Sunday, September 12, 1999

Trio has reputation for low profiles, high profits

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BY SCOTT MacGREGOR
The Cincinnati Enquirer

George Strike, left, and Bill Reik. | ZOOM |

        If history is an indicator, the men who will soon own controlling interest of the Reds are likely to be a three-headed anti-Marge.

        During her tumultuous, 15-year tenure, Marge Schott closely watched the club's day-to-day business, grabbed the spotlight in usually unflattering ways and spent the team into debt. But new owners Carl Lindner, George Strike and Bill Reik appear interested in doing just the opposite.

       The three businessmen, limited partners in the Reds who agreed in April to buy 5.5 of Mrs. Schott's 6.5 shares for $67 million, say their focus is on returning the spotlight to the field, not the ownership.

       All three declined interview requests for this story.

G. Lindner. | ZOOM |

       But friends and business associates insist all three want nothing more from the Reds than to win on the field and be solvent off it. Their business histories suggest a more hands-off approach to running the club than Mrs. Schott, and friends say their motives for buying the club stem from a desire to be part of a successful team.

       ''Carl will depend on professional people that understand it,'' said Terry Jacobs, the CEO of Regent Communications who worked under Mr. Lindner for eight years at Great American Financial Corp. and counts him as a friend. ''They're big on finding the best people they can and letting them run their businesses. That'll be a huge boost to the Reds.''

       Cincinnati restaurateur Jeff Ruby, who knows both Mr. Lindner and Mr. Strike, agreed.

       ''He surrounds himself with good people, and he lets them operate. That's one of the keys of his success,'' Mr. Ruby said. ''Whatever company it is. I don't think he tells anybody how to make ice cream, or how to grow bananas or who he wants drafted.

       ''If there's a major decision, if they're going to spend $200 million on a player, Mr. Lindner may have to be the one who approves it, but I don't think he's going to meddle.''

       Jerry Ruyan, a former member of Frisch's board of directors who was instrumental in getting the restaurant chain to sell its limited share in the Reds last year, said he doesn't believe any of the three has a desire to deal with the day-to-day running of the team. ''It's fun to be a majority owner, but at the end of the day, I don't think these guys are going to come in and be hands-on,'' he said.

       The structure of the new leadership has not been made public, but insiders say Mr. Lindner is the man in charge. Many expect a democratic approach in a ''limited partnership'' as opposed to Mrs. Schott's autocratic reign in the ''general partnership,'' where she held all the power.

       Managing Executive John Allen, who has run the club since Mrs. Schott's 1996 suspension for making insensitive remarks, will remain in control of day-to-day operations, though he can't attend owners meetings or have final say because he has no financial stake in the club.

       The owners intend to leave baseball decisions to General Manager Jim Bowden. But that doesn't mean they'll be completely hands-off. Last October, while still a limited partner, Mr. Lindner was instrumental in signing Mr. Bowden to a contract extension when Mr. Bowden was a candidate for jobs in Baltimore and Los Angeles.

       Mr. Strike and Mr. Reik are avid and knowledgeable baseball fans. Both attended a team workout at Cinergy Field before this season's opener, and Mr. Reik traveled with Mr. Bowden to Indianapolis in April to watch Reds pitcher Denny Neagle in a rehabilitation outing at Triple-A.

       Mr. Allen has worked closely with all three owners on the stadium issue, even before the sale became official in April.

Long-term approach
       The Reds could become World Series contenders immediately if the new owners were to invest an additional $20 million in player payroll next season, a large chunk of change even for a billionaire like Mr. Lindner.

       But the organization's stated goals, along with the management histories of the three men, suggest a more visionary, long-term approach as they let the baseball people build the club from the ground up in scouting and development, with some money pumped into player payroll to become more competitive.

       The group is tight-lipped about its plans, but Mr. Lindner's business background reveals a history of a steady hand, despite setbacks early this decade that forced several of his companies into financial distress and pushed him to uncharacteristically sell holdings before he could realize their full potential.

       In the 1980s, corporate raider Carl Icahn once praised Mr. Lindner's ''great deal of patience,'' and Mr. Lindner built his fortune with a strategy of waiting years -- sometimes decades -- for investments to reap huge profits.

       Cincinnati businessman Richard Farmer, the chairman of Cintas Corp. who has known Mr. Lindner for 30 years, doesn't see Mr. Lindner involved for the short haul to get out with a pile of money.

       ''He doesn't think in the short term. He has only long-term plans,'' Mr. Farmer said. ''I don't think 80 years old is in his vocabulary. That's not how he thinks. I don't think he got into this thing to make money. How much more money does he need?''

       Observers of Mr. Lindner believe that though he wants to see the team competitive immediately, he won't push a quick-fix solution over long-term stability -- perhaps spending money on both current player payroll and future player development.

       ''I don't think you're going to see him be frivolous and stupid,'' Mr. Jacobs said. ''He's never done that in any of his businesses and he's not going to start now. He doesn't have the ego of some of the other owners, so the celebrity of owning the Reds isn't important to him. What is important to him is that the Reds are run like a professional business and can be competitive over a long period of time.''

