CLEVELAND - So who is the man negotiating to buy the Cleveland Browns? The Knoxville News Sentinel, also owned by our parent company Scripps, reported a five-part series about the Haslam family -- including Jimmy Haslam, the man the Browns named Friday as a potential investor.
Read the story below, as posted Jan. 18, 2011.
By the mid-1970s, the family business founded by Jim Haslam was on the verge of a breakthrough.
With the fuel industry changing rapidly, the founder of Pilot Oil Corp. was trying to keep his company ahead of the wave, and over the next decade and a half, the family's second generation would play a major role in making it happen.
But the three children of Jim Haslam and his late wife, Cynthia, approached the company in far different ways, and by the time a new century dawned it was becoming clear that only one of them was likely to make Pilot his life's work.
James A. "Jimmy" Haslam III always knew he wanted to work at Pilot, and even as a young man had begun showing the intense focus and drive that would become his hallmark.
Bobby Reagan, now the CEO of an Atlanta consulting firm, was a fraternity brother of Jimmy Haslam at the University of Tennessee and recalled his friend as an outgoing and upbeat guy who was very competitive. Reagan recalled one occasion when he was playing in an intramural football game at UT and "got my chin busted open."
With blood flowing and a flap of skin hanging down, Reagan started to walk out of the game. His friend, he said, grabbed him and asked what he was doing. "We'll take care of that after the game," Haslam said.
After his mother's death in 1974 - but before he graduated from UT - Jimmy Haslam took her seat on the Pilot board and began working at the company full time in August 1976.
The family business
The industry was changing, with profit margins on the sale of gasoline too small to support the business in the long run. Pilot needed to move into the convenience-store business - selling more food and other retail items - and Jim Haslam wanted his son to figure out how to do it. "Hell, I'm 22 years old," Jimmy Haslam recalled. "I don't know anything, right?"
Jim Haslam gave his son a list of five people around the country who understood that business and told him to go talk to them. Armed with a legal pad, Jimmy Haslam said, he would stay two or three days and ask a million questions - "most of (the questions) probably weren't very smart" - and eventually Pilot decided it made sense to hire outside expertise to ease its transition into the convenience store business. The process had been a learning experience, though, and an early indication that Jim Haslam was planning to share a large amount of responsibility with his sons.
Jimmy Haslam's younger sister, Ann Haslam, went in a different direction. After her mother's death, Ann took over many of the family's domestic duties and eventually took up a teaching career at the Knoxville Adaptive Education Center, a school for children with disabilities.
In 1988, she married Steve Bailey, the owner of a lumber wholesaling company and a childhood friend of the family who had three children from a previous marriage. With a new family of her own, Ann ended her teaching career and said later that she never really considered working at Pilot. Once she started working with kids, she said, "I just never thought about it, and Steve and I got married, and I guess I just never really thought about doing it."
When it came to Pilot, it was the baby of the family who did the most soul-searching. Bill Haslam already had shown a willingness to forge his own path, leaving Knoxville to attend Emory University in Atlanta, where - like his father and brother - he joined the Sigma Chi fraternity, and struck up a friendship with a fellow student named Crissy Garrett.
Garrett was a Memphis native and, like Bill Haslam, had a prominent father. Edward Garrett had trained with famed heart surgeon Michael DeBakey, and Garrett worked on the first successful heart bypass operation in 1964.
Bill Haslam and Crissy Garrett also shared a familiarity with unexpected tragedies. While Crissy was a student at Emory, her younger sister was killed in a car accident, and she called Bill in the early-morning hours to ask if he would drive her to the airport. She said later that she knew Bill had lost his mother, "and I knew that he would understand - or, you know, he wouldn't care if I was just sobbing in the car."
Haslam called frequently after Crissy went home, and they began dating a short time later. In 1981, the couple - both 22 years old - was married.
During his last two years at Emory, Bill Haslam - who graduated in 1980 - was eyeing a post-college career path in which he
would teach high school history for a couple of years and then go to seminary. But he was keeping his options open. Jim Haslam recalled that at one point he went for a jog with his two sons on Cherokee Boulevard, and Bill raised the issue of what his role would be if he came to work at Pilot.
