Crain's Cleveland Business

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VOL. 33, NO. 35

Business, civic bosses brainstorm Future Fund works with executives to create regional growth plan By JAY MILLER jmiller@crain.com

A mega-merger is in the early stage of talks in Northeast Ohio. However, the combination doesn’t involve two corporate giants. Rather, it is a merger of ideas. This merger would align Northeast Ohio’s business and philanthropic communities in pursuit of a unified

strategy to promote the region’s economy. “It’s a good time to increase collaboration and work together,” said William Christopher, a retired Alcoa executive and chairman of the Greater Cleveland Partnership, Cleveland’s chamber of commerce group. “It’s a great time to make sure we are putting our resources in the right places.”

Mr. Christopher is leading a task force of business leaders that is putting flesh on a skeleton of economic priorities developed by the Fund for Our Economic Future, a foundation-supported group that works to advance Northeast Ohio’s economic competitiveness. Those priorities would serve as a basis for a regional economic strategy under JobsOhio, the nonprofit entity that

Banks ease up on terms to compete for business

RETIREMENT, TAKE TWO Former United Way leader lends services to long list of organizations; golf takes a backseat By MICHELLE PARK mpark@crain.com

T

rue to his “Energizer Bunny” nickname, Mike Benz does keep going and going and going. Mr. Benz, whose United Way colleagues gave him the nickname, retired June 1 from his 17-year career leading the United Way of Greater Cleveland. After a month of “not doing anything,” Mr. Benz said, he began working as an executive in residence in development for Cuyahoga Community College on July 1. But the college wasn’t the only organization to reach out when news spread that Mr. Benz — who, in his career, led the local United Way, The Rock and Roll Hall of Fame and Museum, and the Council of Smaller Enterprises — would be leaving full-time work behind him. See BENZ Page 20

MIKE BENZ NOW .... AND THEN

MCKINLEY WILEY

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Mike Benz now is an executive in residence at Cuyahoga Community College and an adviser to Cuini & Panichi, among other local companies and organizations.

Mr. Benz stepped down from his post atop the United Way of Greater Cleveland after his successor, Bill Kitson, was named. But he’ll be remembered for better engaging the organization with Cleveland’s business community. “It’s a very stable organization now,” Richard Pogue, a senior adviser at Jones Day, told Crain’s in March. “It’s got good staff people and good morale. He’s strengthened it and made it more steady.”

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NEWSPAPER

74470 83781 0

The convenience store chain is on the verge of buying 91 convenience stores operated by EZ Energy USA Inc. in Ohio and Pennsylvania. PAGE 3 PLUS: ■ The Cleveland Indians soon will unveil a new method of offering benefits to renewing customers. PAGE 13

See CIVIC Page 8

By MICHELLE PARK mpark@crain.com

See LENDING Page 14

Numbers game in Ohio, Pa. for 7-Eleven

oversees the state’s economic development efforts. Mr. Christopher said he hopes that by the end of this year the task force will have a draft document that can be used in discussions with political and business leaders throughout the region as they look to figure out what roles the various entities can play in building the regional economy. “I’m hoping it will encourage a dialogue,” said Mr. Christopher, whose task force’s work is supported

Fewer restrictions could expose them to more risk

With competition for commercial borrowers intensifying, some lenders are beginning to take down the barriers they raised during the recession — and again are exposing themselves to more risk — by reducing the number of terms and covenants in their loans. “Two years ago, some of the banks couldn’t put enough covenants in a deal,” said Dell R. Duncan, president and CEO of Ohio Commerce Bank in Beachwood. “Today, it’s not so important. “I could have told you this was going to happen,” Mr. Duncan said. “The easiest thing to do is call on a competitor’s customer and say, ‘I’ll cut this, or I won’t require that collateral.’” Geauga Savings Bank is “definitely encountering loose terms and pricing by competitors,” said Allen Lencioni Sr., its president and CEO. He’s observing lenders charge “very low rates,” require only partial or no personal guarantees on commercial real estate and business loans, and demand less financial information on the front end, and throughout, a deal.

INSIDE

World

Trade d C Conference Thursday, Sept. 27

FILE PHOTO/JASON MILLER

Mr. Benz led the United Way of Greater Cleveland for 17 years.

Euro Zone Instability:

What’s next for your business?

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September 27 t Executive Caterers at Landerhaven Mayfield Heights 12:00 p.m. — 6:30 p.m.

World

PRESENTED BY

Trade Conference

If Greece Leaves the Euro Zone, What’s Next for Your Business?

Turmoil in the euro zone is already forcing businesses to adjust their global strategies. What would be the effect if Greece is forced to leave the euro? This is just one of the topics that will be covered at NEO World, a half-day conference exploring the opportunities and obstacles facing our region’s businesses in the global economy.

EURO ZONE SESSION PANELISTS .PEFSBUPS "OESFX 4NBMU[ Director, Corporate Risk Solutions & Events, RBS Citizens Mr. Smaltz’s background includes foreign exchange and commercial banking. He leads event-driven transactions, cross-currency swaps and designs financial risk-minimizing strategies for client companies.

1BOFMJTUT .BSL #BSOFT 1BSUOFS High-Growth Markets, KPMG Mr. Barnes is head of KPMG’s U.S. High Growth Markets practice and is responsible for client

engagements across Europe. He is in charge of enhancing global awareness among KPMG’s client service teams and helps Fortune 1000 enterprises understand opportunities in rapidly developing markets.

#SFUU #BSSBHBUF Partner & Global Co-Leader of Banking & Finance Practice, Jones Day

Tom Collin 1BSUOFS (SPVQ -FBEFS "OUJUSVTU $PNQFUJUJPO %JTUSJCVUJPO 1SBDUJDF Thompson Hine Mr. Collin is head of the firm’s Antitrust, Competition & Distribution practice. He advises on antitrust and distribution matters, including compliance with the Foreign Corrupt Practices Act in international distribution networks.

Mr. Barragate is a co-leader of the firm’s Banking & Finance Practice. He represents financial institutions and other entities in all aspects of transactional and commercial financing-related matters. Included are the purchase and sale of financial assets, restructuring and bankruptcies.

OTHER CONFERENCE TRACK SESSIONS t (MPCBM 'JOBODF )PX XJMM ZPVS CVTJOFTT CF BòFDUFE t #PPTUJOH 4BMFT 'SFF TVQQPSU TFSWJDFT GPS FYQPSUFST

Luncheon Keynote: Brian Kim

Foreign Exchange Strategist, RBS Securities, who is responsible for analysis, forecasts and trade recommendations for the G10 countries

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REGISTER & SPONSORSHIP / ADVERTISING INQUIRIES www.CrainsCleveland.com/NEOworldtix Nicole Mastrangelo at 216-771-5158 or nmastrangelo@crain.com IN PARTNERSHIP WITH

Concluding Keynote: Amy Liu

Co-Director and Senior Fellow, Brookings Institution, leading a new effort to help regions develop globally oriented economic strategies

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Next leader at Weltman Weinberg to push growth

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

7-Eleven out to buy 91 stores from Israeli firm

INSIGHT

Namesake partner’s son prepares for expansion

Purchase of ampm, EasyTrip stores to triple chain’s footprint in Ohio

By MICHELLE PARK mpark@crain.com

Next year will be a year of change for Weltman, Weinberg & Reis Co. LPA. Not only will the Cleveland-based creditors’ rights law firm have completed a multimillion-dollar information systems upgrade that should help Weltman Weinberg expand geographically, but it also will have a new leader for the first time in 17 years. Scott Weltman, who has worked for the firm for 20 years and is the son of one of its namesake partners, will become managing shareholder, or partner, of the 10-office firm on Jan. 1.

By STAN BULLARD sbullard@crain.com PHOTOS PROVIDED

ABOVE: ABSMaterials employees outfit one of the company’s chemically enhanced ditches, which ABS hopes will intrigue sewer districts facing stringent stormwater runoff requirements. BELOW: A cross-section of the ditch’s components.

RAIN, RAIN FLOW AWAY Chemical maker builds ditches designed to purify stormwater, spare sewer systems By CHUCK SODER csoder@crain.com

Weltman

Weinberg

Mr. Weltman, 48, was elected to a four-year term last December by the law firm’s 21 partners and has spent this year learning the ropes as shareholder-elect. He will replace Alan Weinberg, who has been the firm’s leader since 1995, and is assuming a role his father, Bob Weltman, held from about 1975 to 1995. Mr. Weinberg said he decided not to run for another term because he would be nearly 67 by the end of the four years. On Jan. 1, he’ll assume a new role in which he’ll focus on young attorney development, compliance matters and marketing for the firm, which represents client creditors — including banks, credit unions and commercial suppliers — in the collection of money and the enforcement of security interests. “I’m looking forward to stepping back and watching someone else carry the ball,” Mr. Weinberg said. “I figure it’s (younger partners’) time to shine and take on responsibility.

3

B

utterflies and hummingbirds love the rain gardens built by ABSMaterials Inc. of

Wooster. Now the company is working to convince sewer districts and property owners that they, too, could love the chemically enhanced ditches, which are designed to reduce the amount of water and toxins that flow into storm drains. ABSMaterials has built five rain gardens so far and has contracts to do four more, but those could be the first of many: The U.S. Environmental Protection Agency is forcing sewer districts across the country to reduce the amount of

water that flows into storm drains. In some sewer systems, heavy rains can cause sewage to overflow into nearby bodies of water. Thus, sewer districts, including the one that serves most of Greater Cleveland, are spending more money these days on “green infrastructure,” which includes See RAIN Page 21

See GROWTH Page 20

Known internationally for its “Big Gulp” soda offering, 7-Eleven Inc. is on the verge of taking a big swig of the gasoline and convenience store market in northern Ohio. 7-Eleven, which operates, franchises and licenses more than 47,000 stores worldwide, has a paltry 23 in Ohio, according to its website. However, it’s lining up a deal to buy the 91 stores that EZ Energy USA Inc. of Seven Hills, part of Israel-based EZ Energy Ltd., operates in Ohio and Pennsylvania. EZ’s Franchise USA LLC affiliate already has entered IN THE into a purchase and sale NEIGHBORHOOD agreement with privately held 7-Eleven, according to 7-Eleven Inc. currently a copy of a document ob- operates seven stores tained by Crain’s Cleveland in Northeast Ohio, but Business that EZ has circulated stands to gain even among its vendors. More- more with a planned over, the Federal Trade purchase of 91 EZ Commission issued an early Energy USA stores in antitrust clearance for the Ohio and western transaction Aug. 27, according Pennsylvania. The local to the federal agency’s web- 7-Eleven locations: site, www.ftc.gov. Ironically, EZ Energy, ■ 16165 Hilliard Rd., which is traded on the Tel Lakewood Aviv stock exchange, has ■ 4075 Rocky River Dr., disclosed most of the savory Cleveland details of the transaction ■ 11690 Snow Rd., Parma except for one — the would- ■ 1415 S Belvoir Blvd., South Euclid be buyer’s identity. EZ Energy has said it plans ■ 16303 Libby Rd., Maple to sell all its assets to what it Heights th described as a “foreign gas ■ 870 East 185 St., Cleveland station operator” for $64 million in a deal that would ■ 3054 Leavitt Rd., Lorain repay its lenders and bondholders and would net a $10 million profit. The parent company of Dallas-based 7-Eleven Inc. is Seven-Eleven Japan. Earlier this year, EZ Energy had defaulted on the third of five premium payments to its bondholders but arranged to restructure its bond amortization schedule when the buyer surfaced, according to reports it issued publicly. It said the deal may close as soon as Sept. 15. Gregg Budoi, EZ Energy USA president and CEO, declined to comment to Crain’s on whether 7-Eleven is the chain’s prospective buyer. However, Mr. Budoi said the sale may close as late as Oct. 15 rather than by the publicized Sept. 15 date. See STORES Page 21

THE WEEK IN QUOTES “(Lenders) have been through some tough times. ... As a result, they can say, ‘Well, wait, we didn’t really need four covenants. We can get by with one.’”

“The good news is our growth and our size have really forced us to evaluate all options for the sake of maintaining our service standards for our growing client base.”

