Crain's Cleveland Business by Crain's Cleveland Business

VOL. 38, NO. 35

AUGUST 28 - SEPTEMBER 3, 2017

On the rise

Source Lunch

Tremont expects to get a new apartment complex. Page 5

Fred Cummings, president of Elizabeth Park Capital Management

The List Cleveland’s highest-paid athletes Page 17

CLEVELAND BUSINESS

Page 23

SPORTS BUSINESS

MANUFACTURING

Northeast Ohio’s pro athletes haven’t shied away from showing their personalities on social, and those interactions are becoming increasingly important to growing their overall brands — especially for LeBron James. Pages 10-16

Timken buys into products, markets

Staying social is part of the game

By DAN SHINGLER dshingle@crain.com @DanShingler

The Timken Co. is on a tear, and it’s far from finished. “In the last 12 months, we’ve actually completed six acquisitions, which is by far the most we’ve ever done in a one-year period,” said Richard Kyle, CEO of the North Canton-based bearings and power transmission company. The company has been buying its way into new markets, new product lines and onto the supplier lists of new customers with its string of pickups, Kyle said. It’s a strategy he said will continue, because it’s working. Take the last three acquisitions the company has completed, all of them done since April, when it announced it was buying Michigan-based Torsion Control Products. SEE TIMKEN, PAGE 21

Companies’ patience is paying off Illustration by Robert Carter for Crain’s

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

AT THE TABLE

Melt makes Inc.’s fastest-growing list Cleveland-based chain hungry to expand in Ohio, other states Page 7

Northeast Ohio’s public manufacturing companies have been doing pretty well in recent months. Some of this, of course, can be attributed to an improved economy. But some of it is certainly due to the companies themselves, many of which used the slower years of late as a springboard for innovation and change. A lot of companies cut back when times are tough, but that “catches up” to them eventually, said Materion Corp. president and CEO Jugal Vijayvargiya. But Mayfield Heights-based Materion makes sure to invest in research and development when times are good and when they’re bad, so the advanced materials supplier can benefit from it long-term. And it has paid off. “Our new product pipeline is the proof,” Vijayvargiya said. SEE COMPANIES, PAGE 18

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City trying to land Canada’s Nova Steel By JAY MILLER jmiller@crain.com @millerjh

Cleveland is in the running for a new steel tube fabricating plant. City Council will take up legislation in September, when it returns from its August recess, that would offer Nova Tube and Steel LLC, a subsidiary of Canadian steel processor and distributor Nova Steel, a 10-year, 60% tax abatement to develop a tube mill manufacturing facility on land now owned by a public-private development corporation in the Cuyahoga Valley Industrial Center. Councilman Anthony Brancatelli, whose Ward 12 includes the land in the industrial valley along Interstate

77, said Cleveland is competing with one or more other cities for the operation. He said the facility is projected to employ about 75 people. “It’s a Canadian company looking for a location in the United States, so there were lots of other opportunities in other states and cities,” he said. He said the company signed a nonbinding purchase agreement for at least 30 acres at the site, on the land of a former steel mill. The new plant is a response to a demand for material to build oil and gas pipelines that is expected to grow over the next decade, after a drop following the recession. “As production increased, oil and gas companies demanded additional pipeline capacity to transport crude oil from extraction sites to refineries,

“It’s exactly what the site was built for.” — Anthony Brancatelli, Ward 12 Councilman

where crude oil can be refined into higher value products like gasoline,” stated IBISWorld, a Los Angeles-based industry research firm, in a July market report. “Over the coming years, crude oil production will continue to rise, and pipeline investments will drive industry growth.” A Nova Steel spokeswoman declined to comment on the company’s expansion plans. A spokesman for Cleveland Mayor Frank Jackson also declined to comment before the legislation comes before a city council committee.

“It fits well with the site,” Brancatelli said, referring to the nearby ArcelorMittal steel mill and to two steel service centers — Heidtman Steel Products Inc. and Steel Warehouse Co. “It’s exactly what the site was built for,” he said. The industrial center is overseen by the Greater Cleveland Community Improvement Corp., a nonprofit that creates public-private partnerships for land development in Cleveland. In 2008, the city bought contaminated land that had been an ArcelorMittal coke plant and slag dump. Cleveland has been hampered by a lack of large, developable industrial land, and this redevelopment effort gave the city 65 acres to lure new industry to the city. In 2014, the property was certified as

an Ohio Job Ready Site by the Ohio Development Services. That resulted in a Job Ready Site grant of $3.5 million and a $1.5 million Roadwork Development grant to help pay for the cleanup. It required 300,000 cubic yards of material dredged from the Cuyahoga River to make the site ready for redevelopment. Since then, the state of Ohio and a nearby business have committed to move the reclaimed land. In June, Coast to Coast Equipment and Ohio High Reach, two related Valley View companies that rent, sell and service aerial lift equipment, broke ground on a $3.6 million headquarters on 6 acres in the industrial center. The Ohio Department of Transportation is planning to build a new maintenance center on 15 acres along the freeway.

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A U G U S T 2 8 - S E P T E M B E R 3 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

Season-ticket holders have put faith in Indians By KEVIN KLEPS kkleps@crain.com @KevinKleps

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Outfielder Jay Bruce, who was acquired in an Aug. 9 salary dump by the New York Mets, made a near-instant impact for the Cleveland Indians. The acquisition of the 30-year-old, who has already reached 30 home runs in a season for the fifth time, is even more crucial now, as the firstplace Tribe has been brutally hit by injuries. And the move, which resulted in the Indians taking on the nearly $4 million that remained on Bruce’s $13 million salary, probably wouldn’t have been made if not for the Tribe’s 2016 and ’17 business surge. “I hope our fans feel they’ve helped us do stuff like that,” said Tim Salcer, the Indians’ vice president of sales and service. Granted, the Indians’ entertaining run to the 2016 World Series provided more than enough buffer to pay a three-time All-Star $3.8 million for a couple months of work. But Tribe executives say a lot of what has transpired in the wake of the Fall Classic — a $60 million free-agent contract to slugger Edwin Encarnacion, a fiveyear extension for All-Star Jose Ramirez and the trade for Bruce, to name a few — are because of the fans’ response to a winning product. The Tribe recently completed its renewal period for season-ticket holders, and 93% have already placed a deposit for the 2018 season, Salcer said. With more than five months to spare, the Indians have 10,400 full-season-ticket equivalents on board for 2018, and renewal commitments are up 54% year-over-year. Salcer said the response “definitely beat” the Tribe’s goal — the bar for which was set aggressively. And the FSE count will continue to grow, helped by the club being able to offer 2017 playoff access to those who commit to purchasing new season tickets. “We’re still working through projections,” Salcer said, when asked how much he thought the 2018 FSE total could rise. “A lot is determined by how we do in the playoffs.” Still, the Tribe VP added, the Indians could approach 14,000 or 15,000 FSEs for 2018 — which would be the franchise’s highest total since at least 2008. The Tribe’s 12,300 full-season equivalents for 2017 was the Tribe’s largest tally in nine years, and it was about 3,600, or 41%, ahead of the Indians’ 2016 season-ticket base. (For accounting purposes, four customers who purchase 20-game packages for the 81-game home slate equal one full-season equivalent.) The bulked-up base of customers has given the Tribe a cushion on the nights that almost never draw well (most prominently, spring weekdays and September weeknights), and it’s the largest reason for the club’s pergame attendance surge — a figure that should surpass 25% by the end of a weekend series against the Kansas City Royals on Sunday, Aug. 27. The Tribe, as of Aug. 24, was approaching 1.9 million tickets sold, which was a 400,000 year-over-year spike. And the club’s attendance norm of 24,345 — which hadn’t taken into account a three-game Royals series

The Indians’ attendance at Progressive Field is on pace to increase by almost 400,000 this season. (Jason Miller/Getty Images)

By the numbers: Indians’ ticket surge 93%: Tribe season-ticket holders who have renewed their seats for 2018. 54%: Year-over-over increase in renewal commitments. 76%: Renewals that were done online. 10,400: Full-season equivalents for 2018, with five months to spare. 12,300: FSEs for 2017. 8,100: Season-ticket holder accounts in 2017. 9,000: The Indians’ largest season-ticket base from 2010 to 2016, a total that occurred in 2015. 1.9 million: Tickets sold for 2017. 400,000: Year-over-year increase in tickets sold. 1 million: 2017 tickets that have been purchased by season-ticket holders.

that was expected to top 90,000 — through 62 home games put the Indians on pace to draw 1.972 million. By comparison, since 2009, the Tribe has surpassed 1.77 million fans just once — a 1,840,835 total in 2011, for an 80-win club managed by Manny Acta. Of the 1.9 million tickets the Indians have sold this season, the season-ticket base has accounted for more than half — about 1 million. “I think what we’re most proud of is how we grew the season-ticket holder base, and how we’re aiming to make sure we’re selling to pure fans in Northeast Ohio,” Salcer said. “I think that separates us from other teams.” Salcer was referring to the franchise’s crackdown against ticket brokers. The Indians have stopped selling full and partial season-ticket packages to brokers, some of whom have had their previous seats revoked. That’s a stance that’s much easier to take during good times, but one that would become more difficult if the on-field play slips to the 2009-12 levels. But the season-ticket boost, which has gotten a huge lift from 20-game plans, combined with the broker

crackdown, in Tribe parlance, means the Indians have grown their customer base “organically.” Salcer said the majority of the FSE growth has come from the 20-game packages, which are the entry-level point for season-ticket plans. Another positive sign for an industry in which the full 81-game packages have become less and less prevalent: The Indians’ group sales are up 22% year-over-year. And during the week of Sept. 11, the Indians will begin to give season-ticket holders their seat locations for the 2017 playoffs. (Fear not: FanGraphs gives the Tribe a 99% chance to return to the postseason.) Current customers get the first crack at the best seats, a selection that Salcer said is even better because of the reduced amount of broker-owned seats. And new buyers undoubtedly will come on board, as they did throughout the second half of the 2016 season. Thus, by the time the 2018 Indians start play, the Tribe likely will have significantly added to a season-ticket base that already was its best in almost a decade. The current gate numbers, while still ranking in the bottom seven in MLB, have been bolstered by an eight-week stretch that began with a sellout crowd for a July 4 contest against the San Diego Padres at Progressive Field. Entering the Royals series Aug. 25, the last 23 home games had drawn an average of 27,295 fans. The Kansas City game on Aug. 26 will be at least the eighth sellout of the season (the Aug. 25 matchup was getting close, as of press time), which is the highest total since 2007. All but one of the sellouts — the home opener — have occurred in the last eight weeks. Five weeks into that stretch, the Tribe added Bruce in a move that brought comparisons to the 2016 trade-deadline deal for relief pitcher Andrew Miller. The Indians’ payroll is now approaching $138 million — a $50 million bump from Opening Day 2015. “Jay Bruce, the Andrew Miller trade last year — that does not happen without a commitment from our season-ticket holders,” Salcer said. “That now gives us the ability to do stuff like that.”

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Tremont stays ‘hot,’ will add apartments By JAY MILLER jmiller@crain.com @JayMiller

The Tremont neighborhood may soon get its first new apartment building. A zoning change approved Aug. 16 by Cleveland City Council will allow developer Mike Tricarichi to build the first multistory, market-rate apartment building in the West Side neighborhood in anyone’s memory. It will be at the southwest corner of Fairfield Avenue and West 11th Street. “I think it’s going to be a big success,” said David Sharkey, president of Progressive Urban Real Estate. “It changes the whole face of the neighborhood.” Ralph McGreevy, executive vice president of the Northeast Ohio Apartment Association, a trade group, agreed, saying, “I think Tremont has been and has stayed hot as fire. Do I think it can absorb 75 units? Easily.” Tricarichi didn’t not return several phone calls seeking comment. But architect Steve Ciciretto described a 75-unit, four-story building with parking underneath on a handful of vacant residential lots assembled by Tricarichi. A drawing submitted to the Cleveland City Planning Commission calls the building “11th & Fairfield.” Tricarichi purchased six residential lots in 2008 for $425,000. An earlier attempt at commercial redevelop-

A multistory apartment building is expected to be constructed in Tremont, at the southwest corner of Fairfield Avenue and West 11th Street. (Contributed rendering)

ment of this corner of Tremont failed in the mid-1990s when investors in what was to be “Greek Town” dropped out in part because of neighborhood opposition, according to a report in The Plain Dealer. Annunciation Greek Orthodox Church towers over the neighborhood. Ciciretto said Tricarichi wasn’t sure he had a winner. “A few years ago, Mike said he

couldn’t give that land away, and now it’s hot,” he said. “Sometimes you’re lucky when you can’t give it away.” Nearly all new housing in Tremont has been modern, three-story row houses, both for sale and for rent. That’s partly because of a lack of large chunks of land and because of height restrictions in the zoning code, dating from an era of traditional, wood-

frame, single-family and two-family homes. The only multistory apartment developments in recent years have been rehabs. The first was Tremont Place Lofts, the former Union Gospel Press building on Jefferson Avenue developed by a group led by Akron general contractor Myrl Roberts. It opened in 2009 with 102 units. Rents there now range from $1,200 a month

for one-bedroom apartments to $2,000 a month for the larger two-bedroom units. Most recently, Sustainable Community Associates developed two apartment buildings. The Oberlin developer turned the former Fairmount Creamery building on West 17th Street, built in 1930, into 30 apartment units in 2014. More recently, it built the 1895 Wagner Awning building on Scranton Avenue, which opened last November with 50 apartment units. A one-bedroom unit at Fairmount Creamery is listed at $1,350. At Wagner Awning, rents start for one bedroom in the $1,000-a-month range. “When you look at Fairmount Creamery and Wagner Awning, they filled up quickly,” Sharkey said. “Is this a trend? Probably.” The housing market in Tremont has been brisk. Matt Moss, director of housing and economic development for the Tremont West Development Corp., the area’s nonprofit community development corporation, said 237 units of new housing popped up on his radar in the 12 months ending March 31. Some are single-family homes, and others are for-sale or forrent row houses. Typical is Catania Court on Marquardt, where a ribbon was cut in July on what is for now five town homes developed by Cleveland Bricks. Those three-bedroom homes, between 1,800 and 2,200 square feet, are on the market for between $423,000 and $499,000.

