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Jim Stifler, chief economic officer, Hudson

Big data leads to big event at University of Akron. Page 16

Page 19

The List Cleveland’s highest-paid athletes Page 15 ENERGY

SPORTS BUSINESS

TAKEN OUT BY THE BALLGAME

Not all will pay nuclear bailout By Dan Shingler dshingler@crain.com @DanShingler

The thing about House Bill 6 is not everyone has to pay for it. Many rural and urban areas, it turns out, are exempt from the legislation’s new surcharges on electric bills. Also known as Ohio’s nuclear bailout bill, HB6 will provide about $150 million a year to Akron’s FirstEnergy Solutions’ Perry and Davis-Besse nuclear plants in Ohio. It will also provide subsidies to Ohio Valley Electric Corp.’s coal-fired plants in Ohio and Indiana. SEE NUCLEAR, PAGE 17

The Indians extended the netting to the end of the dugouts at Progressive Field prior to the 2018 season. (Damon Sims)

GOVERNMENT

Cleveland tourism is on the rise

Chardon woman becomes vocal proponent of extended netting after scary injury By Kevin Kleps kkleps@crain.com @KevinKleps

“Am I gonna die?” Dina Simpson asked that question in an ambulance, with her right eye swollen shut, her face covered in blood and her brain throbbing. She was being rushed to Hillcrest Hospi-

tal in Mayfield Heights after being struck in the face by a foul ball at a Lake County Captains game on the night of May 20, 2017. Days after the incident, which resulted in permanent blindness in her right eye and required reconstructive surgery on her nose and eye, Simpson began to research injuries sustained by fans who were hit by foul balls at baseball games.

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She figured her ailments had to be among the worst. “I found out it happens a lot,” said Simpson, a 45-year-old Chardon resident. Just this year, Simpson has counted 19 fans who were injured by foul balls at MLB and minor league games. That was only two weeks into August, and strictly based on what she’s seen reported online and via social media. There likely have been many more. In 2014, an analysis by Bloomberg found that 1,750 fans per year were injured by batted balls at MLB games. On May 29, a line drive going 106 mph fractured a 2-year-old girl’s skull during a game between the Chicago Cubs and Houston Astros at Minute Maid Park. SEE NET, PAGE 14

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By Kim Palmer kpalmer@crain.com

The Cleveland area has witnessed a meteoric rise in the number of people visiting from outside the city. With the construction of the Huntington Convention Center in 2013 and the expansion of hotel rooms to 5,000 within five years, downtown Cleveland has been the main benefactor of a wave that, according to an industry report, brought more than 19 million visitors to the area last year — a million more than in 2017. The city, which as recently as six years ago had only one antiquated convention building with few prospects for major events and severely limited hotel availability, has realized a 29% increase in tourism since 2011, according to a report from Destination Cleveland, the organization charged with bringing conventions and visitors to the region. SEE TOURISM, PAGE 18

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Northwest looks to expand NEO market share By Jeremy Nobile jnobile@crain.com @JeremyNobile

Northwest Bank hankers for a greater piece of the Northeast Ohio market that has evaded its grasp as its parent company looks toward more aggressive growth. It has been nearly five years since the Warren, Pa.-based bank bought a true foothold in Northeast Ohio via Lorain National Bank in a $183 million deal announced at the end of 2014. Little has changed for the company since then, but executives aim to remedy that. “We’re playing offense now, compared to back then,” said Northwest’s Ohio president, Kevin Nelson, an LNB veteran. “We’ve added a lot of nice talent and are ready to move the ball down the field a little bit.” That means a refreshed approach in areas like residential mortgage lending and possibly even another acquisition here in the future. “Over the course of the next 12-24 months, we are very positive that there will be more opportunities for us to expand, particularly in Ohio,” said Northwest CEO Ronald Seiffert, alluding to the M&A pipeline, “as well as Indiana and northern Kentucky.” At the time of the LNB deal, one of its largest ever, Northwest grew to about $9 billion in assets. The company is at about $10.5 billion today. Before that acquisition, it had just a couple of branches in Ashtabula and Lake counties and a small amount of deposits. By the time the banks were

fully integrated in 2016, Northwest had $931 million in deposits in the Northeast Ohio market and 21 offices, according to FDIC data. Today, it has a comparable footprint here — save for a new loan production office that just opened in Independence in July — and fewer than $900 million in deposits. As a company, Northwest has made some other moves since then. For instance, it acquired Union Community Bank in Lancaster, Pa., and some branches shed by First Niagara Bank in Buffalo as it was absorbed by KeyBank. The company’s stock has improved marginally since the end of 2014, as it’s about 14% higher today. However, there are “performance deficiencies” to be addressed, as Seiffert put it in a recent letter to shareholders. Beyond the usual investments in technology and efforts to improve efficiency, Northwest’s plans call for a more aggressive approach in Ohio. Much of that begins with new loan production offices opened in Columbus and Independence, which have a particular focus on mortgage originations. Northeast Ohio is one of the first markets to see a new cadre of mortgage loan originators from Northwest who are hitting the streets with a stronger lending team overall. On the mortgage front, the strategy is a change from the more passive, call-center-driven model of the past that left a lot of opportunities on the table. New people are being installed to push that effort forward. This spring, the bank hired Mike Shiplett from Citizens Bank to lead its commercial

Nelson

Sieffert

and industrial (C&I) lending team and appointed LNB holdover Kevin Ball to lead commercial real estate lending, among others. The bank is working on hiring eight or nine new mortgage originators as well through the back half of the year. While C&I lending has remained strong, the mortgage business has become a bit of a missing piece in the puzzle and represents some “low-hanging fruit” to pick, Nelson said. “The hurdle is low for us,” he said. “We could quadruple business and still have great success and not be that large of a player (in the mortgage business). And because we’re a small player, it’s not a large risk for us to go out there and increase our current levels in a significant manner.” The new offices were set up to help support the mortgage business both in Ohio and the Buffalo regions in addition to other business lines, such as indirect auto lending. “We view residential mortgage as a linchpin, core product where we can start building relationships with the consumer market segment,” Seiffert said. “Although we did that in the past, the investment in licensed loan originators will accelerate our ability

to penetrate the Cleveland market at a much faster rate than we have in the past.” Northwest is not unique in this approach. With rates for home loans plunging to their lowest levels since 2016, many large, regional banks are beefing up staff in the mortgage industry. That trend is a reversal from what’s been playing out the last few years. For a local example of that, U.S. Bank closed its mortgage office in Bedford last summer, laying off 260 people. Wells Fargo & Co., the largest mortgage lender in the U.S., has boosted staffing in its mortgage business by 10% this year. “Basically, we weren’t getting our fair share of the vast Cleveland market,” Seiffert said. “It’s such a significant market, and we need to put more feet on the streets.” Acquisitions are also on the table, Seiffert added, which could involve a smaller bank or some additional branches — after all, the bank could use more deposits, though Nelson said there are no immediate plans to open new branches around here. And the timing may be right for that. Bank M&A never completely stops, but there has been a bit of a lull in deals in recent years in this area. The last large deal here was Huntington Bancorp’s purchase of Akron’s FirstMerit Corp. in 2016. Some smaller combinations that have panned out since then include the recent transaction by Farmers National Bancorp (of Canfield) buying Maple Leaf Financial Inc., the parent company of Geauga Savings Bank, an estimated $39.6 million deal an-

nounced last week. The sense in financial markets is that the economy is overdue for a recession. With that looming over an already competitive banking environment with generally rising interest rates — and with tax reforms providing only a short-lived stimulus that’s worn off by now — odds are good more sellers will come to the table. “I always think there’s a calm before the storm,” said Patricia Oliver, a banking expert with Tucker Ellis and chair of its financial services practice. “It was quiet (in Midwest bank M&A) for part of last year as well, possibly because the capital gains tax rate went down, so even underperforming banks looked better on paper than they were. I think there’s going to be some reality checks.” That’s when some sellers could come forward, which could provide fresh opportunity for companies like Northwest positioning themselves as buyers. “If we get the sense of a recession, there are going to be some players who maybe took some risk in areas they shouldn’t have, and we are going to see more sellers,” Oliver said, noting Northwest is a known buyer with a good reputation. Whether through organic growth or deals, Northwest is about to step its game up in this market. “We view Cleveland as a growth opportunity for us, and we are looking for ways to take advantage of that growth,” Seiffert said. “We don’t have to take that much more market share away from leaders to be very successful in the next three to five years in Cleveland.”

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Frontline grows headquarters, overseas business Akron company, which manufactures waste-oil and fresh-oil tanks, has taken a ‘nimble’ path to success By Rachel Abbey McCafferty rmccafferty@crain.com @ramccafferty

Frontline International Inc. in Akron has been helping kitchens store used cooking oil for almost 20 years. Believe it or not, that’s big business. And it’s taken Frontline into commercial kitchens across the globe. President John Palazzo started Frontline after working at a recycler of animal byproducts and cooking oil. He saw the bins and barrels companies used to collect the oil, and he saw how dangerous and expensive the process could be. He thought there had to be a better way. He started Frontline at the end of December 2000, using relationships he had built before to get the company off the ground. It soon began to grow. Frontline’s mantra has long been what Palazzo calls “controlled growth.” There have been opportunities for the company to bring in venture capital, but Palazzo, the sole owner, has declined. He knows taking that route could have helped the company grow faster, but that’s not Frontline’s approach. “We’re nimble, and we control our own destiny right now,” Palazzo said. “And we like that. We like that a lot.” Today, Frontline makes waste-oil containment tanks — the product on which the company was founded — as well as fresh-oil tanks and filtra-

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Frontline president John Palazzo, left, and vice president Giovanni Brienza are shown at the company’s Akron facility. (Contributed photo)

tion systems. It can also work with customers to install systems to dispense oil or transfer used oil to tanks. The products are available in different sizes and for different environments; Frontline has to consider the different types of equipment and the different types of oils being used by its customers across the world. As its product offerings have grown, those products also have become more technologically advanced. Today, customers are able to monitor everything from the quality of their oil to the fill level on a wasteoil tank in person or remotely. Palazzo said Frontline’s waste-oil

products increase the amount of usable oil that can be collected, processed and sold. The company’s products on the fresh-oil side can improve safety in a restaurant, reducing the chance of spills or burns. Company vice president Giovanni Brienza said the technological components of the containers allow restaurants to monitor their oil for consistency across restaurants and stores. Frontline has remained focused on manufacturing as it’s grown. Employees form the equipment, as well as install the insulation and electronic components, on-site in Akron.

But many of Frontline’s competitors also are service providers, supplying fresh oil to customers and removing spent oil. To adapt, Frontline has created strategic alliances with oil suppliers and collectors, so it can offer its customers full packages of products and service. Frontline also works with outside sales representatives, which allows it to keep its direct employment lean while still getting its products in front of potential customers. When Frontline moved to 187 Ascot Parkway in Akron eight or nine years ago, it had about 10 employees. Today, it employs about 25. Frontline does not share annual revenue. Palazzo said he still sees a “huge opportunity” for Frontline to continue to grow domestically. The company’s growth has always started with quick-service restaurants, but Brienza said a particular growth market in the U.S. now is in grocery and convenience store chains, as both have begun offering more prepared foods. But much of Frontline’s current growth is coming from its expansion internationally. The company has made significant progress across the globe, from Europe to Asia to South America. Among the reasons for the growth overseas are regulations related to stricter monitoring of oil quality and the rising popularity of biofuel, Brienza said. All that growth led to a need for more space at its building at Ascot Parkway. The company broke ground on an expansion in March 2018, and

construction was complete that December. In all, Frontline invested about $860,000 in the expansion, not including capital equipment, Palazzo said. After the expansion, the building on Ascot Parkway is about 28,000 square feet, an addition of about 13,000 square feet to the total, he noted. Now that the physical expansion is done, Frontline plans to reorganize its manufacturing operations, setting up cellular manufacturing hubs that will be more efficient for employees, Palazzo said. That means assembly areas will be more dedicated to each type of product the company makes. He also wants to do more to automate the manufacturing process for quality and consistency. With more space, Palazzo said he hopes the company will be able to keep some of its more popular products in stock, rather than making everything to order. Frontline is the kind of company Akron can see growing beyond the local market and into international ones, said Sam DeShazior, director of business retention and expansion for the city of Akron. Akron, Summit County and the Greater Akron Chamber of Commerce are putting a strong emphasis on helping existing companies in the region grow, rather than focusing the bulk of their resources on attracting new companies. The city wants to see “globally competitive companies” with clear strategies like Frontline in the region, DeShazior said.