— Tom Cicarella, head of the commercial finance practice group at Calfee, Halter & Griswold LLP. Page One

— Walter K. Chapman, CEO, Chapman & Chapman Inc. Page 9

REGULAR FEATURES

“Regardless of your party affiliation, it’s just history, plain and simple. … Who would not want to be a part of that?” — Stephanie Forthofer, president of Smitty’s Place Inc., where President Barack Obama visited. Page 15

“We either knew how to sell, or there was something to what we were doing.” — Brian Verne, co-founder, CnXn. Page 17

Best of the Blogs ......23 Big Issue ....................4 Classified .................22 Editorial .....................4 From the Publisher .....4 Going Places ............10 List: Largest Cuyahoga County employers ...19 Reporters’ Notebook...23 Small Business............15 Tax Liens ..................12 The Week .................23 What’s New ...............23

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CRAIN’S CLEVELAND BUSINESS

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SEPTEMBER 10 - 16, 2012

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

Fish tale

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re we carping about Asian carp again? Yep, and we won’t quit until a physical barrier is created to separate the Great Lakes from the Mississippi River water basin, where the voracious carp lurk. We’re renewing our call for the barrier in light of a report late last month that the environmental DNA of silver, or Asian, carp, was found in water samples collected from Sandusky Bay and the Sandusky River. The discovery of the eDNA, as it is called, by the Ohio Division of Wildlife does not mean the carp already reside in the waters of Lake Erie. It could come from the discharged ballast water of freighters, or it may have been transported by fish-eating birds. However, the positive eDNA samples are alarming enough to put state wildlife officials on heightened alert as they continue to search for the presence of live carp in the waters of Lake Erie. It is extremely disappointing that the Obama administration hasn’t acted decisively to prevent the harm a species that can grow to 100 pounds could inflict on the native inhabitants of the Great Lakes. Repeated warnings that the danger is real and that the clock is ticking on preventing an environmental catastrophe seem to make no difference. Just a month before the eDNA findings near Sandusky, the U.S. and Canadian governments issued an unsettling report about the ecological risks posed by the carp. The report indicated it’s highly likely the Asian carp will enter the Great Lakes, and that the ecological consequences of their presence would be significant, bordering on extreme. According to one computer model cited in the report, as few as 10 mated pairs of the carp would have a very high probability of establishing a population in any particular lake within 20 years. The report identified the Chicago Area Waterway System — the artificial connection between the Mississippi River basin and Lake Michigan — as the carp’s most likely point of direct entry into the Great Lakes basin. Shipping interests in President Barack Obama’s hometown of Chicago don’t want that connection eliminated, and it remains open — a sign that the president is a big environmental defender as long as that role doesn’t conflict with the interests of key constituents. Yes, we know the president in July signed the Stop Invasive Species Act, which Ohio’s senior senator, Sherrod Brown, co-sponsored. But that bill only requires the Army Corps of Engineers to come up with a plan by the end of next year to stop the carp. That’s not good enough at this point. The U.S.-Canadian report said to prevent or minimize the consequences of an Asian carp invasion of the Great Lakes, “it is important to continue to focus efforts on reducing the probability of introduction of these species at either the arrival, survival, establishment or spread stage.” This report and others before it have made clear that the No. 1 way by far to reduce the carp’s chances for entering the lakes — if they’re not swimming around in one or more of them already — is to separate Lake Michigan from the Mississippi River basin. The president’s failure to mandate that change should not be forgotten by those who care about our Great Lakes.

FROM THE PUBLISHER

Modell: The good, the bad, the ugly

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a chance to chat with Art and be enterast Thursday, I had intended to tained by his wit, intelligence and charm. offer some thoughts about the To this day, I have met few people with two national political party conthat combination of skills. ventions. But then I read about But then he took on all that debt as he Art Modell’s death. brought in high-priced and ineffective Art’s passing brings a mix of emotions free agents while trying to get his team for me, because when he was the Browns’ into the Super Bowl. owner, our newspaper and the team had Art was in a cash crunch, so a good partnership in a weekly he grabbed the brass ring from luncheon series. Some of you BRIAN Baltimore and that state’s govveteran readers may remember TUCKER ernor and moved this town’s the Crain’s Quarterback Club most beloved franchise. It was luncheons at Executive Caterers the ultimate sucker punch, and at Landerhaven. it hit this newspaper hard. Those luncheons regularly Over that November weekend drew 200 or so business folks, when the news began leaking and the series finale usually was out, we already had printed a attended by 400 to 600 folks. It Browns section that was to put the players in touch with appear in the following Monlocal business executives and day’s edition. The timing was especially was a great first event-oriented branding galling because I had met the preceding effort for us. week with Art’s son, David Modell — a Those were glorious days for the meeting I had suggested because ad Browns; it was the 1980s, when the team sales were weak for the section and I was more than once made the conference considering pulling it from publication. championships and was a step from the David suggested I stay with it, and we Super Bowl. While we entertained clients could review the project later. As he at training camp in Berea, I regularly had

spoke, he knew the team was leaving. What was far worse, though, was the way that Art tried to rewrite history once he got to Baltimore. Even The Baltimore Sun, in its well-crafted obituary last week, got it wrong by simply reprinting the Modell line — namely, that Cleveland, after building new homes for the Indians and Cavaliers, couldn’t afford a third construction project. Well, I was in the room with a large group of civic and business leaders when Art spoke of not wanting a new stadium. What he wanted was an extension of the sin tax and the ability to make major improvements to Municipal Stadium. The community rallied to do just that, and then he made what Clevelanders always will say was the deal with the devil. He took the money and moved the team. It didn’t solve his financial problems, and he was later forced to sell the team. But he got his Super Bowl title. It’s time to move on, and part of that should be remembering Art Modell more for the good he did than for the way in which he made the biggest business deal of his life. ■

THE BIG ISSUE If your local daily newspaper cut back print distribution to three or four days a week, would you miss the newspaper, and would you feel less informed?

JAY VOLK

LINCOLN GRAUBARD

CHRIS SIEBERT

PARIS BARNETT

Bath Township

Orange

Lakewood

Cleveland

Yes, I would. I still get the actual physical paper and I would miss the morning routine of getting the paper and reading about what’s going on in Cleveland and the world.

No, I wouldn’t miss it. Nowadays most of the news I receive is on the Internet. I haven’t received a daily newspaper in years. I get The Plain Dealer on Sunday.

I follow a lot of news media on my phone, but a newspaper is great. ... It provides jobs in the community. Circulation needs to go on because many people don’t have (smart) phones.

I’m not sure. These days a newspaper is a day late, so now you can do everything on the Internet. But there are other things in the newspaper that you can’t get on the Internet.

➤➤ Watch more people weigh in by visiting the Multimedia section at www.CrainsCleveland.com.

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

With new buildings, ID, BW’s focus now on people By TIMOTHY MAGAW tmagaw@crain.com

The private college in Berea that Robert Helmer took over this summer is far different than the one his predecessor, Richard Durst, inherited in 2006. Perhaps most obvious, Baldwin Wallace University dropped the hyphen from its name and transitioned from being called a college to a university. Also, the campus is strewn with new and upgraded buildings, which include a $3 million “welcome center” named for Mr. Durst and his wife, Karen, as well as a $20 million renovation of the university’s conservatory building. In the coming months, Dr.

Helmer will be evaluating how to make his own mark on the university with a new strategic plan. Asked about his ideas, Dr. Helmer wasn’t focused on updating the campus’s infrastructure, but rather on broadening the school’s recruit- Helmer ment efforts, launching new academic programs and investing in the faculty. “Higher education is about the people — not the facilities,” said Dr. Helmer, who joined the university in July after serving since 2003 as president of Lourdes College in Sylvania, Ohio, near Toledo. Baldwin Wallace traditionally has recruited its students from

Northeast Ohio, but in recent years has extended its efforts to central Ohio and western portions of New York and Pennsylvania. Given Northeast Ohio’s population loss, Dr. Helmer said the school plans to boost recruitment in Michigan, Illinois and Indiana. Baldwin Wallace’s enrollment hovers between 4,100 and 4,200 students, which is an appropriate size for the university, according to Dr. Helmer. Because its campus is landlocked and offers little room for expansion, he doesn’t anticipate much growth in incoming classes. “At a place like BW, people want to make sure that personal touch is

not lost,” he said. “Students can’t become anonymous.” Still, Dr. Helmer didn’t rule out the possibility of further construction on campus, given donors’ willingness in recent years to pony up cash for such projects at the university. Last year, for instance, the university completed its most successful fundraising campaign to date, raising more than $97 million — $15 million above its goal. The university has plans in its back pocket for $32 million in upgrades to its aging student union but hasn’t set a timeline on the project, according to George Richard, Baldwin Wallace’s assistant vice president and director of university relations. ■

700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Joel Hammond (jmhammond@crain.com) Sports Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Energy, steel and automotive Tim Magaw (tmagaw@crain.com) Health care and education Michelle Park (mpark@crain.com) Finance Ginger Christ (gchrist@crain.com) Manufacturing, marketing and retailing Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams Marketing director: Lori Grim (lgrim@crain.com) Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Assistant Events Manager: Jessica Snyder (jdsnyder@crain.com)

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CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

SEPTEMBER 10 - 16, 2012

Howard Hanna now managing property Brokerage sees potential in offering more services By STAN BULLARD sbullard@crain.com

Crafting a business that caters to needs created by the long residential real estate downturn, Howard Hanna has launched at its Cleveland office a residential-oriented property management business. Howard “Hoby” Hanna IV, president of the family-owned brokerage’s Ohio division, said if the service takes off, the Pittsburgh-based company would expand the venture throughout its corporate footprint. Mr. Hanna told Crain’s that at a corporate planning session Howard Hanna executives held last October in Cleveland — the meeting circulates annually among the company’s major offices — leadership decided to pursue a property management business as a strategic opportunity. Soon thereafter, Howard Hanna agents Jared Zak and Paul Blumberg approached Mr. Hanna with a similar idea of their own. “I realized I like surrounding myself with passionate, intelligent people,” Mr. Hanna said, so the agents refined the plan so it would

pass muster in the Howard Hanna hierarchy. As a result, Mr. Zak, who managed apartments for years before becoming a real estate agent, is starting the division. Mr. Blumberg continues his real estate practice in the eastern suburbs with a focus on institutional investment sales. One reason for starting the service, Mr. Hanna said, is that the firm wants to provide multiple real estate services, such as it does in mortgage brokerage, surveying and property title work. “Several times a month I would have agents ask me why we didn’t have a property management platform,” he said. “They have found tenants for people who have to move on but have not sold their homes. Then they need the management piece for people who are keeping the house but want to keep life as normal as possible.” The firm also saw the rise of investor-owners snapping up deeply discounted foreclosures in the singlefamily market. The service went live last month with notices to Howard Hanna’s Ohio agents. Agents will be able to

continue to rent homes for clients, while the property management unit will handle leasing as well as background checks, rent collection and maintenance for owners. The unit also will provide property management services for apartments. Mr. Zak said he has landed 20 single-family homes to manage. Asked how Howard Hanna will evaluate the service, Mr. Zak said he and Mr. Hanna agreed his goal is to manage 1,500 units within the next 30 months. The Howard Hanna service will charge 1% of receipts for its services; property management firms catering to commercial properties also typically charge a percentage of receipts as payment. While the attraction of such a service is obvious, making a go of it can be difficult. That’s the opinion of Gary Stouffer, the broker-owner of Fairlawn-based Stouffer Realty Co., who owns 20 single-family rentals he manages himself besides running the five-office firm. “The only people I’ve seen who can make this work are large apartment owners,” he said. “Otherwise, it’s difficult due to the disjointed nature of real estate with 10 houses in 10 different communities. More power to Howard Hanna if they can make it work.” ■

Forest City continues Chicago condo selloff By MICAH MAIDENBERG Crain’s Chicago Business

Real estate giant Forest City Enterprises Inc. is selling its remaining land holdings in the Central Station development in Chicago’s South Loop, a huge residential project that

Symposium on

Sept. 26-27, 2012

Flexible Liquid Crystal Devices Kiva Auditorium, Kent State Student Center, Kent Campus This two-day symposium focuses on the latest developments in flexible liquid crystal devices: displays, e-writers, eyewear, photovoltaics, sensors and biomedical devices. It will feature presentations from technology and business leaders in each field and a poster session reporting the latest research and developments from members of FlexMatters, the Northeast Ohio collaboration, fostering the growing regional cluster in flexible electronics.

Invited Speakers Include: e-Writers: e-Paper: Eyewear: Sensors: Electronics: Electrospun Fibers: Flexible Materials: Flexible Materials:

Asad Khan, Kent Displays Inc. Mike McCreary, E Ink Corporation Bahman Taheri, AlphaMicron Nicholas Abbott, University of Wisconsin, Madison Shizuo Tokito, Organic Electronics Research Center, Yamagata University, Japan Jan Lagerwall, Seoul National University, Korea Miko Cakmak, University of Akron Joe Klinehamer, Genvac Aerospace

Please register at www.kent.edu/research/flcd2012. Kent State University, Kent State and KSU are registered trademarks and may not be used without permission. Kent State University is committed to attaining excellence through the recruitment and retention of a diverse student body and workforce. 12-2014

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has transformed the once-gritty neighborhood but has been hit hard by the condo crash. The Cleveland-based developer said it has signed a letter of intent to sell its interest in Central Station land for about $30 million; it did not identify the buyer. Forest City owns 30 acres in the development at the south end of Grant Park, according to a recent filing with the Securities and Exchange Commission. “We’ve made a strategic decision as a company to exit the land-development business and focus on our rental properties, our office and retail and apartment properties,” a Forest City spokesman said of the sale. Forest City owns the land in a 50/50 joint venture with Chicagobased Fogelson Properties Inc., the spokesman said. A Fogelson executive did not return calls. The move comes about two months after Forest City, Fogelson and a third partner, Chicago-based Enterprise Cos., gave up about 500 unsold condos in three Central Station

towers after failing to pay off construction loans used to finance the buildings. The project once attracted thousands of new residents. Yet sales stalled as the condo market crashed, and the value of the remaining undeveloped land at Central Station has plunged, too. In late 2010, Forest City wrote down the value of its Central Station investment by $18.3 million. Forest City wrote down the value of its stake further in the second quarter, taking another $17 million impairment charge on the investment, according to the SEC filing. The Forest City spokesman declined to specify the location of the land owned by the joint venture it is exiting. Timothy Desmond, president of Central Station Development Corp., did not return calls. ■ Micah Maidenberg is a reporter with Crain’s Chicago Business, a sister publication of Crain’s Cleveland Business.

