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Dillard and Mr. D: William Dillard, Edward DeBartolo mix friendship with business.

The 1989 Super Bowl at Joe Robbie Stadium in Miami brought together an interesting pair.

It wasn't the Cincinnati Bengals and the San Francisco 49ers.

At a private party held in a special suite high above the playing field, Edward J. DeBartolo Sr. had as his guest William T. Dillard Sr. of Little Rock.

Together, they watched The DeBartolo Corp.'s 49ers win their third Super Bowl.

Never mind that son Edward DeBartolo Jr. is the titular owner of the 49ers.

It is clear to most who runs the show.

Sitting side by side on that January night in Miami was a merchant's match made in heaven.

Dillard and DeBartolo go together like a striped shirt and solid tie.

Dillard, 76, is founder, chairman and chief executive officer of Dillard Department Stores Inc., one of the nation's retail giants.

DeBartolo, 82, is the mysterious founder and chief executive officer of The DeBartolo Corp., which owns or manages almost 10 percent of the mall retail space in the country.

Dillard's is the anchor store in DeBartolo mall developments throughout the country.

Not surprisingly, Dillard also is one of DeBartolo's closest friends.

"There is a real friendship between them," says one man who knows both. "And Dillard has learned a lot from DeBartolo."

Besides sharing business interests, Dillard and DeBartolo are becoming legendary in media circles for avoiding interviews.

A business reporter at the Cleveland Plain Dealer says the newspaper has all but given up trying to get an interview with DeBartolo, whose headquarters are in nearby Youngstown, Ohio.

Whether the topic is malls or sports, DeBartolo prefers to remain silent.

Dillard also keeps to himself.

Neither returned telephone calls requesting interviews.

Dillard did comment on DeBartolo in a June 12, 1989, article in Barron's National Business And Financial Weekly:

"We contemplate a wonderful business relationship that will go far beyond what it is today," he said. "In my book, there's no developer in the U.S. as shrewd, hardworking and trustworthy as Ed DeBartolo."

The Past

The Dillard-DeBartolo connection dates back almost 25 years to the days when Dillard's became the anchor store in several DeBartolo developments.

The partnership blossomed on Dec. 31, 1987, when the two held a rare news conference in Cleveland to announce an agreement to pay $165 million for the 14-unit Higbee Co. department store chain.

It was a 50-50 partnership.

Dillard would handle retailing.

DeBartolo would handle the real estate.

"DeBartolo broached |the idea~ to Dillard," says a close observer of the retail market. "He thought very highly of Dillard."

Since taking over Higbee's, the two have drastically altered the flagship store in downtown Cleveland.

Dillard's management cut the retail floor space from about 500,000 SF to about 200,000 SF, using the rest for division operations or subleasing it.

The streamlined operations have worked. Profits are up.

There's a reason some analysts refer to Dillard as "the king of the department store turnaround."

"The |Higbee~ operation has turned around," says the retailing expert. "Even though it was profitable when they bought it, it was not keeping pace with other DeBartolo and Dillard operations."

Just weeks after the purchase of the Higbee Co., Dillard and DeBartolo eyed the Joseph Horne Co. of Pittsburgh. Its 17 stores were valued at more than $150 million.

A deal was cut.

The two men announced in April 1988 they would buy the chain as their second joint venture.

The Federal Trade Commission gave Dillard the go-ahead to buy Horne's, reserving judgment on DeBartolo.

But the two powerful partners pulled out at the 11th hour, claiming a close look at Horne's books had dampened their enthusiasm for the purchase.

Horne's has filed a lawsuit in the U.S. District Court at Pittsburgh charging Dillard and DeBartolo with breach of contract and fraud.

For all their power, some believe even Dillard and DeBartolo may not weather this storm.

"The jury is still out," says one of those who has studied the lawsuit.

Even though that deal fell through, Dillard and DeBartolo have remained friends.

A Day At The Races

Just after the Horne's deal was announced, DeBartolo was Dillard's guest at a Little Rock luncheon honoring the Arkansan for 50 years in the retailing business.

