Authors: Stephen Frey
“Hot damn!” yelled O’Brien, banging the table. He was a sports nut and had helped Gillette and Faraday during the bid process.
“Next week I’m meeting with Kurt Landry, the NFL commissioner, to work out a few things,” Gillette continued, “but basically it’s a done deal.”
“And we’re sure we’ve got the zoning to build the stadium?” Maggie wanted to know.
“Absolutely.”
“Wait a minute,” David Wright broke in. Typically, he was the only managing director that spoke without being asked a question by a managing partner first. “We’re building the stadium?”
“I want to build it so we keep the extra revenue,” Gillette explained. “Concessions, advertising rights, naming it. This way we have total control of everything.”
“How much did we offer for the franchise?” Maggie asked. “I can’t remember.”
“Four hundred and fifty million.”
“What’s the strategy with this?” she continued. “I don’t know much about sports teams, but four hundred fifty million seems like a lot,
and
you’ve got the cost of building the stadium. Which is what?”
“Three hundred million.”
“So we’re in for seven hundred and fifty million. Can we really get a decent return on that, Christian?”
Maggie was suspicious that this was just a “boys gone wild” investment, Gillette could tell. An excuse to jet to Las Vegas every few weeks and hang out with movie stars, corporate bigwigs, sports figures, politicians, and friends in a plush skybox. “The stadium will be finished in a year and a half, and it’ll seat eighty thousand,” Gillette answered, giving a quick overview of the numbers. “We’ll charge an average of a hundred dollars a ticket. That’s eight million dollars for each of the eight home games, sixty-four million a season. And that doesn’t include a couple of preseason games we can probably get fifty bucks a ticket for. Plus, we get concessions, our share of the NFL TV contracts, and ad dollars. One of the big computer store chains already offered us ten million a year to put their name on the stadium. Nigel and Tom,” he said, “figure we can generate at least three hundred million a year in revenues. Based on where other major league sports teams sell, that would make the franchise worth somewhere between two and three billion. That would be a hell of a return.”
“But can you really fill up eighty thousand seats at a hundred bucks a pop in that city?” Maggie pushed. “Vegas isn’t that big, it’s probably only got around a million permanent residents. I don’t think eight percent of the population is going to a football game eight times a year for that kind of money.”
“The population is closer to a million five,” Gillette corrected, “but I hear what you’re saying. Which is why we’re already negotiating with a couple of the major airlines to add flights from Los Angeles to Vegas on game weekends. Remember, as crazy as it sounds, L.A. doesn’t have a football team, and we’ve got assurances from the NFL that it won’t get one in the next few years, until we’re established. I think L.A. will adopt the Vegas franchise. It’s a nothing flight for those people—you’re up, you’re down. We’re also working with the casinos on promotions, and we’re pretty far along with several of them. In fact—and what I’m about to tell you has to stay in this room,” he said, giving everyone a warning glare. “We’re looking at opening a casino ourselves. We’ve gotten to know the city officials very well over the last two years, and they’ve told us they can persuade the state gaming commission to give us a license.”
“What about the Mafia?” Maggie asked bluntly.
Gillette had figured someone would ask about that. “We’re checking, but I doubt the NFL would green-light the franchise if the Mafia was still a problem out there.” He had better information than that but didn’t want to alarm anyone. “I’ll keep everyone up-to-date on what we find,” he promised, looking around the room. It was time to end the cross-examination. Maggie was good, but she didn’t get it this time. “This could turn out to be one of our best investments ever. Not Laurel Energy, but close.”
People rapped on the table hard, nodding their approval, understanding that Gillette had ended the discussion on this topic.
“Another thing,” he continued, holding up his hand for quiet. “I’m going to retain Morgan Stanley to sell Laurel Energy.”
“Why Morgan Stanley?” Maggie asked.
“Why not?”
“I thought Goldman Sachs had the best mergers and acquisitions group for the energy industry.”
“Morgan Stanley will do a great job for us,” Gillette replied confidently.
“Is this payback?” Maggie looked over at Wright, then back at Gillette.
“For what?” Gillette demanded.
“You know what.”
