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Entrepreneurs
Business Observer Friday, Jun. 14, 2013 5 years ago

Art of deal

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Tampa investor and entrepreneur Bob Gries scored a $75 million payday recently on one transaction. His mission, though, remains the same: To swell the portfolios of his eclectic client list.
by: Mark Gordon Managing Editor

The first job Bob Gries had, mowing lawns in cemeteries around Cleveland in 1974 for $3 an hour, didn't cut it.

Gries sought a gig that paid more money. So he covertly went into the family business: His father owned a 20% stake in the Cleveland Browns NFL football team and Gries got a job selling hot dogs at Cleveland Municipal Stadium. Vendors, he heard, could make $75 or even $100 a game. Gries was too young to sell beer.

But Gries didn't want the other vendors, many of whom came from tougher backgrounds, to know he had connections to the owners. He parked his car a mile from the stadium and walked to work. The plan worked because Gries, who attended private schools, saw a side of life he hadn't seen much of growing up. And the job beat the monotony of mowing lawns.

“It was a great experience,” says Gries. “I made as much money as a kid could make.”

Gries no longer sells hot dogs. Now he makes money for an A-list of Tampa-area sports stars, executives and prominent officials. His title is founder and managing director of Tampa-based Gries Investment Funds, but in essence his job is dealmaker.

Those deals have varied widely over the last 15 years. One was a $5 million loan to the then Tampa Bay Lightning owners in 1998 that netted a 43% return in six months. Another was a $12 million investment in a Connecticut energy company, which Gries turned into a $150 million return in three years.

Other investments include past ownership of the Tampa Bay Storm Arena Football League team; a current stake in the AFL's Orlando Predators; and a leadership role in a commercial real estate entity that developed the $25 million, 43,000-square-foot WWE-New York entertainment facility in Times Square.

Gries, further, nearly got into community banking. His firm planned to invest about $15 million into an acquisition of Tampa-based Southern Commerce Bank, with 11 locations statewide and $80.6 million in assets. Kansas City-based Dickinson Financial Corp., a bank holding firm, owns Southern Commerce.

Gries signed a letter of intent to purchase Southern Commerce earlier this year but has since backed off. He cites a banking regulatory environment that could crimp his and his partners' goal with the acquisition, which “is to build a very large mortgage operation.”

The Southern Commerce punt follows Gries' No. 1 deal-making rule: Patience comes first.

“I have a specific niche,” Gries says. “I'm not a deal junkie. I'm not a stocks-and-bonds guy. I'm not going to take your portfolio and spread it out.”

Other people's money
What Gries does do with investors' money, he says, is find a business opportunity that generates a 15% return. The client list includes Tampa Bay Buccaneers quarterback Josh Freeman and popular former Bucs Derrick Brooks and Simeon Rice. It also includes former Tampa Mayor Dick Greco and David Mallitz, executive vice president and CFO of DeBartolo Holdings, a prominent Tampa-based real estate firm.

Greco says Gries mixes three elements that make him a great investor of other people's money: He's smart, tenacious and hyper-competitive. “He works as hard as anyone I've ever met in my life,” says Gries. “When he sets his mind on something, he will not stop until it's done.”

Not surprisingly, Gries has a workaholic streak, says Greco and several others who know the investor. Gries eats lunch at his desk many days, and he spends a chunk of the day taking, and making, phone calls. Sports memorabilia and personal mementos surround his desk in his Westshore office. That includes autographed jerseys, pictures of his daughter playing volleyball and even a few pictures of himself crossing marathon finish lines.

“He puts his own money into deals, too,” Mallitz says. “That's a great indication of how much he believes in his investments.”

Move quickly
The portfolio Gries oversees currently has about 20 active deals. One of the biggest, and most successful, is Crius Energy Trust. That firm, publicly traded on the Toronto Stock Exchange, is the parent entity of Stamford, Ct.-based Public Power and Regional Energy Holdings.

Gries got into the utility industry in 2008, when his firm loaned $5 million to Public Power, which back then was a startup electricity and gas supply company. Public Power aimed to capitalize on new deregulation laws in several states in the Northeast and Midwest.