Earlier that spring, DeBartolo attended the races at Oaklawn Park in Hot Springs with Dillard, verbally trashing Charles Cella's track in the process.

Dillard long has accompanied DeBartolo to Remington Park in Oklahoma City and Louisiana Downs in Bossier City, La., two of the three thoroughbred tracks DeBartolo owns and major competitors of Cella's Oaklawn.

DeBartolo also owns Thistledown at Cleveland.

"Both are older men, self-made guys," says business reporter Stephen Talbott of the Cleveland Plain Dealer. "There is a sense of symbiosis, a certain kinship because of their backgrounds."

Jim East of the Tulsa Tribune is one of the few reporters who has interviewed DeBartolo, although he struck out with Dillard.

"Both come from similar backgrounds -- from poverty to wealth and power," East says. "Both are mall developers with a keen interest in horse racing."

"I thought the relationship was very close and solid when I was there |in the late 1970s and early 1980s~," says Vincent Bartimo, a member of The DeBartolo Corp.'s upper echelon for seven years. "Mr. Dillard was a guest of Mr. DeBartolo's on several occasions."

Bartimo says he met Dillard and his oldest son. Despite being one of DeBartolo's top assistants for almost a decade, Bartimo was not privy to DeBartolo-Dillard skull sessions.

"My impression of Dillard was that he was a private person who had been in business a long time and done well," Bartimo says. "In that regard, he's a lot like Mr. DeBartolo."

A marriage made of money?

"It could well be," Bartimo says.

Or good friends who became business partners?

"Which came first, the chicken or the egg?" Bartimo asks. "I honestly don't know. I know they were personal friends. Whether they were personal friends and then business acquaintances, I don't know."

Not All Roses

Regardless of the relationship's genesis, most Dillard and DeBartolo watchers agree they are more than mere business associates.

Perhaps the most telling sign of their relationship involved the Kensington Galleria hotel-mall development in Tulsa, Okla., a town close to Dillard's heart.

Dillard's first job was at a Sears Roebuck & Co. store in Tulsa.

The Kensington Galleria was built by the Tulsa-based Williams Cos. and various locals, including Oral Roberts.

The project opened at the end of the oil boom. The hotel held its own, but the mall struggled.

Williams and DeBartolo had a good working relationship, having shared other projects.

DeBartolo took Kensington off Williams' hands as part of a larger deal. DeBartolo then went to Dillard.

Dillard opened a 60,000-SF store to anchor the mall in 1986.

"Most Dillard-DeBartolo deals have made one or both money," says East. "But on this one, Dillard knowingly took a chance by placing a store in the mall. He did it as a personal favor to DeBartolo."

Dillard and DeBartolo started from scratch after attending respected universities on a shoestring budget.

Dillard returned from graduate studies at Columbia University in New York to enter the retailing business in Tulsa. After a nine-month training course with Sears, Dillard began his own store (2,500 SF) in Nashville (Arkansas, not Tennessee) in 1938.

During the next 20 years, Dillard expanded his operations to include three stores in east Texas.

The company now operates 196 stores nationwide. Last year, it had profits of $183 million.

DeBartolo graduated from Notre Dame University at South Bend, Ind., and spent time as an Army engineer during World War II.

Once discharged, he worked for his stepfather's driveway paving and scavenger business. He soon branched out on his own. DeBartolo built subsidized housing in his hometown of Boardman, Ohio, for returning war veterans.

He thought the new residents would want the convenience of shopping near home rather than driving to downtown Youngstown. DeBartolo built his first strip shopping center in 1948. It was called Boardman Plaza, and the ex-GIs flocked to it.

All In The Families

Since finding success on their own, the two men have made their businesses family businesses.

William Dillard II is president and chief operating officer of Dillard Department Stores. Sons Alex Dillard and Mike Dillard are executive vice presidents. Each earned more than $1 million in 1990, giving Dillard's five of the 25 highest-paid executives in Arkansas.

