolling shutters and special application doors,
in Cleveland’s Slavic Village neighborhood.
Mr. Was found himself in uncharted territory upon entering the bar
business in 2013, but it was his
dream to open the Polynesian cocktail establishment. He said he drew
upon expertise he gained from AC
Shutters in dealing with banks and
negotiating with vendors. He recruited general manager Shannon Smith
to oversee daily operations, staff and
Porco’s premium cocktail program.
His advice for any novice looking
to enter the industry?
“Make friends with the people in
it,” Mr. Was said. “Most any owner in
the industry is happy to share advice,
and I feel Cleveland in particular is
more of a supportive community
than any other. Our local neighbors
have been amazing in support of not
only promoting each other, but by
actually patronizing one another
with their hard-earned dollars.” ■
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Web: Yes should’ve beaten out Kiss
continued from PAGE 8
It’s always great news to hear an
American company doing well and
even more exciting that it is a local
company. I recently purchased my
first Vitamix and love it! — Barb Billick
25651 Detroit Rd, Suite 203, Westlake, OH 44145
Re: Rock Hall inductees
■ Kiss before Yes? Another snub.
Yes should have worn costumes.
— John Gibson
Re: PD editor talks
paywalls, digital-first
approach
■ A hint as to the financial results
of the PD’s print changes would
have been useful.
Is four days a week of home
delivery profitable, or it is just a
delaying tactic on the way to oblivion? — Robert Salmon
Re: Tribune Co. buys
WJW-TV, Channel 8
■ Depth of resources is critically
important for both decent journalistic endeavors and continued
community involvement.
Let’s hope Tribune gives Fox 8
the support and budgets it needs to
remain viable, while providing
some editorial (guts) and outside
perspective/guidance
on
the
station’s myopic boosterism.
— Steve Bloomfield
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www.capitalworks.net
9
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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JANUARY 6 - 12, 2014
GOING PLACES
JOB CHANGES
CONSULTING
NEWRY CORP.: Matthew Szugye
to senior consultant.
EDUCATION
CASE WESTERN RESERVE
UNIVERSITY: Daniel Ducoff to
associate vice president, strategic
development initiatives.
Szugye
Brunner
Rohrer
Behr
Hetzel
Seeley
Exline
Dupont
Gangel
Hoeprich
Wachsman
Decensi
Hochstetler
Cheung
Reese
Pringle
Schrader
Campbell
Ryland
Manning
Croy
Janowicz
Steber
Hoffman
ENGINEERING
R.E. WARNER & ASSOCIATES
INC.: David J. Brunner to senior
mechanical designer; David J.
Rohrer to mechanical designer.
FINANCIAL SERVICE
AXA ADVISORS: John Behr to
financial professional, retirement
benefits group.
EDWARD JONES: Dale Braun to
financial adviser, Beachwood.
FINKLER & CO. CPA’S: Rosalee
Hetzel to firm administrator; Kim
Seeley to senior associate.
MEDDATA INC.: Carl Naso to
corporate controller.
Kristen Phelps to chief accounting
officer.
GIFFEN & KAMINSKI LLC: Edward
Proctor to partner.
MIDWEST INVESTMENT
MANAGEMENT LLC: Kendall M.
Exline to portfolio administrator.
INSURANCE
MCGLINCHEY STAFFORD: Robert
Terbrack and Amanda Holzhauer
to associates.
HEALTH CARE
AKRON GENERAL: Stefan
Dupont, M.D., vascular neurologist;
Michael Gangel, M.D., urologist;
Mark Hoeprich, M.D., Akron
General Neuroscience Institute; Ari
Wachsman, M.D., neurologist; to
medical staff.
HOSPITALITY
YOURS TRULY RESTAURANTS
AND SHIBLEY MANAGEMENT:
MEDICAL MUTUAL OF OHIO:
Trish Decensi to vice president and
general counsel.
LEGAL
BUCKINGHAM, DOOLITTLE &
BURROUGHS LLC: Andrew Haring
to associate.
CHAPMAN LLC: Neil D. Petkovic
to of counsel.
DAY KETTERER: Matthew R.
Hochstetler, Natalie S. Cheung
and Michelle R. Reese to
associates.
SALT • SALT • SALT
• Water Softener • Industrial • Food
• Ice Melt • Sea Salt
ROETZEL: Marcus A. Pringle to
associate.
SEELEY SAVIDGE EBERT &
GOURASH CO. LPA: Todd A.
Schrader to partner.
TUCKER ELLIS LLP: Jay
Campbell and Josh Ryland to
partners; Tim Manning to counsel;
Chelsea Croy, Paul Janowicz and
Kelli Steber to associates.
MANUFACTURING
CARDPAK: Tom Weber to
president.
CLIFFS NATURAL RESOURCES
INC.: P. Kelly Tompkins to
executive vice president, external
affairs and president, global
commercial.
NONPROFIT
AUTISM SPEAKS: Laura Hoffman
to director of field development,
Northeast Ohio.
REAL ESTATE
ABODE MODERN LIFESTYLE
DEVELOPERS: Erik McKay to
construction manager; Brenda
Rodriquez to marketing and
operations strategy director.
AWARDS
SALES & MARKETING EXECUTIVES
OF CLEVELAND: Bernie Moreno
(Collection Auto Group) received the
2014 Business Executive of the Year
Award; Roy Buchinsky, M.D.,
(University Hospitals Health System),
Robin Doerschuk (Alliance Solutions
Group), Danny Fedeli (The Fedeli
Group), Dave Johnson (Cleveland
Convention Center and Global Center
for Health Innovation), Alex King
(Cleveland Indians), Melissa Marik
(Executive Caterers), Sue Omori
(Cleveland Clinic), James Petrie
(PolyOne Corp.), Sam Pines (Good
Karma Broadcasting and ESPN
Cleveland), Meredith Scerba
(Greater Cleveland Sports
Commission), Brent Stehlik
(Cleveland Browns), Paul Stupay
(NineSigma Inc.) and Rich Wallack
(Medical Mutual) received 2014
Distinguished Marketing and Sales
Awards.
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20140106-NEWS--11-NAT-CCI-CL_--
1/2/2014
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Page 1
JANUARY 6 - 12, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
11
Gate: Sports market is expected to grow at 4.8% rate through 2017
continued from PAGE 3
Executives from the Cleveland
Browns, Cavaliers and Indians
don’t discount the impact of the
rapid growth of media rights on
their businesses, and they value
sponsorships every bit as much as
their peers in other cities. However,
they say in Northeast Ohio, a
team’s economic vitality starts
when you get fans through the gate.
“Our media product is not as
good if our in-person product isn’t
as good,” Cleveland Browns president Alec Scheiner said. “Part of
our business is the energy of the
fans at our games.”
Cleveland Indians president
Mark Shapiro shares that view.
“What’s most important is not
having any weak links in fan experience,” Mr. Shapiro said. “It defines so much. A fan buys a ticket,
enters the ballpark, and then it depends on how he is treated by ushers, the concessions, the product
on the field.”
Kerry Bubolz, president of business operations for the Cleveland
Cavaliers, said he brings up what he
calls “the revenue tree” in presentations to Cavs employees.
The base of that tree, he says, is
ticket revenue. If the roots of the
business are strong, the other areas
tend to thrive.
“Gate revenues directly drive our
concessions revenues and help drive our sponsorship revenues,” Mr.
Bubolz said. “On a more global basis, it drives TV ratings, which ulti-
A LENGTHY LOOK AT THE SPORTS INDUSTRY
The estimated and projected compound annual growth percentages for the four segments of the North American sports
market from 2009 to 2017:
Segment
Gate revenues
2009
-1.3%
2010
2.5%
2011
-0.4%
2012
-2.3%
2013
9.4%
2014
2.9%
2015
2.2%
2016
2.4%
2017
3.0%
x-Total
3.9%
Media rights
3.2%
6.5%
17.8%
6.9%
5.0%
18.8%
7.9%
2.8%
4.7%
7.7%
Sponsorship
-0.9%
2.7%
6.7%
5.1%
6.3%
5.8%
5.4%
7.0%
5.3%
6.0%
Merchandising -20.4%
-0.5%
-0.7%
2.3%
3.5%
1.0%
1.0%
1.2%
1.3%
1.6%
■ Source: PricewaterhouseCoopers LLP; x-Totals are the compound annual rates from 2013 to 2017
mately drive media rights.”
The macro view …
In the past, the PwC study was
global in nature. The 2013 version
focused strictly on North America,
and it paints a promising picture
for sports operations.
The North American sports market is expected to grow at a compound annual rate of 4.8% over a
five-year period, from $53.6 billion
in total revenues produced by college and pro teams in 2012 to an
anticipated $67.7 billion in 2017.
Media rights — buoyed by recent
mega-national television deals in
the NFL and Major League Baseball
— are forecast to grow at a compound annual rate of 7.7% over the
next four years. Sponsorship revenues are projected to rise 6% annually between now and 2017, with
gate revenues, at an expected 3.9%
annual growth, and merchandising, at a 1.6% annual rate of in-
“It’s so critical because
it’s our largest local
revenue stream.”
– Kerry Bubolz, president of
business operations, Cleveland
Cavaliers, on gate revenues
crease, lagging behind the other
two segments.
PwC estimates that gate revenues
for the entire North American sports
industry — college and pro —totaled $17.2 billion in 2013. That figure would be 22% ahead of the estimated revenue generated by
sponsorships ($14.1 billion), 30%
more than merchandising revenue
($13.2 billion) and nearly 39% better
than media rights ($12.4 billion).
