analysis stretched staffs bring temp rush - crain's cleveland

By SHANNON [email protected]

As they continue to endure the worst recession sincethe Great Depression, a rising number of employers cautiously are rebuilding their staffs by hiring temporaryemployees.

Temporary help agencies in Northeast Ohio and nationwide are seeing upticks in the number of tempo-rary employees requested by employers who want to fillgaps left when they had to lay off people earlier this year.

“Customers are really nervous about hiring perma-nent people,” said KentCastelluccio, president ofCleveland-based Area Temps.“They want to keep theirwork force as flexible as theycan.”

It’s a familiar story in manymarkets across the country,said Richard Wahlquist, pres-ident and CEO of Alexandria,Va.-based American StaffingAssociation. Companies are seeing business levels improve, but remain concerned that the rebound won’tlast and so aren’t eager to add workers to their payrolls.

“Many businesses cannot keep up with demand withtheir existing work force size, so they’re beginning tobring people back on a temporary or contract basis,” Mr.Wahlquist said.

That trend has gained speed in the Cleveland market overthe last six to eight weeks, said Dan DiMarco, director ofclient services at the Cleveland office of Resources Global Professionals, which provides high-end tempo-rary workers such as accountants and consultants.

“Many businessescannot keep upwith demand withtheir existingwork force size.” – Richard Wahlquist,president and CEO,American Staffing Association

By JOEL [email protected]

These days, manyBrowns seasonticket holders are feeling likethey’re trapped in a bad rela-

tionship.They say their significant other, with

whom they have a date tonight atCleveland Browns Stadium againstthe Baltimore Ravens, doesn’t pay attention to their needs, and justtakes, takes and takes while never giving back.

And for perhaps the first time, that

imbalance is leadingmany ticket holders toconsider somethingdrastic: a breakup.

“I could always justifylaying out the money somehow,” saidBrian McPeek of Madison, a formerBrowns ballboy who has held his season tickets for seven years. “Thebig issue is that I don’t consider myself a stupid person, yet the Brownsare going out of their way to make mefeel like one.”

Mr. McPeek and others, whetherthey’re planning to renew their season

INSIDE: One season ticketholder has a solution for what he calls poor customer service. Page 9

$1.50/NOVEMBER 16 - 22, 2009

Entire contents © 2009 by Crain Communications Inc.

Vol. 30, No. 43

07148601032

643 SPECIAL SECTION

HIGHER EDUCATIONColleges and universities adapt curricula to meetsustainability push ■■ Page 28PLUS: TENURE TRENDS ■■ STUDENT-RUN BUSINESSES ■■ & MORE

NEW

SPAP

ER

CAN’T BEARTO WATCH

In a season full of bad losses, the Browns may have to prepare for one more — in the form

of backlash from angry season ticket holders

D. JAY TALBOTT/ICON SMI

See BROWNS Page 9

See TEMPS Page 36

Outsidersstruggle tofind footingin NE OhioBusiness community here tough to crack for leaders lacking local ties

See OUTSIDERS Page 6

By JAY [email protected]

Northeast Ohio can be a toughplace for a newcomer to make amark, especially if the newcomer isan agent of change.

Ask Adam Wasserman, who resignedNov. 6 after less than three years as president of the Cleveland-Cuya-

hoga County Port Authority.

His departurewas one of thoseno-notice resigna-tions; they usuallyinclude an agree-ment on both sidesnot to talk aboutthe reasons for thedeparture and,

often, a severance payment. In Mr.Wasserman’s case, $300,000.

Mr. Wasserman was hired in early2007 to implement a plan to movethe Port Authority’s docks away fromdowntown in order to redevelop thatarea as part of a broader lakefrontplan. He began to draw fire when hisport plan called for putting the docksat East 55th Street at a cost estimatedat as much as $500 million.

While Mr. Wasserman’s exit wasunexpected and has had tongueswagging, it is not unusual.

Since the mid-1990s, Mr. Wassermanis at least the fifth leader of a major regional institution who had no localleadership experience and who wouldsee his duties here end in an untimelyfashion. All came to organizations asagents of change, ready to create orimplement visionary, long-term plans.

Cleveland long has been consid-ered a tough town to survive in, withconsiderable political and civic infighting. Without a history here,Mr. Wasserman, like these otherleaders, didn’t know where the politicallandmines were buried and didn’thave a local network to tell him who

Stretchedstaffs bringtemp rushDealing with more work but stillwary of another fall, employersincreasingly turn to contract help

NOTICE TO READERSDue to the Thanksgiving

holiday, Crain’s ClevelandBusiness will not publish anissue next Monday, Nov. 23.

Please visit www.CrainsCleveland.comdaily for all the top busi-ness stories in NortheastOhio.

Also, be sure to pickup Crain’s on Nov. 30, when weunveil our annual Forty under 40 class.

Wasserman

ANALYSIS

20091116-NEWS--1-NAT-CCI-CL_-- 11/13/2009 3:34 PM

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REGULAR FEATURES

Best of the blogs ........35Big Issue ......................8Classified ....................34Editorial ........................8

Going Places ...............10List: Largest savingsinstitutions ................27

The Week ...................35

INSIDEDealers look for some direction

Two words have been driving a controversy,and now are at the center of a lawsuit. The issue is whether anyone owns the phrase“auto mile.” As such, The Bedford AutomileDealers Association filed a suit against 14dealerships on Lorain Road in North Olmstedfor using the words. The Bedford group filedthe suit in an attempt to get the North Olmsteddealers to stop referring to themselves as the “North Olmsted Auto Mile.” SeeChuck Soder’s story on Page 4.