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CRAIN’S CLEVELAND BUSINESS

Rehab/reuse project warming up for old blanket factory By Stan Bullard

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Ricardo León, executive director of the Metro West Community Development Organization, keeps an eye on the Northern Ohio Blanket Mills building, which is across Fulton Road from the nonprofit serving the ClarkMetro and other southwest Cleveland neighborhoods. “We’re afraid bricks may fall from it,” he said of the three-story factory dating from 1890 that was expanded until it covers a city block. He’s excited, though, because plans to renovate it to new use are taking shape. “It will mean a lot for the neighborhood in terms of morale because it’s the largest building here and it’s been vacant so long,” León said, “in addition to the economic benefit of it being put back into use.” Levin Group, a Cleveland real estate development and ownership concern, is starting to take steps to bring to fruition a proposed $15 million renovation and adaptive reuse of the factory into 60 units of affordable housing, mostly with two or three bedrooms, for families. The plan will head for a second time to the city’s Near West Design Review Committee to go over final details this month and, if approved, move on to the Cleveland Landmarks Commission, perhaps as soon as this month. Levin and 3160 W. 33rd St. LLC, an affiliate of real estate investor Derek Ng, also have submitted an application to the Ohio Development Services Agency and the Ohio Historic Preservation office for a State Historic Preservation Tax Credit to help fund the project. The deadline for applications is Sept. 30 and awards will

which, with its predecessors, had made woolen blankets in various buildings on the site since the 1870s. According to the listing for the property on the National Register of Historic Places, a trade magazine described it as the “largest manufacturer of woolen horse robes and carriage blankets in the U.S. in 1895 and one of the largest in the world,” a position it would continue to hold until the 1920s. The square blankets for horses, along with other blankets the company produced on the near West Side as markets changed, were used for automobiles, cruise ships and hospitals. Some are still being resold today online. The Beckman Co. failed during the Great Depression, according to the National Register of Historic Places, and was converted to a vertical industrial park to serve multiple small businesses during the Depression. It was last used by stonecutters and a metal products company until it went dark in 2009. “It has a cool history,” Hudson said of the brick, timber and post structure. “It also has big windows and wide-open spaces that make it worthy of being preserved.” Levin Group, headquartered for decades at the Ohio Savings Building downtown, is operated by Mort Levin and his wife, Judy. The company has a portfolio of 1,500 apartment suites, about half of them in Cuyahoga County, as well as retail and warehouse buildings. Although León is enthused about the potential benefit the project can have on the neighborhood, the structure has gone through several failed redevelopment efforts in the past, so he’s realistic about making a go of the remake. “It will be an uphill battle,” León said.

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be announced at year-end. Kevin Hudson, Levin vice president for development, said winning a state tax credit for undertaking a project meeting federal historic preservation guidelines and credit will be crucial for the project because of the building’s age and condition. “It’s a highly competitive program,” Hudson said. “But we’re really excited about the project. We’ve also had the benefit of collaborating with the city of Cleveland to obtain approval from the Ohio Housing Finance Authority for the project.” The low-income housing tax credits would come from Fast 50, a U.S. Department of Housing and Urban Development program that aids a unit of market-rate housing for each affordable-income suite a project produces. Hudson said the first phase of the Blanket Mills project would all be affordable units but that entry-level, market-rate units might be added later, either in terms of a townhouse project on part of the site or nearby. Hudson said Metro West is Levin’s and Ng’s nonprofit partner in the venture, which they hope will spur additional development nearby on Fulton Avenue. The developer has spent time trying to create a program that fits the site. León said Levin has been an exceptional partner so far. “This is a neighborhood where people feel development is something that is done to them, not for them,” León said. “They’ve spent a great deal of time, and remain committed to spending more time, to hear ideas from the neighborhood.” Although most of its windows are broken and empty doorways are boarded up, the structure was formerly the home of The Beckman Co.,

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Growing tech firm snaps up full floor at East Side building By Stan Bullard sbullard@crain.com @CrainRltyWriter

Cleveland-based AML Rightsource LLC needs room to expand, so it snagged the top floor of Millcreek Place in Highland Hills in a justinked lease for 44,000 square feet of office space. The office building takes its name from its street address at 23000 Millcreek Blvd., near Chagrin Highlands. The lease with AML Rightsource, a financial consultancy that provides anti-money-laundering and bank secrecy act compliance solutions, will make the empty building that New York-based real estate investment company Time Equities Inc. bought six months ago from PNC about 60% leased, according to Jonathan Dulberg, the director of acquisitions for Time Equities. Frank Ewing, CEO of AML RightSource, said in a news release that the company needed additional space “because of the explosive growth we are experiencing. We were elated to find a building centrally located with all of the amenities we were searching for, including the opportunity to customize the space to best fit our employee and client needs.” The company also has offices at 200 Public Square in downtown Cleveland and in Hudson, as well as in Buffalo, Phoenix and near Toronto. Ewing did not return a phone call by 5 p.m. last Thursday, Aug. 29, about whether it will keep its other offices intact. Dulberg said AML Rightsource “moved more aggressively” than other prospects Time Equities had for

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the top floor of the building. Time Equities is in talks with other companies he declined to identify for the other large, empty floor. This spring, Rochester, N.Y.-based Paychex Inc. leased 50,000 square feet in the building. Dulberg said plans call for the companies to be in their new spaces by year’s end. Time Equities is scheduled to complete renovations of the building by the end of the year. The company is spending more than $3 million to add a new lobby, tenant lounge and cafeteria to make the building competitive with newer office space despite its being more than 20 years old. The updates also include adding 300 spaces to the parking lot, Dulberg said, because companies often need more parking in the suburbs to allow them to fully staff suburban offices as office tenants continue to add more workers than in the past. Steve Ross, a senior associate at the CBRE brokerage, credited the improvements for the rapid pace of leasing at the building.

“It also shows the strong demand for quality, large-block space on the East Side,” said Ross, who is part of a trio of CBRE brokers working on leasing the building. Brian Conroy and Scott Pick, office tenant specialists at the Cleveland office of JLL Inc., represented AML Rightsource in its site search. Time Equities paid PNC $7.5 million for the 163,000-square-foot building that the bank had Duke Realty Corp. of Indianapolis build for it in 1997. The bank shed the property after it consolidated multiple suburban offices at its downtown Cleveland skyscraper. Time Equities also has substantial holdings in the Rockside Road office market. The 50-year-old company said it is currently engaged in more than a million square feet of development projects of various types and stages around the globe. Time Equities has a portfolio of nearly 33 million square feet of office, industrial, retail and residential space that includes 1,500 apartment suites.

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CRAIN’S CLEVELAND BUSINESS

Rock Hall runs up score at Interactive Garage $2 million exhibition that opened July 1 is generating impressive visitor totals and reviews from guests By Scott Suttell ssuttell@crain.com @ssuttell

It’s an increasingly digital world, but an exhibition at the Rock & Roll Hall of Fame that relies on an analog pleasure — picking up and playing real musical instruments with friends, family members or strangers — is drawing the strongest feedback from visitors since the institution began using a metric called “Net Promoter Score” in 2014. The exhibition is the Interactive Garage, a $2 million attraction that takes up the museum’s entire second floor and is a centerpiece project of the Rock Hall museum’s multiyear, multimillion-dollar transformation plan that includes the new Hall of Fame Floor and Power of Rock Experience in the Connor Theater, both on the third floor. The Interactive Garage, which opened July 1, includes keyboards, mixing boards, guitars, drums, studio space and a lounge for playing acoustic instruments at dedicated practice stations. As the Rock Hall puts it on its website, “The Garage is where it’s your turn to play.” Greg Harris, president and CEO of the Rock Hall, said in an interview on Aug. 16 that an estimated 50,000 people already had visited the exhibition, including some famous figures from the world of sports — Indians shortstop Francisco Lindor and L.A. Angels outfielder Mike Trout — and, of course, music, where members of Run DMC, the E Street Band, Lynyrd Skynyrd and Buffalo Springfield have dropped in. Rock Hall research shows that about a third of visitors to the exhibition so far are active musicians, Harris said. But you don’t have to be famous, or any type of pro, to noodle around in the Interactive Garage. There are video tutorials to guide visitors new to the instruments, and Harris noted that the exhibit is staffed by “teaching educators” from institutions including Cleveland State and Kent State universities, and Cuyahoga Community College. Guests pick up guitars most frequently — the “Guitar Hero” legacy is strong — with drums in the No. 2 position, Harris said. In building out the Interactive Garage, he explained, Rock Hall officials were “inspired by digital spaces” but “wanted to remain authentic in giving people a meaningful experience.” The instruments in the exhibition are real, “which appeals to people who are professionals and adds meaning to people who are new” to using them, Harris said. The Rock Hall has been embracing a “bigger culture of data and innovation,” Harris said. To that end, it’s using digital data collection to measure the Net Promoter Score of exhibitions, including the Interactive Garage. Harris said that in its first six weeks, feedback provided by visitors showed that the Interactive Garage had a Net Promoter Score of 68, which is the best figure for an exhibition in the five years that the Rock Hall has been using NPS. (A score of 100 would mean that every customer is a “promoter,” helping to tell others about a good experience.) “We’re very proud of that (NPS score) in the first month,” Harris said. Among other data points gathered about the exhibition to date, according to Harris:

P006_CL_20190902.indd 6

The Rock & Roll Hall of Fame’s Interactive Garage “is where it’s your turn to play.” (Contributed photos)

Album cover details adorn the walls of the garage.

JJ97% of the guests indicated it met or exceeded their expectations. JJ87% of visitors to the Interactive Garage interact with teaching educators. JJ53% say they’re inspired to start playing, or return to playing, an instrument. JJUsers are fairly evenly distributed across the age spectrum, but this is not just for boomers: The most-represented age of guests is 18. One of the pleasures of the Interactive Garage experience to date, Harris said, has been its ability to bring people together. “People who don’t know each other are meeting (at the exhibition) and start playing together,” he noted. “It becomes this moment of sharing an experience, and that can be really powerful.” The Interactive Garage’s debut came as the Rock Hall has been on a roll, drawing a record 579,000 visitors last year, topping its previous high mark of 560,000, set in 2017. The Rock Hall also announced that, based on 2017 data, it delivers an estimated $199 million of economic impact to

Guests at the Rock Hall’s Interactive Garage pick up guitars more frequently than other musical instruments.

Northeast Ohio annually. It also has activated its plaza this summer with more live programming, including a stop of the Vans Warped Tour. (There’s an exhibition within the Rock Hall now called “Forever Warped: 25 Years of Vans Warped Tour.”) Harris said the Interactive Garage, like other parts of the museum, likely will evolve as the Rock Hall continues to collect data and talks with guests about their experience. He said he sees the exhibition as another way to use rock music as a source of “education and inspiration.” The power of combining live music and education at the Rock Hall was underscored last month when the Haslam 3 Foundation, funded by Cleveland Browns owners Dee and Jimmy Haslam, made a $2.5 million donation to the institution to support its education-related programming. (The foundation also gave $1 million each to the Cleveland Orchestra and Playhouse Square.) The Rock Hall said that as a result of the gift, it has established the Haslam Scholars Program in recognition of the Haslams’ “generous commitment to the Rock Hall, their ongoing support for education and unwavering commitment to students.” The program provides free admission and expert classroom instruction to Cleveland Metropolitan School District students and Title 1 schools statewide. Dee Haslam, who’s also a Rock Hall board member, said the scholars program is designed to “help foster a deeper appreciation and understanding of music for students.” She said it was important to the Haslam family that it undertake philanthropy aimed at “eliminating barriers and providing equal access” to educational programming within the Rock Hall. Those programs are “on-site, interdisciplinary classes on the history of rock and roll that meet academic content standards,” according to the Rock Hall. The classes “draw on the power of rock to teach students about fine arts, language arts, social studies, mathematics, science and technology,” and reach more than 300,000 students per year.

