ROLDO: Art Modell – What It Means to Lose Political Pull

By Roldo Bartimole

Arthur B. Modell — who died today at 87 years of age — lost his political power to the late Dick Jacobs and that made all the difference.

Jacobs got a new stadium; Modell got nothing. Modell left.

Jacobs rose to power after he bought the Cleveland Indians in 1986 and found a friend in Council President George Forbes at City Hall. Ingratiating himself with Forbes earned him not only the stadium but Chagrin-Highlands land, some of the most profitable developable land between New York City and Chicago, and plenty more.

Sports can pay big dividends.

Modell controlled the old Cleveland Stadium for many years with a sweetheart deal (aren’t they all). He often paid only the minimum rent and sometimes zero. The lease allowed Modell to reduce his minimum rent by the amount of admission taxes paid by fans. So, as I wrote in 1979, Modell paid ZERO for use of the old Cleveland stadium. Team leases are written typically by favored lawyers. His lease was written by Dick Hollington.

Modell controlled the stadium and the Cleveland Indians were tenants. I remember Ted Bonda, at one time an Indians’ owner, grousing to me about the high rent the team was forced to pay. Actually, the Indians’ rent was higher than the stated lease amount Modell would pay the city.

Modell – who was the darling of the media until he shoved off to Baltimore – got into financial trouble. Though he was talked about here as a leading businessman, Modell was not that financially smart. He got into trouble.

He was forced to borrow money at one percent above prime in the 1970s. Unfortunately for him, prime slammed up to 20 percent and he had to pay 21 percent. Modell in a letter to Gabe Paul of the Indians said, “At the one percent over the prime rate our interest costs totaled $1.3 million in 1981 and $1,062,000 in 1980.” He didn’t have that kind of cash sitting around. Bankers testified in 1982 court case that Modell owned some $10 million.

“It’s a private loan,” Modell testified in a California court case, “that I am obligated to pay off, and so is Mrs. Modell.”

His solution apparently was to sell assets he owned – the Stadium Corp. – to the Browns at an inflated price. It got him in trouble and cost him more when he lost the suit brought by Bob Gries.

Modell didn’t own all of the Browns, as some believed. He didn’t bother to present that fact. Bob Gries owned 43 percent as a silent owner. He never pushed himself publicly. No one knew he was a substantial owner. That is, until Modell made some moves that Gries found foul.

First, Modell used Browns money, $1 million, to buy shares in the troubled Inn on the Square (now the Renaissance Hotel). He did it on his own without a board vote. The hotel was owned by the Higbee’s Company at the time and Modell was a Higbee’s board member. He enjoyed palling with the corporate elite, as he did with lesser Cleveland figures. Gries didn’t like the $1 million decision with money that was almost half his.

Modell went further. He owned the majority of the Cleveland Stadium Club (CSC), which held the stadium lease from Cleveland. Needing capital, he had the Browns buy the SCS for $4.8 million, overriding Gries.

This irritated Gries more, especially when other factors were considered.

Earlier, Modell via SCS had bought land in Strongsville for $600,000. It was a possible site for a new football stadium. Modell valued the land at $3.8 million when he sold SCS to the Browns. Gries determined the value to be $335,000.

Gries claimed Modell overvalued the Stadium Corp. by millions of dollars. The case resulted in Modell being forced to buy back the Stadium Corp. from the Browns, pay Gries $1 million more and his legal fees.

I wrote in 1984: “Gries contends Modell used questionable evaluations of CSC’s assets, sought no independent assessment and engaged in self-dealing, damaging to the Browns and Gries.” He labeled the deal as paying Modell “protection money.”

“I don’t think we have to buy protection,” said Gries. The deal went through the team’s board, which had mostly Modell favorites.

The battle got nasty.

Although Gries owned 43 percent of the Browns, Modell wrote a letter in 1982 telling Gries:

“I consider your uninvited attendance at our highlight film press preview last night to be the most impudent of your actions to date.” (Emphasis in original)

“Your name was very intentionally excluded from the invitation list precisely because of the chilling and negative impact that your presence had.

“You have chosen to create an adversary relationship and to publicize it to the hilt. Surely, you cannot be so insensitive to human relations not to have known full well the impact of your actions.

“I have no idea what your motivations are and frankly, don’t care. You have laid down the gauntlet in court and we are fully prepared to meet and prevail in that challenge. In fact, I welcome the opportunity,” the Modell letter said.

He went on: “From this point forward, I will insist that you not attend any staff, media or team activities unless invited, and will enforce my authority to do so if it becomes necessary.”

Not only did Gries own 43 percent of the team; his family had been financially involved for 35 years; and Gries was a board member.

Gries called the letter “very intemperate and, in our opinion, childish.”

There were other problems, too. Modell had a contract with the Browns for management. The Browns failed to extend Modell’s contract when it had the opportunity to extend 10 years. Instead of extending, a new contract gave Modell a $200,000 a year salary and 10 percent of net income from the team and subsidiaries.

I attended much of the court case before Judge John Angellota. I had written a lot about Modell over the years and his lease with the city. However, during the trial I felt badly for Modell.

He seemed like a beaten man. I wrote the following in June, 1984:

“Modell is there alone. No family. Usually grim. During the recess he usually slips into a back room. He’s just recovered from severe physical problems.

“Gries, straight-backed, runner-lean, socializes during recess. He talks with family. Cultivates reporters.

“Gries carries an entourage. Wife. Sister. Off-spring. Other relatives, friends. They sit there daily. No knitting. But Diet Pepsi socializing. They might be attending a Browns game or a social event.”

Likely the Browns were lost to Cleveland after that court case.

The Modell saga certainly showed how fickle and phony the news media and most sports reporters are. They pilloried Modell, the man whose ass they kissed previously, when he took his property to Baltimore. So much so that he couldn’t return to Cleveland for fear of his life.

A real tribute to the news media, the man and the city.

 

Roldo Bartimole has been reporting since 1959. He came to Cleveland in 1965 to report for the Plain Dealer where he worked twice in the 1960s, left for the Wall Street Journal in 1967. He started publishing his newsletter Point of View in 1968 and ended it in 2000.

In 1991 he was awarded the Second Annual Joe Callaway Award for Civic Courage in Washington, D.C. He received the Distinguished Service Award of the Society of Professional Journalists, Cleveland chapter, in 2002, and was named to the Cleveland Journalism Hall of Fame, 2004. [Photo by Todd Bartimole.]

 

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