ROUGH WATERS

Lake 2005 2006 2007 2008 2009

Erie 12.18M 11.77M 9.90M 8.94M 5.44M

Michigan 3.09 2.40 2.50 2.22 1.53

Superior 15.59 15.78 15.52 16.91 13.59

All lakes 30.86 29.94 27.93 28.07 20.57

Coal shipments on the Great Lakes are down sharply this year as the recessionbatters industrial demand, according to new data from the Lake Carriers Association of Rocky River. Shipments in September on Lake Erie, Lake Michigan and Lake Superior totaled 2,752,691 net tons, down 34% from4,183,982 net tons in September 2008. Here’s the January-to-September data for the past five years:

SOURCE: LAKE CARRIERS’ ASSOCIATION; WWW.LCASHIPS.COM

Great Lakes coal shipments: January to September, 2005-2009 (net tons)

20091116-NEWS--2-NAT-CCI-CL_-- 11/13/2009 2:30 PM Page 1

NOVEMBER 16-22, 2009 WWW.CRAINSCLEVELAND.COM CRAIN’S CLEVELAND BUSINESS 3

INSIGHTTHE WEEK IN QUOTES

Financial advisers face more questions from clients wary of turmoilBy ARIELLE [email protected]

These days, financial advisers areanswering a lot more client ques-tions. And they’re not just aboutcollege savings or retirement.

Now, in the wake of some notable financial scams, clientswant to know where their money isheld, who their advisers are associ-ated with and where exactly they’reinvested.

“Individuals, I wouldn’t saythey’re suspicious, but they’re getting a lot more wise about whothey’re doing business with,” saidChristopher Bart, managing directorand principal of Aurum WealthManagement in Mayfield Village.“The financial services world haschanged dramatically.”

Mr. Bart said more clients aretrying to understand the funda-mentals of what their advisers suggest while also taking it upon

themselves to do their own duediligence.

But Mr. Bart and others at inde-pendent advisory firms see that curiosity as a great opportunity.

While the need to answer morequestions about how they workcould be difficult for some invest-ment houses, which are selling prod-ucts along with advice, increasedanxiety means people are seekinginput from those advisers who havea fiduciary responsibility to their

customers alone, said Les Szarka,CEO of Szarka Financial Manage-ment in North Olmsted.

Matt Olver, senior wealth adviserat Spero-Smith Investment Advisers,said independent advisers are in agood place to offer clients reassur-ance.

“It definitely has become a biggerissue,” Mr. Olver said. “We welcomethe comments or questions about it.”

At Spero-Smith, most new clientscome from referrals, Mr. Olver said,

so there is a level of trust thatcomes with a recommendation tothe firm. But Bob Coode, partner-in-charge of financial services atSkoda Minotti in Mayfield Village,cautioned that a referral, or a long-standing presence in the field, nolonger may be enough.

After all, most investors inBernard L. Madoff Investment Securities LLC came via referrals,and the firm was nearly 50 years old

“The current situationmakes me feel like adegenerate gamblerdoubling his bet aftereach loss in a hope toeventually breakeven.”— University Heights native andBrowns season ticket holderGrant Keating. Page One

“No course should betaught without somemention and some in-filtration of the word‘sustainability’ and theprinciples it embodies.”—Roger Saillant, executive director of the Fowler Center for Sustainable Value at CaseWestern Reserve University’sWeatherhead School of Manage-ment. Page 28

“It’s getting out ofhand. We do wantthem to do well. Wejust want them toswitch the name.”— Michael Friedman, president ofthe Bedford Automile Dealers Association, which has filed a law-suit in an attempt to get 14 NorthOlmsted dealerships to stop refer-ring to themselves as the “NorthOlmsted Auto Mile.” Page 4

“Given my mouth, if itwasn’t for tenure, Iwouldn’t have a job.”— Edward “Ned” Hill, dean of the Levin College of Urban Affairs at Cleveland State University. 0

Datatrak begins healing processClinical trial softwareprovider repositionsafter steep revenue hit

August, two months after deregis-tering its stock from the NasdaqStock Market.

Datatrak may not need muchcash, however, because the companyno longer is routinely losing morethan a million dollars per quarter likeit was last year, said Laurence Birch,

the company’s interimCEO.

Datatrak during the second quarter lost just$39,000, even as revenuefell 19%, to $1.83 millionfrom $2.24 million com-pared to the second quarterof 2008, according to itsunaudited results. Plus,once severance costs are

factored out, the company lost just$153,000 from operations in the firstquarter. In the fourth quarter of lastyear, it turned a profit of $15,000from operations, which also factorsout severance costs.

Mr. Birch said those results givehim hope the company can survive

with the cash it has.“I can taste profitability,” he said.Massive cost cuts have helped the

company’s bottom line: Datatrak today has about 50 people, downfrom 75 at the start of 2008 and 117in early 2007. The company also announced last June that it wouldshut its office in Bonn, Germany,and it has eliminated some high-level executive positions.

They were necessary changes, given the company’s lack of cash,Mr. Birch said.

“If we hadn’t have made thosechanges and done what we’d done,we’d have been out of business ayear ago,” he said.