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

Midsize companies key to economic development By Kirk Neiswander

Editorial

Staying ahead Don’t be complacent. That’s good advice in life. And it’s great advice in business — especially in an industry that’s as thoroughly in the midst of disruption as retail. Crain’s real estate reporter Stan Bullard last week examined how retail properties on both sides of town — Beachwood Place in Beachwood and West Bay Plaza in Westlake — are plotting fresh approaches to remain competitive. The West Bay Plaza redevelopment, which could involve the addition of apartments or a hotel, is in its early stages. At Beachwood Place, though, plans for change are moving quickly, and they represent a smart approach to the private and public sectors working together to improve a property while it’s in a position of strength. Beachwood’s Planning & Zoning Commission last week approved plans that would add a covered walkway between Beachwood Place mall and the neighboring LaPlace shopping center, and a grassy community gathering area installed in what now is a portion of parking lot. Brookfield Retail Properties, which owns both Beachwood Place and LaPlace, also plans to create an area where food trucks can be parked, and an outdoor picnic area. “We’re looking to create a more ‘lifestyle’ element,” Brookfield’s project manager, Mark Kelleher, told the commission, according to Cleveland.com, noting that the community area could include screens to show football games on the weekend, or movies in the evening. The plan is to begin construction next spring and to complete work by fall 2020. The Beachwood Place reimagining comes as the 1 millionsquare-foot property remains in great shape. It’s 99% leased, as our Aug. 26 article noted, and it’s blessed with blue-chip retailers such as Nordstrom, Saks Fifth Avenue and Dillard’s — without a troubled Sears or Penney’s store in sight. But the strong retailers of today might not be so strong tomorrow, and taking steps to create a more experiential, event-driven space, similar to lifestyle centers, is smart business for Brookfield and a boost for Beachwood in strengthening a vital property. An impetus for the changes came from Beachwood’s plan-

ning commission, which, in updating sections of its zoning code, looked for ways to allow denser, mixed-use development at the mall site. Cities and suburbs alike should pursue opportunities to add such density, both in new projects and in reconsiderations of existing spaces. It’s much easier, of course, to tweak a high-end, high-performing property than it is to rescue an underperforming asset in a community that’s less financially well-off. Once-thriving malls in North Randall, Euclid and Akron already are, or are slated to become, Amazon fulfillment centers, and it’s possible, given trends in retail and changes in consumer behavior, that nothing could have saved them as traditional retail operations. But Beachwood offers a valuable lesson: Get out in front of potential problems and work to figure out ways to make strong assets stronger, before a rescue operation is too difficult.

Are you ready?

When was the last time you were this genuinely excited to watch the Cleveland Browns play football? Sure, each year offers a fresh start, hope springs eternal, etc., but since the team returned in 1999, most seasons have started with the strong sense that things won’t go well. This year is different, though, and it’s a pleasure. Fans might be getting a little ahead of themselves in thinking the playoffs (and playoff success) await this year’s Browns, but we say this: Enjoy the great expectations. As Crain’s assistant editor Kevin Kleps writes this week, the Browns have turned themselves around and put themselves in position to succeed thanks to a smart, data-focused front office, “a franchise quarterback, plenty of offensive weapons and an upper-echelon defense.” Fall Sundays are events again in Cleveland. If preseason TV ratings are any indication, the regular-season numbers will be astounding. We hope the team is, too.

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

CLEVELAND BUSINESS P008_CL_20190902.indd 8

Managing Editor:

Scott Suttell (ssuttell@crain.com)

Contact Crain’s:

216-522-1383

Read Crain’s online: crainscleveland.com

Economic development undeniably has received a lot of attention as Northeast Ohio has tried to remove its stigma as just another Rust Belt region. A host of government-inspired or -funded programs were launched, and seeming countless ideas tried, to varying degrees of success. Only one was created as a market-driven organization for middle-market companies. Only one was not designed to depend on government money or fundraising: EDGE. Shorthand for Economic Development through Growing Enterprises, EDGE is a 15-year-old nonprofit organization whose mission is sustained by the midmarket businesses that Northeast Ohio benefit from and pay for its services. EDGE believes has now come to strongly that everything in a realize that community is paid for (directly or indirectly) by businesses/ existing midsize organizations and their em- companies are ployees — by paying taxes, spending with local vendors, key to effective and making civic and philaneconomic thropic contributions. Using that premise as a development. starting point, EDGE targeted a sizable segment of the mar- Helping them ket that was largely over- grow is likely to looked. The prevailing strategy 15 years ago was to focus on make a larger, business creation/entrepre- more significant neurship and retaining/attracting larger companies. impact, perhaps Largely ignored were midsize faster and with companies (with 25 or more employees) that weren’t easily less risk than identified and needed alto- concentrating gether different support than on startups or startups or large companies. So, a membership model playing the often was created for midsize companies to come together to zero-sum game discuss various problems, issues and opportunities, of attracting and much like a surrogate group losing larger of advisers. EDGE created events and programs for companies. small groups of noncompetitive companies, based on industry, size or geographic location. Northeast Ohio has now come to realize that existing midsize companies are key to effective economic development. Helping them grow is likely to make a larger, more significant impact, perhaps faster and with less risk than concentrating on startups or playing the often zero-sum game of attracting and losing larger companies. Here are some of the important lessons EDGE has learned from working with midsize companies over the past 15 years: JJCEOs of midsize companies appreciate academic-based initiatives, but with limited time, they want to talk with and learn from others who have faced similar challenges: What has worked in M&A growth initiatives? How to deal with organized labor? How to install effective and efficient ERP systems? What unforeseen liabilities and contingencies need to be confronted upfront? SEE NEISWANDER, PAGE 9

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 ClevEdit@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.

8/29/19 4:19 PM

CRAIN’S CLEVELAND BUSINESS

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FOR PRESTIGE AND ELEGANCE,

THINK FIRESTONE COUNTRY CLUB. Personal View

Our corporations are ahead of Business Roundtable’s thinking By Brian Broadbent

projects in our 26-year history. Corporations are engaging with the community like never before. Earnings. Per. Share. Why the sudden uptick? It apThis is the metric that businesses work to improve, quarter after quarter. Recently, the global pears with low unemployment, Business Roundtable brought “engagement” to be businesses are implementing on-par with “earnings.” As Crain’s Cleveland Busisubstantive programs to attract and retain people. Volunteer proness noted in an editorial in its Aug. 26 issue, nearly 200 chief executives, including the leaders of Amagrams are an important part of efforts to improve the employer zon, KeyCorp, Eaton and Progressive, signed off on Broadbent a statement that redefined the purpose of the corbrand. Millennials are moving poration. It appears to fundamentally change what into the ranks of management. They have made volthe Business Roundtable unteerism a priority throughout their lives and are encourpublished in 1997, which fo- “This new statement aging their employers to do cused mainly on the benefit to stockholders at the time. better reflects the way the same. Finally, many busiAs expected, backlash to nesses have enjoyed strong “the Statement” ensued. Some corporations can and years of earnings and can afeconomists like Jeffrey Sachs ford to invest more time and saw this as the leaders of the should operate today.” money into the community. American economy finally adCleveland’s business leadmitting that corporations have — Alex Gorsky, chairman and CEO, ers have a history of strong been shortchanging society for Johnson & Johnson community engagement, but the benefit of a handful of inthe uptick is noticeable and vestors. Criticism from companies like Ben & Jerry’s welcome. The corporate sentiment in Northeast Ohio and Patagonia suggests that these major corporations has, evidently, been ahead of the Business Roundtable’s thinking for decades. Still hundreds of nonprofit now need to “walk the walk.” At Business Volunteers Unlimited (BVU), we are boards need individuals with targeted skills. The supported by many businesses to help them “walk the complexity of nonprofits and pressure to maintain walk.” Northeast Ohio businesses have charged BVU sustainable operations need the expertise and comto engage their personnel to support nonprofits as mitment that business people can provide. Northeast board members, project consultants and direct ser- Ohio has a culture of community support that is vice volunteers. In Northeast Ohio, we have noticed a unique. To maintain that “community culture,” corpronounced uptick in community support for this porations need to continue to introduce and support kind of employee engagement. Some businesses have the volunteer efforts of our next generations. Keep it more than doubled the number of employees they put up. through our program to be trained and connect to serve on a nonprofit board. In 2018, BVU provided the Broadbent is the president and CEO of Business greatest number of “done-in-a-day” team volunteer Volunteers Unlimited.

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NEISWANDER

companies were giving back to the community. JJMidsize companies that engaged EDGE Fellow summer interns were surprised by how fast students CONTINUED FROM PAGE 8 could get up to speed on their businesses and offer unJJCEOs also want to give their key managers similar biased, productive information on new business exposure to practical lessons, as well as networking ideas, new products/services, market research, data opportunities with peer managers in contemporary analytics, M&A research, etc. Millions of dollars in companies. new revenue have been created by these EDGE stuJJMany of the most successful new businesses created dent internship projects. The students gained practical in Northeast Ohio have been launched by people em- experiences and meaningful relationships. ployed at companies unable or unwilling to fund an EDGE is currently working with more than 90 busiidea for a new business connesses in six different cohort ceived by the employee or one EDGE welcomes all ideas groups, all with the intent of havof the company’s customers. ing them learn with and from on how to spur growth in each other so they can grow the When the idea was rejected, the employee resigned and started midsize companies and is value of their businesses. a business based on that idea — Because EDGE successfully sometimes even financed by not trying to implement created a substantially the customer. Benefiting the this strategy in a vacuum. self-funded model for ecocommunity, a new business nomic development, a number was born, and economic development was the result. of foundations have offered to help EDGE reach more JJLooking through a different lens, EDGE identified midsize companies by creating cohorts across the rehundreds of midsize companies in Northeast Ohio gion based on size, industry or geographic location. that were creating the most value for themselves, as EDGE is working with Geauga County Growth Partwell as the region. Companies were applauded for the nership and MAGNET to set up cohort groups of 10 to highest aggregate combination of reported earnings 15 midsize companies that will benefit from EDGE-creand the taxable compensation paid to all their North- ated events, speakers, content and ideas on how to east Ohio employees, as well as the highest growth rate self-fund such activities. EDGE welcomes all ideas on how to spur growth in of this metric. Many honorees told us this was the kind midsize companies and is not trying to implement this of award they wanted to win and be recognized for. JJEDGE staff learned that Northeast Ohio companies strategy in a vacuum. More partners are welcome. If that were actively managing innovation grew 30% more there are better ideas, we are listening. The goal is to drive improved economic developthan those that were still growing their business but not focused on innovation initiatives. These midsize com- ment for all of Northeast Ohio. panies that were growing were also most interested in learning about the creative, meaningful ways other Neiswander is founder and president of EDGE.

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CRAIN’S CLEVELAND BUSINESS

Focus

SPORTS BUSINESS

FINALLY SOMETHING TO SMILE ABOUT

The Browns’ March trade for wide receiver Odell Beckham Jr. was the highlight of a hectic offseason. (Ken Blaze for Crain’s)

After years of ‘This season will be different,’ this time Browns hype is legit

By Kevin Kleps | kkleps@crain.com | @KevinKleps

ike Schoenbrun has spent much of his career working in New York and Washington, D.C. ¶ He’s worked in Major League Soccer and for prominent media publications. ¶ “I’ve been in a lot of cities,” said Schoenbrun, who was hired by the Cleveland Browns as their vice president of corporate partnerships last November. “Browns fans are on a different level.”

