Skip to main contentIn Portland's recent history, there have been few achievements as impressive as the renovation of Civic Stadium. There have been even fewer failures as stunning as the collapse of Portland Family Entertainment, the company responsible for the city-funded project.
PFE seemed to have it all: cash, connections and a can't-miss product. But it wasn't enough.
In a remarkably candid interview on Monday, Marshall Glickman and Mark Gardiner, the general partners of PFE, acknowledged that their company may be sold out from under them and that they will probably lose their jobs.
By turns philosophical, defiant and resigned, the two men chronicled the reasons behind PFE's collapse and gave what amounted to a eulogy. "Our partners have lost patience, and at least some of them have lost faith in us," Gardiner concedes.
As reported in WW last week, PFE's limited partners, who include some of Portland's savviest businessmen, have decided to pull the plug on Gardiner and Glickman, the pair who delivered a gem of a ballpark but also left the expectations of investors--and city officials--in tatters.
On Monday, Glickman and Gardiner revealed that as early as June--only the second month of after PGE Park opened--things were already so bad that the limited partners were looking for a way out. "That's when they first contemplated a sale," Glickman says.
The combination of interviews with Glickman and Gardiner, background conversations with several people close to PFE, and a review of internal company documents tells the story of the company's rapid demise. Ultimately, that failure stemmed from Glickman and Gardiner's inability to fulfill their lofty goals and, more damagingly, from the limited partners' belief that the pair did not provide financial reports promptly. That belief, Gardiner concedes, "was a considerable source of frustration and friction with the limited partners."
The speed with which PFE self-destructed is breathtaking, considering the staggering array of assets at the company's disposal only five months ago: $33 million pumped into the renovation of the stadium by the City of Portland; $23.4 million in long-term financing from TIAA-CREF, one of the nation's largest pension funds; and $6 million from what appeared to be a dream team of 14 limited partners ranging from pro golfer Peter Jacobsen and car king Scott Thomason to lumber baron Peter Stott and former Fred Meyer CEO Bob Miller.
PFE also enjoyed an open door to the mayor's office and a press corps hungry for a local professional sports story that didn't involve the Blazers. In short, the company looked bulletproof, not least because of the considerable marketing and financial skills that Glickman and Gardiner brought to the game.
The two men's downfall was certainly unexpected. "What's surprising is that they seemed to be two of the good guys in the field," says Len Bergstein of Northwest Strategies, who was part of a committee that three years ago advised Mayor Vera Katz to go forward with the renovation of Civic Stadium, long a source of concern for the city. "I said to people if anybody's going to figure out [how to make Civic Stadium profitable], it would be those two guys."
Although Gardiner and Glickman have been friends for a decade, it wasn't until 1998 that they went into business together. On July 7 of that year, they registered a new company, Sociedad LLC. Their goals: to bring AAA--the highest level of minor-league baseball--to the metro area and to build a multi-faceted entertainment company around Civic Stadium. Although they shared a common vision, in personality terms Glickman and Gardiner were about as similar as Bill Clinton and Al Gore.
Glickman, now 42, brought extensive marketing and promotional experience to the venture. From 1988 to 1995 he worked for the Trail Blazers, ultimately as president of the team his father, Harry, had founded. Sometimes profane, usually funny and always brash, Glickman is both a party animal and a tireless worker who has lots of friends--and nearly as many enemies.
Glickman's dark side got him bounced from the Blazers, but his energy and enthusiasm attracted investments in PFE from some of the city's most sophisticated businessmen. He also enjoyed the backing of Mayor Katz, a longtime pal of his father.
Gardiner, a reserved numbers man who is as colorless as his partner is flamboyant, brought a stellar résumé to the venture. Once the city's top finance official, Gardiner, 49, established himself as a leading advisor on ballpark and arena finance after leaving the City of Portland in 1985, advising on the financing of more than 30 such facilities across the U.S. Most recently, he helped put together the funding for the San Francisco Giants' $320 million Pacific Bell Park. In 1999, Gov. John Kitzhaber drafted him to serve on the five-member Oregon Investment Council, which oversees the state's nearly $50 billion in public funds.
