Crain's Cleveland Business

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VOL. 39, NO. 36

SEPTEMBER 3 - 9, 2018

Source Lunch

Akron An in-depth look at the changes sparked by UA’s program review Page 20

Indians vice president Nicole Schmidt Page 23

CLEVELAND BUSINESS

The List Ohio’s largest public companies Page 16 SPORTS BUSINESS

RETAIL

Indians analyzing All-Star access

NORTHEAST OHIO’S FOOD FIGHT GROWS

By KEVIN KLEPS kkleps@crain.com @KevinKleps

Lucky’s Market store director Ryder Reynolds says shopping with a beer in hand could make for “a better experience.” (Tim Harrison for Crain’s)

Northeast Ohio’s crowded market has grocers doing all they can to stand out

By STAN BULLARD sbullard@crain.com @CrainRltywriter

As Ryder Reynolds sees its, pushing around shopping carts is not fun.

“Doing it with beer or wine in hand may make it a better experience,” said Reynolds, the store director of the new Lucky’s Market that opened in May at the intersection of

Clifton Boulevard and West 117th Street in Cleveland. The Colorado-based chain, which five years ago opened a Columbus store, is one of several supermarkets setting up shop in Northeast Ohio and hoping to recast the grocery-buying experience.

For Lucky’s, it promotes a sip-andstroll strategy as customers might partake in a libation while browsing its rotating cast of culinary creations prepared on site. In-store smoked

Entire contents © 2018 by Crain Communications Inc.

bacon, anyone?

Meantime, Fresh Thyme Farmers Market, a Chicago-based chain angling for time-starved consumers looking for a quick shop, recently christened a store in Westlake, its second in the region after last year’s Mayfield Heights opening. Lucky’s and Fresh Thyme are both grocers with small formats in the 20,000- to 30,000-square-foot range.

Welcome to Northeast Ohio’s food

Inside: More retail Vinyl’s rise: Record stores aren’t reaping rewards from sales surge. Page 10 Q&A: VNTG Home founder Megan Featherston discusses the fast-paced biz. Page 12

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wars — millennium style.

Such are the strategies of what might be considered the cream of a retail invasion by new purveyors in Northeast Ohio. That includes companies such as Meijer and Aldi that are adding shops throughout the region. Moreover, Whole Foods — the natural foods food giant acquired by Amazon last year — recently relocated from Woodmere Village to a new store in Orange Village.

SEE FIGHT, PAGE 13

When the first pitch is thrown in the 2019 MLB All-Star Game at Progressive Field, the Cleveland Indians might be just a few months away from their fourth consecutive postseason berth.

The Tribe’s 2019 season-ticket base could be the club’s largest in 11 years — even surpassing the 13,800 full-season equivalents from 2018.

These are all very good things for the Indians, but the composition of their bulked-up customer base — with quarter-season accounts more than doubling the combined total of full- and half-season plans — has resulted in some All-Star challenges.

“We wanted to make sure the All-Star Game was a reward for our season-ticket holders,” said Tim Salcer, the Tribe’s vice president of sales and service. “Sometimes it’s utilized Salcer to have season-ticket holders jump through hoops, but we didn’t want that.”

There will be no hoops. But there will be a lottery.

Salcer said Major League Baseball controls about 40% of the All-Star ticketing inventory, which leaves approximately 21,000 seats for Tribe fans at Progressive Field.

The Indians will give customers with full- and half-season ticket plans — groups that combined for 3,000 accounts in 2018 — the chance to purchase seats for all of the All-Star festivities.

That strip of tickets, the cheapest of which were $400 for last month’s events in the nation’s capital, includes the team workouts, a celebrity softball contest, Futures Game, the Home Run Derby and All-Star Game.

SEE INDIANS, PAGE 22

8/31/18 3:22 PM

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CRAIN’S CLEVELAND BUSINESS

Clinic’s ‘primary’ focus is its home base

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

Though Cleveland Clinic has been making major plays in Florida, London and China, president and CEO Dr. Tom Mihaljevic said he’s focused on growth in Northeast Ohio.

Eight months into the job, Mihaljevic has settled into his new role and is looking forward, working on a new five-year strategy and focusing on how he can increase access for patients in the region.

“Our primary commitment has been and always will be here in Ohio,” Mihaljevic said. “So we’re allocating the vast majority of our time and resourcMihaljevic es for maintenance and improvement of the care that we provide for residents of our home state, and in particular obviously the Cleveland area (and its) immediate surroundings. This is who we are. This is where we’ve come from. This is where we’ll stay. And we believe that there is a lot of opportunities for future growth in our home state.”

Earlier this year, Union Hospital in Dover formally became a full member of the Clinic, a significant stretch to the south for the health system. After adding Akron General to the system in 2015, going farther south was a “logical” step for the Clinic’s network.

While contiguous geographical moves make a lot of sense for the Clinic’s expansion of its network of hospitals, it is currently focused pri-

Akron General, which was added to the Cleveland Clinic system in 2015, has been “immensely” busy, Clinic CEO Dr. Tom Mihaljevic said.

(Contributed photo)

marily in Northeast Ohio, where Mihaljevic said he sees a number of different opportunities.

“We are blessed by the fact that we have a huge demand for Cleveland Clinic services, and we’re looking to improve access for our patients to come to Cleveland Clinic for care,” he said.

The system is looking at optimally leveraging its capacity, or balancing at-capacity hospitals in the region with less busy facilities. Akron General has been “immensely” busy and Mihaljevic said he believes the Clinic has a large opportunity to grow in Akron.

Optimizing capacity across the system’s facilities could improve access, which Clinic spokeswoman Eileen Sheil said the system is focusing on in response to its second-quarter financial report, which was posted after Crain’s sat down with Mihaljevic.

For the three-month period ending June 30, 2018, the Clinic posted an operating income of $25.1 million,

THE

down more than 80% from the like period last year, in which the Clinic reported $130.5 million in operating income.

Though net patient service revenue increased year over year for that period, expenses in virtually every category — including salaries, wages and benefits, supplies, pharmaceuticals, facilities and more — also grew.

Sheil said the patient numbers were “softer” than expected, and in part attributes this to access issues with certain hospitals operating at capacity and therefore creating wait times for access. For instance, main campus has been at 100% capacity, she said.

She also noted that in 2017, the Clinic had a “favorable recorded item that was unique to that year,” but said she was not at liberty to disclose what it was.

Mihaljevic is working on a new five-year strategy he expects to roll out early next year that will focus on four key dimensions: care of patients, care of the caregivers, care of the or-

ganization and care of the community.

The plan will look at how the Clinic organizes internally, how it can be the best place to work in health care, how it can leverage new expertise to create new technologies, tools and cures for various diseases, and how it can continue to provide safer, more accessible and more affordable care.

“All of that combined with the primary effort to serve our community and our patients in the best way possible,” he said.

While Northeast Ohio remains the focus for Mihaljevic, the Clinic this year has been making some major plays outside of the region.

In Florida, the Clinic has seen a huge demand for its services. Its facility in Weston works at 120% capacity, Mihaljevic said, so the Clinic is about to open an extension of that facility. Building upon the “resounding success” in Florida, the Clinic is now pursuing a network strategy in the state. The Clinic is in talks with both Indian River Medical Center and Martin Health System to bring them into the system.

“We believe that by having those two hospitals become members of the Cleveland Clinic system that we’re going to have an ability to provide a much more coordinated, comprehensive care of residents in Florida,” he said.

In China, the Clinic’s presence will be “comparatively speaking, very small,” Mihaljevic said. The “limited consulting engagement” is an opportunity for the Clinic to reach into China with Cleveland Clinic Connected, an international program that aims to improve patient care delivery in the United States and around the world by enabling other health care providers to access the Clinic’s best practices.

He said it is “very unlikely” that relationship will grow larger in the near future. Rather, the Clinic is “very much focused domestically” in Cleveland and Florida, as well as on Cleveland Clinic London, a project slated to open in 2021.

“So we are looking to build, to bring those three areas to the position we think that they need to be in four or five years before we would venture into anything else,” he said.

The Clinic is also considering growing its partnership with Oscar Health, through which the two offered a co-branded insurance product to consumers in five counties last year. Mihaljevic said they would like to expand to other counties with the insurance product and its digital platform.

“I believe there is an opportunity for us to expand,” he said. “The digital technology is certainly going to have — is having — a transformative effect on health care, and I believe that that influence is only going to intensify going forward.”

Also coming up is the Clinic’s Health Education Campus, where first-year students will be able to start next fall.

“We always strive to get better at everything we do, and that never ever ends,” Mihaljevic said. “Oftentimes people in the world ask me, ‘So what makes Cleveland Clinic different than many other places?’ And I say that is the fact that we have to wake up every single day, every single morning, and think about what am I going to do today to make Cleveland Clinic even more special and better at what we do so we can continue to attract people from all over the world to jump into the plane and fly to Cleveland, Ohio, for their health care.

That is deep into our DNA. So we’re never quite there.”

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CRAIN’S CLEVELAND BUSINESS

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Capital continues to stream into PE funds

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

The latest buyout fund raised by Cleveland’s largest private equity firm illustrates how much capital investors are pumping into the asset class these days in hopes of riding a wave to lucrative returns.

The Riverside Co. — a private equity firm founded in Cleveland and co-headquartered in New York with more than $7.4 billion in assets under management — closed its Riverside Micro-Cap Fund V (RMCF V) at $1.2 billion last week. The fund targets fast-growing North American companies with up to $10 million of EBITDA, or earnings before interest, taxes, depreciation and amortization.

As far as micro-cap businesses go, this is the firm’s fifth fund, so targeting that segment of the market is not a new strategy. Riverside was investing out of its first micro-cap fund back in 2005. Those funds have acquired or otherwise invested in 55 such platform companies, 75 addons for them and exited more than 30 deals since then.

Today’s market — epitomized by record levels of dry powder piling up for financial buyers and buckets of cash on hand by strategic, corporate buyers, factors that are driving up price multiples — is ripe for sellers and a challenging one for buyers.

Several firms have been tweaking

P003_CL_20180903.indd 3

“Not only did we double the size of the fund, we are actually 50% oversubscribed. There was a half-billion more that we couldn’t take. We turned it away because we didn’t want it to be any higher than $1.2 billion. It was in very high demand.”

— Loren Schlachet, Riverside managing partner

their buying strategies and increasingly rowing downstream for deals and value as a result.

Smaller firms will go even further.

Chagrin Falls’ MavenHill Capital is targeting businesses with just $1 million to $6 million in cash flow. That firm made its first deal last year in Connecticut Coining, a manufacturer.

What stands out at Riverside is how its latest fund is nearly double the size of the prior micro-cap fund, which closed in 2016 at $650 million, 30% above its hard cap.

The capital for the new fund was raised quickly, in just under four months. A typical fundraising period is usually more like 18 months.

And that’s all with Riverside leaving at least another $500 million on the table.

“Not only did we double the size of the fund, we are actually 50% oversubscribed,” said Riverside managing partner Loren Schlachet, manager of the firm’s micro-cap funds.

“There was a half-billion more that we couldn’t take. We turned it away because we didn’t want it to be any higher than $1.2 billion. It was in very high demand.”

There are some other factors at play specific to Riverside in that.

Schlachet noted that the firm has been raising a new micro-cap fund about every two years, and doubling the latest one enables the firm to stretch out the fundraising to a more typical three- to four-year cycle.

Of those companies sold in the micro-cap funds, Schlachet said they’ve quadrupled their earnings on average.

That’s helped build faith in Riverside, he said, citing that as an element in the fast fundraise.

Yet, what Riverside is seeing underscores other trends in the sector.

As of June, the global dry powder supply topped $1.07 trillion, setting a new high-water mark for the industry, according to research firm Preqin.

At least $3 trillion has been raised for funds in the past five years.

Several firms just in this market, like the rest of the country, have been closing funds higher than expected for a few years.

That includes groups like Cleveland’s Align Capital Partners, which raised $325 million in 2016 for its inaugural fund in just three months without — technically speaking — ever having made any deals. (While the firm itself is new, its founders are a trio of principals who splintered off from Riverside).

More recently, Cleveland’s Blue Point Capital Partners in January closed its fourth buyout fund at $700 million, about 16% higher than its $600 million target.

Partner Chip Chaikin said there was nearly $1.5 billion in demand for that fund.

“You just can’t accommodate all the money that wants to go into the lower middle market right now,” he said.

For a middle market buyout firm like Blue Point, the decision was made to keep the fund around $700 million lest Blue Point stretch itself too thin in terms of the ability to manage investments and achieve strong returns — which Chaikin said have kept up despite a costlier environment, though it’s taking a lot more effort to achieve that.

There may also be concerns from limited partners about whether a firm could actually deploy all its capital effectively if it took a fund to

$1.5 billion that the market originally was told would be less than half that size.

Notably, money is chasing private equity at record levels Chaikin regardless of the market wide potential for smaller returns in the future because of strong returns today.

According to Preqin, private equity funds have posted sizable returns over one- (+16.3%), three- (+13.9%) and five-year (+14.8%) time horizons to September 2017 (the latest data), but lower returns over a 10-year period (+6.3%).

Fund managers are not exactly broadcasting that lower returns could be in store. If they execute on their investments, returns will stay up. At the same time, most seem to know that’s a risk in the market today.

But it’s not stopping the flow of capital because even if returns trend slightly downward, they’re still very good.

“In franker moments, everyone in the ecosystem knows (returns) are going down,” said a partner at a Cleveland private equity firm, talking on background.

“Everyone realizes if there’s more money in the space, returns are going to go down. You can’t defy that law.”

8/31/18 1:25 PM

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As new apartments take wing at Lofts of West 9 in a 150-year-old Warehouse District building, a retail suite is being constructed for downtown Cleveland’s first site for co-working concern Cube Workspace.

Cube has five suburban locations from Mentor to Lakewood in place since its 2013 launch by Roy Elmalich and a group of investors. The 1275 West Ninth St. location is scheduled to open in November. Elmalich said the company also is preparing to add locations next year in Avon Lake, Hudson and Strongsville.

Asked why Cube is opening downtown, Elmalich replied, “Is that even a question?”

Or, in other words, why wouldn’t a local version of the concept popular on the coasts, particularly in cities with stronger tech scenes and larger populations, want to be near downtown’s growing residential population, tech community and varied entertainments?

