Thursday, November 26, 2009

Game Changers

Shopping for Memphis in the spirit of Black Friday

Posted By on Thu, Nov 26, 2009 at 4:00 AM

Hoping to beat the holiday rush, I did a little fantasy shopping this week. Not for me and mine, but for Memphis. It went something like this:

Good to see you out here, sir. What may I help you with?

I'm looking for game-changers.

Yes, game-changers. I think I know what you mean. We have several possibilities, but this could take a while. How much did you want to spend?

Millions, maybe more.

That's the spirit. You seem to be familiar with the vocabulary of sports. Let's start over there. Football or basketball?

Both.

Coaches or players?

Both. A college football coach who can win seven games a year, put 35,000 people a game in Liberty Bowl Memorial Stadium, and take the heat off R.C. Johnson and some of the load off Josh Pastner. And a pro basketball team that wins consistently and fills FedExForum like the Tigers and Josh Pastner do and gets people excited like Allen Iverson did.

Sorry, I'm a shopping consultant, not a miracle worker. You ever hear of one-to-a-customer? Or listen to Tommy West's rant? Or see those Iverson jerseys that were shipped this week to Tanzania? What else is on your list?

A game-changer for Shelby County.

That would be the new mayor, Joe Ford. You've heard about the Ford turnaround. This one comes with a lot of mileage and an unusual warranty. Instead of running for a long time, it promises to stop running for good after one year.

What accessories do you recommend?

Might I suggest relevance?

How about something for the new city mayor A C Wharton? He's so popular that he even got an invitation to the White House West Wing when he visited Washington last week. What do you get the man who has everything?

A Ford for a foil isn't enough? How about some help in the kitchen? Just make sure to remind him that he's the head cook.

Anything else?

How about a warmed-over consolidation recipe? We're running a special this year. Our research says it's very popular.

Your research wasn't listening when the County Commission chose a new mayor this month and half the members put their names in nomination for a job that will last eight months. What do you have that will provide lots of jobs?

Well, actually that would be two governments. More local government, not less, is the greatest jobs stimulus we have going. It makes it hard to sell our consolidation game-changer though.

I can see that. What do you have that's educational?

We can set you up with $90 million from the Bill and Melinda Gates Foundation.

Sounds good. What's the catch?

Your schools have to be really bad, and you can't just use it to balance your checkbook. Michelle Rhee, the chancellor of the District of Columbia Public Schools, says her district spends more money per child than anyone, and their results are at the bottom. So we're packaging this with accountability and political courage.

I'll take it. What's behind that wall over there?

You can't go in there. That's where we keep grand juries. Sort of like Bad Santa's elves, 23 of them and a federal prosecutor, busy all year making nasty indictments for people who've been naughty.

Anyone in particular?

Let's just say you don't want a target letter in with your Christmas cards. If the target is an ex-mayor, then you've got your game-changer. A few years ago they gave one to Rickey Peete and Ed Ford. Did it in December, too. Call them sentimental.

But couldn't the elves say "no" to the prosecutor?

That's very rare. The prosecutor only needs 12 votes, and the elves have been working for more than a year. A target letter usually means you'll get a "gift."

I'm not sure that's the kind of game-changer Memphis needs.

We know. And it's not returnable either. People who get one have been known to make quite a scene. That's why we say, "Be careful what you wish for."

Tuesday, November 17, 2009

Golf and Dope

Sex drive tops golf drives in federal court case on PGA policy.

Posted By on Tue, Nov 17, 2009 at 5:22 PM

Ever since he turned pro in 1995, Memphis golfer Doug Barron hoped to make a name for himself. This month he did, as the first person suspended under the PGA Tour’s anti-doping rules.

Last week, attorneys for Barron and the PGA argued his case in federal court in Memphis for more than three hours. On Monday, U.S. magistrate Tu Pham denied Barron’s request for a temporary restraining order that would have allowed him to compete this week in a qualifying tournament in Houston.

Strict liability strikes again.

“You are strictly liable whenever a prohibited substance is in your body,” says the first page of the PGA’s anti-doping manual.

Although Barron said he took testosterone and a beta-blocker drug for several years under a doctor’s care for treatment of a medical condition, the PGA Tour refused to give him a “therapeutic use exemption” (TUE), and Pham declined to give him a mulligan. Barron is the second Memphis athlete to make ESPN this year for alleged cheating. The first, of course, was former University of Memphis basketball star Derrick Rose, whose bogus SAT test cost the Tigers their 2007-2008 victories. (The university has appealed the NCAA’s ruling.)

By ordinary standards, Barron, 40 years old, is an excellent golfer. By PGA standards, he is a journeyman battling to qualify for a tour card in the PGA’s pressure-packed “Q-School.” In June he got a break: a sponsor’s exemption into the St. Jude Classic. He played two rounds, shooting 9-over-par 149 and failing to make the cut but not before he was drug tested. Barron did not dispute the positive test results and admitted to continued use of testosterone and propranolol. After again reviewing his medical records, the PGA Tour suspended him for one year.