Portland's odd couple, the two nonetheless looked like a formidable team: The wolfish, goateed Glickman would glad-hand the sports crowd and fill the seats while Gardiner, a walking, talking spreadsheet, would watch the books and keep PFE's financial partners happy.
Early in 1998, when the pair started making their move toward baseball, they explored building ballparks in Hillsboro and Vancouver, but their goal was always control of Civic Stadium.
At the same time, Katz was wrestling with what to do with the decaying, city-owned relic, then run on a shoestring by the Metropolitan Exposition-Recreation Commission.
In September 1998, the city issued a request for proposals to test private-sector interest in running the facility. Glickman and Gardiner formed a group, dubbed Portland Family Entertainment, to put in a bid. The only other respondent, the CS Group, was led by Bob Scanlan, the managing director of local real-estate investment firm SKB.
Team Glickman triumphed, a decision that still rankles Scanlan. "I did not feel that it was an arm's-length decision," Scanlan says. "I think that there was a hidden agenda on the part of the city and that there must have been other reasons than face value that PFE was selected." A city commissioner echoes Scanlan's concerns about the process. "My understanding is that Marshall came to the mayor with a proposal, and that prompted the RFP," says Commissioner Erik Sten. "I think that we made a mistake in not having a longer process. It leaves unanswered questions as to whether or not there were other deals available."
After winning the initial nod to run Civic Stadium, Glickman established PFE's offices at the headquarters of Andy Wiederhorn, just a long fly ball from the stadium.
Wiederhorn, the youthful financier who briefly was one of Portland's wealthiest men, with a paper fortune in excess of $100 million, was PFE's primary financial backer. "Glickman used to show up and hang out with Andy," says a former Wiederhorn associate. "The plan was 'Let's buy up all this land [around Civic Stadium], and when the stadium works out we'll make a lot of money."
But in January 1999, the same month the City Council initially approved PFE's proposal, Wiederhorn, his Wilshire Financial Services Group in tatters, withdrew financial support from PFE.
Scrambling to find new backers, Glickman and Gardiner also faced a series of city-imposed deadlines in order to keep the stadium deal intact. They had to start a new A-League soccer team (the Timbers), purchase Portland's Class A baseball team (the Rockies) and find them a new home (Pasco, Wash.), and buy a AAA baseball team (the Beavers) to occupy the revamped stadium.
Then, before any of that was done, in August 1999 came a bombshell: The Oregonian reported that Mayor Katz had agreed to a secrecy agreement forbidding council members to see PFE's financial projections before approving the company's final contract with the city. "The real history of this deal began with the secrecy agreement," says Sten. "I think it started out poorly."
There was more bad news to come. In October 1999, Enron, the Texas energy giant that was PFE's other potential financial backer, bailed out. (PGE, an Enron subsidiary, ultimately signed a 10-year, $710,000-per-year naming rights deal for the stadium, but not until July 2000.)
Unfazed by the loss of financial support, Glickman secured other investors, including Stott, who was anxious to upgrade the football home of his alma mater, Portland State University, and Thomason, who was awash in cash after selling a majority stake in his dealerships. The two became the largest local investors.
Other Portlanders who ponied up cash included John von Schlegell of Endeavour Capital, Hank Ashforth of Ashforth-Pacific Properties and Jay Zidell of Zidell Marine.
While PFE's limited partners cited the importance of preserving Civic Stadium as a community asset, it didn't hurt that Glickman was offering eye-popping returns. PFE's projections showed returns as high as 30 percent before taxes.
Tempted by the opportunity to share in such a bonanza, city officials were similarly starry-eyed. Tim Grewe, the city's director of finance, predicted that through rent and profit-sharing, the city would realize $26 million in profits over the life of the 20-year deal. "The bottom line: The deal represents a good deal for the public," Grewe wrote in an August 1999 op-ed piece in The Oregonian defending the city's partnership with PFE.
But not everyone bought PFE's numbers. Although Scanlan was far from objective after losing out on the opportunity to run Civic Stadium, some potential investors asked him to review PFE's projections. Scanlan wasn't convinced. "We felt that their revenue numbers were grossly optimistic and in particular that going from A to AAA baseball wouldn't make that much difference," he recalls.