Elmalich said he is excited about the location because he believes today’s downtown will be a popular spot for customers who want shortterm open office or enclosed offices, particularly if they are suburbanites looking for a workspace to park downtown for a short time or to use a conference room. Typical customers are sales people, customer service reps, people who own their own business or staffers from out-of-town corporations.

Moreover, he said he believes locating Cube in the lovingly restored Warehouse District structure will create an environment conducive to creativity.

“We’ll have a patio in the back and a large window shedding light on the lower level, which can be accessed by a circular stairway or elevator, and brick walls with exposed timber,” El-

malich said.

Real estate owner Dan DiCillo, who developed Lofts of West 9, is excited about introducing Cube, which already leases space at a building his firm owns in Solon, to downtown.

“I see it as part of the retail-ification of office space,” DiCillo said. Primarily an owner and developer of shopping centers, the DDR Corp. alum said he’s happy to land Cube because of the challenging retail environment and the concepts blend of retail locations with an office use.

Bringing in such a user is also a different twist on the tenants creators of downtown apartment buildings in old office or warehouse buildings originally relied on — restaurants, nightclubs or bars.

Cube will be a valuable addition to downtown’s business scene in the view of Michael Deemer, executive vice president for business development at the Downtown Cleveland Alliance nonprofit, which oversees the city center’s maintenance, security and marketing.

“I think co-working environments thrive when they can be clustered together in a way that allows entrepreneurs and innovators to interact with other to spark creativity and new ideas,” Deemer said. “I hope that it is the first of more co-working spaces to open in downtown. The Warehouse District is a natural fit for tech companies and entrepreneurs.”

Although co-working environments are generally thought of as spaces for young or newbie entrepreneurs to interact and make contacts in an open-office format, Elmalich said that’s not really Cube’s concept.

“We focus on accessibility and efficiency,” Elmalich said. “We offer it as a place to get work done. You can plug in and get on Wi-Fi quickly.”

In putting together its network of sites, Cube defines its sweet spot as locations that customers can reach within 20 minutes and get inside quickly. Although cubicle work stations are widely derided, Cube actu-

ally offers office cubicles as well as office suites. Locations operate around the clock every day of the week.

DiCillo said he is negotiating with another tenant for first-floor commercial space he declined to identify.

Lofts at West 9 also has enjoyed strong apartment leasing since opening its doors this summer. Only three suites, which includes two three-bedroom suites and one two-bedroom suite, are left, at rents upwards of $2,400 monthly. All nine one-bedrooms are taken.

Built for a liquor importer and later home to a vaudeville house and the Showboat Theater, the one-time Bloch Block has retained some surprising elements from its long period of decline.

DiCillo’s team retained graffiti, which appears to date from the ’60s and ’70s, that decorates some of the building’s hallways. Some walls still have plaster, and DiCillo said that if it wasn’t flaking or loose, it was left in place. In some suites, that creates a hole in plaster showing the bricks behind it.

“We feel it retains some of the building’s bohemian past,” DiCillo said. The other relic was the building’s wood, dating from the era before Cleveland’s tree-lined streets earned it the moniker “The Forest City.”

Massive wooden joists, about two feet wide and more than two inches deep, that had to be removed from part of the building became the stairway to a mezzanine in the top-floor three-bedroom suites. Other wood was used as a backdrop for photos of Cleveland taken by DiCillo, and his wife, Joyce, contributed to the interior decorations.

The two-bedrooms on the building’s street side have river and lake views, but DiCillo said he felt they were overlooked by tenants eager to snag one-bedrooms.

Suites with one bedroom also have a nearly six-by-six foot patio on the building’s east side.

8/31/18 2:58 PM

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Gene Groys, the entrepreneur behind OnShift, is taking the lessons he learned from launching that company and applying them to his new venture: MedaSync.

He isn’t straying far from his expertise.

OnShift is a Cleveland-based postacute care and senior living staff scheduling software company. Groys is now well on his way to a formal launch of MedaSync, which will offer a new software tool for nursing homes to manage rising costs and analyze clinical, financial and insurance information.

So far, MedaSync has eight customers across multiple states and has raised $650,000 in pre-seed funding, $550,000 of which came from its current round, led by Valley Growth Ventures.

“Our mission is really helping nursing homes navigate a lot of the big, immense changes that are going on in the health care environment that are impacting their ability to stay financially sound,” said Ryan Edgerly, CEO of MedaSync.

Groys and Edgerly, both of whom have experience in the nursing home space, sat down two years ago in a Panera Bread to brainstorm ideas and share problems they’d heard from clients. They’d noticed some big changes in the landscape as a result of payer reform and the Affordable Care Act. They turned to a number of clients in the marketplace and people in the industry to see if they’d be

MedaSync founder Gene Groys, left, and CEO Ryan Edgerly both have experience in the nursing home space. MedaSync offers a new software tool for nursing homes to manage rising costs. (Contributed photo)

willing to share their data.

“We got in and we set up shop, and we just kind of started iterating some different theories and hypotheses until we landed on where we were today,” said Edgerly, who also played a strategic role in OnShift.

What they eventually came up with was MedaSync, a software tool that

helps manage admissions, predict costs and monitor things like highcosts medications and equipment. On the back end, the software offers data analytics around clinical, financial and insurance information, effectively “providing a level of logic and intelligence on top of their data,” Groys said.

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At the Table

Musk wants new Next Door to fill gap in sit-down dining A gradual shift in the restaurant industry is changing what we eat when we dine out.

Over the past century, as food technology evolved, ingrediJoe ents and prepaCrea rations changed.

Commercial freezers, more efficient deep fryers and speed cookers, mass production and the rise of a dizzying chem lab of food additives — preservatives, stabilizers, extenders and an array of chemicals that enhance and alter the flavor, aroma and texture of foods — drew consumers into a new age of eating.

More and more midrange chains have come to rely on food prepared in far-away commissaries: precooked fare — often emasculated approximations of old favorites — reheated on-site.

Suddenly, it seemed we are light years away from the food our ancestors had eaten: simple ingredients, prepared from scratch just before the dishes are eaten.

Kimbal Musk says he wants to bring all that back. Bring it back, ironically, to the unlikeliest yet most obvious of places: family restaurants.

“There ought to be a lot more places where you can bring your family, gather with your friends and eat really good food that’s really good for you,” he said.

Musk, co-founder of The Kitchen Restaurant Group, was in town last week to promote his first Northeast Ohio restaurant: Next Door American Eatery. It’s slated to open shortly before Thanksgiving in the new Pinecrest lifestyle center in Orange Village.

Established in 2011 in Boulder, Colo., Next Door reflects a new dimension in that shift. Musk and his associates aim to fill the gap that lies between the newer generation of fast-casual eateries, old-school sitdown chains (“industrial food,” he calls it) and the indie restaurants that have captured a growing number of diners who want fresh food prepared to order.

If the name Musk is familiar, it’s because he shares it with one of the world’s most famous tech giants — his brother, Elon Musk. (Their mother is famed, silver-haired, 70-yearold model Maye Musk.)

But Kimbal Musk was not in town to swap stories of life in those rarefied circles. The food entrepreneur and restaurateur is on a mission — granted, a marketing mission — to drum up interest in what he said will eventually become a prominent player in the local dining scene.

The emergence of Chipotle Mexican Grill restaurants inspired his move to bring healthy sit-down dining mainstream. Musk admired the model: “clean” ingredients, sustainably sourced and humanely raised, essentially prepared to order.

“Our mission as a company is really pretty simple,” Musk said. “We want to bring delicious, real food that you trust to nourish your body, nourish your family, nourish the farmer and nourish the planet.”

Though he served for several years as a member of Chipotle’s board of directors, Musk is quick to differenti-

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ate between the two concepts.

“We’re NOT fast-casual. Next Door is a sit-down restaurant,” he insisted.

“The model we’re disrupting are the Chili’s and Applebee’s.”

For decades, America’s casual, mobile and cost-conscious consumers shifted dining dollars to fast food restaurants. Chains like McDonald’s, Wendy’s and Burger King perfected mass-marketed fuel to go.

Then, 25 years ago, Chipotle challenged that paradigm. (And to its credit, the fast food industry — while retaining a loyal customer base that still craves triple cheeseburgers, fries and shakes — has made strides with an increasing selection of veg-forward offerings, leaner protein choices and other more healthful options.)

“Fresh food, cooked just for you, with no unnecessary ‘stuff’ in it.

That’s become the realm of fast-casual dining. But it’s something the sitdown chain restaurant world has been leaving behind,” Musk said.

Those chains, he added, are struggling. It’s a consideration chronicled last year in The Wall Street Journal.

Plus, the Los Angeles Times, quoting a report from Chili’s parent company, Brinker International Inc., cited a drop in sales between the first quarter of 2015 and the second quarter of 2017. Similar plunges are affecting the entire sector, which includes IHOP, BJ’s Restaurants and Ruby Tuesday. Even Cheesecake Factory, a formidable player, has struggled against the changing tide.

Chains like Chipotle and Panera are central to that sea change. Both companies strongly emphasize the fresh-and-healthy roots of their offerings. “(Applebee’s and Chili’s) are basically industrial food, and that doesn’t

resonate with consumers anymore,” Musk said. “At Next Door, we cook with basic ingredients, cook fresh every day, use ‘local’ wherever possible — and with no freezers in our kitchen.”

A casual glance through the Next Door menu reflects the broad landscape of modern American tastes.

There are a dozen or so “snack and share” options, from house-made hummus and buffalo chicken bites to calamari fritto misto, guacamole with chips, and charred cauliflower salad with raisins and chick peas. There are loads of salads (with optional protein toppings), a trio of soups and lots of bowls (pan-roasted, wild-caught salmon with kale, beets, quinoa and lemon; ancho chili chicken with brown rice, black beans, pico de gallo). Plus, enough sandwiches, burgers and other mainline favorites will cover most parties convening to feast.

“You know, we’re well-known for our vegetarian food, but we’re also well-known for our meat dishes,” Musk said. “We’re heavily focused on where our animals come from. We know our animals from birth — what they’re fed, how they’ve been raised — and humane treatment is essential.

So if you have a vegetarian at the table, they’re super-happy. If someone wants a burger, they’ll be very happy.”

Cleveland has been in the Next Door team’s sights for quite some time now, Musk added.

“We’ve been looking here for a few years, and we love what we’ve found,” he said. “We’ve been looking in Columbus and Chicago, too.”

When his search team first lit on Cleveland, “We were initially looking at Fourth Street. We love being downtown — our whole vibe is urban — but we quickly fell in love with the Pinecrest development,” Musk added.

The plan is to grow into Northeast Ohio. Denver, where the group is headquartered, is currently home to seven Next Doors, but Musk envisions up to 20 throughout that metro area.

“Across Cleveland, we could conceivably do five to 10 stores, and across Ohio, a lot more than that,” he said.

As Next Door unfolds, Musk said he also aims to establish Big Green, an educational program he hopes to tie in to local public schools, and Square Roots, his New York-based hydroponic urban farms built in shipping containers.

“We’ve already met with some local foundations, looking for supporters for those projects,” he said. “For now, we’re just taking one step at a time.”

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CRAIN’S CLEVELAND BUSINESS

Opinion From the Editor

Check out our refreshed digital look

Editorial

A little help here Gov. John Kasich’s administration has been extraordinarily diligent about building up the state’s rainy day fund, which was empty when he took over, but, after a deposit of about $657 million in July, now stands at nearly $2.7 billion.

The fund’s growth represents some admirable fiscal discipline (as well as the fortunes of a growing economy) and sets up the state to manage the inevitable economic or budgetary challenges ahead. But with the fund now at 8.3% of general revenue fund revenues, nearing the legal limit of 8.5%, it also means it’s time to explore ways to tap into it modestly to restore local government dollars that have been slashed throughout Kasich’s tenure.

That’s not going to happen in the few months Kasich has left in the governor’s office. As he told The New York Times recently, in a story that looked at the buildup of rainy day funds by state governments, “We have a constant whining from local governments. They want handouts. They want it to be easy.”

We hope the state’s next governor, whether it’s Republican Mike DeWine or Democrat Richard Cordray, recognizes that Kasich’s budgetary and tax-cutting priorities for the last eight years have made things anything but easy for local governments and is open to sharing some of the prosperity represented by the rainy day fund with communities across the state.

Policy Matter Ohio, a left-leaning think tank, estimates that local governments in the state had at least $1 billion less in state support by 2017 than they did in 2010, adjusted for inflation, by policies that included eliminating the estate tax, ending reimbursements for local taxes abolished earlier, and slashing revenue sharing in half. As The Times pointed out, “disbursements from the Local Government Fund — money the state sends to municipalities each year based on population and property tax values — have been cut to $349 million in 2017 from $674 million in 2007.”

The biggest losers have been large cities and urban counties, but the cuts have affected communities of all sizes. Indeed, a study by the Ohio Municipal League details how a majority of

communities statewide have cut basic services, or increased fees, or delayed repairs, as a result of diminished state support.

We’re not advocating a raid on the rainy day fund. Far from it.

But with the fund at such a high level, it’s reasonable to look at how a small percentage of it — something between 5% and 10% would be $135 million to $270 million — could help restore some of the lost support to local governments.

It also would address the basic needs of citizens across the state, ranging from access to treatment for opioid addiction to infrastructure repairs, that those communities are struggling to meet.

A new hope

Cleveland sports fans have been living the good life for the last few years, with one big exception.

While the Cavaliers were delivering the city’s first title in more than 50 years, and the Indians came oh-so-close to the second, the Browns — the franchise that defines the city like no other and means the most to many fans — virtually redefined ineptitude. (A record of 1-31 over two years will do that.)

We’re not going to get excited over a 3-1 preseason mark — the team went 4-0 in the 2017 preseason before going 0-16 when the games counted — but we’re hopeful that things finally are starting to turn in the right direction.

The Browns have a general manager, John Dorsey, who inspires more confidence than the past holders of that position.

Last year’s No. 1 pick, defensive end Myles Garrett, looks to be a dominant player if he stays healthy, and this year’s No. 1, quarterback Baker Mayfield, shows signs that the position finally could be in good hands once he’s the starter.