A need to avoid hiccupsThe company also dodged what

would have been a fatal bullet inDecember 2008 when it reached anagreement that allowed it to forgopaying $3 million in promissorynotes to some former shareholders

By STAN [email protected]

Ahigh office vacancy rate and a horrific recession laden with severe job cuts usually wouldset the table for steeply

discounted rents as building ownersand developers try to land or keep tenants.

While that is true for much of the nation, thatis not the case in Northeast Ohio, mainly because its office market participated so little inthe last economic expansion.

Although office rents nationwide dropped 8.5%by the end of September compared to a year earlier,rents in the Cleveland region actually rose 0.5% overthat 12-month period, according to a study by Reis Inc., arealty data firm in New York.

“Cleveland rents really didn’t participate in the (office) boomthat ended in 2007,” said Victor Calanog, Reis director of research. In terms of effective rents, which include incentivessuch as free rent or additional building improvements thatlandlords provide to win tenants, Mr. Calanog said rents declined in Northeast Ohio from 2000 to 2007.

Moreover, when office rents are low, building owners havelittle room to cut rents when the economy sours.

“It’s cliché,” said Dr. Calanog, an economist, “but there’sSee RENTS Page 34

By CHUCK [email protected]

The patient is stabilizing,but remains in intensivecare.

That’s how a doctormight describe DatatrakInternational Inc., a Mayfield Heights softwareprovider that over the pastthree years has cut its staffin half in an attempt to stem hugelosses.

The company, which makes soft-ware used to manage clinical trials,had just $1.63 million in cash andhighly liquid investments as of June 30, according to an unaudited second-quarter report it released in

Birch

See DATATRAK Page 10

See ADVISERS Page 7

Office rents inch upRegion’s softer market this decade has shieldedit against price declines that other cities nationwide now are experiencing



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‘Auto mile’ at center of lawsuitBedford dealers groupchallenges use ofwords in N. Olmsted

By CHUCK [email protected]

Does anyone own the term “automile?”

That question is at the heart of alawsuit filed in Cuyahoga CountyCommon Pleas Court by the BedfordAutomile Dealers Association against14 dealerships on Lorain Road inNorth Olmsted. Tom Ganley, whoowns automobile dealerships acrossthe region and is running as a Repub-

lican for one of Ohio’s two seats in theU.S. Senate, owns dealerships on bothsides of the lawsuit.

The Bedford group filed the suit inan attempt to get the North Olmsteddealers to stop referring to them-selves as the “North Olmsted AutoMile.” Bedford dealerships in thecluster near the intersection ofBroadway Avenue and RocksideRoad for decades have referred tothe area as the “Bedford Automile,”and the association in 1987 regis-tered the word “automile” as a tradename with the Ohio Secretary ofState’s office.

When the North Olmsted dealersbegan using the phrase “North Olmsted Auto Mile” to describe thegroup in advertisements and promo-

tional material just over a year ago, itupset a lot of the dealers in Bedford,many of whom are running operationsthat have been in their families forgenerations, said Michael Friedman,president of the Bedford AutomileDealers Association. The Bedforddealers’ group soon thereafter sent theNorth Olmsted dealers a letter urgingthem to stop using the phrase.

“It’s our name. It’s our legacy,”Mr. Friedman said.

Bernie Moreno, who owns Mercedes-Benz of North Olmstedand Porsche of North Olmsted, argued that the Bedford group hasno right to the phrase becausecountless dealers across the countryalready use it. For instance, a groupof dealers in Cincinnati refers to itself as the Beechmont Automile.

“That would be like someone saying, ‘I own the word discount,’”Mr. Moreno said.

Mr. Friedman argued that theNorth Olmsted dealers, who are notpart of a formal organization, couldend up confusing consumers by using the phrase.

“It’s getting out of hand. We dowant them to do well. We just wantthem to switch the name,” he said.

Ironically, Mr. Friedman is generalmanager of three Bedford dealer-ships owned by Mr. Ganley. Thosedealerships are not actively partici-pating in the lawsuit — Mr. Friedmannoted that they are not payinglawyer fees — because Mr. Ganleyalso owns Ganley Honda and GanleyWestside Imports, which both are in North Olmsted and are listed as defendants in the Bedford group’slawsuit. Ganley Westside Imports’web site even lists it as “1st on theNorth Olmsted Auto Mile.”

For Ganley’s dealerships in Bedford to participate in the lawsuitwould be a conflict of interest, Mr.Friedman said.

“We don’t want to sue our owndealerships,” he added.

A phone message left last Thursday,Nov. 12, at the number listed on Mr.Ganley’s campaign web page was notreturned by press time last Friday. ■


By FRANK ESPOSITOPlastics News

Plastics compounder and recyclerMichael Day Enterprises Inc. inWadsworth has filed for Chapter 11 bankruptcy protection fromcreditors, and expects to be sold toItaly’s Radici Group for $5.7 million, unless another buyer comes forwardin the next 60 days.

Michael Day made the filing lastTuesday, Nov. 10, in U.S. BankruptcyCourt in Akron. The company citedassets and liabilities each valued atbetween $10 million and $50 million.

In a Nov. 11 news release, MichaelDay president Michael Cain said the company “has been negatively impacted by the recession, the accompanying downturn in ourmajor markets and the tightening ofcredit markets.

“This has made it increasinglydifficult for us to obtain the capitalneeded to support our customers,”Mr. Cain said, adding that the company will continue to operateduring the bankruptcy process.

In the bankruptcy filing, MichaelDay officials said customer ordersbegan to increase recently, but because of the company’s limitedcash availability, it could not fill requested orders.