DeBartolo's son is president and COO of The DeBartolo Corp. He owns the 49ers and often is praised as a player's owner.

Another similarity: Both men are tireless workers.

"Mr. Dillard" (never Bill) has been known to drop in on his stores without warning and inspect them.

Once he helped a mall security officer apprehend a shoplifter.

"Mr. D" or "the boss" (never Eddie) is famous for being at his office at 5:30 a.m. each day, not leaving until shortly after 7 p.m.

When he dines at Paonessa's, an Italian restaurant he owns about two miles from his headquarters, DeBartolo takes personal and business calls at a special corner table.

Paonessa's is named for Anthony Paonessa, DeBartolo's father who died months before his birth. DeBartolo took his stepfather's name.

Of course, the obvious connection is money.

Both men are rich.

Very rich.

Bartimo, who ran Louisiana Downs for seven years as the track's general manager, says the men make money together.

DeBartolo Gets His Man

A former newspaperman, Bartimo is regarded as the only past or present DeBartolo insider who will shoot straight. Or, rather, who will shoot at all.

DeBartolo employees are not encouraged to comment on "the boss."

At one point in the late 1970s, Bartimo probably knew DeBartolo as well as anybody.

"His wife and kids told me that," says Bartimo, who was rewarded handsomely for being at DeBartolo's beck and call.

Bartimo's $1.2-million annual salary made him the highest-paid sports executive in the country.

"I turned him down five times," Bartimo says. "DeBartolo is a man who is not used to being said no to. He is surrounded by gophers."

When Mr. D's "gophers" could not persuade Bartimo, DeBartolo took it upon himself.

He made Bartimo an offer he could not refuse.

As Bartimo tells it, DeBartolo's empire was on shaky ground in 1975. Louisiana Downs, in particular, was in poor financial shape.

Still, DeBartolo convinced Bartimo to come to Shreveport, La., for a meeting.

"When I went down there, he was sitting across from me with tears in his eyes," Bartimo says. "He explained to me the crunch he was under.

"He threw his checkbook on the table and said, 'Write a figure. I've got to have you.'"

Bartimo says he wrote down $100,000, plus 10 percent of Louisiana Downs' stock, which was virtually worthless at the time.

"He had tears in his eyes, telling me he had problems in Cleveland with a mall and it was destroying his family," Bartimo says. "So I went to work for him."

Things turned sour when Bartimo decided to exercise his stock option.

DeBartolo fired Bartimo in 1982, alleging Bartimo had misappropriated funds.

The matter wound up in court. The DeBartolo Corp. eventually agreed on a settlement, making Bartimo an instant multimillionaire.

Today, Bartimo is quick with a comment on The DeBartolo Corp. He has a two-sentence response written down for those who ask.

"I have no regard or respect for Edward J. DeBartolo Sr. or Edward J. DeBartolo Jr.," Bartimo says, reading over the telephone. "But I've always had positive feelings for the late Mrs. DeBartolo and the daughter, Denise."

As for rumored links between DeBartolo and organized crime, Bartimo quickly gets to the point.

"No," he says. "I have been interviewed twice by a team from the FBI. I came late to The DeBartolo Corp. What he did prior to my association, I have no way of knowing."

There also is no way of knowing what DeBartolo and Dillard will do next -- if anything.

"They would look at anything on an opportunity basis," says one analyst. "They're not aggressively seeking things or avoiding things. For what it was, |Higbee's~ worked OK.

"They can make acquisitions on their own if they choose. |A partnership~ will probably be determined on a case-by-case basis."

Because financing is tight, some have said DeBartolo is having cash-flow problems. It has been reported he would sell Remington Park and Louisiana Downs for the right price.

Recently, he dumped the National Hockey League Stanley Cup champion Pittsburgh Penguins for $31 million.

Still, DeBartolo, with an estimated net worth of $1.4 billion, ranks No. 23 on Forbes' list of the 400 richest people in America.