Schoenbrun — who arrived in Cleveland during the second half of the 2018 season, with Baker Mayfield behind center and Freddie Kitchens calling the plays — has only seen the exciting, hopeful version of the Browns. David Jenkins — the team’s chief operating officer and, entering his 16th season, easily the franchise’s longest-tenured executive — has witnessed mostly the opposite. The 2019 season, with the Browns considered a favorite to win their first division title in 30 years, is the most excited Jenkins has been for the opening kickoff “just because it feels a little different.” Fans and team executives alike have talked themselves into believing that before, but this time all of the hype — with a competent front office, a franchise quarterback, plenty of offensive weapons and an upper-echelon defense — seems legitimate. Saying fans and corporations have bought into the 2019 Browns is an understatement along the lines of “Odell Beckham Jr. has good hands.” The Browns reached their cap on season tickets not long after they acquired the electric Beck-

P010_011_CL_20190902.indd 10

In Baker Mayfield, the Browns finally have a franchise quarterback, along with a player who is fueling Super Bowl hopes. (Cliff Welch/Icon Sportswire via Getty Images)

ham in a March trade with the New York Giants. In mid-July, when the Browns made the rest of their single-game tickets available to the general public, those seats were quickly scooped up, assuring that all eight home games would be sellouts. Two years ago, when the team was winless for the first time in franchise history, the average attendance of 62,403 for seven home dates at FirstEnergy Stadium was their worst since 1984. The Browns’ season-ticket base is in the mid60,000s, Jenkins said, which represents a jump of about 12,000 from 2018. The team also has a waiting list, which requires a deposit of $100, in the thousands — and that continues to grow. All 143 of the stadium’s suites have been sold out for months. The demand has fueled a surge in the secondary market that Mark Klang, who operates Amazing Tickets in Mayfield Heights, said is better than any Cavs regular season that featured LeBron James. The 2019 Browns are approaching the secondary-market levels of the 1995 and ’96 Indians, which were “through the roof,” Klang said. SEE BROWNS, PAGE 13

8/29/19 3:52 PM

Th wer son terb year en o E in a for a Th seas can with than chae “I wer ova voic who seco was yea Y Th thei ons ishi of go W 2019 son QB. “O ly lo it.” Th team whi fam Th

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SPORTS BUSINESS

The Browns are giving Cleveland reasons to believe The Cleveland Browns were coming off a .500 season in which a rookie quarterback, after starting the year on the bench, had taken over. Expectations were high in a city that was starving for a Super Bowl run. The year was 1986 — a Kevin season that Jim Donovan Kleps can’t help but think of now, with the Browns getting more hype than a boxer being introduced by Michael Buffer. “I think that year they knew they were going to be really good,” Donovan, the Browns’ play-by-play voice, said of the 1986 Browns, who had Bernie Kosar entering his second year in the league. “There was a lot expected of them that year.” You know what happened next. The ’86 Browns made the first of their three trips to the AFC championship game in a four-year span, finishing within a John Elway-led drive of going to the Super Bowl. We don’t know what awaits the 2019 Browns, coming off a 7-8-1 season and led by a brash second-year QB. “On paper,” Donovan said, “it really looks dynamic. Now you gotta see it.” The Browns’ radio voice said the team is going through stages with which the majority of its fans aren’t familiar. There’s the “warm and fuzzy” stage

— the 5-2 stretch to close the 2018 season. Then the “wow” stage — the March trade for wide receiver Odell Beckham Jr. Next, fans and talking heads start picking them apart and looking for any weakness they can find. “I think it’s uneasy for everybody here because we’re just not used to that,” Donovan said. “We’re just used to them saying, ‘Maybe they can win four games.’ But no, I think they’re pretty legit.”

‘Freaked out and unsettled’ You can include Mike Polk Jr. in the “uneasy” group. “I’m excited and hopeful about the season, but I’m also freaked out and unsettled, because someone has to be and no one else seems willing to take that on,” the comedian said. “Cynicism,” Polk added, “is not a popular emotion among Browns fans right now. Those who express any level of concern, doubt or temperance regarding the upcoming season are haters. Anyone not offering complete, full-throated acceptance of the Browns’ inevitable, total NFL dominance this year is subject to accusations of treason, and that does concern me.” If you’re the type who worries about such things, Beckham and fellow Browns wideout Jarvis Landry graced the cover of Sports Illustrat-

ed’s NFL preview issue. need were quarterback and a good Beckham also landed GQ’s August team psychologist,” Polk said. “Baker cover. The following issue, Mayfield appears to have filled both of those was also featured prominently in the roles.” Last season, Mayfield became the magazine. GQ’s interviews with the Browns’ top two stars produced Browns’ 30th starting QB since Donplenty of headlines and hot-take fod- ovan began calling Browns games on der, from Beckham saying he “felt the radio in 1999. The team has had disrespected” by the manner in an average of 2.4 quarterbacks make which he was traded by the New York a start each season during that span. But the 24-year-old Mayfield Giants to Mayfield saying his comseems so much ments about the different from the Giants’ selection of “On paper, it really QB Daniel Jones looks dynamic. Now rest. He’s a former were taken out of you gotta see it.” walk-on who uses context. that and previous Being part of the knocks on his unnational conversa- — Jim Donovan, Browns tion is nothing play-by-play voice dersized frame, new not his status as a for the Browns’ QB and No. 1 receiver. But it top overall draft pick and 2017 is for the Browns, in the sense that Heisman Trophy winner, as Myles this talk doesn’t center around every- Garrett-sized chips on his shoulder. “He is an incredible leader. He’s an thing they’re doing wrong and feature off-the-record views of former incredible teammate, too,” Donovan said of Mayfield. “Man, if you’re on staffers. The Browns, not even two years re- his team, he is a thousand percent moved from 0-16, are playoff con- behind you. If you’re not on his team, tenders and attracting more Super aka Duke Johnson (who recently was Bowl bets than all but one team in granted his wish to be traded), you’re a Steeler. And his teammates love Vegas. him.” There’s a lot to like, from Mayfield’s ‘Incredible’ things to come? cannon of a right arm to his Tom The belief, the reason to buy into Brady-like accuracy and his reall of the hype, begins with Mayfield cord-setting rookie season. — the top overall pick in the 2018 He’s also one of the most valuable draft. pieces in the NFL — a productive QB “Through all of those dismal sea- on a rookie contract. Mayfield’s salasons, I’ve always believed that the ry-cap hits the next three seasons are Browns’ two primary positions of a respective $7.4 million, $8.9 million

and $10.4 million. After that, he’ll be in line for a long-term extension that could be worth $40 million or more per year. That makes the next couple years — with Mayfield and Garrett, the top overall pick in 2017, still on rookie deals — the ideal time to strike. The QB, Polk said, “has everyone believing this is real and that our long collective nightmare is over.” Donovan marvels at Mayfield’s ability to “light his own candle. He doesn’t need the opposition to get himself fueled up. He gets himself ready to go.” Browns fans have followed suit. All of the tickets and luxury suites have been sold, the preseason ratings have been terrific and the hype is at its highest point in decades. “I get the impression that people just can’t wait for the start of the regular season,” Donovan said. “Every stage that you went through was big.” Fans, he added, are “waiting to see something pretty incredible.” Polk, who, for now, is staying in the role of freaked-out Cleveland fan, already sees one victory for Mayfield and the Browns. “Regardless of how this season shakes out, that he was able to establish this newfound sense of swagger in us is impressive in and of itself,” the comedian said. “The fact that he managed to earn the faith of this broken, skittish, abused shelter dog of a fan base and establish a sincere sense of confidence in us is nothing short of remarkable.”

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CRAIN’S CLEVELAND BUSINESS

SPORTS BUSINESS

The Cavs’ offcourt advantage As the organization heads into its 50th season, the business side continues to punch above its weight Name that location

By Kevin Kleps kkleps@crain.com @KevinKleps

The Cleveland Cavaliers, Len Komoroski points out, have ranked in the top half of the NBA in revenue every year since 2003-04. “And that includes a stretch with four years of the fewest wins in the NBA,” said Komoroski, the CEO of the Cavs and Rocket Mortgage FieldHouse. The Cavs were a combined 97-215 in the four seasons after LeBron James left for the Miami Heat. Last season — the first after James bolted again, this time for the Los Angeles Lakers — the Cavs’ 19-63 record matched the team’s mark in 2010-11. Those, Cavs, though, won the Kyrie Irving lottery, and another unlikely lottery victory, in 2014, helped pave the way for a trade for Kevin Love and James’ triumphant return. Love is still around, and he’s joined by a pair of guards — 2018 and ’19 lottery selections Collin Sexton and Darius Garland, respectively — who are key pieces in what could be a long rebuilding job. The Cavs, who only get to keep their 2020 first-round pick if it’s in the top 10, don’t have a ton of incentive to be good this season. But Komoroski, not surprisingly, said he believes the basketball side of the house, led by general manager Koby Altman, is in good hands. And the business side, despite a sizable dip in the Cavs’ season-ticket base post-LeBron, says it continues to punch above its weight. The $185 million renovation of Rocket Mortgage FieldHouse reduced the 25-year-old arena’s capac-

The renovated Rocket Mortgage FieldHouse will debut with a Black Keys concert on Sept. 30. The Cavs will open the home portion of the regular season 26 days later. (Arena construction camera)

ity by 1,130. That reduction accounted for the majority of the Cavs’ 2018-19 attendance drop of 1,213 per game, with the team reporting 38 of its 41 home dates as sellouts. As the Cavs get set for the organization’s 50th season, and the first in the newly renovated FieldHouse, the club’s season-ticket base sits just below 10,000 full-season equivalents, a source told Crain’s. The club was in the 15,000 range during James’ last two years in Cleveland. That’s probably to be expected after the best player of his generation — one who hails from Northeast Ohio — leaves for the second time in eight years. A Cavs source said the team will have a bump in single-game ticket sales this season, with the obvious caveat being there are more to sell. And just a few games on the 2019-20 schedule — most notably James’ return to Cleveland on March 26 — have stood out to buyers on the secondary market,

said Mark Klang, who operates Amazing Tickets in Mayfield Village. “This year, most folks believe they will struggle quite a bit and are in a total rebuild,” Klang said.

‘Those are excuses’ A different type of build — the renovation of an arena that, along with the United Center in Chicago, is the league’s fifth-oldest facility — has added to the Cavs’ partnership opportunities. Multiyear deals were struck with Sherwin-Williams and ClevelandCliffs for the naming rights to the entrances on the north side of the arena, which features a glass facade and an atrium that added 42,530 square feet of public space. The south side of the FieldHouse is home to the Discount Drug Mart Entrance, and nine other clubs or sections of the arena are tied to corporate partners.

tion,” said Kerry Bubolz, a former Cavaliers president of business operations A look at the notable partnerships who left in 2016 to become president of that are tied to the renovation of the the Las Vegas Golden Knights. “We facility formerly known as Quicken thought we’d be a top-revenue team Loans Arena: regardless of our market size.” JJRocket Mortgage FieldHouse That’s significantly easier when JJSherwin-Williams Entrance James is on the roster. But the Cavs, JJCleveland-Cliffs Entrance who have one of the largest social media followings in the four major JJDiscount Drug Mart Entrance U.S.-based pro sports leagues, are JJWestfield Champions Club still benefiting from their four-year JJHuntington Legends Club run to the NBA Finals. JJBacardi Ocho Signature Lounge Many of the team’s biggest deals — JJBudweiser Brew House from premium ticketing to major JJBell’s Brewery partnerships such as the multilayJJSaucy Brew Works ered jersey patch deal with Goodyear JJEverstream Founders Level and the ones tied to new arena locaJJLoudville presented by FirstEnergy tions — have multiple years remainJJCrown Royal Rotunda ing, according to sources. That, along with the overall health The arena itself has a new name, of the NBA, will give the Cavs a bit of via a “market-plus” deal that was a cushion as they again try to pick up struck with Dan Gilbert’s Rocket the pieces post-LeBron. Mortgage last spring. Several key metrics — season tickAll of which has helped the Cavs, ets, road attendance (No. 22 in the coming off one of the worst seasons NBA, after leading the league in three in franchise history, rank among the of the previous four seasons), TV rattop five in the league in partnership ings (a 58% drop on Fox Sports Ohio) revenue, a source told Crain’s. — were down last season, as expected. Such a standing goes along with an Komoroski, though, said he beorganizational mandate that Ko- lieves that Cleveland’s “passionate” moroski said is to “take great pride in sports market will continue to supoverachieving, no matter what the port the big three teams in town. Fortifying the roster, and ideally situation is. “The size of the market or whatev- molding a couple of young stars, falls er, those are excuses,” the Cavs CEO under the scope of Altman and a new coaching staff led by John Beilein. And added. The Cleveland-Akron-Canton mar- the Cavs’ payroll, with the team taking ket, at 1.4 million homes, is the na- on expensive contracts in exchange for tion’s 19th-largest TV market, accord- draft picks last season, likely will reing to Nielsen. That puts 18 U.S.-based main one of the 10 largest in the league. NBA teams, plus the Toronto Raptors, “Whether it be an investment in in larger media markets than the Cavs. the franchise or how we approach The Cavs, though, “never allowed the business as a Page whole,1it’s finding a 03-07John S Grimm.qxp 2/23/2016 10:43 AM that to be a narrative in our organiza- way to success,” Komoroski said.