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CRAINâ€™S CLEVELAND BUSINESS

For Sale: 21,910 SF Industrial Bldg.

4630 Hamann Industrial Pkwy, Willoughby, OH

N.J. investor scoops up Beachwood building By STAN BULLARD sbullard@crain.com @CrainRltywriter

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Shutting the door on two years of lender ownership, a New Jersey investor is the new proprietor of five-story Orangewood Place in Beachwood. Thatâ€™s the word from CBRE, which announced the transaction Aug. 24 after handling the sale of the building for the loanâ€™s special servicer. However, CBRE declined to identify the buyer beyond its geographic location. Ohio incorporation records may provide a clue to the new ownerâ€™s identity. A company named 3690 Orangewood Place LLC, apparently combining its street address and the structureâ€™s name, was formed July 19 by Rose & Berg Realty LLC, whose website says it owns and manages more than a million square feet of commercial and industrial property and is engaged in doubling the size of its portfolio. However, Rose & Berg did not respond to an email to its company website or a phone call about whether itâ€™s the buyer, and county records of the transaction were not available by 11 a.m. Friday, Aug. 25 Vicki Maeder, a CBRE vice president based in Cleveland, said in a phone interview that there were multiple bidders for the structure, which houses more than 30 tenants. Maeder and New York-based agents Patrick Arangio and Jack Howard of CBREâ€™s National Loan & Portfolio Sale Advisors unit represented the seller.

A new owner is in charge at Orangewood Place, one of the East Sideâ€™s largest multitenant buildings, as it emerges from financial distress. (Costar)

The seller, identified by land records as 3690 Orange Place Holdings LLC, was formed in 2015 as loan special servicer CW Capital Asset Management of Bethesda, Md. The firm secured ownership of the building at a Cuyahoga County sheriffâ€™s foreclosure sale. The previous owner, Big Orangewood Place LLC of Houston, Texas, had defaulted on the $7 million balance of a $9 million loan it had obtained in 2007 to finance the structureâ€™s purchase for $11 million. Cuyahoga County currently assigns the building a market value of $8 million for property tax purposes. The building is more attractive for investors than the past several years. As the east suburban market has tight-

ened up, it still has 31,000 square feet available, or 25%. Moreover, the buildingâ€™s tenancy has improved during nearly five years of lender and court-overseen receivership control. In 2012, it had 41%, or 50,000 square feet, available, according to Costar, the online realty data service. Steve Egar, a Beachwood-based real estate broker, said rents are rising on the East Side, so it may be possible for new investors to take a position among older buildings and retrofit them for new users. Orangewood Place dates from 1974. The latest sale marks the second time the property has gone through foreclosure in the last 30 years.

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At the Table

Rapidly growing Melt shows no signs of slowing Earning a spot on Inc. magazine’s Inc. 5000 list of the nation’s fastest-growing companies was a welcome nod for culinary entrepreneur Matt Fish and his Lakewood-based Melt Bar and Grilled restaurants. But it won’t really rock his world, Fish said. Melt landed at No. 4,906 on the prestigious list. That may seem faint praise, until you consider the number of food service operations in the U.S. — more than 1 million — and that Melt is the only Ohio food and beverage company included. A total of 171 Ohio businesses made it onto the Inc. 5000 list. If you don’t know Melt, you aren’t aware of one of Northeast Ohio’s most popular fast-casual dining concepts. Packed with iconic Cleveland memorabilia and an array of wildly goofy art, the chain focuses on massive grilled cheese sandwiches built around everything from jalapeno poppers to pierogi. “Gourmet grilled cheese and craft beer are finally recognized for their greatness!” exclaimed Fish, in accepting the Inc. 5000 honor. Fish already is accustomed to praise being heaped on that delectably gooey landslide of success. National publications such as USA Today and Esquire magazine have spotlighted Melt. Food Network star Guy Fieri’s “Diners, Drive-Ins and Dives” featured the restaurant. So has the Travel Channel. In recognizing the budding chain’s success, Inc. noted 2016 revenue as $17.6 million — with a three-year growth rate charted at 44%. Melt, founded in 2006, employs nearly 350 workers. But the honor is just another indicator of the chain’s mounting success. On Aug. 21, Melt debuted its 10th location,

at 35546 Detroit Road (at the corner of Route 83) in Avon — the third store opened this year by Fish. And the fourth new property of the year, in CanJoe ton, will open in Crea fall. And there is no end in sight for growth, Fish promised. The 44-year-old Parma native never quite envisioned that kind of trajectory for his business (“comfort food, all dressed up”), he admitted. “Until 2010, we were pretty content opening one new store each year,” Fish said. The chain was unfolding gradually, starting with the initial location in Lakewood, eventually spawning additional sit-down locations in Cleveland Heights, Independence and Mentor. Scaled-down satellite spinoffs — Melt University (on the campus of Case Western Reserve University), Melt Ballpark (at Progressive Field) and Melt Public Square (at Cafe 200 in downtown Cleveland) — drew a quick-serve clientele. Columbus-area opportunities beckoned. In 2013, Fish heeded the call to head south and opened the first of two stores in Ohio’s capital city — first in the dynamic Short North Arts District, then a spot in the area’s Easton shopping mecca. Last year, it was time for a spot in Akron. Then suddenly, Fish said, offers to expand came rolling in. “So we decided last year to try opening two locations, but it didn’t exactly work out that way,” he explained. Cedar Point came calling “out of the blue, at the end of last year’s season. They approached us about

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opening a full-service location within the park. A chance like that was pretty hard to say ‘no’ to, so that opened on May 12 of this year,” he said of the Sandusky amusement park. But a Dayton location already was in the works: Melt Bar and Grilled in The Mall at Fairfield Commons in suburban Beavercreek. All the while, Fish’s organization was searching for a property in one of Cleveland’s far western suburbs, effectively spanning Northeast Ohio. “Nothing really excited us that much,” Fish said. “Then, around this past February, we were approached to open in a former bar-and-burger concept — the old Bar 145, a college bar kind of feel that just didn’t go over very well. And this particular location in Avon was perfect.”

“It presented the perfect scenario,” he added. Space for Melt locations typically ranges around 5,000 square feet, plus an outdoor patio area where possible. The Avon space is among the largest so far, with 6,000 square feet. While all that was going on, work has been underway for new construction of a Canton location on the north side of Belden Village Mall. Fish is eyeballing a November opening for that spot. Looking toward 2018, Fish said that nothing is set in stone. The recent accelerated growth is giving him and his organization pause to look back, reassess “and make sure the business is functioning properly before we move forward.” “It’s possible we’ll open some-

thing, but it will likely be in the third or fourth quarter — either another new build or a major reno project. Or maybe some place that hasn’t come available but yet. Opening a place in Cincinnati would be a logical next step. You never know what opportunities may come to us.” Ohio isn’t Melt’s last frontier, not by a long shot. Fish is casting his gaze beyond the Buckeye State. “That’s the goal: taking the brand out of state but within driving distance of Cleveland,” he said. Rather than scatter a bunch of one-off Melt locations in several diverse capitals, Fish said, the aim is to choose one region that can support multiple units. Pittsburgh and Indianapolis hold promise, but his partners are training a careful eye on the Motor City. “Detroit has the most opportunity for us,” Fish said. “Detroit is a huge metro area, and the opportunities are tremendous there. (Cleveland Cavaliers owner) Dan Gilbert has poured millions into Detroit, and the area has a 4 million-plus population. “The opportunity to put five or six Melt locations throughout the Greater Detroit area is quite strong for us. So I won’t say with certainty, but I do know that Detroit is the one (expansion city) that most excites us.” Inc. magazine’s nod, Fish said, “puts an exclamation point to all the hard work we’ve done. “Does it mean more business for us? Probably not. It doesn’t mean much in the culinary world, but to influential money people you NEED those kinds of accolades to be recognized. It’s probably going to put more eyeballs on Melt on a national level. Maybe it’ll create more leads for us, generate more interest. We’re a successful business, heading in the right direction.”

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CRAIN’S CLEVELAND BUSINESS

Opinion From the Editor

By sophomore year, dropoff is way easier

Editorial

Game on The deck was clearly stacked in Dan Gilbert’s favor when voters OK’d a state constitutional amendment that legalized casino gambling in Ohio. After all, Gilbert, whose Jack Entertainment operates casinos in Cleveland and Cincinnati, and only one other operator lobbied successfully for a casino monopoly etched into the state constitution. But even before Cleveland’s casino opened in 2012, then donning the Horseshoe branding, state lawmakers preemptively watered down Gilbert’s downtown take by approving legislation that would create the racinos. Since then, as Crain’s Jay Miller reported earlier this month, the Hard Rock Rocksino at Northfield Park, has risen to the top. Last year, the Rocksino led the pack in terms of gaming revenues, followed by the downtown Jack Casino Cleveland and then Jack Thistledown Racino in North Randall, according to data compiled by the Center for Gaming Research at the University of Nevada-Las Vegas. The Rocksino’s success isn’t difficult to deduce: free parking, a variety of food options, active concert and comedy clubs, and, most importantly, a prime location off Interstate 271 that draws Clevelanders and Akronites alike. So, is it time to throw in the hand on the idea of an urban casino and Gilbert’s promised second phase on the downtown riverfront? Hardly. Even before Ohio’s late entry in the gambling game, this portion of the country was already saturated with gambling havens within a few hours driving distance. And as the competition reaches a fever pitch in Northeast Ohio, gambling shops are being challenged to up their game — none other more so than the downtown casino. To its credit, since its opening, the downtown casino has brought more vitality to the urban core. It also brought new life to one of the city’s hallmark buildings. And while it’s numbers aren’t as lucrative as once hoped, it’s hardly proven to be a bust. Also, as Miller reported, Gilbert’s gaming arm recently completed a $70 million upgrade of its Jack Thistledown Racino and will soon introduce an electronic gaming concept at the down-

town casino, designed to attract younger bettors. Is that enough to stave off the Rocksino’s growing dominance in the regional gambling scene? Likely not, but it’s a start — one that should be beneficial to consumers considering where to wager. To that end, the only real way for the downtown casino to overcome its challenges — its confusing layout and limited space for additional entertainment options — is for Gilbert to pursue the long-talked-about second phase on the Cuyahoga River. But given that the state’s casinos have collectively underperformed, would an expansion be a prudent investment? It’s difficult to say in the current market. Gilbert’s remained mum on when — or even if — the second phase would come to fruition despite weighty earlier promises.

The Trade

The Shot. The Block. And now, The Trade. Chances are you recall the feeling when Kyrie Irving drained a 3-pointer in the 2016 NBA Finals. It was the dagger that brought Cleveland its first major sports championship in more than half a century. For that, we will always be thankful and wish Uncle Drew all the best in Boston. Following the Cavs’ Finals loss this year to the Golden State Warriors, the organization was in disarray. Turmoil in the front office led to general manager David Griffin’s departure, and then Irving, looking to escape LeBron James’ shadow, demanded a trade. By all accounts, a rudderless ship — not the perennial contenders the franchise had become. So, credit is due to Gilbert and rookie general manager Koby Altman for making the best out of an incredibly challenging situation. Are the Cavs in a better position to take on the Warriors? Likely not, but the future looks brighter than it did a month ago.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

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You told me it would be OK. Last year at this time, though, I couldn’t believe that. I was preparing to drop off my first-born for his freshman year at Ohio State. And the thought of it terrified me. I was full of trepidation, and eventually reluctant acceptance, as I prepared to wave goodbye to my son as he moved to the next stage of his life. My husband, Mike, and I hoped we had successfully prepared him for this. I had a box of Kleenex ready for the drive home, and I used some. I heard from so many of you after writing that piece. Phone calls, emails, letters that kept coming for weeks. “Very much appreciated your column on sending your son off to school,” one Elizabeth reader wrote. “As kids, we always asMcIntyre sume the world revolves around us. I sometimes think of what my own Mom & Dad were thinking about when I got dropped off at BGSU in the 70s. As you get older, you realize these major events aren’t all about the child — they are about the parents as well. How well we cope as parents is sometimes much more meaningful (and difficult) than how we coped as children. … Then the cycle continues.” Great point. As we worried about whether we’d prepared our son for this, I pondered whether we’d prepared ourselves. Another reader spent a lot of time anticipating his reaction to sending his kids to college, which was still seven years (and the blink of an eye) away: “I plan on sitting in a darkened room for months watching home movies and slide shows non-stop while listening to children’s albums and stuffing my face with junk food.” A mom who sent two daughters to OSU offered this advice: “Believe that what you have done as parents has prepared your son to succeed at every turn as he makes his way on that amazing campus. Bumps and bruises along the way will surely occur but they don’t have to be roadblocks, only possible detours and certainly opportunities to learn, benefit, and grow from wonderful life lessons.” How right she was. Last week, Mike and I drove Aidan to Columbus to start his sophomore year. We’re pros now at setting up a dorm room (though the Progressive Field photo and the Browns pennant both fell off the wall at least once, which was quickly blamed on faulty Command Strips). We completed the task in less than two hours and headed out for pizza. As we sat enjoying that final meal together, I remarked to my son how much he had blossomed in his freshman year. I think he nodded. Then we headed back to his dorm, where I jumped out of the car to hug him goodbye and Mike stayed behind the wheel. No tears this time. No worries. No pit in the bottom of my stomach. I know he’s going to be OK. And so am I. We drove past a mother crying in the arms of a father as we left town. I wish I would have jumped out and offered her the advice you readers gave me. It’s going to be OK. A year from now you’ll know what I mean. It’s all right if you need to use the Kleenex. Locking yourself in a darkened room to watch their old home movies and stuff yourself with junk food might be taking it a bit far. I’m going to clip that last sentence out of the paper and tape it to the fridge. In less than two years, we drop off our youngest.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes. Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