Answering a calling
It was a surprise to his father, but Jim Haslam very much wanted his younger son to join the family business. "So we went over … the things he could do and would do," Jim Haslam said, "and when we finished running I said, 'Are you really serious?' and he said, 'I'm not sure.' "
In seeking counsel, Bill also provided a glimpse of his people skills, asking Natalie Haslam - who had married his father in 1976 - what she thought he should do. Interviewed decades after the fact, Natalie Haslam declined to say what counsel she offered but recalled Bill's query as "one of the greatest compliments."
Despite getting some teaching offers, Bill Haslam decided to work for Pilot, with the idea of learning a little about the business world before going on to seminary and a career as a minister. Peter "Chip" Denton, a friend and roommate of Bill who was a groomsman in his wedding, said that Bill and Crissy Haslam once drove with Denton and his wife to Gordon-Conwell Theological Seminary in Boston - a trip that included a visit to New York City to catch "Evita" on Broadway - to visit classes and meet with professors.
After seriously considering the ministry, though, Haslam eventually decided to stick with Pilot. "I had gotten real involved in our church," he recalled, "and it just became apparent to me that … the role of a pastor or assistant pastor maybe wasn't what I was called to do."
Denton said his friend had a vision for making Knoxville better. "You know, a minister does that in a certain way," he said, "but Bill had an opportunity to do it from an economic standpoint and a development standpoint, and not everybody can do that."
By the time Bill Haslam joined Pilot, the company was changing - again. Pilot already had moved from gas stations to convenience stores, and around 1980 a friend contacted Jimmy Haslam about a new innovation in Slidell, La. As Jimmy recalled it, he and his father flew into the city's tiny airport one night in their small Baron plane, barely missing the pine trees, and Jim Haslam declared that they would never return. But as it turned out, the man who owned the truck stop in Slidell, Ken Pritchard, was a former UT football player, and the ex-Vols hit it off instantly.
Pritchard's idea was to combine a gas station/convenience store with diesel pumps for truckers. Jimmy Haslam said Pritchard's Slidell travel center was selling a million gallons of fuel a month, compared to about 100,000 for a typical Pilot location, and Haslam said he probably returned to Pritchard's three locations 10 times with a legal pad and "shamelessly copied everything."
In 1981, Pilot opened its first travel center in Corbin, Ky. At the time, the company still was paired with Marathon, but the oil giant was focused mainly on the Southeast and Midwest - and Pilot's ambitions were expanding.
Jimmy Haslam said he and his brother saw a fuel-industry landscape with a "million people" in the convenience store business but not many in the truck-stop business and realized an opportunity to build them all over the country. Marathon wasn't interested in such a large expansion, and in 1988 the two companies split up, with Pilot - according to Jimmy Haslam - giving Marathon some convenience stores, truck stops and cash to exit the marriage.
Jimmy Haslam said the split was "hard on my dad," who had essentially grown up in business with many of Marathon's senior executives. "Bill and I didn't have the personal relationship (with Marathon), so it was a little easier for us to split up," Jimmy Haslam said. "For him (Jim), it was somewhat of a divorce, and I remember we had some pretty heated conversations."
No longer backed by a giant oil company, Pilot considered the overtures of Wall Street. The company began preparing for an initial public offering of stock, a move that would have provided an injection of cash, but also required far more openness and brought constant pressure for quarterly profit growth. Top Pilot executives went on a "road show" - an industry term for a series of sales pitches to potential investors - but realized that the company's shares weren't going to draw the price they had expected. The company's board met, and the IPO was deep-sixed.
Jimmy Haslam estimated that some $750,000 had been spent on the abortive effort, but it wasn't a total loss. The executive said the road show started in Knoxville, but the questions got a little tougher in places like New York, Boston and San Francisco. At the time, Pilot didn't even have a chief financial officer and, according to Jimmy Haslam, they realized that "the business is to the size now where you can't run it out of your back pocket … which is kind of how we
were doing it."
The company quickly went about addressing shortcomings in the talent department. Jeff Cornish was working as a consultant in Florida when he received a call from a headhunter who was trying to fill a CFO position with a family business in Knoxville.
Cornish said Bill Haslam traveled to Orlando and interviewed him, and he then met with the company's board at the Blackberry Farm resort. While Pilot had antiquated systems and lacked some of the necessary infrastructure to support its growth, Cornish said, it looked like a serious business and not the sort of place where needed capital was spent to support the family members. "I took it that they really ran the business as a business," he said.