We’re not expecting the Super Bowl, or even a playoff appearance just yet. If you’ve been watching HBO’s “Hard Knocks,” you know the team is full of characters. We hope the team is as fun to watch on the field as it is behind the scenes.

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

CLEVELAND BUSINESS

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Managing Editor:

Scott Suttell (ssuttell@crain.com)

Sections Editor:

Timothy Magaw (tmagaw@crain.com)

Contact Crain’s:

216-522-1383

If you’ve recently visited CrainsCleveland.com or opened a Crain’s newsletter, you’ve noticed we have a new look.

That’s because we’ve launched a completely new CrainsCleveland.com and updated our newsletter format.

It’s our first digital refresh in four years, and as any business owner knows, you’ve got to keep up with evolving technology, especially when it allows you to better serve your customers on the platforms they prefer. Web editor Damon Sims and Craig Mackey, who handles our web production, put in long hours with our corporate team in Detroit to develop a site that, we hope, improves the user experience.

The new site is clean, functional, informative, easy to navigate and easy on the eyes, thanks to a larger font. You’ll find a Elizabeth more robust home page that makes it easiMcIntyre er to see our most important and interesting content at a glance.

You can quickly access news from the home page, and our “voices” tab drops down to columns and reporting from Crain’s journalists as well as guests. There’s easy access to events, such as the Family Business Forum on Wednesday, Sept. 12 at Corporate College East, and to awards such as “40 Under 40” and “Women of Note.” Click for access to data and lists, multimedia presentations and people on the move in Northeast Ohio business, too.

And when you find a story You’ll find a more you want to share, like Scott Suttell’s blog on Next City’s robust home page close look at how the Clevethat makes it land Museum of Art is addressing diversity challenges, easier to see our we’ve made that easier, too.

Just click a button to post on most important Twitter, Facebook, LinkedIn, and interesting Google Plus or share via content at a email.

Most important, the new glance. site offers an improved experience on any device, whether you’re on a desktop at work, using your tablet at home or checking out your phone on the go.

Making our content accessible and user-friendly on mobile was an important goal of this digital update because so many of you prefer to interact with our content through mobile. Right now, 35% of our page views come from mobile visitors, and more people than ever are visiting our website that way.

Those numbers will likely increase, considering that eight in 10 Americans now own a smartphone, according to a Pew Research Center report this year. In 2011, that number was only 35%. Like I said, things are changing. Fast.

We look forward to continuing to provide you with relevant, interesting and valuable news, data and information about Northeast Ohio’s vibrant business communities, as well as impactful news from across the region, in Crain’s print pages and digital products. And we hope you’ll see the value in what Crain’s has to offer by subscribing. There’s a handy button for that on the top right side of our home page.

Please take some time to check out the new CrainsCleveland. com, on whichever device you prefer, or all of them. Let me know what you think of the new experience, what you like and what you don’t. If you have any problems or spot any bugs, let us know and we’ll fix things as soon as we can.

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.

8/31/18 3:33 PM

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REDEFINING CORPORATE HOSPITALITY Personal View

Northeast Ohio needs to land people attraction campaign

Conferences • Trade Shows • Meetings • Fundraisers • Ceremonies • Celebrations

By MARK RANTALA

Attorney Jon Pinney’s City Club speech on June 8 has started a new round of debate on making Northeast Ohio competitive. That conversation is long overdue.

The region’s last conversation about a competitiveness strategy resulted in shuffling the deck with a new strategy for Team Northeast Ohio. The four points of that strategy known as the Regional Competitive Strategy (RECS) included: JJ1. A larger commitment to industry clusters.

JJ2. An increased emphasis on business retention and expansion.

JJ3. More support for startup entrepreneurship and scaleups.

JJ4. Addressing workforce issues and alignment.

These are all worthwhile objectives for the region, but the failure to expand the discussion of talent and talent attraction to include a strategy to address the core people needs of the region is a monumental failure of RECS. As executive director of the Lake County Ohio Port and Economic Development Authority, I have experienced firsthand the challenges of a shrinking workforce. At the Port Authority, we have done a deep dive into the data at the county level. In 10 years, Lake County will experience a shortage of between 4,000 and 8,000 people to fill all the existing jobs in the county. From retail clerk and cook, to CNC operator or chemist, from nurse to physician, we will not have the people to fill all the existing jobs — let alone provide the workforce necessary to support the future growth of businesses currently operating in Lake County or

If we don’t address the need to attract and retain people now, yet another “new” strategy to make Northeast Ohio competitive will fail. new businesses we attract. No population growth means no workers — which means no ability to attract new businesses. We are fast approaching a crisis point as retiring baby boomers are not being replaced.

The reality is this is not only a Lake County issue. At a macro level, this problem exists throughout Northeast Ohio and may be worse in many other counties than in Lake County.

Northeast Ohio lacks a clear talent acquisition and retention strategy. Our alphabet soup of economic development organizations — Greater Cleveland Partnership, Team NEO, JobsOhio, the Fund for Our Economic Future, Destination Cleveland and Global Cleveland — only pay lip service to this problem at best. I have made the rounds of all these organizations pleading for a coherent, comprehensive and aggressive people attraction campaign, without success.

Nearly every market in the United States has some type of campaign to attract people. A few examples: Ten years ago Michigan started a campaign as part of the Pure Michigan campaign. They spend $2 million annually from their travel and tourism campaign on trying to repatriate Michiganders that left in the Great Recession. Their campaign is having some impact — the lights have not gone out in Detroit.

Nashville, in an effort to attract people for the IT industry, runs a successful campaign called WorkIT Nashville.

The Youngstown Business Incubator has a successful campaign to attract talent.

Dallas, one of the fastest-growing markets in the United States, has a campaign called Say Yes to Dallas.

On average, more than 300 people move to Dallas every day, over 100,000 people each year.

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And yet, here in Northeast Ohio, we are watching the U-Hauls and businesses line up to leave for markets where there are people to support the needs of businesses. We watch as our talent leaves the region for greater opportunities.

So how bad is it?

In 1990, the Cleveland-Akron-Canton region ranked 11th in the U.S. with 3,253,750 people. Our share of the U.S. population was 1.3%.

Twenty years later, in 2010, our population had grown to 3,494,596. However, we had slipped to the 16th-largest market in the U.S. with 1.1% of the U.S population.

By 2030, the U.S. population is projected to reach 360 million, and our share of the population will have fallen to 0.94% and dropped to about 3.36 million people.

At what point will we no longer be able to attract the talent for our major corporations? Will they have to move to find the talent necessary to be competitive? I think we are close to that tipping point today.

Between 1990 and 2030, the U.S. population will have grown by 110 million and Northeast Ohio will have grown by 110,000. Our share of the U.S. population will have fallen from 1.3% to 0.94%. Will we even be a middle market in 12 years? It would take 1 million people by 2040 (about 40,000 year) to just maintain our standing. What corporate headquarters will leave or which sports franchise will we no longer be able to support?

In a region that regularly muddles its message and messengers, we need a single voice to let college students know there are opportunities here so they will return from Columbus or Ann Arbor when they graduate. We need a strategy that aggressively recruits from the college campuses of Chicago and elsewhere beyond the Ohio borders. We need to seek to repatriate Northeast Ohio residents who left when times weren’t so good.

The region needs a new approach. A team of “recruiters” assembled from the ranks of college recruiters, alumni relations representatives, IT and technology recruiters, health care and manufacturing that can become the nucleus to lead the campaign. It can use the resources of Destination Cleveland and its national marketing campaign while collaborating with Global Cleveland and the Cleveland Plus network to carry a far more aggressive campaign message.

If we don’t address the need to attract and retain people now, yet another “new” strategy to make Northeast Ohio competitive will fail. Without people, no strategy can succeed.

Rantala is the executive director of the Lake County Ohio Port and Economic Development Authority. He spent 23 years as a commercial real estate broker.

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8/30/18 2:05 PM

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Focus RETAIL

Square Records in Akron’s Highland Square neighborhood is celebrating its 15th anniversary this year.

(Photographs by Shane Wynn for Crain’s)

Song remains the same for indy shops Surging vinyl sales haven’t boosted margins for record retailers

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

The slow and steady resurgence in vinyl records is music to the ears of true fans, a kind of validation of what listeners consider a superior medium for their favorite tunes.

But if the excitement by music snobs for the industry — which saw unit sales of vinyl increase about 10% in 2017 over the prior year for the 12th consecutive year of growth, according to the Recording Industry Association of America and Nielsen — were like the full, rich sound of an LP, the sentiment by retail stores might be more akin to a compressed MP3 file.

In other words, for independent record store owners, that buzz is a bit more muffled.

“It’s a pretty good business right now.

There are a lot of young kids getting into it.

You’ve got teenagers to people collecting records steadily ever since the 1960s who are diehard fans,” said Dave Ignizio, owner of Square Records in Akron’s Highland Square neighborhood. “With so many types of people getting back into records, that makes it easy to stock the store and cover all different genres and know there’s

P010_CL_20180903.indd 10

a market for it.”

Vinyl sales are growing strongly. According to Deloitte, revenues tied to sales of vinyl records were between $800 million to $900 million in 2017. That growth trajectory puts vinyl on track to top $1 billion for the first time this millennium. It peaked during the 1970s.

For neighborhood record stores, though, that’s not really translating to any immediate windfalls. There are at least a couple dozen small record shops dotted throughout Northeast Ohio today. But as evidenced by a number of local stores closing in recent years or otherwise ditching brick and mortar shops for online marketplaces, turning a profit in the business is still quite tough.

“Stores are basically making the same margins as they would have in the past,” said Ignizio, whose shop marks its 15th anniversary this year. “The production costs are more expensive. If I put out a record at $20 here, I most likely paid $14 or so for it.

Maybe a little more. It’s not particularly great.”

Spin the black circle Vinyl is seeing more popularity today for a combination of factors — from older fans who’ve never stopped building collections

to younger people embracing a physical format despite living in a digital age in which modern technology and streaming services have displaced the convenience once offered in CDs. Music labels are reissuing old albums on vinyl, while others are putting out records with previously unreleased tracks on the medium. It’s both an acknowledgment of vinyl’s quality and the market’s demand for it. That’s all breathing new life into back catalogs, said Gene Shelton, an associate professor at Kent State University whose résumé includes past work for labels like Motown Records, CBS Records and Epic Records. Shelton teaches the journalism school’s Media, Power & Culture course and is working to revive classes on record promotion there.

“I think the purists have, through word of mouth, expressed that when you want to hear the music in its purest form, when you want to hear the music as recorded, you want to hear it on vinyl,” said Shelton, who lives in California outside the school year and frequents Amoeba Music there to build his record collection. “But other than the purists and that small group of people who prefer vinyl, I just don’t know if that’s enough to maintain a brick-and-mortar store with huge success.”

SEE VINYL, PAGE 14

Square Records owner Dave Ignizio says the store’s profits on record sales are “not particularly great.”

8/30/18 4:48 PM

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RETAIL

Stark launches own restaurant week Cleveland-based Stark Enterprises is launching its own restaurant week to showcase more than 40 restaurants across its portfolio of retail complexes in Northeast Ohio.

The showcase — which runs through Monday, Sept. 3 through Sunday, Sept. 9 — will promote eateries at Stark’s various holdings such as Crocker Park in Westlake, Eton Chagrin Boulevard in Woodmere, Portage Crossing in Cuyahoga Falls and The Strip in Canton. Participating restaurants will offer special menu items across three price points — $10, $20 or $30. Participating restaurants can be found on Stark’s website, but include locales such as 3 Palms Pizzeria, Aladdin’s, Paladar Latin Kitchen and B Spot, among dozens of others.

“We are thrilled to host such a large restaurant week across our vast portfolio here in Cleveland,” said Ezra Stark, Stark’s chief operating officer, in a news release. “We invite all to try and enjoy a new restaurant around Cleveland and see what our fantastic food scene has to offer.”

As Crain’s reported this spring, dining options are becoming increasingly important to the success of the region’s retail mega-complexes — many of which are described as lifestyle centers. And they’re much more than glorified food courts.

For example, the newly christened Pinecrest lifestyle center in Orange

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3 Palms Pizerria is part of Stark Enterprises’ restaurant week, which runs Sept. 3-9. (Kevin Kleps)

Village — a project of Cleveland-based Fairmount Properties — is home to Northeast Ohio’s first Shake Shack, a City Works gastropub, Firebirds Wood Fired Grill, Bibibop Asian Grill and several others.

“But let’s face it: People like to go out to eat,” Fishman told Crain’s this spring. “And they’re cooking less, at an increasing rate. Having a multitude of dining options is essential.”

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RETAIL

Q&A: Megan Featherston Founder, VNTG Home

Megan Featherston is no stranger to the challenges — and opportunities — afforded by the ever-evolving retail industry. Since the early ’90s, the Texas native has held several leadership roles for iconic brands such as Sears, Payless, Wilsons Leather, Michaels and ultimately Jo-Ann Stores, which brought the experienced multi-channel marketer and merchandiser to Northeast Ohio. Despite being attached to some of the nation’s most well-known brands, Featherston’s always had an itch to start something of her own.

Enter VNTG Home — a Cleveland-based startup Featherston said is designed to connect generations. VNTG Home, which has a 25,000-square-foot marketplace in Cleveland’s Tyler Village, is more than a muscled-up consignment shop, as the company takes vintage wares and allows its patrons (usually young dwellers) to upcyle them by repainting, reupholstering or refinishing.

For folks looking for less stuff, VNTG Home offers services ranging from estate sales to home liquidations and cleanouts along with moving services and consignment options. To support its growth, the company recently invested in a 53,000-square-foot space a few blocks from its showroom to serve as its operational headquarters, design space, upholstering station and inventory warehouse. — Timothy Magaw Did you always expect to go into retail?

Actually, no. I graduated from college in 1989, and I was being recruited by IBM, some oil companies because I was from the South, the Federal Reserve Bank and May Department Stores. My father, a businessman, was excited about me maybe going to the Federal Reserve Bank — probably so he could talk about it while playing golf — but I ended up going to May Co. to run one of its shoe departments. And from there, my career flourished.

day, you get a scorecard and customers vote and tell you what they think. It’s really responsive. In the time period I’ve spent in retail, there’s been robust growth in American consumerism. That is our industry; we consume. I grew up in a time in retail where it was growing and flourishing. I’ve opened thousands of stores for national retailers and built brands for people of all different demographics relevant to their product category.