But there was no stopping PFE.
Whatever else preceded the renovation of Civic Stadium, the result of the marriage between PFE, its limited partners and the city was extraordinary. Eight months and 28 days after breaking ground, the partnership gave birth to the retro-chic PGE Park, to universal applause.
A packed house turned out for the Beavers' home opener. Instead of the cardboard pizza, Oscar Mayers and Bud served up at some parks, PFE offered Pizzicato, tube steaks from Good Dog/Bad Dog and Widmer Hefeweizen. Fans loved touches such as a hand-operated scoreboard, a return of the diving Jantzen girl and the wrought-iron fence that allowed passersby to view the action. "We did what we set out to do," Glickman says. "And that was to preserve the stadium."
Opening night was a shining moment, but in retrospect, the seeds of PFE's self-destruction were germinating even then. Vendors ran out of hot dogs, a fact that was well-publicized and forgiven as a first-day misstep but foreshadowed PFE's inability to handle the nuts and bolts of running a baseball team.
For instance, PFE failed to secure its inventory at the ballpark. "T-shirts, apparel, hats, novelties, sodas, coolers full of food, there was just a tremendous amount of material lying out in the concourse for the first couple of weeks," says a former employee. "A lot of it got stolen simply because of the inability to run the stadium."
Glickman concedes that a number of glitches cost PFE time and money, blaming them on the rush to get the stadium finished.
But PFE faced larger problems. To start with, overhead was greater than anticipated. PFE hired 10 more full-time employees than had been budgeted for, at a cost of an extra $1 million, Gardiner says. The payroll also included Glickman's father, Harry, a $75,000 a year part-timer whose chief pursuit, according to former employees, was sitting in his office playing computer solitaire. Asked recently what the senior Glickman brought to PFE, Marshall grinned and said, "Wisdom."
Unfortunately for PFE, that wisdom didn't help sales. Revenues from sponsorships and luxury-box sales fell far short of expectations. "Projections weren't achieved," Glickman admits. "We fell $2 million short of our plan."
By the end of May, PFE's first full month of operating the stadium, Gardiner says that he realized the company needed more capital.
He and Glickman immediately tapped the limited partners, at least some of whom had assumed that their original investments, which totaled $6 million, would be their last. On May 31, for example, records show that Thomason deposited an additional $166,666 in PFE's account. In all, the limited partners would eventually contribute an additional $3 million.
By early June, some of the limited partners were getting nervous. Miller, the former Fred Meyer CEO who had left Portland to take the top job at Rite Aid Drugs, called on a former colleague, Mike Don, who had previously run Fred Meyer Jewelers, for help.
Miller wanted an independent assessment of PFE's books. It
wasn't just that PFE's numbers were bad; in some cases there were no numbers at all. "There was a delay in getting financial statements out," Don told WW. "The limited partners were looking for somebody to give an outside look at how things were going."
Don briefly reviewed PFE's performance and recommended that the limited partners bring in David Goodknight, a CPA from Lake Oswego who specializes in helping troubled companies. Goodknight quickly became a regular fixture at PFE, debriefing staff and suggesting immediate fixes.
Gardiner explains that PFE's accounting system was overwhelmed by the demands of opening the stadium and running three teams. He acknowledges that PFE's failure to provide monthly account statements to limited partners was a mistake. "In retrospect, I would have devoted more resources to that," he says.
Even with investors digging into their wallets, Glickman and Gardiner needed additional cash. On June 21, company records show, PGE wired $1.38 million to the company. That sum was a discounted advance payment of the two remaining years of the naming-rights deal. By taking the payments early, PFE solved some short-term cash flow problems at the cost of using up guaranteed future income.
By midsummer, the limited partners took an increasingly active role, holding meetings in Stott's offices in the Bank of America Building. For one meeting, Miller jetted into town on a Rite Aid company plane to discuss strategy; lengthy conference calls became regular events.
At one point, the partners suggested that Glickman and Gardiner take a step toward lowering expenses by cutting their own salaries. Glickman, whose salary was reportedly $260,000, was particularly resistant.