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Letters to the Editor

More views on the state of Public Square I agree that having concrete barriers and buses on the renovated Public Square destroys the unified design of the square, as per David Kordalski’s Aug. 21 column in Crain’s. (“No more room for compromise on Public Square.”) My understanding is that RTA’s objection was that closing the square to buses added 72 seconds in the morning and 60 seconds in the peak evening hours to travel time around the square. When multiplied by hundreds of buses, that resulted in missed schedules and financial loss for RTA. It is likely that 72 seconds or more could be saved on each bus trip if a truly comprehensive traffic study was done to 1.) coordinate the many poorly timed traffic lights not only in the square but also for the two blocks of each street leading into the square; 2.) convert the ring road around the square into a partial or total traffic circle to vastly facilitate movement around the square; and 3.) add traffic sensors so all traffic lights within two blocks of the square are only activated when traffic is present or when pedestrians push a button. Some combination of these three steps would likely eliminate the bus delay issue altogether. Jim Schaefer, Cleveland

It was with some dismay that I read the column from David Kordalski, who appeared to be subbing for the usual editor’s column in the Aug. 21 edition. I don’t expect everyone who works at Crain’s Cleveland Business to be a cheerleader for Cleveland. But I also don’t expect to find Ebenezer Scrooge in the prestigious space of the main opinion column. Clue David: Maybe opinion pieces shouldn’t be written when you’re having a really bad day. Or if they are, don’t press send. The piece was written in a journalistic voice, yet it was clearly a negative opinion piece. Somebody ought to be coaching this writer to be clear that it’s their opinion. I pretty much lost it when I got to the end of the column and he called the chandelier in Playhouse Square ugly, stating it as a fact versus as an opinion. I take great pride in passing and admiring that fixture, and have lost track of how many times I have offered to take pictures for tourists or other locals who are thrilled with it. David is entitled to his opinion. Just don’t pretend it’s news. Jim Smith, Cleveland

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CRAIN’S CLEVELAND BUSINESS

Focus LEBRON JAMES Twitter: 37.8 million followers Instagram: 32.3 million followers Facebook: 23.2 million followers Total: 93.3 million (through Aug. 24)

SPORTS BUSINESS

The King’s social media machine LeBron James’ digital conquest continues to elevate his already-powerful brand By KEVIN KLEPS kkleps@crain.com @KevinKleps

The workout videos LeBron James posts to Instagram generate so much attention that Steph Curry drew a crowd that included Kyrie Irving while mocking one of the performances during a former Golden State Warriors teammate’s wedding reception. The video Curry was imitating — a June 15 “bald head nut” post of James showing off his fresh cut while performing a dizzying version of “First Day Out” by Tee Grizzley — has produced 9.2 million views. Hookit, a Solana Beach, Calif., digital marketing firm, said it’s one of three Instagram videos posted by James in the last year that have sparked at least 10 million combined views and social-media interactions. It’s all part of the social-media machine that is LeBron James Inc. Despite “Zero Dark Thirty-23,” the two-month span in which James doesn’t post anything on Facebook, Instagram and Twitter because of the NBA playoffs, the world’s best player is easily the most followed and most engaged athlete in the United States. And the gap between the Cavs superstar and Curry, one of his Golden State rivals, is even more sizable than the rift between James and Irving — a feud that led to the latter being traded to the Boston Celtics on Aug. 22. As of Thursday, Aug. 24, James had a combined 93.3 million followers on Facebook, Twitter and Instagram. Curry, who

IIllustrations by Robert Carter for Crain’s

ranks second among the athletes in the four major U.S. pro sports leagues, had 35.4 million followers. In fact, James’ Twitter following of 37.8 million had Curry beat on its own. But it’s engagement — the number of interactions a social-media post generates — that mean far more to businesses and fans, said Hookit founder and CEO Scott Tilton. Not surprisingly, James does just fine in that area, too. Hookit supplied Crain’s with engagement statistics for every athlete on Cleveland’s three major pro sports teams in the last year. During that span, which concluded on Aug. 16, James’ social-media posts drew a combined 95,805,280 video views and interactions. James’ 822 posts during the 12-month stretch produced an average of 116,551 interactions — only 10,052 fewer than the one-year total for all of Browns wide receiver Kenny Britt’s 425 posts on the three platforms. James’ total was dominated by the star’s Instagram videos — five of which drew at least 6 million views and interactions. His 95.8 million interactions are more than 26.4 million ahead of the combined tally of the rest of his Cavs teammates, a gap that is made all the more gaudy by the fact that the 2016 NBA champs have one of the most-followed rosters in sports. “His platform is not so much a brand. It’s more of a machine,” Cavs veteran forward and noted podcaster Richard Jefferson said of James. “It’s the support he can get. A guy like him, when someone pitches something to Maverick (Carter, James’ business partner), they show him the numbers — 25 million on this, 35 million on this.

CRAIN’S CLEVELAND BUSINESS

EDWIN ENCARNACION Twitter: 246,000 followers Instagram: 515,000 followers Facebook: 267,000 followers Total: 1.03 million (through Aug. 24)

“Those things, when it comes to how much he can get from a company, all of those things go in,” Jefferson said. “ ‘Well, you want him?’ It used to be Michael Jordan and his name and his face. Now you have LeBron and the 200 million people he has direct access to.”

Wait, he can do more? Tilton said James, who averaged 2.3 social-media posts per day in the last year, “isn’t as active as he could be.” The Hookit CEO pointed to soccer star Cristiano Ronaldo — the most followed athlete in the world, at nearly 290 million combined on Facebook, Instagram and Twitter. Ronaldo posts about three times a day, and he incorporates sponsors into 10% to 15% of his posts, Tilton said. And while James doesn’t have the social-media following of a few soccer superstars (Ronaldo, Neymar da Silva and Lionel Messi), he certainly makes up for his annual spring break from the three major platforms. On Tuesday, Aug. 22, for instance, the four-time NBA MVP posted a video of him circling a basketball court, and dunking prior to reversing course. It drew more than a million views in the first hour. A few hours after that popular post, the Cavs dealt Irving, who is second in the Cleveland engagement rankings, at 28.8 million. We kept him on the list because his robust social stats from the last year were accumulated during the Cavs’ third straight run to the NBA Finals. The Cavs occupy the top seven spots, and 10 of the top 17. Of the 13 Cleveland MLB, NBA and NFL athletes who produced at least one million combined interactions and video views on social media in the last year, seven are Cavs, three are Browns and three play for the Tribe. “I think it’s the star power and the players are just more active (on social media),” Tilton said of the NBA’s dominance of the space. One of the most prominent examples is found in Northeast Ohio. The Cavs have seven players with at least 2.6 million combined followers on Facebook, Instagram and Twitter. (That number remains the

spite having the 14th-largest combined following among Cleveland’s big three teams, produced the ninth-largest engagement total — 2,463,129, or 5,207 per post. Peppers, meanwhile, had 670,148 combined followers as of Aug. 16, including the largest Twitter backing on the Browns. The versatile defensive back also ranked second to Haden, and 11th on the big three teams, with 1,685,831 social-media interactions in the last year. Lee Norris, the director of brand planning at Cleveland-based Adcom, said as a celebrity’s following grows dramatically, it “becomes much more of a business venture.” Still, brand experts with whom Crain’s spoke said it’s important that even business machines such as LeBron be as authentic as possible. “Their personality is the starting point,” said Brady Cohen, the chief digital officer at Dix & Eaton, a Cleveland integrated communications and public relations firm. “Without showing their personality and using it wisely to tap into their fans’ emotions, the athlete’s brand is less valuable.” In the case of James, that personality can be used to sell his latest line of sneakers. More often, though, it’s a window into his hectic world — from trips in helicopters to dinners with Drake. “The more you can include fans in what you can do day in and day out, the better,” Hookit’s Tilton said.

A U G U S T 2 8 - S E P T E M B E R 3 , 2 017

JOE HADEN Twitter: 416,000 followers Instagram: 592,000 followers Facebook: 21,800 followers Total: 1.03 million (through Aug. 24)

same with Irving being replaced in the backcourt by All-Star Isaiah Thomas, who has almost 3.6 million combined followers on the three platforms.) And the Cavs’ team accounts on the three platforms have a larger following than those of such signature franchises as the Dallas Cowboys and New York Yankees. For a sports franchise, that means increased reach, which can impact the bottom line. For an athlete, the follower totals make for interesting comparisons, too. But Tilton said potential sponsors are focused on something else. “Don’t mistake action for traction,” said the Hookit founder, whose company posts monthly engagement rankings for athletes in a wide array of sports. “You can have 100 million followers and won’t drive the action others will. Engagement is the new currency of social. That’s why we focus entirely on that.”

It all adds up Make no mistake, though: Huge follower counts are valuable, too. An October 2016 report by The Economist, using data provided by Captiv8, said personalities with seven-figure followings could command between $20,000 (Twitter) and $125,000 (YouTube) for a single social-media post. The range increased to $30,000 to $187,500 for followings of 3 million-plus, and $60,000 to $300,000 for those with at least 7 million followers on a platform. The Cavs have seven players with at least 1 million followers on Facebook, Instagram or Twitter, and six with seven-figure counts on at least two of the three platforms. The Browns and Indians, by contrast, each only have one player — Joe Haden and Edwin Encarnacion — with a combined social-media following of 1 million. But both clubs also have some young players whose stars are on the rise — most notably Tribe shortstop Francisco Lindor and Browns rookie safety Jabrill Peppers. Lindor’s combined 471,222 followers as of Aug. 16 represented a 350,464 year-over-year increase, according to Hookit. The Gold Glove shortstop, de-

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CRAINâ€™S CLEVELAND BUSINESS

SPORTS BUSINESS

Thomas tackles weighty issues on Twitter By KEVIN KLEPS kkleps@crain.com @KevinKleps

Joe Thomas had quite the offseason on Twitter. The Cleveland Brownsâ€™ left tackle rooted for a Super Bowl win by the New England Patriots, just because he wanted to see NFL commissioner Roger Goodell hand the trophy to Tom Brady in what was sure to be an awkward display. He weighed in on the Colin Kaepernick debate. He criticized the NFLâ€™s drug-testing protocol. Heck, he even had fun at the expense of United Airlines. But it was the 10-time Pro Bowl selectionâ€™s opinion on why Kaepernick, a former San Francisco 49ers quarterback who has been very outspoken about racism in the United States, is a free agent that made Thomas realize there are certain subjects that he shouldnâ€™t tweet about. Thomasâ€™ initial tweet on the matter, a March 25 post that said teams donâ€™t view Kaepernick as a starting quarterback and they â€œaccept ZERO distractions from their backup QBs,â€? plus his subsequent tweets (and Twitter polls) on the subject, became debate fodder on ESPN and FS1, and were featured on every major sports website. â€œThat was always amazing to me,â€? Thomas said of the responses he received. â€œSometimes on Twitter, I try to put on the hat of an NFL insider, maybe because Iâ€™ve been on so many different organizations within Cleveland â€” so many front offices â€” and Iâ€™ve been close to a lot of general managers and head coaches.

â€œI thought I was pretty down the middle on the Kaepernick thing. ... I realized quickly that that subject is so polarizing that people on either side, they canâ€™t read through any quotes or context to dig down into the minutiae and the details of what somebody is trying to talk about â€” even when somebody is trying to hit it right down the middle.â€?