Dillard seemingly has no cash-flow problems. Sales for Dillard Department Stores were up 18.3 percent last year and net income was up 23.4 percent.

"Setting the numbers aside for a moment, we feel that, on the whole, our year was successful," Dillard wrote to stockholders in the company's 1990 annual report. "Many in the industry are finding poor results right now."

Not Bill Dillard.

Perhaps it is the company he keeps.

Edward John DeBartolo Sr.

* Age: 82

* Hometown: Boardman, Ohio, a suburb of Youngstown.

* Title: Chairman of the board and chief executive officer of The DeBartolo Corp.

* Education: Bachelor's degree in civil engineering from Notre Dame University at South Bend, Ind.

* First job: At age 13, DeBartolo was a scribe and translator for his Italian-speaking stepfather.

* Background: After initial success with strip shopping centers in the 1940s and '50s, DeBartolo gambled on mall developments in Florida in the '60s and on thoroughbred racing in the '70s.

DeBartolo hit the jackpot with both.

His Florida land holdings prospered. The DeBartolo Corp. continued to expand and now owns more than 75 million SF of mall space.

"Mr. D" also turned Louisiana Downs in Bossier City, La., into one of the most profitable tracks in the country after an almost disastrous start.

In addition to malls, The DeBartolo Corp. owns three thoroughbred tracks (Louisiana Downs, Remington Park in Oklahoma City and Thistledown in Cleveland), the San Francisco 49ers of the National Football League, hotels and office space. DeBartolo recently sold the Stanley Cup champion Pittsburgh Penguins of the National Hockey League for a reported $31 million.

How rich is he?

Forbes estimates his net worth at $1.4 billion.

But don't believe everything you read.

DeBartolo was asked several years ago by a reporter (during a rare interview) about his investing some money in a new parking lot for Louisiana Downs.

Asked if all his money had gone into the new $90-million Remington Park, DeBartolo became furious.

"Do you know what I'm worth?" he screamed.

The reporter, taken aback, mumbled something about DeBartolo being on Forbes' list of the 400 richest people in America.

"... Forbes," DeBartolo retorted, using the language of the street, not the boardroom.

The interview was over.

William Thomas Dillard Sr.

* Age: 76

* Hometown: Mineral Springs

* Title: Chairman of the board and chief executive officer of Dillard Department Stores Inc.

* Education: Bachelor's degree in business from the University of Arkansas at Fayetteville. Master's degree in business administration from Columbia University at New York.

* First job: After graduate work, Dillard took a job with Sears Roebuck & Co. at Tulsa, Okla. He completed a nine-month training course and then decided to open his own store in Nashville.

* Background: Dillard turned a profit immediately in 1938 with his small store at Nashville. That year, he had $42,000 in sales and revenues of $3,000.

From there, things consistently got bigger and better for Dillard.

He expanded into east Texas during the next two decades. But it was when he bought the Brown-Duncan Department Store in 1960 at Tulsa that Dillard's growth really began.

In 1963, Dillard brought his act to downtown Little Rock.

He bought Pfeifer's Department Store, two blocks south of Blass Department Store, which was then the No. 1 retail store in Little Rock.

Six months later, Dillard bought Blass, too.

Dillard Department Stores went public in 1969.

By 1990, Dillard's had grown to 186 stores in 18 states.

Last year, Dillard's had profits of $183 million. The success begins at the top.

A 1989 article in Fortune described the company's founder as "an instinctive merchant who has spent the past 50 years refining his idea of what a department store should carry |reasonably priced, brand-name goods aimed at middle- and upper-class customers~ and how it should be run |clean, well-lit stores, plenty of merchandise, and polite but not pushy sales help~."
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Title Annotation:includes biographical sketch; chairman of Dillard Department Stores and chief executive officer of Dillard Department Stores
Author:Webb, Kane
Publication:Arkansas Business
Date:Oct 21, 1991
Previous Article:The public pulse: bank holding companies hold their own among state's public companies.
Next Article:Coming in 1992: Central Arkansas commercial real estate leaders look at what the future holds.

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