With that, the relatively unknown Barron joined fellow athletes such as track star Marion Jones, cyclist Floyd Landis, and baseball player Manny Ramirez, all of whom were penalized for illegal drug use. Attorney Jeff Rosenblum argued that Barron is “disabled” under the Americans With Disabilities Act, because low testosterone levels “impair a major life activity,” namely intimacy with his wife. The beta-blocker, he said, was for treatment of a racing heart, and Barron’s doctor was trying to wean him off of it.

“This is an outrageous penalty when you compare it to baseball or football,” Rosenblum said.

Not so, said Rich Young, the PGA Tour’s lawyer. The rules are the rules, and Barron signed off on them and broke them.

“This isn’t fun or easy for anybody, but it’s the right thing for a sport to do,” Young said.

The drugs are banned because they’re performance enhancers that increase strength, speed recovery, and calm nerves. Young described a situation where a golfer needs to make up one stroke on the 18th hole and can either play it safe or go for the green on his second shot to get the last qualifying spot. On such decisions, tour cards are earned, and fortunes are made. Steve Stricker came through Q-School in 2005 and earned $6 million this year. And Memphian Shaun Micheel came out of nowhere to win the PGA Championship in 2003. Micheel’s name came up in court. Last year, he got a medical exemption to use testosterone. He and Barron are friends and are the same age. Micheel told ESPN.com last week that the PGA’s drug-testing process “nearly drove me out of the game” and made him question whether it was worth it to play pro golf. Young said he wouldn’t talk about Micheel “but if the facts had been the same, then his TUE request would have been turned down.”

Barron’s wife and this reporter were the only spectators at the hearing. The case has attracted international attention. Pham took three days to issue his 33-page ruling after first saying he might have it in a day. He called it “a close case.”

“If Barron is permitted to play in the second qualifying stage (Q-School), it could raise substantial public policy concerns regarding the enforcement of anti-doping policies in professional sports,” he wrote in his conclusion. Rosenblum hinted that he will probe the inner workings of the PGA Tour through the discovery process if the case goes to trial. It has been assigned to U.S. district judge Samuel H. Mays. In golf parlance, Barron went for the green instead of laying up, and his ball landed in the water. Now he has a year to think about it.

Thursday, November 12, 2009

Charity and Hospitals

The Med is hurting, but Baptist and Methodist are fine.

Posted By on Thu, Nov 12, 2009 at 4:00 AM

Headlines can mislead us. The financial crisis that could close the emergency room at the Med is a special case. Nonprofit hospitals in Memphis make a lot of money, they're expanding out of Memphis, and their balance sheets are flush with cash.

The two giants are Baptist Memorial Health Care Corporation, with 32 percent of the Memphis market and rising, and Methodist Le Bonheur Healthcare, with 37 percent of the Memphis market. St. Jude Children's Research Hospital specializes in childhood cancer and has a small share of the market.

In a report in October affirming Baptist's "AA" bond rating, Standard & Poor's noted that Baptist "has identified more than $933 million of fixed income and equity assets," commonly known as stocks and bonds. In the 11 months ending in August, Baptist's revenues exceeded expenses by $88 million, up from $36 million in 2006, when it was in a slump. This year's results and 5 percent operating margin have far exceeded the hospital's own forecast of an operating margin of less than 1 percent.

Methodist isn't doing quite as well but has a very strong balance sheet and an "A" credit rating. According to its third-quarter financial statement, Methodist has $711 million in cash, an increase of $88 million this year. Patient service revenue increased by $23 million, or 2.6 percent over the same period last year. Methodist's operating margin is 4.5 percent, with operating income of $56 million for the first nine months of 2009.

The term "nonprofit" as opposed to "for-profit" hospital systems such as Tenet Healthcare, which has 14 percent of the Memphis market, does not mean Baptist and Methodist don't make a lot of money. They do, even during a recession and a national "health-care crisis." They don't pay taxes, because they each provided more than $275 million of charity care last year, by their own accounting.

So did the Med. And if the Med cuts back or closes, that charity care will have to go somewhere else. And there's the rub. Charity care is crucial for mission statements and tax exemptions but bad for balance sheets and credit ratings. The founders' vision is the financier's risk.

Baptist hospital was founded in 1912 by churchmen in Tennessee, Arkansas, and Mississippi "to render quality health care to all in this area in keeping with the tenets of our church." Methodist's mission is "supporting and extending the health and welfare ministries of the Memphis, Arkansas, and Mississippi annual conferences of the United Methodist Church."

For nearly a century, a Baptist hospital of some sort was a Medical Center landmark, until its 20-story building between Union and Madison was closed in 2000 and demolished in 2005. Baptist now has 14 hospitals and one rehabilitation facility but nothing in the Medical Center. Its growth has been in the suburbs and the tri-state region. Its board of directors includes only one Memphian: president and chief executive officer Stephen Reynolds.

