Crain's Cleveland Business

VOL. 40, NO. 19

MAY 13 - 19, 2019

Source Lunch

Akron Kent Displays CEO pens brand strategy. Page 20

The Lists Mac Love, founder, Art x Love Page 23

CLEVELAND BUSINESS

Registered investment advisers and money managers Pages 18-19

FINANCE

NEO may finally get its due from JobsOhio

SPORTS BUSINESS

POTENTIAL JACKPOT The Cavs’ odds of landing Duke phenom Zion Williamson — arguably the top prospect since Kevin Durant — are slim, but the benefits would be huge

By JAY MILLER jmiller@crain.com @millerjh

Fresh eyes in Columbus may mean a boost for the civic effort to grow the Northeast Ohio economy.

Several events in recent months, including a May 2 visit by new Gov. Mike DeWine, suggest that the region will be getting more attention — which could lead to more investment — from JobsOhio, the nonprofit that leads the state’s business development efforts and that in 2019 provided $149 million in financial incentives to attract business growth in the state.

At the May 2 annual meeting of Team NEO, JobsOhio’s regional business development partner, DeWine told 300 business and civic leaders that he intends to listen to the needs of local communities and pointed to the importance of Northeast Ohio.

“You know that 40% of the economy of the state comes from Northeast Ohio,” he said. “So how Northeast Ohio goes, so goes Ohio.”

While it’s widely acknowledged that the 18-county region has the largest regional economy in the state, it doesn’t get a corresponding share of JobsOhio’s attention. The 8-year-old nonprofit makes loans and grants to businesses that bring new operations to the state or to existing businesses that expand.

According to a Crain’s analysis of JobsOhio data, affirmed by the leaders of Team NEO, JobsOhio’s partner in the 18 counties of Northeast Ohio, the region won only 20.7% of the $149 million invested by JobsOhio.

The region also batted under its weight when it came to jobs created and investments made by companies that won assistance from JobsOhio.

By Kevin Kleps kkleps@crain.com @KevinKleps

Ed Tiryakian has taught a sports business class at Duke University for the last nine years.

He’s a Duke graduate who attends a handful of men’s basketball games each season.

He was still astounded by the Zion Williamson experience.

“People were paying two or three grand to watch a college kid play,” Tiryakian said. “As someone who has been around the program a long time and is a sports economics guy, I’ve never seen anything like it. It’s amazing.”

On Tuesday, May 14, representatives from the Cleveland Cavaliers and 13 other NBA teams will gather in Chicago for the draft lottery. Each will be hoping for a shot at Williamson, who is regarded by many analysts as the top prospect since Kevin Durant and could have the best combination of potential on- and off-court impact since LeBron James.

The Cavs, along with the New York Knicks and Phoenix Suns, have the best chance to land the high-flying 18-year-old, but Cleveland’s odds, at 14%, are remote. Williamson, though, is a rare prospect for whom the “lottery” tag is appropriate.

A league source estimated that the Spartanburg, S.C., product — the consensus player of the year as a freshman at Duke — could produce a 25% to 30% business lift for a team such as the Cavs. For another club that’s really struggling to drum up interest, the increase could be 40%, the source said.

SEE ZION, PAGE 21 Mitchell Layton/Getty Images

SEE JOBSOHIO, PAGE 21 Entire contents © 2019 by Crain Communications Inc.

Focus: Finance Private equity and venture capital firms see cannabis as a growth industry. Page 12 Q&A: Tim Burke of KeyBank Page 13 Insight2Profit helps companies stop leaving money on the table. Page 16

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CRAIN’S CLEVELAND BUSINESS

Advance, PD struggle to adapt to new reality

By Jay Miller jmiller@crain.com @millerjh

On May 13, 1983, The Plain Dealer listed on its editorial page its circulation figures — 497,386 daily and 501,042 on Sundays.

In its latest circulation numbers from the Alliance for Audited Media — The Plain Dealer long ago took its circulation figures down from the editorial page — the monopoly daily newspaper in Cleveland reported average Sunday circulation for the first quarter of 171,404 and average circulation for Wednesdays and Fridays (the only weekdays the paper is home delivered) of 94,838.

A year earlier, those same numbers were 216,711 and 141,053. Part of the reason for the decline in average daily circulation is the decision in 2013 to reduce home delivery, typically where 80% of newspapers are sold.

Advertising revenue has long been the main source of media revenue, and when circulation falls, advertising revenue follows.

“Since around 2001, newspaper advertising revenue has been plummeting,” George Rodrigue, president and editor of the newspaper, wrote in an email to staff. “It’s below the level of the 1950s now. This has forced newsrooms around the country to make painful adjustments.”

That continuing decline in readers — diminishing its value to advertisers — led the PD to trim its editorial staff in April, laying off 14 news staffers.

Since, then it has laid off another 29 staffers, as part of a shift in page production to a centralized system.

It’s unlikely that the Cleveland newspaper will disappear any time soon, in part because of its relationship and its importance to its companion news organization, cleveland.com.

The Plain Dealer Publishing Co., which runs the newspaper, and Advance Ohio, which controls cleveland.com, are both owned by Advance Publications. They operate as separate companies. Work from cleveland.com reporters appears in The Plain Dealer, while the work of PD reporters also appears online on cleveland.com.

The New York City-based parent is a media giant that has had a long commitment to newspapers: It traces its roots to a single newspaper, the Staten Island Advance. And while Advance just sold its New Orleans operation — the Times-Picayune newspaper and its nola.com website — it’s unlikely the Cleveland business will be sold. The New Orleans sale, which Advance announced May 2, appears to be a one-off, a victim of the decision by the owner of the Baton Rouge Advocate to compete in nearby New Orleans. The Advocate has notified Times-Picayune employees that all will be laid off and it is keeping only the name. Some of those laid off might be hired back by the Advocate.

Although 60 daily newspapers closed since 2004, according to a 2018 study, “The Expanding News Desert,” by the University of North Carolina — Advance Publications is not banking on a recovery of print for The Plain Dealer. It firmly believes the future is cleveland.com, the 23-year-old digital news operation, calling its strategy “digital first.” It also has expanded its business side beyond advertising, offering clients a variety of digital marketing services, including search engine optimization.

As Rodrigue wrote, the advertising

P002_CL_20190513.indd 2

The building at 1801 Superior Ave. used to house The Plain Dealer, but now is the home of Advance Ohio, the organization that operates cleveland.com. (David Kordalski)

The civic impact of fewer reporters The changing economics of the news business make the financial struggles of The Plain Dealer and cleveland.com a business story worth telling.

But the loss of revenue at the organization in the last decade has translated into a sharp decline in the size of the reporting staff. That, says a Cleveland State University professor who studied this industrywide decline at California newspapers, diminishes a news organization’s role as a civic watchdog.

In that study, lead author Meghan Rubado, an assistant professor in the Maxine Goodman Levin College of Urban Affairs, argues that the loss of experienced, professional reporting in the coverage of local government has negative consequences for the quality of city politics. That’s because citizens become less informed about local policies and elections. The lack of information, in turn, may reduce voter turnout.

On April 1, The Plain Dealer laid off 14 newsroom employees, mostly reporters. The newspaper also is losing 29 jobs from what is called its “Pub Hub,” the production department that designed and laid out the newspaper pages. That work has gone to a centralized production center run by Advance Local, the newspaper unit of Advance Publications, a New York City media giant.

The Plain Dealer newsroom now has 32 members, said Ginger Christ, chair of the PD’s NewsGuild-CWA cuts, followed by staff cuts, are typical in the newspaper business, including the other 23 newspapers owned by Advance. News operations that pair print and online outlets have lost about two-thirds of their ad revenue over the last dozen years.

Online advertising has been able to show modest ad growth in recent years, but the bulk of the advertising revenue newspapers used to have has been siphoned off by online giants, including Google, Facebook and Craigslist, which now corral 51.5% of the $207 billion spent on advertising in the United States, according to Magna, a media buying service. Print’s share — magazines as well as newspapers — has shrunk to 14.9%.

However, it is not at all clear if the Cleveland operation can survive continuing losses.

As a private company, Advance does not disclose financial information. Chris Quinn, the president and editor of Advance Ohio, declined a request for an interview for this story.

Advance Ohio is the Advance organization that operates cleveland.com

Local 1, who work at the PD’s production facility in Brooklyn.

However, Advance Local has a second newsroom at 1801 Superior Ave., in the building that once housed The Plain Dealer. There, according to several sources, between 50 and 60 people, who are not unionized, produce and edit news stories that appear on the website and in the PD. Two decades ago, according to Christ, The Plain Dealer had only one newsroom and a unionized staff of 340 at the Superior Avenue location. The combined newsrooms are now about one-quarter of that size.

The Plain Dealer was the only unionized Advance newspaper.

The Guild’s contract, which was recently extended, runs until the end of February 2021, Christ said.

While the union continues to fight for the jobs of its members, Christ knows Advance can’t ignore the economic reality of a declining newspaper revenue stream.

“We know this was hard for them,” she said. “We know someone had to make those hard decisions.”

In “Political Consequences of the Endangered Local Watchdog: Newspaper Decline and Mayoral Elections in the United States,” Rubado and co-author Jay Jennings of the University of Texas found that “relatively sharp declines in newsroom staffing had, on average, significantly reduced political compeand oversees the marketing and advertising for both outlets.

“I think I’m going to sit this one out,” Quinn said, responding by email to an interview request. “I’ve found of late that the best way to get our story out there is to tell it ourselves or to talk with people who cover our industry.”

Advance shocked the media world in 2009 when it closed its Ann Arbor (Mich.) News and reconstituted its operation in the college town as AnnArbor.com, a website that would publish a print edition two days a week. Then in 2012 it reduced the publication of the Times-Picayune to three days a week.

The rest of the Advance stable of newspapers has followed suit, including the PD, which went to four-daysa-week delivery in 2013. The strategy, said then-managing editor Thom Fladung at the time, was an attempt to re-create as much as possible online the domination of local advertising revenue that hometown newspapers had in the days before the internet.

The move hastened the loss of circulation, and observers do not be-

tition in mayoral races. We also find suggestive evidence that lower staffing levels are associated with lower voter turnout.”

In an interview at her office on the Cleveland State campus, Rubado, a former reporter for the Syracuse Post-Standard — a publication that, like The Plain Dealer, is owned

by Advance — assessed the political coverage she has seen in Cleveland since she arrived three years ago.

“I was struck when I moved here,” she said of her arrival from graduate school in Philadelphia. “I found it very hard to find local political information, even just basic candidate and ballot-issue options in the local races, stuff like that. There would be an editorial, or some sort of endorsement or recommendation on a valid question. But finding just the basic facts, some reporter just detailing for a busy citizen what they’re going to face — I found it hard to find that stuff. And also just day-to-day in city government in Cleveland to some extent.”

Rachel Dissell, a Plain Dealer reporter and vice chair of the Guild unit, sees what Rubado sees. And she knows that management, as well as reporters like her, struggle with the organization’s diminished resources.

“People on both sides seriously care about the quality of the journalism,” she said, but added, “We no longer have someone covering transportation.” — Jay Miller lieve online advertising has offset the loss of circulation and ad revenue, as Advance might have hoped.

“They would say that their calculation in 2008 and 2009 that print wasn’t going to bounce back at all and over time you would just as soon be out of that business was correct, and the savings when you don’t have to print and deliver and you don’t need as elaborate a layout system, are real savings,” said Rick Edmonds, a media business analyst at the Poynter Institute for Media Studies in Tampa, Fla. “On the other hand, a strategy of building up huge volume with the websites and selling a lot of advertising, I won’t say that hasn’t worked at all, but it hasn’t worked nearly as well as they’d hoped.”

Ken Doctor, a media analyst and former print and digital news executive, described Advance as a “highly paternalistic” organization that was slow to start trimming its operations after the Great Recession “All of a sudden, (Advance) got the religion that the digital world was going to overtake the print world and

flipped the switch faster than any other company, but without preparation, and they are still dealing with that today as we approach 2020,” Doctor said in a telephone interview from the office of his Newsonomics consulting firm in Santa Cruz, Calif. “Their plan (cutting days of print) hasn’t worked.”

Industrywide, according to a study by the Pew Research Center, newspaper advertising nationally peaked at $49.3 billion in 2006. By 2017, that figure was down to $16.5 billion, with digital advertising accounting for onethird of that total, reports PwC, the worldwide auditing and professional services firm, in its annual Global Entertainment & Media Outlook. However, PwC reports digital advertising for news organizations is expected to grow by only 2.2% a year, while print losses will run about 10.4%.

On its website, Advance Ohio states that its brands reach 1.5 million different local consumers every week, about the same number, it claims, for the total audience reached by local television stations at prime time and local radio stations during drive time.

But, said Doctor, trying to sell digital advertising against the likes of Facebook and Google “is an ongoing disaster.”

Locally, advertisers and advertising agency executives say they use the PD and cleveland.com, but the two aren’t significant parts of media budgets, save perhaps for the auto dealers.

“People still are attracted, not only to the physical newspaper itself in a physical sense, but also to the cleveland.com version, which has some advertising in it,” said Lou Vitantonio, president of the Greater Cleveland Automobile Dealers Association. “It gives the dealers an opportunity to put numerous offers out in one place. I’m sure the budgets for print and cleveland.com aren’t the same as they were because we have other places we have to advertise to be in front of customers.”

Jim Gagen, president of SynerG Marketing & Media Inc. in Lakewood, a longtime media buyer, whose clients have included Cedar Point amusement park, Medical Mutual and Perkins Pancake Restaurants, said he uses the PD and cleveland.com, but not extensively.

“People are saying their entity is so diminished, is it worth the cost anymore?” he said. “Ten or 20 years ago, you would say, ‘That’s what it costs and we’ve got to do it because no one else has that kind of reach.’ ” He said the Advance sales staff is not as interested in selling newspapers ads as selling online advertising or the variety of digital marketing services that are part of online marketing, such as search engine optimization and geofencing, two services that help clients increase the reach of their digital advertising.

But there, Advance is fighting an uphill battle, competing with advertising agencies, marketing firms and digital specialists, said Jason Therrien, president of thunder::tech, a Cleveland digital marketing and web design agency.

“I assume this approach is justified because, if they’re already talking to a local company that advertises with them, why not sell them marketing services, too?” Therrien said in an email. “In theory, this can work, but going from publishing to standing up to a full-fledged professional services firm is a big jump that takes a combination of time and money to build the infrastructure for. They’re not the only ones trying it.”

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CRAIN’S CLEVELAND BUSINESS

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Team NEO trying to align supply and demand

By Rachel Abbey McCafferty rmccafferty@crain.com @ramccafferty

Team NEO is trying to take its skills-gap data into the real world.

The latest edition of the Aligning Opportunities report was released in May 2018. The report identifies areas of job demand and how well those match up with the credentials students are actually earning. And it took a close look at the supply and demand in manufacturing, health care and information technology.