In a phone interview last Thursday,Nov. 12, Mr. Cain said in his 30

years working with the automotivesector, he had never seen the market“stop so quick and then start soquick.”

“Our business has strengthened— now it’s a question of whether itcan be sustained by the economy,”he said.

Mr. Cain also said the company— which compounds and recycles a variety of engineering resins, including nylon and polycarbonate— “has done a lot of heavy lifting” inthe last 18 months to preserve thecompany and to continue to supplyits customers.

“We’ve located a strategic buyerand have a signed agreement,” hesaid. “And we also have support andfunding from our bank.”

Michael Day Enterprises employs84 and posted sales of almost $44million in its 2009 fiscal year, whichended Sept. 30. Most of its salescome from the automotive sector,which has been pummeled by adownturn in auto sales and by the

“(The recession) hasmade it increasingly difficult for us to obtainthe capital needed tosupport our customers.” – Michael Cain, president,Michael Day Enterprises Inc.


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Capital dearth drives compounder into Chap. 11Pummeled by auto decline, Wadsworth outfitsees business uptick but lacks cash to supply it

bankruptcies of General Motors andChrysler.

The company had employed 135as recently as 2005, but had reducedthe size of its work force in an attempt to cut costs.

Radici Group is a maker of plas-tics, chemicals and fibers based inBergamo, Italy, with annual sales of$1.8 billion. Radici has worked withMichael Day as a supplier at variouspoints over its history, Mr. Cain said.

Radici’s plastics business had operated its own North Americancompounding plant in Blacksburg,S.C., until closing it in 2007 becauseof declining sales in the region. Inlate 2007, Radici marketing andtechnical service director GiovanniPioltini told Plastics News that Radici“is not giving up on the North Amer-ican market,” and would continue to serve the region via imports anddistribution sales.

Michael Day Enterprises is ownedby plastics veteran Michael Day, whofounded the company in nearby Fair-lawn in 1981. Prior to starting hisown company, Mr. Day worked forplastics and chemicals firm CelaneseCorp. and A. Schulman Inc.

According to a court filing, MichaelDay Enterprises’ largest unsecuredcreditors include Huntington Bank($585,000), recycler Technoplas Inc.($587,000) and resin distributors JMPolymers ($536,000) and MonsterPolymers Inc. ($323,000). ■

(Frank Esposito is a senior reporterwith Plastics News, a sister publica-tion of Crain’s Cleveland Business.)


to tread carefully around. Plus, these heavily recruited leaders

often are private sector managershired into public agencies or intoorganizations with high public profiles or local constituencies. Mr.Wasserman fit that mold, and he sawhis primary job as running a businessabout to embark on a big expansion,not running for public approval.

The dearly departedEach of the following executives

came in with high hopes, but beforelong found their plans sinking in thelocal quicksand.

Dennis Barrie was recruited fromCincinnati in 1993 to put meat onthe bones of the yet-to-be-builtRock and Roll Hall of Fame and

Museum. He was gone shortly afterNew Year’s Day 1996, less than sixmonths after the Rock Hall opened.

Edward Hundert, who had beendean of the medical school at theUniversity of Rochester, took overas president of Case Western ReserveUniversity Aug. 1, 2002, with a five-year plan to reshape the universityinto an economic engine for the region. Four years later, he was gone.

Robert Farley, executive vice pres-ident of the Fort Worth Chamber ofCommerce, was hired with greatfanfare in November 2003 to be thefirst head of Team NEO, a nonprofitintended to broker some of the region’s bigger economic developmentdeals. He resigned in December 2005.

In July 2008, Magnet, the manu-facturing advocacy group formerly


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continued from PAGE 1

Outsiders: Disconnect on vision often leads to troubleknown as CAMP, named David Foutspresident. While he had worked inthe region — he was a former Ernst &Young accountant and consultant —he had not been visible in civic affairs. By this October, Mr. Foutswas replaced on an interim basis byDaniel Berry, a vice president of theGreater Cleveland Partnership busi-ness advocacy group.

Each of these men was hired by aboard of directors that was lookingfor someone to implement new ideas,new ways of operating, to breakthrough the inertia and negativismthat can engulf efforts at change inNortheast Ohio. Each “resigned” unexpectedly, usually saying theywould be pursuing other interests.

Division over vision“There’s an evolution to any sort

of organization,” said Edward “Ned”Hill, dean of the Maxine GoodmanLevin College of Urban Affairs atCleveland State University. “Youstart with a board (of directors) that’sgot a vision of where it’s going, andyou find out not everyone agreeswith that vision.

“Sometimes the CEO brings thatnews back and they shoot the CEO,or sometimes the CEO can’t imple-ment the vision.”

In these situations, the full storybehind a CEO’s departure often isn’tknown widely for years.

In Mr. Barrie’s case, he left sixweeks after the Rock Hall boardbrought in William Hulett, a localStouffer hotel executive, to be chiefexecutive over Mr. Barrie.

“We needed a little more horse-power running this thing,” Mr. Hulett,who had been on the museum’sboard of directors, told The PlainDealer when he was appointed. “I justdon’t think we had the staff structuredright to provide the necessary overall management of the facility,”he said at the time.

Two years later, Mr. Barrie wouldsay that micromanaging by membersof the Rock Hall’s New York board ofdirectors had made the job intolerable.

