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American City Business Journals Nov 23, 2001On the hard court he was in total control, in absolute command of every basketball skill, making every teammate better.
But for Oscar Robertson the CEO, it's been a different game.
"A lot of people will take advantage of you when you're naive," said Robertson, 62, an NBA legend whose three decades of business ventures have spawned several lawsuits, a bankruptcy filing and recurring allegations that he operated as a minority front for whiteowned companies.
"I studied business, but I spent a lot of time on the basketball court" Robertson said. "You have to find people you can trust. And I'll tell you right now, you can't trust a lot of them."
Robertson agreed to discuss his business career as part of a promotional tour for a new video, "The Big O: The Oscar Robertson Story." The two-hour biography, available for $29.95 at (877) 8772446, covers Robertson's rise from an Indianapolis ghetto to the top of the NBA. His most amazing stat was the triple double - double-digit figures in scoring, rebounds and assists. The best players accomplish the feat only occasionally. Robertson averaged a triple double during the first five NBA. seasons. He is widely regarded as one of the best to ever play the game, but Robertson's highest annual salary, $550,000, is "less than the NBA's worst player makes today," said his attorney and longtime adviser, Robert Brown. That's one reason Robertson turned to business after his 1974 retirement.
Big O in business
Robertson rarely talks publicly about his business exploits. But his story offers a fascinating case study of black entrepreneurism in Cincinnati.
After all, Robertson's former hard court rival, Dave Bing, has built a $310 million steel-processing conglomerate in Detroit on contracts from U.S. automakers.
Another of Robertson's contemporaries, Jack Twyman, built a $1 billion company in Dayton. Robertson and Twyman, who is white, played both for the University of Cincinnati and the Cincinnati Royals. Twyman, now living in Indian Hill, sold Super Foods Services Inc. to Minneapolis-based Nash Finch Co. in 1996 for $247 million in cash and debt assumption.
It's been a different story for Robertson. The four companies he operates under a family-owned holding company, O.R. Group, generate annual sales of about $70 million and employ 272, he said. That's bigger than Blue Chip Broadcasting, the radio chain built and later sold by one of Cincinnati's most celebrated black entrepreneurs, Ross Love. But Brown said more than half of O.R. Group's revenue comes from joint ventures, where Robertson shares 49 percent of profits with larger, white-owned partners. Robertson said his companies, as a whole, are profitable. But his wholly owned flagship firm, specialty chemicals maker Orchem Corp., is not.
"We're struggling," he said. "The funny thing about business, if you can't borrow money from banks you can't build anything. If I could get the right financing, I could grow this company into something that could shock the world. But the banks in this town are difficult to say the least."
Robertson is equally critical of local companies. He said Procter & Gamble Co. is his only local customer. A Kroger Co. spokesman said its Lower Price Hill foodprocessing plant buys from Orchem, but be couldn't give specifics.
Then, there are his partnerships. When you take stock of Robertson's ventures, a pattern emerges.
Virtually all started as joint ventures, with many of his partners looking to capitalize on Robertson's Hall of Fame reputation. Brown said he tries to limit Robertson's financial exposure in the deals. He thinks that might be a reason banks are reluctant to finance the ventures.
In many cases, the ventures have sought more than profits. At least twice, Robertson has redeveloped inner-city neighborhoods. When his Orpak Stone joint venture bought a packaging plant in Illinois, it had no black workers. Now, it has about 30. Another common theme of the ventures is Robertson's hands-off management style that relies on employees to handle day-to-day affairs.
"He believes in building a team that puts the right experts in place," said Christopher Che, O.R. Group's chief financial officer. "But he's very challenging. Most of the time he's pressing for results. When those results are achieved it's very rewarding."
Picking partners
But that approach has failed Robertson in several ventures. Here's a look at some of them:
* The Avondale Towne Center was built from the ashes of businesses destroyed during the riots of the late 1960s. The $2.8 million center opened in 1983 with 11 stores, including an IGA grocery operated by Super Foods Services Inc., a Dayton-based company run by Twyman.
"It just didn't work," said Twyman, who closed the store after three different operators failed to make it work. By 1993, the center was mostly vacant and the city was pushing to terminate its lease agreement with Robertson's development company. A consortium of churches took over the center in 1997.
Brown said the city assumed Robertson's remaining debt and paid $550,000 as reimbursement for capital improvements made by the company. "It was sort of a break-even proposition," said Brown, who was among Robertson's investors in the Avondale project. "It wasn't a disaster, but it wasn't the home run everybody hoped it would be."
* Another real estate deal in Robertson's native Indianapolis blew up more dramatically a few years ago. Oxford Terrace was a $4.6 million housing development aimed at providing home-ownership opportunities for low-income residents.
In 1999, published reports indicate Robertson fired his Indy partner, Rodney Bynum, and asked for an investigation after several hundred thousand dollars tamed up missing. Robertson told a paper he had $400,000 tied up in the project. When he fell behind in mortgage payments, a co-investor ousted Robertson from the deal.
"I lost all of it" said Robertson. Brown said the criminal case continues. The FBI declined to comment.