There’s an art and science combination to retail that engaged me.

What kept you in the industry?

Retail is a fast-paced, everyday, every decision counts business. Each

How did you get the idea for VNTG Home? Have you always been into antiques ?

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When I was just about 7 years old, I went to an estate sale with my grandmother, and she let me bid on one of the boxes being auctioned off. For $1, I got this whole box and then got to see what was in it. In that box was a teapot. Of course, Featherston said VNTG Home’s personalization I thought it was services are what set it apart. (Contributed photo) the most beautiful thing in the world, and it still sits on The internet has certainly my desk. I’ve always enjoyed the old revolutionized retail. How does soul, loved before and the excitethat affect your model? ment of choosing from the wonderWe have a robust digital platform, ful things that exist on this earth. which, of course, is important to The other side of VNTG Home is the engage all customers, but primarily retail landscape is changing. There younger dwellers. We might not are 80 million millennials and 80 always convert digitally, but we drive million baby boomers. So, half of the them to our marketplace to have population is either trying to get rid that experience. But this model is of things or starting their own intended to go beyond Cleveland, households. And that estate-sale and we’ll need that digital model is changing, which has infrastructure to take our vintage traditionally been older people vibe to the next lucky city. To do selling to other older people. So, the that, we have to have a headquarsupply is great, but the demand isn’t ters that can support fabric there. We are connecting generations distribution and digital operations to with a solution that offers our target support our growth. customers — younger dwellers, home decor enthusiasts — a Why did you choose Cleveland, marketplace with 10,000 unique particularly Tyler Village, for this items at any given time to build their venture? home design. And uniquely, we This is not retail row where you’re unlock the value of those furnishings paying $26-$40 a square foot in a by allowing them to upcyle them. Our shopping center to be next to some inspiration is to allow all people to familiar brands. This is about an live beautifully and afford luxury. experience. We like to call it a

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treasure hunt where you have an ever-changing vast space full of old funky cool stuff — like an old French market that lands in a rusty old city in its renaissance. So, the real estate aspect is important and Cleveland is a perfect fit for that. We’re also not a bright, shiny new-city kind of company. We’re about cities in their renaissance. Cleveland is perfect for that. It’s an old city with a growing segment of boomers downsizing and a resurgence of young people who want to be part of that renaissance.

Tell me more about the services side of the business. You’re not just a retail outlet, right?

We call ourselves the single solution.

That means we take people from what we call overwhelmed to overjoyed. Anyone can call us — someone downsizing, divorcing or maybe just wants a change. Home transition is very stressful. We are a single company that comes in and says we’ll pack you and move only what you want. We’ll help you solve the balance of the rest — we’ll sell things that are of right value, donate other things and get rid of things that have no value. Then, we’ll make the house real estate ready. We do professional staging. There are estate sales, consignment stores, contractors and restoration services, but it’s the combination thereof that allows anyone to say, “OK. For one price, I’m out.” This is also where we get inventory, but it allows those customers who would have had to put it all out on the curb a solution without having to schlep it themselves.

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CRAIN’S CLEVELAND BUSINESS

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S E P T E M B E R 3 - 9 , 2 018

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PA G E 13

RETAIL

FIGHT

Smoking the competition

CONTINUED FROM PAGE 1

A study by Prosper Insights of Columbus demonstrates who has the The onslaught creates the question most at stake from new entrants.

The consultancy samples customers of whether the region, lacking the population growth of many markets, has locally and nationally to determine enough hungry mouths to feed. With which stores they first think of shopmultimillion-dollar investments going ping at in multiple categories as well as into place throughout and established groceries. Pittsburgh-based Giant Eaplayers like Pittsburgh-based Giant Ea- gle tops the list for 26.7% of those surgle upping their game with dropping veyed in Northeast Ohio, followed by prices, the retailers are voting with Walmart at 20.9%. Aldi comes in third their dollars and betting the sales will with 11.2% and the remainder are all follow. Any gains are primarily going to below 5%. The other two big categories be their competitor’s losses. are no preference or other, 13% each.

Fresh Thyme is one of those more For its part, Giant Eagle knows it aggressive competitors, as it may add provides the largest target for comas many as five more stores in the re- petitors.

Jannah Jablonowski, a Giant Eagle gion, said Michael Doiron, the grospokeswoman, said the changing grocer’s chief marketing officer.

“We continue to beat the feet and cery landscape is the “launch pad for find locations for our stores,” Doiron what we are doing” from multiple store said. “We look to serve a high popula- formats ranging from 120,000-squaretion of people we call health seekers. foot Giant Eagle stores to its small-forThey are looking for ways to feed mat GetGo stores.

A big initiative at Giant Eagle was themselves and their family healthier, maybe hormone-free products or launched in April as it cut prices an average of 15.5% on 5,500 items, innatural and organic products.”

Lucky’s founders, both former cluding 1,000 items cut by 25% or chefs, visited Cleveland on a personal more. The move followed the August trip and were amazed by its incredible 2017 price cuts of as much as 43% at food scene. They pegged it as a place Whole Foods when Amazon took that would find a following for its culi- over the natural food chain.

“We have a long-standing philosonary creations, prepared on site, that are a significant part of its business. phy that competition makes us better,” “Our made-from-scratch recipes Jablonowski said. “There are so many prepared on site are not typical of con- different players that come in for so ventional stores,” said Ben Friedland, many different categories that we are marketing vice president for Lucky’s. competing with everyone. We have to “We smoke our own bacon and make provide the traditional weekly shopour own sausage on site. There’s noth- per with a phenomenal store experiing like the smell of smoking bacon as ence, customer service and price. We you walk into one of our stores. Our want to attract the foodie-oriented fresh food is often a gateway for the customers with our Market District rest of the store. Someone might stop banner. We want to be competitive in to buy something for their kitchen or all the categories that we touch. Good dinner, see the rest of the store and re- enough is not good enough anymore.”

For customers seeking organics, it alize, ‘I can expand the rest of my offers its own brand. shopping here.S’ ”Grimm.qxp 2/23/2016 03-07John 10:43 AMNature’s Page Basket 1

It’s also innovating in extending its made-fresh food to its GetGo stations, which Jablonowski said have evolved from providing rebates in the form of savings on gasoline to serve as small markets for everyday needs.

Most of the 415-store company’s growth is in the GetGo category, and its 199 GetGo locations include a new store opened last March in Medina.

“It’s a case of extending the Giant Eagle shopping experience as much as possible,” she said.

The company is also constructing a 55,000-square-foot Giant Eagle store in Mentor; it has not announced yet its plans for its existing store in the suburb.

The new competition will also impact Cleveland-based supermarket companies. Local grocer Dave’s Markets of Bedford declined to be interviewed for this story, and Jeff Heinen, a co-owner of the Warrensville Heights-based Heinen’s Fine Foods chain, did not return two calls on the topic by Aug. 30.

Such experimentation in the food retailing arena even has, after a fashion, brought Kroger back into the core of Northeast Ohio. The Cincinnati-based grocery goliath made what the companies describe as a “significant investment” in Lucky’s in 2016.

Friedland said the investment by Kroger has helped Lucky’s to accelerate its movement into markets it sought to reach faster than otherwise, such as Cleveland.

“For us, what has made Kroger such a strong partner is its recognition of what Lucky’s offers,” Friedland said. “There has been no ask or desire for us to be anything but Lucky’s.”

In some markets, Lucky’s is experimenting with sourcing some of its offerings through Kroger’s, but that’s not the case in Cleveland. As far as more stores in Northeast Ohio, Friedland said the company is “always

$60 million Amount Aldi will spend on stores in Northeast Ohio by 2020.

looking” for other opportunities, but wants to see how the new store fares.

Aldi, based in Essen, Germany, is also ramping up in the region, opening a new store in Medina Aug. 23, the same day it opened remodeled and expanded stores in Brooklyn and Chardon. Aldi is also in the midst of a complete makeover of its Lyndhurst store.

The remodelings open the door for more storage of fresh produce, dairy and meat, as well as increased natural lightings. All told, Aldi will spend $60 million in Northeast Ohio by 2020, according to Miranda Coello, a spokeswoman for Aldi.

Freshening the strategy This frenzy occurs as online retailers, especially Amazon, go after the food market, the last retail sector not already disrupted by online sales.

Grocers are also rushing into home delivery out of a philosophy that they do not want to be left behind.

“The reality of today’s grocery retailing world is that online ordering and delivery is like table stakes in playing cards,” Friedland said. “To play in the game, you have to offer this experience.”

Lucky’s is looking, he said, to add a third-party delivery service in the future.

The largest factor accounting for grocers expanding into new markets, store expansions and remodeling is that unemployment is at low level and the economy is strong again.

Chuck Cerankosky, a principal at independent institutional equity analysis firm Northcoast Research of Cleveland, said, “With the stronger

economy, you have customers trading up, so competition for supermarkets and restaurants, whatever their form, is increasing.”

The in-home food market is fragmented, he said, but it benefits from consumers having more money to spend than in the downturn.

“With dual-income families,” Cerankosky said, “when you get home from work and the kids are hungry, you have more choices than ever before, from fine dining to prepared food from Costco.”

A few things have emerged in this food fight.

“Fresh food, prepared food and dining out have come back. The private label for in-home food retailers has grown,” Cerankosky said. “The retailer is staking the quality of its reputation on it. If you skip the restaurant (for prepared supermarket food) and it’s not good, that creates a problem.”

The strong economy is likely to give the growing retailer mix more time to run than otherwise. However, with Northeast Ohio’s lack of population growth, the question will be how soon larger players start giving up some profits to retain market share.

“There’s going to be some road kill,” Cerankosky said, pointing to supermarket chains closing in other regions. “There is no obvious weak competitor in Northeast Ohio. Keep in mind that Walmart sells a lot more than food. And you can walk in to Costco for groceries and walk out with a trampoline, which I’ve done.”

Despite all the work on formats and embracing technology, Cerankosky points to some fundamental facts.

“I think people like to buy food in person,” he said, and there is a unique twist in the notoriously low-margin grocery business: “Poor people have to save money and rich people like to save money.”

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PA G E 14

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CRAIN’S CLEVELAND BUSINESS

S E P T E M B E R 3 - 9 , 2 018 |

RETAIL

VINYL

CONTINUED FROM PAGE 10

Cleveland’s Gotta Groove Records, which is among just roughly two dozen or so record pressing plants in America and bills itself as the “artist’s preferred pressing plant,” has been cranking out vinyl since 2009. Matt Earley, its vice president of sales and marketing, said every year since then has been better than the last.

He said revenues grew about 10% in 2017. The manufacturer, which now has 38 employees working two shifts, produced about a million records in 2017, which is effectively its capacity at this time. Earley said they could make more if a third shift were added, but he’s not sold that demand dictates a need for that just yet.

He described the vinyl resurgence as a sort of “revenge of analog.”

“It’s basically the recognition, at least among some, that something tactile has an importance to it that something virtual or digital can never really achieve,” he said. “Just like there are people who prefer physical books, or want to go to the museum instead of looking at a photo, these are different experiences. You have to hold it, turn it on, flip it over. It doesn’t lend itself to a world of daily interruptions we live in now with emails and text messages. It makes you sit and listen, which is what the artist intended anyway.”

While vinyl popularity is bound to plateau at some point, Earley is optimistic it will continue its steady upward growth.

“I still know people who say, oh,

they still make records? The majority of the population still has no idea what’s going on and isn’t aware of the vinyl revival,” he said. “So I think there’s still room for growth.”

That doesn’t guarantee success for stores actually selling the records, though.

Downward spiral?

According to market research firm IBISWorld, physical, independent record stores across the U.S. logged $1.1 billion in revenue in 2017 (that figure excludes online sales). That’s an annualized decrease of 11.1% in the past five years, and a 3.2% drop from 2016. Profits were estimated to be about 2.8% of total revenue in 2017.

Revenues are projected to de-

2,117 Independent record stores in the U.S. in 2017, according to IBISWorld.

1,038 IBISWorld’s estimate for the number of independent record stores in 2022.

crease even further from here to the tune of about 4.3% between now and 2022. Record store revenue is estimated to be around $898 million at that time.

That means vinyl sales are growing. But in the big picture, and despite some exceptions, as far as the stores overall are concerned, that trend is simply slowing down what’s been a collective rate of decline.

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Independent stores have closed at a rate of nearly 11% in the past five years. IBISWorld estimates there were 2,117 of those physical retailers active in 2017, but that there will be 1,038 shops by 2022 — which would be a decline of 51% compared with 2017.

Challenges in the business are what ultimately pushed former Waterloo record shop Music Saves to the web, said owner Melanie Hershberger. Her store opened in Hershberger 2004 and enjoyed steady growth in the years following.

But business peaked in 2010 and trailed off from there.

The cost of raw materials began to increase, she said, leading to higher prices on store shelves. The average record goes for about $18 to $25 nowadays, roughly twice as much as a decade or so ago. Popular releases will go for more. But as Ignizio indicated, margins for retailers are mostly flat despite those higher price tags.

Meanwhile, internet sales and competition from big-box retailers and other chain shops selling records, like Half Price Books — which enjoy buying power that keep costs low that independent shops don’t have — have somewhat disincentivized patrons from coming to physical stores in their neighborhoods anymore, Hershberger said. There’s lots of access to records now, and larger stores may be able to sell them for cheaper than their smaller counterparts.

“The job had become extremely stressful. I found myself not wanting to listen to music anymore. Every day was a disappointment, with fewer and fewer days of good business mixed in,” Hershberger said. “We were struggling financially. I wasn’t happy. All of the original joy the store initially brought me had been sucked dry, and the reasons I originally had for opening the store no longer existed.”

She decided to close the storefront in December and move her sales online. The web store has been live for about three months now.

But to Hershberger’s dismay, it’s not doing terribly well.

“The summer months may have something to do with it,” she said.

“We hope to stick with it through the end of the year, at least, hoping sales will improve. This business never made a lot of money, but that’s not why I got into it in the first place. I always hoped it could just sustain itself, and it did for several years.”

While vinyl is enjoying some new popularity, and record stores overall may never actually go away, it may take a steeper spike in demand, and some creative cost control by shopkeepers, for those independent record retailers to remain viable.