Crain’s wins Ohio SPJ awards Crain’s Cleveland Business has been honored with three awards in the Best of Ohio Journalism Awards, which are presented by the Cincinnati, Cleveland and Columbus chapters of the Society of Professional Journalists. The staff of Crain’s won first place in the category of best recession impact reporting for a series of stories on the ongoing effect of the recession on Northeast Ohio’s economy. Editor Mark Dodosh received first place in the category of best editorial campaign for a series of editorials related to Republicans’ misuse of power in Columbus. And government reporter Jay Miller won second place in the government

Dodosh

Miller

reporting category for his body of work related to state and local government coverage. Crain’s competed in the category of print publications with circulation of less than 100,000. The awards will be presented at a luncheon at Great American Ballpark in Cincinnati on Sunday, Sept. 30. ■

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Civic: Kasich urges development groups to shape strategy continued from PAGE 1

which economic sectors they should with research, data and manpower be working to support both with supplied by the Future Fund. finances and with public and pri“Hopefully we’ll get some (agreevate efforts. ment) for a regional agenda.” Planting seeds None of the priorities will come as a shock to anyone. They all tie Ludwig “Lud” Huck, a retired into the broad goal of bringing Wooster businessman, is sold on jobs and capital investment into the importance of a single regional the region. economic strategy for Northeast “We’re taking each of Ohio. In particular, he those priorities and figuring likes the idea of something out what our role is, and we that would tie the nearly have every expectation that 1,800 farms in Wayne our partners (in the busiCounty with the thousands ness community) will do of other agricultural busithe same thing,” said Brad nesses across the region. Whitehead, president of So, the former Rubberthe Fund for Our Economic maid Inc. executive is Future. “For these priorities, Whitehead active in a group called we’ve gone in and said, the Agriculture-Bioscience ‘What’s our strategy today?,’ and in Industry Cluster. That’s a program the coming months we’ll be able to that is developing under the aegis say, ‘How do we want to adjust our of the Future Fund. strategy?’” “Now this gives agricultural busiWhile the concept may sound nesses a road map to connect” with like a cousin of 1950s Soviet other farm business across the region economic engineering, its authors in building a stronger regional supdon’t expect to create an economic ply chain for locally sourced food blueprint. As befits the Internet and for sharing sales possibilities, age, it’s more of a “Wiki” strategy — Mr. Huck said. “Wiki” being online parlance for a “It’s an element of a seed well virtual document that will evolve planted that is focused on getting the because it constantly will be revised business community more (regionand edited by its users. ally) organized on a large scale,” he This economic goal-setting will said. provide the Future Fund, regional The Agriculture-Bioscience Industry business attraction group Team Cluster is among a number of seeds NEO and Northeast Ohio’s largest planted by the Future Fund, a chambers of commerce with a road unique alliance of philanthropic map that will help them choose organizations that has played a key

“It was vital that the other sectors ... pull together with us.” – David Abbott, chairman, Fund for Our Economic Future role in the development of organizations such as JumpStart Inc. and NorTech, nonprofits that help nurture young businesses in the region. Since its founding in 2004, the Future Fund also has sought to promote and tie together promising business sectors and business support programs that have arisen around Cleveland, Akron, Lorain and other local communities in hopes of building a stronger regional economy. “From the outset of the fund, we always knew it was important for philanthropy to invest in economic competitiveness, but we also recognized the limitations of philanthropy,” said David Abbott, chairman of the Future Fund and executive director of the Gund Foundation, a big fund supporter. “It was vital that the other sectors in our community pull together with us,” said Mr. Abbott, who welcomes the chance to work with the business interests via the task force. “We are eager to create a new relationship that creates a much more aligned strategy.”

Opportunity knocks Business groups are stepping up their role in developing a regional

economic strategy because of a mandate from Gov. John Kasich that regional business development organizations, such as Team NEO in Northeast Ohio, create economic strategies for their respective parts of the state. This expanded effort is happening at an opportune time, according to Edward Hill, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. “The economy of Northeast Ohio may be at an inflection point in terms of our global position,” he said. Dr. Hill sees the natural gas boom in eastern Ohio, a weaker U.S. dollar that makes American goods more saleable around the world, and a revitalized auto industry as creating an opportunity for Northeast Ohio — and especially its backbone manufacturing sector — to boom. The task force headed by Mr. Christopher and the Future Fund want to work together to find ways to help the region’s manufacturing companies expand their markets nationally and even globally. These sectors, which include auto, aerospace and electronic controls, build regional wealth by pulling dollars into Northeast Ohio, unlike hospitals or other service businesses that move dollars around the region. The task force and Future Fund want to do the same for emerging sectors — those such as medical devices, advanced energy and the

Wiith W t h iits tss ccon onnveeni onve n ennt lo loca cati ca t on andd eeas aassy ac acce cess ce sssibil ibbililit i y to it t t hee hea eart r of do rt down wnto wn town to wnn Cleeve v la l nd nd,, itt’s tim me to t putt BBur urke ur k to woorkk for ke o you o r co comp m an mp any. y Finnd ouut m y. mooree aatt bu b rkkeeaairirpo poort rt.c .ccom m.

agricultural-bioscience cluster — that have the potential to be wealth builders through trade. At the same time, it remains an ongoing priority to nurture entrepreneurs through organizations such as BioEnterprise Corp., JumpStart and NorTech.

The time is right After those priorities are addressed, the Future Fund and the task force will consider how to bolster programs and initiatives that build the resources on which employers rely. For example, they will be figuring out how they can help ensure that growing employers have access to skilled workers. “We’re increasingly looking at this (the lack of skilled workers) as one of the great limiting factors to our growth,” Mr. Whitehead said. The task force and Future Fund also are assessing the region’s physical assets. They will look at what needs to be done to build up places where business innovation is happening, such as the Austen BioInnovation Institute in Akron, an incubator for medical-related research and commercialization. And they plan to examine how the private sector can work with the Future Fund and the philanthropies that support it to finance these efforts over the long term and how to bring the public sector into this process. “It’s a great time to make sure we’re putting our resources in the right places,” Mr. Christopher said. ■

B UR K E M E A N S B U S I N E S S.

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Area wealth management, insurance outfits merge Twinsburg, Sheffield firms add expertise By MICHELLE PARK mpark@crain.com

Two years ago, it was casual parking lot chat between two business owners. Today, it’s a done deal: Chapman & Chapman Inc., a 126-year-old employee benefits and insurance brokerage in Twinsburg, has merged with PJ Amos & Associates, a Sheffield Village wealth management firm, to form a combined company of 28 people with three offices. The merged entity will retain the Chapman & Chapman name, and counts 350 individual clients and more than 250 corporate clients throughout the region. The deal diversifies the merged firms’ offerings: PJ Amos & Associates expands Chapman & Chapman’s financial planning, wealth management and executive benefits expertise, said Walter K. Chapman, CEO of the combined firm. Likewise, PJ Amos’ professionals now have greater resources in the areas of retirement plans and employee benefits, said Philip Amos, the second-generation owner of PJ Amos who’s now president of Chapman & Chapman. “Having more tools in our arsenal” should produce strong growth, Mr. Chapman said. Mr. Amos agreed. “A multidisciplined approach offers us strategic advantages over our competition,” Mr. Amos said. Messrs. Amos and Chapman came to know each other through clients who did business with both Chapman & Chapman and Voluntary Benefits Group, a division of PJ Amos. A couple years ago, after a lunch, they’d agreed in a parking lot that they should talk about a combination, but only nine or so months ago did they begin serious discussions, Mr. Chapman said. This is the first merger for either firm and another local example of increasing mergers and acquisitions within the insurance business. Other local deals have included the acquisition by Rocky River-based Dawson Cos. of a Virginia firm in July 2011, and the subsequent acquisition of Dawson Cos. itself by AssuredPartners Inc. last December. Mergers and acquisitions among insurance agencies and brokerages in the United States numbered 351 in 2011, up 44% from 243 in 2010 and up 99% from 176 in 2009, according to the annual Global Insurance Mergers & Acquisitions Strategic Study by Conning Research & Consulting, which provides insurance industry research.

Not all in the family Effective July 2 but announced last week, the merger involved Mr. Chapman acquiring the stock of PJ Amos using stock he held in Chapman & Chapman, which employed 21 people pre-merger. The exchange was based on an independent valuation of each company. Mr. Chapman, whose family has had five generations involved in the business since its founding in 1886, remains majority shareholder, but for the first time in the company’s history, there are two unrelated shareholders: Mr. Amos and Aaron

Marinelli, an account executive who’s been with Chapman & Chapman for several years. “Historically … we have coveted our independence and the retention of stock within our family,” Mr. Chapman said. “The good news is our growth and our size have really forced us to evaluate all options for the sake of maintaining our service standards for our growing client base.” Mr. Chapman said he didn’t want the company “swallowed up” by a public corporation. He wanted to retain control, yet still accomplish growth, and he needed to find the “right fit,” he said.

CRAIN’S CLEVELAND BUSINESS

Chapman & Chapman’s revenues are up 40% this year over 2007, Mr. Chapman said, though he wouldn’t disclose revenue figures for either year. PJ Amos, which employed seven pre-merger, has grown revenues, too — roughly 15% to 20% every year for the past five years, Mr. Amos said. He also wouldn’t reveal revenue figures. Another primary reason for the merger is succession planning, said Mr. Chapman, who noted that he is 57 years old; Messrs. Amos and Marinelli are 36. “This is really strengthening our next generation within the industry,” Mr. Chapman said. While the merged firm has three offices now, its leaders said they hope to consolidate within a year its two West Side offices — in Westlake and Sheffield Village — into a new space, as neither existing office has the capacity needed. ■

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CRAIN’S CLEVELAND BUSINESS

COMING UP

GOING PLACES

Crain’s seeking area family businesses to profile

JOB CHANGES

Crain's Cleveland Business is again this year looking to highlight family businesses in a special section slated for publication Oct. 22. We are looking for businesses that have exhibited longevity, so we will be highlighting second-, thirdand fourth-generation (or older) family-owned firms. If you have a suggestion of a family business we should highlight, please send general information regarding the company to Amy Ann Stoessel at astoessel@crain.com or call 216-771-5155. Suggestions are due by end of day on Wednesday, Sept. 19.

MBI K2M ARCHITECTURE INC.: Rachel Maher and Aubrey Frederick to junior interior designers.

ARCHITECTURE

CONSTRUCTION TURNER CONSTRUCTION CO.: Jason Jones to general manager, Cleveland. WELTY BUILDING CO.: Jason Effner to project manager, Cleveland Group.

FINANCE FEDERAL RESERVE BANK OF CLEVELAND: Thomas Sohlberg to vice president, human resources. OHIO COMMERCE BANK: Maria A. Hydell to senior credit officer.

FINANCIAL SERVICE ANCORA ADVISORS LLC: Kevin Conway to director of trading; Daniel Hyland to vice president, mutual funds market development. FILE PHOTO/RUGGERO FATICA

Tom (left) and Jeff Heinen, of Heinen’s Fine Foods, one family business we profiled as part of a special section in April 2010.

LEGAL MCDONALD HOPKINS LLC: Richard H. Blake to member and co-chair, White Collar and Government Compliance Practice Group.

WWW.CRAINSCLEVELAND.COM

SEPTEMBER 10 - 16, 2012

NONPROFIT SINGERMAN, MILLS, DESBERG & KAUNTZ CO. LPA: Daniel L. Bergrin to associate.

LOGISTICS JARRETT LOGISTICS SYSTEMS INC.: Deanna Skelton to lead logistics coordinator.

TRANSITIONAL HOUSING INC.: Maggie Byrne to development director. TECHNOLOGY ENTREPRENEURIAL CENTER OF HUDSON: George Buzzy to entrepreneur in residence.

MANUFACTURING

ABODE MODERN LIFESTYLE DEVELOPERS: Samantha Jones to design and marketing associate.

CATACEL CORP.: J. Gary McDaniel to CEO.

RE/MAX TRINITY REAL ESTATE: Sheila Stupka to office manager.

EBO GROUP INC.: Karl Driggs to president; Keith Nichols to CFO.

RETAIL

PT TECH: Ralph Rogers to president. TIMKEN CO.: Christopher A. Coughlin to group president, Mobile and Process Industries; Richard G. Kyle to group president, Aerospace and Steel. TRANSMOTION MEDICAL C.O.O.’S: Ryan Yerkey to president.

MARKETING CLAYMAN ADVERTISING INC.: Chris Poznako to media buyer. MEDIA SYNTHESIS INC.: Cheryl Pifher to business development. TRIAD/NEXT LEVEL INTERACTIVE: Joshua Clevenger to senior designer, interactive and digital media.

Jones

Skelton

McDaniel

Coughlin

Kyle

Poznako

Jones

Stupka

Landskroner

REAL ESTATE

E&H FAMILY GROUP: Mark Klingbeil to chief financial officer.

TECHNOLOGY SELECTCARE CONNECT: Jim Lark to partner, chief operating officer; Prentice Thompson to partner, CFO; Kyle Callahan to director of business development; Melissa Verzi to controller; Edward Golden to business development executive; Michael Farley to graphic designer. TOA TECHNOLOGIES: Brian Cook to chief financial officer.

TRANSPORTATION

Supply) to president; Rob Fetz to president-elect; Jim Haberek to vice president; Bruce Stebbins to treasurer.

METRO RTA: Richard M. Enty to executive director.

PUBLIC JUSTICE FOUNDATION: Jack Landskroner (Landskroner Grieco Merriman) to president.

BOARDS

AWARDS

HUMILITY OF MARY HOUSING INC.: Rich Boyson (Therapy Partners) to chair. LAKEWOOD CHAMBER OF COMMERCE: Diane Helbig to president; Bill Craighead, Lucinda Einhouse, Nicole Farley to vice chairs; Steve Clark to treasurer.

NATIONAL ASSOCIATION OF WOMEN BUSINESS OWNERS, CLEVELAND CHAPTER: Sarah Fox (Fight Fit), Rachel Kabb-Effron (Kabb Law Firm) and Darlene Campagna (Direct Opinions) received 2012 Top Women Business Owners of Northeast Ohio Awards.

PLUMBING-HEATING-COOLING CONTRACTORS OF OHIO: Greg Eisenhart (Sanford Plumbing &

Send information for Going Places to dhillyer@crain.com.