By 2017, gate revenues are projected to rise to $19.1 billion in annual revenue, while sponsorships
($17.7 billion) and media rights
($17.1 billion) are expected to narrow the gap significantly. Contrast
those figures with 2008, when gate
revenues were 87% ahead of media
rights and almost 38% above sponsorships.
“This year, the takeaways (of the
study) are the convergence of three
of the four revenue segments that
we have tracked for close to a
decade and a half,” said PwC Sports
Advisory Services director Adam W.
Jones, editor of the 2013 analysis.
“Gate revenues continue to be the
largest segment, but media rights
and sponsorships will outpace
them in terms of year-on-year
growth.”
PwC estimates that gate revenues declined in 2009, 2011 and
2012, before increasing 9.4% in
2013. The latter increase, Mr. Jones
says, was a “one-time correction”
because of the return to a full season by the National Hockey League
after a lockout that reduced the
2012-13 season by 34 games and
ticket price increases after years of
decreases or freezes. The annual
growth of gate revenues is expected
to slow to 2.9%, 2.2% and 2.4% in
the next three years, the PwC report
says.
… and the micro view
The Browns’ Mr. Scheiner didn’t
dismiss the value of the PwC study
altogether. But, he said, because it’s
national, “I don’t put too much
stock into it.”
“When you have these national
studies, there are so many levers
that you have to pull that it stops
being too meaningful to me,” he
said. “We focus much more on our
market, our business and how we
connect with our fans.”
The Indians’ Mr. Shapiro made a
similar observation.
“It reminds me of reading a toplevel financial analysis of markets
that point out trends at a macro
level that are clearly true but only
partially relevant to our market,”
Mr. Shapiro said.
Though gate revenues may not
be as significant to teams in big media markets such as New York and
Los Angeles, where franchises can
reap huge revenue windfalls from
television and radio broadcast
rights, they remain a big deal to
teams in smaller media markets
such as Cleveland. Hence, the focus
of the Browns, Cavaliers and Indians on the gate.
“It’s so critical because it’s our
largest local revenue stream,” the
Cavs’ Mr. Bubolz said.
■
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in the right direction.
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20140106-NEWS--12-NAT-CCI-CL_--
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1/2/2014
3:46 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JANUARY 6 - 12, 2014
NOTABLE NORTHEAST OHIOANS WHO DIED IN 2013
F. Joseph Callahan
By SCOTT SUTTELL
[email protected]
Northeast Ohio last year lost the
man who built Progressive Corp.
into an insurance powerhouse, a
doctor who was one of the Cleveland Clinic’s most prolific inventors, and the woman who was the
first general manager of WVIZ-TV,
Channel 25.
Here’s a retrospective of some of
the most notable Northeast
Ohioans who died last year. They’re
presented alphabetically.
Powell W. Caesar III
Mr. Caesar was “an astute, savvy
and street-smart spokesman for
some of Greater Cleveland’s bestknown people and organizations,”
according to a Plain Dealer obituary.
He was 63 when he died of a
heart attack on May 27. Mr. Caesar
had been a spokesman for the
Cuyahoga County Medical Examiner’s Office since 2007.
Former Cleveland City Council
President George Forbes, a longtime friend of Mr. Caesar, told The
PD, “He would give me his point of
view on many things. He believed
what he believed at heart. There
was nothing phony about him.”
Save the date
Tuesday,
April 15, 2014
Mr. Callahan spent 42 years at
fluid system company Swagelok,
securing 23 patents there and ultimately becoming its president and
then chairman, according to a profile on the website of Case Western
Reserve University, where Mr.
Callahan is the namesake of the annual F. Joseph Callahan Distinguished Lecture.
He died June 28 in Chagrin Falls
at age 89.
Among other philanthropic ventures, in 1968 he created the Callahan Foundation, which has given
more than $10 million to entrepreneurial nonprofits.
Mr. Callahan graduated from the
U.S. Naval Academy in 1945, then
went on to submarine school.
Among the officers he served with
were Admiral Hyman Rickover and
future President Jimmy Carter.
Betty Cope
Ms. Cope was “the driving force”
behind getting WVIZ-TV, Channel
25, on the air in February 1965, serving as the station’s general manager
until her retirement in June 1993, according to The Plain Dealer.
She died Sept. 14 at age 87.
The PD noted that Ms. Cope got
her start in the business as a receptionist at Cleveland’s first commer-
cial television station, WEWS Channel 5, when it began broadcasting
in December 1947.
Jerry Wareham, president and
CEO of Ideastream, the corporate
umbrella over WVIZ and WCPNFM, 90.3, told the newspaper, “Betty Cope was a trailblazer throughout her professional life. She was a
legitimate television pioneer even
before Channel 25 went on the air.”
Dr. Roy Greenberg
Dr. Greenberg — one of the
Cleveland Clinic’s most prolific innovators — died the weekend of
Dec. 7-8 at his home on Lake Erie after a battle with cancer. He was 49.
Crain’s story on Dr. Greenberg,
who was born in Ithaca, N.Y., noted
that had been with the health system since 1999. He was “known as
a pioneer in the field of treating
complex aortic disease and held
more than 50 patents,” according to
the story.
Dr. Greenberg helped create a 3D
navigation technology that lowers
exposure to radiation. He also developed a modeling technology for
3D printing that can create custom
endovascular grafts. His work has
been credited with a dramatic reduction in mortality for endovascular aortic repair patients over the
last decade.
CIO
Mike Hegan
When longtime Cleveland Indians broadcaster Mike Hegan died
Dec. 25 at age 71, the team “lost a
close friend,” according to a profile
on Indians.com
Mr. Hegan “spent most of his life
around the Cleveland Indians,” the
story noted. “He shagged fly balls in
the outfield of Cleveland Municipal
Stadium as a boy, played in the ballpark as a visiting big leaguer and
went on to call some of the franchise’s most memorable games as a
broadcaster.”
He was inducted into the Cleveland Sports Hall of Fame in 2011.
The former star athlete at St. Ignatius High School called Indians
games with Tom Hamilton on the
radio for 14 years until he stepped
down at the end of the 2011 season.
Inez Killingsworth
OF THE YEAR
2014
NOW ACCEPTING NOMINATIONS
For nomination inquiries email
Kim Hill at [email protected]
or visit
CrainsCleveland.com/CIO
Deadline: February 3, 2014
Cocktail Reception Sponsor
Presented by
JASON MILLER
Peter B. Lewis, shown in 2010, passed away Nov. 23 at age 80.
Co-Presented by
Video Sponsor
Ms. Killingsworth was the
founder of Empowering and
Strengthening Ohio’s People, a
Cleveland-based organization dedicated to fighting against foreclosures and predatory lending practices. She died Jan. 17 after a battle
with cancer.
“After retiring from the Cleveland
public school system as a janitor in
2001, ESOP became Killingsworth’s
encore career,” according to a profile
on Encore.com. “She took the organization statewide, and today ESOP
has nine offices throughout Ohio.
When Killingsworth received The
Purpose Prize in 2010, upwards of
15,000 homeowners … had participated in ESOP’s programs. Thousands of homeowners are still in
their homes today due to her work.”
Peter B. Lewis
Mr. Lewis, who died Nov. 23 at
age 80, will be remembered as a
business titan for building Progressive Corp., and as a major figure in
U.S. philanthropy.
During a career that lasted more
than half a century, Mr. Lewis grew
Mayfield Village-based Progressive
into the fourth-largest auto insurance company in the United States.
He donated an estimated $500
million to various causes during his
lifetime.
Mr. Lewis graduated in 1955 from
Princeton University. A Washington
Post profile upon his death noted
that Mr. Lewis’ senior thesis was titled “The Financially Irresponsible
Motorist: A Problem in Practical
Politics.” He later was a Princeton
trustee and donated more than
$220 million to the university.
He was a trustee of the Guggenheim Museum, but he stepped
down in 2005, saying he disagreed
with the institution’s focus on international expansion. Mr. Lewis donated $36.9 million for the construction of a building bearing his
name at the Weatherhead School of
Management at Case Western Reserve University. The building was
designed by architect Frank Gehry,
with whom Mr. Lewis worked frequently.
Mr. Lewis also was a major donor
to liberal political causes, most
prominently, late in his life, in the
push to legalize marijuana.
Peter McDonald
Tire industry veteran Peter McDonald, widely known for his work
in tire forensics, died June 21 at age
83, according to Tire Business, a sister publication of Crain’s.
Mr. McDonald had a 28-year career as director of tire design for the
former Firestone Tire & Rubber Co.
in Akron, now part of Japan’s
Bridgestone Corp. His career passion was tire forensics, which led
him to work as an expert witness for
both prosecution and defense and,
along the way, produced his book,
“Tire Imprint Evidence.”
In one famous case, Tire Business
noted, Mr. McDonald “concluded
that there were more conspirators
in the truck bombing of the Alfred P.
Murrah Federal Building in Oklahoma City on April 19, 1995, that
killed 168 people. He reached that
deduction after looking through FBI
photographs of tire tracks at two
Oklahoma sites where authorities
believe the conspiracy took place.”
Gary Taylor
Mr. Taylor, founder of telemarketing giant InfoCision Management Corp. in Akron, died March 2
at age 59. InfoCision said Mr. Taylor’s death came just over three
years since he initially fell ill after a
heart attack suffered in 2009.
Crain’s story about Mr. Taylor’s
death noted that he spent his entire
life in Akron, the city he loved.
He earned bachelor’s and master’s degrees from the University of
Akron, which is where he met his
wife of 34 years, Karen. Mr. and Mrs.
