Kicking off the 2023 Cleveland Smart Business Dealmakers Conference were several of the region’s top executives talking with moderator Jeff Bechtel, President - Cleveland Region, First National Bank, about the organizations’ growth and lessons learned making deals.
Haslam Sports Group CEO Dee Haslam says she's often asked how she got into the sports business. She says she and her husband, Jimmy Haslam, were encouraged to be part of the Steelers by buying a minority interest
"Before we wrote a check, we were standing out in the confetti and I was standing next to Ben Roethlisberger, and we thought this was going to be easy," she says. "We got the opportunity to own the Cleveland Browns and that was just one of the most exciting things that have ever happened to us."
Since then, she and her husband have bought into two other sports teams: The Milwaukee Bucks and The Columbus Crew. She says the decision to buy the Crew was based upon knowing what it was like to lose a sports team.
"When we were reading that Columbus was going to lose a major sports team, we were like, You cannot let that happen," Haslam says. "You won't ever have the opportunity to get one back. And it's just such a valuable asset. So, we just picked up the phone and had a conversation. The next thing we know, we're part of the Columbus Crew. And it's been just an incredible journey."
As owners, she says they had to build a stadium, a training facility and a staff, all of which took time. That investment paid off when, in their second year as owners, the team won the MLS Cup. But the investment has also had an impact off the pitch.
"The economic development around the stadium, and what we've been able to do, is also so exciting," she says. "You're able to create the drive. There was a piece of property that was not going to be developed, we were able to develop kind of a rough piece of land, a beautiful stadium, and then build an office complex and apartments on that same property. So it's really going to be a vibrant neighborhood in Columbus. And that's a way that a sports team can give back as well is just developing and creating a neighborhood for sure."
After selling more of the family business, Pilot Flying J, this year to Berkshire Hathaway, she says she and her husband talked about what they want to do.
"We like sports," Haslam says. "And it's such a privilege and an opportunity to be part of something where you're invest in something that you love and you enjoy. And we've always loved the work that the sports part has been just incredible."
So, when an opportunity came along to buy into the Milwaukee Bucks, they took it.
"What's nice about the Bucks is they already have an arena, we didn't have to build that," Haslam says. "They have a practice facility. We didn't have to do that. They're already developing around the stadium. They already have a strategy for giving back to the community and they have a pretty good player. So, it was a good opportunity for us. That organization is in such great shape."
"It's unique that a Cleveland startup is acquired by one of the largest tech companies in the world," he says. "There aren't many Cleveland deals to Microsoft or Apple or Facebook or Spotify."
Heading into the market, Kroll, the company's co-founder and CEO, says there were two things he was thinking about based on his previous experiences selling a company and being part of another company that had been acquired. The first, he says, was the strategic synergy.
"So, at the highest level, that was a huge check plus for us," Kroll says. "Spotify had entered music after Apple, they had entered podcasts after Apple and Stitcher and many others, and they won those markets coming with a market entry of not being the first in. And this was clearly going to be the case with audiobooks. And Findaway was going to be the centerpiece of the offering. So from a strategic fit, it couldn't have been better."
But the more personal aspect on his mind was the cultural fit.
"You want to make sure that your team is taken care of," he says. "And as we were doing that deal, we spent a ton of time on that. And it was during COVID — we were doing due diligence in 2021. And I was adamant that we would not do the deal until Spotify came to Cleveland to meet our team and to have an understanding of what we were about."
The minute they walked in the door and met his team, he says he saw the beauty of those interactions.
"And then we got a very quick sense that the benefits, the wages, the stock options were going to be massively elevated for everyone on our team," Kroll says. "The combination of those allowed me to have comfort to say, Okay, now it's time. Because we had been pursued for many years by many people in this strategic synergy, and this cultural synergy and looking in the whites of their eyes, and them looking at the whites of our eyes, allowed us to say, Let's go. Let's do it. And from that moment on, we fairly quickly came to an agreement on the terms of the deal."
Chris Adams, president and CEO ofo Park Place Technologies says the company did a lot of acquiring and consolidating, which created considerable value.
"We started as this little Cleveland company," he says. "But as we've grown, we've gone through tiers of investment banks and private equity firms. And we've gotten to the point now where there's only 20 or 25 private equity firms that can even consider our deal. And that's really exciting when you're sitting in that room compared to where you started 15 years ago, and you'd never heard of the names of the private equity firms showing up and some of them were established, some of them weren't very established. So it's been exciting to see that much more sophisticated conversation, ultimately, maybe even it's either this or an IPO at some point."