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Auto lenders broaden customer base In improved environment, buyers with lower credit scores, higher purchase prices land deals By JIM HENRY Automotive News

Auto lenders aren’t quite throwing caution to the wind, even though they made bigger loans, at lower interest rates, and approved customers with lower average credit scores in the second quarter of 2012, according to Experian Automotive. According to Melinda Zabritski, director of automotive credit for Experian Automotive, lenders are loosening credit in many other ways, but they’re keeping a tight rein on loan-to-value ratios — the value of the loan expressed as a percentage of the value of the vehicle. “There is still a strong sense of managing risk,” Ms. Zabritski stated in a written report. In the second quarter, the average loan-to-value ratio for new vehicles was about 110%, down from about 116% a year earlier, she said. The average loan-to-value ratio on used-vehicle loans was essentially flat at about 127%, up less than one percentage point from 126% a year

earlier. The higher the loan-to-value ratio, the smaller the down payment required. Customers also can use the higher amount to pay off negative equity on their trade-in. A higher loan-to-value ratio also allows dealerships to add the cost of add-ons such as extended-service contracts to the same finance contract as the vehicle, an important selling point. A lower loan-to-value ratio has the opposite effect. By most other standards, auto loans were easier to secure in the second quarter, according to Experian Automotive. ■ The average amount financed for new vehicles was $25,714 in the second quarter, up $474, or 1.9%, from a year ago, the credit bureau said. For used vehicles, the average amount financed was $17,433, up $370, or 2.2%. ■ The average credit score for new-vehicle loans was 753, down from 763 a year earlier. Experian considers the prime-risk category to be a credit score of 680 or above,

using Experian’s Scorex Plus scale. The average credit score for usedvehicle loans was 662, down from 671 a year earlier. ■ The average interest rate on new-vehicle loans was about 4.6%, down from 4.8% a year earlier. The average rate for used-vehicle loans increased a fraction of a percentage point to about 9%, but Experian Automotive said rates were down for most used-vehicle loans. “Deep subprime” customers, which are those with credit scores below 550, were the exception. ■ Subprime loans accounted for about 44% of the auto loans made in the second quarter, up from about 41% a year ago. “Because the overall lending environment has improved, lenders are making loans available to a wider range of customers,” Ms. Zabritski stated. “This is good for manufacturers and dealers, as it allows them to sell more vehicles. However, the lower loan-to-value ratios show that lenders are not willing to throw caution to the winds.” ■ Jim Henry is a special correspondent for Automotive News, a sister publication of Crain’s Cleveland Business.

ERC is Northeast Ohio’s leading provider of compensation and benefits data. Salary, wage and benefits data for thousands of positions locally, regionally and nationally.

#6 7

SEPTEMBER 10 - 16, 2012

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.

Type: Employer’s withholding Amount: $31,706 Peter G. Gordon DDS Inc. Beachwood Dental Group 23300 Chagrin Blvd., Suite G10, Beachwood ID: 34-1134403 Date filed: July 24, 2012 Type: Employer’s withholding Amount: $30,294 LDH Painting Ltd. 11811 Shaker Blvd., Suite 316, Cleveland ID: 20-3987745 Date filed: July 5, 2012 Type: Employer’s withholding, unemployment Amount: $28,472

LIENS FILED Financial and Information Technologies Inc. 390 Norwich Drive, Broadview Heights ID: 05-0525941 Date filed: July 24, 2012 Type: Employer’s withholding, unemployment Amount: $306,686

Hogg Heating & Cooling Inc. 4207 Brookpark Road, Parma ID: 34-1816168 Date filed: July 5, 2012 Type: Employer’s withholding, unemployment Amount: $23,050

J R Hudak Inc. 6465 Pebblecreek Drive, Independence ID: 34-1675388 Date filed: July 5, 2012 Type: Employer’s withholding Amount: $144,499

Rainbow Child Day Care Center No. 2 Inc. 24349 Lorain Road, North Olmsted ID: 34-1932457 Date filed: July 19, 2012 Type: Employer’s withholding, corporate income Amount: $22,802

Weston Services Inc. P.O. Box 25279, Cleveland ID: 31-1464654 Date filed: July 6, 2012 Type: Employer’s withholding, unemployment Amount: $131,749

Adventure Team Racing LLC 5247 Wilson Mills Road, Suite 145, Richmond Heights ID: 55-0756218 Date filed: July 11, 2012 Type: Employer’s withholding, unemployment Amount: $26,628

S&B BQ Investors LLC P.O. Box 181487 ID: 26-3418986 Date filed: July 6, 2012 Type: Partnership income Amount: $113,866 Flaming Ice Cube LLC 1449 Boardman Canfield Road, Suite 260, Boardman ID: 27-0763491 Date filed: July 19, 2012 Type: Employer’s withholding, unemployment Amount: $62,646

LIENS RELEASED MJS Logistics Inc. 6111 Carey Drive, Suite 1, Valley View ID: 76-0714459 Date filed: Sept. 13, 2010 Date released: May 22, 2012 Type: Employer’s withholding Amount: $12,906

Optimum Enterprises Ltd. 75 Public Square, Suite 1200, Cleveland ID: 34-1867061 Date filed: July 11, 2012 Type: Employer’s withholding, unemployment Amount: $61,992

Ohio Family Realty Inc. 26747 Brookpark Extension, North Olmsted ID: 42-1552978 Date filed: Nov. 26, 2007 Date released: May 15, 2012 Type: Employer’s withholding Amount: $6,414

Marmalade Café LLC 2101 Richmond Road, Suite 19, Beachwood ID: 20-8976888 Date filed: July 5, 2012 Type: Employer’s withholding Amount: $57,018

Ohliger Drug of Fairview Park Inc. 21720 Lorain Road, Fairview Park ID: 34-1121297 Date filed: Nov. 10, 2011 Date released: May 22, 2012 Type: Employer’s withholding, corporate income Amount: $12,283

Valal Inc. 408 W. St. Clair Ave., Cleveland ID: 34-1948807 Date filed: July 5, 2012

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New Indians program lets renewing customers pick perks If a suite, club seats aren’t up their alley, team now has new way to reward By JOEL HAMMOND jmhammond@crain.com

The Cleveland Indians surprised the pro sports industry in January 2011 when they began offering season ticket buyers a suite rental, Terrace Club access and seats in the all-inclusive club lounge at Progressive Field as part of those customers’ ticket packages. But as it turns out, even those perks — at their original prices, valued at more than $2,500 on the low end — weren’t enough to satisfy all season ticket holders, some of whom either weren’t terribly interested in a suite or who’d enjoy other benefits more. The Indians, in turn, have partnered with the Minneapolis-based E Group loyalty marketing firm to create a more fluid renewal benefits system that allows customers to choose what they want their benefits to be, rather than be shoehorned in to most teams’ current one-size-fits-all benefits packages. Think of it like a loyalty program: To start, the amount of points a seasonticket holder receives with a renewal depends on how long they’ve been a customer. A full-season package earns more points than a 40- or 20-game pack, and paying off a bill in full earns more points than employing a payment plan. Opting for paperless tickets over the paper variety is another factor. From there, customers log on to a website that shows them how many points they have and the options for which they can redeem their points. The selections include far more experiential options that the team could not offer to its entire season ticket base previously. “There are people who we’ve given a free suite to that maybe don’t want that,” said Curtis Danburg, the team’s senior director of communications.

“Maybe they have kids and want something more experiential; they can use those points and turn into that.” Mr. Danburg said those options could include throwing out a first pitch, sitting with radio announcer Tom Hamilton in his booth or other on-field experiences. There’s also an auction feature on E Group’s eFan system that allows fans to use points to bid against other customers for certain items.

Really cool ideas The Indians are the first in Major League Baseball to employ such a tactic, though E Group is working

with the Nashville Predators and Minnesota Wild of the National Hockey League, said senior loyalty marketing manager Lisa Missling. Ms. Missling said her company will sit with a team first and figure out goals they have; the Predators’ desire to improve cash flows was a top priority, so eFan rewarded those customers paying their bills in full with more points. “We’re using these rewards to drive fan behaviors,” Ms. Missling said. Teams often have spent hundreds of thousands of dollars on gifts for their most loyal customers, Mr. Missling said, but often found those

A.

gifts weren’t as valuable as other offers the team could make. Thus, eFan was born. The Predators just signed on with E Group after the 2011-12 season, so the team hasn’t even employed its incentives yet with the team on the ice. But, its customers already have seen benefits, whether using points for summer concert tickets at Nashville’s Bridgestone Arena, or food and beverage at those concerts. Once the season starts, experiential options will include Zamboni rides. “It’s a much more interactive benefits platform than more standard systems,” said Nat Harden, vice president of ticket sales with the Predators. “Customers are receiving

B.

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ON THE WEB

Story from www.CrainsCleveland.com.

Investors buy local custodial services firm GCA Services Group Inc., a Cleveland-based provider of custodial, grounds management and staffing services, is about the change hands. GCA and investment firm Blackstone announced a definitive agreement under which a fund managed by Blackstone on behalf of its private equity investors, Blackstone Capital Partners V LP, will acquire GCA for an undisclosed price from Nautic Partners LLC and other minority shareholders. “This transaction is a tremendous opportunity to fuel our continued growth,” GCA president and CEO Robert Norton said in a statement. “We have transformed ourselves into one of the country’s leading facility services companies in a few short years and our new relationship with Blackstone demonstrates our managementled commitment to continued dynamic growth.”

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benefits on a 12-month basis, rather than six months when the Predators are playing.” Mr. Harden also said the new loyalty program has allowed the Predators to monitor their unused inventory and adjust their ticket offerings accordingly. For instance, if, leading into a Tuesday game, the Predators see a chunk of lower-level tickets going unsold, they’re able to move some of those tickets onto eFan and upgrade fans who may be sitting further from the action. “We’re not incurring any hard cost there, because the seat was going to go unsold anyway,” Mr. Harden said. “But we’re able to create a better environment at the game and reward a loyal customer.” ■

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Lending: Borrowers more adamant about excluding covenants continued from PAGE 1

“You would think everybody would be a little more cautious right now,� Mr. Lencioni said, citing banks’ recent and ongoing experience with nonperforming loans. “A lot of the problems were caused by really lax standards and terms. “It will be an ongoing challenge to identify and win good business with the aggressiveness I am seeing,� added Mr. Lencioni, whose bank only ramped up its commercial lending about six months ago. “I’m afraid, as an industry, we have not learned much,� he said. The Federal Reserve Board’s July 2012 Senior Loan Officer Opinion Survey on Bank Lending Practices seems to confirm terms and covenants are relaxing. Lending policies for loans to businesses generally eased over the past three months and “domestic banks continued to ease many terms on C&I (commercial and industrial) loans to all types of firms,� the survey reported. In particular, large percentages of survey respondents continued to indicate they had narrowed the spreads on commercial loan rates over their cost of funds and had reduced their use of interest rate floors.

Almost all domestic banks that reported easing standards or terms on commercial and industrial loans continued to cite “more-aggressive competition from other banks and nonbank lenders as a reason,� the loan officer survey said. Only about one-fourth of the banks that had eased lending policies had done so because of a more favorable or less uncertain economic outlook. One local commercial loan officer who talked to Crain’s on the condition of anonymity said “lenders have been backing off on covenants and giving better rates and terms for the best borrowers to win the deals.�

Letting down their guards As 2011 financial results have posted, an easing of loan terms and covenants has picked up, said Tom Bechtel, director of the transaction services group for Cohen & Co. in Cleveland, who said he’s seeing a “little bit of loosening� for the first time in years. A Skoda Minotti survey of real estate companies conducted in March and April shows they, too, are seeing it. When asked whether they’ve found that lenders are seeking more stringent terms on financing than in the past, 21% this year said

lenders are not, the highest level since the Mayfield Village CPA, business and financial advisory firm began asking the question. That percentage was up from 16% who said so in 2011 and 7% in 2009. Among the terms that some say have relaxed — albeit slightly by most accounts — are debt service coverage ratios, or the measure of an entity’s ability to produce enough cash to cover its debt payments, and personal guarantees. “If it’s a strong credit without significant leverage ‌ people are getting more competitive and trying to get in there,â€? Mr. Bechtel said, referring to companies that are good credit risks. And therein lies the fine print: Not everyone, particularly small businesses and those with tarnished credit, is enjoying loans with prettier pricing and fewer strings attached. Notably, though, a number of industry insiders said they have noticed bankers become more willing to finance companies that have hit bumps in the road. “Some community banks and even some new out-of-town banks/ lenders are starting to step back up to the plate on the weaker deals, to earn this extra interest income —

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especially if it’s a new-to-them borrower and the institution doesn’t have any prior history with the borrower,� noted the commercial loan officer who asked not to be identified.