Taylor later became large donors to
the university; the football stadium
bears the InfoCision name, and
their $3.5 million donation to the
school established The Taylor Institute for Direct Marketing at The
University of Akron.
Ned Whelan
Legendary Cleveland journalist
and public relations executive Edward P. Whelan, 70, died March 20
from brain injuries suffered in a fall
in Phoenix, where he was visiting
his daughter.
Crain’s story about the passing of
Mr. Whelan, who was called Ned,
noted that he had operated a public
relations firm, Whelan Communications Inc., for many years but remained best known as a writer and
managing editor of Cleveland
Magazine.
■
20140106-NEWS--13-NAT-CCI-CL_--
1/2/2014
3:21 PM
Page 1
2014 PREDICTIONS
JOHN BEGALA
Executive director
The Center for Community Solutions
■ PREDICTION:
Prospects for the
Democrats in
Washington will
brighten.
T
he combination of
growing
disfavor with both the Tea
Party and Affordable Care Act will
yield a continued, but somewhat reduced, Republican majority in the
U.S. House, predicts John Begala,
whose organization is an advocate
and policy think tank for health, social and economic issues with offices
in Cleveland and Columbus.
In the Senate, Republicans will
pick up five seats, bringing their
number to 50, but Democrats will
maintain a functional majority with
the continued support of two Independents and Vice President Joe
Biden’s tie-breaking vote.
Ironically, the slimmer majorities
and split government will erode the
grip of gridlock, as more moderate
voices come to leadership positions
in both parties, said Mr. Begala, a former state legislator and hospital and
government administrator.
In the executive branch, President
Barack Obama will experience a mild
surge in popularity as the result of
diplomatic successes and the winddown to the Afghan war.
DAN BERRY
A
President and CEO
Manufacturing Advocacy & Growth
Network
■ PREDICTION: A good year for
manufacturing — that’s already
becoming evident.
From more innovation to a stronger marketplace, here’s what they had to say
about what 2014 could have in store:
A
s the head
of an entity that
not only
advocates for
manufacturing
but also helps
many area manufacturers with product development
and other challenges, Magnet CEO
Dan Berry takes a broad view of manufacturing. He likes what he sees as
the sector heads into a new year, but
he also anticipates some challenges.
Data from the National Association of Manufacturers and the Institute for Supply Management are indicating strong growth for U.S.
manufacturing.
“This good news about manufacturing nationally generally means
good news for Northeast Ohio because of the region’s deep manufacturing base,” Mr. Berry said. “The
short-term future is optimistic for
manufacturing in Northeast Ohio
with many opportunities. But each
opportunity brings with it some challenges,” he noted.
Among the challenges Mr. Berry
sees ahead are continued cost pressures on local auto suppliers and the
availability of workers with skills in
trades such as welding and machining.
Then there is the matter of continued growth in shale oil and gas
drilling. That’s giving a welcome advantage to industries that are finding
cheaper sources of fuel and chemical
feedstocks, but Northeast Ohio manufacturers have been slower than expected to find and exploit opportunities in the shale-drilling supply chain
so far, Mr. Berry noted.
s the pages of the calendar turn to a new year, Crain’s Cleveland Business
asked some of the region’s leaders to weigh in on what might take place
over the next 12 months.
DAVID BROWNING
DENISE CARKHUFF
Managing director
CBRE Group, Cleveland office
Partner, private equity
practice
Jones Day
■ PREDICTION: The
Northeast Ohio real estate
market will be much more
dynamic than one would
expect from reading national predictions
about it.
F
or example, David Browning, managing
director of CBRE Group’s Cleveland office, said the Urban Land Institute think
tank’s annual survey of rankings of development action by real estate professionals
recently ranked Cleveland near the bottom in
the nation.
While that survey suggests it is a dead market, Mr. Browning sees much occurring if you
take a deeper look. He expects the popularity of
downtown and urban living among young professionals to continue to remake the city. The
ability to attract talented young workers will
continue to fuel movement to the downtown
office market, he said, by suburban and growing companies.
The rise of big mixed-use developments in
town, such as the conversion of the former
Ameritrust office complex to apartment, hotel,
retail and office uses that Geis Cos. began in
2013, is in its infancy. He also expects to see
niche office development in areas such as Ohio
City and University Circle that would have
been unthinkable 20 years ago.
Mr. Browning also expects to see more sales
of big-ticket commercial properties in 2014 as a
tremendous amount of capital nationally and
globally is looking for places to find a home.
■ PREDICTION: Mergers
and acquisitions will pick
up.
D
ealmakers could hear a pin drop in
early 2013, following the rush of deals
in 2012 before impending tax increases. And that hangover lasted
probably half the year, said Denise Carkhuff, a
partner in Jones Day’s private equity practice.
“So, 2012’s (M&A) numbers were inappropriately high and 2013’s numbers were inappropriately low and what’s going to be 2014 is a
normalization,” she said. “I think it’s going to
be a big uptick because of how slow we started
in 2013.”
A normalized deal flow means buyers will get
to put their money to use, but they also will
continue to pay “more than they want to pay”
because valuations have not normalized, Ms.
Carkhuff said.
“I think the sellers continue to be the winners
— hands down,” she said. “There’s so much
money available with the private equity funds as
well as the strategics. Financing is cheap.”
Ms. Carkhuff also believes that a form of insurance called representations and warranties
will become the norm. The insurance covers liabilities that a buyer may discover after an acquisition, thus protecting buyers and sellers from financial loss in the event that inaccuracies in
representations and warranties were made.
“Up until now, we’ve seen various private
equity funds and other companies flirt with the
idea of rep and warranty insurance,” she said.
Now there’s a transition afoot. In fact, some
sellers are telling buyers they are not invited to
bid for their company without the insurance,
Ms. Carkhuff observed.
“You’re probably going to see more insurance companies getting into the product,” she
said. “The more that get in, the pricing should
come down.”
DR. TOBY COSGROVE
President and CEO
Cleveland Clinic
■ PREDICTION: Hospitals
will continue to integrate
and consolidate.
L
ast year, Northeast
Ohio saw a string of
hospital acquisitions
and integrations that brought a handful
of new players into the region’s already-crowded health care landscape. This year, that cozying up is expected to continue, especially as the
full thrust of the Affordable Care Act takes hold.
“We’re going to see some continuation of the
trends we’ve seen already,” said Dr. Toby Cosgrove, president and CEO of the Cleveland
Clinic. “More integration of hospitals and more
consolidation.”
Since the late 1990s, the Cleveland Clinic has
pieced together a strong regional network by
acquiring several of Northeast Ohio’s community hospitals. Last year, the Clinic struck a
partnership with Community Health Systems,
a for-profit health care juggernaut based in
Nashville, Tenn., and announced plans to
jointly acquire Akron General Health System.
See COSGROVE Page 14
20140106-NEWS--14-NAT-CCI-CL_--
1/2/2014
3:21 PM
Page 1
2014 PREDICTIONS
14 CRAIN’S CLEVELAND BUSINESS
Cosgrove
continued from PAGE 13
The Clinic, of course, wasn’t the
only local health system eyeing acquisitions. University Hospitals
announced plans to acquire EMH
Healthcare in Elyria and Parma
Community General Hospital.
Summa Health System in Akron,
meanwhile, sold a 30% minority
stake of its enterprise for $250 million to HealthSpan Partners, a
subsidiary of Catholic Health Partners in Cincinnati.
JIM DOYLE JR.
Senior vice president
Bellwether Enterprise
■ PREDICTION:
There will be
more real estate
activity this year
because more
lenders are
regaining
appetites for
commercial real estate lending.
J
im Doyle Jr., senior vice president of the Bellwether Enterprise mortgage brokerage
firm, said a broad range of
commercial property lenders,
from insurance companies to Fannie Mae and Freddie Mac and securitized lenders are competing
for deals as 2014 begins.
Last year was the first year in
many years that such competition
occurred, and as recently as 2012,
many owners were lucky to find
one lender to look at a deal.
Major banks also are tiptoeing
into real estate development lending again, but only developers with
strong track records and highquality projects are getting anywhere. Increased competition has
meant that borrowers may get
loans for as much as 75% of an ac-
quisition’s cost, which beats the
50% loan and 50% equity ratio that
had been the norm. Lender competition for the best deals means
that lenders who do not lend those
transactions will look at lesser
properties.
Rates on commercial loans
climbed to 4.75% from 3.75% a
year ago, and Mr. Doyle expects
them to climb more this year. He
wonders how long it will be before
increasing interest rates will start
pushing up property sales prices,
but has not seen it so far.
GARY FINGERHUT
Executive director
Cleveland Clinic Innovations
■ PREDICTION: Electronic health
record systems will get a lot
smarter.
T
he
health
care industry is
ready to tap into
the true potential of that fancy
system your
hospital uses to electronically
store your records, according to
Gary Fingerhut, executive director
of Cleveland Clinic Innovations.
Hospitals across the country
have been beefing up their electronic health records systems over
the past decade or so, partly because the federal government has
been giving them financial incentives to do so.
Now, however, the main pieces
of those systems are mostly in
place, so the next step for the industry is to build more capabilities
on top of them, Mr. Fingerhut said.
Where
futures
beginSM
Tools that help doctors analyze
data to figure out whether a patient has one condition or another.
Interfaces that allow physicians to
access records just by talking or
gesturing. All sorts of cool stuff.
“This will be the year that people will start to add on top of the
EHR (electronic health record),”
Mr. Fingerhut said. “They’re implemented. The time is right.”
Some companies already develop software designed to work with
electronic health record systems,
including Cleveland Clinic spinouts such as data analysis firm Explorys and iVHR, which stands for
interactive visual health record.