Gillette’s eyes narrowed. “No.” He stared at her for a few moments more, then resumed the meeting. “I want to get back to a point Blair made earlier. The fact that we’ll be making two hundred million a year in fees on Everest Eight. I’ve decided to commit ten million of the first-year fee to St. Christopher’s Hospital up on the West Side.” He paused. “I want all of you to make personal contributions to your local charities, too. In your towns, your neighborhoods, whatever. That’ll be something I’ll talk about with each of you during your annual reviews in January. Frankly, the more you donate the better. All of us are lucky when it comes to money. I know everyone works hard and makes a lot of sacrifices, particularly those of you who have spouses and children. You don’t see them much,” he said, his voice dropping. “But it isn’t like we dig ditches, either. While I’m chairman, this firm is going to be socially responsible, understood?”
His words were met with nods.
“Good.” Gillette checked his agenda, scratching out the NFL, Laurel Energy, and charitable contribution items. The next topic was the L.A. office. “Just so everyone’s clear, Nigel and I are looking into opening a Los Angeles office, but we haven’t made any final decisions yet. I don’t want rumors going around. When we do make a decision, we’ll let everyone know right away.” He grinned. “Anybody want to volunteer to go?”
Wright raised his hand immediately. “Can I get promoted to managing partner if I do?”
Gillette shot Faraday a quick look and shook his head, still grinning.
Faraday rolled his eyes.
“Always looking for a deal, aren’t you, David.” Gillette turned back to face Wright. “Stop by later and we’ll talk about it. We can talk more about that other thing, too.”
“Stop by later” meant they’d talk about it during a game of pool in the room adjoining Gillette’s office.
“I’d rather talk about Hush-Hush
now,
” Wright said, taking advantage of the fact that Gillette was speaking to him. “I don’t want to wait. It’s too hot.”
To bring up a prospective investment in this meeting, a managing partner or managing director was supposed to run it by Faraday first, then send around a short memo on the company so the group had the basic facts—what the company did, how big it was, how profitable it was. Wright hadn’t talked to Faraday or sent around a memo.
“Hush-Hush?” O’Brien piped up. “The intimate-apparel company?”
“Yeah, that’s it,” Wright said.
“What’s the deal?”
“We’ve got the inside track to buy it. I have a friend in senior management who can help us ink it.” Wright nodded at Gillette. “I spoke to Christian about it earlier. He likes it.”
“
What I said was,
you should get more information,” Gillette reminded the younger man, irritated that Wright had jumped the gun and was trying to make people in the room think he was already on board.
“I’ll vote against that investment on principle alone,” Maggie spoke up. “I don’t care how great a deal it is. Their catalog is basically a porn magazine. It’s insulting to women.”
“If it’s so insulting,” Wright shot back, “there must be a lot of women who like being insulted. Hush-Hush is growing at over eighty percent a year, and—”
“I don’t care how fast it’s growing,” Maggie interrupted. “It’s not something we should get into.”
“Hey, just because you don’t care about looking sexy doesn’t mean the rest of the female world doesn’t—”
“David.”
Gillette’s sharp rebuke cut Wright off instantly.
Maggie glared at Wright for several moments, then turned to look at Gillette when Wright didn’t look away. “Besides, it’s the fashion business,” she said, her voice cracking with anger. “There can be big revenue swings.” She took a deep breath. “Christian, for Everest to make an investment, you and all four managing partners have to vote yes. I’m telling you right now, I’d vote no. So we can all save ourselves a lot of time by cutting off this discussion right now.”
Gillette folded his arms over his chest. Maggie was right. Buying any fashion business was risky, especially one like Hush-Hush. But he didn’t appreciate the way she’d tried to take control of the meeting. “Let me remind you,” he said, “the chairman of this firm can overrule any single negative vote. Got that?”
She nodded quickly, understanding what he was saying—so much more than that he might overrule her if she chose to vote against the investment. “Yes.”
Gillette looked back at Wright, irritated. “David, you know you’re supposed to talk to Nigel before you bring up something like that.”
“But I thought—”
“David.”
Wright’s gaze fell to his lap. “Sorry.”
“
YOU GIVE
David Wright a lot of fucking rope,” Faraday muttered as he sat down in front of Gillette’s desk.