Borrowers speak up While requiring fewer covenants in loans is driven in part by lenders’ desire to attract business, the change also is occurring because of borrower demands, the loan officer noted. “Borrowers are now negotiating covenants in their loan documents like never before,� especially borrowers that came close or actually were put into technical default due to certain covenants, such as loanto-value ratios, he said. “These have been sticking points and borrowers are willing to pay huge legal fees to have them negotiated out,� he said. “I have seen some of the more sophisticated borrowers list covenants they will not agree to on the front end of a loan request.� Tom Cicarella, head of the commercial finance practice group at Cleveland-based law firm Calfee, Halter & Griswold LLP, is seeing fewer financial covenants in loans, but said lenders are not consistent as to which covenants they’re deleting. His group represents both commercial lenders and borrowers. “(Lenders) have been through some tough times and the consequence of it is they can see what really ended up being important in those times,� Mr. Cicarella said. “As a result, they can say, ‘Well, wait, we didn’t really need four covenants. We can get by with one.’�

The chase is on The decreasing loan prices and easing of covenants and terms is music to the ears of companies that want money. So is this: Like other bankers, Rick

L. Hull, president and CEO of Ohio Legacy Corp, the parent of Premier Bank & Trust in North Canton, sees competitors fixing interest rates for longer periods of time. Mr. Hull said his bank has lost deals to lenders that have dropped their debt service coverage ratios to 110% and 105% — numbers not seen since before the recent recession, he said. If a debt service ratio is 105%, a company’s cash flow is 105% of its debt obligations. Premier Bank & Trust continues to require debt service ratios of at least 115%, and more typically 120% or 125%, Mr. Hull said. It’s also continuing to require personal guarantees, unlike some competitors. “We’re not going to compete against stupid,â€? he said. Mr. Hull is one of many who characterize the easing of terms and covenants as evidence that banks never learn. He and others predict some banks will pay for that easing in the form of losses — in some cases because long, fixed-rate loans may perform, but at a negative spread, when interest rates rise. Most bankers expect that even more lax terms and covenants are on the way, though they doubt they’ll reach the relaxation — or “insanity,â€? as Geauga Savings’ Mr. Lencioni characterizes it — of 2006 and 2007. “It’s going to take us a while to screw things up as well as we did in the past,â€? Mr. Lencioni predicted. “This is kind of the history of banking. We do this: We chase business, we get too aggressive, then we get hurt and we turn off the tap, and then we try to get it back. “I see signs that make it tough to be a competent and fair lender already,â€? he said. “I know everybody’s got too much cash in their vault, so it’s more likely to get more challenging before it gets better.â€? â–

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SMALL BUSINESS

INSIDE

16 ADVISER: RETENTION PART OF ANY GROWTH PLAN.

CANDIDATE VISITS LAND BUSINESSES IN THE SPOTLIGHT Owners say there can be benefits to presidential hopefuls’ often-impromptu pop-ins By KIMBERLY BONVISSUTO clbfreelancer@crain.com

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own hall meetings, nationally televised debates and baby kissing are staples of the American political campaign. But more and more candidates are adding local small businesses to their campaign arsenals. The hometown settings allow presidential hopefuls to bring their messages to the average Joe while the small business enjoys its 15 minutes of fame and, in some cases, a boost in sales. Oftentimes, there is little notice given that a candidate is going to

INSIDE: Photos from recent visits to local businesses. Page 18 descend on a certain location as part of a stop to the Buckeye State. Indeed, three Northeast Ohio business owners were going about their normal days when the Secret Service came through the doors and took over for a few hours. As agents searched every nook and cranny to prepare for the candidates’ arrivals, customers took to social media to spread the word and owners prepared themselves to serve as ambassadors for their communities. See VISITS Page 18

IN BRIEF ■ WHAT’S OLD IS NEW: A boutique owned by Eugene and Kelly Pallas, The Lorain Furniture Gallery, has opened between the Detroit Shoreway and Ohio City neighborhoods at 7948 Lorain Ave. The Lorain Furniture Gallery sells original, mid-century modern vintage furniture, home décor and accessories with an emphasis on American-made products. It also features a line of new sofas and side chairs made by 60-yearold Virginia company, Rowe Furniture, and a line of candles created by Sarah Sampsell of Sweet Dish & Darling, Cleveland. The Pallases also own Lorain Furniture and Appliance (Used & New). ■ TASTY TREATS: A third Froyo Twist location is slated to open midSeptember in downtown Willoughby. The new store will join two others located in Mentor — one near the borders of Concord, Painesville Township and Mentor, which opened in June; and the original store, on Center Street across from Yours Truly, which opened in 2011. The three stores are the creation of majority owner and operator Ed Sammon of Willoughby. Erik Schroeder of Wickliffe is a minority share owner in the three businesses. In July 2011, Bob Krizancic of Mentor became involved with the two Mentor locations, and he has a business interest in them along with Messrs. Sammon and Schroeder. ■ ALL IN THE FAMILY: Crain’s Cleveland Business is again this year looking to profile family businesses in a special section slated for publication Oct. 22. We are looking for businesses that have exhibited longevity, so we will be highlighting second-, third- and fourth-generation (or older) familyowned firms. If you have a suggestion of a family business we should highlight, please send general information regarding the company to Amy Ann Stoessel at astoessel@crain.com or call 216-771-5155. Please send suggestions by end of day Wednesday, Sept. 19. ■ GRAND OPENINGS: Have you recently opened a new business? Please send along the following information for inclusion in our monthly Small Business sections: business name; address; website address; brief description of business; business phone and fax number; business email address; and date that the business opened. Information should be sent to Amy Ann Stoessel at astoessel@crain.com or by calling 216-771-5155.

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Any growth includes customer retention IRS clears up Medicare LAURASHERIDAN deduction uncertainty

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e all know that the most important part of any business is its customers. Without them, there wouldn’t be a business. So why do so many companies spend most of their marketing budget chasing new customers instead of nurturing the ones they already have? Customer retention, not acquisition, is the key to growing your business. You’ve seen the data: 5-to-1. That’s the cost of acquiring a new customer versus keeping an existing one. If you buy this, then it’s time to manage your business to leverage the economics of retention. How about starting with taking a fresh look at your customer service? Manage customer service to catapult your customer retention results. We all believe that we treat our customers like gold, but is it true? Take this customer retention quiz and see how you’re really doing: ■Do you think of your customer service department as an accounting expense line item or an opportunity to delight customers? Savvy business leaders prioritize long-term brand reputation over short-term profit. They treasure the opportunity to speak directly with people who have proactively contacted them. They view people who call with questions and concerns as potential brand ambassadors who they can delight, rather than problems or ticket numbers. ■Is your best manager in charge of customer service? Top talent belongs in your customer service department. Think about your best manager and

Business is always

ADVISER imagine what he or she would do if put in charge of customer service. Then, add a staff of “A� players with amazing listening skills, real empathy and tremendous company knowledge. Your customers will notice and your financial results will improve. ■Are your metrics focused on reducing talk time or delighting customers? Do you measure the length of customer service calls and reward those reps with the shortest call times? If so, it’s time to flip that paradigm. If you think of each call as an opportunity to better understand and meet a customer’s needs, then call length isn’t the right measure. ■Are your policies designed to make things easy for you, or your customers? How many times have you signed up for a service online only to have to type in the same information multiple times? How about your return policies, warranties and response time? Are you making it easy for customers to keep coming back to you? When designing policies, put yourself in your customer’s shoes. ■How often do you and your senior managers listen to customers

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versus pitching a new product? Do you ask how you can improve or are you always in sales mode? When was the last time you asked a customer about their business? Enough said. ■At staff meetings, how much time do you devote to sharing customer feedback and talking about their concerns? Staff meetings are a great time to share educational customer service case studies. Or, use them for brainstorming on how to make it easier to do business with your company. How about asking each manager to talk to a few customers about their experience working with you and then devote a meeting to review what you learn? ■Have you critiqued your marketing materials and web site to see if the messages talk about what you care about, or do they resonate with your customers? We’ve all experienced them. Web sites that are inwardly focused that go on and on about how the company is so great, but fail to quickly tell you why you need them. They list lots of features, few of which seem to apply to you. Maybe it’s time to review your materials to see if you fall into the same trap. So, how’d you do with the customer retention quiz? If you’re not managing customer service to improve retention and therefore financial results, it’s time to take a fresh look at your priorities. What’s your answer to the question, “What business are you in?� I asked the president of a large medical practice recently, and he responded “customer service.� This was a doctor! He gets it. Next time a customer calls with a complaint, take advantage of the situation! You now have an opportunity to talk to your customer, solve his or her problem and begin developing a long-term relationship. Sure, it’s nice to add new customers. It just makes a lot more sense to nurture the ones you already have. ■Laura Sheridan is president of Viva La Brand, a Cleveland-based marketing strategy and ad agency search firm.

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ax authorities recently clarified something tax professionals long have believed but could not confirm. Medicare premiums are deductible for small business owners, and those individuals might be able to claim a refund on some taxes paid in recent years. The Internal Revenue Service published a memo from its Office of Chief Counsel to explain how the IRS looks at Medicare premiums as they relate to rules around the deductibility of health insurance premiums. The memo says Medicare premiums may be deducted for selfemployed individuals, including premiums paid for spouses and dependents. The memo also says individuals who have paid the premiums in prior years can file amended returns to claim the deduction. Tax rules long have said that sole proprietors, partners and other minimal shareholders in S corporations are not treated as employees because they are treated as selfemployed for the purposes of determining certain employee benefits. That includes employer-provided health insurance. If a company assumes some or all of the cost of providing health insurance benefits to such individuals, the amount was not deductible from the income of the business. The only way such an individual could take a deduction is as an “above-the-line deduction� on Form 1040, the self-employed health insurance deduction. In its forms and guidance in recent years, the IRS left hints that it might regard Medicare premiums as deductible under those rules, but it was never clear. Now the IRS has said more clearly that it considers all four parts of Medicare — A, B, C and D — as qualifying for the deduction. It also opened the door for taxpayers to file amended returns for open prior tax years when they did not take the deduction.

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TAX TIPS Depending on the income level of a “self-employed� individual, the premiums for Medicare coverage could be significant. Medicare Part A coverage, which generally covers hospital costs, can exceed $5,400 a year for each covered person. Part B, often referred to as medical insurance, can reach more than $3,800 a year for each covered person. Premiums for supplemental coverage under Part C can vary depending on the plan, and Part D coverage for prescriptions can add up to nearly $800 a year. Depending on the income and the amount a given taxpayer pays for health coverage, that means taxes paid in prior years could add up to a meaningful number. The IRS memo unfortunately does not address whether deductions also would apply to Medigap coverage, which is another supplemental coverage option. However, it’s hard to see why it would not be treated in the same manner as all other Medicare plans. The statute of limitations on filing amended returns generally is three years. Depending on when a particular tax return is filed, a taxpayer could go back to the 2009 tax year, and possibly even the 2008 tax year to claim the refund. Claims going back as far as 2008 would depend on when a return was filed and would need to be filed quickly. The statute of limitations on those will expire soon even for the latest-filed returns. It’s also important to note that the deductions for Medicare premiums only will apply when self-employed individuals meet the usual criteria for health insurance deductions to be available. Self-employed individuals only are eligible for the deduction for any health insurance premiums if they are not eligible to participate in any subsidized health plan offered by another employer, including a spouse’s employer. That eligibility is determined monthly, not annually. Another important limitation to consider focuses on income levels. The deduction an individual would claim for assuming the cost of health care premiums cannot exceed the income that is earned for the business activity that the health insurance covers. For self-employed business owners who have shouldered their own health insurance costs, the IRS has offered some welcome relief that should be pursued soon to produce the greatest benefit. ■Peter A. DeMarco is vice president and director of tax services for the regional accounting and business consulting firm of Meaden & Moore, headquartered in Cleveland.

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CnXn to unite athletes, sports businesses through social media Former college baseball players pursue deal to expand athletic apparel line By JOEL HAMMOND jmhammond@crain.com

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s high school football kicks into high gear across the region, players from schools big and small carry with them varied goals and motivations. Some might want simply to improve. Others might have atop their list conference championships, or a playoff berth, or for a select few, a state title. Others still might have a college scholarship in mind. Either way, a trio of Clevelanders wants to make each part of that process easier. CnXn, founded by former Oberlin College baseball players Brian Verne and Jack Dunn and Mr. Verne’s childhood friend Mike Eppich, who played at Rollins College, pitches itself as an athlete’s “digital combine,” a digital baseball card of sorts. Their multi-pronged web platform — think of a sportsfocused social media site — allows athletes, coaches, instructors, fitness centers and tournaments all to interact. Take Mr. Verne. The Shaker Heights native, who now serves as a Shaker assistant baseball coach,

Verne

Dunn

in their first year, which included a move into a warehouse on East 40th Street in Cleveland. There, they taught themselves how to screen print. In year two, they began selling to high schools and camps, and revenue jumped to about $40,000. “We either knew how to sell, or there was something to what we were doing,” Mr. Verne said. They’ve been chasing national deals for a new line of performance apparel, and had a major presentation in New York last week in an attempt to close one of those agreements. CnXn gear also has landed in other places, including the team shops of the Avon-based Lake Erie Crushers, an independent team that plays in the Frontier League, and the Green Bay Blizzard of the Indoor Football League. Without a major-league affiliation, those

“We get a high school kid on board now, and maybe he turns into a Division I scholarship player, or a first-round pick. That validates us even more.”

launches, and Mr. Dunn said the group made vital connections at tournaments and other events where they’ve sold apparel. Eppich In a perfect situation, the launch would take place in three months, though that’s reliant on securing funding to bring the Nike+ people on board. Monetization of the site would come through advertising and sponsorship revenue, but also instructors, trainers, facilities and camps paying a transaction-based fee for every athlete who signs up for their services through CnXn. “Our presence at those high school and other tournaments validated us and our brand a little,” said Mr. Dunn, an Arizona native. “We get a high school kid on board now, and maybe he turns into a Division I scholarship player, or a first-round pick. That validates us

PHOTO PROVIDED

New York Jets fullback John Conner was one of the first pro athletes to don CnXn’s apparel, which is branded with the area code of the athlete’s hometown — Cincinnati, in Mr. Conner’s case. even more.” CnXn recently spent time at the Founders Factory, a Columbus early stage business incubator, and in St. Louis with Yao-Hui Huang, who started well-known venture collaboration forum The Hatchery in New York City. The company

also has talked with former Avon Lake and Ohio State linebacker Mike D’Andrea, who in 2009 opened TRAQ 3D, a fitness and athletic development gym in Avon, and two weeks ago signed a deal with the Euclid School District to provide apparel for all its teams. ■

If you can help bring a meeting to Cleveland,

we’d like to meet you.