“Aside from the internet, Cleveland offers more record stores than there are people in the city to support them. As our population declines, it becomes harder and harder for small shops like ours to stay open,” Hershberger said. “There just aren’t enough people.”

Some are surely more optimistic than others, though.

“To me, it’s not something that will ever go away,” Ignizio said. “If we need to be more niche, that’s fine. It’s kind of like comic shops. They find ways to survive and do their thing. I think we will do all right no matter where this all ends up.”

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PA G E 16

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S E P T E M B E R 3 - 9 , 2 018 |

CRAIN’S CLEVELAND BUSINESS

THE LIST

THE LIST

Ranked by market capitalization as of Aug. 1

Ranked by market capitalization as of Aug. 1

Largest Public Companies - Ohio THIS YEAR COMPANY

MARKET CAP 8-1-2018 BUSINESS (MILLIONS) CATEGORY

Largest Public Companies - Ohio

TOP EXECUTIVE

THIS YEAR COMPANY

MARKET CAP 8-1-2018 BUSINESS (MILLIONS) CATEGORY

TOP EXECUTIVE

$201,471.8

Manufacturer

David S. Taylor, chairman, president, CEO

29

GrafTech International Ltd./EAF 982 Keynote Circle, Brooklyn Heights (216) 676-2000/www.graftech.com

$6,760.8

Manufacturer

David J. Rintoul, president, CEO

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

$40,709.4

Manufacturer

John G. Morikis, president, CEO, chairman

30

Forest City Realty Trust Inc. (1)/FCEA 127 Public Square, Suite 3100, Cleveland (216) 621-6060/www.forestcity.net

$6,694.4

Real estate

David J. LaRue, president, CEO

3

Marathon Petroleum Corp./MPC 539 S. Main St., Findlay (419) 422-2121/marathonpetroleum.com

$36,826.6

Energy

Gary R. Heminger, chairman, CEO

31

Lincoln Electric Holdings Inc./LECO 22801 St. Clair Ave., Euclid (216) 481-8100/www.lincolnelectric.com

$5,994.5

Manufacturer

Christopher L. Mapes, chairman, president, CEO

4

Eaton/ETN 1000 Eaton Blvd., Beachwood (440) 523-5000/www.eaton.com

$35,690.9

Manufacturer

Craig Arnold, chairman, CEO

32

Goodyear Tire & Rubber Co./GT 200 Innovation Way, Akron (330) 796-2121/www.goodyear.com

$5,664.7

Manufacturer

Richard J. Kramer, chairman, CEO, president

5

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

$35,253.6

Insurance

S. Tricia Griffith, president, CEO

33

Chemed Corp./CHE 255 E. Fifth St., Suite 2600, Cincinnati (513) 762-6690/www.chemed.com

$5,083.8

Health care; repair and maintenance

Kevin J. McNamara, president, CEO

6

American Electric Power Co./AEP 1 Riverside Plaza, Columbus (614) 716-1000/www.aep.com

$34,653.3

Utility

Nicholas K. Akins, chairman, president, CEO

34

Teradata Corp./TDC 10000 Innovation Drive, Dayton (866) 548-8348/www.teradata.com

$4,610.6

Technology

Victor Lund, president, CEO

7

MPLX LP/MPLX 200 E. Hardin St., Findlay (419) 421-2414/www.mplx.com

$28,995.9

Energy

Gary R. Heminger, chairman, CEO

35

TFS Financial Corp./TFSL 7007 Broadway Ave., Cleveland (800) 844-7333/www.thirdfederal.com

$4,254.5

Financial services

Marc A. Stefanski, chairman, president, CEO

8

Worldpay Inc./WP 8500 Governors Hill Drive, Symmes Township (513) 900-5250/www.worldpay.com

$24,310.7

Financial services

Charles Drucker, co-CEO, executive chairman Philip Jansen, co-CEO

36

Scotts Miracle-Gro Co./SMG 14111 Scottslawn Road, Marysville (937) 644-0011/www.scottsmiraclegro.com

$4,244.3

Manufacturer

Jim Hagedorn, chairman, CEO

9

Welltower Inc./WELL 4500 Dorr St., Toledo (419) 247-2800/http://welltower.com

$23,420.0

Real estate

Thomas J. DeRosa, CEO

37

Wendy's Co./WEN One Dave Thomas Blvd., Dublin (614) 764-3100/www.aboutwendys.com

$3,992.5

Restaurants

Todd A. Penegor, president, CEO

10

The Kroger Co./KR 1014 Vine St., Cincinnati (513) 762-4000/www.thekrogerco.com

$22,856.6

Retail

W. Rodney McMullen, chairman, CEO

38

Lancaster Colony Corp./LANC 380 Polaris Parkway, Suite 400, Westerville (614) 224-7141/www.lancastercolony.com

$3,949.2

Manufacturer

David A. Ciesinski, president, CEO

11

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

$22,333.1

Financial services

Beth E. Mooney, chairman, CEO

39

The Timken Co./TKR 4500 Mount Pleasant St. N.W., North Canton (234) 262-3000/www.timken.com

$3,589.3

Manufacturer

Richard G. Kyle, president, CEO

12

Parker Hannifin Corp./PH 6035 Parkland Blvd., Mayfield Heights (216) 896-3000/www.parker.com

$22,026.1

Manufacturer

Thomas L. Williams, chairman, CEO

40

PolyOne Corp./POL 33587 Walker Road, Avon Lake (440) 930-1000/www.polyone.com

$3,551.0

Manufacturer

Robert M. Patterson, chairman, president, CEO

13

Cintas Corp./CTAS 6800 Cintas Blvd., Cincinnati (513) 459-1200/www.cintas.com

$21,890.3

Uniforms; business services

Scott D. Farmer, CEO, chairman

41

Cleveland-Cliffs Inc./CLF 200 Public Square, Suite 3300, Cleveland (216) 694-5700/www.clevelandcliffs.com

$3,170.2

Natural resources

Lourenco Goncalves, chairman, president, CEO

14

Fifth Third Bancorp/FITB 38 Fountain Square Plaza, Cincinnati (800) 972-3030/www.53.com

$20,195.7

Financial services

Greg D. Carmichael, chairman, president, CEO

42

First Financial Bancorp/FFBC 255 E. Fifth St., Suite 700, Cincinnati (877) 322-9530/www.bankatfirst.com

$3,039.9

Financial services

Archie M. Brown Jr., president, CEO

15

TransDigm Group Inc./TDG 1301 E. 9th St., Suite 3000, Cleveland (216) 706-2939/www.transdigm.com

$19,330.0

Manufacturer

Kevin M. Stein, president, CEO; W. Nicholas Howley, executive chairman

43

Dana Inc./DAN 3939 Technology Drive, Maumee (419) 887-3000/www.dana.com

$3,002.2

Manufacturer

James K. Kamsickas, president, CEO

16

FirstEnergy Corp./FE 76 S. Main St., Akron (800) 736-3402/www.firstenergycorp.com

$17,720.3

Utility

Charles E. Jones Jr., president, CEO

44

Owens-Illinois Inc./OI One Michael Owens Way, Perrysburg (567) 336-5000/www.o-i.com

$2,974.7

Manufacturer

Andres A. Lopez, CEO

17

Huntington Bancshares Inc./HBAN 41 S. High St., Columbus (614) 480-2265/www.huntington.com

$17,104.5

Financial services

Stephen D. Steinour, chairman, president, CEO

45

Cedar Fair LP/FUN One Cedar Point Drive, Sandusky (419) 627-2233/www.cedarfair.com

$2,914.0

Amusement parks

Richard A. Zimmerman, president, CEO

18

Cardinal Health Inc./CAH 7000 Cardinal Place, Dublin (614) 757-5000/www.cardinalhealth.com

$15,546.7

Health care

Mike Kaufmann, CEO

46

Worthington Industries/WOR 200 Old Wilson Bridge Road, Columbus (614) 438-3210/worthingtonindustries.com

$2,795.1

Manufacturer

John P. McConnell, chairman, CEO

19

Mettler-Toledo International Inc./MTD 1900 Polaris Parkway, Columbus (614) 438-4511/www.mt.com

$14,813.6

Manufacturer

Olivier A. Filliol, president, CEO

47

Applied Industrial Technologies Inc./AIT 1 Applied Plaza, Cleveland (216) 426-4000/www.applied.com

$2,793.9

Distributor

Neil A. Schrimsher, president, CEO

20

The J.M. Smucker Co./SJM One Strawberry Lane, Orrville (330) 682-3000/jmsmucker.com

$12,420.7

Manufacturer

Mark T. Smucker, president, CEO

48

Greif Inc./GEF 425 Winter Road, Delaware (740) 549-6000/www.greif.com

$2,669.4

Manufacturer

Peter G. Watson, president, CEO

21

Cincinnati Financial Corp./CINF 6200 S. Gilmore Road, Fairfield (513) 870-2000/www.cinfin.com

$12,239.6

Insurance

Steven J. Johnston, president, CEO

49

DDR Corp./DDR 3300 Enterprise Parkway, Beachwood (216) 755-5500/www.ddr.com

$2,510.2

Real estate

David R. Lukes, president, CEO

22

Macy's Inc./M 7 W. Seventh St., Cincinnati (513) 579-7000/www.macysinc.com

$11,623.7

Retail

Jeff Gennette, chairman, CEO

50

Covia Holdings Corp. (2)/CVIA 3 Summit Park Drive, Suite 700, Independence (800) 255-7263/www.coviacorp.com

$2,361.3

Natural resources

Jenniffer D. Deckard, president, CEO

23

American Financial Group Inc./AFG 301 E. Fourth St., Cincinnati (513) 369-5000/www.afginc.com

$10,023.9

Insurance

Carl H. Lindner III S. Craig Lindner, co-CEO, co-presidents

51

Convergys Corp./CVG 201 E. Fourth St., Cincinnati (513) 723-7000/www.convergys.com

$2,236.1

Customer management services

Andrea J. Ayers, president, CEO

24

Steris/STE 5960 Heisley Road, Mentor (440) 354-2600/www.steris.com

$9,732.1

Manufacturer

Walter M. Rosebrough Jr., president, CEO

52

DSW Inc./DSW 810 DSW Drive, Columbus (614) 237-7100 /www.dsw.com

$2,200.0

Retail

Roger L. Rawlins, CEO

25

L Brands Inc./LB Three Limited Parkway, Columbus (614) 415-7000/www.lb.com

$8,684.8

Retail

Leslie H. Wexner, chairman, CEO

53

Medpace Holdings Inc./MEDP 5375 Medpace Way, Cincinnai (513) 579-9911/www.medpace.com

$2,125.3

Contract research organization

August Troendle, president, CEO

26

RPM International Inc./RPM 2628 Pearl Road, Medina (330) 273-5090/www.rpminc.com

$8,521.5

Manufacturer

Frank C. Sullivan, chairman, CEO

54

Ferro Corp./FOE 6060 Parkland Blvd., Mayfield Heights (216) 875-5600/www.ferro.com

$1,910.8

Manufacturer

Peter T. Thomas, chairman, president, CEO

27

Nordson Corp./NDSN 28601 Clemens Road, Westlake (440) 892-1580/www.nordson.com

$7,703.0

Manufacturer

Michael F. Hilton, president, CEO

55

Big Lots Inc./BIG 4900 E. Dublin-Granville Road, Columbus (614) 278-6800/www.biglots.com

$1,752.8

Retail

Bruce K. Thorn, president, CEO (3)

28

Owens Corning/OC One Owens Corning Parkway, Toledo (419) 248-8000/www.owenscorning.com

$6,793.5

Manufacturer

Michael H. Thaman, chairman, CEO

56

Park National Corp./PRK 50 N. Third St., Newark (740) 349-8451/www.parknationalcorp.com

$1,730.5

Financial services

David L. Trautman, president, CEO

1

Procter & Gamble Co./PG One Procter & Gamble Plaza, Cincinnati (513) 983-1100/www.pg.com

2

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

Want the Excel version of this list — and every other Crain's list? Become a Data Member: CrainsCleveland.com/data Numerical data provided by S&P Global Market Intelligence, Marketintelligence.spglobal.com. Send all feedback to Chuck Soder: csoder@crain.com.

(1) Brookfield Asset Management Inc. plans to buy Forest City in an $11.4 billion deal expected to close during the fourth quarter of 2018. (2) Fairmount Santrol merged with Unimin Corp. on June 1, 2018 and changed its name. (3)

Thorn is expected to be formally appointed as president and CEO at the end of September.

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FINANCE

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

VOL. 39, NO. 21

MAY 21 - 27, 2018

The largest money manager in NortheastFINANCE Ohio, which has been quietly amassing Byrather JEREMY NOBILE size for well over a century, has achieved explosive growth sincejnobile@crain.com a management-led and private equity supported separation from Key@JeremyNobile Corp a few years ago.

Now, following a recent IPO, Brooklyn, Ohiobased Victory CapitalThe Management’s parent largest money manager in Northeast company, Victory Capital Holdings, is setting Ohio, which has been rather quietly amassing NOBILE the stage for its next size era offorgrowth driven by itsBy JEREMY well over a century, has achieved exmulti-boutique model and agrowth consistent acquiplosive since a management-led jnobile@crain.com and sitions strategy. private equity supported separation from Key@JeremyNobile CEO David Brown: “We eventually evolved to the point where it just didn’t make sense for Key “We saw an opportunity market Corp a in fewthe years ago.to do to be the owners of Victory Capital.” (Ken Blaze for Crain’s) something different than what was happening, following a recent IPO, Brooklyn, OhioNow, which was our integrated, multi-boutique no animosity there.