The flirtation with Wall Street in the past, Cornish said Pilot looked to plow cash flow back into the business and do it in a way that could avoid high levels of debt. Also in the early 1990s, according to Jimmy Haslam, Pilot partnered with Louis Dreyfus, the French conglomerate that got its start in the commodities business.
Renewing old alliances
The Dreyfus investment powered more expansion, and in 1994 Pilot grew again with the acquisition of 11 Pro Stop travel centers in five states. That deal made it the country's second-largest truck-stop chain, with 66 travel centers that it owned and operated along with 50 convenience stores in Tennessee and Virginia.
The following year, Pilot Corp. made official a transition that had been years in the making, announcing that Jimmy Haslam would take over as CEO, with Bill Haslam stepping into the president's role and Jim Haslam staying on as the company's chairman.
Cornish - who now runs Knoxville-based consultancy Cornish Global Advisors - said that if he had been an outside consultant working with Pilot, he would have advised them to make the same move. The former CFO described Bill Haslam as a people person and "a pretty good strategic thinker" who would look at issues from a broader perspective, while he said Jimmy had been at the business longer and had "almost a maniacal focus" on tasks and managing people.
Jimmy Haslam, Cornish said, is "a guy who will every day of the week have a game plan for that day - and (a) pretty detailed game plan - and he really won't forget things that he's asked you to do, or things … that (are) on your plate. And that's good."
By the end of the decade, the family was thinking about options to diversify its investment in Pilot. With competition increasing in the travel-center industry, according to Jimmy Haslam, Pilot wanted to be in position to make acquisitions rather than be an acquisition target. The company hired Morgan Stanley to explore its options. And as it turned out, Pilot's old partner - Marathon - looked like the best bet. Jimmy Haslam said the two sides began talking between Thanksgiving and Christmas of 2000, and on the Friday before Memorial Day 2001, a handful of people crowded into his office for a day-long session, writing the outline of the deal on a whiteboard.
"I remember telling the person that cleans the office, do not under any circumstances erase this," Jimmy Haslam recalled.
The deal closed on Aug. 31, 2001. Pilot Corp. would team with Marathon Ashland Petroleum LLC - itself a joint venture between Marathon Oil Co. and Ashland Inc. - as 50-50 partners in a new venture called Pilot Travel Centers LLC, which would have 235 locations and approximately 11,000 employees.
Less than two weeks later, terrorists crashed jetliners into the Pentagon and the Twin Towers. The brazen attacks caused a shudder in the American financial system, just as Pilot was trying to finalize its financing after the Marathon deal.
"You had a lead bank give you all the financing," Cornish recalled, "but the lead bank says, 'I'm not going to hold this by myself, I need to syndicate it. So I need to go out and you need to help me go out and get a bunch of banks to buy into the deal.' … Banks and insurance companies."
As Jimmy Haslam remembers it, company officials had a meeting in New York within weeks of the attacks, but even the nearby Teterboro airport in New Jersey was closed to flights. Eventually, he said, they flew into an airport that was even farther away and were dropped off several blocks from the building where the meeting was scheduled. Haslam recalled it as a very tenuous time because no financing was taking place but said that "we were fortunate things started to loosen up and we got it done."
Changing the game plan
It was a time of monumental change for Pilot, but Bill Haslam's attention had already begun to shift. For years, his family had taken annual beach trips with a group of friends, including David Bowen, who had been a teacher and coach at Webb School of Knoxville before going on to divinity school. Bowen recalled that in the mid-1990s, the group read a book called "Half Time: Changing Your Game Plan from Success to Significance." The book's author wrote of achieving business success and a strong marriage,
but still feeling unfulfilled, and argued that the second half of one's life can be a time of "personal renaissance."
At the time, Bill Haslam was considering what the rest of his life should look like. "Maybe because I'd come to Pilot thinking I was going to be there for a short period of time … I never really thought, 'Well, this is what I'm going to do with my entire working career,' " he said later. "And so … in the back of my mind I'd thought, you know, I think there's a real chance I'd do something else at some point; I just couldn't have told you what that was."