"He wound up with a whole lot more exposure than he anticipated," said Brown.
* Robertson's joint ventures with Frank Messer & Sons Construction Co. in the 1980s also generated controversy. Messer and Robertson teamed up on several projects, including the city-owned Garfield Garage and a library on the University of Cincinnati campus, said Brown.
William Cargile Contractors, a black-owned competitor, filed a complaint with the city of Cincinnati in 1982 alleging Robertson's company was a minority front for Messer.
Danis Building Construction Co. filed suit with a similar allegation on a Dayton project. Brown said Robertson won the Dayton lawsuit but settled with Cargile and wound up losing money on the Garfield project. In 1987, the city's office of contract compliance terminated Orchem's certification as a minority business enterprise, ruling it wasn't controlled by minorities.
Then, as now, Oscar defends his joint ventures: "I wouldn't get into a situation where my honesty and character can be questioned."
* When Orchem filed for Chapter 11 bankruptcy in 1996, Provident Bank lost $400,000 of a $1.9 million loan, and unsecured creditors lost more than 90 percent of the roughly $5 million they were owed, according to published reports. What caused the bankruptcy? That depends on whom you ask. Mel Fisher, whose family-owned Texo Corp. helped finance Orchem's startup, said Orchem's decision to manufacture its own products produced high debt levels and cashflow problems. Orchem sells specialty chemicals that sanitize food processing plants.
Originally, it distributed Texo products. But Robertson said the company's suppliers wanted Orchem to be more than a distributor. To accommodate that wish, he bought out Fisher's 49 percent ownership stake. Brown said the deal was fair, but Robertson said he "paid way too much."
Both said the buyout left Orchem thinly capitalized, leading to the 1996 bankruptcy. Robertson said the bankruptcy could have been avoided if his bank had accepted a promissory note from Ecolab Inc., a Minneapolis-based company that wanted to buy Orchem.
* Robertson has had better luck with another joint venture, Orflex Inc. The Forest Park company makes flexible packaging for Fortune 500 companies, including Kraft, Nabisco and Frito Lay. The 80-employee plant was owned by Printpack Inc., an Atlanta-based packaging firm that posted sales of just over $1 billion last year. Printpack Vice President Jimmy Love said the company was thinking about closing the plant but opted instead to market it as a minority business enterprise.
Printpack spun out its factory into a new joint venture, 51 percent owned by Robertson. Printpack financed the deal by extending a loan to Robertson and guaranteeing the venture's bank loan. Love said Orflex will post sales of up to $20 million this year and has the potential to double in five years.
He credits Robertson's "common-sense" approach to business and adds that the Big O's name recognition has been a "value add" to the partnership.
"He's a door-opener," said Love. "He can approach very sizable companies at the highest level. We kind of provide the credibility, and he provides the opportunities."
Persistence paying off?
Those who know Robertson best say the success of his business ventures has ultimately depended on the partners he picked.
"He's been taken advantage of at times," Brown said. "He's had some deals that have really backfired."
But the Big O is nothing if not persistent You might say relentless.
"He does have the best work ethic of anybody I've ever seen," said Brown. "He'll travel constantly to develop sales for any business he's involved in.
"He's gone through a lot of different ventures. There have been losers along the way. But he's been holding onto the winners. For a guy who really didn't do anything in business until he retired from basketball, I think be's done very well."
Gene Ellington agreed. The president of the South Central Ohio Minority Business Council has followed Oscar's career since the 1960s. He was 8 when he first saw the Big O play at Cincinnati Gardens. Ellington's father owned a construction company that worked at Robertson's home and poured concrete for the Avondale Towne Center. Ellington said Robertson's business success should be celebrated, bankruptcy and all.
"Look at the image he portrays," said Ellington. "Look at where he came from. He's continued to persevere. Companies file bankruptcy every day. No real big issue is made out of it. But when it's a minority company, it's cause for pause."
Fisher thinks Orchem would have been more successful if he had pursued the original distribution strategy, but Robertson was reluctant to challenge his management team. Fisher said insecurity might be at the root of that reluctance. He said Robertson is "worried about being viewed as capable as a white person."
Robertson rejects the criticism, saying he readily admits his mistakes.
"Oscar's a great guy," countered Fisher. "He still has the ability after all these years to pick up the phone and call the president of any company in the country and get an appointment. If I were he, I'd have a Harvard MBA CEO as the head of those four companies.
"If you'd take an inventory of his strengths and weaknesses, play to his strengths and find some people to help with those weaknesses, you'd have a tripledouble, to use basketball terminology."
O.R. GROUP is the parent of companies totaling $70 million in sales and employing 272 workers.
ORCHEM CORP. is a Fairfield-based specialty chemical company with about 35 employees.
ORFLEX IS a packaging firm whose Forest Park plant employs about 80.
ORPAK-STONE CORP. manufactures corrugated packaging at a plant in Southern Ilinois. It employs about 150.
OSCAR ROBERTSON Document Management Service Co. is a 10employee company in New Jersey that offers document storage, printing services and machine leasing.
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