Ken Blaze for Crainâ€™s

â€œI kinda have a pretty good idea of how they think,â€? Thomas continued. â€œI thought I was pretty down the middle on the Kaepernick thing, giving

sort of an insight into what a front office would think about the decision of signing him or not. I realized quickly that that subject is so polarizing that

people on either side, they canâ€™t read through any quotes or context to dig down into the minutiae and the details of what somebody is trying to talk

about â€” even when somebody is trying to hit it right down the middle.â€? Now, almost five months later, the player the Browns selected third overall in the 2007 draft says it â€œwas easy to step away from that one because I never meant it to be controversial at all.â€? Thomas often hits it out of the park on Twitter â€” but he most often does so with his humor, not by weighing in on far more serious discussions. Heâ€™s made such random requests as imploring Aquafina to produce a water

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SPORTS BUSINESS bottle that remains upright, he’s been amazed that a Kevin Love cutout had a head even larger than his, he’s posted a “Club Med” training camp picture of him sharing a pool of ice with his teammates, and has asked Danny Shelton if he played The Rock’s part in “Moana.” “I think it’s a way to have some fun with some stuff, interact with the fans a little bit,” Thomas said of Twitter. “Mostly instead of annoying my friends and family with text messages that I think are funny, I get to annoy the entire world — or at least all of my followers.” Thomas’ follower count is closing in on 71,000 — or 929,000 shy of what he predicted it would be within a year of him joining the platform in 2010. Thomas’ Twitter following ranks seventh on the Browns, and 21st among Cleveland’s three major professional sports teams. The future Pro Football Hall of Famer figured it would be so easy to reach seven figures on the platform that he made a friendly wager with Browns public relations staffer Dan Murphy that he would get there in 12 months. (Murphy said Thomas still hasn’t paid up, to which the lineman, prior to a recent training camp practice, playfully yelled, “Hey, snitches get stitches, Dan.”) Seven years later? “I guess getting to a million is not as easy as you thought,” a smiling Thomas said. But the lineman has been much more active on the medium in the last year — and plenty of people have noticed. According to Hookit, a Solana Beach, Calif., digital marketing firm, 619 of Thomas’ 800 tweets as of Thursday, Aug. 24 occurred during the previous 12 months. The tweets in the last year generated 545,119 interactions — 881 per post. Thomas’ engagement total, despite not having Facebook and Instagram accounts, is the fourth-largest on the Browns and ranks 19th among Browns, Cavs and Indians players. Thomas believes Twitter is the perfect platform for his blend of humor and insider opinions on the most powerful league in sports. It’s also not a coincidence that he’s become more outspoken as his career has entered its second decade. “I’ve always tried to joke with people and have a good time,” the 32-year-old said. “As you get older, you get more comfortable saying those things through the media or in the public eye — just letting your personality show and having fun with it.” He’s also not afraid to go at Goodell, whom Thomas has criticized for the league’s handling of the Ray Rice and Deflategate cases, plus anything else with which the 6-foot-7 tackle disagrees. “It’s just like in my business,” Thomas said. “If I have a penalty or I give up a sack at the wrong time, people are going to ask me about it and people are going to write articles about it. And I think as commissioner, you open yourself up for reasonable criticism for the job that you do when you potentially make mistakes or when other people can see the things that you’ve done as mistakes.” Thomas then pointed out that he’s also praised Goodell. One example: A May 27 tweet that commended the commissioner for the league relaxing its penalties on celebrations. The best draft pick of the second incarnation of the Browns said he’s never heard from the NFL about any of his criticisms. In fact, during a stop at Browns training camp on Aug. 17, Goodell was even a guest on the Joe

“Mostly instead of annoying my friends and family with text messages that I think are funny, I get to annoy the entire world — or at least all of my followers.” — Browns left tackle Joe Thomas, on Twitter

Thomas chats with NFL commissioner Roger Goodell. (Via Twitter)

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Thomas Hour — a series of amusing video interviews that appear on the Browns’ media properties. If you think all of this appears to be setting the stage for Thomas to be a member of the media when his career is over, you could be right. Thomas said he’s thought about getting into broadcasting, but it’s much too soon to know if it’s something he’ll pursue when he concludes his stellar career. Until then, fans should probably

expect him to continue to produce (he’s yet to miss a snap) and make them laugh — especially on Twitter. “I think some of it goes back to when you’re a rookie, you’re just kind of swimming in information trying to figure your role and trying to figure out the offense and stuff,” Thomas said of his more outspoken role. “As you get older, you’re able to master the details a lot easier, so you have a lot more free space in your brain to fill with useless Twitter stuff.”

PA G E 14

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LeBron, Cavs dominate Cleveland’s social stats By KEVIN KLEPS

LeBron James’ Facebook, Instagram and Twitter accounts produced almost 96 million combined interactions and video views in the last year. That amount — which was provided to Crain’s by Hookit, a Solana Beach, Calif., digital marketing firm — is so staggering that it’s more than 10 times greater than the 12-month total for the Cleveland Browns. James’ interaction tally is a whopping 66,992,625 ahead of the next-closest athlete on Cleveland’s

big three sports teams — former teammate Kyrie Irving, whose 28,812,655 interactions on the three major social-media platforms easily ranks second. But as the best player in a sport that has produced the largest individual followings of the U.S.-based professional leagues, James’ advantage shouldn’t be a surprise. What stands out most in Hookit’s interaction numbers is the NBA’s continued dominance of social media. (It also helps that the star-studded Cavs have the fifth-largest following among major U.S. pro teams.) Crain’s, using Hookit data, ranked the top 25 athletes on the Browns,

Cavs and Indians by total interactions and video views during a 12-month period that ended on Aug. 16. The Cavs occupy the top seven spots, and 10 of the first 17. The 25-player list features 10 Cavs, eight Browns and seven Indians. The Cavs’ reach is so significant that a player who wasn’t a factor at all as a rookie, guard Kay Felder, had a higher engagement total in the last year than all but three Browns and three Indians players. Of the 13 players who produced at least 1 million interactions in the last year, seven are Cavs, with the Browns and Indians splitting the remaining six spots.

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Peppers

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PRESENTING SPONSORS

Love

Athlete, team

Posts

Interactions

Followers

New followers

1. LeBron James, Cavs

822

95,805,280

92,969,803

13,422,694

2. Kyrie Irving, *Cavs

182

28,812,655

16,432,527

4,246,078

3. J.R. Smith, Cavs

921

14,938,832

5,085,136

1,093,305

4. Iman Shumpert, Cavs

713

6,979,808

3,224,963

372,310

5. Tristan Thompson, Cavs

272

5,772,587

2,664,434

1,169,346

6. Kevin Love, Cavs

232

5,122,414

7,037,255

1,568,074

7. Derrick Rose, Cavs

739

4,946,576

13,316,988

79,586

8. Edwin Encarnacion, Indians

290

2,620,766

1,028,225

228,560

9. Francisco Lindor, Indians

473

2,463,129

471,222

350,464

10. Joe Haden, Browns

474

2,174,301

1,033,211

141,746

11. Jabrill Peppers, Browns

376

1,685,831

670,148

172,879

12. Jason Kipnis, Indians

389

1,262,764

502,136

152,076

13. Jason McCourty, Browns

792

1,163,814

453,321

71,750

14. Channing Frye, Cavs

153

871,832

339,959

255,393

15. Kay Felder, Cavs

659

717,300

157,913

60,359

16. Carlos Santana, Indians

621

701,460

138,926

109,090

17. Kyle Korver, Cavs

193

658,461

1,370,139

466,891

18. Jose Ramirez, Indians

342

571,466

115,480

87,701

19. Joe Thomas, Browns

619

545,119

69,008

44,119

20. DeShone Kizer, Browns

154

497,886

120,577

80,779

21. Corey Coleman, Browns

111

430,332

160,560

45,901

1,161

396,912

131,483

16,126

486

370,001

71,616

33,752

780

340,734

73,333

20,124

3,796

296,876

91,604

45,877

23. Carlos Carrasco, Indians 24. Christian Kirksey, Browns 25. Trevor Bauer, Indians

FINAL CALL!

Team totals for Cleveland’s big three teams VALET SPONSOR

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Kipnis

Social media: Individual totals for Browns, Cavs and Indians

22. Duke Johnson, Browns

2017 NOMINATIONS:

Kizer

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TECHNOLOGY PARTNER

Team

Posts

Interactions

Followers

New followers

Cavs

10,396

195,616,554

16,468,436

4,684,751

Indians

18,918

28,431,640

2,553,135

629,821

Browns

6,945

9,064,398

2,638,263

347,611

Notes: The numbers are the combined interactions and video views for the athletes’ and teams’ Facebook, Instagram and Twitter accounts during a 12-month period that began on Aug. 17, 2016, and ended on Aug. 16, 2017. ... *-We kept Irving, who was traded to the Boston Celtics on Aug. 22, on the list because he was a member of the Cavs during the one-year period that was tracked. ... One of the players the Cavs received in the blockbuster deal — All-Star guard Isaiah Thomas — also has a considerable social-media following, with almost 3.6 million combined on Facebook, Instagram and Twitter. The total ranks fourth on the Cavs, and is fourth among all athletes on Cleveland’s big three teams. ... J.R. Smith’s totals include a Facebook page with 1,220,296 followers that was deleted on June 28 — a week after a “Goood Bye CAVS!!” message that Smith said he didn’t post. ... Jason McCourty’s stats are from the “McCourty Twins” accounts he shares with his brother, Devin, a two-time Pro Bowl safety for the New England Patriots. ... Suspended Browns wide receiver Josh Gordon ranked 28th with 233,184 interactions. As of Aug. 16, Gordon had a combined 382,866 followers on Twitter and Instagram, a total that increased by 47,767 in the last year and is topped by just three members on the team — Joe Haden, Jabrill Peppers and Jason McCourty. Source: Hookit

CRAINâ€™S CLEVELAND BUSINESS

A U G U S T 2 8 - S E P T E M B E R 3 , 2 017

PA G E 15

SPORTS BUSINESS

Snapchat â€˜accidentâ€™ spawned popular podcast Reactions to behind-the-scenes Snaps led Richard Jefferson and friends to Road Trippinâ€™

Los Angeles Angels star Mike Trout and Cavs All-Star Kevin Love are among the many notable guests.

The Road Trippinâ€™ crew promotes its podcast episodes on Instagram and Twitter. This amusing Anchorman imitation is from an April show.

By KEVIN KLEPS kkleps@crain.com @KevinKleps

Richard Jefferson avoided social media until he was almost 36 years old. Jeffersonâ€™s knack for seeing humor during the long slog that is an NBA season led to him creating a Snapchat account during the 2015-16 season â€” his first with the Cleveland Cavaliers. â€œSnap was truly an accident,â€? said the small forward, who is entering his 17th year in the league. â€œI wanted to show a different side of our team, to crack jokes.â€? That he has. Heâ€™s also retired, then unretired, on the platform, plus given Cavs fans a look at the teamâ€™s locker-room celebration after Game 7 of the 2016 NBA Finals, and a sneak peek, which he deleted within a few hours, at the Cavsâ€™ championship rings. The escapades resulted in Jefferson being named USA Todayâ€™s 2016 Snapchatter of the Year. The hilarity also set the stage for the now-37year-oldâ€™s next business venture â€” the popular Road Trippinâ€™ podcast, which launched in January. The reaction to the humorous Snaps â€” one of which proved that, yes, LeBron James does drive a Kia â€” was almost immediate. Jefferson said he noticed that the short videos he posted to the platform soon were getting â€œ5,000, then 10,000, then 25,000â€? views â€” until the total eventually reached six figures. â€œAnd Iâ€™m just like what?â€? he said. â€œThen it becomes a social experiment. Letâ€™s see what the fans really like. What gives fans the most interesting perspective? It was purely out of curiosity, not to pump my own brand. This is purely what I see from my perspective.â€? The attention, and the fun, led to Road Trippin,â€™ which Jefferson created with Channing Frye, his Cavs teammate and longtime friend, and Fox Sports Ohio reporter Allie Clifton. â€œSnapchat is really what spawned the podcast,â€? Jefferson said. â€œI saw it

with my own eyes. Iâ€™m not a social media person. This isnâ€™t something that is appealing to me.â€? And as was the case with Snapchat â€” the draw of which, Jefferson said, is â€œaccess I was trying to give them that had not been seenâ€? â€” the podcast generated plenty of early headlines. Kyrie Irving infamously revealed on Episode 7 that he believes the earth is flat. Four shows earlier, James and Irving â€” now former teammates â€” appeared together for a frank discussion about James passing the â€œblueprintâ€? to Irving, and the superstarâ€™s two sons idolizing the All-Star guard. (How quickly things change in the NBA.) Getting their teammates â€” a group thatâ€™s also included Kevin Love, J.R. Smith, Tristan Thompson, Kyle Korver, James Jones and Deron Williams â€” to open up for extended talks over drinks helped the podcast vault to 14th on iTunesChart.netâ€™s list of the top 100 podcasts in the U.S. And that was in its second week. The podcast has surpassed 3 million downloads in its first seven months. Itâ€™s also been featured by the likes of the New York Times, ESPN and CBS Sports, and in March it became part of Uninterrupted â€” a multimedia platform in which James has a stake. Jefferson said Uninterrupted helps with the podcastâ€™s logistics. The platformâ€™s social presence â€” with more than 700,000 combined followers on Twitter, Instagram and Facebook â€” doesnâ€™t hurt from a promotional standpoint, either. In late July, for instance, Olympic skier Lindsey Vonn retweeted three mentions (two of which were by Uninterrupted) of her Road Trippinâ€™ appearance in a span of 24 hours. Vonn, who frequently appears on the Uninterrupted network, has more than 925,000 followers on Twitter. â€œYou 100% get a lift,â€? Jefferson said of such shoutouts. â€œIf you follow Lindsey Vonn and she tells you to check it out, or if a Road Trippinâ€™ fan knows Lindsey is on and their best friend is a fan of Vonn, it draws people back.â€? And though Snapchat remains Jeffersonâ€™s lone social-media account, aside from a Facebook page with

fewer than 3,000 followers that he rarely utilizes, he promotes the latest Road Trippinâ€™ episodes on the podcastâ€™s Instagram and Twitter pages. The podcastâ€™s unique combination of humor and behind-the-scenes access helped it gain quite a bit of notoriety, as has a star-studded guest list that, in addition to the Cavsâ€™ players and Vonn, has included Tim Duncan, Mike

Trout, Robert Horry and Bill Walton. Jefferson, who owns the podcast, finds it amusing that his latest adventure stemmed from his random experimentations with a social-media platform known for its disappearing videos. â€œI started from scratch as an old man,â€? he said. On Snapchat, Jefferson has shown

fans a different side of the NBA, which then allowed him to do the same in the extended format of a podcast. â€œSocial media is a community more than anything,â€? Jefferson said. â€œIf you are a fan of a podcast and you see other fans talking about it, you can â€˜atâ€™ other people. What youâ€™re doing is building a community of people who enjoy the same content.â€?