This year, Aligning Opportunities is less of a report and more of a program, said Sydney Martis, research manager at Team NEO. On May 6, Team NEO held the first of three planned Aligning Opportunities events. The first forum was focused on manufacturing and held at a Vitamix facility in Strongsville.

There will also be forums on health care and IT before the launch event for the new report in July. Delta Dental is sponsoring the Aligning Opportunities report and related programming in 2019.

Attendees at the first forum included everyone from manufacturers to HR and technology companies and from government agencies to schools. That’s intentional. Martis said Team NEO wanted to give these different groups the chance to talk directly to one another.

“The unique thing about what we’re doing this year is we’re really trying to bring our partners together so that we are aligned with what we are doing, the story we are telling and how we’re working together to overcome these talent challenges,” Martis said.

In the few years that Team NEO has been producing the Aligning Opportunities report, Jacob Duritsky, vice president, strategy and research, said he has seen the community embrace the idea that the “misalignment” isn’t due to any one institution or industry, but that everyone has to deal with it if they want better business development outcomes.

Team NEO wants to “quantify” the problem, Duritsky said.

“What this ultimately became is a bit of a call to action for the region that says: We know we have challenges. We know others do, too,” Duritsky said. “But by defining it, by quantifying it, we think, ultimately, we can start to convene folks in a more meaningful way that drives regional solutions.”

Attendees of the first forum had the chance to share some of the challenges they’re seeing to hiring, like transportation or attendance, as well as potential solutions they’re trying, such as ensuring high school students get exposure to the industry.

The conversation didn’t go deep, but it was broad.

Though the discussion skewed more toward concerns than solutions, Duritsky said that was the balance he expected. As long as Team NEO can gather two or three possible case studies for the 2019 report from each event, it will be satisfied.

Some possible strategies he plans to follow up on from the first meeting are the Akron Public Schools’ acade-

Correction JJA

May 6, Page 15 Q&A with Heather Roszczyk incorrectly stated the number of Akron companies to appear on the Inc. 5000 list. Akron has had 42 companies appear on the list in the past five years.

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mies, which will expose students to different career paths, and Vitamix’s approach to internal career paths.

This is designed to be just the start of the conversation.

In the fall, Martis said, Team NEO hopes to work with its partners in manufacturing, health care and IT to create programming to expose K-12 students to those different career paths.

And Team NEO would like to createsomething of a talent development council in the region, Duritsky said, pulling together representatives from business and higher education.

Team NEO is far from the only organization in the region trying to tackle the skills gap in in-demand industries. For example, there’s the public-private partnerships of Work-

force Connect in Cuyahoga County, of which Team NEO is part, aimed at addressing the skills gap in manufacturing, health care and IT. There is also the workforce development agency ConxusNEO in Summit County. It was clear that Team NEO’s efforts in the skills-gap space had to be “complementary” toward the economic development work already going on, not duplicative, Duritsky said.

Team NEO’s goal is to provide the data needed for those efforts and to amplify the efforts in a way that benefits the whole region.

ConxusNEO has been working with Team NEO, MAGNET, RITE, the Greater Cleveland Partnership and other organizations looking to produce labor-market information, said

ConxusNEO president Sue Lacy.

“We all realize that we want to be singing out of the same hymnbook,” Lacy said. “Gone are the days where we’re interested individually in producing reports that, just because of the way we might view the data, it might show a slightly different picture.”

Now, the goal is to determine how to best use each organization’s individual strengths. For example, ConxusNEO has developed an approach to illustrate career pathways, Lacy said. That work began as part of the Akron Public Schools’ move to an academies model for high schools, but can be applied elsewhere.

Ethan Karp, CEO and president of MAGNET, thinks workforce development efforts have to be local, but that

sharing possible solutions and strategies regionwide makes sense. MAGNET is one of the leaders of Workforce Connect’s manufacturing sector partnership.

Ultimately, Karp said he thinks the skills gap is too large for one organization to take on. He likens it to the start of the auto industry, when instead of a few large companies, there were a lot of small ones. That led to innovation.

In terms of the skills gap, once there are some solutions that work at scale, he expects people will gravitate to them. But for now? Even if there’s some redundancy in the region, most of the programs he sees are taking on the skills gap in slightly different ways. And that, Karp said, is “all part of the innovation process.”

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Capitalizing on the tight industrial real estate market, a joint venture formed by two Lake County companies is preparing to launch an industrial park on an 87-acre site in Mentor that’s considered the last large industrial parcel in a suburb known for industrial properties.

The name of the new park remains to be determined. Its design, which could accommodate buildings with a total of more than a million square feet of space, is being readied for city review this summer. If approved, that could trigger installation of utilities and construction of roads by the fall.

“We’re trying to move fast,” said Greg Sommers, a principal of The Sommers Real Estate Group of Chardon.

Sommers Group partnered with homebuilder George Davis, president of ProBuilt Homes of Mentor, to form Mentor Industrial Development LLC to acquire at auction the parcel previously owned by Hamilton-Mercantile LLC, an affiliate of longtime real estate owner and developer Richard Osborne Jr. of Mentor.

Moving fast sounds fine to Kevin Malecek, the city of Mentor’s director of economic development and international trade.

“We get inquiries from companies about land to build all the time,” Malecek said. “We want to provide them a landing spot.”

And no small landing spot is planned. The city and developers are keen to attract large concerns that could be in the market for buildings

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Malecek said he believes the other large parcel available in town is about 20 acres. Most of the other parcels are in the 6- to 12-acre range.

“We have a vision of providing a park for companies that want 8 to 10 acres or more,” Sommers said.

“We’ve been approached for smaller sales but want to provide what the market lacks.”

Terry Coyne, a Newmark Knight Frank vice chairman in its Cleveland office, said industrial users with an appetite for big parcels have defined the Northeast Ohio industrial market the last few years, particularly due to the rise of e-commerce. (Coyne is the listing agent who represents Mentor Industrial Development.)

“Whether it’s Mentor or Twinsburg, the market is for parcels of 20 acres and up,” Coyne said in a phone interview on Thursday, May 9.

“What’s unique is that we have a large parcel in a market with many smaller parcels.”

The asking price for sites is $65,000 an acre, according to NKF’s online listing for the site. Coyne added, “The developers are agnostic. You can have us build it for you or bring your own builder.”

Sommers said his family’s business has decades of experience in residential land development but is venturing into industrial land to diversify its offerings. Sommers also has participated in multiple commercial projects throughout Northeast Ohio and western Pennsylvania, he said.

Davis has often bought home sites from the Sommers over the years, Greg Sommers said. The two groups decided to join together, he explained, because they realized they were both in pursuit of the same prize at last year’s auction.

In an interview, Davis said he viewed it as an opportunity he wanted to take advantage of and that building industrial roads is not much different from building a residential street.

“The utilities and the pavement are much the same,” Davis said. “My business is in Mentor, and I know that Mentor needs this. There are a lot of synergies where suppliers of larger companies could set up shop here.”

According to Lake County land records, Mentor Industrial paid $445,500 for the 87-acre parcel, or a little more than $5,000 an acre. Although that’s a pittance in a market where industrial land often goes for $100,000 or more an acre, it also reflects the substantial capital investment it will take to make the park an operating industrial estate.

David Browning, managing director of CBRE’s Cleveland office, said, “The market has been supply-constrained for several years.

It’s great to see new industrial parks come forward. I hope we see some quality industrial development come out of it.”

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By Lydia Coutré lcoutre@crain.com @LydiaCoutre

In addition to the new seven-story patient tower Summa Health is opening in late May on its Akron campus, there are nearly two dozen other construction projects planned or underway across the system.

Summa estimates that it will invest more than $100 million in direct labor costs for the projects scheduled over the next two to three years.

“This is really a function of a couple things,” said Dr. Cliff Deveny, Summa’s president and CEO. “One is it was time to update everything. But two, the organization has done much better. And so being in a better financial position, we were able to borrow the money. We’re going to be refinancing some of the debt. Days cash (on hand) is the highest I’ve seen it since I’ve been here: 273 days.”

Deveny joined Summa as its interim leader in March 2017, a time of financial and cultural turmoil for the system. He was named its permanent president and CEO in October 2018 following a significant financial turnaround.

Summa closed 2018 with an operating income of $24.3 million, compared to an operating loss of $28 mil5/8/19 PM prior. Operating revenue lion 12:21 the year grew slightly, from $1.31 billion to $1.37 billion, between those two years.

Throughout this turnaround, the system has remained committed to its construction projects. Summa expects to open the new 343,000-square-foot patient tower — the first phase of the system’s $350 million investment in its facilities — on time and under budget.

Summa has planned a community open house for the building from 11 a.m. to 3 p.m. on Sunday, May 19.

Of the $350 million commitment, more than $220 million is being spent during the campaign’s first phase, of which the tower is the landmark investment. It includes other major projects as well, including $22 million spent on improvements throughout Summa’s Barberton campus.

Construction is expected to start within a year on phase two, which includes relocating inpatient services and clinical services from St. Thomas over to the Akron campus, as well as the renovation of current hospital space at the Akron campus and a couple dozen projects that are new facilities or renovations of existing buildings.

The new tower brings the portion of Summa’s inpatient rooms that are private from 30% to about 50%. Following the renovation in phase two, that number should be in the mid- to upper 80s.

“Because of the privatization, we’re not really increasing the number of beds at all,” said Dr. David Custodio, president of Summa Health System – Akron and St. Thomas Campuses.

The ground floor of the new pa-

The seven-story Summa Health tower in Akron will open in late May. (Photographs by Tim Harrison for Crain’s)

tient tower will include pre-admission testing, a multipurpose conference center and the Dr. Gary B. and Pamela S. Williams Center for Breast Health. The first floor is dedicated to same-day surgery and expands the operating rooms by 33%.

The birthing center (featuring labor and delivery rooms with options for tub birthing, as well as a dedicated triage area, operating rooms and a suite of recovery rooms for surgical deliveries) and Akron Children’s Hospital’s neonatal intensive care unit are housed on the second floor.

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The first phase of Summa Health’s renovations will cost more than $220 million and feature a patient tower that will span 343,000 square feet.

Construction for the second phase is expected to begin within a year.

h

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The third floor is dedicated to mechanical equipment and will have no public access. Floors four through six contain in-patient rooms and space for friends and family to visit.

With a couple of years under his belt, the finances recovering from 2017 losses and the new patient tower scheduled to open in late May, Deveny has a goal going forward to continue to meet the needs of the community and to grow.

“One of the things we saw early on was we had a significant amount of demand for services … but we hadn’t built the capacity or the accessibility,” he said. “So either we didn’t have the workforce or we didn’t have the sites of care, we didn’t have the con-

sumer focus to meet the needs and expectations.”

In the first quarter of this year, compared to Q1 2018, inpatient admissions were up 5% and surgical cases increased 2%, while observation cases decreased by 23%, emergency visits decreased by 3% and other outpatient visits decreased by 2%.

The system has extended hours and expanded its workforce while reducing overhead through the consolidation of administrative functions. In the past 18 months, the system has hired about 50 new physicians. The new tower will create 100 new jobs.

“You may see 20 positions over here relocated or changed, but then

Summa Health’s Dr. David Custodio, left, and CEO Dr. Cliff Deveny walk through the newly renovated Akron campus.

we’re growing over here,” Deveny said. “So we’ve been basically recreating ourselves.”

Last October, Summa launched a

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search for a partner health system to provide long-term financial stability, advance service offerings and support continued investment in the

community’s health.

Deveny said the system currently has a few final candidates who are currently working to propose everything from structure to governance to capital commitments and more.

The board will assess the final proposals and score them over the next two to three weeks with a goal of making a decision by late May or early June as to whether they will partner with a system and, if so, with whom. Deveny called the final candidates a “diverse” group but declined to lay out specifics.

As the system has gone through massive change in the past couple of years, so too has the culture of the organization.

“At every level, you’re seeing pride in the work, pride in the organization,” Deveny said. “People are telling their friends, ‘You need to come work here.’ Physicians are more actively involved in recruitment than I’ve ever seen.”

Added Custodio: “It’s palpably different in the workforce.”

This editorial feature is a yearly snapshot of activity taking place in the region’s robust private school landscape.

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trilogycle.com Just west of the apartment row that is shaping up on lower Detroit Avenue in Ohio City, Conveyer & Caster and Kowalski Heat Treating occupied adjoining properties where they have worked out among themselves a solution to the same problem: finding room to grow.

The outcome for the north end of the block between West 33rd and West 38th streets easily might have been different.

Owners of Conveyer & Caster sold the company’s three small buildings to Kowalski after moving to Westlake. Indeed, Conveyer & Caster’s owners, the Stohr family, rebuffed three unsolicited offers from real estate developers produced by word-of-mouth reports that the company, through Storefront LLC, had paid $2.9 million for a building at 29570 Clemens Road in Westlake.

Instead, an affiliate formed by Stephen Kowalski, president of Kowalski Heat Treating, submitted the best offer for Conveyer & Caster’s three buildings. They will provide room to expand for the family-owned Kowalski, which already occupies six buildings that it has purchased since setting up shop in 1975 at 3611 Detroit Ave. Conveyer & Caster last month settled into its new Westlake location.

CEO Jeff Stohr said the company has gained a lot with the move, besides setting up shop in a 75,000-squarefoot building on a 9-acre site (compared to 3 acres in Ohio City) with a total of 24,000 square feet.

“When we looked at undertaking new challenges, we could not because we did not have the room,” Stohr said. “When we wanted to hire someone, we didn’t have room.”

Now, the company arguably has more room than it needs, with contemporary offices, a large training center capable of accommodating the entire 48-person staff and room to install displays of the casters and conveyors it sells. There is even room to assemble and test conveyors for clients before shipping them off for installation, a value-added side of its business.

“We have grass,” Stohr added.

“We have two parking lots. We have

P009_CL_20190513.indd 9

24/7 Access | Free Parking No Commitment | No Fees Conveyer & Caster owners Trevor Stohr, left, and Jeffrey Stohr said the company gained room to grow in Westlake, though they miss Ohio City.

three loading docks.”

Previously, it would have trucks lined up on the alley behind its former Detroit location to load or unload.

“We’d have people going in and out to trucks in freezing weather,” Stohr said. Now, there is even room for an entertainment center, complete with a pingpong table and cafe, that the company will use for entertaining and educating clients.

At the same time, the new place recalls the old one, with photo-collages of the exteriors of the old buildings, its warehouse and family portraits of the Stohrs’ father and grandfather adorning the new office.

Meantime, Kowalski won’t focus on any shortcomings of its additional buildings in Ohio City.

“It’s wonderfully exciting,” Kowalski said. “We needed assembly and warehouse space and office space. That’s all there in the Conveyer & Caster buildings. And we don’t have to move.”

“This will make us more productive,” Kowalski said of the 40-person company. “Our engineering staff estimates the company will save 250,000 steps a year with the added space and improved designs. You know what that means? We can produce more with the same effort.”