An imprecise processWhen Dr. Hundert took over as

president of Case Western Reserve,he said his goal was to invest heavilyto make the university “the world’smost powerful learning environment.”

However, money got tight. In par-ticular, alumni donations declinedsharply after Mr. Hundert removedthe words “Western Reserve” fromthe university’s logo and the facultyhanded him a vote of no confidence.

Team NEO hired Tom Waltermire,former chairman and CEO of plasticsmanufacturer PolyOne Corp. in Avon,to replace Mr. Farley and reshape itsmission. Team NEO shifted its focusto marketing the region to out-of-town companies looking to expandafter it found that local communitiesweren’t ready to concede the role ofdealmaker to a regional organiza-tion. Doing deals, not marketing,was Mr. Farley’s expertise.

Magnet, too, is going through atransition.

“It was partially a leadership issue” at Magnet, Dr. Hill said. Buthe said the organization is strugglingto grow in two different roles — pro-viding direct assistance to individualmanagers and serving as a broaderadvocate for manufacturing.

Finding the right person to managesuch complicated organizations “ispart of the evolution,” observed Dr. Hill.

“If a board got it 100% right and always picked a winner, then they areincredibly conservative,” he said. ■


“Trust has a different definition today becauseof mistrust.” – Nan Cohen, certified financialplanner, Cedar Brook FinancialGroup

before it was revealed to be a Ponzischeme.

“You just never got these ques-tions in the past,” Mr. Coode said ofclients who ask an adviser who willbe holding their money. “People assumed, right or wrong, that if afirm was 100 years old, it was fine.”

Heightened attentionTony Decello, director of private

client advisers at Deloitte in Cleve-land, said interest in what advisersdo comes in cycles, and he doesn’tthink that answering more questionsis a bad thing.

“When the markets are great, you have a hard time convincingpeople to pay attention to details,”Mr. Decello said.

Nan Cohen, a certified financialplanner with Cedar Brook FinancialGroup in Cleveland, said shethought some people were shyingaway from going to financial advisers,even as their expertise was neededmore. Now, she says, people arecoming back — but they still haveissues of trust.

It’s not just advisers they’re ques-tioning, though, Ms. Cohen said.They also wonder about credit ratingcompanies and ask how an advisercan know that a bond is good.

“Trust has a different definition today because of mistrust,” Ms. Cohensaid. “We can no longer have the assumption that if (advisers) were doing it for 30 years, it must be OK. We


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Advisers: Investors want accountabilitycontinued from PAGE 3 have to ask, ‘How are they doing it?’”

Cedar Brook has seen its owntrouble, with some investors losingmoney in two funds that have beenshut down by the Securities and Exchange Commission. ProvidentRoyalties, a Texas fund that allegedlyraised at least $485 million frommore than 7,700 investors, was usingmoney that was supposed to go toward the acquisition and develop-ment of oil-and-gas assets to payfalse dividends and returns to earlierinvestors.

Medical Capital Holdings, a medicalreceivables financing company inCalifornia, also was accused of fraudfor misappropriating $18.5 million to pay administrative fees, and a receiver was appointed.

Azim Nakhooda, Cedar Brook’schief investment officer, said he doesn’t know the extent of the MedicalCapital losses suffered by Cedar Brookclients. Michael Perlmuter, managingprincipal of Cedar Brook, said previ-ously that fewer than 2% of CedarBrook’s 2,500 clients — or 50 people —lost less than $9 million, or about 0.5%of the $1.8 billion Cedar Brook ismanaging, in Provident Royalties.

No fool-proof safeguardsMs. Cohen said she talks about risk

“extensively” with her clients, but thatsome seem to have lost sight of the inherent risk in investing. Still, shesaid, people seem to be getting overtheir first jarring reactions to thefrauds that have been exposed and

again are beginning to trust peoplewith whom they have financial rela-tionships.

Even as they’re asking for checksand balances, Ms. Cohen said, people still tend not to ask enoughquestions about, perhaps, how advisers get paid and whether theyhave any special incentives for selling a specific product or fund.

The financial services industry hasa lot of credibility to gain back, Mr.Nakhooda said, but firms are changingin response to their mistakes.

“We’re doing it one investor at atime, one client at a time,” he said.“We have to show them what welearned, what we’re doing differently.”

Mr. Olver, at Spero-Smith, saideven as firms make changes, there’sthe chance that something else maygo wrong. While Spero-Smith andother advisory firms have institutedmore checks, he said there’s no wayto guarantee another fraud won’t beperpetrated.

“At the end of the day, unethical behavior can happen anywhere,” hesaid. “You can’t guard against it, butwe do have safeguards in place thatmake it more difficult for that unethicalbehavior to occur.” ■

Former U-Store-It execsopen doors to storage firmBy STAN [email protected]

Two veterans of U-Store-It, formerly a Cleveland-based self-storage empire that moved its head-quarters to Philadelphia earlier thisyear, have acquired two of itsNortheast Ohio properties tolaunch their own company in theminiwarehouse business.

Doing business as All Stor SelfStorage, but formally named SquareFoot Management Cos., the venturewas formed by Steve Osgood, formerly U-Store-It’s chief financialofficer, and Tedd Towsley, U-Store-It’s former treasurer. Mr. Osgood isthe new company’s CEO and Mr.Towsley its CFO.