That $5 million loan soon turned into a more serious investment, when Gries bought the company for $13 million in 2009. Gries says the deregulation opportunity was too good to pass up — though others thought the same thing. In fact, nearly 100 other power companies, some established, some startups, targeted the same customers.

Gries and his team were undaunted. Gries was also a present leader: He spent the first two years in the CEO role at Public Power flying 40 weeks a year from Tampa to Stamford to run the company.

“I knew it was something we had to grow quickly,” says Gries. “I've always operated with an underlying sense of urgency. We operate like every day could be our last day.”

That hurry-up approach was a key factor in what turned out be a major victory, when, last November, Gries took the company public. That led to a $150 million payday for investors and a three-year return of 1,054% on the $13 million acquisition. Gries personally earned $75 million in the deal, according to public filings.

Gries is now chairman of the Crius Energy Trust board, which requires far less travel than the CEO position. He has ambitious expansion plans for the company, both to grow through new customers and acquisitions.

'More money'
While the Crius deal is uber-successful, not everything Gries does turns out so well. He launched a $50 million private equity fund in 2005, for example, that invested some money in real estate. The market turned sour soon after that, however Gries says the losses were negligible.

Gries' three-year ownership of the Tampa Bay Storm was another humbling experience.

Gries bought the team when he was 30 years old in 1991. The team, then the Gladiators, played in Pittsburgh for one season before Gries moved it to Tampa and changed the name.

The Storm was a hit on the field. Led by quarterback Jay Gruden, brother of former Bucs coach Jon Gruden, the team won two championships during Gries' ownership tenure. The president and CEO, Gries was named league executive of the year in 1993.

“It was fun,” says Gries. “I wanted to win championships, but the more you win, the more money you lost.”

Gries also learned a valuable lesson from the Storm ownership, that success in the sports business is all about repeat business. “If you can sell season tickets, you're pretty much OK,” says Gries. “But if you don't, you're dead.”

Gries learned that by observing the Orlando Predators. The Predators had consistent sellouts, driven by season ticket sales, and by doing that the team made at least $100,000 more a night in concessions, Gries says. The Storm, by contrast, played in cavernous Tropicana Field back then, when it was called the Thunder Dome. Sellouts were rare, and season ticket sales were low.

The Storm lesson is partially why Gries' decision-making process on deals starts with patience and ends with prudence. He says he's an optimistic person by nature, but he looks at deals with a weary eye.

“I can tell in 30 seconds if a deal is no good,” says Gries. “I never think of the upside until I'm comfortable with what the downside could be.”

That's why he says his biggest challenge going forward is to find the right deal to do, not to find any deal. He and his team get several new deal-related calls a day, and they read over hundreds of possibilities. “People will always press you to do a deal,” says Gries, but he adds that his ability to say no when necessary preserves capital for the right deal.

Besides, Gries says his current portfolio is enough of a workload. He likens the investments and companies in the firm's portfolio to players on a team where's he the coach. “There's not a night that goes by,” says Gries, “that I don't wake up at 3 a.m. and think about a problem or an issue with an investment.”

Good Deeds
Tampa investor Bob Gries says his ability to say no is one of his best attributes when it comes to being picky about deals.

But that skill doesn't always translate to his philanthropic works. That's an area where Gries regularly says yes. Last June, for example, Gries read an article in People Magazine about a struggling unemployed single mom and her son living in an Orlando motel room. Gries reached out to the woman and offered her a job in his investment firm's call center and furniture for a home in Pinellas Park. The magazine reports Gries and an anonymous donor paid the woman's rent for the first year.

There are multiple other examples of Gries' charitable works, say several people who know him. One is the Heart of a Champion program, which he recently founded to provide scholarships and support for Hillsborough County high school athletes. He hosted a dinner for the program in May emceed by former Tampa Bay Buccaneer star Derrick Brooks. More than 400 people, including new Bucs cornerback Darrelle Revis, attended the event.

Another project Gries is behind is a plan to build an indoor youth sports facility in Tampa, possibly in the Westshore neighborhood. Gries says some of the funds for the $20 million facility would come from proceeds he made when he led a partnership that took a Connecticut-based utility company public. The center would focus on volleyball, basketball and wrestling, and Gries is working with Tampa and Hillsborough County officials on it. Says Gries: “We desperately need a facility like that.”

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