Shortly after moving to San Antonio in 1987, my growing family needed the convenience of a recent invention – a minivan. Although Chrysler invented the minivan (1984), I was a committed Ford man, so I took a short drive down the road to McCombs Ford, and ended up buying a Ford Aerostar – a beautiful vehicle that served us well.
I still remember dealing with the slick McCombs sales manager who buttered me up by saying I was such a good negotiator that I should leave USAA and take a job with McCombs as a salesman. I blew off his compliment because, as an insurance adjuster, I had learned that guys like him will say anything to close the deal and that he will like me only as long as I had something that he wanted – i.e., my money.
In my subsequent dealings with McCombs Ford, either with Sales or Service, I was similarly unimpressed. They reminded me of the old saying, “A fool and his money are soon parted.” If you weren’t careful with your money at McCombs Ford, they would end up with it. I thought of that sales manager as I read Big Red, Memoirs of a Texas Entrepreneur and Philanthropist, by Red McCombs. McCombs Ford was an extension of Red McCombs – it’s all about the money.
Back in the late 80s, when I bought my first McCombs vehicle, Red’s name meant nothing to me. Since then, the 84-year-old McCombs has acquired some fame, first by buying and selling the San Antonio (NBA basketball) Spurs and later by buying and selling the Minnesota (NFL football) Vikings. In the past few years I have learned that he had an ownership interest in communications company Clear Channel, and then he started appearing on the Forbes list of the 400 richest men in America, with between $1 and $2 billion.
Big Red tells the story of a poor kid from a small town in west Texas who rose to become one of the 400 richest men in America. There is so much to the story that I didn’t know, and I found it to be fascinating. The key to Red’s rise, as he freely acknowledges, is that he is a “wheeler-dealer,” although he benignly defines the term as someone who transforms under-performing assets into high-performing assets. Actually, according to Wiktionary, it means, “A shrewd, and often unscrupulous, person who advances his own interests by scheming; a hustler; political or commercial shady operator.” That is actually a more complete description of Red.
An excellent example of Red’s wheeling and dealing was his purchase of a small chain of Mister M convenience stores. The local owner of Mister M was selling the chain to 7-Eleven, a national chain based in Dallas. When Red heard about the imminent sale, he interjected an offer and prevailed upon the local owner to give a local boy a break. He told them, “I don’t know what it is like to sell to a big national chain like that, but you also have an opportunity to sell it to a San Antonio boy. I just hope you give me a chance.” Red closed the deal for Mister M, and the next day 7-Eleven offered him $50,000 to transfer the sale to them. Red refused, but said he would sell it to them for $1 million, and they refused. So much for the local boy wanting to keep the chain locally-owned.
There is a lot of truth to Red’s assertion that he likes to buy low and sell high, and a natural salesman, like Red, can do that for a lifetime. In Red’s eyes, however, he was more than a salesman. That is why his definition of a wheeler-dealer includes transforming low-performing assets into high-performing assets. A perfect example of this is his ownership of the Minnesota Vikings.
Red bought the Vikings in 1998 for $250 million. Although the team regularly sold out its games, it was not doing well financially because of an inadequate stadium. Despite seven years of trying, Red was not able to secure a new stadium and in frustration he sold the team in 2005 for $600 million. Red defending this immense profit by asserting, “The fact is I had increased the value of a poorly performing asset and turned it into a major profit center. The revenue streams that I had built were far more than what I had purchased, so that if you looked at the purchase based on anticipated revenue, then Zygi Wilf actually paid less for the Vikings than I had paid.”
That unsupported assertion seems quite a stretch, especially when you consider that in his seven years with the Vikings (a) Red was unable to obtain a new stadium that would improve the local revenue stream (30% of their income) and (b) the NFL-TV deal that provided 70% of their income had been finalized before Red purchased the Vikes. Maybe Red has been drinking the Republican Party’s Kool-Aid because his assertion sounds like the Republicans talking about balancing the federal budget without cutting entitlements.
The Wiktionary definition of “wheeler dealer” refers to a “political shady operator,” and it’s difficult to imagine that a wheeler dealer like Red would not work the political angle in his dealings. There is, however, almost no discussion in Big Red of any lobbying. The two notable exceptions are (1) Red’s inability to persuade three different Minnesota governors to help with a new stadium, and (2) his partner’s (Lowry Mays) lobbying in Washington D.C. for legislation that resulted in the exponential expansion of Clear Channel. According to NEWSMEAT, Red has given $600,000 in political contributions, with 64% going to Republicans, 8% going to Democrats, and 29% going to special interests. I would be surprised if Red’s motivation for these contributions was altruistic.
Speaking of altruism, the book’s sub-title suggests that philanthropy has played a major role in Red’s life, and although the book’s major focus is on entrepreneurship, his philanthropy is well-reported, too. Red learned philanthropy from his mother Gladys, who in the 1930s religiously took $2.50 from her husband’s weekly $25 paycheck for their church donation and commented that she wished they could save some of their spending money so that she could give something to the church. Red responded that they were already giving $2.50, and his mother told him that the $2.50 already belonged to God; any amount above that would be a gift.
Another example of his family’s religiosity – his mother Gladys was raised in the Church of Christ, but started attending a Baptist church with her husband. Gladys’ mother was a die-hard proponent of the Church of Christ – “Gladys, are you still going to that Baptist church?” Upon being told that Gladys was attending it, and loving it, her mother calmly added, “You’re going to hell, Gladys. I’m sorry but you’re going to hell.” That’s taking your religion seriously.
Big Red describes some of his major philanthropic gifts, including $40 million to MD Anderson Hospital in Houston and $50 million to the University of Texas business school. I suppose it is customary seven- and eight-figure contributions to result in buildings being renamed McCombs, but Red’s name is attached to so many buildings his giving seems less pure than Gladys’. To his credit, Red notes that his $50 and $100 charitable contributions early in his business career were more painful to him than his current seven- and eight-figure gifts.
Red ends his book by saying that he plans to work until the day he dies because he loves what he does. He reminds me a lot of Warren Buffett, the so-called greatest American investor. A principle difference between them, other than about $40 billion, is that Buffett uses a great analytical mind in making investing decisions whereas Red uses his gut a lot more. And although Red will occasionally apply Buffett’s “buy and hold” strategy (such as with Clear Channel), he is more often looking to “buy low and sell high.” Another difference between the two men is that Buffett thinks it would be wasteful for his kids to attempt to manage Berkshire Hathaway, but Red is in the process of letting his daughter manage McCombs Enterprises.
If you have an idea, Red’s door remains open, but he doesn’t believe in late bloomers. Real entrepreneurs like him start young, and if you haven’t made your mark by age 40, it’s unlikely you will. He also isn’t much interested in start-ups. He prefers under-performing assets that can be polished and sold.
For anyone interested in being an entrepreneur, I can’t think of a better role model than Red and I can’t think of a better primer than Big Red.