It was six-fifteen. The managers meeting had broken up ten minutes before, and Gillette was checking out a story on the Internet. He put his shoes up on the desk and locked his fingers behind his head. “David’s a star, easily our top managing director. We both know that. He deserves some extra rope.”
“Not as much as you give him.”
“He’s a thoroughbred.”
“He’s cocky as hell.”
“He’s young, he’ll mellow with age. You and I can help him with that.”
“Some of the other managing directors are grumbling.”
“About what?” Gillette demanded, dropping his shoes to the floor. “Making a million dollars a year?”
“There’s more to it than just the fucking money,” Faraday retorted. “People around here are like puppies, okay? They don’t like it when you pay a lot of attention to one person.”
“Tell the whiners to find some investments for us,” Gillette suggested. “Right now, David’s the only managing director who does. We’ve already bought two companies he found, and now he’s got us in the hunt for Hush-Hush. Which despite Maggie’s objections might be a good deal. It’s three hundred million in revenues, growing like mad, too. And I think you told me once you know people at some big apparel company in Paris. Your family is friends with the CEO’s family, right?”
Faraday nodded, understanding immediately where Gillette was headed. “That’s a good idea, I’ll get in touch with him.”
“He’d probably salivate at the chance to own Hush-Hush,” Gillette pointed out. “You know, increase his presence in the U.S. with a hot brand.”
“Sure.”
“It’ll be an easy flip. We grab this thing quick, before other people find out it’s on the block, then sell it in a few months for a couple-hundred-million-dollar gain. If it works, it’ll be thanks to David.”
“Yeah, but—”
“And remember, David’s the one who got us in to see the California Teachers Pension,” Gillette reminded Faraday. “The people who made that six-hundred-million-dollar commitment this morning. At one percent, that’s six million a year of income for this firm. That ain’t chump change.”
“His fucking
father
got us in to see them.”
Wright’s father was a senior investment banker at Morgan Stanley. He’d introduced Faraday to the executives of the West Coast pension fund several months ago.
“But David made it happen. Now we have a great relationship with one of the biggest institutional investors in the country. Hell, they could have committed a couple of billion to us if they wanted. And they will next time around, to Everest Nine.”
Faraday shook his head. “Christ, the ink isn’t even dry on the Everest Eight subscription agreements and you’re already thinking about Nine.” He smoothed his tie. “Can I ask you something?”
Gillette heard an unusual tone in Faraday’s voice. “What?”
“Was Maggie on point today?”
“About?”
“She didn’t spin it out all the way, and frankly, I don’t blame her. God, you looked like you were going to bite her head off when she started talking.”
“You mean the Laurel Energy thing?” Gillette asked. “Giving the sell-side mandate to Morgan Stanley?”
“Yeah. Was that payback for David’s father introducing us to the California Teachers Pension? Was she right?”
“Morgan Stanley will do a great job for us. I’m confident they’ll get us five billion for Laurel.” Gillette raised one eyebrow. “But if I can show appreciation for a favor at the same time and give them an incentive to do us more favors, well, that’s just good business.”
“Laurel Energy is so important to—”
“Enough.” Gillette checked a stock price on his computer. “I’m thinking about promoting David to managing partner.”
Faraday groaned. “But he’s only thirty-one.”
“He’s on seven of our boards, five with me. I’m chairman of those companies, but he basically runs the quarterly meetings. He does a great job, too. Nobody on those boards seems to care that he’s thirty-one.”
Faraday exhaled heavily. “I guess it’s better to promote from inside; at least you know what you’re getting.” He looked up. “But I don’t think it would be a good idea to promote him, then send him to L.A. to open the office. We need to see how he does as a managing partner first.”
“Agreed.”
Faraday chuckled. “Can you imagine letting him go to L.A., what with all that beautiful, barely dressed tail running around, right after we promote him to managing partner? Jesus, we’d never be able to find him. Neither would his wife.”
“I
said,
I agree.”
“I just don’t want you changing your mind over a game of pool with him. David can be very convincing.”
“Won’t happen.” Gillette thought back to this morning when he was coming out of the conference room and he’d run into Wright. “Has David seemed a little off lately?”