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S E P T E M B E R 2 - 8 , 2 019

PA G E 13

SPORTS BUSINESS

BROWNS

CONTINUED FROM PAGE 10

The Browns’ Nov. 10 matchup against the Buffalo Bills — a 1 p.m. game against a team that was 6-10 last season — is generating the fifth-highest prices of the season for Amazing Tickets. Those numbers, Klang said, are 20% higher than the prices for the 2018 season opener against the Pittsburgh Steelers. “My numbers will blow away what I expected to do at schedule release,” Klang said.

Conversations are ‘easier’ The stats are just as strong for the Browns’ digital properties. Heading into the team’s final exhibition game on Thursday, Aug. 29, the Browns’ preseason ratings were up 11%. A Friday night kickoff at Tampa Bay on Aug. 23 generated a rating of 22.7 in the Cleveland market, with 41% of the households that were watching TV at the time tuning in for the game on WEWS. Episodes of “Building the Browns,” the Emmy-winning, behind-thescenes look at the franchise, have averaged 660,000 views on the Browns’ YouTube channel. The average view time has checked in at more than 12 minutes, and the total minutes watched on the team’s YouTube channel is up an impressive 281% year-over-year. The majority of the viewers, the team said, are in the coveted 18-to-34 demographic. “The content we produce, 75% of it

A 5-2 stretch, with Freddie Kitchens calling the plays and Baker Mayfield tallying 17 touchdown passes, to close the 2018 season helped to inspire faith in the Browns. (Nick Cammett/Diamond Images via Getty Images)

is consumed outside of Ohio,” Schoenbrun said. With a history that dates to 1946 and 417 groups of Browns Backers in 19 countries, the Browns have always been a national brand. But a starstudded roster led by Baker Mayfield and Beckham has amplified that, and

helped to produce some notable new partnerships on the business side. The group includes McDonald’s and Progressive. A deal with the latter marks the first time the Browns have partnered with a local insurance company, though Progressive, like Cleveland’s football team, has a

reach that extends well beyond Northeast Ohio. “We never want to waver on providing the best experience possible and giving back to the community,” Jenkins said. “But you do have to take advantage when you have some momentum as a brand. It’s allowed us to

have new relationships with partners we haven’t had.” The Browns also renewed a significant deal with Speedway and are “in the process of talking to a few select clients” about naming rights to their facility in Berea, Schoenbrun said. Such conversations, Jenkins noted, are “a little easier” when the team seems poised to be a championship contender. The team still sees opportunities to have partnerships tied to select spaces at the stadium, as well as a presenting sponsor for “Building the Browns,” Jenkins said. The Browns are also heading into the final season of their rights deals with WEWS (for the preseason games and shoulder programming such as “Building the Browns”), Entercom and Good Karma Broadcasting. The latter two companies are part of the unique radio rights deal the team struck with WKRK-FM, 92.3, and WKNR-AM, 850, in 2013. And ticket prices — which rose 7% in 2019, but were the league’s lowest in 2018, according to Team Marketing Report — likely will keep rising, assuming the product is vastly improved. Led by general manager John Dorsey, the Browns have consistently stressed that they haven’t accomplished anything yet. Yes, they’re getting a ton of attention. Yes, fans and partners are lining up and, for many, opening day can’t get here soon enough. “There’s definitely more of a national spotlight on it, which is a good thing,” Jenkins said. “You’d rather have that pressure than some of the pressures we’ve faced in the past.”

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PA G E 14

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SPORTS BUSINESS

NET

CONTINUED FROM PAGE 1

On July 20, a 3-year-old boy was hospitalized after he was hit by a foul ball off the bat of Indians shortstop Francisco Lindor during a game against the Kansas City Royals at Progressive Field. After the game, Lindor — who hit the ball just beyond the protective netting that extends to the end of the dugouts — encouraged every club to move the nets to the foul poles. An Indians-Royals game a week later was briefly stopped after a woman was struck in the face by a foul ball hit by the Tribe’s Greg Allen. “It’s hard, because every time you see it happen again, you kind of relive it yourself,” said Simpson, a certified public accountant who has worked at her sister’s firm in Chesterland for more than 20 years. On the night she was injured, Simpson was with her husband and three children, who were 4, 8 and 11 at the time. They were there for a Captains reading program celebration, which welcomes children from local elementary schools. In the ninth inning, after a line drive was hit toward the seats, Scott Simpson tried to warn his wife. “He didn’t finish the sentence. I just felt it hit me,” Dina said.

Above: Dina Simpson lost the sight in her right eye after being struck by a foul ball at a Lake County Captains game. Left: Some fans worry that an obscured view will spoil their enjoyment of a game. (Contributed; David Kordalski)

‘You’re playing with fire’ On Jan. 5, 2018, the Captains announced that they were extending the protective netting at Classic Park in Eastlake. The netting now goes to Sections 107 and 115 — the respective ends of the dugouts on the first- and thirdbase lines. Simpson was seated two areas over, in Section 117. “I was like, whatever,” she said of her reaction at the time. “If that’s what you wanna do, you’re not sav-

ing anybody because I was almost near the end of the seating section and I’m blind.” What the Captains did, however, is common in professional baseball. That same year, the Indians and Akron RubberDucks, the Tribe’s Class AA affiliate, moved the netting at Progressive Field and Canal Park to the end of the dugouts. By 2018, the other 29 MLB clubs had done the same. But research — which shows hundreds of line-drive foul balls with exit velocities of more than 100 mph being hit each month in MLB — sug-

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gests that isn’t enough. A recent FiveThirtyEight study of 906 foul balls hit on the most foul-heavy days at 10 big-league ballparks showed a nearequal split between balls that ended up in areas with netting (454) and fouls that landed in sections without the protective mesh (452). “You’re playing with fire,” Simpson said of the teams that haven’t extended the netting to the foul poles. “I don’t understand why they’re waiting.”

Many fans, players agree The Indians are among the clubs that say they will look into extended netting after the 2019 season. Three big-league teams — the Chicago White Sox, Houston Astros and Washington Nationals — moved their safety nets to the foul poles this summer. The Los Angeles Dodgers started the process on Aug. 21, and six other MLB clubs — the Atlanta Braves, Baltimore Orioles, Kansas City Royals, Pittsburgh Pirates, Texas Rangers and Toronto Blue Jays — have said they will have extended netting in place before the 2020 season. (The Braves plan to have the project completed by the end of September.) Baseball players have been outspoken on the issue, with many saying MLB needs to do more. The MLB Players Association proposed poleto-pole netting as far back as 2007. Japanese baseball stadiums have just that, plus ushers who warn fans with whistles and horns when a ball clears the netting. The majority of fans also seem to be in favor. A recent survey commissioned by ESPN resulted in 78% of respondents saying that expanded netting is a good idea. Opponents — some of whom can be season-ticket holders who voice their complaints to clubs — often say the netting obstructs their view and fans need to pay better attention or should understand the risks before they select a seat. Simpson — who started a private Facebook group for fans who have been injured by foul balls at professional baseball games (she said there are about 50 members) — said she’s happy big-league players have been speaking up. “They’re saying, ‘We can’t even get out of the way. Why are we expecting you to?’ It’s like, thank you,” she said.

State legislation possible After teams began to announce that they were extending safety netting to the far ends of the dugouts, rather than the foul poles, Simpson reached out to State Rep. John Patterson, a Democrat from Jefferson. Patterson said he has drafted a bill, one that’s “not ready for prime time” yet, that would authorize a study on

what would need to be done to have pole-to-pole netting at the state’s MLB and minor league ballparks, since each is configured differently. A sticking point, he said, is how high the nets should go. The netting behind home plate at Progressive Field is 23 feet high, and the protective mesh increases in height as the cables that support it climb higher along the base lines. At Dodger Stadium, the netting is being raised to 33 feet. That’s a foot higher than the new netting at Minute Maid Park in Houston. “We gotta figure out a way to standardize this,” Patterson said. Ohio has two big-league venues — Progressive Field and Great American Ball Park in Cincinnati — and six parks that host minor league teams. Six of the eight — the two MLB parks, plus Canal Park, Classic Park, Eastwood Field in Niles (home of the Mahoning Valley Scrappers) and Huntington Park (home of the Columbus Clippers) — have netting that goes to the end of the dugouts. Fifth Third Field in Toledo, where the Triple-A Mud Hens play, has netting that only reaches the halfway point of the dugouts. The exception in the group is Fifth Third Field in Dayton. The Dragons, a Class A affiliate of the Reds, installed netting that covers the entire seating bowl prior to the 2017 season. There are many logistics that go into such a step, Lake County Captains general manager Neil Stein said. One is bargaining with the respective cities that own the ballparks. “The next discussion potentially could be you have netting that’s vertical, but not everyone has the netting over the top,” Stein said. “The Indians do (via netting that stretches over the lower-level seats and extends to the press-box level). We don’t. Most minor league teams don’t.” The Captains and Eastlake officials haven’t had any formal discussions about extending the netting for a second time in three years, Stein said. Such conversations typically don’t happen until after the season, he added. Jim Pfander, the GM and chief operating officer of the Akron RubberDucks, said the increased netting at Canal Park “has already knocked down a ton of bats and baseballs that in the past had reached the stands.” He acknowledged, though, that there is a widespread push to do more, and said “everything” will be examined after the season. Simpson, who said she “hasn’t shut up” since she was injured, is trying to aid the charge. She is hoping Patterson is able to enact legislation — the state representative said he’d prefer to introduce a bill this fall and have it in place prior to the 2020 baseball season — and her Facebook group is there for anyone who wants to share stories or is in need of emotional support. She said she’s “made a lot of progress” the last two years, but her “depth perception is gone” and she has “constant flashing lights” in her eyes. All told, she’s racked up almost $90,000 in medical bills, but “really good” health insurance has paid for all but about $5,000. She said she hasn’t been to a baseball game since the injury, and has no plans to attend another. Still, she’ll continue to push for increased netting, and her Facebook group keeps a tally of every club that says it will extend the protective mesh. “I don’t know if I look like the crazy lady, but I don’t care,” Simpson said. “I don’t want anybody to suffer like I’ve had to.”