Kowalski spent more than two years sizing up options to move, but dropped them when the option to buy Conveyer & Caster’s site surfaced.

“It’s proof there’s a big guy up there,” he added.

Owners of both companies worked with the city to find options to expand within the city.

Trevor Stohr, president of Conveyer & Caster, said existing buildings tended to need too much work. The company did not want to build, and construction sites the city showed them required a land lease rather than the outright ownership they sought.

Neither company would disclose how much Kowalski paid for the three buildings. A sale price could not be found last week in Cuyahoga County records, which value the buildings at more than $600,000.

Tom McNair, executive director of Ohio City Inc., said the situation shows the challenges that legacy companies have expanding in longtime city sites.

The deals mean different things for the owners of the two businesses.

Kowalski kept a prized view of Lake Erie that he has from his second-floor office. He also enjoys the neighborhood’s evolution.

“On Sundays before, no one was here. Now, it’s an active area, with people walking around with baby carriages,” he said. By contrast, he said that in the 1970s, there was a stolen, burned car found nearby on an almost weekly basis.

Jeff and Trevor Stohr said they will miss the camaraderie of their old neighborhood, and, Jeff Stohr said, the ability to walk to restaurants.

They now have to drive to go out to eat in Westlake.

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5/9/19 3:43 PM

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

A frank discussion on Cleveland

By Ron Starner

Crain’s Cleveland Business Editor’s Note: This piece originally appeared in the TrustBelt Report, a publication of Conway Inc. and Site Selection magazine. As a note atop the piece explained, the impetus for this column was “an insightful question posed by a curious reader, Rob Grealis of Cleveland, Ohio. But rather than attempt to answer his question ourselves, we decided to invite an expert in corporate site selection, noted site consultant Starner John Boyd of Princeton, New Jersey, to share his thoughts. The following is their quite candid exchange.”

First, the question, from Rob Grealis of Cleveland:

Editorial

Step right up Ohio increasingly finds itself surrounded in the sports betting game.

Last week, Indiana Gov. Eric Holcomb signed a bill that legalizes sports wagering in the Hoosier State. Indiana is the third state that borders Ohio to legalize betting on pro and college sports, joining West Virginia and Pennsylvania. Six other states — Delaware, Mississippi, Nevada, New Jersey, New Mexico and Rhode Island — also currently offer sports gambling, and several additional ones have passed bills since the U.S. Supreme Court, in May 2018, opened the door to legalizing such wagering.

Ohio’s not yet among the states to enter this space, though it’s getting closer, with separate bills introduced in the Ohio House and Senate, and with some of the major issues already resolved.

Gov. Mike DeWine has deferred to legislators on the matter, but he seems supportive and has said he expects sports betting to be in place to start generating tax revenue at some point in the next two-year budget cycle.

Both the House bill, from Reps. Dave Greenspan, a Republican from Westlake, and Brigid Kelly, a Cincinnati Democrat, and the Senate version, from Republican John Eklund of Chardon and Warren-area Democrat Sean O’Brien, would allow sports wagering at Ohio’s 11 casinos and racinos. Critically, they now both have provisions for mobile wagering, which is needed if Ohio’s program is to be competitive with other states and able to attract the full spectrum of people who want to place bets. There are differences on other important issues, such as licensing fees, tax rates and where tax revenue would be directed, but they’re not far apart on these points. (The Legislature resolved more significant differences, for instance, on the gas tax increase.)

The major divergence relates to who regulates.

The Senate version calls for the Ohio Casino Control Commission (OCCC) to be in charge, while the House bill establishes the Ohio Lottery as the regulator and creates an

11-member Sports Gaming Advisory Board that would recommend regulations. As website USBets.com, which covers the country’s gambling business, pointed out, the lottery vs. casino commission regulation issue has played out in other states, and so far, it’s “relatively common for states to look at sports gambling regulation under the lottery.” This issue would mean nothing to people placing bets, but it’s important for structuring sports betting to withstand any potential legal challenge at the Ohio Supreme Court.

Greenspan told Cleveland.com that, based on guidance he received from the Ohio Legislative Service Commission, sports gambling is a game of chance that could be treated as a lottery. Eklund, meanwhile, has said he sees the OCCC as the better option because of its established expertise in regulating the gambling business. As he told The Columbus Dispatch, “I think there is a palpable difference between the games that the Lottery Commission is responsible for now and something like sports gaming. I think sports gaming is on a significantly more sophisticated level.”

We see the lottery as plenty capable of doing the job but urge the competing camps to resolve this issue quickly. It’s likely to take at least six months from passage to actual implementation, so Ohio, realistically, isn’t getting into the sports betting game until sometime in 2020. When we last wrote about sports betting in this space, in July 2018, we noted that an American Gaming Association study of the potential of sports betting in Ohio put the state’s annual tax revenue take at about $13 million, and while that’s a nice bit of money, legislators’ obligation when it comes to legalization was “to do it right, not to do it first.”

They haven’t done it first, but they’re close to getting it right.

Ironing out the regulatory issue should be a lead item in their summer homework so the state doesn’t fall further behind its neighbors in drawing tax dollars from the sports wagers already being placed every day.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

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Contact Crain’s:

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Dear Ron, I really liked your article about Columbus. I’m in Cleveland and have been a native Ohioan all my life. However, Cleveland is dying. We used to be the city with the most corporate headquarters across the U.S. A lot of companies have left, though, and we are experiencing a population decline mostly due to lack of jobs and lack of opportunity. But I still think Cleveland can be revitalized. I really liked the part of your article where it said, “When asked how Columbus achieved this success so quickly, McDonald says, ‘First and foremost, it was leadership at a business community level. The biggest companies made this a priority to invest in it and get started. Secondly, our elected leaders decided to be more intentional about pursuing job growth; and thirdly, we had professional economic developers at the local, regional and state level lean into this.’ ” My question to you is, do you think this can be done for the Cleveland metropolitan area? If so, what needs to be done and do you think we can get there realistically? In my opinion, we lack true leadership, and are still stuck in this blue-collar Rust Belt mentality.

I want to help break out of that and into a new age of modernization and technology. What can we do to attract more tech companies here? What can we do beyond that to make them stay? What can we do to attract more people to move here without it growing too fast and raising prices through the roof? My feeling is that if things don’t change soon, that in the next 10 years Cleveland will be in such a state of decline that no one will want to live here anymore. Thanks for your time.

Now, the answer, from site selector John Boyd, founder and principal, The Boyd Co. of Princeton, N.J.: When you mentioned Cleveland to me, it hit a responsive chord. First, a bit of background to that statement.

Born and bred a Jersey guy, nonetheless I do have a special connection to Cleveland. I am the son of a General Motors executive who brought his family to more than one Midwest GM city during his career. One of those cities was Cleveland. While I lived there for only three years, they were formative and memorable ones, as they coincided with my high school years living on the west side of Cleveland (North Olmsted H.S. grad).

That history, plus the fact that our firm has done site selection work for Cleveland-based Progressive Insurance and ParkOhio Industries, makes me a bit more than a dispassionate, third-party observer of Cleveland. (I still have great memories of watching the Indians play back in the day in the mammoth 80,000-seat Municipal Stadium on the lake.)

SEE STARNER, PAGE 11

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com.

Please include a telephone number for verification purposes.

5/9/19 3:45 PM

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PA G E 11

FOR PRESTIGE AND ELEGANCE,​

THINK FIRESTONE COUNTRY CLUB. STARNER

CONTINUED FROM PAGE 10

Back in those days, Cleveland was the undisputed corporate kingpin of the Buckeye State. Its famous economic development tagline, “Cleveland/Northeast Ohio: The Best Location in the Nation” — sponsored by the Cleveland Electric Illuminating Co. — set a positive, upbeat tone for the city, its town fathers and its economic horizons.

During Cleveland’s long reign, Columbus was just a big college town, Cincinnati a small-market town that hit the jackpot by being the HQ of consumer product giant Procter & Gamble, Akron just a town that made a whole lot of tires, and Toledo where Jeeps were made and not much else. Today, the roles are all reversed, with Cleveland wondering what the hell happened.

As the TrustBelt Report reader’s question suggests, it is all about leadership. Just look at how another TrustBelt city has benefited from outstanding leadership: Indianapolis, where its string of smart and progressive mayors over the years — Dick Lugar, Bill Hudnut, Stephen Goldsmith — elevated that city’s stature on a national stage. The last good Cleveland mayor was George Voinovich. He went on to bigger things as governor and then to the U.S. Senate, but he left the mayor’s position nearly 30 years ago.

My sense is that Cleveland has reached a tipping point where there are just too many stakeholders dissatisfied with the status quo and much too tired of reading about the economic wins of Columbus, Cincinnati, Indianapolis and other TrustBelt markets.

Regionalism has its merits, especially in more homogeneous markets like a Phoenix, Las Vegas or even an Atlanta, but Cleveland marketing itself as Northeast Ohio or “Team NEO” is a bridge too far given the great diversity and fragmentation of the 18 counties that comprise the region — not to mention the utter and desperate need for Cleveland to distinguish itself from the now-crowded field of successful Midwest cities that have rebooted their identities and economies.

I would look to the prestigious Cleveland Clinic — the largest private employer in Ohio — which has

been a catalyst for downtown redevelopment in places like Las Vegas through its partnership with Lou Ruvo Center for Brain Health and more recently in South Florida, to take a strong lead in Cleveland’s reboot.

A common denominator among successful cities is the degree to which its academic community is an active player in the region’s economic development network. We see this in Philadelphia through the work of Drexel University president John Frey; in South Florida with John Kelly, president of Florida Atlantic University; and in Phoenix through the leadership of Michael Crow, president of Arizona State University.

These same dynamics are very much in place in Cleveland through Case Western Reserve University and its activist president Barbara Snyder, who recently opened the University’s new Cleveland Blockchain and Digital Futures Hub. The Hub in Cleveland will focus on blockchain technology, augmented and virtual reality and other new fintech applications. The Hub can serve as a bridge from Cleveland’s historic role as a regional banking and financial services center to that industry’s rapidly evolving landscape fueled by technology and the Internet of Things. Our firm sees great promise here for Cleveland.

Looking beyond health care and financial services, our firm has been very active in the aerospace industry over the years, working with Boeing, Pratt & Whitney and Paris-based Safran. I see opportunities for Cleveland to leverage that booming sector on the strength of its housing the NASA Glenn Research Center, where I have witnessed some leading-edge aeronautical and space exploration research being carried out.

My contacts on the ground in Cleveland tell me that the city has a lot of self-inflicted wounds worsened by power plays by competing development groups and ineffective leadership at city and county government.

Again, maybe all of this built-up angst has brought Cleveland to a tipping point where a real TrustBelt reboot is now possible. I will be rooting for that.

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Web Talk Re: Bailout bill On top of all these incisive arguments by Ned Hill in his May 6 Personal View, “Bailing out FirstEnergy’s failed nukes harms Ohio’s economic future,” the proposal would increase costs yet another time by dismantling energy efficiency in Ohio, which saved Ohioans $2.65 for every $1 invested in 2017.

Residential customers would see their bills go UP by a net of $6.11 per month since customers would lose energy-usage reductions, avoided cost in new transmission and distribution, and reduced need for expensive peak power generation. This proposal certainly is not free market, but government picking winners and losers for the most selfish, political reasons: pay to play. And four legislators appointed to the money-awarding agency would hit a pay-to-play jackpot since the bill doesn’t prohibit campaign donations from beneficiaries.

— ConservationIsConservative

Re: Development worlds colliding Residents of first-ring suburbs want to maintain good city services and high-quality schools, but with declining populations in the same-size land area, the only way to maintain funding for these city services is through redevelopment. Given the preferences of many young professionals to live in mixed-use walkable neighborhoods, as well as the need of many baby boomers to downsize out of single-family houses, it makes sense that much of the new housing will be in midrise condo and rental apartment buildings along main streets. ... For those of us who live in first-ring suburbs like Cleveland and Lakewood, we need to accept — and hopefully value — the fact that we live in areas that

P011_CL_20190513.indd 11

J.D.

are diverse in many ways, including the type and height of well-designed buildings. ... The reality is that we cannot maintain good-quality city services and public schools without allowing our communities to evolve and to attract new development that meets the current market needs.

— Bob Brown

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The same chainsaws and bulldozers will be used to destroy the environment and build the same project we see everywhere else and don’t need more of.

You don’t need the money. Use a little imagination and say no to the developer. — StopBackRoomDeals

Re: New Menards store in Brooklyn It’s nice to see something on that property (at 7700 Brookpark Road), but I’m not sure this is what was needed. — s

Re: Whose city?

In his April 29 Personal View headlined, “Yes, I moved to Cleveland. Here’s why,” entrepreneur Ari Lewis, co-founder and partner at Green Block Group and a partner at Grasshopper Capital, explains why he was attracted to the city. OK. But the only reason he is able to enjoy Cleveland is because it was designed for people like him to enjoy. White people with even just a little bit of money flock here because they can buy up the houses, open up businesses and keep (things) white as it can be.

Meanwhile, it’s the most hyper-segregated city in the nation. — Glamour Goul

5/9/19 3:47 PM

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CRAIN’S CLEVELAND BUSINESS

Focus

FINANCE

EYEING POT PROFIT

Aleksandr Kravtsov via iStock

Investment firms see cannabis as a growth industry

By Jeremy Nobile jnobile@crain.com @JeremyNobile

A

s cannabis goes increasingly mainstream, with medical and recreational marijuana sales alone already expected to top $16 billion by next year, institutional investors are warming up to the potentially risky but lucrative industry.

And that’s raising interest among investment firms whiffing some opportunities in Ohio’s fledgling market.

“There is still a lack of access to financing,” said Tom Haren, a cannabis lawyer with Frantz Ward. “But the fact that traditional financial institutions are not participating in the market has opened up a huge opportunity to private equity and venture capital to play in the space and fill the need.”

Banking is still hard to come by in the mari-

P012_CL_20190513.indd 12

juana space due to federal prohibition, which affects lending.

Some state-chartered banks and credit unions are accepting deposits from marijuana companies and ancillary businesses, some more openly than others. But most large banks won’t be knowingly involved at all. The largest have even distanced themselves from a congressional bill allowing cannabis companies access to checking accounts and loans by balking at backing the bill.

So traditional bank financing isn’t available to this budding industry, which would be ripe for government-backed Small Business Administration (SBA) loans if it didn’t operate in violation of federal laws.

Even small banks are avoiding lending. For some, that’s due to legal concerns. Others might take the risk, but may be flummoxed by underwriting such a young and unique industry.

So as the cannabis industry grows despite federal rules, private equity and venture capital

“If you had asked me three or four years ago if I’d ever invest in a business that is supporting the cannabis market, my answer would have probably been no.”

— Mark Mansour, senior managing partner, MCM Capital Partners

funds are increasingly filling that need for capital, something that’s drawing money to Ohio and raising investor interest among firms here.