The first strokes in putting theirown names into the ownership category are the acquisition of theformer U-Store-It property at 10117Brecksville Road in Brecksville,which transferred Nov. 4 to All Stor,and a former Hudson U-Store-Itproperty at 70 W. Streetsboro St.that sold last October. Both proper-ties are about 20 years old, about50,000 square feet in size and haveoccupancies in the 80% range.

Although Messrs. Osgood andTowsley declined to disclose the purchase prices, Cuyahoga and Summit county land records, respec-tively, put the sale prices of the

Brecksville center at $3.3 million andthe Hudson property at $2.64 million.

All Stor acquired each propertywith some equity contributed by agroup of silent investors. Mr. Osgoodsaid the Amsdell family, which builtU-Store-It from the ground up andlost managerial control of it two yearsago, has no stake in All Stor.

U-Store-It has been sheddingproperties as part of a drive to improve liquidity and reduce debt,according to a transcript of U-Store-It management’s Feb. 27 conferencecall on the Seeking Alpha financialblog.

All Stor will focus on NortheastOhio purchases as it builds its port-folio of properties because it makesits headquarters here. Mr. Osgoodsaid the two men also believeNortheast Ohio has fewer mini-warehouse properties than otherparts of the country.

Although prices for self-storageunits have not fallen as much as other commercial property types,one factor that will aid the duo isthat the $2 million to $3 million acquisition price for purchases islow enough that local and regionalbanks will have an appetite for lendingon such deals. In the initial acquisi-tions, All Stor’s lenders are TriStateCapital Bank of Pittsburgh, whichhas a Cleveland office, and FirstFederal of Lakewood. ■


As I write this, the ClevelandBrowns are trying to work theirway out of being the butt of all bad football jokes by re-

inserting Brady Quinn as their startingquarterback as they readied for the fiercedefense of the Baltimore Ravens.

The whole thing unfolding in thisgrand old football town is so weird it’s surreal. It would bejust my luck that somehow theBrowns will have pulled off theimpossible and won this week’sMonday night matchup; Idoubt that will happen, but Iwould be thrilled to be wrong.

What I am hoping for is thatsome people come to theirsenses in and around the teamheadquarters and figure a pathto respectability. I just don’t know how that happens, or at least begins tohappen.

It long has been a given that Clevelandis a football town (although the currentCavaliers team and organization couldbe changing that), but how patient can

Browns owner Randy Lerner expect thefans to be? Especially when they readquotes like this one in Plain Dealer beatwriter Tony Grossi’s pre-game story lastweek: “With any of these decisions, I’m not looking to change,” he quotedcoach Eric Mangini as saying regarding the shift back to the season-opening

starter at QB. “That’s never theintention.”

Now, clearly, we read suchquotes out of the context inwhich they are uttered — it’s always like that for newspapers,ours included.

You hope that reporters,through a consistent body ofaccurate reporting and writingover a long period of time, earnthe respect and trust of the

readers. So I don’t know what else thecoach might have said, but that quote —again admittedly without context —seems absurd.

Does he mean that at 1-7, he’s not trying to change a team that ranks near the bottom of so many statistical

measurements (including touchdownsscored)?

Excuse me? I don’t know which I findmore aggravating — that quote or thecoach’s decision two weeks ago to insertBrady Quinn in an unwinnable gamewith a little more than three minutes left.

Then I read about Mangini giving national radio interviews, and I wonderwhy he hasn’t been more expansive withthe fans here who really count.

Is anyone in Berea soliciting, or taking,any advice from communications experts?

Do they ever stop and think what message is conveyed when the owneragrees to an interview with the region’slargest daily newspaper, but only by e-mail, with prepared questions and nofollow-up?

There needs to be a teardown — again— inside the Browns headquarters.Nothing is working right now, and therest of the football world — and all theso-called “knowledgeable football men”Mr. Lerner says he wants — may want nopart of this town and its team. ■


All shook upG

overnment entities that rely on taxpayersfor all or part of their finances have a dutyto keep their operations and their decision-making processes transparent to the public.

The board of the Cleveland-Cuyahoga County PortAuthority has breached that duty with its failure to disclose the reasons for the sudden, $300,000buyout of president and CEO Adam Wasserman.

Transparency is not a strong suit of governmentbodies and agencies in Northeast Ohio. For example,the Cuyahoga County commissioners routinely resorted to meeting behind closed doors in “execu-tive session” to craft the deal struck this year withMerchandise Mart Properties of Chicago for a newconvention center and medical merchandise martin downtown Cleveland.

We now have the curious case of Mr. Wasserman,who has succeeded in shaking up things at the Portof Cleveland, though not in the way he expected.

Mr. Wasserman embodied the spirit of early 20th

century architect Daniel Burnham, creator of themall plans in Cleveland and Chicago, who invokedthe notion of making big plans that would stir men’ssouls. Mr. Wasserman’s big plan called for creatinga $500 million home for the Port of Cleveland nearEast 55th Street, which would free up for redevelop-ment valuable downtown land by moving the portfrom its current location at the base of West NinthStreet.

There was a certain “if you build it, they willcome” element to Mr. Wasserman’s plan, which envisioned the new port becoming the equivalent ofan inland seaport that would serve as an alternativeto congested ports along the East Coast. It would be capable of handling the container vessels ofglobal shippers that wanted their cargo delivered toAmerica’s heartland, and vice versa.

Skeptics questioned whether enough containerships would make the trek through the St. LawrenceSeaway to reach a Cleveland superport, and wondered where the money would come from tojustify the massive expense. But the Port Authority’sboard seemed comfortable enough with Mr.Wasserman’s plan that it let him spend several hundred thousand dollars to beef up his staff so thatit could pursue the new business he envisioned.