The relationThat was nearly five years ago. And while The There largestwas money manager in Northeast based Victory Capital Management’s parent model that we havecompany, today,” said Victory CEOOhio, ship between Keyrather and Victory is still strong, in Crestview is still a majority owner of the busiwhich hassetting been quietly amassing Victory Capital Holdings, is — the headquarters off exTiedeman ness — of which employees own a 35% stake David Brown, who joined the firm in next 2004 era while fact for well overlatter’s century, has achieved the stage for its ofsize growth driven bya its growth since a complex management-led and staff it — it’s given Brown and Victory’s board freeRoad sits within for KeyCorp it was still a part of Key. multi-boutique model andplosive a consistent acquiequity supported separationThe from Key- simply dom to operate how it likes. subleases from the company. timing That model, whichsitions truly started to develop atprivate strategy. a few years ago.said, CEO separate from Key,where Victory on an Brown for Victory step out oneventually its Once Victory following a management-led buyoutCorp David to Brown: “We evolved to the point it set justout didn’t make sense for Key “We saw an opportunity in felt theright, market to do following a recent OhioNow, to beBrooklyn, the owners of Victory (Kenstreak Blaze for acquisition toCrain’s) give it more scale. It’s own continue theIPO, work it had been doing for Capital.” from Key in 2013, is largely what Brown feels po-what something different than wasand happening, based long Victory Capital Management’s parent sitions the firm to flourish industry bought companies as Key refocused on other whichas its was our evolves. integrated,somulti-boutique There wasstrategies. no animosity there.

The three relationThatsince was then: nearlyMunder five years ago. And while company, Victory Capital Holdings, is setting management business Key’s investmentmodel 2014); Efficient Model Port- owner of the busi“We eventually evolvedbetween to the point it Capital that we have today, ” said CEO Keyitswhere and Victory is still (in strong, inCompass Crestview is still a majority the stageVictory for its next era ofship growth driven by that eventually became Victory was more thanthe firm folios (in 2015), which became known as CEMP; just didn’t for—Key be the owners thetolatter’s David Brown, who joined in 2004make whilesense multi-boutique model andfact a consistent acqui- headquarters off Tiedeman ness — of which employees own a 35% stake a century old as theitcompany to shedsitions RS Investments 2016).

It also took and a mi-Victory’s board freeof Victory Capital,” Brown said.within a complex forand Road sits KeyCorp staff it (in — it’s given Brown was still alooked part of Key. strategy. the division several years ago.

CEO David eventually to the point where it just didn’t make sense for Key fromtothe TheBrown: timing“We simply domevolved to operate how it likes.

That model, which truly started to develop at subleases “We saw an opportunity in the market docompany. to be the owners of Victory Capital.” (Ken Blaze for Crain’s) Many banking conglomerates were making something different than what was happening, felt right, Brown for Victory to step out on its Once separate from Key, Victory set out on an Victory following a management-led buyout Victory Capital at a said, glance similar moves around thatKey time, shedding theirwhich There wasbeen no animosity The relationwas our multi-boutique years acquisition streak toThat givewasit nearly more five scale.

It’sago. And while continue the work it had doing for there. from in 2013, is largely what Brown feels integrated, po- own and J JVictory Capital spun KeyCorp a management-led, private equity-supportmoney managers to cut costs focus on coreas ship Key and Victory bought is still strong, incompanies model that weevolves. have today, ” long saidout Victory CEO following Crestviewsince is stillthen: a majority owner of the busisitions theand firm to flourish its industry three Munder so asof Key refocused onbetween other strategies. ed buyout at firm $246 million in 2013. the point latter’swhere headquarters off Tiedeman ness — of which employees fact — who valued joined the 2004 while banking services in those following management theDavid Brown, investment business Key’syears (in 2014); Compass Efficient Model Port-own a 35% stake “We in eventually evolved to the it Capital Road sits a complex forfolios KeyCorp staff — it’s given known Brown as and Victory’s board freeit was still amore part that ofthan Key. JJSince deal,just thedidn’t firm has gone from $18 billion assets to $60.9 billion, 148it which last recession. Key eventually sold the business that eventually became Victory was (in 2015), became CEMP; make sense for Key towithin bein the owners employees totruly 300,started 18 investment to 72 andthe five franchises to nine, plus a dom to operate how it likes. from company.

The timing simply model, which to developstrategies at subleases to Victory employeesa—century there were at Thatlooked old about as the148 company to shed of Victory Capital,” Brown said. and RS Investments (in 2016). It also took a misolutions VictoryShares.

Once separate from Key, Victory set out on an followingplatform, a management-led buyout felt right, Brown said, for Victory to step out on its the time — and Newthe York private equityyears firmVictory division several ago. acquisition streak to give it more scale. It’s and continue the work it hadThat beencapital doing for from Key in 2013, is raised largely what po- in aown JJ The firm aboutBrown $140feels million recent IPO (NASDAQ: VCTR). will help Crestview Partners for Many $246 million. bankingProceeds conglomerates were making Capital glance sitions the firm toits flourish as itsVictory industry evolves. bought three companies since then: Munder so long asat Keyarefocused on other support eventual separation from Crestview Partners, the New Yorkstrategies. private equity firm of Key’s sale were used to buymoves back stock, similar aroundbenethat time, shedding their investment business Key’sthat “We eventually evolved to the point where it Capital (in 2014); Compass Efficient Model Portstill holdsmanagement a majority stake in the business. fiting shareholders. money managers to cut costs and focus on core JJVictory Capital spun out of KeyCorp following a management-led, private equity-support-

SUCCESS IS IN VICTORY’S SIGHT

that eventually became Victory was more than

just didn’t make sense for Key to be the owners

folios (in 2015), which became known as CEMP;

ed buyout valued at $246 million in 2013. banking services in thosea years following the century old as the company looked to shed of Victory Capital,” Brown said. and RS Investments (in 2016). It also took a milast recession. Key eventually sold theseveral business the division years ago.JJSince that deal, the firm has gone from $18 billion in assets to $60.9 billion, 148 employees to 300, 18 investment strategies to 72 and five franchises to nine, plus a to Victory employees — thereMany werebanking about 148 at conglomerates were making Victory Capital at a glance solutions platform, moves around shedding their VictoryShares. the time — and New Yorksimilar private equity firmthat time, JJVictory Capitalinspun out ofIPO KeyCorp following a management-led, JThe money managers to cut costs J and focus onraised core about firm $140 million a recent (NASDAQ: VCTR).

That capital willprivate help equity-supportCrestview Partners for $246 million.

Proceeds ed buyout valued at $246 million in 2013. support its eventual separation from Crestview Partners, the New York private equity firm banking in those years following the of Key’s sale were used to buy backservices stock, beneholds a majority stake in the JJSince last recession. Key eventuallythat sold still the business that deal,business. the firm has gone from $18 billion in assets to $60.9 billion, 148 fiting shareholders.

to Victory employees — there were about 148 at the time — and New York private equity firm Crestview Partners for $246 million. Proceeds of Key’s sale were used to buy back stock, benefiting shareholders.

employees to 300, 18 investment strategies to 72 and five franchises to nine, plus a solutions platform, VictoryShares.

JJThe

firm raised about $140 million in a recent IPO (NASDAQ: VCTR). That capital will help support its eventual separation from Crestview Partners, the New York private equity firm that still holds a majority stake in the business.

OnShift was one of Groys’ early forays into the entrepreneurial space, he said. It took time to figure out what specific problem he was looking to solve, and the work pivoted a number of times. He learned the importance of spending time validating a product and bringing on industry expertise.

“I think there’s a lot of learning, but you know, also very proud of what I was able to accomplish with OnShift,” Groys said Today, OnShift has thousands of nursing home customers across the country, employs several hundred people and has raised close to $33 million, he said.

In six months, MedaSync has gotten to a point that took OnShift three to four years to reach.

“Now, we have the industry expertise, we’ve got product market fit, we’ve got the right team and we bootstrapped it up to this point instead of taking on investment to learn all those painful lessons,” Groys said.

Groys and Edgerly had been funding their efforts themselves along with some grants, including $100,000 from the Youngstown Business Incubator. But as of a couple weeks ago, they secured significant funding from Valley Growth Ventures.

“Now with our recent funding,

“Certainly they also both have strengths in software development and creating a business around that. So we love the idea, but in particular we love the team that they’ve built.”

we’re adding bodies, we’re adding developers, we’re enhancing our product,” Edgerly said.

The company has five employees today, with plans to grow that to 10 by the end of the year and at least 20 by the end of 2019.

Ernie Knight, managing director of Valley Growth Ventures, said the strong team behind MedaSync helped him make the decision to support it with funding.

“If you look at Ryan and Gene, they both are experienced entrepreneurs,” he said. “But even more so they’re experienced in the market space that they’re entering, the nursing home market. They’ve both had experience in a startup within that. They’ve worked together before, which kind of takes off the table sort of interpersonal issues because they’ve had a background together.”

On top of that, in researching what potential customers were looking for, Knight said he found that “the predictive analytic solution that they’ve developed was a clear ‘must-have’ across the board.”

Barbara Ewing, CEO of the Youngstown Business Incubator, agreed that the strength and knowledge of the MedaSync team “truly is a differentiator for them in the market.”

YBI has supported MedaSync with marketing assistance, help with pitches, making connections and more, as well as the $100,000 in capital.

— Barbara Ewing, CEO of the Youngstown Business Incubator, on MedaSync

“They have spent a lot of time personally engaged with the health care industry and specifically focusing on nursing care, so it’s an area that they know,” Ewing said. “Certainly they also both have strengths in software development and creating a business around that. So we love the idea, but in particular we love the team that they’ve built.”

MedaSync hasn’t done a big market launch yet, but Edgerly said he would guess that would be possible by the end of this year.

“There’s a lot to be said of launching at the right time,” Groys said.

“That’s how we’re going about doing it.”

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AKRON

UA program review sets changes in motion College of Polymer Science to receive increased funding, make new hires

College of Education looks to strengthen focus on serving public school districts

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

By DAN SHINGLER dshingler@crain.com @DanShingler

The University of Akron’s renowned College of Polymer Science and Polymer Engineering is getting a boost in the university’s reorganization of its academic programs — including money to possibly hire four new tenured faculty members.

While there are still some in the college who are dubious that there’s enough money behind the effort to make it fully effective, Polymer College interim dean Ali Dhinojwala said he’s pleased with what he sees in the reorganization so far and is optimistic it will make a meaningful difference at his school. Dhinojwala praised current University of Akron interim president John Green, whom he said was focusing the university on its core competencies and most in-demand degrees after the recent comprehensive program review.

“To use Dr. Green’s phrase, we’re ‘doubling down’ on those particular areas, and that certainly is the case when it comes to polymer science and polymer engineering,” Dhinojwala said.

While the university has gotten a lot of attention in recent weeks over its program reductions — it said in August it is cutting 80 of its degree or degree track programs — the Polymer College’s funding actually will increase.

Wayne Hill, UA’s vice president and chief communications and marketing officer, said the university overall will save about $6 million over a three- to five-year period with the program reductions, which will affect less than 5% of students. The university is plowing most, if not all, of that money back into its targeted programs, such as polymer science and engineering, he said.

The university will spend $2.8 million to hire 31 new faculty members now being recruited and an additional $3.5 million over three years to purchase equipment for lab startups.

The latter will be for new faculty involved in research.

The Polymer College will add four new tenure-track faculty members, plus faculty will be added in related fields.

The four tenure-track hires at the college include two each in the areas of polymer engineering and polymer science. In addition, the university’s programs for chemical engineering, civil engineering and corrosion engineering will each get one new tenured faculty member. The university counts them all under the umbrella of “polymer and chemical sciences,” and Dhinojwala said they’ll help the work of his college.

The current operating budget for the Polymer College, for its fiscal year ending June 30, 2019, is slightly more than $5.7 million, plus another $1 million allocated for labs needed by existing faculty, Hill said.

How much more money the college gets in the coming year is yet to be determined, he said, and will depend on how many new faculty

P020_CL_20180903.indd 20

The Goodyear Polymer Center on the University of Akron’s campus houses the College of Polymer Science and Polymer Engineering.

(Shane Wynn for AkronStock)

“To use Dr. Green’s phrase, we’re ‘doubling down’ on those particular areas, and that certainly is the case when it comes to polymer science and polymer engineering.”

— Ali Dhinojwala, interim dean of the College of Polymer Science, about the university focusing on core competencies

members the college can hire by then and what they cost.

“The total additional investment in the College — reflecting salaries and benefits for the still-to-be-hired faculty members and necessary startup packages for labs — will be reflected in next year’s budget,” Hill said via email.

Faculty at the Polymer College has dropped in recent years from retirements and the loss of professors to other schools. The college had 35 full-time faculty members in 2013 and has 29 today.

Those who have left include big names in the field, such as Alamgir Karim, former associate dean of research and the university’s Goodyear chair, who left for the University of Houston last September. He was followed in October by George Newkome, former head of the university’s graduate school. Before them, William Landis retired from the school as a tenured professor and left an en-

dowed chair.

Such issues have caused strife with remaining faculty. Former Polymer College dean Eric Amis talked publicly about his concerns in March, then soon announced he was stepping down as dean to become part of the regular faculty in June.

In March, Amis and Polymer College researcher Matt Becker said the college was languishing and predicted more faculty would leave — and at least one has.

David Simmons, who was an assistant professor and principal investigator at Akron’s Simmons Research Group — which does “soft matter theory and simulation work” — said he recently left for another school.

“I departed the College of Polymer Science and Polymer Engineering as a regular faculty member late this summer. I remain an unpaid Adjunct at U. Akron, which essentially enables me to continue helping along students I worked with until they complete their degrees,” Simmons said via email.

He declined to discuss why he left or the state of the Polymer College, but that’s not unusual. He and three other faculty members, past and present, all declined to speak on the record. All say the issue is a sensitive subject within the college, with faculty concerned and wanting issues addressed but also not wanting to publicly criticize a school they care deeply about in ways that might hurt it.

Privately, two faculty members expressed reservations that the amount of money budgeted to the college will be enough to fully right the ship.

That’s largely because the labs that

SEE POLYMER, PAGE 21

The University of Akron recently went through a comprehensive academic program review, identifying struggling programs to cut and areas of strength in which to invest. For the LeBron James Family Foundation College of Education, that meant taking a “hard look” at its programs and making sure they were serving area school districts well, said interim dean Jarrod Tudor.

“You would be hard-pressed to find another college that has just that real need to serve its public like the College of Education,” Tudor said.

The college decided to focus on its strength of serving public school districts, mainly by training teachers and administrators, and cut programs that fell outside that scope. The college’s refocusing is getting it to its “roots,” Tudor said.

The college will discontinue eight master’s degrees or degree tracks in areas such as education administration for higher education and special education for practicing teachers.

Though the academic program review identified programs to be phased out (students currently in those programs will be able to finish their degrees), there are no layoff plans for any “regular faculty, contract professionals or staff positions,” according to a Q and A from the university. At the College of education, one tenure-track position is expected to be added in exchange for a visiting faculty position in language arts for adolescents/ young adults.