– Jack Dunn co-founder, CnXn

W

ith $2 billion in visitor-

would load to his CnXn profile vital information such as statistics, photos, videos and other biographical information. Where CnXn stands out, Mr. Verne says, is that he then can search and register for various tournaments, camps and combines held in his area; when he does, that event appears on his profile in CnXn, and his competitors and teammates then can see he’ll be there, along with anyone who’s registered for specific events. “We’re bridging the gap of communication between athletes and sports-related businesses,” he said. “Our combination between the social component and business platform is the first of its kind.”

Not always digital The social media aspect was a small part of the group’s original plan. They started with an apparel line in Mr. Verne’s living room with a heat press borrowed from a friend. In all, the group has generated about $100,000 in revenue from sales of its apparel, which is branded with an athlete’s area code; Mr. Verne calls that region identity a “strand of every athlete’s DNA.” They’ve outfitted about 15 pro players with their apparel, including Atlanta Falcons defensive lineman Corey Peters and New York Jets fullback John Conner. But they’ve also pounded the pavement: They started by selling about $1,600 worth of merchandise at a youth baseball tournament and made about $12,000 in revenue

related infrastructure

teams, and other independents like them, have the freedom to sign such deals. Dan Helm, the Crushers’ general manager, said the team informally met the trio at an Oberlin game played at the Crushers’ All Pro Freight Stadium. The merchandise, Mr. Helm said, was popular in the team’s on-site store and at camps it ran, and the Crushers, in turn, will help CnXn by introducing their players to the social media platform when it’s completed. “We were in need of some merchandise options, and their stuff is different,” Mr. Helm said. “People have pride in where they’re from.”

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Dual goals With the apparel line moving along, CnXn has spent much of the summer developing the enterprise’s social media aspect. They’ve worked with Mayfield Heightsbased Think Media Studios on branding efforts, and though the trio was unhappy with their original web development partner’s vision, they hope to fast-track an effort with the company that developed Nike’s popular Nike+ GPS SportWatch technology. Ideally, the web portal would have been launched a few weeks back, in time for high school football’s kickoff. “We weren’t that pleased with how it ended up and didn’t want to release something that was just mediocre,” Mr. Verne said. “We just couldn’t go with it. It was OK.” They have about 60 athletes ready to jump aboard when CnXn

who has a hand in your organization’s meeting planning or you’re simply a resident full of civic pride, Positively Cleveland can support you – and even reward you – for bringing a meeting hime to Cleveland. Visit ClevelandChampions.com.

“Why not Cleveland?” - Jack Schron, president of Cleveland-based Jergens, Inc.

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Visits: Long-running businesses targeted continued from PAGE 15

Ziggy’s Sports Bar & Grill

PHOTOS PROVIDED

ABOVE: Republican presidential nominee Mitt Romney, Sen. Rob Portman and Mapleside Farms co-owner Greg Clement. BELOW: President Barack Obama at Ziggy’s Sports Bar & Grill in Amherst on July 5.

Larry Niehart, owner of Ziggy’s Sports Bar & Grill in Amherst, brought some out-of-town friends to his business on July 5, when he was met by a Secret Service agent who said President Barack Obama would be dropping by in about 20 minutes. With that, 20 agents and dogs swept the building, prompting the 50 or so patrons already inside the restaurant to post the news to social media. Within minutes, about 2,000 people were gathered outside. “He was a nice guy,” Mr. Niehart said of the president. “He was only supposed to be there for 10 to 15 minutes, but he did not leave until he talked to everyone in the whole place.” Mr. Niehart said he learned that an advance team had been at Ziggy’s three weeks earlier sizing up restaurants from Sandusky to Parma. “Ours was perfect,” he said. The next day Mr. Niehart was bombarded with radio and television interview requests. The free publicity also boosted sales for the month at Ziggy’s by 30% compared to the same time period a year ago.

Given the positive exposure, Mr. Niehart said he would absolutely host another political candidate. “Regardless of your political stance, the most powerful man in the world is walking through your door,” said Mr. Niehart, a registered Republican. “Although I would definitely love to have (Republican vice presidential nominee) Paul Ryan visit.”

The Hot Dog Shoppe Mr. Ryan did drop in on a business east of Cleveland in mid-August. Tim McAdams, the manager of the Hot Dog Shoppe, knew something was up when the media started showing up in the morning at his Warren business. During a crowded lunchtime, with all 70 seats filled and 20 to 25 people waiting at the takeout window, the Secret Service came in and announced that Mr. Ryan would arrive in about 15 minutes. Mr. McAdams, who was busy cooking up orders, heard a commotion and saw members of the press coming in through his side door. “They literally just plowed through my employees, went behind the registers and counter and just took over. They were jumping over my booths,” Mr. McAdams said, adding that Mr. Ryan ordered lunch and talked to his customers. After Mr. Ryan’s visit — which was arranged by a former employee who was friends with the Ryan campaign — Mr. McAdams said he saw a pretty good increase in business for several days. He said the exposure a candidate brings to a small business is tremendous, but he was unprepared for the media. “I understand where they’re coming from and they want the best shot, but I would say they have to deal with that a little bit better,” Mr. McAdams said. “At least prepare us for what they’d be doing so our employees would know to step out of the way.”

Smitty’s Stephanie Forthofer, president of Smitty’s Place Inc., knew President Obama was in town in January 2010. She expected a slow lunch crowd because of it since streets around Smitty’s were shut down and normal traffic patterns were interrupted. Still, about 30 to 40 people “camped out” at tables and worked from their laptops at the Elyria restaurant, hoping the president would choose Smitty’s for lunch. Among them was a man in a suit “waiting for friends.” After finishing his lunch, he introduced Mrs. Forthofer to the Secret Service. “They informed everyone the president was coming, and they had to agree to be searched or leave. Of course, everyone agreed,” Mrs. Forthofer said, adding that President Obama mentioned the “great burger” he had at Smitty’s at a town hall speech he gave later that day at Lorain County Community College. “We saw a 20% increase in sales that lasted the remainder of the year,” Mrs. Forthofer said. “We still have people that come in, it’s their first time in the restaurant, and they are here because they want to see where the president ate.” Mrs. Forthofer said she would recommend any business entertain a visit from a sitting president, calling it a “phenomenal opportunity.”

“Regardless of your party affiliation, it’s just history, plain and simple,” Mrs. Forthofer said. “Who would not want to be a part of that?”

Dean’s Greenhouse In early August, Dean’s Greenhouse in Westlake hosted a fundraiser featuring Libertarian Party vice presidential nominee Jim Gray, who is running with presidential candidate Gary Johnson. As co-director of Ohio for Gary Johnson 2012, Debbie Dean-Espie — who runs Dean’s Greenhouse with her father, Larry Dean, and brother, Scott Dean — coordinated the visit to her business, but she offered some insight into how a campaign stop might occur: ■ Campaigns typically target businesses with longevity. ■ They look for entrepreneurs or owners sympathetic to the candidate’s cause or someone who has donated to a specific party. ■ A state campaign director might have 10 to 12 days’ notice a candidate is coming, starting a chain of phone calls until they find the right business and a willing owner. ■ The owner typically has less than one week’s notice about the visit and might be asked to communicate the visit to customers, depending on their comfort level. ■ The campaign typically handles security and may bring signage or stickers to hand out.

Mapleside Farms Greg and Kelly Clement, owners of Mapleside Farms in Brunswick, hosted Republican presidential nominee Mitt Romney at a Father’s Day pancake breakfast after Mapleside turned up as the top Google result in a search for familytype farms in Ohio. “(The Romney campaign) called us out of the blue,” Mr. Clement said. “They asked if we’d consider having Mitt launch his summer presidential campaign here at Mapleside. We said, ‘Absolutely.’” Even with heavy rains, he said about 3,800 people came out to hear Mr. Romney speak. “I think, big picture, long-term, it was great for the community and great for the business,” he said, adding that it provided exposure to a large audience. “Mitt is using that one picture of the backdrop of his bus and our orchard. I’ve seen it in a lot of spots even outside Ohio.” Mr. Clement felt a little political backlash when he sent an invitation to his Mapleside client list. He recalled a response from a 40-year customer who said she would now buy her apple pies elsewhere. The comment spurred Mr. Clement to send out a second email in which he noted the event was not a Democrat or Republican thing, but a way to showcase the local community. “It was great that a presidential candidate picked Northeast Ohio, picked the city of Brunswick and picked Mapleside. That was a huge victory,” Mr. Clement said, adding that although he didn’t see a noticeable financial impact from the event, he participated to give his three sons the opportunity to meet someone who could be the next president. “It was a once in-a-lifetime thing,” he said. “For me it was more about family and community than a business thing.” ■

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LARGEST CUYAHOGA COUNTY EMPLOYERS RANKED BY FULL-TIME EQUIVALENT LOCAL EMPLOYEES

Company Address Rank Phone/Website

FTE employees Cuyahoga County June 30 2012

Total number of employees in Ohio

1

Cleveland Clinic 9500 Euclid Ave., Cleveland 44195 (216) 444-2200/www.clevelandclinic.org

30,600

33,000

Health care provider

Delos M. "Toby" Cosgrove president, CEO

2

University Hospitals(1) 11100 Euclid Ave., Cleveland 44106 (216) 844-1000/www.uhhospitals.org

13,334

15,123

Nationally recognized, integrated health care system comprised of hospitals and outpatient health centers

Thomas F. Zenty III CEO

3

U.S. Office of Personnel Management 1900 E St., NW, Washington 20415 (202) 606-1800/www.opm.gov

12,035

50,409

Federal government

C. Frank Figliuzzi chair, Cleveland Federal Executive Board

4

Progressive Corp. 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com

7,858

8,766

Insurance and financial company

Glenn M. Renwick president, CEO

5

Cuyahoga County 1219 Ontario St., Cleveland 44113 (216) 443-7220/www.cuyahogacounty.us

7,709

7,709

County government

Edward FitzGerald county executive

6

City of Cleveland 601 Lakeside Ave., Cleveland 44114 (216) 664-2406/www.city.cleveland.oh.us

7,061

7,061

Municipal government

Frank G. Jackson mayor

7

Cleveland Metropolitan School District 1380 E. Sixth St., Cleveland 44114 (216) 574-8000/www.cmsdnet.net

6,246

6,246

Education

Eric S. Gordon CEO

8

KeyCorp 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com

5,241

7,166

Bank holding company

Beth E. Mooney chairman, CEO, KeyCorp

9

MetroHealth System 2500 MetroHealth Drive, Cleveland 44109 (216) 778-7800/www.metrohealth.org

5,238

5,238

Health care provider

Mark J. Moran president, CEO

10

Case Western Reserve University 10900 Euclid Ave., Cleveland 44106 (216) 368-2000/www.case.edu

4,636

4,636

Higher education

Barbara R. Snyder president

11

Group Management Services Inc. 3296 Columbia Road, Suite 101, Richfield 44286 (330) 659-0100/www.groupmgmt.com

4,261

11,206

Professional employer organization

Michael Kahoe president

12

Giant Eagle Inc. 5300 Richmond Road, Bedford Heights 44146 (216) 292-7000/www.gianteagle.com

4,025

NA

Grocery store chain

Bill Artman vice president, Cleveland operating division

13

Swagelok Co. 29500 Solon Road, Solon 44139 (440) 248-4600/www.swagelok.com

3,686

3,686

Designer and manufacturer of industrial fluid system components

Arthur F. Anton president, CEO

14

U.S. Postal Service 2200 Orange Ave., Cleveland 44101 (800) 275-8777/www.usps.com

3,426

NA

U.S. postal service

Todd Hawkins district manager, Northern Ohio District

15

Sherwin-Williams Co. 101 W. Prospect Ave., Cleveland 44115 (216) 566-2000/www.sherwin-williams.com

3,053

3,801

Coatings and related products

Christopher M. Connor chairman, CEO

16

Lincoln Electric Co. 22801 St. Clair Ave., Cleveland 44117 (216) 481-8100/www.lincolnelectric.com

2,706

2,711

Designer, developer and manufacturer of arc welding products

John M. Stropki, chmn., president, CEO; George D. Blankenship, sr. vice president, president, Lincoln Electric North America

17

General Motors Co. P.O. Box 33170, Detroit 48232-5170 (313) 556-5000/www.gm.com

2,500

9,000

Automotive manufacturing

Robert Parcell, plant manager, Lordstown; Al McLaughlin, plant manager, Parma

18

Cuyahoga Community College 700 Carnegie Ave., Cleveland 44115 (800) 954-8742/www.tri-c.edu

2,332

2,342

Higher education

Jerry Sue Thornton president

19

State of Ohio 30 E. Broad St., Columbus 43215 (614) 466-2000/www.ohio.gov

2,311

54,681

State government

John R. Kasich governor

20

Greater Cleveland Regional Transit Authority 1240 W. Sixth St., Cleveland 44113 (216) 566-5100/www.riderta.com

2,307

2,307

Public transportation

Joseph A. Calabrese CEO, general manager, secretary/ treasurer

21

UPS 4300 E. 68th St., Cleveland 44105 (216) 641-3027/www.ups.com

2,083

10,089

Parcel delivery

Dwayne Meeks president, UPS Great Lakes District

22

American Greetings Corp. One American Road, Cleveland 44144 (216) 252-7300/www.americangreetings.com

2,050

2,050

Greeting cards; character licensing

Zev Weiss CEO

23

Continental Airlines 5300 Riverside Drive, Cleveland 44135 (216) 501-5170/www.continental.com