“PE is absolutely filling that gap,” said Thomas Kern, a marijuana lawyer with Benesch based in Columbus. “There’s a lot of money coming from out of state, but also a lot in-state.

“It’s not for everybody,” he added. “Some people are morally opposed to it. But the ones who aren’t, they see it like any other business.

They look at the numbers, they look at the (principal protected note) and decide whether it’s a good deal.”

That says volumes about the industry’s growing legitimacy.

“If you had asked me three or four years ago if I’d ever invest in a business that is supporting the cannabis market, my answer would have probably been no,” said Mark Mansour, senior managing partner with Beachwood private equity firm MCM Capital Partners.

SEE CANNABIS, PAGE 17

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FINANCE

Q&A: Tim Burke

Northeast Ohio market president, KeyBank A Pittsburgh native, Tim Burke joined Cleveland’s KeyBank in August 2016, but is well acquainted with the Northeast Ohio market.

Burke previously worked for Akron’s FirstMerit for about seven years, departing the company as a regional CEO in the wake of its acquisition by Huntington Bank. And he took the job with FirstMerit following PNC Bank’s acquisition of the troubled National City Bank 10 years ago. That all positioned Burke as a prime fit for the role of Northeast Ohio president this spring. In that position, he effectively replaces Kip Clarke, who most recently served Key as president of the Midwest region and Cleveland market president and has been promoted to head the bank’s national business banking team. In light of the transition, Crain’s sat down with Burke to get his insights on the market, banking trends and what the local growth strategy looks like for Cleveland’s largest and only remaining super-regional hometown bank. — Jeremy Nobile Let’s talk Northeast Ohio. Is this really a growth market for Key? Absolutely. Cleveland is our backyard.

We think there are a number of different ways to grow and add market share. And we are coming at it from a position of strength: We’re ranked No. 1 in the Cleveland MSA with over 23% market share. We’ve grown deposits by almost $2 billion.

We have our community benefits plan where we invested over $215 million in Northeast Ohio. So we are giving back to the community. We are also very highly optimistic as we look at the economy going forward and the strength of our team. We feel like

2019 and beyond, this should be a good growth market for the bank.

That said, it seems like the newer markets get the bulk of attention today. Perhaps that’s natural as the company settles into areas like Western Buffalo following that deal with First Niagara Bank.

Meanwhile, the new branch designs are being rolled out in places like Colorado, not Ohio.

How do you square the growing focus elsewhere with this being a growth market?

I think in each community, you’re going to look at individuals and determine

what is the right growth strategy for the market. You can’t always pick Cleveland as the pilot for everything.

We love new opportunities, but at times you have different reasons to focus things outside of Ohio and the headquarters. But we are, in fact, looking to invest and expand in our hometown market of Northeast Ohio from an FTE standpoint and looking at the community banking team. We have 5,700 employees in the local market. We’ve doubled the size of our eastern Ohio market, our legacy Akron/Canton/Youngstown market.

And we have our “paint the town red” strategy. That’s about partnering with corporations — the Indians, Cavs, Playhouse Square — and middle market companies to hire and invest in community across each of our markets.

What’s your pulse on the middle market segment today?

More than 50% of (Key customers) would tell you they continue to see growth in the economy today. But they’re concerned and thinking about, when that slowdown happens, whether this year or next, what are the things they should be doing today to make sure they’re prepared? We talk about interest-rate swaps, looking at business in different ways from a cost standpoint.

You want to be prepared, but you also need to be flexible. So I think

the economy is strong right now, and I think most people are looking to expand and grow. But people definitely have their eyes on the next 18-24 months and thinking about when that slowdown comes.

As Northeast Ohio president, there’s a bigger region under your purview than what would’ve been the case with separate presidents in Cleveland and Akron. Why did Key change that structure?

We want to tear down silos that would make it harder to do business.

And we view Northeast Ohio as one region. Most of the boards I’m on are focused on leveraging the region. So if we can eliminate silos and make it easier for customers across the market to do business, whether in payments or mortgage solutions, etc., we think it will be easier to deliver in the market. Before, we looked at two different markets with two different teams. With all this completely under me, with a focus on Northeast Ohio as one market, certainly we will continue to have a very visible presence in each community, whether Canton or Akron or Cleveland, but we’re going to market as one.

What are some areas of focus for your team right now?

Our focus areas are health care, nonprofits, franchise finance — we

have a big initiative that includes many lines of business on the franchise finance side — as well as manufacturing. A quarter of our economy is driven directly or indirectly from manufacturing, and we have a lot of expertise in that space we can leverage.

What is an area Key could do better in?

Mortgage would be one. We’ve made some investments there and have the right talent and leadership in place, so I think we’re on track with that. But it’s a huge area of opportunity for us. Strictly in regards to mortgage, our pipeline has seen a significant increase. It’s double digits higher today in Northeast Ohio than it was at this time last year.

If a strong local economy is a tailwind to growth, what might be a headwind to it?

From a company standpoint, this is a very overbanked market to a degree.

There is a lot of competition and new companies coming in, whether banks based in western Pennsylvania that over the last two to four years have been investing in Northeast Ohio to the largest banks looking to do more in Ohio as well. I don’t see the competitive landscape changing anytime soon. That’s why it’s mission-critical to go to market in a differentiated way.

Ancora

Ancora

Special Opportunity Fund

Income Fund

Overall Morningstar RatingTM out of 389 small value funds as of 02/28/2019

Overall Morningstar RatingTM out of 290 multisector bond funds as of 02/28/2019

Fund Manager Richard A. Barone, Ancora’s Founder and Chairman Emeritus © 2019 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

For each fund with at least a three-year history, Morningstar calculates a Morningstar RatingTM based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar RatingTM for a fund is derived from a weighted average of the performance figures associated with its three-, five- and 10year (if applicable) Morningstar Rating metrics.

The Ancora Special Opportunity Fund was rated against the following numbers of U.S.-domiciled Small Value funds over the following time periods: 389 funds in the last three years, 342 funds in the last five years, and 233 funds in the last ten years. With respect to these Small Value funds, The Ancora Special Opportunity Fund received a Morningstar Rating of 4 stars, 5 stars and 5 stars for the three-, five- and tenyear periods, respectively. Past performance is no guarantee of future results. Morningstar Rating is for the I share class only; other classes may have different performance characteristics.

The Ancora Income Fund was rated against the following numbers of U.S.-domiciled Multisector Bond funds over the following time periods: 290 funds in the last three years, 222 funds in the last five years, and 130 funds in the last ten years. With respect to these Multisector Bond funds, The Ancora Income Fund received a Morningstar Rating of 3 stars, 5 stars and 5 stars for the three-, five- and ten-year periods, respectively. Past performance is no guarantee of future results. Morningstar Rating is for the I share class only; other classes may have different performance characteristics.

Carefully consider the Fund’s investment objectives, risks and expenses carefully before investing. This and other information can be found in the Fund’s prospectus, and if available, summary prospectus, which may be obtained by calling 1-866-6-ANCORA or by visiting www.ancorafunds.com. Read the prospectus carefully before investing. Investing involves risk, including possible loss of capital.

Ancora Holdings Inc. is the parent company of three registered investment advisers with the United States Securities and Exchange Commission; Ancora Advisors, LLC, Ancora Family Wealth Advisors, LLC and Ancora Retirement Plan Advisors, Inc. In addition it owns Inverness Securities LLC, a FINRA & SIPC member broker dealer. A more detailed description of Ancora, its RIAs, management team and practices are contained in the firm brochure, Form ADV Part 2a. Qualified prospective investors may obtain the ADV Part 2a by contacting the company at: 6060 Parkland Boulevard, Suite 200, Cleveland, Ohio 44124, Phone: 216-825-4000, or by going to www.ancora.net.

Ancora Funds are distributed by Arbor Court, LLC. Member FINRA and SIPC. Find out more about the background of this firm on FINRA’s BrokerCheck. Ancora Advisors LLC is the investment advisor to the funds and receives a fee from the Funds for its services.

P013_CL_20190513.indd 13

5/9/19 12:16 PM

PA G E 14

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M AY 13 - 19 , 2 019 |

CRAIN’S CLEVELAND BUSINESS

FINANCE

Amish make the ultimate traditional customers

By Jeremy Nobile jnobile@crain.com @JeremyNobile

Lenders like Middlefield Bank vice president Al Thompson Jr. are often taught early on to never take anything for collateral that eats.

But that rule goes out the window when it comes to serving Amish clientele.

“If they offer you the horse, you take the horse,” Thompson said. “That’s their transportation, after all. We take horses as collateral all the time.”

The Amish are a special customer segment for Ohio bankers in rural markets, which most often align with smaller community banks. After all, the population predominantly clusters in the states of Ohio, Pennsylvania and Indiana, where some 63% of all Amish people live, according to research from Amish Studies.

And as the economic expansion draws on, heightening concerns that an inevitable downturn could occur in the next couple years, having a preponderance of Amish loans on the books could help insulate some financial institutions’ balance sheets

Amish buggies are hitched outside Middlefield Bank’s flagship branch in Geauga County. (Contributed photo)

when it happens.

As promoted by a sign on the city limits, the village of Middlefield in Geauga County happens to be home to the fourth-largest Amish settlement in the world.

Middlefield Bank, which was officially established in 1902 and has about $1.2 billion in assets today,

credits growth in its formative years to banking Amish customers.

Many of those legacy families are still with the bank today. Thompson estimated that more than half of all business at the bank’s flagship Middlefield branch — which offers hitching posts in addition to parking spaces — belongs to Amish clients.

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P014_CL_20190513.indd 14

“We’ve had generation after generation, second, third and fourth generations coming to the bank for their first horse-buggy loan, home loans and business loans,” said Middlefield vice president and commercial lender Tom Neikirk. “They spend a lot of money in Middlefield. They stay very low-key and try not to make waves.

They just do their work and their businesses and take care of their families. And they’re very loyal.”

The Amish are not traditional users of the banking system for reasons obvious to anyone familiar with their minimalist culture.

They don’t typically have hazard insurance and will instead pool money within the community to help their ranks when facing financial duress, such as if a house or barn burns down. They tend to support one another when someone is struggling to repay a loan and cover the required payments.

And while there are exceptions, many shun technology, which can make them a bit more challenging to work with. Some communities may share one telephone posted outside an elder’s house or general store.

But they’re undoubtedly industrious and have lending needs like everyone else.

They don’t need car notes, but a horse-and-buggy loan could go for $10,000 on the high end nowadays.

Residential home loans of $200,000 to $250,000 are not uncommon.

They do pay income taxes — perhaps contrary to some outsiders’ perceptions — and operate a variety of different small businesses, from construction companies and woodworking shops to hog farms.

In an industry that spawned the term “banker’s hours,” lenders who meet with Amish clients may take calls at 5 a.m. or have meetings with businessmen as late as 7 p.m. because that’s when the customers are available.

However, making some concessions to serve those clients is worth it.

“They’re very good customers for banks and there tends to be a lot of cash flow in the businesses they’re in,” noted James Thurston, a spokesman for the Ohio Bankers League trade group. “They’re very low-risk typically, and banks are very enthusiastic to bring Amish customers into the traditional banking system. It’s good for the Amish themselves, because they get all the benefits of being in the system, but it’s also good for banks because they get a very good and potentially profitable customer.”

Ohio is home to nearly as many Amish people as Pennsylvania, with a population just shy of 76,000 in 2018.

“In terms of having this big s u b p o pu l at i o n Thompson that really traditionally has not used the orthodox banking system, it is a fairly unique situation,” Thurston said.

The Amish tend to pay off debts quickly, even if they don’t put down as much money up front, which regulators don’t like from a risk-management perspective. Yet it’s not uncommon for a client to take out a 30-year mortgage and pay it off in 20 years, Thompson said. What might look like a riskier customer profile on paper is actually a pretty safe deal.

At Geauga Savings Bank, Amish were among the first to take loans with the company as it worked its way out of a consent order issued in 2009 by regulators who charged the bank with hazardous lending and collection practices, poor management and weak capital levels. That order was lifted in 2015.

“For many years, they’ve been a big segment of the bank,” said Geauga Savings CEO Jim Kleinfelter. “We have a handful of customers now, and I love doing business with them.

The bank didn’t even make any loans for five or six years coming out of those problems. Then, we financed an Amish birthing center in Geauga County and a lot of people who worked there joined the bank.”

That bank has about $278 million in assets today and has been slowly growing as it turns the balance sheet around. As the bank improves, there’s been a growing emphasis on smaller commercial loans, which are naturally larger and offer stronger returns than a loan for a carriage, but Kleinfelter won’t forget how the Amish population has supported the bank.

“If you take care of them, they will be very loyal to you,” Kleinfelter said.

And as far as the balance sheet goes, there’s a strong economic benefit to serving those clients.

It’s only a matter of time until the market swings down and another recession strikes. Being debt-averse makes Amish good customers to have on the books.

“In the last recession, the market was being hit and property values were declining, putting a lot of banks in a serious position because you lent 80% of the value of the home, then the value drops 30% and you’re underwater,” Thompson explained.

“But when people prepay, or pay down debt quicker, you don’t face the same risk. It’s the same with lines of credit or a business loan.”

Community banks may not be actively seeking out Amish customers with an eye to loan diversification, buffering the books against a financial downturn. But the fact that those options are out there isn’t lost on local bankers who can service the population.

“If you’re a community bank located near an Amish community, it’s definitely a plus,” Kleinfelter said.

Middlefield, by the way, has never had to claim one of those horses put up for collateral.

“We have never had to repossess a horse,” Thompson said. “I don’t know how to ride anyway.”

5/9/19 12:15 PM

INVESTMENT

BDB 2019 Investment Crains.indd 1 CL_051319_FP Template.indd 2

5/2/2019 9:01:40 AM 5/6/19 3:16 PM

PA G E 16

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M AY 13 - 19 , 2 019 |

CRAIN’S CLEVELAND BUSINESS

FINANCE

Insight2Profit ensures the price is right

By Douglas J. Guth clbfreelancer@crain.com

Businesses in the product-pricing sector generally fall into two camps, said Ryan White, CEO of the service firm Insight2Profit: straight-up technology companies offering product-pricing software or consulting businesses bringing clients a theoretical take on how to handle their sales.

According to White and the organizations his company assists, Insight2Profit is a much-needed hybrid of analytics and precisely tailored

pricing and profit strategy. The Beachwood-based provider of software and consulting services uses information about a client’s buyers — invoice patterns, competitive price lists and more — to determine the exact worth of its wares.

“Our clients change their prices annually, so the model has always been hands-on and detailed to specific industry types,” said White, who founded the company in 2006.

“There’s no canned algorithm. We develop an approach clients are comfortable with. It’s not just a black box.”

Since inception, the “tech-en-

abled” firm has grown 40% a year on average, currently employing 150 people across its Cleveland and Chicago offices. Insight2Profit is in the process of relocating its headquarters to the former DDR building in Beachwood, a move to accommodate 50 new employees expected to be on its Northeast Ohio payroll by year’s end.