Now, less than three years into a job for which hewas rewarded with a hefty raise just last year, Mr.Wasserman is out, without a decent explanation asto why.

It’s ironic that the first of the “frequently askedquestions” on the port’s web site is, “Is the Port Authority a government agency?” To which the answer is: “The Port Authority is a governmentagency authorized under state code and created by the city and county. The port authority has theresponsibilities of a public agency, including holdingpublic meetings and making its records available forpublic inspection.”

Lest the port board forget, a tax levy that yieldsabout $3 million a year for the port’s operationsgoes before Cuyahoga County voters every fiveyears. The board should not be surprised if taxpayerspunish the agency for its lack of candor by defeatingthe levy the next time it comes around.

FROM THE PUBLISHER

BRIANTUCKER

Do the Browns care that fans see red?

PUBLISHER/EDITORIAL DIRECTOR:Brian D.Tucker ([email protected])

EDITOR:Mark Dodosh ([email protected])

MANAGING EDITOR:Scott Suttell ([email protected])

OPINION

STEVE SELLAuburn TownshipI think they do enough with thebudget they’re working with. Todiscount them on that (case) iskind of odd. I look at the neigh-borhood more than I do the police. The neighbors somehowoverlooked this fellow.

THE BIG ISSUE

SEAN MCGRAWClevelandEverything in hindsight is 20-20. The fact of the matter is hewas a sick guy; I don’t know ifthere’s a whole lot the policecould have done.

RENNA WARDChandler, Ariz.I think they’re dropping the ball,because they’re downsizing alot of departments and they dohave heavy caseloads — butthat’s no excuse on follow-up. Ifsomething is reported, I think itneeds to be followed up.

KIMBERLY WELLSGarfield HeightsThere is more that they cando, but they need to hire morepolicemen to do it.

In light of the Anthony Sowell case, do you think the Cleveland police do enough to protect the city?

➤➤➤➤ Watch more people weigh in by visiting the multimedia section at www.CrainsCleveland.com.


tickets or not, spoke passionately notonly about the team’s poor play on thefield, but also about a general sense ofthe team taking them for granted.

The latter has fans feeling power-less, especially because they essential-ly are locked in to their seats if theyhave any intention of keeping them.

That’s because to buy season tickets anywhere but in the DawgPound, located in the stadium’s eastend zone, a personal seat license, orPSL, is required (a policy not uniqueto the Browns). Browns spokesmanBill Bonsiewicz said PSLs range from$375 to $1,500 per seat, dependingupon their location; it’s a one-timefee, but fans lose their PSLs if theydon’t renew their tickets.

That setup is forcing even some ofthe most frustrated fans to keep theirPSLs and tickets, though firsthandaccounts and anecdotal evidencesuggest there’s a growing numberwilling to take the loss and sever ties.

“People just renew as a matter ofcourse because of the PSLs,” saidRichard Selby of Painesville, a seasonticket holder since the Browns returned in 1999. “The Browns havegrown used to that, but I have heardfrom season ticket holders who areconsidering not renewing and forfeiting their PSL money. I’ve neverheard that before.”

Painesville native Tony Lastoriareceived two PSLs from his wife as awedding gift eight years ago, andthat — along with a desire to passalong the seats to his 5-year-old son— have prevented him from ditchingthe licenses and seats. But thoseforces, along with his sudden inabilityto find takers for the tickets he can’tor won’t use, now are in danger oflosing the fight, he said.

“I am really tempted to just letthem go,” Mr. Lastoria said. “Fansare really becoming turned off withthis team. If (owner Randy) Lernerand (coach Eric) Mangini return nextseason … I will be done supportingthis team through the purchase ofseason tickets.”

The flip sideNot Dave Baker, who said he will

not consider giving up his tickets. Heenjoys the gameday atmosphere andfan camaraderie, whether inside thestadium or in the tailgating lots, cele-brating during or after a victory or


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Browns: Decline in PSL value provides opportunity for investmentcontinued from PAGE 1

For one fan, Indians’ summer strategy provides PR model

commiserating during or after a loss.That’s not to say he’s pleased. The

Euclid native, who has held seasontickets since 1989, has stopped wearing his Browns gear and stoppedpatronizing the stadium’s conces-sions, though he admitted he’llsneak a hot chocolate or a coffeewhen the Browns play Oakland (Dec.27) and Jacksonville (Jan. 3).

Still, a fear eats at him.“The superstition that the year I

give up the tickets they get goodhaunts me,” Mr. Baker said.

University Heights native GrantKeating also won’t cancel his seats,which are in his brother’s name, onlybecause he couldn’t sell his PSLs foranywhere near the $3,000 he paid forthem, he said.

“The current situation makes mefeel like a degenerate gambler doubling his bet after each loss in ahope to eventually break even,” Mr.Keating said.

A silver lining for Mr. Keating,though, is a presumed easier timesnaring upgraded seats; season ticketholders can request in writing an upgrade, which either is approved ordenied after the team receives all renewals after each season.

That process, and what Rick Bushcalls the Browns’ inattentiveness tohis problems, bug him more thanthe losing, costs for concessions andparking, and the PSL requirement.Mr. Bush, a native of McDonald,near Youngstown, has held two season tickets since 1986, and his

father has owned two since 1985. “You can’t talk to a person to

upgrade, and of course you have tofirst buy your tickets before you canrequest a seat change,” said Mr. Bush,who’s leaning toward canceling atleast two of the PSLs. “I guess if we dorenew, my father might have achance at getting unobstructed views,since I do expect a mass exodus.”