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Playoffs give push to team accounts By KEVIN KLEPS kkleps@crain.com @KevinKleps

A 26-second Facebook video of LeBron James and J.R. Smith dancing prior to Game 4 of the NBA Finals has been watched almost 10 million times. Sure, it helps that the Cavs, at nearly 9 million, have the NBA’s fifth-largest following on the platform. A star-studded roster with such entertaining subjects doesn’t hurt, either. The June 9 video featuring James and Smith was the Cavs’ most popular Facebook post during the 2016-17 season — a campaign that was as prolific on the digital side as it was on the court. The 2016-17 Cavs ranked in the top five in the league in followers, follower growth, engagements and impressions. The team said its social-media numbers in the latter two categories grew 123% and 43%, respectively, year-over-year. Helped immensely by the presence of the world’s best player and the most followed athlete in North America (guess who?), the Cavs’ 16.4 million followers on Facebook, Instagram and Twitter rank fifth among all teams in North America’s four major professional sports leagues. And even coming off a season in which the franchise won its first championship, the Cavs had their follower counts on the three major social-media platforms increase between 38.1% and 70.2% year-over-year. A prolonged playoff run also provided an Andrew Miller-sized jolt to the Indians’ social stats. The Tribe’s Twitter and Instagram interactions are among the top two in Major League Baseball, and the club ranks in the top 10 in the category on Facebook. During a 38-day span that began with the Indians clinching the American League Central Division crown on Sept. 26 and concluding with Game 7 of the World Series on Nov. 2, the Tribe’s Facebook followers jumped 105,949, and the club’s Twitter and Instagram followings increased by 82,908 and 49,554, respectively. According to Hookit, the Indians’ combined 2,553,135 followers on the three social-media platforms as of Aug. 16 represented a 32.7% increase in the last year, and a total jump of 629,821. The Tribe, in fact, is closing in on the team that, until James’ return and the Indians’ World Series appearance, has almost always been the talk of the town. The Browns, as of Aug. 16, had 2,638,263 combined followers on Facebook, Instagram and Twitter. The tally marked a 15.2% increase in the last year.

The Facebook disparity

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Teams obviously use social media much differently than athletes. They also rely more on Facebook. Of the NBA’s top 10 teams in combined followers on Facebook, Instagram and Twitter, only the Golden State Warriors, at 49%, get fewer than half of their followers from Facebook. The Cavs, with nine million followers on Facebook, get more than 54% of their 16.4 million followers on the three platforms via Mark Zuckerberg’s media giant. The Indians, meanwhile, get about 53% of their followers from Facebook, and the Browns are in the 48% range. That’s a stark contrast from the athletes — especially when it comes

By the numbers: Cleveland teams and social media 38.1%: The Cavs’ year-over-year growth in Facebook followers between the conclusions of the 2015-16 and ’16-17 seasons. 70.2%: The Cavs’ surge in Twitter followers in that span. 58%: The increase in the Cavs’ Instagram followers. 476: The increase in average Twitter interactions per post, from 2,488 to 2,964, for the Cavs between the 2016-17 regular season and the playoffs. 18,377: Average Cavs Facebook engagements during the 2017 postseason, which was a slight increase from a norm of 18,294 per post in the regular season. 71,122: The Cavs’ average Instagram engagements during the playoffs was the largest of the three platforms. 56,685: Average Cavs Instagram engagements in the regular season. 105,949: Increase in the Indians’ Facebook followers during a 38-day span from Sept. 26, 2016 (when the Tribe clinched the AL Central title) to Nov. 2 (Game 7 of the World Series). 18,643: Increase in the Tribe’s Facebook followers in the previous 38-day period, Aug. 19 to Sept. 25. 82,908 and 49,554: Respective increases in the Tribe’s Twitter and Instagram followers, Sept. 26 to Nov. 2. 27,768 and 8,829: The Indians’ Twitter and Instagram surges in the previous 38-day stretch. Sources: CrowdTangle, Twitter Analytics, Spredfast Intelligence, teams

to NFL and MLB stars. Of the Browns players with the 20 largest followings on the three platforms, only 11 have official Facebook pages. Jason McCourty — who shares his account with his brother, Devin, a Pro Bowl safety for the New England Patriots — is the only Browns player with a Facebook following above 22,000. Tribe slugger Edwin Encarnacion has a Facebook page with 267,000 fans. Six of the Indians’ top 10 in terms of total followers don’t have official Facebook pages, however, and one of the four who does — pitcher Trevor Bauer — hasn’t posted on his since February 2013. The Cavs’ players, with the exception of Derrick Rose (who has the league’s fourth-largest Facebook following at 10.5 million), don’t get the majority of their followers on the platform, either. But they do use it more than their MLB and NFL counterparts. The Cavs have four players with at least 1 million Facebook fans (a fifth, Kyrie Irving, was traded on Aug. 22), and seven with at least 430,000-plus fans on the platform — including Isaiah Thomas, who was acquired from Boston in the Irving blockbuster. The primary reason teams use it more: Facebook, with 2 billion monthly users as of June 2017, has a much larger reach. Instagram has 700 million monthly users, and Twitter is way back — at 328 million.

CRAIN’S CLEVELAND BUSINESS

A U G U S T 2 8 - S E P T E M B E R 3 , 2 017

PA G E 17

THE LIST

Highest-Paid Athletes Ranked by current base salary THIS YEAR NAME, AGE (1)

TEAM

BASE SALARY

TOTAL CONTRACT VALUE

CONTRACT LENGTH CONTRACT (YEARS) EXPIRES (2)

POSITION

SEASONS PLAYED (3)

COLLEGE

LeBron James, 32

Cleveland Cavaliers

$33,285,709

$99,857,127

2019

forward

Kevin Love, 28

Cleveland Cavaliers

$22,642,350

$113,211,750

2020

forward

UCLA

Tristan Thompson, 26

Cleveland Cavaliers

$16,400,000

$82,000,000

2020

center

University of Texas

Brock Osweiller, 26

Cleveland Browns

$16,000,000

$72,000,000

2019

quarterback

Arizona State University

J.R. Smith, 31

Cleveland Cavaliers

$13,760,000

$57,000,000

2020

guard

Edwin Encarnacion, 34

Cleveland Indians

$13,000,000

$60,000,000

2019

designated hitter

Jay Bruce, 30

Cleveland Indians

$13,000,000

$51,000,000

2017

right fielder

Carlos Santana, 31

Cleveland Indians

$12,000,000

$21,001,900

2017

first baseman

Joe Haden, 27

Cleveland Browns

$11,100,000

$67,500,000

2019

cornerback

University of Florida

Iman Shumpert, 27

Cleveland Cavaliers

$10,337,079

$40,000,000

2019

guard

Georgia Tech

Jason Kipnis, 30

Cleveland Indians

$9,000,000

$52,500,000

2019

second baseman

Arizona State University

Joe Thomas, 32

Cleveland Browns

$8,800,000

$80,500,000

2018

offensive tackle

University of Wisconsin

Corey Kluber, 31

Cleveland Indians

$7,500,000

$38,500,000

2019

pitcher

Stetson University

Channing Frye, 33

Cleveland Cavaliers

$7,420,912

$32,000,000

2018

forward

University of Arizona

Cody Allen, 28

Cleveland Indians

$7,350,000

2017

pitcher

High Point University

Kyle Korver, 36

Cleveland Cavaliers

$7,000,000

$22,060,000

2020

guard

Creighton University

Jae Crowder, 27

Cleveland Cavaliers

$6,796,117

$35,000,000

2020

forward

Marquette University

Carlos Carrasco, 29

Cleveland Indians

$6,500,000

$22,000,000

2018

pitcher

Isaiah Thomas, 28

Cleveland Cavaliers

$6,261,395

$27,000,002

2018

guard

University of Washington

Kevin Zeitler, 27

Cleveland Browns

$6,000,000

$60,000,000

2021

guard

University of Wisconsin

Jamie Collins, 27

Cleveland Browns

$4,750,000

$50,000,000

2020

linebacker

University of Southern Mississippi

Bryan Shaw, 29

Cleveland Indians

$4,600,000

2017

pitcher

California State University, Long Beach

Yan Gomes, 30

Cleveland Indians

$4,500,000

$23,000,000

2019

catcher

University of Tennessee

Kenny Britt, 28

Cleveland Browns

$4,000,000

$32,500,000

2020

wide receiver

Rutgers University

Christian Kirksey, 24

Cleveland Browns

$3,797,000

$38,000,000

2021

linebacker

University of Iowa

Trevor Bauer, 26

Cleveland Indians

$3,550,000

2017

pitcher

UCLA

Joel Bitonio, 25

Cleveland Browns

$3,164,777

$51,164,777

2022

guard

University of Nevada

John Greco, 32

Cleveland Browns

$3,075,000

$6,420,000

2017

guard

University of Toledo

Joe M. Smith, 33

Cleveland Indians

$3,000,000

2017

pitcher

Wright State University

Isaiah Crowell, 24

Cleveland Browns

$2,746,000

2017

running back

Alabama State University

Cedi Osman, 22

Cleveland Cavaliers

$2,634,921

$8,317,064

2020

forward

Jamar Taylor, 26

Cleveland Browns

$2,500,000

$16,500,000

2019

cornerback

Boise State University

Richard Jefferson, 37

Cleveland Cavaliers

$2,500,000

$7,612,500

2019

forward

University of Arizona

Jose Calder—n, 35

Cleveland Cavaliers

$2,328,652

2018

guard

Jeff Green, 30

Cleveland Cavaliers

$2,328,652

2018

forward

Georgetown University

Derrick Rose, 28

Cleveland Cavaliers

$2,106,470

2018

guard

University of Memphis

J.C. Tretter, 26

Cleveland Browns

$2,000,000

$16,750,000

2019

center

Cornell University

Brandon Guyer, 31

Cleveland Indians

$2,000,000

$5,000,000

2018

left fielder

University of Virginia

Zach McAllister, 29

Cleveland Indians

$1,825,000

2017

pitcher

Marcus Burley, 27

Cleveland Browns

$1,797,000

2017

cornerback

University of Delaware

Marcus Martin, 23

Cleveland Browns

$1,777,000

$3,069,248

2017

guard

University of Southern California

Britton Colquitt, 32

Cleveland Browns

$1,650,000

$11,200,000

2020

punter

University of Tennessee

Ante Zizic, 20

Cleveland Cavaliers

$1,645,200

$3,597,960

2019

center

Calvin Pryor, 25

Cleveland Browns

$1,587,716

$8,563,253

2017

safety

University of Louisville

Jason McCourty, 30

Cleveland Browns

$1,500,000

$6,000,000

2018

cornerback

Rutgers University

Austin Jackson, 30

Cleveland Indians

$1,500,000

2017

center fielder

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

23 24 25 26 27 28 29 30 31 32 33 34 34 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

Danny Shelton, 24

Cleveland Browns

$1,498,970

$11,703,667

2018

defensive tackle

University of Washington

Walter Tavares, 25

Cleveland Cavaliers

$1,471,382 (4)

$3,077,047 (4)

2019

center

Kay Felder, 22

Cleveland Cavaliers

$1,312,611 (5)

$2,498,982 (5)

2019

guard

Oakland University

Cameron Erving, 24

Cleveland Browns

$1,292,188

$9,429,065

2018

guard/offensive tackle

Florida State University

RESEARCHED BY CHUCK SODER

Want the Excel version of this list Ñ and every other Crain's list? Become a Data Member: CrainsCleveland.com/data Numerical data from spotrac.com. Additional information from espn.com and team websites. Crain's does not independently verify the information and there is no guarantee these listings are complete or accurate. Send questions, corrections and suggestions to Chuck Soder: csoder@crain.com.

(1) This list includes 17 Cavaliers; only 15 will make the team's final roster. (2) NFL players whose contracts end after the 2017 season technically remain under contract until March 14, 2018. (3) Excludes the 2017 Browns season, which starts on Sept. 10, and the 2017-2018 Cavaliers season, which starts on Oct. 17. (4) Non-guaranteed (5) Partially guaranteed; Felder is only guaranteed to receive $456,529 during the 2017-2018 season.