Glickman's cockiness was no surprise to the investors; his partner's behavior, however, baffled some of them. Gardiner was supposed to keep Glickman's spending in check and ensure fiscal discipline. And unlike Glickman, he had equity in the company. But the limited partners were astounded by his inability to maintain even rudimentary controls. "Here was a guy who just didn't seem to get it," says one insider.
Gardiner doesn't deny that there were problems, but he argues that investors underestimated the difficulty of running PFE. "Some of the limited partners didn't have a clue how complex this thing was," he now says.
In July, Glickman and Gardiner went to the limited partners with a plan that seemed to solve PFE's financial woes. The plan was to cut expenses and--more important--sell the rights to run concessions at the stadium for several million dollars. "We took a plan that outlined a path to profitability," Gardiner says.
The partners rejected the plan, claiming that selling the concessions business might make it more difficult to sell the entire enterprise. In reality, both Gardiner and Glickman now concede, the decision underlined the limited partners' lack of confidence in the pair. "My sense is that they didn't have faith in [our plan]," says Gardiner.
In early August, Portland crowds were enjoying Thirsty Thursdays at PGE Park, and Glickman was presenting City Hall with a rosy "midterm report card." Behind the scenes, all that was left for Glickman and Gardiner to do was figure out an endgame strategy.
On Aug. 8, Glickman and Gardiner sent a nine-page memo to the limited partners, portions of which were obtained by WW.
"We understand the LP's frustration with getting well behind with financial reporting," they wrote, going on to outline a "Cooperation Agreement" that would ensure a smooth sale of PFE. The proposed agreement included 10 conditions, such as severance, equitable sharing of the proceeds of the sale of part or all of PFE, and a "mutual and cooperative public-relations strategy." In essence, the memo was a response to the limited partners' request for a divorce--and their unwillingness to carry PFE any longer.
All that's left now is the sale of part or all of PFE, which is unlikely to impact sports fans--there will still be pro baseball and soccer here next season. The limited partners are talking to at least three potential buyers, all of whom are currently involved in sports and entertainment businesses. They expect to announce a deal involving a sale or change of management by Oct. 30. And while no prices have been revealed, it's hard to imagine how, in today's economy, they can get out of their investments without a loss.
The City of Portland is also hurting, having budgeted at least $800,000 in revenue from PFE that's not going to arrive. "Compare [PFE's performance] against the projections, and we might have gotten sold a bill of goods," says Sten.
And although Grewe assures WW that the city's position is secure, Glickman and Gardiner's Aug. 8 memo suggested that the limited partners work with them to "effectively negotiate modifications to our agreements with the city."
Finally, there are Glickman and Gardiner, who--despite having delivered a ballpark that will be a civic asset for years to come--will probably emerge from PFE with their reputations tarnished. They appear to have accepted loss of control as an inevitability. Asked on Monday how he was feeling about PFE's future and his own prospects, the normally upbeat Glickman just shrugged: "Not great."
Gardiner hopes that people will focus on the stadium and not dwell on what went wrong. "We're pleased with what we've accomplished," he says. "It's business; it's not life."
Marshall Glickman and Mark Gardiner first worked together on putting together financing for the Rose Garden. Glickman was the Blazers' president; Gardiner worked in an advisory role.
PFE will pay the city rent of $908,000 and a capital-improvement fee of $186,000 this year. The numbers escalate each year. The city paid $33 million of PGE Park's $38.5 renovation costs.
Gardiner is married to state Rep. Mary Nolan, a Portland Democrat who represents the 11th District.
PFE had a tough year in Pasco, Wash., where the company moved the former Class A Portland Rockies. "Basically they came in with a very overpriced product," says Jim Riley, a reporter for the
. The team finished last in its league in attendance.
Complimentary tickets consistently represented more than 20 percent of reported attendance at PGE Park this season (see "Ghost Fans in the Stadium,"
, July 18, 2001). Glickman says most of the tickets were given to sponsors.
Although the Portland Beavers (the San Diego Padres AAA affiliate) finished the season below .500, the Portland Timbers finished 13-10-3 and made the playoffs.
WWeek 2015