Filling an industry gap White, a Pennsylvania native now living in Concord, landed in Cleveland in 2001 to take a position at label and packaging materials maker Av-

ery Dennison.

During his years with the company, he noticed a lack of comprehensive pricing support for B2B firms. After saving up more than $200,000, White White struck out on his own as Price for Profit, changing the name as the company’s suite of services expanded.

Today, Insight2Profit serves 60 to 70 clients, most of them owned by private equity firms and representing

the manufacturing, distribution and service industries. Rising inflation rates are motivating companies to utilize White’s services, as is increased turnover in the ownership and executive ranks, he said.

“We get hired as more new executives come in,” White explained.

“People who’ve been (with a company) for a while are more stuck in their ways and won’t look at a topic like changing their pricing.”

Insight2Profit’s fusion of technical and professional resources begins with a client assessment and plan implementation that typically lasts six months. Long-term, the company checks in with businesses every month to fine-tune strategies and drive profit improvements.

As clients may have difficulty understanding deep-dive sales data, Insight2Profit creates an analytical package that includes, among other details, invoicing patterns on particular products. Just as importantly, White’s team of pricing-strategy advisers and data scientists keep up the relationship via sales reviews and quarterly workshops.

Beyond the product

®

P016_CL_20190513.indd 16

Having people behind the data is a boon, said Cary Glay, executive vice president and CFO of Q Holding Co., a producer of components for the medical and industrial space. Glay’s company has been working with Insight2Profit for three years, gaining a crucial education on the execution of price changes from the firm’s expert staff.

“They train our salespeople about value and price propositions, so we’re communicating in a way the customer can appreciate,” Glay said. “That’s important in our business, because we’re involved in highly regulated industries where everything is double- and triple-reviewed from an analytical standpoint. We have to be on solid ground when we go back to our customers.”

Alongside a better understanding of pricing strategies, Q Holding’s relationship with Insight2Profit provides updated knowledge of its value within the marketplace.

“We understand that our value goes beyond the simple creation of a product,” Glay said. “We also understand the engineering and other work that goes into it.”

White said his company was challenged early on to shop its services to a market cautious about altering a product’s price point. As many owners were unfamiliar with the base concept, the budding entrepreneur had to explain exactly how he could help. White built his portfolio via contacts at Avery Dennison, gradually gathering enough hard data to show new clients what they were missing.

Insight2Profit clients average a 4% gain in price, which may not sound like much but represents an enormous bottom-line enhancement, White said. Generating profit through growth results in a crucial life cycle to which all businesses should aspire.

“We’re helping them hire more people, which allows them to invest back into the company and community,” White said. “They’re reinvesting into the business and their team.”

5/9/19 12:15 PM

+ + + ++ +

CRAIN’S CLEVELAND BUSINESS

Entrepreneurs awarded state licenses to grow, process and sell medical marijuana in Ohio all raised the capital from private investors to launch their multimillion-dollar enterprises. Some of those people are connected with investment funds and family offices, but in general they were investing their own capital, not a fund’s.

Outside of Ohio, those who were cutting deals even a few years ago did so very quietly, said Kevin Murphy, a cannabis lawyer with Walter Haverfield. Many still fly under the market’s radar, and prefer to, because of legal concerns or competition.

Just like banks, some are more open about it than others. A few funds have formed in recent years or otherwise have been providing debt financing for the marijuana space, such as The Cronos Group.

But now independent marijuana companies are looking to grow and compete with ever-larger corporations. Consider PharmaCann, which operates a cultivation facility in Buckeye Lake and is looking to merge with California-based MedMen (which trades on the Canadian stock exchange) in a $682 million stock deal, or Canadian company Canopy Growth, which is reportedly closing in on a deal to acquire Acreage Holdings, the New York-based parent company of Ohio’s Greenleaf Apothecaries, which is licensed to run five dispensaries in Ohio under The Botanist brand (the $3.4 billion deal was recently described as “rotten” by one activist hedge fund, according to Barron’s). Amid all that dealmaking, independent companies are increasingly looking to investment firms to raise capital to compete with the future juggernauts.

“Smaller operators who have no intention of growing are taking much harder looks at operating independently when there’s consolidation like this,” Murphy noted. “The smart ones are understanding they either need to raise capital and grow or align with somebody who is doing that.”

Ohio’s Standard Wellness Co., a vertically integrated marijuana company that will be among the first to market here with processed products like oils and edibles at its dispensary brand, The Forest Sandusky, is already looking to expand and is courting institutional investors that want to help.

CEO Erik Vaughan said the company wants to be vertically integrated in each of the next two or three states into which it expects to expand.

“We welcome the day we have access to more traditional types of funding, like an SBA loan,” Vaughan said.

“But right now, we have to seek out those private and alternative sources.”

He said investors’ attitudes have evolved in the past few years, mirroring the evaporation of marijuana stigmas and adoption of its use as medicine.

The announcements of M&A deals in Ohio by companies like MedMen and Canopy are accelerating that.

“What we’re seeing right now is a big breakthrough with Canadian public companies, and that suddenly changes the risk perception for a lot of institutional investors. You’re seeing the fear of missing out kick in,” he said. “That could stoke additional institutional investors in the industry, broadly speaking. You’re going to see a lot more of that over the next five years.”

P017_CL_20190513.indd 17

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M AY 13 - 19 , 2 019

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PA G E 17

+

A sharp jump in medical marijuana sales in Ohio is expected as the industry builds up. One group projects Ohio’s compound annual growth rate (CAGR) in medical sales between 2019-2025 will be 44%, compared to 14% for the U.S. as a whole. $1.2B $1B

$12.9B

Ohio

$1.06B $15B $12B

U.S.

$800M

$9B

$600M $6B

$400M

$3B

$200M 0

’19

’20

’21

’22

’23

’24

’25

0

U.S. medical marijuana sales

Legal weed’s capital needs

+

Why investors are warming to cannabis

Ohio medical marijuana sales

CONTINUED FROM PAGE 12

++

CANNABIS

+

FINANCE

+ ++ +

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Who’s interested in cannabis Some private equity and venture capital firms based in Northeast Ohio that have told Crain’s they’re open to investments in the cannabis industry include: 

MCM Capital Partners



Coventry League Capital Partners



ScaleCo LLC



Flashstarts



North Coast Angel Fund



North Coast Venture Fund

Genie is out of the bottle Mansour said MCM has been vetting a distributor that makes distillation equipment, which can be applied to the extraction process for marijuana oils. That happens to be that operator’s fastest-growing business segment, qualifying it as a marijuana-related business (MRB).

For MCM, this opportunity, which came up just a few months ago, marks an evolution in thought, even though the firm isn’t immediately interested in marijuana companies that handle the plant or derivative products.

The company being vetted fits with MCM’s investing philosophy, which focuses on niche, value-add investments in high-growth, B2B manufacturing industries.

Yet, marijuana is still a federally illegal and stigmatized industry, so the firm isn’t exactly rushing to participate.

As investors sense the industry going more mainstream, though, and see projections that marijuana sales alone could balloon to $24 billion in 2025, they’re starting to pay a bit more attention. Plus, it’s hard to put the genie back in the bottle once it’s out, Mansour said — a sentiment shared among stakeholders that reflects the belief that laws will only continue to open up from here.

It helps that financial analysts tend to see growth in the industry as insulated from an inevitable market downturn, which may be one reason funds are increasingly weighing cannabis-related investments.

“It’s obviously early. But when you’re in the market we are in right now, where everyone is looking for value, I think people look at cannabis with a shifting or softening viewpoint on it being inherently bad,” said Matthew Roberts, a Cleveland vice president with M&A advisory Copper Run Capital, which has been shopping around a manufacturer of marijuana processing equipment to private equity groups. “I do think you see more people open to investing in it.”

That doesn’t mean all personal morals are thrown out the window, of course.

“I would still want to know more about who their customers are and what markets they support, in the same way that we would have an objection to an alcohol-related product that was effectively flavored soda going after an underage market,” Mansour said. “That’s just not who we are.”

Business Advisors and Certified Public Accountants

Risky business The risk also means higher costs for capital. Some funders will offer money that looks like a bank loan, but with effective interest rates in the range of 12% to 20% for cannabis-related deals. Debt financing could easily jump to 20% to 30% for a quick turnaround.

Terms would obviously be better with bank loans. But marijuana companies expecting cash flow are taking those terms anyway because they have few other choices. And those rates sweeten the deal for risk-averse funders.

“The borrowers are expecting cash flow in a business you won’t see in other industries, so they can manage those higher rates,” Haren observed.

“That’s why deals are still happening.”

Some of the larger funds operating out of the Northeast Ohio market, wishing to remain anonymous, said they are still avoiding the marijuana space for reasons ranging from legal concerns to general riskiness. Some report that their limited partners have hangups about cannabis and tell them to stay away.

But in a recent Crain’s survey of private equity and venture capital groups, a half-dozen firms confirmed they are considering cannabis-related investments. That includes MCM and North Coast Angel Fund/North Coast Venture Fund.

While a marijuana cultivator or processor might align more with manufacturing, and a dispensary feels more like a retail store, many of those businesses have high-tech components, which is what’s driving interest from the VC crowd.

“I would say we are still pretty early in understanding the space,” said North Coast Angel Fund managing director Todd Federman, whose fund often invests in medical devices and digital health technology. “But we are very interested in exploring the right opportunity along those lines. I think our sweet spot is more of a tech-enabled venture.”

Expect more competition for those investments as the industry develops.

“It’s true we’re hearing from more and more funds today,” Murphy said.

“We are seeing people who just two years ago weren’t interested saying, ‘We’re interested now. What have you got?’ ”

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YOUR STORY. YOUR STAGE. SPONSOR AN EVENT TODAY: Lisa Rudy • lrudy@crain.com

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5/9/19 12:17 PM

PA G E 18

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M AY 13 - 19 , 2 019 |

CRAIN’S CLEVELAND BUSINESS

THE LIST

Registered Investment Advisers Ranked by regulatory assets under local management

THIS COMPANY YEAR LOCAL ADDRESS

ASSETS UNDER LOCAL MGMT. AS OF DEC. 31 (MILLIONS) ADV ASSETS (MILLIONS) 2018/ % WITH 2017 CHANGE DISCRETION (1)

MINIMUM ACCOUNT COMPENSATION (THOUSANDS) (2) PRIMARY LOCAL ADVISORY SERVICES

CIO/ HEAD OF TOP LOCAL INVESTING EXECUTIVE

1

CBIZ Retirement Plan Services/CBIZ Investment Advisory Services (3) 6050 Oak Tree Blvd. S., Suite 500, Independence (216) 447-9000/cbiz.com/retirement

$12,396.4 $10,518.0

18%

$1,595.1

$19,831.7

$5

Fixed fees, percent of AUM; hourly

Portfolio management for businesses, institutional clients and individuals; pension consulting; periodicals

Brian Dean

Brian Dean, president

2

CAPTRUST 222 S. Main St., Suite 220, Akron (330) 535-4550/captrust.com

$8,387.4 $8,199.5

2%

$849.9

$289,654.6

$1,000

Fee only, percent of AUM

Portfolio management for business/ institutional clients, pension consulting services, seminars/workshops

Kevin Barry

Steve Wilt, senior vice president, financial adviser

3

Sequoia Financial Advisors LLC 3500 Embassy Parkway, Akron (330) 375-9480/sequoia-financial.com

$2,708.7 $2,551.7

6%

$2,687.0

$3,903.1

$0

Percent of AUM, hourly rates, fixed fees

Financial planning, portfolio management for individuals, businesses and institutional clients

Russell Moenich

Thomas Haught, president

4

CM Wealth Advisors 2000 Auburn Drive, Suite 400, Beachwood (216) 831-9667/cmwealthadvisors.com

$2,642.5 $3,120.9

-15%

$2,380.2

$2,642.5

$5,000

Percent of AUM, fixed fees

Financial planning, portfolio management for individuals, businesses and institutional clients

Cynthia Koury

James Wert, CEO, managing member

5

Cerity Partners LLC 50 Public Square, Cleveland (216) 464-6266/ceritypartners.com

$1,908.5 $2,095.2

-9%

$1,905.5

$8,303.3

$2,000

Fee only

Portfolio management, financial planning and tax planning and compliance

Benjamin Pace

Robert Smith, partner, Cleveland market leader

6

Fairport Asset Management 1350 Euclid Ave., Suite 400, Cleveland (216) 431-3000/fairportasset.com

$1,689.7 $1,774.5

-5%

$1,310.2

$1,689.7

$1,000

Fee only

Financial planning (wealth management), portfolio management for individuals/small businesses, seminars/workshops

John Silvis

Kenneth Coleman Heather Ettinger, managing partners

7

Fairway Wealth Management LLC 6055 Rockside Woods Blvd., Suite 330, Independence (216) 573-7200/fairwaywealth.com

$1,374.9 $1,334.2

3%

$3.1

$1,374.9

$2,000

Fee only based on assets and/or services

Wealth management, investment management, retirement planning, family office services

Mark Weiskind

Daniel Gaugler, CEO, managing director

8

NCA Financial Planners 6095 Parkland Blvd., Suite 210, Mayfield Heights (440) 473-1115/ncafinancial.com

$1,002.2 $899.8

11%

$984.6

$1,002.2

$0

Percent of AUM

Portolio management for individuals and small businesses

Leslie Globits

Kevin Myeroff, president, CEO

9

Cedar Brook Group (4) 5885 Landerbrook Drive, Suite 200, Mayfield Heights (440) 683-9200/cedarbrookfinancial.com

$969.0 NA

NA (4)

$953.3

$1,030.2

$0

Negotiated

Financial planning, wealth management, risk management

Azim Nakhooda

William Glubiak, CEO

10

McDonald Partners LLC 1301 E. 9th St., Suite 3700, Cleveland (216) 912-0567/mcdonald-partners.com

$891.2 $760.6

17%

$543.7

$1,114.1

$0

Fee and commission

Portfolio management for individuals, businesses and institutional clients, financial planning, pension consulting

Bill Hegarty Thomas Yako

Thomas McDonald, chairman, CEO

11

Aurum Wealth Management 6685 Beta Drive, Mayfield Village (440) 605-1900/aurumwealth.com

$709.0 $860.0

-18% (5)

$704.4

$709.0

$0

Fee only

Financial planning, portfolio management for businesses, institutional clients and individuals, pension consulting

Michael McKeown

Eric Wulff Christopher Bart, managing directors

12

MGO Investment Advisors Inc. 24400 Chagrin Blvd., Suite 310, Beachwood (216) 771-4242/mgo-inc.com

$695.6 $733.1

-5%

$357.2

$695.6

$0

Percent of AUM

Portfolio management for individuals/small businesses

Michael Moskal

Ronald Gross, president

13

St. Clair Advisors LLC 6120 Parkland Blvd., Suite 306, Mayfield Heights (216) 925-5670/saintclairllc.com

$554.3 $570.6

-3%

$554.3

$554.3

$2,500

Fee only, fixed or based on AUM

Wealth planning, investment advisory, tax planning and compliance services

David Sommer

Ronald Bates, CEO

14

Cornerstone Capital Advisors 1640 Corporate Woods Circle, Uniontown (330) 896-6250/ccadvisors.com

$520.0 $522.1

-0%

$520.0

$520.0

$0

Fee only

Investment management for individuals/small businesses, financial planning, pension consulting

Mario Giganti

Mario Giganti Mark Fearigo, principals

15

Landing Point Financial Group 36350 Detroit Road, Avon (440) 934-7100/landingpointfinancialgroup.com

$518.7 $523.0

-1%

$172.8

$518.7

$0

Fee and commission

Portfolio management for individuals/ businesses, financial planning, pension consulting

Matt O'Bryon

Joe Flinner, president, CEO

16

Vantage Financial Group Inc. 6200 Rockside Road, Independence (216) 642-7878/vanfin.com

$490.8 $508.9

-4%

$350.4

$490.8

$0

Fee and commission

Portfolio management for individuals/small businesses, pension consulting, financial planning

NA

William McCormick, president, CEO

17

Scott Snow (financial advisors) LLC 1991 Crocker Road, Suite 210, Westlake (440) 871-7669/s2fa.com

$426.8 $422.1

1%

$0.0

$426.8

$2,000

Fee only

Porfolio management for individuals

Scott Snow

Scott Snow, managing director

18

Demming Financial Services Corp.