That momentum is really going
to accelerate this year, and the
Clinic will take advantage, Mr. Fingerhut said. Health IT-related
technologies account for about
20% of the inventions coming out
of the Clinic today, up from 6%
three years ago.
GRACE GALLUCCI
Executive director
Northeast Ohio Areawide Coordinating
Agency
■ PREDICTION: Washington will
finally increase
the federal
gasoline tax.
I
n the next
Transportation
Authorization due in
2014, Congress
will act to stabilize the Highway
Trust Fund, including both its
highway and mass transit accounts, by increasing the gas tax or
simply indexing it to inflation,
61,000
FOR EVERY
OF CUYAHOGA COUNTY
SUPPORT
FOR TRI-C
THE COLLEGE PROVIDES
$
A RETURN OF 100
10
$
41,000+
MORE THAN
TRI-C STUDENTS HAVE SUCCESSFULLY
TRANSFERRED TO 4-YEAR UNIVERSITIES
IN THE PAST 5 YEARS
IN ECONOMIC BENEFIT
TO THE COUNTY
EIGHTY-FIVE
PERCENT OF TRI-C GRADUATES
CONTINUE TO WORK AND LIVE IN OUR REGION.
www.tri-c.edu
JANUARY 6 - 12, 2014
which has not been done since
1993, predicts Grace Gallucci, executive director of the Northeast
Ohio Areawide Coordinating
Agency. The agency oversees
federal spending on highways in
Cuyahoga, Geauga, Lake, Lorain
and Medina counties.
Then, we can fix the crumbling
transportation infrastructure, plan
for future transportation needs,
and make the region economically
competitive again.
NOACA has estimated it could
cost as much as $1.4 billion to
bring the roads in NOACA’s fourcounty region up to good condition. But the agency expects to
have only $760 million to spend
between 2014 and 2017.
The gas tax, which funds federal
highway building and maintenance, has been at 18.4 cents a gallon since 1993 despite rising inflation and improvements in vehicle
fuel economy that have reduced
consumption.
DAVID GILBERT
President
Greater Cleveland
Sports
Commission
■ PREDICTION:
Cleveland will
become a
destination city
for big events.
O
n that end, David Gilbert
of the Greater Cleveland
Sports Commission and
his crew already are suc-
ceeding.
On Dec. 11, Cleveland was
selected to host the 2018 NCAA
Division I wrestling championships at Quicken Loans Arena.
The sports commission also
submitted winning bids for the
2017 NCAA Division III men’s and
women’s outdoor track and field
championships and the 2018 D-III
wrestling championships.
This year, Cleveland will host
NCAA championship events for
women’s bowling, Division II
wrestling and D-II men’s and
women’s swimming and diving,
along with a Web.com Tour golf
tournament and a women’s Fed
Cup quarterfinal tennis match between the United States and Italy.
“After the National Senior
Games last year, I think a lot of
people around the country have
noticed how well that event went,”
Mr. Gilbert said. “A lot of major
rights holders are now seeing
Cleveland as a destination city for
big events.”
One of the biggest yet is on tap
for spring 2015. That year, The Q
will play host to the NCAA men’s
basketball Midwest Regional semifinals and championship game.
The latter contest will decide one
of the participants in the 2015
men’s hoops Final Four.
HOWARD ‘HOBY’
HANNA IV
President
Howard Hanna
Real Estate
Services, Midwest
region
■ PREDICTION:
The residential
real estate market will strengthen
this year, even if mortgage
interest rates continue to inch up.
H
oward “Hoby” Hanna IV,
president of the Midwest
region of Howard Hanna
Real Estate Services, said
he expects that local home
builders will be able to land loans
to build homes on a speculative
basis for the first time in almost 10
years.
That development will allow
them to compete more with national builders active in the area.
More lenders will also put up for
sale home sites they seized from
home builders and land developers during the downturn.
He expects residential sales volume will increase another 10% in
2014. Home prices will rise about
5%.
However, the home market will
overcome some challenges on the
way to those increases. Look for a
lot more multiple bid situations for
good homes in desirable neighborhoods due to the shortage of
homes listed for sale. He also
thinks the market may hit a bump
when federal banking reform kicks
in early in 2014. It may be more
difficult for buyers to find loans
until it becomes clear which
lenders want to continue making
home loans. Once that sorts itself
out, the housing recovery will resume.
ROBERT HELMER
President
Baldwin Wallace University
■ PREDICTION: Higher ed will
continue to become more flexible
and innovative.
B
aldwin
Wallace
University president Robert
Helmer doesn’t
expect any watershed moments in 2014 for higher education. However, he expects
colleges and universities will continue to focus on producing a new
kind of graduate. Higher ed institutions, for instance, are taking a
hard look at their curriculum and
infusing a dash of entrepreneurial
thinking in all courses of study.
“Is there a value in higher
education? Every study
suggests yes, but I think
the public today is
questioning that.”
– Robert Helmer
president, Baldwin Wallace
University
“We want students who graduate — regardless of their major —
to have an entrepreneurial mindset that will allow them to get their
first job but also allow them to
switch jobs in 10 years to something that doesn’t even exist today,” Dr. Helmer said. “The view is
on the output.”
Dr. Helmer said colleges and
universities will continue to experiment with new ways of delivering
education. As for BW, he expects
the college will experiment more
with online and hybrid courses
over the next year.
Private colleges and universities
have been criticized for their high
tuition costs, and that criticism is
expected to escalate as recent
graduates struggle to find jobs in
the slowly recovering economy.
“Is there a value in higher
education?” Dr. Helmer said.
“Every study suggests yes, but I
think the public today is
questioning that.”
continued on PAGE 15
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2014 PREDICTIONS
JANUARY 6 - 12, 2014
BRUCE HENNES
Partner
Hennes Paynter Communications
■ PREDICTION: Adults older than
the age of 50 will increasingly rely
on social media for news.
T
he Plain
Dealer
doesn’t
show up
seven days a
week any longer,
but the need for
news continues
unabated — and
quick daily visits to Cleveland.com,
CrainsCleveland.com, CNN.com
and NewYorkTimes.com are
quickly filling the void, although
with a great deal of grousing from
older adults.
Bruce Hennes, a partner with
Hennes Paynter Communications,
predicts that more Cleveland-area
adults soon will begin to understand that platforms like Twitter
aren’t necessarily just frivolous
toys. Instead, they are serious business tools, allowing newsmakers
and the public to instantaneously
communicate with one another
without the assistance of traditional media outlets.
It’s a fact that today’s 30- and
40-year-olds don’t read newspapers — and they’re likely never going to acquire that habit, as did
their elders.
Unfortunately, Twitter isn’t as
easy to use as a newspaper, but necessity and time will force today’s
50-and-older adults to accept the
fact that social media isn’t a fad
and they must master this new
technology.
Does this have major implications for the business models of
Northeast Ohio’s main media outlets? Absolutely.
RAY LEACH
CEO
JumpStart Inc.
■ PREDICTION:
Local startup
companies have
a tough time
raising capital.
P
romising young companies
still have plenty of options
within a three-hour drive of
Cleveland if they’re looking
to raise a few hundred thousand
dollars from investors.
But more mature startups that
need a few million dollars are
going to have a hard time finding it
in Ohio and surrounding states,
said Ray Leach, who leads a nonprofit that assists startups in
Northeast Ohio.
Venture capital firms here and
across the nation have been slow
to sell off their investments over
the past few years, partly because
of the recession that started in
2007.
Thus, they haven’t yet produced
much profit, which has made it
hard to raise new funds and make
new investments. Venture firms
are starting to produce better returns as each quarter goes by, but
it’ll be a while before many of
them are profitable enough to
raise new funds and invest in more
companies, Mr. Leach said.
Locally, their returns will improve when buyers emerge for
fast-growing companies such as
TOA Technologies in Beachwood.
The mobile work force management company raised $66 million
from Technology Crossover Ventures in California’s Silicon Valley
this October after previously having raised cash from local investors.
But until firms in Ohio and nearby states can raise new funds,
many deserving young companies
could be unable to raise capital —
or they’ll have to look for it somewhere else, Mr. Leach said.
STEVE MILLARD
customers, such as Facebook,
Constant Contact and Google Analytics.
He also pointed to the mobile
technology that’s increasingly
available to small businesses, like
those used to help customers
make payments.
Where social media was the first
wave of technology-related
changes, Mr. Millard said he
thinks mobile will be the “next
wave.”
“They’re just really beginning to
embrace that,” he said.
MARC MORGENSTERN
Chairman
CadenceCounsel
Inc.
■ PREDICTION:
Law firms will
hire more contract attorneys
to control costs.
G
iven the focus most law
firm managing partners
currently place on reducing fixed costs where possible, Marc Morgenstern is confident more firms will choose to use
CRAIN’S CLEVELAND BUSINESS 15
outside lawyers so they can operate with smaller staffs, but still
meet demand when it arises.
“Every year, technology means
that fewer humans are needed to
produce paper, to generate ideas,
to propel a task to completion,” he
said. “The legal practice is still set
up as if it is impervious to that
technology, and it isn’t. So, on a
go-forward basis, law firms will
hire fewer associates, law firms
will make fewer partners and because of that … their need for ad
hoc counsel on a when-needed
basis will increase.”
Full disclosure: Mr. Morgenstern has a dog in this prediction.
He is chairman of CadenceCounsel Inc., a staffing agency founded
in 2013 to provide variable, on-demand, high-end lawyers.
Mr. Morgenstern also is managing partner of Maxim Advisors, a
Cleveland-based company that
does deal document design and
communication development of
attorneys.