1,954

1,954

Airline

Rich Lisser managing director

24

Nestle USA in Solon (includes Nestle Prepared Foods and Baking) 30003 Bainbridge Road, Solon 44139 (440) 349-5757/www.nestleusa.com

1,917

2,579

Manufacturer of Stouffer's and Lean Cuisine prepared Frank Higgins foods, Buitoni pasta and sauce, Hot Pockets and Lean president, CEO, Pockets Nestle Prepared Foods

25

ArcelorMittal 3060 Eggers Ave., Cleveland 44105 (216) 429-6000/www.arcelormittal.com

1,860

2,810

Steel manufacturer

Eric Hauge vice president, general manager, ArcelorMittal Cleveland

26

Medical Mutual of Ohio 2060 E. Ninth St., Cleveland 44115 (216) 687-7000/www.medmutual.com

1,820

2,600

Mutual company providing health and life insurance, dental, vision products and TPA services

Rick A. Chiricosta president, CEO

27

Horseshoe Casino Cleveland(2) 100 Public Square, Cleveland 44113 (216) 297-4777/www.caesars.com/casinos/horseshoe-cleveland

1,793

1,793

Horseshoe Casino Cleveland is part of Caesars Entertainment Company, the world's largest casino entertainment company

Marcus Glover senior vice president, general manager

28

Southwest General 18697 Bagley Road, Middleburg Heights 44130 (440) 816-8000/www.swgeneral.com

1,698

1,750

Private, not-for-profit 354-bed top 100 hospital with a 90-year history

Thomas A. Selden president, CEO

29

Kaiser Permanente 1001 Lakeside Ave., Suite 1200, Cleveland 44114 (800) 524-7371/www.kp.org

1,582

1,770

Health care provider and insurance company

Patricia D. Kennedy-Scott regional president

30

Parma City School District 5311 Longwood Ave., Parma 44134 (440) 842-5300/www.parmacityschools.org

1,517

1,517

Public school system

Jeffrey Graham superintendent

Type of business

Source: Information is supplied by the companies unless footnoted. PNC does not report local employee numbers. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and enhanced versions of most lists, with more companies, are available to purchase at www.crainscleveland.com. (1) The 2012 employee numbers include St. John Medical Center. UH is the operating manager of St. John Medical Center. (2) Employee numbers include Thistledown.

RESEARCHED BY Deborah W. Hillyer

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Benz: Clients hope to tap vast rolodex for various purposes continued from PAGE 1

In the months following his retirement, Mr. Benz, 65, has agreed to advise a total of five clients on a part-time basis. The others are Ciuni & Panichi Inc., a Beachwood accounting firm; Falls River Group LLC, a Naples, Fla., an investment banking firm; Spire Institute, a sprawling athletic complex in Ashtabula County; and Surety Title Agency Inc. in Cleveland. Most of the organizations have retained Mr. Benz for at least a year as an executive adviser and are looking to him for advice for strategic planning, business development,

client relations and marketing, among other things. He also is talking to a couple other potential clients. “Some of my buddies are teasing me about failing retirement,� Mr. Benz said. “I just couldn’t go off and play golf and read and travel full time. It just wouldn’t be me. “It’s retirement, my way,� he added. “I can’t just flip a switch. I have a lot of years in management, and I started from the ground floor up. I figured I could help some other people.�

Knowledge to tap For Tri-C, Mr. Benz is helping to

4608 ST. CLAIR AVENUE, CLEVELAND

raise friends and money. Ciuni & Panichi hired him in August to assist the firm with its year-old initiative to tell its story better, said Mike Klein, a partner in the audit department. “We’d like to be more visible,� Mr. Klein said. “Mike’s had such a great career, and a lot of success brings a wealth of knowledge in terms of marketing and business development.� Plus, the firm has a large nonprofit practice, and Mr. Benz “certainly knows his way around nonprofits,� Mr. Klein added. Spire Institute hired Mr. Benz because it wants more visibility in Cleveland, Mr. Benz said, and the same is true for Falls River Group, which would like to increase its Northeast Ohio reach. Mr. Benz is to make introductions for Falls River Group to companies that may have a desire to buy or sell, now or later. Falls River Group used to have an office in Cleveland but closed it within the last decade. CEO and

chairman Kerry Dustin, who said Mr. Benz and he knew each other years back, approached Mr. Benz about taking a strategic adviser role at the firm, which he did Aug. 1. The firm has several retired executives who work full- or part-time to make introductions to potential clients and to help strategize. Mr. Dustin said what’s particularly attractive about Mr. Benz is that he knows leaders around Greater Cleveland and elsewhere. “Since I don’t have a Cleveland office anymore ‌ we’re not on (people’s) radar screen,â€? Mr. Dustin said. “Mike is a known person to us, and we think extremely highly of him, so having him be a representative in Northeast Ohio made all the sense in the world.â€?

Maintaining boundaries Mr. Benz is determined not to work full time, though. He reserves a couple days during the week and also his weekends for true-to-retirement activities, such as golf, fly fishing and time with family. He also

is a new trustee for the Cleveland Leadership Center and remains on the Cuyahoga County Workforce Investment Board. While he’s open to adding one or two more clients, Mr. Benz said he isn’t looking to build his newfound advisory work into a business. Instead, he wants to keep it to a small consulting practice where he can control the time spent and the quality. “I’ve had executive management responsibilities, so I know about leadership and management,â€? Mr. Benz said. “I can add value, and that’s what I really want to do. That keeps me excited. I still love Greater Cleveland, and I’m going to do everything I can to build it.â€? “When I decide that it’s no longer fun and I’m not adding value, hopefully I’ll know before anyone else knows,â€? he said. His gauge, he said, will be client feedback: “Am I making a difference for their firm from their perspective? If they don’t feel I am, then I’m out of there.â€? â–

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continued from PAGE 3

Theyâ&#x20AC;&#x2122;re the future of the firm.â&#x20AC;? Mr. Weltman aims to continue the firmâ&#x20AC;&#x2122;s growth. Weltman Weinberg employed more than 1,330 people, including 115 attorneys, in 2011, up from roughly 1,000 employees in 2007. About 600 of those employees work in the firmâ&#x20AC;&#x2122;s Cleveland and Brooklyn Heights offices. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m motivated to make us bigger and better,â&#x20AC;? Mr. Weltman said. â&#x20AC;&#x153;I feel excited. My excitement is really

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only partially related to me. We have so much change going on.â&#x20AC;?

Data-driven Weltman Weinberg is in the process of a multimillion-dollar investment, which includes an overhaul of its entire information systems infrastructure to replace technology thatâ&#x20AC;&#x2122;s more than a decade old. The firm uses the system to store client, debtor and case information. Slated for completion next April, the new system should help the company add offices in other states by allowing for quicker configuration to meet different statesâ&#x20AC;&#x2122; collections requirements, Mr. Weltman said. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ve seen a demand from our clients to have us in places other than our footprint,â&#x20AC;? he said. In addition, the firm plans to upgrade its document management system to a paperless one, and itâ&#x20AC;&#x2122;s upgrading every employeeâ&#x20AC;&#x2122;s desktop computer by the end of the year, Mr. Weltman said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s the single-largest investment that the firm has ever made,â&#x20AC;? he said, estimating it all will cost $4 million to $5 million. â&#x20AC;&#x153;Our current systems werenâ&#x20AC;&#x2122;t keeping up with our pace of growth and our needs and demands.â&#x20AC;? The upgraded system will generate real-time data that will help measure the firmâ&#x20AC;&#x2122;s success in serving clients; for example, it will show how fast a real estate case is moving along or how effectively the firm is recovering money for its clients. Mr. Weltman said he plans to place a greater emphasis on data in monitoring and evaluating the firmâ&#x20AC;&#x2122;s performance. He also intends to visit each of the firmâ&#x20AC;&#x2122;s offices at

least twice annually. â&#x20AC;&#x153;In todayâ&#x20AC;&#x2122;s world of email, all of the instant ability to communicate with people, we lose sight of the value of being there,â&#x20AC;? Mr. Weltman said. â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m looking forward to leading by being there. â&#x20AC;&#x153;When someone like me gets to every place, you see the best practices of every office,â&#x20AC;? he added. â&#x20AC;&#x153;I can see what they (offices) are doing well and take that idea from one location and be able to spread the best practices across all the offices.â&#x20AC;?

Ready for change Already, as shareholder-elect, Mr. Weltman suggested a change that has been implemented â&#x20AC;&#x201D; specifically, the naming of office managing attorneys in Cleveland and Brooklyn Heights. The firm has an office managing attorney in each of its other offices; by appointing one for Cleveland and one for Brooklyn Heights, the firm-wide managing shareholder isnâ&#x20AC;&#x2122;t handling both the local offices and the entire firm. The change also allows others to gain administrative experience. Thatâ&#x20AC;&#x2122;s a logical move, Mr. Weinberg said. â&#x20AC;&#x153;Heâ&#x20AC;&#x2122;s a very, very bright young man,â&#x20AC;? Mr. Weinberg said of his successor. â&#x20AC;&#x153;Heâ&#x20AC;&#x2122;s got a lot of great ideas. He brings a lot of things to the table. â&#x20AC;&#x153;The apple didnâ&#x20AC;&#x2122;t fall far from the tree,â&#x20AC;? added Mr. Weinberg, who regards Scottâ&#x20AC;&#x2122;s father, Bob, as the â&#x20AC;&#x153;the best collections attorney Iâ&#x20AC;&#x2122;ve ever met.â&#x20AC;? â&#x20AC;&#x153;Scott Weltman has got everything that Bob brought to the table, plus some more,â&#x20AC;? Mr. Weinberg said. â&#x20AC;&#x153;He is prepared for this job. He is ready.â&#x20AC;? â&#x2013;

DONâ&#x20AC;&#x2122;T FORGET: Crainâ&#x20AC;&#x2122;s Cleveland Business on-line @ CrainsCleveland.com For all the latest business news...online

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Rain: Gardens’ early Stores: 7-Eleven has been aggressive results show promise continued from PAGE 3

continued from PAGE 3

rain gardens, constructed wetlands, pervious pavement and anything else that helps reroute water so that it flows into the ground instead of into storm drains. That growing demand is a big reason why ABSMaterials has started designing rain gardens that use Osorb, a glass-like substance the company produces that breaks down fuel oils, solvents and other chemicals. The National Science Foundation last month announced it would award ABSMaterials a $489,000 grant to help the company figure out the best way to build Osorb rain gardens and to document how well they work. The two-year grant from the federal government’s Small Business Innovation Research program follows a previous SBIR award ABSMaterials received for the project last year.

Butterfly-approved Test results from the first garden the company built, located at the College of Wooster, showed it produced “consistently excellent” results, in some cases reducing pollutants by more than 90%, according to a written statement attributed to Hanbae Yang, an environmental engineer who is leading the company’s efforts to develop rain gardens and larger versions called “bioswales,” which can drain multiple properties. Not only do they work well, but they look good, said ABSMaterials CEO Stephen Spoonamore. The company built two of its first five rain gardens at its headquarters in Wooster. They look like normal ditches filled with plants that are native to Ohio. While showing off the two rain gardens last month, Mr. Spoonamore pointed out a few butterflies and hummingbirds fluttering among the plants. There might as well be lollipops springing up, he said with a big laugh. The rain gardens capture almost all of the water on the property that used to flow into storm drains — water that often carries chemicals from parking lots and agricultural runoff, Mr. Spoonamore said. The plants and dirt in the gardens eat chemicals such as nitrates and phosphates, which can lead to excessive algae growth if they get into lakes and streams. The Osorb, which is mixed in with the soil, breaks down toxins. The rain gardens on display at the company’s headquarters would sell for about $40,000 and $60,000. The Osorb material accounts for roughly 25% to 50% of the cost of the company’s rain gardens, but they still are cheaper than traditional systems of concrete and pipes designed to handle similar volumes of stormwater, Mr. Spoonamore said. He added that the company has bid on four projects over the past month, and all its bids were

lower than the “concrete bids.” “And in many cases we project better water quality,” he said via email.

Meeting the mandates ABSMaterials is working to get the U.S. EPA to award “best available technology” status to Osorb, which could help speed up adoption of the company’s rain gardens. The agency wouldn’t say much for this story, but the U.S. Department of Energy said in a 2011 news release that Osorb represents “a breakthrough in hydrocarbon removal technology.” In both 2010 and 2011, the department awarded two SBIR grants to ABSMaterials, which used the money to study ways to use Osorb to treat and recycle contaminated water produced during the process of exploring for oil and gas in shale rock formations. Neither the Northeast Ohio Regional Sewer District nor the city of Euclid, which runs a sewer system that serves several nearby suburbs, has committed to use the technology in any specific stormwater remediation project. But officials from both sewer systems said that situation could change in the future, if the right project comes up. Plus, the Northeast Ohio Regional Sewer District this January will start charging property owners $5.05 for every 3,000 square feet of impenetrable surface area on their land, which would create more demand for rain gardens and other types of green infrastucture. Such green alternatives notwithstanding, the sewer district still needs to invest in more concrete and pipe to treat stormwater and satisfy the U.S. EPA, said Vicky McCauley, stormwater design manager for the district. The sewer district will need to “capture a large, large, large amount of stormwater runoff,” Ms. McCauley said, to meet U.S. EPA mandates that require the district to reduce sharply the amount of sewage that flows into Lake Erie and other bodies of water during heavy rains that overwhelm the sewer system. The district plans to spend $3 billion over the next 25 years to meet the requirements. “We can’t do a handful of rain gardens and meet that mandate,” Ms. McCauley said. The city of Euclid is thinking about charging a fee designed to get property owners on its sewer system to reduce the amount of water that flows into their storm drains, said Euclid public service director Lee Bock. Though Euclid doesn’t have immediate plans to use ABSMaterials’ system, Mr. Bock said it could be a good fit for companies that own manufacturing plants, gas stations and other properties that might contain toxins. “Their system seems to have some promise,” he said. ■

Volume 33, Number 35 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the third week of May and fourth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

“We gave ourselves some wiggle room,” said Mr. Budoi, a one-time chief financial officer of the former Dairy Mart Inc. convenience store chain, which now is owned by Circle K. Mr. Budoi had participated with Eli Zahavi, an Israeli investor who lists his base as New York City, in building the EZ Energy USA business since its 2009 launch in Mansfield with the purchase of a handful of convenience stores.