Going forward, Tudor said, the college will focus on undergraduate teacher licensure programs and two master’s level programs. The master’s programs will focus on K-12 administration and curriculum instruction.

One of the areas of focus for the college will be preparing “urban educators,” according to information from the university.

Tudor said part of the college’s mission has always been to serve the Akron and Canton schools and inner-ring suburbs. One of the ways the college will do that is by developing an urban STEM center, which will soon go to the board.

Tudor said the faculty told him there was a need for professional development related to teaching STEM-related subjects — that is, science, technology, engineering and math.

That kind of input has been important. When Tudor took on the interim dean role a little more than a year ago, he put together an advisory board of local superintendents, something the college hadn’t had in recent years.

“They told me, point blank: We need teachers, and we need administrators,” Tudor said. “It’s really that simple of a conversation.”

But there are some specific needs that those local districts have. Summit County has a increasingly large population of people for whom English is not their first language, he said. Plus, the districts are seeing more special education needs.

A more diverse society is “enriching,” Tudor said, but it also brings the challenge of making sure teachers are

“They told me, point blank: We need teachers, and we need administrators.

It’s really that simple of a conversation.”

— Jarrod Tudor, interim dean of the College of Education, about local school superindents

qualified to teach those different populations.

“The business of education is not getting any easier,” Tudor said.

And those local needs are set in the landscape of rapidly changing state requirements, which means teachers and administrators need to be able to adapt quickly.

In addition to training teachers with the skills they need to succeed, the university is also aiming to train teachers who want to stay in the field.

David W. James, superintendent of the Akron Public Schools and member of the advisory board, said he wants to see graduates who better understand what happens in a classroom. When those graduates aren’t prepared, they sometimes decide to leave.

James said he’d like to see some of those students taking classes on Akron Public Schools sites, a practice that Tudor said happens in some districts like Barberton.

The university already has a strong field experience program, but it is also looking to take on this issue in another way. The college plans to adjust its admissions policy for undergraduate students, likely in fall 2019, to be more “holistic,” Tudor said. That means it won’t be solely based on grade-point average, but will ask students what motivates them and what unique skills they can bring to the program.

Chuck Sincere, superintendent at the Springfield Local School District and member of the advisory board, finds the chance to give the university feedback about things such as what skills and certifications are valuable to teachers. School superintendents have similar meetings with area businesses to make sure they’re preparing students properly, he said.

Another advisory board member, Shawn Braman, superintendent of the Waterloo Local School District, was impressed by the university’s willingness to listen to local leaders. Usually, work between K-12 and higher education institutions is a top-down model, but this initiative was more, “Hey, we’re all in this together,” he said.

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POLYMER

CONTINUED FROM PAGE 20

top researchers dfesf need can be very expensive — often costing between $500,000 and $1 million — and well-funded labs mean as much or more than salaries to some dedicated researchers.

The proposed $3.5 million for such startup costs, shared with other parts of the university, may not be enough and reflect how the university’s current financial constraints could mean it’s operating at a hiring disadvantage, they say.

Dhinojwala is well aware of the challenges, and he said he, too, thinks that startup costs are a critical part of the equation in terms of rebuilding faculty of the Polymer College.

“Infrastructure is critically important to the success of these people. You can’t just bring them here,” he said.

But Dhinojwala said he thinks he has enough startup money to make the four initial hires and hopes more funding will come in the future.

If the university as a whole can turn its fortunes around, that may be likely, given the importance of the Polymer College to industry in the region.

Companies such as A. Schulman — now part of the Netherlands’ LyondellBasell — have long supported the college, and Schulman has an endowed professorship at the university.

On top of that, the University of Akron now has Schulman CEO Joe Gingo — someone who is no stranger to the importance of polymer research to the local economy — chairing its board.

When concerns for the college came to light earlier this year, Schulman and the industry trade group PolymerOhio both stood up for the school and stressed its importance to one of Ohio’s major industries,

not just for its raw research but for its ability to attract industry talent to the region.

“I think it’s more powerful and more important than maybe it’s thought of when you just talk about the technical side of it,” Schulman chief operating officer Gary Miller said in March.

“It casts a net far wider than just the technical community. … It’s very important to the region, and beyond, because of that.”

Schulman and PolymerOhio said they want the school to rebuild its prominence.

Dhinojwala said he and others are working hard to do just that, and they are under way with the recruiting efforts for four new faculty members.

“The advertisement is out already … and we’re hoping to fill these positions by the end of the year. That should bring our strength back up to about where it was four or five years ago,” he said.

SSIFIEDS

AdvertisingClassifi Section eds To place your listing in Crain’s Cleveland To place your listing, contact Kate Rozek at Contact Kate Rozek at 216-771-5276 313-446-0485 or email krozek@crain.com www.clevelandbusiness.com/classifieds or email CLBClassified@crain.com

CRAIN'S CLEVELAND BUSINESS

μ

AUGUST 20, 2018

The University of Akron’s academic program review will eliminate some degree programs but bolster others, such as in the College of Polymer Science and Polymer Engineering. (Shane Wynn for AkronStock)

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PAGE 37

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μ

UNITED STATES BANKRUPTCY COURT, NORTHERN DISTRICT OF OHIO, EASTERN DIVISION ) Chapter 11, Case No. 18-50757 (AMK) In re: FIRSTENERGY SOLUTIONS CORP., et al.,1 ) (Jointly Administered) ) Hon. Judge Alan M. Koschik Debtors.

NOTICE OF DEADLINES FOR THE FILING PROOFS OF CLAIM, INCLUDING REQUESTS FOR PAYMENT UNDER SECTION 503(B)(9) OF THE BANKRUPTCY CODE THE GENERAL BAR DATE IS OCTOBER 15, 2018 THE GOVERNMENT BAR DATE IS OCTOBER 15, 2018 PLEASE TAKE NOTICE OF THE FOLLOWING: Home Improvement TRUSTEE ORDERED Deadlines for Filing Proofs of Claim. On August 22, 2018, the United States Bankruptcy Court for the Northern District Sale of Ohio (the “Court”) entered an order [Docket No. 1199] (the “Bar Date Order”)Company establishing certainfor deadlines for the filing of proofs of claim, including requests for payment under section 503(b)(9) of theSales Bankruptcy$1,884,141 Code, in the chapter 11 cases of the following debtors and debtors in possession (collectively, the “Debtors”): FirstEnergy Solutions Corp., case no. 18-50757 (AMK); FE Aircraft Leasing Corp., case no. 18-50759 (AMK); FirstEnergyMike@empirebusinesses.com Generation, LLC, case no. 18-50762 (AMK); FirstEnergy Generation Mansfield Unit 1 Corp., case no. 18-50763 (AMK); FirstEnergy Nuclear Generation, LLC, case no. 18-50760 (AMK); FirstEnergy Nuclear Operating Company, case no.18-50761 (AMK); and www.empirebusinesses.com Norton Energy Storage LLC, case no.18-50764 (AMK).

The Bar Dates. Pursuant to the Bar Date Order, unless specifically excluded in the Bar Date Order, all entities (excluding governmental units), including individuals, partnerships, estates, and trusts who have a claim or potential claim against the 440-461-2202 Debtors that arose prior to March 31, 2018, no matter how remote or contingent such right to payment or equitable remedy may be, including requests for payment under section 503(b)(9) of the Bankruptcy Code, MUST FILE A PROOF OF CLAIM on or before October 15, 2018, at 5:00 p.m., prevailing Eastern Time (the “General Bar Date”). Governmental entities who have a claim or potentialAugust claim against25 the Debtors that arose Saturday, at 1:00 pmprior to March 31, 2018, no matter how remote or contingent such right to payment or equitable remedy may be, including requests for payment under section 503(b)(9) of the Bankruptcy Code, ϲϰϵϬ ŽůĞƌŝĚŐĞ ZĚ͕ ŽŶĐŽƌĚ dŽǁŶƐŚŝƉ MUST FILE A PROOF OF CLAIM on or before October 15, 2018, at 5:00 p.m., prevailing Eastern Time (the“Government Bar Date”).

ANY HOLDER OF CLAIMready AGAINST ONE OR MORE OF THE DEBTORS WHO IS REQUIRED, BUT FAILS, TO FILE A PROOF Clean, move-in home with OF CLAIM IN ACCORDANCE WITH THIS ORDER OR BEFORE THE GENERAL BAR DATE, GOVERNMENTAL BAR DATE, professionally landscaped yard ONand REJECTION DAMAGES BAR DATE AND AMENDED SCHEDULES BAR DATE AS APPLICABLE: (A) MAY BE FOREVER BARRED, 2 ESTOPPED, adjacentANDlots.

3 bed ENJOINED / 2 bath ranch PERMANENTLY FROM ASSERTING SUCH CLAIM IN THESE CHAPTER 11 CASES AGAINST THE DEBTORS, 2 THEIR SUCCESSORS, OR THEIR includes story outbuilding onPROPERTY 1.04+/-(AND FROM FILING A PROOF OF CLAIM WITH RESPECT TO, AND THE DEBTORS, THEIR SUCCESSORS, AND THEIR PROPERTY MAY, UPON A CONFIRMED CHAPTER 11 REORGANIZATION ĂĐƌĞ ůŽƚ͘ ůƐŽ ŽīĞƌĞĚ͗ Ϯ ƐĞƉĂƌĂƚĞ͕ PLAN BECOMING EFFECTIVE, BE FOREVER DISCHARGED FROM ANY AND ALL INDEBTEDNESS OR LIABILITY WITH adjacent 1+/acre lots.(B) MAY NOT BE TREATED AS A CREDITOR (AS DEFINED IN SECTION 101(10) OF THE RESPECT TO SUCH CLAIM; BANKRUPTCY CODE) WITH RESPECT STARTING BID:TO SUCH CLAIM FOR PURPOSES OF VOTING AND DISTRIBUTION UNDER ANY PLAN OF REORGANIZATION OR LIQUIDATION FILED IN THESE CHAPTER 11 CASES; AND (C) MAY NOT BE ENTITLED TO RECEIVE ,ŽƵƐĞ͗ ΨϭϮϬ͕ϬϬϬ ͮ >ŽƚƐ ΨϮϬ͕ϬϬϬ ĞĂĐŚ FURTHER NOTICES SENT TO CREDITORS; PROVIDED, HOWEVER, THAT A HOLDER OF A CLAIM SHALL BE ABLE TO ASSERT AND VOTE UPON ANY UNDISPUTED, NONCONTINGENT AND LIQUIDATED CLAIMS IDENTIFIED IN THE SCHEDULES ON BEHALF OF SUCH HOLDER, IN THE AMOUNT SET FORTH IN THE SCHEDULES, AND RECEIVE DISTRIBUTIONS UNDER ANY For Open HouseINDates PLAN OF REORGANIZATION OR LIQUIDATION THESE CASES ON ACCOUNT OF SUCH SCHEDULED CLAIM. Filing a Proof ofĂŶĚ ŝĚĚŝŶŐ /ŶĨŽƌŵĂƟŽŶ Claim. Each Proof of Claim must be filed and actually received by Prime Clerk LLC by either (a) electronic submission through the interface available at https://cases.primeclerk.com/fes or (b) non-electronic means, such Seaman as U.S. Mail or other hand deliveryThomas system, to the following address: FirstEnergy Solutions Corp. Claims Processing Center, c/o Prime Clerk LLC, 850 3rd Avenue, Suite 412, ƵĐƟŽŶĞĞƌ Brooklyn, NY 11232.

PROOFS OF CLAIM SUBMITTED BY FACSIMILE OR ELECTRONIC MAIL WILL NOT BE ACCEPTED. Contents of Proofs of Claim. Each proof of claim must: (i) be legible; (ii) include a claim amount denominated in United States dollars unless the claim is a contingent claim and it is not possible to quantify the amount of the claim as of the date of the filing of the Proof of Claim Form; (iii) conform substantially with the Proof of Claim Form provided by the Debtors or Official Form 410; and (iv) be signed by the claimant or by an authorized agent or legal representative of the claimant on behalf of the claimant, whether such signature is an electronic signature or is ink. Please note that each proof of claim must state a claim against only one Debtor and clearly indicate the specific Debtor against which the claim is asserted. To the extent more than one Debtor is listed on the proof of claim, such proof of claim is treated as if filed only against FirstEnergy Solutions Corp., or if a proof of claim is otherwise filed without identifying a specific Debtor, the proof of claim may be deemed as filed only against FirstEnergy Solutions Corp.

Electronic Signatures Permitted. Proofs of claim signed electronically by the claimant or an authorized agent or legal representative of the claimant shall be deemed acceptable for purposes of claims administration. Copies of proofs of claim or proofs of claim sent by facsimile or electronic mail will not be accepted.

Section 503(b)(9) Requests for Payment. Any proof of claim asserting a claim entitled to priority under section 503(b) (9) of the Bankruptcy Code must also: (i) include the value of the goods delivered to and received by the Debtors in the 20 days prior to the Petition Date; (ii) attach any documentation identifying the particular invoices for which the 503(b)(9) claim is being asserted; and (iii) attach documentation of any reclamation demand made to the Debtors under section 546(c) of the Bankruptcy Code (if applicable).

Additional Information. If you have any questions regarding the claims process and/or you wish to obtain a copy of the Bar Date Notice, a proof of claim form, or translations of this notice, the Bar Date Notice, the Bar Date Order, or certain other pleadings, orders, and notices, or related documents, you may do so by: (a) calling the Debtors’ restructuring hotline at 855934-8766 (toll free) and/or (b) visiting the Debtors’restructuring website at:https://cases.primeclerk.com/fes.

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, are: FE Aircraft Leasing Corp. (9245), case no. 18-50759; FirstEnergy Generation, LLC (0561), case no. 18-50762; FirstEnergy Generation Mansfield Unit 1 Corp. (5914), case no. 18-50763; FirstEnergy Nuclear Generation, LLC (6394), case no. 18-50760; FirstEnergy Nuclear Operating Company (1483), case no. 18-50761; FirstEnergy Solutions Corp. (0186); and Norton Energy Storage LLC (6928), case no.18-50764. The Debtors’address is 341 White Pond Dr., Akron, OH 44320.