Law firms, he predicts, will increase the amount of professional
development they provide to their
attorneys as a means of differenti-
ating themselves.
“Most law firms, there’s almost
no direct, consistent professional
development,” he said. “One of
the consequences of technology is
… now, lawyers in Cleveland compete with lawyers in Palo Alto. The
ease of technology and people’s
acceptance to that approach …
means stiffer competition.”
Law firms that invest to develop
their people regularly can say,
“‘Here’s why we think our lawyers
are so good. Here’s the professional development they receive.’ That
feels more quantitative,” he said.
DAN MOULTHROP
CEO
The City Club of Cleveland
■ PREDICTION: The 9-12 District
will awaken.
A
fter a near decade-long
slumber,
the real
estate market
on Euclid Avenue — between East 9th
and East 12th
streets — will finally come alive, causing nay-saying downtown denizens and workers to finally declare a legitimate
urban resurgence.
See MOULTHROP Page 16
President and executive director
Council of Smaller Enterprises
■ PREDICTION: Small businesses
will continue to grow and hire,
and they’ll take advantage of the
technology available to them.
verall, Steve Millard,
president
and
executive director of the Council of Smaller
Enterprises,
said he expects
that manufacturers, in particular, will continue
to grow, assisted by reduced energy costs, improved productivity
and more on-shoring.
He thinks small businesses also
will benefit from relatively low interest rates and more availability of
capital.
In terms of technology, Mr.
Millard highlighted the variety of
programs companies can use to
get information and data on
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20140106-NEWS--16-NAT-CCI-CL_--
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Page 1
2014 PREDICTIONS
16 CRAIN’S CLEVELAND BUSINESS
Moulthrop
continued from PAGE 15
For his part, Dan Moulthrop,
CEO of the City Club, believes RTA
chief Joe Calabrese will declare a
final “I told you so” on the Euclid
Corridor project.
Still, perception issues will
linger and many outer ring suburbanites won’t catch on to downtown’s greatness until 2024.
BRAD NELLIS
President
Northeast Ohio
Software
Association
■ PREDICTION:
Local IT
companies cool
their jets.
A
fter a long streak of
growth, information technology companies in
Northeast Ohio next year
probably will slow down their
expansion, predicts Brad Nellis of
the Northeast Ohio Software
Association.
First, he pointed to NEOSA’s
survey for the third quarter of
2013. Granted, 54% of the local IT
companies who responded described their current performance
as “good” or “very good,” but
that’s way down from 73% for the
same quarter a year ago and 69%
in the second quarter of 2013. Other statistics from the survey provided more evidence that the local
tech sector is a little shakier than it
has been recently.
Mr. Nellis believes another, bigger factor will work against the local tech sector: Though he’s not an
economist, he believes that “the
broader economy is really not as
strong as it appears.” He doesn’t
think the stock market will go up
much, if at all, next year.
“In the history of the United
States, we’ve never had an expansion that did not end,” he said
with a laugh.
He predicts that big companies
will buy less software and services
from local tech firms as the Federal Reserve reduces the amount of
money that it pumps into the
economy.
The Fed in December started
trimming the amount of bonds it
buys off the public market, and it
could stop buying bonds completely by the end of 2014, should
the economy keep growing, according to news reports. The stock
market, however, reacted well to
the news, which included an an-
nouncement that the central bank
will keep interest rates on shortterm loans near 0%.
THOMAS NOBBE
President
Cleveland Special Events Corp.
■ PREDICTION: Gay Games 9 will
be a big
money-maker
for Northeast
Ohio.
T
homas
Nobbe
— executive
director of the
Gay Games, which will be Aug. 9 to
Aug. 16 at venues all across the region — said the group is attempting to raise $2.1 million to put on
the event.
As of early December, the Gay
Games already had raised $1.5
million in donations and sponsorships, and Mr. Nobbe estimated
the total could reach $2 million by
the end of 2013 — a figure that includes money the games receive
from the city and Positively Cleveland.
If the games reach its goal of
HEALTH CARE LAW
A look at the people and organizations in Northeast Ohio who focus
on the practice of health care law and the current issues that are
relevant to the field.
JANUARY 6 - 12, 2014
drawing 10,000 participants, Mr.
Nobbe expects 30,000 tourists to
come to Northeast Ohio and spend
about $1,700 each — which would
result in a $51 million windfall for
the area.
More than 2,200 athletes already
have signed up for Gay Games 9,
which Mr. Nobbe views as a sign of
positive things to come.
“Registration is the area that
takes the longest and we have the
least control over,” he said. “The
games are held every four years,
and traditionally, 70% of the athletes or individuals register the
year of the games. We always want
to make sure of that (10,000 goal).
We’re not letting up.”
BRANDON NOWAC
Vice president
and head of
prepaid cards
KeyBank
■ PREDICTION:
2014 will be the
year of the
prepaid card.
T
he use of prepaid cards has
grown significantly, and
Brandon Nowac — vice
president and head of prepaid cards for Cleveland-based
KeyBank — expects corporations
and public sector entities to ramp
up their use of them in the coming
year.
Companies issuing payroll
checks to employees and public
sector entities issuing paper benefits checks stand to reduce their
costs by 90% by switching to prepaid cards, Mr. Nowac estimated.
That’s because when they opt to
use the cards, they can load dollars
electronically to them instead of
printing and mailing checks, he explained. Plus, the risk of fraud is
less with prepaid cards, he noted.
While the state of Ohio already
uses prepaid cards for some benefits programs, “2014 will be a year
where the states that have not
adopted these programs … (get)
off of check and (move) onto prepaid card,” he said.
And the benefit, according to
Mr. Nowac, extends beyond the issuing entities.
“Those individuals who do not
have a bank account, they have to
get a check today and they have to
pay 2 to 10% just to get it cashed,”
Mr. Nowac said. “Their (companies’) employees now have a much
better solution where their cards
are loaded similar to if they were
with a bank.”
KeyBank went live in December
with its product, Key2Payroll,
which allows companies and public sector clients to distribute funds
with prepaid cards.
“We do believe that more banks
will begin to do what we’ve just recently done,” Mr. Nowac said.
JOE PULIZZI
Founder
Content Marketing
Institute
Issue date:
February 3
Ad close:
January 23
Materials due:
January 28
Book your ad today! Contact Michelle Sustar at 216-522-1383 or
[email protected].
■ PREDICTION:
More
companies,
especially
manufacturers,
will be hiring in-house reporters
to tell the story of their products.
J
oe Pulizzi, founder of the
Content Marketing Institute,
said companies are seeing
their marketing departments
evolve to resemble a publishing
company. They’re hiring people
who can tell stories and create
content for them on an ongoing
basis. Most companies don’t have
that storytelling muscle now, but
they’re working on it.
“They’re trying to build that
muscle back up right now,” Mr.
Pulizzi said.
The driving force behind this
trend could be content marketing,
a marketing approach in which
companies create content that
they deliver directly to consumers
through media, such as newsletters, blogs, custom magazines and
social media. It’s existed for a century, Mr. Pulizzi said, but it’s really
taken off in recent years.
Some of the content that staff
members are creating may go into
native advertising, like sponsored
social media posts or editorial content. But native advertising is just
one option of many when it comes
to content marketing, and companies can share content through
their own media sources. There are
“no barriers to entry anymore,” he
said.
Mr. Pulizzi also said he wouldn’t
be surprised to see more non-media brands buying smaller media
companies in the future, if not in
2014.
STEVE PRESSER
Owner
Big Fun
■ PREDICTION: The buy-local
movement will continue to grow.
T
here is a movement toward
buying
local,
said
Steve Presser,
owner of the Big
Fun toy and collectible stores.
He pointed to
Small Business
Saturday as evidence of this trend.
The annual event, which falls after
Black Friday and encourages customers to shop at their local small
businesses, is starting to gain momentum, he said. The public is
getting behind it, and it has been
gaining big corporate sponsors.
There’s more talk about shopping
local in the media and in advertising, he said.Mr. Presser compared
the shop-local movement to the
environmental or green movement, which took decades to take
hold.
He said he hopes the buy-local
movement doesn’t take as long to
set in. He has seen a big push toward patronizing local restaurants,
a move he said he supports. Small
businesses are the “fabric of neighborhoods,” Mr. Presser said.
“I’m hoping the same people,
including the restaurateurs, see
that it’s a two-way street,” he said.
LUIS PROENZA
President
University of Akron
■ PREDICTION: Higher education
will continue to redefine itself.
O
hio’s
colleges
and
universities,
particularly
those funded by
tax dollars, are
facing pressures
on several fronts, according to University of Akron president Luis
Proenza. They’re receiving less financial support from the state than
they had decades prior. There’s a
growing clamor for colleges and
universities to cut costs and be
more affordable. Also, they’re being
asked to teach in innovative ways
beyond the classroom.
See PROENZA Page 17
20140106-NEWS--17-NAT-CCI-CL_--
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2014 PREDICTIONS
JANUARY 6 - 12, 2014
Proenza
WANT TO KNOW
WHAT WE THINK?
continued from PAGE 16
“2014 is going to be a continued
redefinition of what the normal is
for higher education,” Dr. Proenza
said.
Dr. Proenza, who plans to retire
from UA’s presidency this summer, said higher education is facing a public relations issue of
sorts. Colleges and universities are
now expected to prove their value
to an increasingly skeptical public
and state and federal lawmakers.
“Whether people will acknowledge it or not, higher education is
still an extremely fine investment,”
Dr. Proenza said. “How can you say
a public higher education is too expensive when you have many private schools charging four to 10
times more and providing, in many
cases, far less in return?”