This is how the audit and financial reports describe indigent care: "Hospitals may be susceptible to economic and political changes that could increase the number of indigents or the hospitals' responsibility for caring for this population." And this: "The indigent care communities could constitute a material and adverse risk in the future."

From this perspective, Methodist could be more "at risk" than Baptist, because its hospitals are closer to indigent populations. In addition to expanding its Germantown hospital, it is replacing Le Bonheur on Dunlap. If the Med closes, Methodist could see its market share increase but its revenues decrease as doctors and paying patients migrate eastward and non-paying patients go to Le Bonheur or Methodist University hospital on Union Avenue.

The Med has a proud 180-year history and a lousy balance sheet. In 1981, it was incorporated as the Regional Medical Center for indigent care for a six-state area. In partnership with the University of Tennessee medical school, it has trained more than half the physicians practicing in Tennessee.

But it loses money. The Med lost $33 million from operations in 2005, $38 million in 2006, $39 million in 2007, and $40 million in 2008. The loss was partially offset by a contribution from Shelby County government of $25 million to $31 million a year.

Hospitals are desirable talent magnets for cities, part of the "eds and meds" equation. The issue is who's going to take the hit for indigent care?

Thursday, November 5, 2009

Too Much Retail

Raleigh copes with a struggling mall and "unfair" reputation.

Posted By on Thu, Nov 5, 2009 at 4:00 AM

So this is what $751,000 buys these days in Memphis: a big house or the Raleigh Springs Mall.

Even in a real estate crisis, some numbers jump out at you. At that price, you might think the mall on Austin Peay Highway is closed or bulldozed, like the old Mall of Memphis.

But the doors of the main entrance were open at 8 a.m. this week, and the woman mopping the floor said walkers can come in at 9 a.m. and shoppers at 10 a.m. There are about 30 tenants listed on the building directory, including fast-food restaurants, sporting-goods stores, jewelers, and a Malco 12-screen theater with five screens currently in use. A Sears that was not part of the sale remains open. But Dillard's and JC Penney are gone, their signs stripped off the anchor stores, leaving only the shadow of their names. An expressway-style flyover provides quick access from Raleigh's main drag to Interstate 40 and newer suburbs.

The mall is a symptom of what ails Memphis. There are vast empty spaces from Raleigh to Hickory Hill to the fairgrounds to Overton Square to the Pyramid looking to hook up with Bass Pro, Target, Trader Joe's, or some other retailer. But planners say there is a simple reason why there's not much action.

"There is way too much retail for this community to support," said Robert Lipscomb, head of the Memphis Division of Housing and Community Development. "There is not enough demand to support all these malls."

Less than a mile from the Raleigh Springs Mall on Austin Peay Highway there is a Kmart store and a Walmart. Lipscomb, along with the Greater Memphis Chamber of Commerce and neighborhood leaders, tried to get the Walmart to move into the mall, but Walmart could not find a user for its current building, so it is staying put.

Dexter Muller, senior vice president of community development for the chamber, said Memphis malls have been cannibalizing one another for years as the population moves east and south.

"The beginning of the end for Raleigh Springs was when Wolfchase Galleria opened," he said. "The next new mall blows out everything behind it."

Muller and Lipscomb said Raleigh's "fundamentals" are still good. There are more than 100,000 people who live between Frayser and Raleigh. The Raleigh Community Council is one of the strongest neighborhood groups in the city.

"Raleigh is a diverse community with stable incomes and good neighborhoods," Lipscomb said. "We've got to make it work."

The city has hired a planning firm, Looney Ricks Kiss, to help research the market and figure out what to do. Federal stimulus money could play a role. Muller said Southland Mall in Whitehaven has survived the loss of key anchors, but battling decline and attracting new businesses "is like trench warfare." If neighborhood residents don't "buy everything they can within the neighborhood" then retailers fail, he said.

Several remedies already have been tried, including the movie theater, which was lured by an $11 million investment by the mall's previous owner. Lipscomb notes that multiplex theaters have had crowd problems recently that can drive away more business than they attract. The current mall owner, Whichard Real Estate based in North Carolina, has not announced its plans. A Memphian who is familiar with the company from when it owned Southland Mall calls them "speculators."

"I don't know what the best prospects are," Lipscomb said. "Probably some kind of retail unique to the area. That's one reason to bring in the outside expertise."

Kevin Brooks, president of the neighborhood council, has lived in Raleigh since 1997. He and his wife raised three children there. He hopes the new owners, whom he has not yet met, can attract an anchor tenant. The mall is "beautiful on the inside" despite little patronage.

"Something like a Target store would conform with the status of Raleigh," he said. "We don't have a whole lot of low-income areas, and we don't have many high-income residents. We are pretty much a good representation of Memphis in the middle class. We do have the perception of being a violent area, but if you look at police reports, they actually pulled police out of our area and sent them to other areas. I hate to see the news pointing fingers at Raleigh."

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