PA G E 18

A U G U S T 2 8 - S E P T E M B E R 3 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

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For example, the company’s second quarter saw record sales for its ToughMet high-strength alloys, which the sales team has been working to get into new markets like aerospace and oil and gas in recent years. New product sales made up 15% of Materion’s total value-added sales, according to a news release. Value-added sales don’t include socalled pass-through sales of precious metals to customers, Vijayvargiya said. Materion’s value-added sales grew 14% to $176.1 million in the second quarter of 2017. Net sales for the quarter were $295.8 million. Although not every company had a strong quarter, Materion was far from alone in seeing sales jump in recent months. Other public Northeast Ohio manufacturers that reported strong sales in their most recent quarterly reports include Ferro Corp. of Mayfield Heights, which saw net sales increase by 17% compared to the same time last year (boasting revenue from new products and acquisitions); Nordson Corp. of Westlake, which saw sales increase by 20% compared to the same quarter in 2016 (attributing that to organic growth and acquisitions); and TransDigm Group Inc. of Cleveland, which saw net sales increase by almost 14% compared to this time last year (net income also increased due to those sales, improved operating margins and lower refinancing expenses). At Canton-based TimkenSteel Corp., net sales increased to $339.3 million in the second quarter of 2017 from $223.1 million in the second quarter of 2016. Net income grew to $1.3 million, compared with a loss of $6.6 million in the like period a year ago. The steelmaker began expanding its product horizons in the second part of last year, said chief financial officer Chris Holding. The company is now putting a stronger focus on products with a lower alloy content. That doesn’t mean it’s not still producing its special bar quality steel, but it’s opening its sales up to other kinds of steel to allow it to better use capacity at its plants. TimkenSteel had gotten tired of seeing low melt utilization rates, Holding said. “This is just not the path to victory,” he said. Melt utilization for TimkenSteel was 76% in the second quarter, according to a news release. It was just 45% in the like quarter last year. While TimkenSteel was looking for new products to offer, Cleveland-Cliffs Inc. is seeing success after narrowing its area of focus. Lourenco Goncalves, chairman, president and CEO, made note of businesses and geographies, like Canada, the iron ore and mining company has left in recent years under his leadership. Cleveland-Cliffs saw its consolidated revenues reach $569 million in the second quarter of 2017, a 15% increase from 2016’s second-quarter results. Yatish Desai, a Cleveland-based managing director for audit, tax and advisory services firm KPMG LLP, said he sees companies increasingly working toward long-term solutions, by investing in employees and other resources, instead of short-term successes. He’s also seen a focus on increased automation and other technology. Companies also have worked to create more flexible supply chains, and the merger-and-acquisition market has been strong. There are plenty of external factors

Vijayvargiya

Teshome

helping to strengthen companies’ results, too. At TimkenSteel, that includes an improved rig count and a revival in the energy market, Holding said. ViRolf jayvargiya of Materion pointed to a pickup in the industrial and consumer electronics spaces and a successfully completed acquisition. Goncalves’ business at Cleveland-Cliffs is boosted by stable steel prices and improving iron ore prices. Reports that track manufacturing activity have been pretty positive in recent months. The most recent Institute for Supply Management report on manufacturing showed economic activity in the industry expanding in July, though at a slightly slower pace than it did in June. Similarly, IHS Markit found U.S. manufacturing production was growing in August, though at a slower pace than it had in July. Mekael Teshome, an economist at PNC Financial Services Group, said manufacturing as a whole is doing pretty well right now. There have been improvements in sectors like housing and oil and gas. U.S. employment is steady, and there’s strong demand creating a relatively solid economy. Teshome doesn’t expect this to translate to rapid growth or to large increases in hiring for manufacturers, but he is expecting consistent, moderate growth that follows GDP. He will be watching for tax reform or infrastructure spending bills that could improve that outlook, and for trade policies that could have difficult-to-forecast effects. But whenever big companies are doing well, one question is whether that success is making its way down to their smaller peers. Performance does vary by industries served. Ohio is a big supplier to the aerospace industry. Jeff Rolf, president and CEO of the Ohio Aerospace Institute, said commercial airframers have bookings out for years right now, which takes a lot of risk out of the business and frees them up to invest in new processes, machines and tooling. And that’s good for the smaller companies that supply them and that make those tools and machines. “It really runs its way through the economy,” Rolf said. John Colm, president and executive director of manufacturing economic development group Wire-Net in Cleveland, said he generally is seeing optimism among its approximately 320 members. The majority of its members — nearly 40% — have annual revenue between $2 million and $10 million. The rest are split rather evenly, with about 31% smaller than that and about 30% larger. Local companies in the aerospace, military, coating and container spaces are doing well, while companies supplying to the solar industry may be seeing challenges in that space. And automotive varies by the types of vehicle the parts are for. “I think there’s some really good bright spots, but it’s a little uneven,” Colm said.

CRAIN’S CLEVELAND BUSINESS

A U G U S T 2 8 - S E P T E M B E R 3 , 2 017

THE LIST

Ranked by Full-Time Equivalent Employees in County

Cuyahoga County Employers THIS THIS YEAR COMPANY YEAR COMPANY Cleveland Clinic Clinic Cleveland

STAFF IN TOP LOCAL COUNTY (1) TYPE OF BUSINESS EXECUTIVE

THIS YEAR COMPANY (1) STAFF IN COUNTY TYPE OF BUSINESS

Health care provider

Toby Cosgrove 32,772 president, CEO

University Hospitals University Hospitals 11100 Euclid Cleveland 11100Ave., Euclid Ave., Cleveland (216) 844-1000/www.uhhospitals.org (216) 844-1000/www.uhhospitals.org

16,606

Health care provider

Thomas F. Zenty 16,606 III CEO

U.S. Office Personnel Management U.S.of Office of Personnel Management

12,045

Federal government

Kathleen McGettigan acting director

Progressive Corp. Corp. Progressive 6300 Wilson Road, Mayfield Village Village 6300Mills Wilson Mills Road, Mayfield (440) 461-5000/www.progressive.com (440) 461-5000/www.progressive.com

9,002

Insurance company

Susan Patricia Griffith president, CEO

Cuyahoga CountyCounty Cuyahoga

7,397

County government

Armond Budish 7,397 county executive

7,000 (2) Area Temps Inc. Area Temps Inc. 4511 Rockside Road, Suite 190, Independence 4511 Rockside Road, Suite 190, Independence (866) 995-5627/www.areatemps.com (866) 995-5627/www.areatemps.com

Staffing and employment services firm

Kent Castelluccio7,000 (2) president

City of City Cleveland of Cleveland

6,561

Municipal government

Frank G. Jackson 6,561 mayor

6,469

Health care provider

Akram Boutros 6,469 president, CEO

Cleveland Metropolitan School School DistrictDistrict 6,392 Cleveland Metropolitan 1111 Superior Ave., Cleveland 1111 Superior Ave., Cleveland (216) 838-0000/clevelandmetroschools.org (216) 838-0000/clevelandmetroschools.org

Public school district

Eric S. Gordon CEO

6,392

Group Management Services Inc. Group Management Services Inc.

5,357 (2)

Staffing and employment services firm

Michael Kahoe president

5,357 (2)

KeyCorp KeyCorp

4,841

Banking and financial services company

Beth E. Mooney 4,841 chairman, CEO

Case Western ReserveReserve University Case Western University

4,501

Private university

Barbara R. Snyder4,501 president

Sherwin-Williams Co. Sherwin-Williams Co.

4,185

Manufacturer of paint, coatings and related products

John G. Morikis 4,185 president, CEO, chairman

Swagelok Co. Swagelok Co.

3,914

Manufacturer of industrial fluid system components

Arthur F. Anton 3,914 president, CEO

U.S. Postal U.S. Service Postal Service

3,519

Federal agency

Giant Eagle GiantInc. Eagle Inc.

3,252

Multi-format food, fuel and pharmacy retailer

Bill Artman, senior 3,252 vice president, retail operations

Nestle Nestle

2,438

Food and beverage company

Paul Grimwood (3) 2,438 chairman, CEO

2,300 GreaterGreater Cleveland RTA Cleveland Regional Transit Authority

Public transit agency

Joseph Calabrese2,300 CEO, GM, secretary, treasurer

State of Ohioof Ohio State

2,103

State government

John R. Kasich governor

ArcelorMittal ArcelorMittal

1,967

Steel manufacturer

JACK Entertainment JACK Entertainment

1,945

E St., NW, Washington, D.C. 1900 E St., NW, Washington, D.C. 3 3 1900 (202) 606-1800/www.opm.gov (202) 606-1800/www.opm.gov

E. 2079 9th St., Cleveland E. 9th St., Cleveland 5 5 2079 (216) 443-7220/www.cuyahogacounty.us

Summa Health Health care provider 1077 Gorge Blvd., Akron (330) 375-3000/www.summahealth.org

5,788

Health care provider Toby Cosgrove president, CEO

Cliff Deveny interim president and CEO

Cleveland Clinic Health care provider 9500 Euclid Ave., Cleveland (216) 444-2200/www.clevelandclinic.org

4,485

Health care provider Thomas F. Zenty III CEO

Toby Cosgrove president, CEO

12,045

Akron Children's Hospital Federal government One Perkins Square, Akron (330) 543-1000/www.akronchildrens.org

4,114

Pediatric health care Kathleen McGettigan provider acting director

William H. Considine CEO

9,002

Akron PublicInsurance Schools company 70 N. Broadway, Akron (330) 761-1661/www.akronschools.com

3,602

Public school district Susan Patricia Griffith president, CEO

David W. James superintendent

Summit County County government 175 S. Main St., 8th floor, Akron (330) 926-2525/www.co.summit.oh.us

3,192

County government Armond Budish county executive

Ilene Shapiro county executive

Goodyear Tire & Rubber Staffing andCo. employment services 3,000 firm 200 Innovation Way, Akron (330) 796-2121/www.goodyear.com

TireKent manufacturer Castelluccio president

Richard J. Kramer chairman, CEO, president

Signet Jewelers Ltd. government Municipal 375 Ghent Road, Akron (330) 668-5000/www.signetjewelers.com

2,733

Specialty retailer Frank jewelry G. Jackson mayor

Virginia C. Drosos CEO

FirstEnergy Corp. Health care provider 76 S. Main St., Akron (800) 736-3402/www.firstenergycorp.com

2,519

Electric utility holding Akram Boutros company president, CEO

Charles E. Jones Jr. president, CEO

University ofPublic Akron school district 302 Buchtel Common, Akron (330) 972-7111/www.uakron.edu

2,056

Public Ericuniversity S. Gordon CEO

Matthew J. Wilson president

(216) 443-7220/www.cuyahogacounty.us

Lakeside Ave., Cleveland 601 Lakeside Ave., Cleveland 7 7 601 (216) 664-2406/www.city.cleveland.oh.us

(216) 664-2406/www.city.cleveland.oh.us

The MetroHealth SystemSystem The MetroHealth

MetroHealth Drive, Cleveland 2500 MetroHealth Drive, Cleveland 8 8 2500 (216) 778-7800/www.metrohealth.org

(216) 778-7800/www.metrohealth.org

Columbia Road, Suite 101, Richfield 3296 Columbia Road, Suite 101, Richfield 10103296 (330) 659-0100/www.groupmgmt.com (330) 659-0100/www.groupmgmt.com Public Cleveland 127Square, Public Square, Cleveland 1111127 (216) 689-6300/www.key.com (216) 689-6300/www.key.com Euclid Cleveland 10900Ave., Euclid Ave., Cleveland 121210900 (216) 368-2000/www.case.edu (216) 368-2000/www.case.edu

W. Prospect Ave., Cleveland 101 W. Prospect Ave., Cleveland 1313101 (216) 566-2000/www.sherwin.com (216) 566-2000/www.sherwin.com Solon Solon 29500Road, Solon Road, Solon 141429500 (440) 248-4600/www.swagelok.com (440) 248-4600/www.swagelok.com Orange Ave., Cleveland 2200 Orange Ave., Cleveland 15152200 (800) 275-8777/www.usps.com (800) 275-8777/www.usps.com Richmond Road, Bedford Heights Heights 5300 Richmond Road, Bedford 16165300 412-967-4551/www.gianteagle.com 412-967-4551/www.gianteagle.com Bainbridge Road, Solon 30003 Bainbridge Road, Solon 171730003 (440) 349-5757/www.nestleusa.com (440) 349-5757/www.nestleusa.com

Group Management Inc. StaffingServices and employment services 1,980 firm (2) 3296 Columbia Road, Suite 101, Richfield (330) 659-0100/www.groupmgmt.com

Staffing andKahoe employment Michael services firm president

Michael Kahoe president

1,769 City of AkronBanking and financial services company 166 S. High St., Akron (330) 375-2330/www.akronohio.gov

Municipal Beth E.government Mooney chairman, CEO

Daniel Horrigan mayor

Fred W. Albrecht Grocery Co. Private university 2700 Gilchrist Road, Akron (330) 733-2263/www.acmestores.com

Grocery and R. pharmacy Barbara Snyder store operator president

Jim Trout president

1,306 Diebold Nixdorf Manufacturer of paint, coatings and related 5995 Mayfair products Road, North Canton (330) 490-4000/www.dieboldnixdorf.com

Self-service technology, Andreas W. Mattes John G. Morikis software and security president, CEO, chairmanpresident, CEO systems provider

1,306 State of OhioManufacturer of industrial fluid system 30 E. Broad St., Columbus components (614) 466-2000/www.ohio.gov

State government Arthur F. Anton president, CEO

John R. Kasich governor

Giant Eagle Inc. Federal agency 5300 Richmond Road, Bedford Heights 412-967-4551/www.gianteagle.com

Multi-format food, fuel and pharmacy retailer

Bill Artman, senior vice president, retail operations

1,253 Huntington National Bank Multi-format food, fuel and pharmacy retailer 200 Public Square, Cleveland (800) 480-2265/www.huntington.com

Banking and financial Sean P. Richardson Bill Artman services regional president seniorcompany vice president, retail operations Cleveland

U.S. Postal Service Food and beverage company 2200 Orange Ave., Cleveland (800) 275-8777/www.usps.com