The Browns’ Mr. Bonsiewicz did not

reply by press time to a request aboutany plans the team is making tochange its season ticket structure.

When opportunity knocksErik Mosley and Brian Hartman

took the opposite route this season:They bought PSLs in section 510, onthe 40-yard line in the upper deckfor what Mr. Mosley estimated at35% of their face value. Meanwhile,

the fans, residents of Cleveland andBroadview Heights, respectively, go toa few games, make back some of theirmoney by selling marquee tickets andpatiently bide their time.

“We want the Browns to do well, butwe realized we’re investing in the future,” Mr. Mosley said. “If theBrowns get back to being good some-day — with the parity in the NFL, it’sunlikely they don’t contend for theplayoffs in the next five years — thevalue of a PSL in a football-crazedmarket will rocket higher than face value.”

Ticket reselling agencies say theyare hearing from plenty of potentialPSL sellers, though the PSLs can’t betransferred until after the season.

“It’s early, but we’re definitely hear-ing from plenty of people,” said MarkKlang, president of Beachwood-basedAmazing Tickets. “That’s the only advantage when the Browns aredown; people admit they’re going tolose the money and get rid of them.”

The same goes for Merk’s Tickets inBrook Park, where president ScottMerk said he’s been inundated withpeople coming from out of town toscoop up his Browns ticket inventory.

“There’s a good number of peoplecoming to us with PSLs,” Mr. Merksaid. “They’re cheap these days.” ■

Themes repeated in Crain’sconversations with Browns seasonticket holders were lack of respect,a feeling of being trapped and beingtaken advantage of.

Painesville native Richard Selby,who has held season tickets sincethe team returned to the NFL in1999, was one of many who saidhe has been appalled by the way theBrowns have treated him.

What’s a solution? He says it’s tofollow the Indians’ lead.

Mr. Selby, also an Indians andCavs season ticket holder, said hereceived a letter from the Indians explaining the rationale behind the

team’s summer trades that sentCliff Lee, Victor Martinez and MarkDeRosa, among others, packing.

The letter, Mr. Selby said, acknowledged to the fans that theywere giving up on the present andwere building for the future. In August, the Indians sent coupons formerchandise and for ticket upgrades.

“It definitely sent the messagethat they wanted to thank us forstaying with them,” Mr. Selby said.

Indians vice president of public relations Bob DiBiasio confirmedMr. Selby’s account.

“It was very important we commu-nicate directly in the wake of the

trades when there was so muchemotion involved,” Mr. DiBiasio said.“You may not always like or agreewith how we manage our business,but we work hard to present the reasoning behind our decision-making.”

That’s been lacking with theBrowns, Mr. Selby said.

“It’s Business 101,” he said. “TheBrowns have done none of that. Byfailing to even acknowledge the horrible direction of the franchise,the message the Browns are sendingis that they don’t really respect theloyalty fans are showing them.”

— Joel Hammond



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Datatrak: Firm boosts clinical trial partnershipsof ClickFind Inc., a Bryan, Texas-based software company it boughtin February 2006.

As part of the agreement, Datatrakdismissed a lawsuit it filed in September 2008 against the share-holders, alleging that they failed to disclose important informationabout ClickFind prior to the $18 million acquisition.

Datatrak did not have the moneyto pay the former ClickFind share-holders before the Feb. 1, 2009 duedate.

“That was a wall,” he said. “Weweren’t going to be able to pay thatnote.”

The specter that Datatrak could goout of business still lingers. Mr. Birch

said the company needs to startturning a profit soon, unless it canraise more capital, which would beparticularly challenging in today’stight credit market.

“We can’t withstand many hiccups,” he said.

The company also has made somechanges to boost its revenue sinceMr. Birch replaced Jeffrey Green asthe company’s CEO in January.

For one, Datatrak now is focusingmore on partnering with contract research organizations that conductclinical trials for drug and medicaldevice developers and often presenttheir clients with software options inthe process. The company nowworks with more than 20 contract research organizations, up from just

a few a year ago, Mr. Birch said.It also is doing more to market

how its software can be used to manage the entire clinical trialprocess from start to finish.

‘Early signs are positive’The tactics may be working: Data-

trak’s backlog of work is starting tostabilize after shrinking every quarterfor two years, even though the reces-sion and health care reform efforts inCongress have increased the numberof clinical trials canceled or delayed.

Mr. Birch said he expects thebacklog to grow once researchersconducting clinical trials know whatto expect from the economy andCongress.

Datatrak’s stock closed at 40 cents

a share on Nov. 4 after hovering inthe range of 30 cents to 35 cents overthe past few months. By comparison,the stock closed at $5.06 on Jan. 3,2007.

The firm has a shot at bouncingback, said Mike Havrilla, co-founderof BioMedReports.com, which givesinvestors advice on biomedicalstocks. In late October, he wrote anarticle highlighting Datatrak’simproving bottom line and expectedgrowth in the clinical trial softwaremarket.

Though the company still mustprove its stability, it has made somestrides, Mr. Havrilla said.

“The early signs are positive thatthey’re executing on the plan,” hesaid. ■

continued from PAGE 3


analysis stretched staffs bring temp rush - crain's cleveland

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