8/29/19 3:50 PM

CRAINâ€™S CLEVELAND BUSINESS

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PA G E 15

THE LIST

Highest-Paid Athletes

Ranked by base salary for current or upcoming season

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

CASH RECEIVED THIS YEAR

TOTAL CONTRACT VALUE

CONTRACT LENGTH CONTRACT (YEARS) EXPIRES (2) POSITION

(3)

COLLEGE

TEAM

BASE SALARY

TOTAL SALARY (SIGNING BONUS AMORTIZED) (1)

Kevin Love, 30

Cavaliers

$28,942,830

$120,402,172

2023

forward/center

UCLA

Tristan Thompson, 28

Cavaliers

$18,539,130

$82,000,000

2020

center

University of Texas

Carlos Santana, 33

Indians

$17,000,000

$20,333,333

$17,000,000

$60,000,000

2020

first baseman

Corey Kluber, 33

Indians

$17,000,000

$17,200,000

$17,000,000

$42,500,000

2019

pitcher

Stetson University

THIS YEAR NAME, AGE

SEASONS IN LEAGUE

Odell Beckham Jr., 26

Browns

$16,750,000

$17,000,000

$90,000,000

2023

wide receiver

Louisiana State University

Brandon Knight, 27

Cavaliers

$15,643,750

$70,000,000

2020

guard

University of Kentucky

Olivier Vernon, 28

Browns

$15,250,000

$15,500,000

$85,000,000

2020

defensive end

University of Miami

Jason Kipnis, 32

Indians

$14,500,000

$14,666,668

$14,500,000

$52,500,000

2019

second baseman

Arizona State University

Jordan Clarkson, 27

Cavaliers

$13,437,500

$50,000,000

2020

guard

University of Missouri

Larry Nance Jr., 26

Cavaliers

$12,727,273

$44,800,000

2023

forward

University of Wyoming

Jarvis Landry, 26

Browns

$12,500,000

$14,050,000

$12,550,000

$75,500,000

2022

wide receiver

Louisiana State University

Francisco Lindor, 25

Indians

$10,550,000

2019

shortstop

Carlos Carrasco, 32

Indians

$9,750,000

$47,000,000

2022

pitcher

Yasiel Puig, 28

Indians

$9,700,000

2019

right fielder

Matthew Dellavedova, 28

Cavaliers

$9,607,500

$38,430,000

2020

guard

Saint Mary's College

Damarious Randall, 27

Browns

$9,069,000

$16,984,734

2019

safety

Arizona State University

John Henson, 28

Cavaliers

$8,732,396

$9,732,396

$8,732,396

$48,000,000

2020

forward

University of North Carolina

Sheldon Richardson, 28

Browns

$8,000,000

$9,666,667

$13,000,000

$37,000,000

2021

defensive tackle

University of Missouri

T.J. Carrie, 29

Browns

$7,500,000

$8,900,000

$8,000,000

$31,000,000

2021

cornerback

Ohio University

Christian Kirksey, 27

Browns

$7,000,000

$8,200,000

$7,000,000

$38,000,000

2021

linebacker

University of Iowa

Joel Bitonio, 27

Browns

$6,500,000

$7,000,000

$51,164,777

2022

guard

University of Nevada

Brad Hand, 29

Indians

$6,500,000

$19,750,000

2020

pitcher

Darius Garland, 19

Cavaliers

$6,400,920

$13,121,640

2021

guard

Vanderbilt University

Chris Hubbard, 28

Browns

$6,150,000

$7,300,000

$6,500,000

$36,500,000

2022

tackle

University of Alabama at Birmingham

J.C. Tretter, 28

Browns

$5,500,000

$7,250,000

$5,750,000

$16,750,000

2019

center

Cornell University

Greg Robinson, 26

Browns

$5,500,000

$7,000,000

2019

tackle

Auburn University

Collin Sexton, 20

Cavaliers

$4,764,960

$8,833,560

2020

guard

University of Alabama

Danny Salazar, 29

Indians

$4,500,000

2019

pitcher

Jose Ramirez, 26

Indians

$3,750,000

$4,150,000

$3,750,000

$26,000,000

2020

third baseman

Myles Garrett, 23

Browns

$3,229,750

$8,294,251

$3,229,750

$30,412,255

2020

defensive end

Texas A&M University

Cedi Osman, 24

Cavaliers

$2,907,143

$8,317,064

2020

forward

Chris Smith, 27

Browns

$2,750,000

$4,416,666

$3,250,000

$12,000,000

2020

defensive end

University of Arkansas

Britton Colquitt, 34

Browns

$2,700,000

$11,200,000

2020

punter

University of Tennessee

Drew Stanton, 35

Browns

$2,650,000

$3,765,625

$2,765,625

$6,500,000

2019

quarterback

Michigan State University

Terrance Mitchell, 27

Browns

$2,500,000

$3,466,666

$2,800,000

$10,000,000

2020

cornerback

University of Oregon

Roberto Perez, 30

Indians

$2,500,000

$2,625,000

$2,500,000

$9,000,000

2020

catcher

Florida Gateway College

Oliver Perez, 38

Indians

$2,500,000

2019

pitcher

Ante Zizic, 22

Cavaliers

$2,281,800

$5,879,760

2020

center

Dylan Windler, 22

Cavaliers

$2,035,800

$4,173,240

2021

forward

Belmont University

Joe Schobert, 25

Browns

$2,025,000

$2,183,489

$2,025,000

$4,278,956

2019

linebacker

University of Wisconsin

Rashard Higgins, 24

Browns

$2,025,000

2019

wide receiver

Colorado State University

Eric Murray, 25

Browns

$2,015,500

$2,025,000

$2,967,303

2019

cornerback

University of Minnesota

Denzel Ward, 22

Browns

$1,805,698

$6,628,490

$1,805,698

$29,165,356

2021

cornerback

Ohio State University

Jarell Martin, 25

Cavaliers

$1,737,145 (4)

1 (4)

2020 (4)

forward

Louisiana State University

Sindarius Thornwell, 24

Cavaliers

$1,620,564 (4)

1 (4)

2020 (4)

guard

University of South Carolina

Carl Davis, 27

Browns

$1,500,000

$2,000,000

2019

defensive tackle

University of Iowa

Tyler Clippard, 34

Indians

$1,500,000

2019

pitcher

J.P. Macura, 24

Cavaliers

$1,445,697 (4)

1 (4)

2020 (4)

guard

Xavier University

Adarius Taylor, 28

Browns

$1,350,000

$2,040,625

$2,540,625

$5,000,000

2020

linebacker

Florida Atlantic University

David Njoku, 23

Browns

$1,330,918

$2,597,753

$1,330,918

$9,525,095

2020

tight end

University of Miami

46 47 48 49 50

RESEARCHED BY CHUCK SODER (CSODER@CRAIN.COM)

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

(1) Total salary figures include only a portion of signing bonuses, which are typically amortized over multiple years for the purpose of calculating salary caps. (2) Represents the final season the player is under contract. NFL contracts technically don't expire until March of the following year. (3) Excludes the 2019 Browns season, which starts Sept. 8, and the 2019-2020 Cavaliers season, which starts Oct. 23. (4) Nonguaranteed

P015_CL_20190902.indd 15

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PA G E 16

S E P T E M B E R 2 - 8 , 2 019 |

CRAIN’S CLEVELAND BUSINESS

AKRON

Auto collaboration fuels rapid growth at Stark’s Surgere By Judy Stringer clbfreelancer@crain.com

When employees of Surgere unpack their boxes at a new 40,000square-foot headquarters this January, they might not have as much elbow room as someone coming from a 7,000-square-foot building would expect. President and CEO William Wappler estimates employment will mushroom to three times its August size of 150 staffers by the time Surgere relocates from its Lauby Road site in North Canton to a Massillon Road building one exit south on Interstate 77 in Green. The Stark County company is investing nearly $10 million in the new headquarters, which will be constructed from an existing building. And while most of those new hires will be based at the headquarters, the company also recently launched a subsidiary in central Mexico. Wappler said about 30 people will work there by year’s end. By early 2021, he anticipates the company will have about 900 employees worldwide with “relationship offices” in Japan and Europe, as well as sites in Nashville, Tenn., and Detroit. “Right now, we are hiring nearly three people a day,” Wappler said. “It’s quite an aggressive expansion.” And, he added, “It has everything to do with AutoSphere.” AutoSphere is Surgere’s effort to digitally link automotive original equipment manufacturers with their suppliers and streamline the processes they use to track reusable packaging and the associated parts. The web-based platform traces its roots to a December 2017 meeting with Honda, Nissan, Toyota, General Motors, Fiat Chrysler Automobiles and several of their top-tier suppliers and transporters. At the Cleveland assembly, the carmakers agreed to explore a community approach to container asset management. Wappler said Honda was the first to deploy a shared container tracking system with its vendors, selecting Surgere as its technology provider. “The others thought that model would be a perfect framework to get (the community) started,” he said.

Good timing Surgere was a logical fit. The company began in 2004 in the package engineering space. It optimized the design of reusable shipping containers for auto suppliers. Pretty early on, the startup spotted an opportunity to help OEMs better manage their reusable investments. The costly containers were often discarded or misplaced; counting containers and finding lost ones — and sometimes the assets inside — was largely a manual process. Surgere developed software to track reusable containers and acquired a radio-frequency identification (RFID) tagging system to create location data points. Howev-

P016_CL_20190902.indd 16

er, the bigger hurdle in overcoming the lack of visibility over returnable containers and their parts was variability. “The problem was everyone had a unique solution,” Wappler said. “If you are a supplier and you are supplying parts to OEMs like GM and Fiat or whoever, when you have to do something unique for each one, it tends to be expensive, and secondarily, it never works. As a result, the problem created cost the auto industry about $3.4 billion a year.” The power of AutoSphere, he said, is delivering the appropriate technology in the form of a community — among multiple auto companies and thousands of supplier sites, many of which serve more than one OEM. “We put into the containers a lot of different sensors, like RFID and Bluetooth, so that science follows them and they don’t get lost,” Wappler said. “And all of that data is shared by all the companies in the community, and they all know where their containers and racks are, which keeps everything fully monitored and fully visible.” Surgere anticipates AutoSphere will be used at 1,551 sites among 631 clients by the end of 2019, the first full year of deployment. Toyota is just behind Honda in onboarding new supplier sites, with three remaining original collaborators “following suit,” Wappler said. Rapid user growth means Surgere needs to scale up fast, too. The company’s new Mexican subsidiary, based in Aguascalientes, will act as a hub for activity among Latin American suppliers. Wappler said more than 1,000 suppliers and automotive plants are within 124 miles of Aguascalientes. Once Aguascalientes is up and running, Surgere will open a Nashville location to derive and facilitate business among automotive interests in the South. Later — sometime mid-2020 — it will add a Detroit office to support the industry there. In addition, Surgere plans to set up shop at undisclosed locations in Japan and Europe as early as next year to supervise relationships with overseas automakers and suppliers. The company doesn’t disclose its revenue figures. Meanwhile, back at home, the company also is focused on maximizing its analytics capabilities. More AutoSphere users means an escalating amount of data funneling into the platform and, once properly harnessed, unprecedented visibility into the automotive supplier ecosystem, according to Wappler. “Today, just at the beginning of all of this, we are tracking about 1.8 million transactions a week. After full rollout, it will be a billion transactions a month. So you can image how, at that point, learning machines and advanced analytics play a significant role because you stand to gain so much insight into what is happening in the supply chain,” he said.