13 New Hudson Road, Aurora (330) 562-2122/demmingfinancial.com

$394.1 $423.3

-7%

$394.1

$394.1

$0

Fee based on AUM

Financial planning

David Demming Jr.

David Demming Sr., president

19

Jentner Wealth Management 3677 Embassy Parkway, Akron (330) 668-1000/jentner.com

$345.3 $370.3

-7%

$345.3

$345.3

$1,000

Percent of AUM

Financial planning and investment management

Seth Jentner

Bruce Jentner, president

20

Peak Wealth Solutions 29225 Chagrin Blvd., Suite 100, Pepper Pike (216) 370-7887/retirepeak.com

$320.0 $325.0

-2%

$249.0

$320.0

$0

Percent of AUM

Financial planning, portfolio management for individuals, seminars, pension consulting

Greg Gromek

David Kocsis Greg Gromek, managing principals

21

Lineweaver Wealth Advisors 9035 Sweet Valley Drive, Valley View (216) 520-1711/lineweaver.net

$306.3 $292.1

5%

$306.3

$306.3

$20

Fees, percent of AUM

Portfolio management for individuals/small businesses

Jim Lineweaver

Jim Lineweaver, president, founder

22

W.A. Smith Financial Group 4604 Timber Commons Drive, Sandusky (419) 626-8600/wasmithfinancial.com

$290.9 $217.9

34%

$261.6

$290.9

$50

Percent of AUM, financial planning fees

Financial planning and portfolio management for individuals

William Smith

William Smith, founder, CEO

23

Reed Financial Services Inc. 5885 Landerbrook Drive, Suite 110, Mayfield Heights (216) 464-2090/reed-financial.com

$213.2 $232.6

-8%

$213.2

$213.2

$250

Percent of AUM

Financial advice, investment management

James Reed

James Reed, president; Amanda Lisachenko, COO

24

Advance Capital Management 5005 Rockside Road, Suite 215, Independence (216) 520-1437/acadviser.com

$206.6 $193.8

7%

$201.7

$2,512.2

NA

Fee only

Financial planning, portfolio management for individuals/small businesses, pension consulting, seminars/workshops

Christopher Kostiz

Todd Schmidt, financial adviser

25

Cirrus Wealth Management 6060 Rockside Woods Blvd., Independence (216) 503-9310/cirruswealth.com

$186.7 $188.7

-1%

$138.9

$186.7

$0

Percent of AUM, hourly charges, fixed fees

Portfolio management for individuals/small businesses

Joseph Heider

Joseph Heider, president, financial adviser

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

See 30 investment advisers and 22 money managers in Excel format. Become a Data Member: CrainsCleveland.com/data

This list of registered investment advisers excludes companies that invest most of the assets they locally manage directly into stocks and bonds; they appear on the Money Managers list. Data is supplied by the companies. Send feedback to Chuck Soder: csoder@crain.com.

(1) Total regulatory assets as of Dec. 31, 2018 (2) AUM stands for assets under management. (3) CBIZ's 2018 figures include assets managed by two registered investment advisers owned by CBIZ Inc. The 2017 figures only include data from CBIZ Retirement Plan Services. (4) Cedar Brook became a registered investment adviser on Feb. 5, 2018. (5) Aurum in 2018 began excluding more than $295 million in company-sponsored employee retirement plan assets from the regulatory assets under management that it reports on its ADV, causing this decrease.

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THE LIST

Money Managers

Ranked by regulatory assets under local management ASSETS UNDER LOCAL MGMT AS OF DEC. 31 (MILLIONS)

ADV ASSETS MINIMUM % WITH (MILLIONS) ACCOUNT CHANGE DISCRETION (1) SIZE

COMPENSATION STRUCTURE (2)

PRIMARY LOCAL ADVISORY SERVICES

CIO/ HEAD OF INVESTING TOP LOCAL EXECUTIVE

$10,994.1 $11,540.1

-4.7%

$10,844

$52,826

$10,000,000

Percent of AUM

Portfolio management

CIO at franchise level

David Brown, chairman, CEO

Boyd Watterson Asset Management LLC 1301 E. 9th St., Suite 2900, Cleveland (216) 771-3450/boydwatterson.com

$8,483.4 $7,992.8

6.1%

$7,977

$8,483

$1,000,000

Fee only, percent of AUM

Portfolio management

Brian Gevry

Brian Gevry, CEO, CIO Tim Hyland, Michael Bee, managing partners

3

Ancora 6060 Parkland Blvd., Suite 200, Mayfield Hts. (216) 825-4000/ancora.net

$6,350.3 $6,293.7

0.9%

$4,074

$6,350

$500,000

Percent of AUM

Portfolio management, financial planning, retirement plans

John Micklitsch

Frederick DiSanto, chairman, CEO

4

AB Bernstein 127 Public Square, 50th floor, Cleveland (216) 263-8090/bernstein.com

$6,254.0 $6,827.2

-8.4%

$6,254

$516,353

$1,000,000

Performance based or percent of AUM

Portfolio management for individuals, businesses and institutional clients; financial planning; unlisted securities

Kathleen Fisher

Kara Lewis, managing director

5

MAI Capital Management LLC 1360 E. 9th St., Suite 1100, Cleveland (216) 920-4800/mai.capital

$4,460.0 $4,724.4

-5.6%

$4,223

$4,460

$500,000

AUM-based fee; set fees for noninvestment services

Financial planning, portfolio management for individuals, selection of other advisers

John Zaller

Richard Buoncore, managing partner

6

Wasmer Schroeder 1111 Superior Ave., Suite 1100, Cleveland (216) 622-0000/wasmerschroeder.com

$3,092.2 $3,046.7

1.5%

$3,059

$8,894

$500,000

Percent of AUM

Portfolio management for individuals, businesses, investment companies and institutional clients

Thomas Richmond Jr.

John Majoros III, director of Taxable Portfolio Management

7

Carnegie Investment Counsel 30300 Chagrin Blvd., Pepper Pike (216) 367-4114/carnegieinvest.com

$1,838.0 $1,687.8

8.9%

$1,781

$1,838

$500,000

Fee only, percent of AUM

Investment research, portfolio management, wealth management

Richard Alt

Gary Wagner, Richard Alt, Arthur Merriman III, principals

8

Oak Associates Ltd. 3875 Embassy Pkwy., Suite 250, Akron (330) 668-1234/oakltd.com

$1,544.0 $1,559.0

-1.0%

$1,544

$1,544

$500,000

Percent of AUM

Portfolio management for business/ institutional clients and investment companies

James Oelschlager Robert Stimpson

James Oelschlager, cochief investment officer

9

Prosperity Capital Advisors 30400 Detroit Road, Suite 201, Westlake (888) 240-0064/prosperitycapitaladvisors.com

$937.0 $884.9

5.9%

$937

$937

$5,000

Fee only, percent of AUM

Financial planning; portfolio management for individuals, businesses and institutional clients; seminars

Clint Pelfrey Jerry Herman

Douglas King, president, CEO

10

North Point Portfolio Managers Corp.

5910 Landerbrook Drive, Suite 160, Mayfield Hts. (440) 720-1100/nppmcorp.com

$635.2 $763.4

-16.8%

$632

$635

$500,000

Percent of AUM

Portfolio management for individuals, businesses and nonprofits

Diane Stack

Ronald Lang, president, secretary

11

Beese Fulmer Private Wealth Management 220 Market Ave. S., Suite 1150, Canton (330) 454-6555/beesefulmer.com

$584.1 $606.4

-3.7%

$584

$584

$500,000

Percent of AUM, fee only

Portfolio management for businesses, institutional clients and individuals

Dennis Fulmer

Dennis Fulmer, president, principal

12

First Fiduciary Investment Counsel Inc. 6100 Oak Tree Blvd., Suite 185, Independence (216) 643-9100/firstfiduciary.com

$535.4 $587.8

-8.9%

$535

$535

$1,000,000

Percent of AUM

Portfolio management for individuals, businesses and institutional clients

Mary Anderson William Henry

Mary Anderson, president

13

Van Cleef Asset Management Inc. 3201 Enterprise Pkwy., Suite 140, Beachwood (216) 464-0253/vancleefinc.com

$529.7 $537.1

-1.4%

$512

$530

$1,000,000

Percent of AUM

Portfolio management for individuals and institutional clients

Lino Sergo

Geoffrey Hauck Martin Burke Jr.

THIS YEAR

COMPANY LOCAL ADDRESS

2018/ 2017

1

Victory Capital Management Inc. 4900 Tiedeman Road, 4th Floor, Brooklyn (216) 898-2400/vcm.com

2

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM) This list consists of registered investment advisers that invest at least half of the assets they manage locally directly into stocks and bonds. Advisers below that threshold appear on our Investment Advisers list. Information is provided by the companies. Send feedback to Chuck Soder: csoder@crain.com. (1) Total regulatory assets as of Dec. 31, 2017 (2) AUM stands for assets under management

LIST ANALYSIS

Investment firm 2018 results aren’t as bad as they look

By Chuck Soder csoder@crain.com @ChuckSoder

Don’t worry about the companies on our Money Managers and Investment Advisers lists.

Sure, the lists make it look as if many of them had a rough 2018. And while that’s true in a strict numerical sense, the picture would look much different if these lists relied on data produced even a few weeks into the new year.

Of the 52 registered investment advisers that appear on the full digital versions of these lists, 25 of them, or nearly half, saw the value of the regulatory assets they manage locally decline from Dec. 31, 2017, to Dec. 31, 2018.

How does that compare to last year’s edition of these lists? The number of firms on those lists that saw a decline in 2017 was exactly zero. The previous year, five companies saw a decline.

So what happened that made this year’s numbers look so bad?

In December, the stock market took a nosedive. It started climbing back up just after Christmas, but the gains didn’t come quickly enough to make the year’s numbers look good.

However, the stock market continued to climb well into 2019. For

P019_CL_20190513.indd 19

Although that bad December caused the S&P 500 to lose 6.2% of its value during 2018, it has since erased those losses and hit a new record high in early May. instance, although that bad December caused the S&P 500 to lose 6.2% of its value during 2018, it has since erased those losses and hit a new record high in early May. At least one firm on these lists noted in a federal filing that its assets started recovering in the new year: North Point Portfolio Managers Corp., No. 10 on the Money Managers list, saw the value of its assets decline 16.8% in 2018, but by the end of February the Mayfield Heights firm had seen a 10% increase in two months due to “a sharp rebound in stock prices,” the company stated on the Form ADV it files with the U.S. Securities and Exchange Commission.

The companies on the Money Managers list tend to focus more on making direct investments in stocks and bonds. Those on the investment advisers list focus more on recommending investment products like

mutual funds — which are operated by money managers. In some cases, they make the final investment decisions for their clients; in other cases, their clients make the final decisions. But many companies on that list sometimes act as money managers and vice versa.

Once again, Victory Capital Management tops the Money Managers list. The Brooklyn-based company is slated to close an $850 million deal to acquire San Antonio-based USAA Asset Management Co. by July 1. It’s planning to move its headquarters to San Antonio while maintaining a local presence, the firm told Crain’s in January.

Likewise, CBIZ remains at the top of the Investment Advisers list. It saw an 18% increase in assets under local management in 2018, partly because in 2018 it started rolling in numbers from a second registered investment adviser it owns, CBIZ Investment Advisory Services, which is becoming more closely tied to its Retirement Plan Services unit.

Three companies — Cedar Brook Group, Ellsworth Advisors and Presper Financial Architects — joined these lists this year after becoming registered investment advisers in 2018. The second two firms are on the full digital lists, which are available to Crain’s Data Members.

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AKRON

DriveIT shuts down as two founders join national firm

By Dan Shingler dshingler@crain.com @DanShingler

Asad Khan, above, became CEO of Kent Displays in January, one month after longtime CEO Albert Green said he was stepping away from the maker of e-writers. (Contributed photo)

New Kent Displays CEO wants to elevate brand Khan aims to move Boogie Board closer to being a household name

By Judy Stringer clbfreelancer@crain.com

Asad Khan, the newly minted CEO of Kent Displays Inc., pinpoints three major inflection points in the Portage County company’s 26-year history.

There were the early days as a fledgling liquid-crystal “R&D tech house,” a pivot about 2004 to focus on flexible crystal displays and the 2009 decision to manufacture and market — by itself — the first consumer electronic writing surface, the Boogie Board. Users can write on the liquid-crystal display, much like a normal sheet of paper, and erase the surface with the touch of a button.

Put more simply, however, there is before Boogie Board and after.

In the past decade, the e-writer franchise has spawned nearly a dozen new products and moved beyond its initial Jot personal notepads to applications in education, business and productivity. The brand ranges from creative-play devices that allow messfree tracing and coloring to its newest Blackboard line, which is designed for offices and professional use.

To date, more than 13 million Boogie Board units have been sold in 44 countries across the globe, according in the company, making it the No. 1 e-writer in the world. In the U.S., the products are on the shelves at Walmart, Target, Costco, Sam’s Club and Staples, among others, as well as with online retailers. Kent Displays also produces and sells Boogie Boards as a component in other devices, most notably as the writing surface of a new generation of Etch A Sketch tablets.

Still, “we have so much more to do,” Khan said from the company’s Portage Boulevard office late last month. “Kent Displays is still mostly a secret, and we are trying not to be a secret.”

Khan took the reins at the company in January, one month after long-

P020_CL_20190513.indd 20

time CEO Albert Green said he was stepping away “to pursue other endeavors.” Khan, a Kent State-educated physicist, joined the startup in 1994 as a research scientist and had been the company's chief technology officer since 2009.