1,024

Federal Paulagency Grimwood (3) chairman, CEO

Western Reserve PublicHospital transit agency 1900 23rd St., Cuyahoga Falls (330) 971-7000/westernreservehospital.org

805

Health careA. provider Robert A. Kent Jr. Joseph Calabrese president,treasurer CEO CEO, general manager, secretary,

Hard Rock Rocksino Northfield Park State government 10777 Northfield Road, Northfield (330) 908-7625/www.hrrnp.com

800

Gaming, and John dining R. Kasich entertainment governor destination

Mike Madar, interim 1,967 vice president and general manager

Bridgestone Steel Americas Inc. manufacturer 10 E. Firestone Blvd., Akron (330) 379-7000/bridgestoneamericas.com

719

TireMike manufacturer Nizar Trigui Madar technology interim vice president andchief general manager officer

Operator of JACK Cleveland Casino and JACK Thistledown Racino

Mark Tricano 1,945 senior vice president, Northeast Ohio operations

U.S. Office ofOperator Personnel Management of JACK Cleveland Casino713 and JACK 1900 E St., NW, Washington, D.C. Thistledown Racino (202) 606-1800/www.opm.gov

Federal Kathleen Markgovernment Tricano McGettigan senior vice president, Northeast Ohio acting director operations

1,748

Health care provider

1,748 William A. Young Jr. president, CEO

Dominion Energy Ohio Health care provider 1201 E. 55th St., Cleveland (800) 362-7557/www.dominionenergy.com

647

Natural gasA. distributor William Young Jr. president, CEO

1,713

Health insurance company

1,713 Rick A. Chiricosta president, CEO, chairman

BWX Technologies Health Inc. insurance company 24703 Euclid Ave., Euclid (216) 912-3000/www.bwxt.com

640

1,665

Enterprise content management software developer

Enterprise content management software 512 National Interstate Insurance Co. developer 3250 Interstate Drive, Richfield (330) 659-8900/www.natl.com Public university 500 FedEx Custom Critical Inc. 1475 Boettler Road, Uniontown (800) 762-3787/customcritical.fedex.com Automobile manufacturer 468 Pepsi Beverages Co. 1999 Enterprise Parkway, Twinsburg (330) 963-5300/www.pepsico.com

Pressure vessels, steam Jim Bittner, general Rick A. Chiricosta generators andCEO, electropresident, chairmanmanager, BWXT mechanical components Nuclear Operations provider Group Barberton Bill Priemer Specialty property Anthony J. Mercurio president, CEO and casualty insurance president, CEO company Ronald M. Berkman Expedited, temperatureVirginia Addicott president control and brokerage president, CEO transportation solutions Kevin Heck Manufacturer, seller and Dan Hungerman, Steve Wilcox distributor of PepsiCo foodplant service, plant manager, ClevelandVP, engine and plant Alliedmanager, beverages Great plant Lakes region Ohio assembly

Oriana HousePublic Inc. school district P.O. Box 1501, Akron (330) 535-8116/www.orianahouse.org

Community corrections, Carl H. Hilling addiction treatment and superintendent re-entry services provider

W.1240 6th St., Cleveland W. 6th St., Cleveland 18181240 (216) 621-9500/www.riderta.com (216) 621-9500/www.riderta.com E. Broad Columbus 30 E.St., Broad St., Columbus 191930 (614) 466-2000/www.ohio.gov (614) 466-2000/www.ohio.gov

Eggers Cleveland 3060 Ave., Eggers Ave., Cleveland 20203060 (216) 429-6000/www.usa.arcelormittal.com (216) 429-6000/www.usa.arcelormittal.com

Public Cleveland 100Square, Public Square, Cleveland 2121100 Casino: (216) (216) 297-4777, 297-4777/Racino: (216) 662-8600 (216) 662-8600/JACKEntertainment.com www.JACKEntertainment.com Southwest General

Southwest General 18697 Bagley Road, Middleburg Heights Bagley Road, Middleburg Heights (440) 816-8000/www.swgeneral.com 222218697 (440) 816-8000/www.swgeneral.com Medical Mutual of Ohio

Medical2060 Mutual of Ohio E. 9th St., Cleveland E. (216) 9th St., Cleveland 687-7000/www.medmutual.com 23232060 (216) 687-7000/www.medmutual.com Hyland

Hyland 28500 Clemens Road, Westlake Clemens Road, Westlake (440) 788-4988/www.hyland.com 242428500 (440) 788-4988/www.hyland.com Cleveland State University Cleveland State University 2121 Euclid Ave., Cleveland 2121 Euclid Cleveland (216)Ave., 687-2000/www.csuohio.edu (216) 687-2000/www.csuohio.edu

Bill Priemer president, CEO

3,519

2,103

1,665

1,572

Public university

1,572 Ronald M. Berkman president

Ford Motor Co. Ford Motor Co.

1,560

Automobile manufacturer

1,560 Kevin Heck, plant manager, Cleveland engine plant

Parma City School DistrictDistrict Parma City School

1,546

Public school district

2525

One American Road, Dearborn American Road, Dearborn (800) 392-3673/www.ford.com 2626One (800) 392-3673/www.ford.com

STAFF IN TOP LOCAL COUNTY (1) TYPE OFLOCAL BUSINESS EXECUTIVE TOP EXECUTIVE

(216) 444-2200/www.clevelandclinic.org

PA G E 19

Summit County Employers

32,772

Euclid Cleveland 9500Ave., Euclid Ave., Cleveland 1 1 9500 (216) 444-2200/www.clevelandclinic.org

Longwood Ave., Parma 5311 Longwood Ave., Parma 27275311 (440) 842-5300/www.parmacityschools.org (440) 842-5300/www.parmacityschools.org

Carl H. Hilling 1,546 superintendent

24 25 26 27

1,338

1,277

455

Mark Birtha president

Jeff Murphy, VP, GM, Ohio & West Virginia Distribution

James J. Lawrence president, CEO

RESEARCHED BY CHUCK SODER AND CRAIG MACKEY

RESEARCHED BY CHUCK SODER AND CRAIG CRAIG MACKEY MACKEY

The online version of this list includes 63 employers and names of additional executives. To download it, become

The online version of this list includes 38 employers and names of additional executives. To download it, become

CORRECTION: These lists are being republished to fix errors that which employers appeared in companies. the original lists. a Crain's Data Member: CrainsCleveland.com/Data a Crain's altered Data Member: CrainsCleveland.com/Data Information is supplied by the Send questions,

Information is supplied byfour thecompanies companies.to A be Cuyahoga firm, Minute Men Cos., did not failed to corrections and suggestions to ChuckbySoder: A technical error caused left out County-based of the original staffing lists in our Aug. 21 edition. Also, Crain's catch a mistake in data submitted JACK csoder@crain.com. Entertainment, which caused it to appear on the Summit County list submit county-specific employment but ranked 2nd when CrainÕs published its 100 Largest (1) Employee figures are as of June 30, 2017. (2) This is a staffing firm; the vast majority of these employees work instead of the Cuyahoga County list. information, We apologize forthey the errors. Northeast Ohio Employers list on Aug. 7. Send questions, corrections and suggestions to Chuck onnames behalf of of additional other companies. The online of versions of these lists include more employers (63 for Cuyahoga County and 38 forSoder: Summit County) and executives. Information is supplied by the companies. A Cuyahoga County-based staffing csoder@crain.com. firm, Minute Men Cos., did not submit county-specific employment information, but it ranked 2nd when CrainÕs published its 100 Largest Northeast Ohio Employers list on Aug. 7. Send questions, corrections and suggestions to (1) Employee as of June 30, 2017. (2) These are staffing firms; the vast majority of these employees work Chuck Soder: figures csoder@crain.com. on Employee behalf of other companies. Based in(2) California (1) figures as of June(3) 30, 2017. These are staffing firms; the vast majority of these employees work on behalf of other companies. (3) Based in California

PA G E 2 0

A U G U S T 2 8 - S E P T E M B E R 3 , 2 017 |

CRAIN’S CLEVELAND BUSINESS

AKRON

Lobby compliance firm looks beyond borders By DAN SHINGLER

“This is an area that is not getting smaller. The states and the municipalities want more transparency as to who’s doing what, where, why, and for how much. They want to know who is making contributions, how much, who do they work for. I always say this is an area where you can’t ask for forgiveness later. You have to ask for permission first.”

dshingler@crain.com @DanShingler

Akron-based State and Federal Communications says it has everything it needs to continue its national growth and, soon, to expand internationally. The firm provides compliance information and help to clients that lobby governments of all sizes, from local city councils to the U.S. Congress. State and Federal has a list of top-tier clients any law firm would drool over, a growing market that it dominates, an almost endless number of new markets to enter, and an economical operation it can scale up at its downtown headquarters on South Summit Street. One might think such a firm would be based in the lobbying mecca of Washington, but CEO Elizabeth Bartz has been there and done that. Bartz moved the company to Akron in 1993, the same year she bought it as an employee, and said she has never regretted it. “We’re based here in Akron, Ohio, where the living is a heck of a lot cheaper than it is in Washington, D.C.,” she said with an easy response to a familiar question. When Bartz and the firm moved to her hometown, State and Federal had just two employees. Today, it has 40, including 12 attorneys, and still is looking for more help. Its clients are among the biggest corporations in the United States. “We do all the lobbying compliance for GM, Honda, Walmart and Target … And here in Ohio, we work with (Procter & Gamble), and have since 1998,” Bartz said. And those are just the ones that

— State and Federal Communications CEO Elizabeth Bartz, on lobbying compliance

come immediately to her mind. Talk to Bartz for a bit longer and she’ll impress you with other client names, too — such as Amazon and the rideshare company Lyft, which was referred to State and Federal by General Motors. There are more than 100 companies for which State and Federal works directly, she said. “If I or a client of mine ever had a need, she would be the first person I would call,” said Mark Krohn, a business lawyer and entrepreneur in Akron who said he’s known Bartz for years through their work on community issues. “When industry needs to know what to do, she’s where they turn.” State and Federal doesn’t lobby. That’s up to its clients’ employees or other outsiders they may hire. State and Federal’s role is to ensure that its clients know the rules and regulations that govern lobbying — and that they properly fill out the paperwork necessary to register lobbyists and disclose their activities to government. Some clients just subscribe to the firm’s online publications and resources, while others use it to provide direct compliance services, sort

of like an accountant manages a client’s taxes. In the beginning, State and Federal did its job with print publications. Those have migrated to the internet, Bartz said. And, more significantly, most of the firm’s revenue now comes from clients who hire it for direct compliance services, she said. Several sources of wind are filling her sails. First, companies are doing more lobbying, either because they’re finding it to be more effective or because there are more government regulations they hope to influence. While that trend helps Bartz find more clients, she’s also expanding the scope of her firm. She’s constantly adding new governments to those whose regulations her firm tracks. Lately, that’s meant researching and working with more municipal governments across the U.S. The firm adds another city, sometimes more, to the list of governments in its database almost every month. For its federal work, the company recently added a person to its staff in Washington. Bartz has a pie that is continually

growing. “This is an area that is not getting smaller,” she said. “The states and the municipalities want more transparency as to who’s doing what, where, why, and for how much. They want to know who is making contributions, how much, who do they work for. “I always say this is an area where you can’t ask for forgiveness later. You have to ask for permission first.” Downtown Akron has been a great location for her business, Bartz said. She can get space for far less money than she’d have to pay in Washington, not to mention that she and her staff can live better in Akron on less money. She’s on the road a lot, though. “Business isn’t walking down South Summit Street in Akron, Ohio. I go to where my clients are. Last week, it was Boston,” said Bartz, who added that she’s a “million-mile flyer” with United Airlines. But that would be the case whether she was based in Cleveland, New York or even the nation’s capital, she said. Bartz, who said she already spends about 40% of her time on the road,

might be about to increase her air miles as well. Her firm is expanding into the international arena this year and next, she said. That means she and her staff will have to learn about lobbying rules and regulations in other countries. State and Federal will expand into English-speaking nations first, initially from Akron, Bartz said. She will need more people, too. Finding them is the toughest part of her job, she said, because the work requires a detail-oriented person who can do it effectively, often a lawyer, but then it still takes a long time to become an expert on lobbying compliance. “We need someone who comes in and spends four to six months just learning what we do,” Bartz said. The city hopes she continues to find the people she needs, because State and Federal is an important member of Akron’s downtown business community, which is key to the city’s efforts to repopulate the city center with companies and residents. The city also values Bartz herself, because she supports a broad swath of efforts to revitalize Akron. “We are incredibly proud to have State and Federal Communications — a successful, world-renowned, woman-owned business — right here in downtown Akron,” Mayor Dan Horrigan said. “Elizabeth Bartz is not only a front-runner in her field, she is an active and engaged leader who freely gives of her time and treasure to support the greater Akron community. “She has been an anchor tenant in an important downtown building for more than 15 years and provides valuable employment opportunities for new graduates and other local talent. ”

Giving students with disabilities pathways to work By BETH THOMAS HERTZ clbfreelancer@crain.com