The University of Akron will gather technology experts from local companies for its Business Analytics Innovation Summit on Sept. 27. (Shane Wynn for AkronStock)

UA’s big data summit to tap into local expertise By Dan Shingler dshingler@crain.com @DanShingler

As it turns out, big data is a big deal in Northeast Ohio. The University of Akron is welcoming students, members of the business community and the public alike to its Business Analytics Innovation Summit Sept. 27 on the topic, which is of increasing importance to businesses. And the school had no trouble finding experts in the field at local companies. The university’s College of Business Administration is sponsoring the event. It’s the second year for the event, which last year raised $17,000 for scholarships at UA. If it’s a similar success this year, the summit might become an annual event, organizers said. “We are hoping to make it an annual thing. If it’s a big success this year, we’ll probably do it again next year,” said William McHenry, an associate professor in the university’s department of management who teaches information systems and is spearheading the event. Big data is the use of information — typically information gathered about customers — to better understand how to market products and deepen relationships between businesses and those who buy their products and other constituents. It’s become such a hot topic in the business world that UA now requires coursework in business analytics for both its undergraduate and MBA business students, McHenry said. Even students who don’t directly manage big data systems will need to understand how it works if they’re to be successful managers and executives, McHenry said. Hiring managers already realize this. “We want them to have experience with the tools, so they know the right questions to ask later,” he said. “If they don’t have experience with

cleaning data, for example, they won’t know how to ask their technical person if the data has been cleaned.” Students will get to see more about how big data works in the real world at the summit, which will be held at Quaker Station in downtown Akron. The event will feature Abdou Ayoub, managing director of Paragon Shift in Middleburg Heights; Gary Gruccio, director of enterprise and market analytics at Signet Jewelers in Fairlawn; Matt Loveless, director of information systems and data science at Orrville’s J.M. Smucker Co.; and Kevin Mooney, senior director of enterprise data governance at the Cleveland Clinic Foundation. McHenry also will moderate the event’s keynote panel with Jason Albers, information technology manager for Progressive Insurance in Mayfield Heights; and Simone Gabbianelli, global IT director of digital and analytics at Akron’s Goodyear Tire & Rubber Co. Albers said the event isn’t intended to demonstrate specific big-data tools but to inform students and other audience members of how the technology is being used, what it can accomplish and why it’s becoming more important in the business world. “Our six speakers are going to be talking about all the different aspects of business analytics: how companies use it, what they use it for, its impacts and effect on management,” McHenry said. Speakers will also address topics such as keeping data private, something with which the Cleveland Clinic’s Mooney is especially familiar, McHenry said. Meanwhile, Signet’s Gruccio will talk about how to support analytics, which his company does with its own dedicated group, and Smucker’s Loveless will address some of the human-relations aspects of big data, including hiring managers who will know how to use it. “Both of those firms are fairly well

along with their analytics implementations,” McHenry said. Ayoub, whose firm consults with clients on how to use big data and other business analytics tools, said he hopes the event shows attendees that many of them are already in a position to use big data and show them how to use it wisely. Most companies have significant data on their customers through their normal business practices, even if those firms haven’t been thinking about big data until now, he said. “Clients don’t realize how much of a gold mine they’re sitting on right now,” Ayoub said. He also hopes attendees come away realizing that there is plenty of low-hanging fruit to be harvested from existing data before they spend money on fancy big-data initiatives that should probably wait, if they’re done at all. Forget scraping social media or other external sources, and look at the information on your own computers first, he said. “You don’t always need to go out and get the Facebook, the Instagram and the Linkedin (data). Most of the time there’s so much they could do with the data they have. … That’s concrete data, and you know the quality of that data,” Ayoub said. He’ll be preaching the same at his presentation, in addition to answering questions. Those who get results from their first big-data initiatives are more likely to follow up with bigger projects, he said. For his part, McHenry hopes the event helps keep the field growing in importance among his students and local companies. He likened big data’s potential to that of oil 100 years ago. “If data is considered to be ‘the new oil,’ organizations that develop a deep understanding about how to achieve benefits from analytics will be the engines of change in which this fuel can burn,” McHenry said in a statement prior to his interview. To register for the event, go to tinyurl.com/uabigdatasummit.

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served by FirstEnergy and are not municipal power companies did not. Valley Electric Corp, and HB6 allows against HB6. Advertising Section Hill said that while it’s significant Bierne said his group opposed the consortium of investors who own Hudson Public Power customers will be required to pay the monthly HB6 because it will drastically cut OVEC to recoup operating expenses.” some ratepayers don’t have to pay To place your listing Crain’s the surcharges, “more importantly, That in includes HB6Cleveland subsidies forClassifieds, and eventually eliminate subsidies surcharge.” the cost they would have borne gets plant in Indiana, noted,sjanik@crain.com renewable-energy The city is correct, said Mike Bi- that support contact SuzanneprojJanikOVEC’s at 313-446-0455 orheemail erne, vice president of external affairs ects, such as wind, solar and hy- which would be paid for by Ohioans. shifted onto everyone else.” That means the difference beHudson said it put out its anfor the Ohio Municipal Electric Asso- dro-generation facilities in which nouncement mostly to clarify the is- tween what exempted customers ciation, the state lobbying arm for the cities have invested. Some cities won’t be affected, but sue for residents, but said anything and the rest of state residents pay is American Municipal Power trade others that invested heavily in re- that allows the city to offer lower likely to increase as HB6 takes effect group. electric rates helps its econo- and further cost-shifting takes place “We are not subject to to make up for any shortfalls, such my. those charges, and our “From our perspective, we “Any time we can offer lower as losses at subsidized utilities. If ratepayers are not subject have home-rule protection utility costs, it is an economic that happens, those costs are likely to those charges,” Bierne development advantage,” said to be shifted to small and medisaid. That’s because, he ex- that effectively prohibits the Hudson spokeswoman Jody um-sized businesses, because rates Roberts in an email. “We are for residential and large industrial plained, municipal power legislature from imposing pleased that we did not have to customers are capped by HB6, Hill companies aren’t regulatthese fees on us.” pass along that FirstEnergy said. ed by the Public Utilities “There’s a lot of rulemaking left to surcharge to Hudson Public Commission of Ohio, or — Mike Bierne, vice president of external affairs Power customers. It is confus- do, and there’s going to be cost-shiftthe state legislature. for the Ohio Municipal Electric Association ing for residents since some ing … and it could all get shifted onto “From our perspective, are on FirstEnergy, while oth- small-to-midsized businesses,” Hill we have home-rule protection that effectively prohibits the newables will be hit hard, Bierne not- ers are on Hudson Public Power. We said. “If someone’s exempted, there legislature from imposing these fees ed, so his group doesn’t see the pas- put out information so people un- are most costs to shift.” Another reason exempted comsage of HB6 as a good thing, or even derstand if they receive a surcharge, on us,” Bierne said. AMP is shielding a significant por- something likely to give municipal that it’s a FirstEnergy charge. Hud- munities aren’t likely to suddenly betion of the state from the new fees, power providers a leg up over their son Public Power customers will not come stars of economic development is that their rates were typically see the surcharge on their bills.” too. The organization has 80 Ohio corporate competitors. Neither Higgins nor Bierne already higher than those served by municipalities among its they expect to see a big investor-owned utilities in the state, members, and they serve “There’s a lot of rulemaking said windfall for their members in said Matt Brakey, president of Chaabout 400,000 customers who won’t be impacted left to do, and there’s going the form of economic develop- grin Falls’ Brakey Energy and a consultant to big industrial power users ment. by HB6, Bierne said. to be cost-shifting … and it “It’s really not going to be a in the region. Also protected from “AMP Ohio has made some pretty factor for us in terms of ecoHB6’s charges are about could all get shifted onto nomic development, I think,” poor power-purchase decisions, 380,000 other Ohio elecHiggins said, noting that rural which has resulted in above-market tric customers who are small-to-midsized areas have other disadvantages prices,” Brakey said. served by rural electric businesses.” Meanwhile, he added, HB6 will to contend with, such as the exco-ops, which also have tra miles of transmission line give savings to all ratepayers by elimhome rule to keep legisla— Edward “Ned” Hill, Ohio State University necessary to reach their spread- inating renewable subsidies. tures and the PUCO from professor and economist “Actually, HB6 should provide a out customer base. imposing the charges. Bierne said most municipali- net decrease in rates for most cus“We are not regulated. Meanwhile, the rural co-ops were ties won’t see a net gain even if they tomers. While there will indeed be That’s the whole co-op business model: We’re self-regulated,” said not as heavily invested in renew- escape HB6 surcharges, because new charges associated with HB6, Patrick Higgins, director of commu- ables, but they do collectively hold a they’ll lose a similar if not larger charges that fall off the bill should nications for Ohio’s Electric Cooper- stake in OVEC, which will receive amount as renewable subsidies dis- more than offset the new costs,” ative, the industry’s trade group here. subsidies from HB6. That may also appear. More than 70 of AMP’s Ohio Brakey said. There’s still considerable controBut that’s where the common explain why many rural GOP legisla- members will lose renewable subsidies, he pointed out, but the impact versy over HB6, and Hill said the disground and shared interest of the tors supported the bill. “We supported it. We were quiet on them individually will vary wide- closure that its costs are being ungroups seems to end. evenly borne only adds to claims that While Higgins said the rural co- about it, but we did support it,” Hig- ly. “Each one of them has a different the legislation is little more than “croops supported HB6, Bierne said the gins said. “We own 18% of the Ohio level of participation in these renew- ny capitalism.” Whether that affects public opinable projects,” Bierne said. But there’s also a hidden effect, ion might be important, too. An effort to overturn the legislasaid Ohio State University professor and economist Edward “Ned” Hill, a tion via referendum is underway, former dean of Cleveland State Uni- and its ballot language was recently versity’s Maxine Goodman Levin approved by the state for the ballot in College of Urban Affairs who testified 2020.

CLASSIFIEDS

CONTINUED FROM PAGE 1

Those nuclear subsidies will cost residential ratepayers an extra 85 cents per month beginning in 2020. However, some commercial and industrial customers will reportedly pay up to $2,400 per month. Meanwhile, the OVEC subsidies will result in residential customers paying up to $1.50 extra per month, with commercial and industrial customers forking over up to $1,500 a month in new charges. The legislation’s recent passage was controversial, with some Republicans opposed to the GOP-sponsored measure on economic grounds, while Democrats opposed its provisions gutting Ohio’s renewable-energy standards. One sticking point was the cost, which many said will put Ohio at an economic disadvantage against other states with which it competes for business and industrial plant locations. Those costs, however, apparently won’t be borne by everyone. Municipal power companies and rural electric co-ops are exempt from HB6 and their customers won’t have to pay the subsidies, their members and associations say. On Aug. 28, the city of Hudson — where some residents get their power from Hudson Public Power and others get their electrons from FirstEnergy Corp. — put out an announcement clarifying that Hudson Public Power customers would not be impacted by HB6. The city told residents on Facebook and its website that “as the result of continuous pushback from American Muncipal Power (AMP) and its member communities, the surcharge does not apply to public power companies. Therefore, Hudson Public Power customers will not be required to pay the monthly surcharge. Hudson residents that are

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“We saw significant growth at the same time as winning an NBA championship and hosting a very successful Republican National Convention. A lot of things played into a dramatically changed perception of Cleveland to the outside,” said David Gilbert, president and CEO of Destination Cleveland. Leisure travel, as it is called in the industry, is on the rise nationally. Cheap airfares, in large part due to lower fuel costs, and an increased investment in expanding tourist attractions translate into higher numbers for travel and tourism. But for the eighth straight year, those rates grew faster in Cuyahoga County than they did nationally, according to a report by Tourism Economics. The growth is mirrored by increases at Cleveland Hopkins International Airport, which hit a record number of travelers, and the Port of Cleveland, with expanded cruise travel bringing in Great Lakes and Canadian tourists. “We saw tremendous growth, but a lot of it was based on starting at a very low bar,” Gilbert admitted. Beyond the lack of a modern convention center and adequate hotel rooms, Cleveland long struggled with a perception problem. Changing those perceptions, both internally and externally, was crucial, said Ron King, general manager of the Huntington Convention Center. He said the best and only way to do that was to show, not tell, the world that “our city is the best.” “Everyone says it,” King noted. “Every city has a sizzle reel, and they

Destination Cleveland is making “Visit Me in CLE” postcards available to encourage Northeast Ohioans to promote the city. (Crain’s photo illustration)

all look exactly the same. Aerial shot over the water, people in restaurants having fun — every city has the same footage.” Word-of-mouth advertising — people coming to the city and leaving with a good impression, or more often an “I can’t believe how nice Cleveland is” reaction — is key, he said.