President and chief financial officer Joel Domino said Khan brings a unique blend of experience as both a technologist and business leader.

“For more than 23 years, his expertise has been instrumental in many of the company’s key strategic planning decisions and many of its most transformational business interactions,” Domino said.

Khan said his first objective as CEO is to inch Boogie Board closer to being a household name. The recent emergence of smart pens and pixelated writing surfaces is helping with that.

When Kent Displays first started selling e-writers, there were no “iPad pencils, even the iPad wasn’t there,” he noted. “Microsoft Surface wasn’t there, Sampson Galaxy wasn’t writing on anything and Wacom was a barely known entity. Smart pens did not exist.”

Today, all those things are on the market and, yes, their presence makes Boogie Board just one piece of a “massively big pie” — estimated at a whopping $1.6 billion, according to Khan — but at least it’s a piece people recognize.

“We’ve been advocating in this electronic writing and electronic surface space since 2009,” he said. “And we’re super excited that all these brands and applications and different technology offerings are available, because it is a rising-tide effect.”

In that rising tide of alternatives, Khan thinks Boogie Board has a compelling value proposition, especially among consumers or businesses looking for simple electronic writing capabilities. Most of the company’s e-writers retail around $20 to $30, pen included.

Khan’s vision for Kent Displays

also includes a continued commitment to new product development.

The company will release “a couple of products” this year with some “major developments” coming in 2020. Details about the impending offerings are not being publicized yet, but Khan said the devices will incorporate more functionality — such as the ability to save work — into its e-writing platform.

In addition, Kent Displays will look to market and grow its technical services and contract manufacturing divisions. Over the past two decades, the company has built a complex supply chain for the manufacture of flexible liquid-crystal displays, which Khan intends to leverage into engineering expertise for manufacturers outside of the e-writing space, such as optics and artificial/augmented reality.

With the company’s three roll-toroll manufacturing lines at its Kent headquarters and two newly acquired warehouses nearby, he also envisions more “Boogie Board technology inside” applications. Along with the Etch A Sketch contract, Kent Displays supplies Boogie Board surfaces for a range of products sold in China by Lenovo Group and other consumer goods it is not permitted to divulge. It routinely fields inquiries regarding other possible partnerships.

Khan admitted, however, that assessing those requests today as a 100-person company is quite different from when Kent Displays made the leap into e-writers a decade ago and was less than half that size. The private company does not share its revenue, but in recent years has pegged year-to-year revenue growth at about 30%.

“When you’re small, you don’t have that much to lose,” Khan said.

“We also don’t want to miss out on opportunities because we were not ready or not rightsized when they presented themselves. It’s a balancing act, but we’ve got great people and we are up to the challenge.”

a higher price. The company had only offered classes for about seven months.

“That was the intention: to go for a double-digit, million-dollar valuation,” Schwarber said. “That’s why I’m disappointed, because that’s what we were building and that’s the trajectory we were on.”

As a minority shareholder, Schwarber had to go along with Wise's and Ward’s wishes, but he thinks DriveIT might have done more locally on its own, both for workers and its investors, he said.

“It takes time to show the trajectory of people who used our stuff and what it does. … Had we had the chance to go 12 to 18 months, I think our investors would have been more pleased,

DriveIT, the Akron company that had been providing training to the area’s incumbent IT workers and developers, is no more.

The company sold its intellectual property and shut its doors as two of its founders, Eric Wise and Eric Ward, left to join Trilogy Education Services. A New York company that also provides skills training, Trilogy works with employers and universities, including Case Western Reserve University in Cleveland.

Wise said he was limited in what he could say, in “We’re shutting down part because Trilogy was acDriveIT and joining quired by Maryland’s 2U, anothTrilogy. It’s not an er skills-training acquisition, more of entity, in a $750 million deal anan IP/licensing nounced April 8. arrangement.”

That was just after Ward and — Eric Wise, DriveIT cofounder Wise finalized their deal with Trilogy, according to as would I, because we could have several sources familiar with the reached our potential,” he said. deal. Trilogy officials declined to Wise, however, said he determined comment pending completion of the that striking the deal with Trilogy now 2U deal, and terms of its deal with “was the best path forward to having DriveIT were not disclosed. the impact we wanted to have.”

DriveIT is no longer offering memSchwarber noted that investors got berships, which it modeled after fit- a positive return during a time when ness center memberships and al- the U.S. stock market actually fell, lowed clients to pick from a menu of thanks to a sharp dip in December. software and IT training courses, said He chalks that up, in part, to the comIan Schwarber, a DriveIT co-founder pany’s unique business model and who did not go with Wise and Ward the abilities of his former partners. to Trilogy.

“Ward and Wise were the two most The DriveIT website says: “We are exceptional people in IT training I’ve excited to announce that we have ever come across,” Schwarber said. joined the team at Trilogy Education Sue Lacy, president of ConxusServices. As full-time employees of NEO, a regional workforce developTrilogy, we will be winding down ment organization based in Akron, day-to-day operations of DriveIT also had hoped DriveIT would stick while remaining committed to creat- around. With its closure, Akron has ing exceptional learning experiences lost a valuable source of workforce training in the important IT sector, as part of our new employer.”

Wise said he and Ward will lead she said.

“I’m disappointed that we did not enterprise development efforts at have the opportunity to fully realize Trilogy.

“We’re shutting down DriveIT and the potential of DriveIT here in our joining Trilogy. It’s not an acquisi- community,” she said. “But I certaintion, more of an IP/licensing ar- ly wish Eric (Wise) the best in his rangement,” Wise said in a text to work with Trilogy. My understanding Crain’s. is they won’t really be doing work in “We’re excited to work with a team this market, so we’ve already been committed to quality and outcomes exploring other resources to do work and willing to invest at scale, as well in Akron.”

That includes possibly bringing as gaining access to companies and markets that are eager to build another software coding boot camp next-generation workforce skills,” or similar entity to Akron from CleveWise added. land or another city, she said.

It’s the second time Wise has “We don’t have a boot camp in Akcashed out on a software training ron any longer. … We are talking to an startup in Akron. He was a founder of entity in Cleveland now,” Lacy said.

Akron’s Software Craftsmanship She declined to name the organizaGuild in 2013 and agreed to sell it in tion, but said she hoped to have an 2016 to The Learning House, an edu- announcement soon.

As for companies that were using cation and workforce training firm in DriveIT, it’s unclear how they will go Louisville, Ky. While the deal for DriveIT was not about further training their existing an outright sale, investors still got employees.

Akron’s FirstEnergy Corp., which their money back and a positive rehad been using DriveIT, declined to turn, Schwarber said.

Schwarber added he was disap- comment. Spokeswoman Tricia Inpointed that Wise and Ward chose to graham said the company’s policy is exit now, as opposed to further grow- not to discuss its relationships with ing DriveIT and potentially selling it for vendors, “whether good or bad.”

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ZION

CONTINUED FROM PAGE 1

The 6-foot-7 Williamson has 3.2 million followers on Instagram, a total that would rank among the top 25 NBA players and is ahead of all but eight team accounts. The tally has increased by one million since January.

Duke men’s basketball — which leads all collegiate athletics programs with a combined 4.1 million followers on Facebook, Instagram and Twitter — had a Shaquille O’Neal-sized surge in its social stats during a season in which Williamson was a highlight waiting to happen.

The increase in Duke’s in-season Instagram following (358,000, as of March 29) exceeded the total follower count for two of the most storied programs in college hoops: North Carolina (347,000, as of May 9) and Kentucky (341,000). Duke’s total IG following of 1.1 million easily tops the Alabama and Ohio State football programs, and is slightly ahead of the combined count for North Carolina, Kentucky, UCLA and Kansas basketball.

“I’ve been fortunate enough to get a lot of athletes in my (sports business) class,” Tiryakian, the Duke associate professor, said. “Even they’re impressed (by Williamson). He’s sort of a phenomenon.”

Victor Matheson, a College of the Holy Cross professor who specializes in sports economics, puts Williamson’s popularity in much simpler terms.

“He is a person that everyone loved, despite the fact that he played for Duke,” Matheson said.

Where he goes, many follow The Cavs, revitalized by the 2014 return of James, already have the league’s fifth-largest social media following, with 19 million combined on Facebook, Instagram and Twitter. The tally has remained mostly flat since James left for the Los Angeles Lakers.

Williamson’s likely off-court impact, though, can be best defined by a few other LeBron-influenced numbers.

The 2018-19 Cavs, whose 19 victories matched the figure for the 2010-

JOBSOHIO CONTINUED FROM PAGE 1

The Northeast Ohio region attracted only 29.5% of the capital investment made by businesses coming into the state or expanding existing operations, creating 6,329 new jobs — only 23.4% of the total created in the state — according to JobsOhio’s 2018 annual report.

It’s difficult to pinpoint the reasons for the region’s low batting average.

In part, that’s because where companies choose to make investments are business decisions that a state or local economic development organization doesn’t control. JobsOhio can introduce a growing business to expansion opportunities in every corner of the state, but when a site selector approaches it seeking 1,000 acres of former farmland along Interstate 70, which cuts through the middle of the state, or a distribution location in the state’s shale oil region, Northeast Ohio isn’t in the running.

The communities of Northeast Ohio have been hampered because they were slow to develop a single economic development strategy — most importantly, a single point of contact for businesses and their site consultants to learn what the region can offer them. That’s partly because Northeast Ohio, unlike other parts of the state, has more than a handful of

P021_CL_20190513.indd 21 21 P021_CL_20190513.indd

Social sensation A look at the growth of the Duke men’s basketball team's Instagram account during Zion Williamson’s lone season in Durham, N.C. (all stats are through May 9, unless noted): 1.1 million: Total followers for the Duke men’s hoops team’s IG account.

358,000: The Duke basketball team’s follower growth during the 2018-19 season (as of March 29).

347,000: Followers for the North Carolina men's basketball team's IG account.

341,000: Followers for the Kentucky men’s basketball team’s IG account.

1,027,000: Combined followers for the IG accounts of the North Carolina, Kentucky, UCLA and Kansas men's hoops programs.

780,000: The Alabama football program's IG followers.

627,000: Followers for the Ohio State football team's IG account.

Lance King/Getty Images

11 club that was devastated by James’ first departure, had an average attendance of 19,349 — or 99.6% of the reduced capacity of the then-named Quicken Loans Arena. The actual crowd counts for much of the season were significantly lower, however.

A stat that stands out more to Matheson, the Holy Cross professor, is 17,632 — the Cavs’ average road attendance last season. The norm ranked 22nd in the NBA and was down 1,439, or 7.5%, from the team’s league-leading 19,071 average with James in 2017-18. (The Cavs paced the league in road attendance in three of the four seasons after James announced his return.)

“One of the real tests is how a player draws on the road,” Matheson said.

“That’s a great way to tell how a player is viewed.”

The more important gate numbers to the Cavs are obviously those at Rocket Mortgage FieldHouse, which will debut an $185 million renovation

in 2019-20, a year in which the franchise will celebrate its 50th season.

The Cavs’ key business metrics — season tickets, premium seating and sponsorships — are solid, sources said, with multiyear commitments that were in place before James’ second exit. But the addition of Williamson likely would produce another string of sellouts (the combined regular-season and playoff streak with James on the roster is 286), which would funnel additional business to other areas — in and outside the arena.

communities — Akron, Canton, Cleveland, Lorain-Elyria and Youngstown — that built distinct industrial economies and their own business development agencies.

Team NEO recognizes that the changes in the governor’s office present an opportunity to boost the region. Bill Koehler, Team NEO’s CEO, has been grappling with elevating the stature of Northeast Ohio since he was hired to replace Tom Waltermire in 2015.

“When I joined, and this has persisted during this time ... it’s always been this discussion about, ‘Oh, Northeast Ohio is not getting its fair share’ ” from JobsOhio, Koehler said in an interview. “While I think that is an important concept, I think we have to ask ourselves, ‘How do we create an environment where we earned the right to get our fair share?’ And that is what we’ve been trying to do.”

Knitting the region together and making Team NEO the point of first contact has been a long process. In late 2017, Team NEO and JobsOhio, which financially supports Team NEO, implemented a new strategy to help local business development groups work better together. In addition, the changing political environment — notably the retirement of former Akron Mayor Don Plusquellic, a JobsOhio opponent — has helped bring the Northeast Ohio communities together.

Though the governor’s only formal

role with JobsOhio is to appoint the members of its board, it has always been clear that the organization responded to the priorities of the governor. So the naming of Bob Smith, the market leader of the Cleveland office of Cerity Partners, a national wealth management and investment firm, as the new chairman of JobsOhio should help Northeast Ohio in Columbus.

“I wanted someone, and he was the logical choice, who could pull the local communities together,” DeWine said of Smith at the Team NEO meeting. “I was delighted he agreed to take on the position as chairman of our board.”

Until his appointment to the JobsOhio board, Smith was chairman of the Team NEO board and is a former chairman of the Greater Cleveland Partnership (GCP), the regional chamber of commerce, and the Council of Smaller Enterprises, GCP’s small business affiliate.

Also, soon after taking office, DeWine and his lieutenant governor, Jon Husted, impressed the leaders of the state’s largest cities with their commitment to bolstering urban development.

Keary McCarthy, executive director of the Ohio Mayors Alliance, a bipartisan coalition of 25 mayors in Ohio’s largest cities and suburbs (except for Cleveland Mayor Frank Jackson), said the two new leaders understand that the state’s economic growth will come from its cities.

A good year awaits?

The secondary market for Cavs games — like the win total of a team that entered the season saying it was trying to compete for a playoff spot, then quickly shifted to rebuild-andhope-for-more-lottery-luck mode — tanked last season.

Vivid Seats, a Chicago-based online marketplace, said the average

sales price of a Cavs ticket was $57 in 2018-19. That was down from a norm of $108 the previous season.

TickPick, a New York secondary-market operator, said the norm fell from $94.54 to $31.

Mark Klang, who owns Mayfield Village-based Amazing Tickets, doesn’t believe Williamson’s potential impact on the market will be “anywhere close” to that of James. Klang does think Williamson can “move the meter” more than anyone drafted since LeBron — “much more than Kyrie (Irving) did (prior to James’ return), which was practically nothing.”

While LeBron’s Lakers were a flop in Year 1 — missing the playoffs for a sixth consecutive season, one that was followed by the firing of head coach Luke Walton and the odd resignation of president of basketball operations Magic Johnson — the Cavs operated mostly under the radar from a national perspective.

Five of the team’s seven national

TV appearances were on NBA TV. The Cavs, after appearing on ABC, ESPN and TNT a combined 102 times the previous four seasons, had all of two showings on ESPN. That total would go way up with Williamson, which in turn would pump up the value of such partnerships as the team’s $10 million-ayear deal with Goodyear.