Two Summit County school districts have received a combined $250,000 in grant money to help them start earlier in preparing more students with developmental disabilities to join the traditional workforce instead of going into sheltered facility-based workshops after high school, which has been the default path for many. For local employers, these students might be ideal for jobs that they are otherwise struggling to fill, say people close to the programs. “There are a million jobs out there, and this population could provide economic benefit by providing reliable people to fill them. They are an untapped resource,” said Andrea Dobrin, chief operations officer of Cleveland-based Koinonia Homes, which is helping administer the program with the Woodridge Local School District, which covers most of Peninsula and parts of Cuyahoga Falls and Akron. Jobs for which these students could be suited include stocking shelves, retrieving items in warehouses, working in greenhouses, performing repetitive manufacturing tasks, loading trucks, prepping food or cleaning hotel rooms, she said. “A lot of our people can do those

kind of jobs, but we need to help them imagine it first and start earlier than we have been to get them ready for it,” Dobrin said. Woodridge and Copley-Fairlawn City Schools both received $125,000 over two years from the Summit County Developmental Disabilities Board for this pilot programming. Copley-Fairlawn selected United Disability Services (UDS) of Akron as its provider of job preparation services. “Workshops are a great opportunity for some of our students, but many others are fully capable of working in community-based jobs, and if we can front-load supports starting at 14 or 15 years of age, have them get more experience in the community and get involved in internships and summer jobs, they will be better able to live more independent lives after graduation,” said Billie Jo David, director of communications at the Summit County board. The programs, which started in January, began with thorough assessments of each student’s abilities and interests, and will move more into job coaching and work site visits as school resumes this fall. Teaching the aides in the schools to act as job coaches is an essential part of the program, as it will allow the districts to continue this work after the grants expire, she said. Dobrin said the team at Koinonia hopes its program will flip the dy-

“There are a million jobs out there, and this population could provide economic benefit by providing reliable people to fill them.” — Andrea Dobrin, chief operations officer of Koinonia Homes

namics for developmentally disabled students. “Currently, 90% of them end up working in a workshop/facility-based program. Our goal is to help them see a different life for themselves, to imagine a path that is closer to what their peers would be envisioning, and instead see 90% chose more traditional community-based jobs or higher education,” she said. While students with developmental disabilities are legally allowed to remain in school until their 22nd birthday, these programs may help more of them graduate earlier, allowing them to move on to the next phase of life at the same time as their peers and saving school districts a lot of money, she said. Part of making that happen includes working with parents to help them envision a more independent life for their child than

they might have come to expect, she said. “Let’s dream with your son or daughter,” Dobrin said. In addition to the money from the county, Koinonia also received a $30,000 grant from the state to bring in a national expert for three days in June to help with strategic planning around the program, said Stacy Collins, who is the employment first lead with the Ohio Department of Developmental Disabilities. That money came through a Building Innovative Service Model grant that is funded through the Employment First Initiative, which states that employment should be the preferred option for people with intellectual and developmental disabilities, she said. “The work Koinonia is doing falls right in line with this in making sure that we are preparing youth with disabilities to make informed choices about the multiple pathways to employment as they come to graduation,” Collins said. In addition to teaching students how to perform specific tasks, these programs also teach softer skills, such as being on time or knowing how to respond when an employer asks you to do something, said Heather Doyle, Copley-Fairlawn City School’s pupil services director. Copley-Fairlawn has about 20 students currently enrolled in its partnership with UDS, and helping them

identify their own unique strengths and weaknesses is a key part of it, she said. For example, some enjoy jobs that involve social interaction, while others would rather work alone or with a computer. “This partnership is allowing us to have a clearer path for some of our students and more activities available to them so that they are getting these skills much earlier than in the past and making sure we have the appropriate experiences in place,” Doyle said. It also is allowing the schools to start talking to students about what it means to have a job while they are still in middle school, which lays important groundwork for the future, she added. In Woodridge schools, about a dozen students are enrolled in the program. Pupil services director Valerie Riedthaler said that with their assessments mostly completed in the spring, she is looking forward to matching the students up with workplaces where they can start putting in some hours this fall. She expects these will include nursing homes, bowling alleys and restaurants, and welcomes inquiries from any businesses that think they can incorporate these students into their workforce. “Our goal is to place them into employment opportunities in their own community seamlessly after finishing school,” she said.

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Timken, which is closing in on $3 billion in annual revenues, targets companies that produce sales in the range of $100 million per year, CEO Richard Kyle said. (Keith Berr)

TIMKEN

CONTINUED FROM PAGE 1

That was a pretty small deal for Timken, as Torsion Control’s revenues of about $20 million a year are dwarfed by Timken’s, which are closing in on $3 billion. But the deal brought Timken new products with Torsion Control’s line of couplings, which are used in the power trains of construction, mining and agricultural equipment. In May, Timken announced it was buying Sharon Center-based PT Tech, another much smaller company that also had sales of about $20 million last year. But PT Tech makes industrial clutches, hydraulic equipment and brakes that Timken did not make before, but wanted to produce, Kyle said. And, just like with the products from Torsion Control and other parts of Timken, PT Tech’s products are used in heavy industries, like mining, and they fit in with Timken’s larger strategy of serving the power-transmission industry. “We’d never made industrial clutches and brakes. … We’d prefer something a little larger, but it was a relatively inexpensive way to get our toe in the market,” Kyle said.

Timken in late June announced it was buying the Netherlands’ Groeneveld Group, which makes automatic lubrication systems for on- and off-highway vehiKyle cles and equipment. That deal was a little bigger; Groeneveld had sales of $105 million for the year ended May 31, and the purchase was big enough that Timken disclosed the purchase price of $280 million. The primary significance of the Groeneveld deal was that it added new product lines, new markets and new customers for Timken, while also providing new products for existing Timken customers, Kyle said. All the deals represent relatively low-risk bets that Timken can make with potential larger payouts down the road. Timken can cross-sell other products to the new customers it picks up with the acquisitions, Kyle said, while selling its newly owned products to existing Timken customers at the same time. Timken also picks up engineering,

production and marketing expertise that matches its goals and its new product lines, along with all of the intellectual property previously generated at the acquired companies, Kyle added. The company is getting kudos from observers who follow Timken, the acquisition market generally, or both. “I think they’re doing a very smart thing because they are selectively and strategically using niche acquisitions to fill in gaps in their product line,” said Mark Filippell, an investment banker and managing director of Cleveland-based Western Reserve Partners, which recently became part of Rhode Island-based Citizens Financial Group. Timken, Filippell said, is taking a smart shortcut to new product development and bigger markets. “They’ve always been in the bearing business — now they’re in the motion business,” he said. “If they tried to develop all these things themselves, though, they could spend 50 years, and they’d be reinventing the wheel over and over again.” Chris Dankert, a senior research analyst who follows Timken and other industrial companies for Cleveland-based Longbow Research, is similarly impressed. Although he has

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Timken rated as “neutral” at its cur- jobs in place — and could mean a rent price, he recently wrote that the few positions are added in areas like company is gaining market share just marketing or accounting, he said. As for what type of company it will as demand for its products picks up, thanks in part to some of Timken’s buy next, Kyle said it’s unlikely Timrecent acquisitions. ken will take on a transformative ac“In short, yes, we do see a lot of val- quisition of another similarly sized ue in Timken’s current M&A strategy industrial giant. It’s mostly looking for and the feedback we are getting from companies with annual sales of bethe company’s distribution partners tween $10 million and $200 million. suggests they are having great suc- That’s in part because companies on cess cross-selling Timken’s core the next tier are relatively few, and bearing portfolio to newly acquired they're hard to come by, Kyle said. “We’d certainly like something in customers,” Dankert said in an email the $100 million range as opposed to correspondence with Crain’s. That likely means he’ll be pleased the $10 million range,” Kyle said. He’ll likely find them if he looks with Kyle’s future moves, because Timken plans to keep buying up hard enough. Filippell, of Western Reserve Partcompanies with the products and market positions that fit its strategy. ners, said the mergers and acquisi“It’s working. It’s delivering results tion market remains hot. Prices are and we’re looking to continue it go- fairly high — “Just look at the stock ing forward,” Kyle said, adding that market,” he said — but strategic buyhe's also seeing strong growth in the ers like Timken have an advantage heavy industries that buy many of the over many private equity buyers or other investors who might not be company's new products. Locally, the deals probably won’t able to achieve the same synergies. “It’s not that they’re just making a mean wholesale changes at Timken’s headquarters. But Timken handles bet here and a bet there and a bet much of the back-office administra- there on something else,” Filippell tive work for all its operations from said. “It’s very clear they have an North Canton, so they do help keep overall strategy … that’s smart acquithe company’s roughly 1,000 area sitions.” CRAIN'S CLEVELAND BUSINESS μ AUGUST 28, 2017 μ PAGE 21

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So 2016 was a big year for bank M&A. What’s activity looking like in 2017 so far? While M&A is not stronger than ever, it’s stronger than it’s been in the last six years. Things are moving in the right direction in terms of the number of deals getting done. And even the price-to-tangible book multiples are all trending higher. I think the all-time high level of M&A activity occurred in the early 1990s, where you had a record number of deals. One reason we won’t see that happen again is simply because there is a fewer number of banks out there. So one has to look at the percentage of banks that have sold each year relative to the number of banks at the beginning of the year. That number has been hovering around 4%. Around the early ’90s, it reached 4.5%. So that’s a signal that things are very robust and very healthy right now. What’s comparable in terms of M&A volume today is relative to some 25 years ago, then. Why did it take so long to get back to this level of activity? There are a couple factors. For one, typically buyers don’t want to buy until they’re confident credit quality is sound, and we’re clearly at that point. Right now, credit quality indicators are stronger than they were (before the) financial crisis in 2007. Two, you had bank stock prices go up. That’s allowed the buyer to have strong currency with which to pursue acquisitions. Three, the regulatory environment has loosened up to some extent. Not to the extent we need it to, but it’s improved. And lastly, the economy is improving. All those factors taken together have contributed to an ideal environment for M&A activity to occur. So as we talk about it being a strong year for M&A, how’s that treating your business? We launched an event-driven fund in February 2016 with the focus of identifying banks who would be likely sellers over a three-year time frame in anticipation of M&A remaining strong. That fund did well last year, in part due to the broad-based rally that bank stocks enjoyed. But in terms of number of deals in that fund, we had five banks sold in that fund last year. This year, we’ve had seven so far. So we’re very pleased with that progress. And I imagine you expect more before the end of the year? We fully expect, based on our conversations with banks across the

country, that there is going to be more M&A. Banks are looking to increase their market share in specific markets all over the country and looking to achieve economies of scale, cut costs, and they’re attempting to leverage their capital. And that’s the best thing. The banking industry is blessed with a lot of capital right now. And they want to put that to work, and one way to do that is through strategic M&A. Now let’s say the administration actually makes progress on its agenda and achieves things like bank regulatory relief or tax reform. How could that impact the M&A landscape? I think the biggest impact would be regulatory changes, particularly loosening regulations on larger banks. At that point, you’d likely have more big banks like KeyBank and Fifth Third Bank entering the M&A markets. We saw Huntington Bank do a deal over the last year and Key. But I think the biggest change would be with any type of regulatory relief, you’ll see more big banks, super-regional banks, actually pursue deals. That would put more buyers in the marketplace. In terms of relief, how the definition of SIFI (systematically important financial institutions) banks could change, would be a major factor in this, right? It’s why we think the largest banks would be the biggest beneficiaries of any type of regulatory relief. What you’re looking for in tangible regulatory relief is definitely that SIFI definition, which is defined as a bank with assets greater than $50 billion. That threshold might be lifted. And if that happens, we anticipate some of those banks becoming buyers. Any thoughts on the general state of M&A in our regional market here or across the state? We know there are a lot of banks around and outside the state who are interested in becoming bigger here in Northeast Ohio — names like First Commonwealth Bank, S&T Bank, Park National Bank in Newark, Peoples Bank in Marietta. There are a number of banks who want a stronger presence in Northeast Ohio or want to enter the market based on the number of business that operate here. So I would expect there to be some M&A still. But you got to have a willing seller, and we don’t know how many are really willing to sell.

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360Ëš PRIVATE EQUITY AT WORK:

Building and sustaining partnerships

PRESENTING SPONSORS

THE UNION CLUB

Come learn from the experiences of two private NEO companies that turned to private equity investments, and hear from the private equity firm, Gridiron Capital, and legal counsel, Benesch, that helped make the deals a reality. In September 2016, Gridiron Capital partnered with LeafFilter, a 12-year-old Northeast Ohio company, to provide strategic, marketing and operational expertise. LeafFilter, which serves LeafFilter, Hudson customers in 34 states through 39 office locations across the United States and Canada, believes its partnership with Gridiron Capital has been instrumental to accelerating the companyâ€™s growth, allowing it to provide more value to its satisfied customers.

FIRESIDE CHAT 1

LeafFilter will provide perspective on what they were looking for in a private equity partner and describe the first year in partnership with Gridiron Capital. Gridiron Capital partnered with Performance Health, a global consumer branded health, wellness and self-care company in October 2012. In partnership with Gridiron Capital, Performance Performance Health, Akron Health built on its strong brand and product platform, culture of excellent customer service, and new product innovations to accelerate growth both internally and via add-on acquisition. This enhanced growth and expanded market opportunity enabled Gridiron Capital and the company to pursue a dual-track IPO/ M&A sale process, which generated significant public market and strategic acquirer interest and, ultimately, led to a strategic exit to Patterson Medical after the public S-1 was filed.

FIRESIDE CHAT 2

EVENT/REGISTRATION QUESTIONS: Megan Lemke at 216-771-5182 or mlemke@crain.com

Performance Health COO Rocco Mango will discuss the importance of finding a partner with an objective perspective and the benefits the company received from its partnership with Gridiron Capital.

LEARN MORE ABOUT THIS EVENT:

www.crainscleveland.com/360

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