BILL RYAN
President
and CEO
Center for Health
Affairs
■ PREDICTION:
The cost cutting
will continue.
he Cleveland Clinic made waves
last fall when it announced it planned to cut
$330 million from its budget — a
move expected to involve layoffs.
The Clinic, of course, wasn’t the
only health system in the country
— or even locally — to take a
scalpel to its books, and it surely
won’t be the last.
“The biggest issue right out of
the box is the continued pressure
on health care providers to manage internal costs,” said Bill Ryan,
president and CEO of the Center
for Health Affairs.
Mr. Ryan said the pressure to
drive down costs is due to a number of factors. Hospitals, for one,
are dealing with declining reimbursements from government and
commercial payers. Also, a surge in
high-deductible health plans purchased through the Obamacare exchanges or provided by employers
could leave patients with hefty
medical bills after receiving care —
bills that can often go unpaid.
“While you’re going to need to
cut costs, you can’t cut costs the
patient will notice,” Mr. Ryan said.
“It’s not like we’re going to increase the number of patients a
nurse has to manage to solve our
problem. They’re going to have to
figure out where the costs are that
patients won’t notice.”
T
ALEC SCHEINER
President
Cleveland Browns
■ PREDICTION:
Fans at
FirstEnergy
Stadium in 2014
will get a much
different vibe
during games than in past years.
onstruction on the
Browns’ $120 million upgrade to the 15-year-old
stadium was expected to
begin “immediately” after the regular season concluded Dec. 29,
Browns president Alec Scheiner
said last month. The Browns are
paying for the upgrade up front,
and the city will kick in $2 million
a year for the next 15 years from
its general fund. The result, the
team says, will be mammoth
state-of-the-art scoreboards in
each end zone, along with much-
C
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to find out what Crain’s reporters
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predictions.)
needed amenities such as a new
audio system, two new escalators
and LED video boards that will appease fans’ thirst for more, and
constant, game-day information.
“I predict that it will not feel at all
the same to be a fan at our stadium
next season,” Mr. Scheiner said.
The Browns’ president wasn’t
referring to wins and losses —
though a large improvement in
that area certainly would help. But
Mr. Scheiner and vice president of
fan experience and marketing
Kevin Griffin are placing a huge
emphasis on fan experience, and
they are using the Seattle Seahawks — Mr. Griffin’s former employer — as an example of how
crucial a strong home-field advantage is in the NFL.
MARK SHAPIRO
President
Cleveland Indians
■ PREDICTION:
More sports
fans in general
— and Tribe
fans, specifically
— will begin to
manage their tickets with mobile
devices.
I
n 2013, the Indians tested mobile ticketing on “an extremely limited basis” toward the
end of the season, team president Mark Shapiro said.
Mobile ticketing is used by the
Cleveland Cavaliers (Flash Seats)
and other pro sports teams as a
way to allow fans to enter more
rapidly, and gives teams a behavioral profile of their ticket buyers.
This season, the Tribe will be
“all in” on digital ticketing.
“We have had nearly 100% of
season-ticketholders switch to
FanPass digital tickets that they
can use to enter Progressive Field
by using a mobile device, credit
card or by printing their tickets at
home,” Mr. Shapiro said.
CHARLES STACK
Founder
FlashStarts
■ PREDICTION:
Angel investing
becomes a lot
more popular
ationwide,
the number of people
who invest in startup
companies is going to go up in
2014 by about one-third, now that
it’s legal for entrepreneurs to tell
the world that they’re raising
money, said Charles Stack, a longtime entrepreneur who runs
FlashStarts, a business accelerator
for startups in Cleveland.
Before Sept. 23, 2013, the U.S. Securities and Exchange Commission
banned private businesses from going public with their plans to raise
investments. Thus, startup companies and other businesses had to
raise money the old-fashioned way
— by talking to people one on one.
Now that the ban has been lifted, entrepreneurs are free to plead
N
for money in public, be it through
the news, traditional advertisements or even social media.
And Mr. Stack — who coaches
entrepreneurs who need to raise
capital — is all for it.
“It really democratizes the angel
funding process,” he said.
That freedom should help entrepreneurs here and throughout the
country lure more individuals to
become angels, Mr. Stack said. He
predicts that, this year, the number
of U.S. angel investors should jump
from about 225,000 — an estimate
from the Angel Capital Association
— to more than 300,000.
CRAIN’S CLEVELAND BUSINESS 17
down in value, they would … close
up their purse strings and that
would slow down the economy
and would more than likely put
you in a recession.”
of stories they want to see and the
sources they want that news from,
increasing in 2014.
JEFF WALTERS
President and CEO
Wolstein Group
President
Master Products
Co.
■ PREDICTION: Positive
momentum will likely continue
downtown.
■ PREDICTION:
There will be a
health care
damper on
consumer spending.
J
oger
Sustar is
CEO of Mentor-based Fredon Corp., a custom machine shop and fabricator and a
leading Lake County manufacturer. Mr. Sustar’s business makes
parts and assemblies for the defense and medical device industries, among others.
With the threat of sequestration
and its effect on the defense industry waning — and most of its
2014 defense-industry orders already in place as of mid-December, Mr. Sustar was predicting
modest growth for 2014.
Like others, he’ll be watching
the economy closely though. He’ll
be paying particular attention to
retail sales. Though his company
doesn’t sell consumer items, sales
at Fredon typically lag trends in
U.S. retail sales by about six
months, Mr. Sustar said.
Retail sales are expected to rise
in 2014 and, if past trends hold
true again this year, Mr. Sustar expects to see similar growth at his
company.
eff Walters’ Cleveland-based
Master Products makes washers and other stamped products, primarily for the automotive/transportation and
durable goods sectors. He thinks
that, while the economy still may
grow in 2014, it’s going to face a
headwind because of the Affordable Care Act.
Though he is actually a proponent of the ACA — “I believe
putting the buying and selection
choices in the hands of the individual is the right move,” he said
— he thinks sticker shock might
give consumers pause and cause
them to curtail other spending.
“Individuals are going to be more
apprehensive about spending
because they may need the money
for health issues and businesses are
going to be burdened with changes
in plan practices,” Mr. Walters
predicts. “People are going to put
large purchases — automobile, appliances, etc. — on the back burner
until a comfort level is achieved regarding health care,” he adds.
His apprehension is not based
on concern over the debauched
launch of the nation’s new health
care law, he said. Even had the system been implemented perfectly,
the new way of paying for health
care and consumers’ increased
awareness of the costs would have
put a drag on spending, at least until people get used to the new system, Mr. Walters said.
LES SZARKA
THOR WASBOTTEN
CEO
Szarka Financial
Director and professor
Kent State University School of
Journalism and Mass Communication
ROGER J. SUSTAR
CEO
Fredon Corp.
■ PREDICTION:
Modest sales
increases for
2014.
R
■ PREDICTION:
Stock market
volatility will
increase
dramatically.
M
uch
of the money flowing
into the stock market
today isn’t flowing
there because investors are confident in the economy, according to
Les Szarka, head of a North Olmsted-based financial planning firm.
“The money that’s going into
the stock market today is (going
there) because nothing looks really attractive,” he said, citing low
yields on investments, such as certificates of deposit (CDs).
With that, Mr. Szarka said, the
money is on a “very, very short
leash,” and “at the first sign of any
trouble, it’s getting yanked out.”
Given the double-digit gain that
the stock market has enjoyed in
2013, Mr. Szarka calls the situation
tenuous.
“When you see years where the
market is way up, you just have
more people who are willing to cash
out,” he said. “If I’m sitting in there
with a 27% gain, I’m more worried
about protecting the gain than trying to get an extra 1 or 2 or 3 or 4%.”
If the stock market suffers a significant reversal, “it would definitely have a ripple effect on the
economy because if, all of a sudden, people saw their assets going
■ PREDICTION: Media graduates
will have to be a bit more flexible
in their job
searches, and
professional
newsrooms will
be reaching out
for more help.
K
ent
State’s
School
of Journalism and Mass
Communication serves students
in fields from advertising to journalism to electronic media, but its
graduates end up in fields far beyond those industries, according
to Thor Wasbotten, director and
professor in Kent State University’s School of Journalism and
Mass Communication.
More companies have been looking to increase their presence online
and on social media. So, it’s more
important now than ever for schools
to teach media graduates adaptable
and flexible skill sets, he said.
He also sees more collaboration
with outside organizations in the
future for newsrooms.
For example, he thinks more
newsrooms will be reaching out to
universities to connect with students
who can supplement their coverage.
Mr. Wasbotten also sees the
move toward “personal news,”
where consumers use apps and
other programs to filter the types
SCOTT WOLSTEIN
S
cott Wolstein,
president and
CEO of Wolstein Group, is
excited about
starting construction in January of apartments, restaurants and entertainment spots in the second phase of
the Flats East Bank Neighborhood.
Mr. Wolstein said his team is
bullish about its apartment plan
and may start a second phase before it finishes leasing out the first
256 units.
Moreover, Mr. Wolstein feels
continued apartment development is what downtown Cleveland
most needs. He expects the trend
of converting old office buildings
to apartments to accelerate in
2014. He feels the only thing that
will keep downtown from absorbing a tremendous number of
apartments is if local governments
do not understand the situation
and do not seize the opportunity
that downtown has today.
The city needs more downtown
housing to support the addition of
conventional retail downtown. In
rust-belt cities such as Cleveland,
he believes vibrancy has to be driven by the people living in the region. That is a stronger driver for
the market, he said, than chasing
the benefits of a nice casino and a
nice convention center that may
be illusory.
JERRY ZEITLER
President
Die-Matic Corp.