In 1999, Bill Haslam announced he had taken a new job, heading up the fledgling Internet retail operation of upscale apparel chain Saks. The retailer was led by Brad Martin, a family friend and Pilot board member, and Haslam recalled telling Martin, "I don't know anything about the Internet and I don't know anything about fashion." But he said that Martin wanted an executive who would set up a long-term business plan and hire the people to run the venture.
The Saks move illustrated the value of family connections for a guy with no track record in fashion or technology. In fairness, though, the absence of a track record wasn't exactly a deal-breaker in the era of the Great Internet Bubble. After joining Saks, Haslam said he fielded calls from headhunters whose clients offered big money to join their team. "And I'd go, 'Well, really? Do you know that … we don't even have an online presence yet, nothing's happening yet?' " he said. "And the guy was kind of like, 'Well, so what's your point?' I mean, nobody did. So it was just (the) wild, wild west of Internet retail, where, you know, everybody was kind of making up the rules as they went."
At the time, a News Sentinel story about Haslam's move reported that his father, the Pilot Corp. chairman, "quashed any rumors that his son left (Pilot) under difficult circumstances," a sentence that highlighted the occasional fascination with - and armchair analyzing of - the family's inner workings. While it's difficult to assess exactly how the two brothers got along, then or now, friends and family describe their relationship as one of respect and affection. As Natalie Haslam put it, the two men love each other, "but almost more important, they really like each other."
According to the standard, shorthand explanation of their roles in the family business, Bill Haslam was in charge of "Pilot Tomorrow" - finding new locations, developing strategy - while Jimmy was "Pilot Today," managing the day-to-day operations of the company's travel centers and convenience stores. They switched roles at least once, though, and while Jimmy Haslam had been named the CEO, he later described the relationship as one of co-equals.
"Just like if you and I worked together and you're co-equals, there's natural tension there," he said. "Was it anything terrible or horrible? No … I'd say we worked together well. Could we have done it better? Probably. But you know, you're in your 30s, and it was a good learning experience for both of us."
All fired up
And outside of Pilot, each has been actively engaged in the other's life. When Bill launched a political career, Jimmy was an avid supporter and helped lead the fundraising for his brother's gubernatorial run. Meanwhile, Jimmy's wife, Dee Haslam, said in an interview that when she and her husband were baptized in the late 1990s - partly through the influence of local minister Doug Banister - Bill Haslam wrote his brother a note, saying it was a great day because Bill had been praying to that end since he was 16 years old.
The career paths of the two men eventually diverged, though. By February 2001, Bill Haslam had moved out of management at Saks and into a consulting role, although he didn't leave the retail industry entirely. That same year, he joined the board of Dallas-based clothing chain Harold's Stores Inc. at the invitation of Ronald de Waal, an investor in the Texas company and the vice chairman of Saks Inc. Bill Haslam would serve as the nonexecutive chairman of Harold's for several years, but the company would eventually collapse.
Another new opportunity arose in the same year, one that turned out to be more promising. Haslam was vacationing in Florida at the same time as Bob Corker, a long-time family friend and the newly elected mayor of Chattanooga, and the two men ended up going for a bike ride. A couple of weeks earlier, as Haslam recalled it, someone had mentioned the idea of a mayoral run to him. During the bike ride, Corker described the ability of a mayor to make an impact.
When he returned from the ride, Crissy Haslam said, her husband was "kind of fired up" about the idea. "And he basically kind of told me the things they talked about," she said. "And I thought, 'Uh-oh.' "
In an interview, Crissy Haslam said Corker's arguments about having an impact made sense and that she knew there was "something out there" for her husband to do, but indicated that the job
of mayor was not one she had thought about.
Haslam floated the idea to a group of friends from Cedar Springs Presbyterian Church that he meets with on Friday mornings - most recently including attorney Herbert Slatery, Young Life executive Steve Chesney, banker David Reynolds and dentist Dan Crawford. The late Lee Scruggs was a participant prior to his death in 2004. Bill Haslam received a more positive response than he expected.
He began sounding out a wide variety of people about the race, and in June 2002 he named a campaign treasurer. He didn't know it yet, but he had finally found his calling.
Read the other stories of the five-part series here:
- Pilot emerges in the 1990s as a major market force, eventually becoming one of the largest privately held businesses in America ; the family's success in business has proved a boon to East Tennessee cultural and educational institutions.