The exposure value of the Goodyear Wingfoot patch on the top left of the Cavs’ jerseys is worth $14.9 million to $16.3 million, Eric Smallwood, managing partner of Apex Marketing Group, a sports sponsorship and analytics firm in St. Clair, Mich., told Crain’s. With Williamson on the roster, the value would jump to $26.1 million to $27.4 million, Smallwood said.

The Cavs’ franchise value, meanwhile, fell $50 million, to $1.275 billion, in 2019, according to Forbes.

The estimate ranked 25th in the league, down from 15th in 2018.

Tiryakian said he believes the addition of Williamson could cause that number to soar $500 million in the near future. (Forbes’ 2019 estimate is $760 million above its projection of $515 million prior to James’ return in 2014.)

“The question you pose is not what happens if the Cavs get Zion. It’s what happens if they don’t?” Tiryakian said.

The Cavs, with 2018 lottery pick Collin Sexton and, at worst, a top-six selection guaranteed for the June 20 draft, believe they’re on a good path regardless of how the pingpong balls fall on May 14.

Still, there is little question that Williamson could be a franchise-altering addition.

That won’t change the fortunes of Northeast Ohio, said Matheson, who, like most economists, believes fans spending less or more because of a sports team often means they’re doing the opposite elsewhere.

“They’re just spending money differently,” he said.

But it could drastically change the Cavs’ future — and quite a few moods.

“As an economist, there is little reason to believe Zion will make the city rich,” Matheson said. “There is plenty of reason to believe he will make the people who live in that city happy.”

Advertising Section

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5/10/19 10:40 1:51 AM PM 5/8/19

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PEOPLE ON THE MOVE

To place your listing, visit www.crainscleveland.com/people-on-the-move or for more information, please call Debora Stein at (917) 226-5470 or email dstein@crain.com.

ACCOUNTING

CONSTRUCTION

FINANCIAL SERVICES

FINANCIAL SERVICES

FINANCIAL SERVICES

BDO

Rudolph Libbe Group

Ancora

Ancora

Springside Partners LLC

BDO USA, LLP, one of the nation’s leading professional services firms, has announced that Brian Kenyon has joined the firm as a managing director in BDO’s Business Services & Outsourcing Practice. Mr. Kenyon has more than thirty years of experience as a valued advisor and strategic thinker in transforming and leading growing organizations in the large tax-exempt, manufacturing, staffing, and professional services industries.

Keith Weisman, of Westlake, Ohio, has been promoted to Account Manager in the millwright group.

Weisman joined GEM Inc., a member of the Weisman Rudolph Libbe Group of companies, as an apprentice in 2005 and has held a supervisory role since 2010. A certified rigger with optical alignment expertise, he has supervised several large high-profile jobs with RLG’s northeast Ohio operations.

Ryan Miglets, of Avon Lake, has been promoted to Account Manager in the Rudolph Libbe Group’s piping group.

He joined GEM Inc. as a co-op in 2013 and Miglets accepted a full-time position in 2015. Miglets holds a bachelor’s degree in mechanical engineering from the University of Toledo.

Ancora is happy to welcome Mr. Brian Joseph to the firm as a Vice President and Family Wealth Advisor.

Brian will be managing client relationships with individuals, corporations, public and government entities, unions, and charitable foundations and will specialize in the firm’s managed accounts, hedge funds and mutual funds.

Brian’s prior experience includes time with Goldman Sachs in Chicago and with BNY Mellon in New York City. We look forward to working with Brian in his new role.

We are pleased to announce that Mr. Paul Caruso has joined Ancora as the Director of Commodity Investments. Paul will be launching and managing a new commodity focused fund for Ancora’s alternatives group.

Prior to joining Ancora, Paul served as the Director of Commodities Procurement for The J.M. Smucker Company and has prior experience in managing, trading and analysis of commodity funds and hedging. We look forward to working with Paul and are happy to welcome him to the Ancora team.

Springside Partners LLC, an SEC Registered Investment Advisor, welcomes David M. Taucher, CFP®, Senior Portfolio Strategist. Dave brings over 30 years in financial planning and wealth management, helping clients identify their goals and achieve a level of financial independence. At Springside, he will bring specialized, high-level experience to contribute creative wealth strategies. He was principal and chief investment officer of RAV Financial, which was later bought by Sequoia Financial Group.

BANKING

CIBC CIBC has added asset-based lending capabilities to its Cleveland commercial banking office with the addition of Joe Panico as Managing Director of Business Development. Joe will focus on serving middle market businesses across Ohio, Michigan and Pennsylvania with tailored financing solutions. Joe brings experience and expertise in asset-based lending to CIBC’s already strong commercial capabilities in the region. He joins CIBC from WNB Specialty Finance.

INSURANCE

Gallagher Gallagher Benefit Services is pleased to welcome Suzi Tamborelle to our Ohio team as our Voluntary Benefits Practice Leader. Suzi has worked for several insurance carriers focusing on voluntary benefits and helping to drive sales growth. With more than 15 years of industry experience, Suzi is dedicated to delivering excellence in voluntary benefits offerings and helping clients achieve better.

CONSTRUCTION

Rudolph Libbe Group John Roberts Jr., of Broadview Heights, has accepted the position of Account Manager in the Rudolph Libbe Roberts Group’s millwright group. Roberts is a 20-year member of Local 1090 Millwrights with certifications in gas/steam turbines, rigging, laser tracking, human performance and OSHA 500.

Stan Piecuch has been named Safety Manager for Rudolph Libbe Group in northeast Ohio.

Piecuch has over 9 years of experience in heavy industry as a process equipment operator, also performing equipment maintenance and Piecuch serving as a first responder. He is a Graduate Safety Practitioner and a former U.S. Army sergeant with multiple deployments and state missions, and holds a bachelor’s degree in safety management from Slippery Rock University.

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PROFESSIONAL SERVICES

RCF Group RCF Group is proud to announce the promotion of Damian Thomas to Market President of its Cleveland Office. He joined RCF Group in 2014 as a Project Manager and most recently served as General Manager, playing a key leadership role in the successful transition and growth of the organization following its acquisition. As part of RCF Group’s Executive Leadership team, he will assist in development of the company’s strategic plan as well as represent the organization through civic involvement.

LEGAL

PUT A SPRING IN YOUR STAFF’S STEP Announce new hires, promotions and board appointments in Crain’s People on the Move to ensure you have happy employees and are helping your bottom line. Placement guaranteed in print, online and our e-newsletter. Ask about our new 6x and 13x bulk commitments.

Singerman, Mills, Desberg & Kauntz Co., L.P.A. Singerman, Mills, Desberg & Kauntz Co., L.P.A. is pleased to announce that Laura T. Pizmoht has joined the Firm as an Associate. Prior to joining the Firm, Laura was tax counsel at The Sherwin-Williams Company and an adjunct professor of taxation at Case Western Reserve School of Law. She serves on The Willoughby Hills City Council. She received her J.D., magna cum laude, from Case Western Reserve University and her LL.M in Taxation from New York University School of Law.

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PEOPLE ON THE MOVE For more information, contact Debora Stein at dstein@crain.com CrainsCleveland.com/People-On-The-Move

5/10/19 10:21 AM

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Mac Love

CLEVELAND BUSINESS

Founder, Art x Love Despite never having lived there, artist and entrepreneur Mac Love knew he was coming home when he moved to Akron. He was born in New York and grew up in Europe, but his father’s ties to Northeast Ohio connected Love to the region, too. Love, who studied fine art but also has experience in advertising, marketing and business development, recently opened Art x Love, a creative agency that designs art and branding. Its downtown Akron site also is a gallery space. In June 2017, Love — who’s the creator of the Believeland mural and other chalk murals in Cleveland — won a $240,000 grant from the Knight Foundation for his 18-month @Play project, which brought community-inspired art projects to Akron’s 24 neighborhoods. Projects ranged from colorful murals to work that revived tired community spaces. “The project taught people how to ‘human’ better,” Love said. “When talking about why was it important, or how was it different, it’s because ‘humaning’ became a verb,” he said. Our conversation was edited for clarity and length. — Sue Walton

The Love file For fun Spending time with his son. Being outside, visiting the parks system.

In training “I signed up for the Akron Marathon, so I have to get back to running.”

What to love about Ohio The legacy that people from the state are so kind.

Highest compliment received That he lives up to his name.

How old were you when you moved to Belgium?

I was 11. I was entering into middle school.

You never lived in Northeast Ohio, yet growing up, the region held a mythical status as “home” to you.

Why? My dad was originally from North Olmsted. And I was born at a magic, impressionable age when “Major League” came out, when the Indians were incredible underdogs. And my mother was a Yankees fan. There are certain Yankees I love, but I always will be a diehard Indians fan.

How did you make your way to Akron?

I married a girl.

Lunch spot Diamond Deli 378 South Main St., Akron 330-762-5877

The meal Amy’s Sound of Music sandwich with a Diet Coke, and Debbie’s Carpe Diem sandwich with a Mountain Dew.

The vibe There are no frills but a lot of taste at this Akron mainstay, which is known for sandwiches whose names are as flavorful as the creations themselves.

The bill $16.50, plus tip

Were you interested in art from an early age?

A lot people think that you’re born with it. That wasn’t the case. I don’t believe in that. But I did have art around me. My parents kept sketches from where they traveled.

So I had authentic expressions from their own hands of felt experiences they had. I also realized early on that I was a little spoiled in that. I had a degree of confidence in it that no one else in my school had and a comfort level.

How did @Play come about?

Moving around as much as I did, I developed a system for exploring and understanding places, people and value systems. @Play was born from this experience and it addresses civic challenges with equity-building initiatives that are designed to endure.

How did you choose the artists to work with @Play?

We have a tier here in Akron who are established professionals who are highly reliable, a lot of photographers and videographers and people who are highly creative.

People who are go-tos. For our project, I knew we couldn’t necessarily afford to work with them. I also knew that I didn’t really want to. I met so many other people who were inspiring that I wanted to empower them to have those opportunities. So we sought them out in every neighborhood.

And because we did all street-level research, a lot of it was word of mouth. We hired 168 artists, but we probably identified about 500.

How were the projects decided?

We started all of our neighborhood research in the library. We would read news articles, look at old photographs and try to understand the footprint of the neighborhood from a historic perspective. Then we talked to the neighborhood leaders and stakeholders. While we were doing that, we would go into the neighborhoods and vet what we were learning and hearing. We talked to a lot of people at bus stops, coming out of schools, whoever was around. We also never positioned ourselves in one place.

We identified corridors in every neighborhood, and we made sure we dedicated time in all of them.

How was funding for each project decided?

We went into each neighborhood with a $10,000-per-neighborhood mindset. In some cases, that was

more than what was needed. In others, it was far less.

What were some of your favorite projects to come out of @Play?

The GIS Mapping platform we developed with the city of Akron is exciting and could significantly improve services across all of Akron’s neighborhoods. The Silent Disco Dustup is also the most fun and innovative idea for a neighborhood cleanup that any of us have ever heard of.

What kind of learning experience was the project for the artists, especially the emerging ones?

That was my favorite part about it. I would give them 15 free minutes of consult: Here’s how you start building a brand, or communications.

I would edit their résumés for them. I would tell them how to do a first-approach letter. So many people don’t know where to start. That was my favorite part of it, and I think a lot of the artists appreciated it.

What’s it like to balance the business part of things with artistic vision? Is there compromise involved?

What some artists might see as compromise, I see as progress. I have worked on many independent projects where no compromise was involved, but the success was lonely and felt hollow. I prefer the collaborative approach. It multiplies our capability to make a difference.

Independent and professional success is great, but if you’re not elevating and amplifying the capability of your peers and industry, what good is it?

700 W. St. Clair Ave., Suite 310 Cleveland, OH 44113-1230 Phone: (216) 522-1383 www.crainscleveland.com Twitter: @CrainsCleveland Publisher/editor Elizabeth McIntyre Group publisher Mary Kramer Managing editor Scott Suttell Sections editor Michael von Glahn Creative director David Kordalski Web editor Damon Sims Associate editor/Akron Sue Walton Assistant editor Kevin Kleps Senior reporter Stan Bullard, Real estate/construction Reporters Jay Miller, Government Dan Shingler, Energy/steel/auto/Akron Rachel McCafferty, Manufacturing/ energy/education Jeremy Nobile, Finance Lydia Coutré, Health care/nonprofits Senior data editor Chuck Soder Cartoonist Rich Williams Sales and Events coordinator Megan Lemke Integrated marketing manager Michelle Sustar Managing editor custom/special projects Amy Ann Stoessel Associate publisher/Director of advertising sales Lisa Rudy Senior account executives Dawn Donegan, John Petty Account executives Laura Kulber Mintz, Loren Breen People on the Move manager Debora Stein Office coordinator Denise Donaldson Pre-press and digital production Craig L. Mackey Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich Crain’s Cleveland Business is published by Crain Communications Inc.

Chairman Keith E. Crain Vice chairman Mary Kay Crain President KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong CFO Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Reprints: Laura Picariello, 732-723-0569 or lpicariello@crain.com Customer service and subscriptions: 877-824-9373 Volume 40, Number 19 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the last week of December, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230.

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THE WEEK Fresh start?

More impact

General Motors is in talks to sell the Lordstown auto plant it idled earlier this year to a tiny electric truckmaker, a plan that won President Donald Trump’s praise despite the likelihood the factory will employ far fewer workers.

The discussions with Workhorse Group, which makes plug-in pickups and all-electric delivery vans, and an affiliated new entity could bring “significant” production and assembly jobs to the manufacturing complex, GM said. The United Auto Workers union called for GM to keep operating the plant.

GM produced its last Chevrolet Cruze at the factory in March and had said it didn’t have any future product planned for the 53-year-old facility.

The Cleveland Foundation is expanding the kinds of investments it will make to have a greater social, economic and environmental influence on the Cleveland area.

The 105-year-old community foundation will allocate $150 million in capital for what the nonprofit world calls social impact investing by the end of 2022. Senior vice president and CFO Rosanne Potter said that for the Cleveland Foundation, that means investing in early-stage capital funds, biotech funds, sustainable energy funds and even Opportunity Zone funds focused on local businesses and projects.

P023_CL_20190513.indd 23

Plus one The Lordstown auto plant, once home of the Chevrolet Cruze, could soon be the spot for a Workhouse Group complex. (Bloomberg)

Geometry Global, part of an international advertising and marketing

agency, with a legacy home in Akron, plans to add an office in downtown Cleveland by 2020.

That’s the upshot of Post Office Plaza owner K&D Group announcing that Geometry plans to move 100 jobs to the building after leasing more than 14,000 square feet on its fourth floor. Geometry will continue to maintain an Akron office, although its size and location may change.

Taking off FedEx Corp. pledged an additional $5 million to support Kent State University’s new aeronautics academic center. The center at the Kent State University Airport will be named the FedEx Aeronautics Academic Center.

Construction is underway on the 17,800-square-foot building, which is expected to open this fall.

5/10/19 1:53 PM

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