AUCTIONS

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CAR WASH CAR WASH FOR SALE FAR EAST SIDE OF CLEVELAND * 100 foot Peco soft cloth express tunnel with 4 self serve bays, 4 vacs, * Shampoo, fragrance and vending * Built in 2000 * Business and equipment $175,000 * 3-5 year lease on property with possible purchase and vacant lot next to it available for expansion, 1.99 acres total available, owners retiring Contact shermant70@hotmail.com for more information.

AUCTION

216-771-5276

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CRAIN’S CLEVELAND BUSINESS

Tribe’s ticket base

INDIANS

A look at the number of season-ticket accounts the Indians had in 2018, along with the Tribe’s 2019 numbers, as of Aug. 29:

CONTINUED FROM PAGE 1

Fans with quarter-season plans can also get full All-Star access by upgrading to a 40-game package for 2019.

“Obviously, that’s not possible for everyone, and we only want them to upgrade if they’re truly going to use the tickets,” Salcer said. “We don’t want to put them in a place where they have too much inventory. That’s not a good way to grow our business and take care of our customers.”

The Tribe is also going to give 400 new customers a shot at All-Star access — with the total split between fans who make full- and half-season deposits. The catch: They have to commit to such plans for the 2019 and ’20 seasons.

“We felt like that would be most fair to our existing season-ticket holders,” Salcer said.

Lottery will split top two All-Star events The current group of 13,800 full-season equivalents (four 20-game purchases counts as one FSE, since MLB clubs have 81 home contests to sell) is 1,500 ahead of the 2017 tally and 5,100 greater than the count for 2016.

Quarter-season purchases make up about 68% of the Indians’ season-ticket accounts. The Tribe has 6,300 20-game accounts this season — a total that ranks fourth in baseball, Salcer said.

Since the All-Star demand figures to far outweigh the supply, the Indians are going to have a weighted lottery in which the winners would get the chance to purchase tickets for one of the two main events — the Home Run Derby or the All-Star Game. Which of the two they get will be decided in the lottery, Salcer said.

Dividing the marquee events — which will take place on July 8 and 9,

6,300 3,000

2019 Quarter-season plans Full- and half-seasons

4,900 2,800

Note: The Indians had 13,800 full-season ticket equivalents in 2018. They already have 12,400 on the books for 2019.

The logo for the 2019 MLB All-Star Game was on display during an Indians-Twins game on Aug. 7. (Getty Images)

2019 — allows the Indians to give “as many season-ticket holders as possible the ability to experience All-Star week in some way,” Salcer said.

Season-ticket holders with a longer tenure will have better odds of getting their names called during the lottery. Fans with quarter-season plans will get one entry for each year in which they’ve been a customer.

New season-ticket holders can also get into the lottery via a 20-game purchase, but, much like the full AllStar access that will be granted to 400 new full- and half-season customers, a two-year commitment is required.

And while the Indians stress that they view the All-Star Game as a way to reward their most loyal customers, there’s little doubt that baseball’s summer showcase can provide a sizable boost for the host’s business.

In February, five months before the All-Star Game was played in the

nation’s capital, The Washington Post reported that the Nationals’ season-ticket base was the largest in the franchise’s 14 years in D.C. (The club, like the Indians, guaranteed All-Star access for customers with full- and half-season plans.)

The Indians, meanwhile, have already reached 1 million tickets sold for 2019, thanks to a season-ticket base that is already at 12,400 FSEs. Granted, the Tribe’s on-field product has been mostly terrific the last three seasons, and the 2018 Indians have a legitimate chance to record the franchise’s second consecutive 2-million season at the gate.

But the All-Star Game’s impact seems evident in the number of fulland half-season plans that are already on the books for next season.

As of Aug. 29, the Indians had 2,800 such accounts — just 200 shy of 2018.

The quarter-season accounts remain

ADVERTISING SECTION

dominant, though the gap isn’t quite as large, with the 4,900 20-game plans accounting for 64% of the club’s 2019 total.

Another signature event — the playoffs — means additional chances for the Tribe to add to those numbers, since customers who purchase season tickets in the next few weeks will get priority access before postseason seats go on sale to the general public.

Salcer said the postseason has prepared the Tribe’s business team for the All-Star-related juggling.

Not surprisingly — considering the limited supply, plus all of the new customers who have signed on the last two seasons and the price hikes that have coincided with the improved on-field product — some season-ticket holders have grumbled about the All-Star lottery on social media.

The Indians say their 2019 ticket prices will increase in a similar man-

ner as 2018. According to Team Marketing Report, the club’s average ticket price of $30.04 in 2018 ranked 16th in MLB and was up 7.9% from the prior season. The Tribe’s $68.40 norm for a premium seat was the 10th-lowest in baseball.

“We definitely have been conscious. We want to do it in a reasonable way,” Salcer said of the cost increases.

The Tribe exec said the club has been thrilled that 90% of its season-ticket holders have renewed for 2019. The team won’t know for months how many of those fans will purchase All-Star seats (Salcer said the process likely will begin early next year), but the early commitments should continue to fuel a payroll that, according to Spotrac, now ranks in the top half of MLB. (The Indians’ total payroll of $141.2 million at the end of August was the 14th-largest in the game.)

“That goes back to the support our season-ticket holders have given this organization has been tremendous,” Salcer said. “It really gives us the ability to go out and get an Andrew Miller, go out and get an (Edwin) Encarnacion, and then bolster our bullpen at the trade deadline this year. That doesn’t happen without the support.”

MBA

WEATHERHEAD SCHOOL OF MANAGEMENT

www.crainscleveland.com/onthemove

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

ACCOUNTING

2018 Quarter-season plans Full- and half-seasons

INSURANCE

weatherhead.case.edu

LAW

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LAW

Craig Thomas

Brinton Lincoln

Gregory Watkins

Mark Wallach

Sachin V. Java

Assurance Manager

VP of Military Markets

Associate

Partner

Associate

Walter | Haverfield

Walter | Haverfield

Gallagher Sharp LLP

RSM US LLP RSM is pleased to announce that Craig Thomas has been promoted to Assurance Manager.

He has approximately seven years of experience in public accounting, providing audit services and business advice to privately-held and privateequity-owned companies in the technology and manufacturing and distribution industries. Craig has assisted clients with various complex accounting topics, including business combinations, revenue recognition, consolidations and general financial reporting considerations.

P022_CL_20180903.indd 22

Selman & Company LLC SelmanCo welcomes Brinton Lincoln as VP of Military Markets to head the TRICARE and CHAMPVA supplement insurance products, which are available to association members and employees. Mr. Lincoln, formerly with Rustbelt Reclamation, holds his MBA from Case Western Reserve University, and served in the US Air Force for nearly 14 years as a Combat Rescue Officer. With 11 deployments to Afghanistan, Iraq and elsewhere, Mr. Lincoln brings vast experience in leading individuals and teams.

Walter | Haverfield is pleased to announce that Gregory Watkins has joined the firm as an associate in its Corporate Transactions group. Watkins’ practice focuses on mergers and acquisitions, representing sellers and purchasers. In addition, Greg counsels clients on general business matters, including governance, compliance, and day-to-day operations. For more information, visit www.walterhav.com.

Walter | Haverfield is pleased to announce that Mark Wallach has joined the firm as a partner in its Litigation group. Wallach litigates and tries complex business disputes, concentrating on corporate, business tort, real estate and public law litigation. His in-depth focus includes consultant and accountant liability litigation, contract disputes, Uniform Commercial Code issues, trade secrets and non-competition covenants. For more information, visit www.walterhav.com.

Gallagher Sharp welcomes Sachin Java as an Associate.

Sachin defends attorneys in legal malpractice actions.

He also has experience in complex commercial litigation, general corporate law, mergers and acquisitions, real estate, mass torts (asbestos), FDA and health law. Prior to his legal career, Sachin served in several clinical research and healthcare administration operational roles and as an engineer.

In addition to his J.D., he has a M.Eng. & Mgmt., and a B.S. in Biomedical Engineering.

8/31/18 3:26 PM

CRAIN’S CLEVELAND BUSINESS

Source Lunch Nicole Schmidt

VP of brand, strategy and analytics, Indians After a five-year tenure at a Chicago-based consulting practice, Nicole Schmidt took a two-year “break” to earn her master’s degree at Northwestern University’s Kellogg School of Management. The summer between her first and second years at Northwestern — a rival of Schmidt’s beloved Iowa Hawkeyes — consisted of a fellowship with the Cleveland Indians. “Alex King (the Tribe’s senior VP of marketing and strategy) was trying to hire someone for a year-round position,” Schmidt said, “but I didn’t have a year to give. I just had the summer. So he basically took the yearlong job and said, ‘How much of this do you want to try to do?’ ” She apparently did quite a bit. A year later, in 2013, the Tribe hired Schmidt, whose job might not be quite as cool as her boyfriend says it is. — Kevin Kleps

Five things Triple play Schmidt played volleyball, basketball and softball as a kid.

(Brief) break from technology Schmidt enjoys riding her bike along the Metroparks trails. “I can’t be on my phone while I do it,” she said.

Cheers She also loves Cleveland’s thriving craft beer scene. “I like the beer, I like the food that often goes with the beer and I like the people,” she said.

Best pieces of business advice Two stand out to Schmidt: Have strong opinions loosely held, and never stop learning.

Best moments from the 2016 playoffs The Dolans paid for each member of the front office, along with a guest, to attend a World Series game in Chicago. Schmidt brought her father, Craig. As great as that was, though, Schmidt said Rajai Davis’ home run in Game 7 was the best sports moment she’s ever witnessed.

Lunch spot Heck’s Express 515 Euclid Ave., Cleveland 216-303-9494 www.heckscafe.com

The meal One had the Falafel burger with spicy fries and a soft drink, and the other had the Heck burger with spicy fries and a coffee.

The vibe The quick-serve version of this four-decade-old Northeast Ohio brand gets crowded at lunchtime, but the line moves quickly and the food remains delicious.

The bill $26.22, plus tip

P023_CL_20180903.indd 23

How do you describe your job to family and friends?

My boyfriend likes to say that I’m in charge of the folks who shoot off the T-shirt guns, which is entirely facetious, but it gets everyone really excited. Then it’s actually a letdown when I explain what I really do. I think there’s kind of two buckets. We’ve got the brand side, which does market research, which for us is really critical because it allows us to get the voice of the fan. ... The strategy and analytics side is a little more nebulous for most folks — a little more conceptual. We don’t do the same thing every year the way that we do on the brand side. There, we’re predominately bringing data and analytics and strategic project management to whatever the organization’s biggest challenges are.

There seems to be a feeling on the Indians’ business side that you have to be better than everyone else to be competitive. Do you look at it that way?

I absolutely do. We’ve got headwinds that come from being in a smaller-sized market, where we’ve got three professional sports teams. We have great fans who have a huge appetite for sports, but that doesn’t change the fact that it’s a challenging economy to function in as a sports team. That’s not an excuse; it’s just a reality. For those of us who decided to make a career with the Tribe, it fuels us a little bit. It’s a challenge that we find motivating.

Do you feel like the market has really responded to the improved on-field product?

I definitely do. The attendance has been really strong relative to the years prior, and if you’re in the park on one of those nights, it just feels different than when I got here five years ago. There’s always going to be people who expect us to draw better than we do and are unhappy with the attendance numbers, but I think the atmosphere in the city and the atmosphere of the fan base, it’s fantastic right now. And you can see that in a number of different channels — not just in the park.

When you were at the University of Iowa, did you think you’d be working in Major League Baseball seven or eight years later?

I didn’t. Honestly, growing up (in Iowa), I didn’t know anyone that worked in sports and I didn’t realize that was a viable career path for somebody who

wasn’t going to be on the sports operation side. It really wasn’t until well into being a consultant (at Chicago-based Monitor) that I realized there are people in sports that are trying to tackle the same type of questions that we’re trying to tackle at this pharmaceutical company, this CPG (consumer packaged goods) company, what have you. Gosh, wouldn’t this be a heck of a lot better than working on this asthma inhaler that I’m working on right now? That’s really what sort of triggered me to say, “What do I want out of my next step?”

On a personal level, what have these last few years been like?

I feel so fortunate because I fully recognize that I could have come here and worked just as hard as I did and by pure bad luck, a bounce of the ball here or there, not had these same opportunities. I know a lot of people work a long time in baseball and don’t get these chances, so I’m very, very grateful. And just in general, I think everything about being here has surpassed my expectations — from the city, to the organization, to what I’ve been able to get back from the game while I’ve been here. It’s been better than I could have ever dreamed.

How important have the ballpark renovations been for the Tribe?

It’s been huge. I’m so glad I was here before we did that so I’ve gotten to see the before and afters. It’s changed the atmosphere of the ballpark tremendously. I think one of the most underrated aspects is what opening up the outfield gates has done. The view is just so much more open, and I think it changes the dynamic. And the impact of The Corner and the drink rail is obvious, but really can’t be understated. That has brought so much energy to the park and changed the feel completely.

What’s the most important thing about being a manager?

I think you have to genuinely care about developing your people. I always played team sports growing up. Both my parents coached my teams at different points in time.

That’s always been something that’s been held in very high regard in my family — being a good coach and being a good teammate. I think those two things go hand in hand. To be a good manager, you have to care about your people and their growth as much as you care about your own.

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sider intel

MARKETING, ADVERTISING & EVENTS INSIGHTS.

Today’s Tip: Do one thing different with your next advertising campaign to make your company stand out from the competition.

What are you promoting in your ads? Are you doing the same type of advertising as your competition? What if you took a different approach and did something unique? Changed up your ad look, size, placement, content -- the possibilities are endless.

DAWN DONEGAN

SENIOR Account executive Crain’s Cleveland Business DDONEGAN@CRAIN.COM

How Crain’s can work for you: CRAIN’S ADVERTISING OPPORTUNITIES Crain’s Cleveland Business has a talented sales staff committed to assisting you with all of your advertising needs, including print, digital, event sponsorship and custom content.

For more information contact your advertising sales representative or contact me at DDonegan@crain.com.

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8/31/18 11:38 AM

ntinue at watch the story co agined m BDBLAW.COM/rei

2018 BDB TEAMWORK Crains.indd 1 FP.indd 1

3/27/2018 10:32:19 AM 8/28/18 10:20 AM