       But that doesn't mean Mr. Lindner won't bump up the payroll some to make the Reds competitive in the short-term either. Mr. Jacobs, among others, expects some increase.

       ''He's going to be concerned about building a solid foundation,'' Mr. Jacobs said, ''but he'll also be pretty realistic about what the current game is. He'll probably be more willing to spend money on free agents than the team has in the past.''

       ''When he gets involved in something, he'll go for it big,'' said Mr. Farmer.

       And patience doesn't mean Mr. Lindner will be an absentee owner. Though friends say he likes to spend free time with his family, they also say he's still active in his businesses and their decisions. In the past, friends have described Mr. Lindner as a tireless worker with little time for hobbies.

       ''We always said Carl will die with his boots on,'' Mr. Jacobs said. ''He's still just as sharp as he can be mentally, and just as driven. He outworks some people half his age.''

Potential to boom
        The Reds also seem to fit Mr. Reik's investment profile perfectly: A company with potential to boom. As a Wall Street money manager and director of the investment firm William D. Witter, Mr. Reik has tended to chose equities that are undervalued, Mr. Ruyan said.

       ''I would say he's hands-off,'' Mr. Ruyan said. ''He's a guy that goes and gets the facts, then makes a decision based on those facts, as you would expect a money manager to be. I believe he'll approach the Reds the same way.''

       A self-made millionaire, Mr. Reik has built a career turning other people's investments into profits. During the stock boom of the 1980s, he and his son, William ''Trey'' Reik III, were pulling an average 34.4 percent annual return for their clients, according to a 1987 profile in Financial World magazine.

       Several of those investors, including Missouri Senator Christopher S. Bond and the Houston city employees pension fund, sued Mitchell Hutchins Investments (where Mr. Reik was a manager until he was reportedly forced to resign in 1990) for what they described as years of money mismanagement.

       Mr. Reik was a main defendant in three suits, which alleged that 32 of Mr. Reik's clients in the late 1980s had lost more than $18 million on bad investments in which Mr. Reik had allegedly tried to corner a few thinly traded stocks, partly through an investment known as the Cypress Fund. One of the stocks in question was Frisch's. The suits were settled out of court for at least $11 million, according to a January 1997 article in the trade publication Institutional Investor.

       Richard Martens, Mr. Reik's attorney for those cases, said his client did not contribute financially to the settlements.

       Mr. Martens contended the cases would have been thrown out if they had gone to court, and that only one case ever went to a hearing and was dismissed. ''There has never been a finding of wrongdoing on Bill's part,'' Mr. Martens said.

       Mr. Martens, in fact, staunchly defends Mr. Reik's character. They remain friends, though Mr. Martens no longer represents him.

       ''Bill Reik is one of the most intelligent, thoughtful and perceptive businessmen I've ever met,'' Mr. Martens said. ''He's a man of extremely high standards of integrity.''

       Mr. Lindner also has been sued in the past by disgruntled shareholders of Great American, who alleged he was not offering them a fair price when he tried to take the public company private in the late 1970s by buying out other stockholders.

       In 1998, Mr. Lindner's Chiquita Brands International and the Enquirer were embroiled in a legal battle over articles published in the Enquirer on Chiquita's business practices. The newspaper renounced the articles, apologized to the company and paid Chiquita more than $10 million.

       In 1986, Mr. Strike and the Enquirer settled a libel suit for an undisclosed amount over a 1983 article concerning Mr. Strike's purchase of several parcels of Baldwin-United real estate.

       Though Mr. Martens doesn't know the specifics of the Reds' new structure, he does know Mr. Reik recommends changes only when they're in the company's best interests.

       ''I think he'd be the type of guy to find the best possible management and let them do their jobs,'' Mr. Martens said. ''He'd watch them, but he'd let them manage.''

       Those who know Mr. Strike also doubt he'll interfere, and his own words from early in his career form the basis of his management style. In 1963, he told the Enquirer he believed the key to management is selecting good people and delegating responsibility, but ''Everybody has to do a certain amount of detail work to keep in touch with the business.''

Working with people
       Mr. Strike, who in 1992 called for Mrs. Schott to be barred from baseball for life for making racial remarks, is known as an intensely private, soft-spoken man who ''has a tendency to work with people,'' said former Enquirer publisher Bill Keating, a friend for 20 years. ''He's direct, very clear. He understands his mission and stays very focused.

       ''He's a good delegator. I can't picture him coming in and saying 'I'm in charge.' I can picture him coming in and working with people, developing strategies, determining strengths and weaknesses of various people.''

       Mrs. Schott had a tendency to work against people (her well-publicized dispute with manager Davey Johnson over his live-in girlfriend and her constant struggles with limited partners such as Mr. Strike and now-deceased Carl Kroch, as examples), and to let her mouth get her in trouble (two suspensions by the National League for making insensitive comments).

       But the new owners appear much more measured. Little is known about them other than what they want to be known, and none appears inclined to make hasty decisions.

       And Mr. Lindner isn't likely to bring a dog on the field before games, or try any of the other stunts that attracted Mrs. Schott so much negative publicity.

       ''I don't think you'll see any mules, or any dogs or a horse-and-pony show,'' Mr. Ruby said. ''He'll butt out of it. But it'll make money.''

       

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