■ PREDICTION:
A good year —
one that’s
getting better
already.
B
rooklyn
Heights-based Die-Matic
produces small, precisionstamped parts that go into
cars, home plumbing fixtures,
medical devices and other U.S.produced products. He was already predicting that sales would
be up in 2014 — and then December hit.
“Our sales jumped by 50%, in
one month,” Mr. Zeitler said.
Why? He has no idea, he said,
because the new orders came in
from a broad variety of industries
and customers. Some were existing customers, some were new,
some were local and some in other
parts of the U.S., Mr. Zeitler said.
“I was going to say it would be a
slightly better year, but the way it’s
starting off, I’m going to say it’s
going to be a much better year,”
Mr. Zeitler said.
Over the long term, however, Mr.
Zeitler said he thinks that the automotive sector will reach a sales
plateau, possibly sometime in 2014.
Pent-up demand eventually will be
met, he said, and cars continue to
be better-made and require replacement less frequently, he adds.
Reporting by Stan Bullard, Kevin
Kleps, Michelle Park Lazette, Timothy Magaw, Rachel Abbey McCafferty, Jay Miller, Dan Shingler and
Chuck Soder.
20140106-NEWS--18-NAT-CCI-CL_--
18
1/3/2014
3:24 PM
Page 1
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JANUARY 6 - 12, 2014
Fine: Penalties will push few entrepreneurs to get insured
continued from PAGE 1
Nationwide, 25% of entrepreneurs
are uninsured, whereas only 10% of
other workers have no health insurance, according to a survey conducted
from January 2011 through September 2012 as part of the GallupHealthways Well-Being Index.
However, many of those uninsured entrepreneurs — whether
they’re plumbers, painters, consultants or computer programmers —
won’t buy coverage because the
fines put in place as part of Obamacare are relatively low compared
to the cost of insurance premiums,
according to the experts who spoke
with Crain’s.
Many entrepreneurs who don’t
have insurance are young and single,
so they don’t think they need it. And
some are in the process of building a
company, so money is tight.
Mr. Geigel, for instance, is in his
early 30s and has no children. But he
and his two co-founders do need to
take care of their company, Kudoala.
The startup in Shaker Heights is
developing an online tool designed
to give people a fun, easy way to recognize the achievements of their
friends on Facebook and other social
media sites.
To Mr. Geigel, making sure the
company succeeds takes priority
over buying insurance.
“As an entrepreneur I’m focused
on more important things that
demand my immediate time and
attention,” he wrote in an email to
Crain’s.
As it happens, Mr. Geigel is one of
the few entrepreneurs affiliated with
the Shaker LaunchHouse business
incubator who is without health
insurance, according to LaunchHouse partner Todd Goldstein. He
estimates at least 90% of LaunchHouse entrepreneurs are insured.
The incubator encourages entrepreneurs to get coverage, Mr. Goldstein said. If an entrepreneur isn’t
healthy, their business will suffer,
too, he noted.
Older entrepreneurs and those
with pre-existing medical conditions
will be more likely than their
younger, healthier counterparts to
sign up for insurance through
Healthcare.gov, the federal health
insurance marketplace set up as part
of Obamacare, Mr. Goldstein said.
He suspects a lot of uninsured entrepreneurs probably will take a “catchme-if-you-can” mentality: They’ll
just wait and see if they end up with
a fine.
To buy, or not to buy?
If you haven’t bought insurance
by March 31, you could pay a onetime fine equal to 1% of your
income, or $95, whichever is greater.
Next year, if you still don’t have
insurance, you could pay a higher
fine equal to 2% of your income, or
$325. In 2016, the fine will go up to
2.5%, or $695.
In contrast, it costs an average of
$328 per month for an individual
to buy a mid-tier health plan
through Healthcare.gov and other
exchanges run by individual states,
according to a federal report published in September.
That rate is higher than what
many people with a mid-tier plan
will pay, however, because the federal
government is subsidizing plans for
buyers who make less than 400% of
the federal poverty level. Any individual who makes up to $45,960
would receive a subsidy, and the cap
goes up to $94,200 for a family of
four.
Scott Shane, an entrepreneurship
professor at Case Western Reserve
University, said the penalties and the
subsidies won’t be enough to convince most people — entrepreneurs
included — to pay for coverage.
“I think most of the people who
didn’t have insurance just won’t
have insurance,” Dr. Shane said.
Tom Campanella agreed that the
penalties won’t create a strong
incentive for entrepreneurs to buy
health insurance. However, over
time, most uninsured entrepreneurs
will realize they need coverage,
according to Mr. Campanella, associate professor and director of the
health care MBA degree at Baldwin
Wallace University.
Mr. Campanella has been there
himself, as he once worked as a consultant in the health care field while
raising children. So his company,
Campanella Consulting Inc., bought
coverage through the Council of
Smaller Enterprises, a small business
advocacy group that among other
things provides its members with
group buying power.
“I was married, and I had two
younger kids, so health care coverage was critical,” he said.
Confidence booster?
Gary Conlin, a health care adviser
for COSE, said the new subsidies and
penalties will be enough to push
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BakerHostetler
takes space
in Key Tower
The BakerHostetler law
firm signed a lease for
five floors at Key Tower in
downtown Cleveland, though it
won’t move into the building for
another two years.
The firm said it expects to
move its Cleveland attorneys
and office staff — a total of
about 300 employees — to
115,000 square feet at Key in
2016 when the firm will celebrate its 100th anniversary.
The prominent law firm now
has 14 offices across the country and nearly 900 attorneys.
BakerHostetler signed a 15year lease for floors 17 to 21 at
Key Tower, which is owned by
Columbia Property Trust of
Atlanta and managed by Jacobs
Real Estate Services of Westlake, which developed the tower.
Hewitt Shaw, managing partner
of the firm’s Cleveland office,
said the move will accommodate
its needs for greater flexibility
and functionality as it grows.
“We have been in our current
location for more than 30 years,”
Mr. Shaw said, “and with this
move we will have the opportunity
to design our space to better
meet the current and future
needs of our attorneys and
clients.” — Stan Bullard
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many uninsured entrepreneurs to
get coverage. Many entrepreneurs,
especially those who are in the
process of starting a company, will
qualify for at least some subsidies,
given how high the income caps are,
Mr. Conlin said.
The Affordable Care Act also could
lead to more entrepreneurship, Mr.
Conlin noted. The law says insurance companies can’t deny people
coverage for pre-existing medical
conditions. Thus, employees with
medical problems will feel confident
they can buy health insurance even
if they leave their current jobs.
“Maybe we’ll see more people
coming out and starting new businesses,” he said.
Mr. Conlin and others interviewed
for this story said entrepreneurs who
are in the market for health insurance will look at plans on Healthcare.gov.
Nicki Artese could become one of
them. For 12 years, the 47-year-old
has run Artese Communications out
of her home in University Heights.
She has had coverage through Medical Mutual of Ohio the whole time.
This past summer, however, her
monthly rate jumped to $388 from
$299. Ms. Artese said she believes it’s
still a good rate for the coverage she
receives, but she suspects it will go
up again this summer, maybe
because of all the expenses she has
incurred since undergoing pelvic
surgery about a year ago.
If her rate climbs again, Ms. Artese
will be checking out the plans available through Healthcare.gov.
“I would be foolish not to,” she
said.
■
ON THE WEB
(855) 707-1944
B-to-B Service Business
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Highly-automated.
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FLYNN
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Do you have any CNCs for sale?
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Crain’s Executive Recruiter
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www.flynnenvironmental.com
(serving No. Ohio for 33 years)
330-492-6294
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20140106-NEWS--19-NAT-CCI-CL_--
1/3/2014
3:03 PM
Page 1
JANUARY 6 - 12, 2014
CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
19
THEINSIDER
THEWEEK
DECEMBER 30 - JANUARY 5
The big story: Jimmy Haslam said the Cleveland Browns are trying to get it “right” after admitting the team was wrong to hire Rob
Chudzinski as its head coach a little more than
11 months ago. “We understand the importance
of continuity,” the Browns owner said in a Dec.
30 news conference the day after firing Mr.
Chudzinski. “But we also understand the importance of getting it right.” Mr. Chudzinski’s replacement will be the Browns’ fourth head
coach since 2010. “We deserve the skepticism,”
Mr. Haslam said of the criticism the team received in the wake of the firing. “Talk’s cheap,”
Mr. Haslam said. “We have to prove” we can find
the best candidate, he added.
Content is king: Kevin Spacey, star of the
Netflix series “House of Cards,” will deliver the
closing speech for Content Marketing World
2014, which returns to Cleveland Sept. 8 through
Sept. 11, the Content Marketing Institute announced. ”We look for well-known people who
are good storytellers,” said Joe Pulizzi, founder
of the Content Marketing Institute. “That’s what
these brands are trying to do: tell better stories.”
Mr. Spacey, who won Academy Awards for his
performances in “The Usual Suspects” and
“American Beauty,” is a fitting keynote speaker
for the four-day event, Mr. Pulizzi said, given
how “House of Cards” has “broken content distribution barriers in television.”
In transition: The Benesch law firm laid out
its plan for a change at the top in 12 months. Benesch said Ira Kaplan will continue as managing
partner through 2014, and will be succeeded in
the role by Gregg Eisenberg, who has been
named associate managing partner. Mr. Eisenberg said he is “very much looking forward to
working with Ira this year on our firm strategic
plan.”