Our reputation for Midwestern nice, as King calls it, seems to be working. The convention center’s visitor numbers jumped from 52,000 in 2017 to nearly 90,000 in 2018, with the estimated economic impact of business there shooting from $120 million to $171 million over the same span. A vital component of the conven-

CUSTOM PUBLISHING SECTION:

ESTATE PLANNING

tion center’s success has been the marquee events Cleveland has hosted recently. That list includes the MLB All-Star Game, NCAA basketball tournaments, the Republican National Convention and the Gay Games. In addition to the national exposure, such events mean overnight guests and occupied hotel rooms. According to the Destination Cleveland numbers, both day visits and overnight stays have risen, with those staying overnight making up 42% of the total number of visitors to the region in 2018. Since 2011, that number has grown by nearly 32%, while day visits with no hotel stay increased by 26%. Of course, there are only so many NFL drafts or political conventions Cleveland can host. So how does the city sustain its momentum after the big-ticket events move on? “The NFL draft it is going to be really enormous,” Gilbert said. “The key to something like that is how do you leverage it and use it, in and of itself, as a selling tool?” Because as beneficial as high-profile events like the draft and All-Star Game are for the city, the long-term goals require attracting less-flashy events that still show a solid return on investment. “Our strategies are absolutely changing to be more strategic about the size, scale, the groups, the timing of groups and getting more strategic about the types of groups you want to have come in,” Gilbert said. Cleveland’s convention center still costs the county about $2 million a year, unlike the Greater Columbus Convention Center, which runs at a profit as a result of an average $8 million in annual revenue from parking fees. Cleveland’s facility was operating at a surplus as of late July and has

funded capital improvements from annual revenue. “We are entering a period when we are starting to look at future years and we are not going to see the hockey-stick growth because we don’t have the capacity to,” said Gilbert. “In a lot of ways, we will have to be far more strategic than we have before.” Even if the region experiences a slowdown in tourism growth, King said he would like to see the city add to its 5,000-hotel-room base to land larger conferences and meetings. This year, downtown Cleveland hotels had an average 70% occupancy rate, which King would like to see expand to 80% to 90%, which would extend business farther out beyond the city limits. More rooms means more business. Before the Hilton was built, the occupancy rate was 50%, he noted. Change is inevitable. “I think that we are heading into a very different market,” Gilbert said about the future of tourism and events in Cleveland. Both he and King said they expect a “boomerang effect” for the continued success of Cleveland’s tourism. King is hoping for repeat business, with conferences, meetings and people returning to the convention center because they had such a good experience when they were here. Gilbert has in mind a longer-term goal to transition tourists into fulltime Clevelanders. “We know that Cleveland still has major perception issues as a place to visit and, because we have done research, as a place to live and work,” he said. “How do we harness the power of those 19.2 million visits to get repeat customers? But also, how do you translate those visitors into potential people to live and work in Cleveland?”

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SOURCE LUNCH

Jim Stifler Chief economic officer, Hudson Jim Stifler thinks the region is at a tipping point. ¶ “The Midwestern moment is beginning to happen,” he said. ¶ Stifler’s experience gives him a good sense of how our region compares. He worked in finance in big cities for firms such as Fidelity Investments and JPMorgan. He retired from the field after more than 30 years, but in 2014 decided to go to work for his longtime hometown. ¶ He said he’s trying to honor the city’s history while helping to create a new narrative of innovation and steer Hudson into the future. The city recently was a finalist in the Intelligent Community of the Year competition, which looks at social and economic growth in the broadband era. Other efforts include Velocity, the city-owned broadband service, and the downtown Phase II mixed-use project, plans for which were recently revamped after some residents voiced concerns. ¶ “We want to protect this history and so forth, but we also need to think of the future. I like to say we’re connected to our past, but we’re building for our future,” he said. — Sue Walton

The Stifler file Best piece of advice “Problems don’t age well.” — from JPMorgan CEO Jamie Dimon

What’s on the radio? “I have three boys ages 22 to 28. So I listen to Alt Nation on Sirius XM, because it keeps me young.”

How he landed with Hudson His wife saw the opening and said it would be perfect for him. “And time and again, I’ve learned that she’s right way more than she’s wrong.”

Lunch spot Comida Hudson 36 Park Lane, Hudson 330-655-0059

The meal One had the Bang Bang shrimp rice bowl and an iced tea. The other had barbecue chicken empanadas and a diet soda.

The vibe Chef Brandt Evans’ latest endeavor, with partner Bill Evans, brings Mexican-style dishes to a newly revamped, comfortable space.

The bill $39.50, plus tip

Where did you grow up? I was born in Kalamazoo. I lived in Peoria and moved to Cleveland. I grew up in Mentor. Where did you go to college? Ohio State, but I did not start college until a few years after high school. One, I was a young senior. Two, I had to figure out how to pay for it. I learned a construction trade. I was a carpenter. So I started college when I was almost 21. I’m glad I learned a trade. It taught me a lot. What kind of finance work did you do? I went to Chicago for a couple of years after college and got further training in finance. I moved to Boston with the same firm. I had a nice four-year start to my career, and there was a low rumble across the street that was Fidelity Investments, which today is massive. I really caught a wave that lasted most of my 35-year career, and that was this giant movement by corporations to outsource a lot of the things they’d done internally — in my case, their pensions and their 401(k) plans. How does what you do specifically in Hudson translate to the region? I believe that a big part of my job is to be a leader in the regional economy and to be a source of ideas and inspiration, because people can say, “That little town has 22,000 people and look at what it’s doing.” What do you think of some of the region’s efforts and players? I’m a huge fan of Bernie Moreno. This is one of the smartest, most energetic people I’ve ever met. This

guy doesn’t make a lot of mistakes. I love the energy of Bernie and Jon Pinney. We’ve got to pick Cleveland up by the belt loops and dust it off. We have so much upside. I’m energized by people like that. It makes me realize how much more we all can do. What are some of the common challenges you’re seeing for the region? One of the challenges here is moving the rest of the region to a smart manufacturing mentality. We’re not the manufacturer of old anymore. That can be done for less. We have tiny companies sprouting up here, there and everywhere with geniuses behind them, and the manufacturing environment today is smart, efficient and clean. There are $80,000, $90,000, $100,000 jobs, great jobs. What kind of companies is Hudson attracting? Companies that have chosen Hudson in the past two to three years are what I call future-friendly companies. By that I mean IT, technology, software, financial forensics, medical devices, wellness, cybersecurity, homeland security. They’re all a combination of brains and what I call forward-leaning businesses. Has the city-owned Velocity broadband been what leaders envisioned as far as an economic development tool? I think it has been an unqualified success. The ability to self-fund this and stand it up by ourselves has made us the envy of Ohio. Today, almost 300 businesses use it, but nearly 100% of anyone we’ve had to attract or

incentivize uses it. In addition, it sticks our other businesses to Hudson. Is Velocity standing on its own? Operationally, it flickers in and out of the black to the red. I think it’s pretty much on the verge of being in the black full-time. The only thing that makes it go in the red a little bit is debt service, because we lent ourselves the money to build it. And people want to pick on that. But income tax revenues in the past two calendar years on a cumulative basis have risen 20%. And that’s meaningful. That’s a lot of money. What has the city learned from the downtown Phase II situation? We have looked at how we communicate and we’ve determined the one thing you can absolutely not do enough of is to constantly remind people: Here’s the idea, here’s what’s in it for you, here’s how it protects Hudson’s future. Here’s why this is a good idea for you. We had dozens and dozens of meetings. To have people say we didn’t listen, I don’t think is accurate. But I think what we thought was enough listening, we needed to do even more. Is being an Intelligent Community now Hudson’s economic development philosophy? It is our philosophy in a sense that it’s central to changing the narrative. We’re more than just cute. We’re more than just schools. It gives the city, and certainly all of us who run the city, something to strive for. Hopefully, over time it can give residents something to be proud of. To my thinking, this stuff is like the secret sauce.

700 W. St. Clair Ave., Suite 310 Cleveland, OH 44113-1230 Phone: (216) 522-1383 www.crainscleveland.com Twitter: @CrainsCleveland Publisher/editor Elizabeth McIntyre Group publisher Mary Kramer Managing editor Scott Suttell Sections editor Michael von Glahn Creative director David Kordalski Web editor Damon Sims Associate editor/Akron Sue Walton Assistant editor Kevin Kleps Senior reporter Stan Bullard, Real estate/construction Reporters Jay Miller, Government Rachel McCafferty, Manufacturing/ energy/education Jeremy Nobile, Finance Kim Palmer, Government Dan Shingler, Energy/steel/auto/Akron Lydia Coutré, Health care/nonprofits Senior data editor Chuck Soder Cartoonist Rich Williams Local sales manager Megan Lemke Events manager Erin Bechler Integrated marketing manager Michelle Sustar Managing editor custom/special projects Amy Ann Stoessel Associate publisher/Director of advertising sales Lisa Rudy Senior account executives Dawn Donegan, John Petty Account executives Laura Kulber Mintz, Loren Breen People on the Move manager Debora Stein Pre-press and digital production Craig L. Mackey Media services manager Nicole Spell Billing YahNica Crawford Credit Thomas Hanovich Crain’s Cleveland Business is published by Crain Communications Inc.

Chairman Keith E. Crain Vice chairman Mary Kay Crain President KC Crain Senior executive VP Chris Crain Secretary Lexie Crain Armstrong CFO Robert Recchia G.D. Crain Jr., Founder (1885-1973) Mrs. G.D. Crain Jr., Chairman (1911-1996) Reprints: Laura Picariello, 732-723-0569 or lpicariello@crain.com Customer service and subscriptions: 877-824-9373 Volume 40, Number 35 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for the last week of December, at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2019 by Crain Communications Inc. Periodicals postage paid at Cleveland, OH, and at additional mailing offices. Price per copy: $2.00. Postmaster: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, MI 48207-2912. 1-877-824-9373. Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, MI, 48207-9911, or email to customerservice@crainscleveland.com, or call 877824-9373 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777.

THE WEEK A sense of place

net access to businesses, has finished an 80-mile fiber ring that encircles the state capital. The fiber is designed to give businesses fast connections to 36 data centers in the Midwest, including three in the Columbus area. Everstream also recently opened a downtown Columbus office with 21 employees. Everstream’s goal is to add another 500 miles in Columbus. The company has more than 10,000 miles of fiber in six Midwest states.

A $1.2 million gift from The NRP Group and the Millennia Cos., both of Cleveland, will help expand research and education in real estate and property management at Cleveland State University. The gift will establish The NRP & Millennia Center for Property Management in the university’s Monte Ahuja College of Business. The center will have an applied research initiative and an internship program tailored to the needs of real estate and property management firms. It also will include a scholarship program.

Up to a challenge

Fiber fill Everstream’s fiber internet network has expanded to another Midwest city: Columbus. The Cleveland company, which offers high-speed inter-

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The NRP & Millennia Center for Property Management will help to expand research and education in real estate and property management at Cleveland State. (Cleveland State University)

University Hospitals was one of four winners that each received a $1 million prize from the Ohio Opioid Technology Challenge, which seeks new ideas in the battle against opioid abuse and addiction. UH Ventures, the system’s innovation arm, developed an app intended to prevent

abuse and addiction, and overdoses related to opioids. The challenge, launched in October 2017 with an $8 million commitment, is a partnership between Ohio Third Frontier and global and science technology network NineSigma.

Birdland Bird Rides Inc. scooters are back in Cleveland. The California company’s scooters returned to downtown, Ohio City and Tremont on Aug. 26. Bird originally landed here in summer 2018, but left quickly after running afoul of the city of Cleveland on issues of safety and permitting. Cleveland City Council earlier this summer voted to allow scooters back in the city and gave the go-ahead for four companies to operate here. Bird is the first to hit the streets.

8/30/19 11:35 AM

32% say their budgets have been cut.

Thfifififfififififififififififififififififififififi fiffififirpfirfifififififififisfifi. Opfirfifififififiwfifihfififififififififififis? ThfimpsfififiHfififi’sfififififirfifififivfifiprfifififififififififihfifip. In our survey of in-house counsel and senior executives at 176 companies, 32 percent said they are operating with reduced budgets. At Thompson Hine we have responded by crafting several types of pricing options that help you to better monitor and manage costs. In addition, our SmartPaTH® Value-Based Pricing ensures we accurately estimate costs based on our experience with similar matters of similar scope.

Download our research study on what corporate counsel expect and need from their law firms at ThompsonHine.com/ ClosingTheInnovationGap

Count on a pricing strategy that’s cut out for you.

A Smarter Way to Work – predictable, efficient and aligned with client goals.

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8/30/19 2:23 PM