Targeted approach The company’s biggest growth spurt — and its big Northeast Ohio presence — came in 2009 when it bought 65 BP “ampm” stores in Ohio and the Pittsburgh area. EZ operates some stores under ampm and others under its own “EasyTrip” label. Now based at the 4141 Rockside Road building in Seven Hills, EZ Energy USA has 25 employees at its store service center there, part of a total work force of 700. It runs 55 store locations in Ohio and 36 in Pennsylvania. Debt woes aside, Mr. Budoi said, the chain is profitable. He said the almost-resolved debt issues were

“We selected a buyer we believe will do quite well.” – Gregg Budoi, president and CEO, EZ Energy USA Inc.

less important in leading to a sale of the stores than EZ Energy’s strategic review of options for the business, which ranged from bringing in a partner to selling to a private equity firm. “We looked at selected buyers for the company and decided this was the best way to go,” Mr. Budoi said. “We did not take this out for a wide sale process. We selected a buyer we believe will do quite well.” Industry insiders say the EZ Energy chain may have suffered from the rapid rise of the Giant Eagle supermarket chain’s GetGo convenience stores, which give consumers a discount on gasoline based on their supermarket purchases; reduced margins due to high gasoline prices; and taxation under Ohio’s commercial activity tax. However, Mr. Budoi said no one factor led to the sale decision.

On the prowl Auday Arabbo, president and

CEO of the Associated Food and Petroleum Dealers trade group, which is based in West Bloomfield, Mich., and has 1,000 Ohio members, said he “would not be surprised” to see 7-Eleven emerge as EZ Energy’s buyer. “7-Eleven has been very aggressive,” Mr. Arabbo said. “They offer a pretty good deal to operators in terms of changing their location’s appearance. The commercial activity tax gives an advantage to the monsters of the industry. 7-Eleven can make it up on sales of other items (such as food and drinks) because you can’t make money on gasoline and stay in business at all.” Moreover, 7-Eleven has been active buying stores in the Midwest and Mid-Atlantic portion of the country. Last year it bought almost 200 stores in Buffalo and upstate New York from Buffalo-based Wilson Farms Inc. On Aug. 20, it bought 76 stores, most in West Virginia, but also in Ohio, Pennsylvania and Kentucky, for an undisclosed amount from Prima Marketing LLC of Fairmont, W. Va. Spokespersons for 7-Eleven Inc. did not return an e-mail message and two phone calls by Crain’s deadline last Thursday, Sept. 6. ■

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New Health Care Summit

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REAL ESTATE

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CLASSIFIED PUBLIC NOTICE SUBJECT: REQUEST FOR PROPOSAL (RFP) re: Cell Tower Revenue: The City of Seven Hills, Ohio invites Proposals from Qualified persons or entities for the selection of a: Broker for the Buyout/Enhancement of Revenue Streams of Up to Three City Cell Tower leases Parties interested in obtaining a complete copy of this RFP may do so by accessing the City of Seven Hills Web Page at www.sevenhillsohio.org. City Information > Forms > Cell Towers beginning August 27, 2012, or by faxing their request to (216) 525-6276, attention Stewart Lovece PE, PS, CBO, Director of Public Service and Properties. Please include the following information in your request: name and address of firm; name, telephone and facsimile number of contact person; specify RFP Cell Tower Leases. Copies of the RFP may also be obtained by calling 216-525-6224 Trish, or in person at City Hall, 7325 Summitview Drive Seven Hills, Ohio 44131 at the Building Dept.

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SEPTEMBER 10 - 16, 2012

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THEINSIDER

THEWEEK

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

You’ve got problems? They’ve got answers

SEPTEMBER 3 - 9

LEW STAMP/KRT

Former Cleveland Browns owner Art Modell at Cleveland Municipal Stadium in 1993.

The big story: Former Cleveland Browns owner Art Modell, who moved the team to Baltimore after a failed attempt to land a new stadium to replace Cleveland Municipal Stadium, died Sept. 6. He was 87. Browns fans never forgave him, but many people close to Mr. Modell, including former Browns tight end and current Baltimore Ravens general manager Ozzie Newsome, saw him as a key innovator for the National Football League. A former New York City ad man, Mr. Modell is regarded as one of the leaders who helped steward the NFL’s growth on television. See more, Page 4.

Writing’s on the wall: Plain Dealer publisher Terrance C.Z. Egger said he will retire from the newspaper sometime shortly after the end of this year. Mr. Egger, 55, has been the daily paper’s publisher since May 2006. The announcement sent the always-active newsroom rumor mill buzzing with concerns for the newspaper’s future. In recent weeks, Advance Publications, the paper’s New York-based owner, has announced that it would cut back from seven-day publication at a handful of its newspapers, including the New Orleans Times-Picayune.

■ NineSigma Inc. exists to help companies be more innovative, so CEO Andy Zynga figured that the Beachwood company should do some innovating of its own. NineSigma in June launched an early version of NineSights.com, a website designed to help companies facing technical challenges find people who can solve them. It’s a natural extension of the company’s day-to-day business: NineSigma helps solution “seekers” recruit problem “solvers” from all over the world to tackle specific technical issues. The seekers in that equation typically are larger companies with urgent problems that need to be solved quickly. The website, however, is targeted more toward helping companies of all sizes solve perennial problems, Mr. Zynga said. For instance, consumer products giant Procter & Gamble of Cincinnati always is looking for ways to remove stains, he said. Companies can post their technical challenges on NineSights.com for free, but they have to pay to receive special placement on the site. Researchers looking to solve problems can create profiles on the site, which tells them about new problems that fit their expertise whenever they log on. NineSigma has been using those profiles to form panels of technology experts. Solutions seekers collect their input for a fee, part of which goes to NineSigma. Mr. Zynga said he doesn’t think NineSights.com will disrupt the company’s existing business, given that its traditional clients often want to recruit problem solvers more

WHAT’S NEW

Motivated funders: BioMotiv LLC, a startup

Nailed it: RPM International Inc. of Medina acquired Kirker Enterprises Inc., a maker of nail care enamels, coatings components and related products for the personal care industry. Paterson, N.J.-based Kirker has annual sales of more than $100 million, RPM said. The maker of coatings and sealants said the acquisition is expected to be accretive to earnings within a year.

Chapter 22:

Journal Register Co., which publishes The (Lake County) News-Herald and The (Lorain) Morning Journal, filed for Chapter 11 bankruptcy protection. John Paton, CEO of Digital First Media, which operates Journal Register, wrote on his blog that he will “seek to implement a prompt sale” of Journal Register, which previously declared bankruptcy in 2009. He expects the auction and sale process to take about 90 days. Journal Register has signed a stalking horse bid with 21st CMH Acquisition Co., an affiliate of funds managed by Alden Global Capital LLC — the company that owns Journal Register.

An attorney’s interest in principal and interest ■ The new leaders of Central Federal Corp. aren’t the only ones buying up lots of shares in the newly recapitalized banking company. Edward W. Cochran, who in a Securities and Exchange Commission filing describes himself as a self-employed attorney, revealed in a document dated Aug. 29 that he has bought more than 1 million Central Federal shares for $1.6 million in personal funds. That means Mr. Cochran now owns 6.75% of the company’s common stock outstanding. Central Federal, the parent of CFBank in Fairlawn, announced in late August that it had raised $22.5 million in new capital and will use the money to grow the company, to improve the bank’s capital ratios and to extinguish its obligations to the U.S. Department of the Treasury through the Troubled Asset Relief Program. Also filed were documents revealing that the banking company’s new leaders — including CEO Tim O’Dell, president Thad Perry and chairman Bob Hoeweler — on Aug. 20 bought the shares they’d agreed to buy as standby purchasers in Central Federal’s stock offering.

This fear factor does not involve eating bugs

THE COMPANY: Cequent Consumer Products Inc., Solon THE PRODUCT: SportWing Trunk Mount 2-Bike Carrier Cequent is set to unveil the bike carrier at the Interbike International Bicycle Expo, which will be held Sept. 19-21 at the Sands Convention Center in Las Vegas. This is the fourth rack from Cequent’s SportWing line. Cequent says the SportWing Trunk Mount fits most cars, vans, SUVS and holds two bikes — any size, any style — by the wheel for a secure transport. The SportWing Trunk Mount has a manufacturer’s suggested retail price range of $99.99 to $109.99. Cequent says the new product fits into the company’s “long tradition” of manufacturing and distributing bike racks that combine quality with affordability. The SportWing Truck Mount’s support cradles hold bikes by the wheels and “provide instant adjustability for any style of bike,” along with quick and easy loading, the company says. No adapter bars are needed. Francis Bernart, vice president of marketing for Cequent, says this will be the company’s second year of exhibiting at the Interbike show. For information, visit www.CequentConsumer Products.com.

As a result, Mr. O’Dell owns 374,333 shares, or 2.37%; Mr. Perry owns 683,333 shares, or 4.32%; and Mr. Hoeweler owns 136,666 shares, or 0.86%. Collectively with two other new board members, James H. Frauenberg II and Donal H. Malenick, who also were standby purchasers, they own 1.79 million shares, or 11.3% of the total shares outstanding. — Michelle Park

A law office takes its spot in history ■ McMahon DeGulis LLP has long aimed to become known as a premier environmental law practice in Ohio. The opening of the firm’s third office in a metropolitan area should help, partner Lou McMahon said. Founded in 1994 in Cleveland, the 13attorney law firm in late July opened a Cincinnati office that is frequented by Mr. McMahon, who has had significant client relationships in the market for years, and staffed by associate Erica M. Spitzig. The firm’s Columbus office opened in 2007. “Our work for manufacturers and local governments in one part of Ohio translates very well to the needs of clients across Ohio, so this gives us the ability to better serve the entire state,” Mr. McMahon said. McMahon DeGulis’ Cincinnati office is located at The Monastery, an office building in the city’s Mount Adams neighborhood that’s listed on the National Register of Historic Places. — Michelle Park

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

that aims to raise $100 million that it would use to help experimental drugs get to the point where they can be sold to pharmaceutical companies or investors, secured $21 million in financing from its founding investors, University Hospitals and the Harrington family. The initial capital will be used to launch operations and initiate the development of BioMotiv’s technology portfolio.

Securing the future: Giesecke & Devrient, a German company that specializes in mobile security, will expand its production operations in Twinsburg and double its local work force in the process. The Twinsburg plant makes magnetic stripe-based cards such as those used at automated teller machines. The plant has been part of the G&D portfolio since 1997, when it acquired Cardtech Inc. G&D employs about 100 at the plant. Once the 28,000-square-foot expansion is completed, the company expects to have 200 workers in Twinsburg.

aggressively. But if NineSigma didn’t create the website, another company eventually would have built something like it, Mr. Zynga said. “We might as well be the one doing the disrupting,” he said. — Chuck Soder

■ Jones Day lawyers apparently benefit from having intimidation on their side. Law360.com reported that Jones Day is among “four top-notch firms that in-house counsel dread seeing on the other side of the courtroom, according to a new survey of corporate counsel.” Jones Day, Boies Schiller & Flexner LLP, Kirkland & Ellis LLP and Skadden Arps Slate Meagher & Flom LLP — dubbed the “Fearsome Foursome,” naturally — were listed as the four most-feared litigation firms in the BTI Litigation Outlook 2013 report from The BTI Consulting Group of Wellesley, Mass., Law360 .com reported recently. In its statement on the survey, Jones Day noted this is the second time it was named to the Fearsome Foursome. It also was named a “Litigation Powerhouse” in intellectual property, securities and finance, and complex commercial litigation.

Americans hate government, but not local governments ■ U.S. states still have a long way to go in consolidating local governments. Governing.com reported there were 89,004 local government entities across the United States this year, down only 472, or 0.5%, from 2007, according to the 2012 Census of Governments. In terms of raw counts, Illinois (6,968), Pennsylvania (4,905) and Texas (4,856) have the most local governments of any state. Ohio has 3,702 local governments, or 32.1

government entities for each 100,000 citizens. That puts Ohio 26th in local governments per capita, according to the website. “Government fragmentation has long been torn between two competing interests,” Governing.com noted. “On one hand, many officials argue consolidation boosts efficiency and makes coordination easier. Citizens, though, remain attached to their local governments and often resent representation by a perceived group of outsiders.”

Computer images in ads offer an escape from reality ■ A John Carroll University professor was quoted in a recent MarketWatch.com story about the rise of computer-generated imaging in advertising and its impact on consumers’ perceptions of what’s real and what’s fake. The piece noted that Swedish retailing giant Ikea “created computer-generated images of its furniture for the new catalog, rather than hiring a photographer. By next year, a quarter of the scenes depicted in Ikea’s print and online advertising will be digitally drawn rather than photographed.” The strategy is common in other parts of the ad world, particularly in the fashion, housing and auto markets. Computer-generated realities “may be cheaper, more appealing, and more versatile than the genuine articles,” MarketWatch .com reported, but experts say they could distort consumer expectations. “I worry that it will create an unrealistic picture that customers will not be able to copy,” said Earl Spurgin, professor of philosophy and director of applied ethics at John Carroll.

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