Retiring type?: Cuyahoga County Council
president C. Ellen Connally announced she will
not seek re-election to the post. Ms. Connally, a
former Cleveland Municipal Court judge, said in
an emailed statement that, “I am fortunate to
have served many years as a public official. Now
I plan to retire to my books and lectures.” On
Dec. 27, The Plain Dealer reported that Ms. Connally had talked to Hamilton County Commissioner Todd Portune about being his running
mate as the Democratic Party’s candidate for
governor, challenging the presumed frontrunner, Cuyahoga County Executive Ed FitzGerald.
She did not mention that possibility in her statement.
Taking account: Gas Natural Inc., a Mentorbased company that has seen two subsidiaries
come under fire from the Public Utilities Commission of Ohio, appointed public accounting
firm MaloneBailey LLP as its outside auditor.
The appointment of MaloneBailey follows a recommendation of the audit committee of Gas
Natural’s board of directors. Roughly 25% of the
clients of the Houston-based accounting firm
are in the energy business.
This and that: Trustees of the Pro Football
Hall of Fame named a former commissioner of
the Arena Football League as the Canton institution’s president and executive director. David
Baker starts in the job today, Jan. 6. He succeeds
Stephen A. Perry, who has been the hall of
fame’s executive director since April 2006. Mr.
Baker will become the sixth president and executive director in the hall’s 50-year history. … Applied Industrial Technologies acquired Texas
Oilpatch Services Corp. of Houston. The Cleveland-based distributor of bearings and industrial parts said Texas Oilpatch is a distributor of
bearings, oil seals, power transmission products
and related replacement parts to the oilfield industry.
REPORTERS’ NOTEBOOK
BEHIND THE NEWS WITH CRAIN’S WRITERS
Slowed by snow? That’s
OK, most employers say
Valentine’s day was Jan. 1
this year at Hahn Loeser
One down, 11 to go in
this gift extravaganza
■ When the weather outside is frightful, as
it was last week, most Northeast Ohio employers (72%) allow exempt employees —
those not entitled to overtime pay for working more than 40 hours a week — to work at
home and the vast majority (84%) forgive
tardiness with no penalties, a recent survey
of 119 Northeast Ohio organizations reveals.
Conducted by ERC, a human resources
organization in Highland Heights, the Inclement & Adverse Weather Practices Survey also found most employers do not set a
particular length of time that is considered
an “acceptable” tardiness due to weather,
but instead make that determination on a
case-by-case basis.
According to the survey, just 42% of the
respondents have a formal inclement/adverse weather policy; instead, discretion of
top management or the CEO/president determines whether organizations stay open
at the majority of employers surveyed.
Fifty-five percent of respondents said
they communicate weather-related closures
or delays using a phone tree, and 29% said
they use email. Some employees, though,
shouldn’t expect to receive either one, as
20% of the respondents cited critical individuals or departments to which company
closures or delays do not apply.
Pride yourself on being a stalwart? Don’t
expect a perk from most employers, as only
13% of those responding said they offer a
“bonus” or “perk” to employees who “brave
the weather” and come in when most do
not. —Michelle Park Lazette
■ The largest office of Hahn Loeser & Parks
LLP has a new leader.
Nancy A. Valentine, who has been an attorney with the law firm for nearly a dozen
years and a partner since 2007, on
Jan. 1 became managing partner
of the Cleveland office,
which employs roughly 140
people, including 75 attorneys. She replaced Alan Kopit, who has been office managing partner since the
position was created in 2003
and remains a partner with
the firm.
Previously the chair of recruiting for
the firm, Ms. Valentine said she aims to expand its mentorship and team-building activities.
“I, of course, like practicing law, but I’ve
gotten more interested in the business side
of the firm,” said Ms. Valentine, 41, who now
is one of two women leading three offices
for Hahn Loeser, which has seven offices
total.
Lawrence E. Oscar, who is CEO and firmwide managing partner, said he recommended Ms. Valentine to the board because
she’s “dynamite” and “really creative.”
“What I think Nancy is going to do differently is really bring a younger perspective to
the position and really connect with and excite and energize and motivate our up-andcoming lawyers — not that Alan didn’t do
that,” Mr. Oscar said.
— Michelle Park Lazette
■ Greater Clevelanders have 11 more gifts
coming their way, but Bob Eckardt of the
Cleveland Foundation isn’t quite ready to
tear off the wrapping paper.
As part of its 100th birthday celebration, the foundation plans to unveil
a series of monthly gifts over the
coming year. Last week, the foundation announced its first gift,
saying it would pick up the tab for
a day of free ridership on the
Greater Cleveland Regional Transit Authority on Thursday, Jan. 16.
While he wouldn’t say what
Clevelanders could expect with
the next unveiling, Mr. Eckardt, the
foundation’s executive vice president, said
the remaining 11 gifts would be “similar in
spirit” to the free day on the RTA. He said
they would be gifts that can be appreciated
by “broad swaths of the community.”
Mr. Eckardt said the foundation wanted
to celebrate its centennial by doing more
than hosting an expensive dinner.
“If we did that, we would just be kind of
talking to the same people,” he said. “We’re
trying to do something that does more than
talking and demonstrates our reach of the
community.”
The foundation also launched a website —
www.clevelandfoundation.org/100 — outlining its history using a mix of videos, donor biographies and interactive timelines.
“It’ll be fun and crazy at times,” Mr.
Eckardt said about the foundation’s centennial. “Who knows what will pop up?”
— Timothy Magaw
Construction: Some contractors are skeptical
continued from PAGE 1
The Mohr survey team wants to catalog all
projects, not just those that might adopt community benefits agreements. Such agreements commit developers and contractors to
goals for hiring local residents, minorities
and/or women on projects and may include
pledges to support training programs designed to bring more women and minorities
into the construction field. They also can
specify that properties will meet green building standards and that builders will set aside
land for neighborhood parks.
“We’re doing a construction demand
study that benefits the industry and it just
happens to be that we hope to have community benefits that are included,” said
Brian Hall, executive director of the inclusion commission and CEO of Innogistics
LLC, a Cleveland-based logistics firm.
“We need people to participate in this
demand study,” Mr. Hall said.
Projections of construction activity based
on the information gathered initially will be
used to right-size apprenticeship and preapprenticeship programs at Cuyahoga
Community College, Max Hayes High
School in Cleveland and elsewhere, said
Dave Wondolowski, executive secretary of
the Cleveland Building and Construction
Trades Council. The goal is to create a
pipeline of qualified local trades people and
business owners that fills the demand for
new workers and to replace retiring workers.
In August 2012, Cleveland Mayor Frank
Jackson brought contractors, unions and
property owners together to press the construction community to adopt recommendations made in a GCP-commissioned study
that found “minorities are currently underrepresented in the local construction sector.”
That gathering led to an agreement unveiled last February and signed in September
by 10 “project owners” to set standards designed to encourage the use of local labor and
contracting firms — and in particular minority and female workers and firms — on building and infrastructure projects in the region.
The signers of that agreement, a memorandum of understanding to develop a community benefits agreement, are Case Western
Reserve University, Cleveland Clinic, Cleveland Metropolitan School District, Cuyahoga
Metropolitan Housing Authority, Dominion
East Ohio Gas, Geis Cos., the Medical Center
Co., MetroHealth System, Northeast Ohio Regional Sewer District and University Hospitals. All expect to have some level of construction underway in the next few years.
“It’s up to the particular project” to create a specific agreement, said Mary Beth
Levine, associate general counsel at University Hospitals. “There (would be) certain
goals and guidelines established with the
contractor and the labor force at the outset,
depending on the project.”
The Black Contractors Association of
Cleveland, the Construction Employers Association, the Cleveland Building and Construction Trades Council, Hard Hatted
Women, the Hispanic Roundtable and the
Urban League of Greater Cleveland also
have pledged support for the community
benefits concept.
Filling the trades pipeline
One complaint often raised by contractors who don’t meet hiring objectives is
that the community lacks qualified minorities and women. That’s why the Commission on Economic Inclusion is pushing for
the creation of training programs for minorities to enter the construction trades.
Down the road, the memorandum of understanding contemplates more monitoring of both the success of specific projects
in meeting agreed-upon goals and on a
continuing effort to develop and pass on
best practices for raising minority and female employment in the construction
trades.Mayor Jackson long has advocated
community benefits agreements on city
construction projects and on privately developed projects that receive financial support from the city. Besides goals for hiring
minorities and women, the city has pressed
developers and contractors to hire a specified percentage of city residents and to construction buildings that meet certain energy efficiency and waste recycling standards.
“I’m pleased with where we are,” said
Natoya Walker Minor, Cleveland’s chief of
public affairs. “With the (demand study) we
should know where the demand is, by
trades, so that those pre-apprenticeship
programs will be based on the trade demands that come out of the study.”
The need for buy-in
Still, various minority contractors remain
skeptical about the willingness of developers and large contractors to sustain a commitment to diversity in hiring. Some groups
representing those contractors and trades
people are taking a wait-and-see attitude.
“It (minority participation) is something
that is foreign to some people,” said John
Todd, president of John W. Todd & Associates and a member of the Black Contractors
Association of Cleveland. “Right now, you
need a document to push this. If everybody
buys into it, it’s great.”
Norm Edwards, president of the Clevelandbased American Center for Economic Equality, is even less convinced. Mr. Edwards said
he believes companies that are held out as minority subcontractors too often are “front
companies” created by existing contractors.
“All this stuff that they’re doing won’t
lead to” growing minority contractors, Mr.
Edwards said. “The white contractors don’t
want to share.”
Mr. Hall said the study team still is seeking to contact developers, architects, engineers, builders and others to participate in
the survey.
■
20140106-NEWS--20-NAT-CCI-CL_--
1/3/2014
11:19 AM
Page 1
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