Late last month, Lehman Brothers, the bankrupt investment banking firm, held a virtual garage sale on eBay.
For sale: promotional items of all kinds, including umbrellas, ties and even silver-plated baby rattles, handsomely engraved with the Lehman logo.
Great stuff, if you’re looking for gag gifts, or perhaps for a visible reminder of the overblown folly of the gilded age.
Like Conde Nast’s Portfolio magazine, which folded last year after losing $80 million, Lehman is part of what now seems an impossibly distant time.
During October 2007, the Dow reached 14,000 — remember? Real estate could only go up — remember? And even old media looked pretty good, especially when Sam Zell leveraged a $300 million investment into an $11 billion acquisition of Tribune Co. — remember?
And remember all the deals that were cut during the fat years? Gone to graveyards every one — leaving behind angry creditors, bankrupt companies and federal bailouts. But at least one artifact remains from those heady times: the U.S. Olympic Committee deal.
The preliminary agreement between the city, LandCo Equity Partners and the USOC, conceived and negotiated during 2007, and announced with great fanfare on March 31, 2008, fell apart of its own weight a year later.
The reason was simple: LandCo couldn’t come up with a promised $16 million investment. The erstwhile partners sued each other, LandCo exited the deal and the city “negotiated” a new economic development agreement with the USOC.
The new agreement is identical in most respects to its predecessor, with one important difference: the city is the principal paymaster. Most of the deal’s cost, estimated at more than $50 million, will be borne by city taxpayers.
Less than $2.2 million has been committed by other sources, including $1.5 million from the El Pomar Foundation and $500,000 from the state.
We’re happy that the USOC is staying, and we congratulate USOC CEO Stephanie Streeter and her team for their negotiating skills.
But imagine for the moment that the original deal had never been created, and that the USOC had approached the city about a $50 million retention package two weeks ago. We’d guess that city officials would have told them the truth as it is now, not as it might have been two years ago.
“We’d really like to help, but tax revenue has collapsed, we can scarcely fund basic services, and the kind of money that you want just isn’t there,” they might have said. “You want $2 million annually? We’d have to stop maintaining parks, and fire a bunch of employees to meet your demands. We can’t do it — and, given that every other city in the country has the same problems, neither can anyone else. We’re stuck with each other.”
But city negotiators were clearly overmatched by Streeter, who, like Douglas MacArthur on the battleship Missouri at 9:08 p.m. Sept. 2, 1945, would sign only a document of unconditional surrender.
MacArthur compelled the surrender of Japan with military might, while Streeter had only cunning and guile. The Olympic Training Center and the USOC aren’t going anywhere, and Streeter would most likely have settled for less — a lot less.
We’re fairly certain that council will sign off on the new EDA as written, and ignore any public opposition. Unhappily, such supine acquiescence might mean that an initiative nullifying their decision might be placed on the ballot at some future date.
If such an initiative met with voter approval, that would be the worst of possible outcomes. Explicit public rejection likely would drive the USOC out of town, even if it had to buy its own bus ticket. It would brand us as a wretchedly backward and insular community, and stifle economic development for years to come.
Just as taxpayers had little choice but to pay for the excesses of Wall Street investment banks, we appear to be stuck with the USOC deal, warts and all.
And for all the city officials who merrily whooped the deal through, a modest suggestion: Go on eBay, and buy some genuine Lehman Brothers umbrellas.
You might need them come the next city elections.
Remember Bob Dylan’s words, from September 1962?
“And it’s a hard, it’s a hard, it’s a hard, and it’s a hard, it’s a hard rain’s a-gonna fall.”