The Chatter Class: Nashville without Gaylord HQ?

Monday, February 2, 2009 at 1:00am

It’s rare to have a front-row seat to a fight that potentially could end with a long-time headquarters leaving Nashville.

Usually, a headquarters disappears when an out-of-town group buys the company — an occurrence Nashville has seen fairly often with banks and health care companies. Or, another city succeeds in luring away a company, which has rarely happened here.

However, the Gaylord situation presents a rarity in Nashville — a proxy fight for greater control that could take away a headquarters that’s been here since the early 1990s when the company went public.

There is some talk, mostly in the form of questions, about what it could mean for Nashville to lose Gaylord’s headquarters.

Would Colin Reed, the company’s chairman and chief executive officer, be missed if Texas billionaire oilman Robert Rowling succeeded in his bid to convince shareholders to revolt?

Who else other than the city will help finance the Music City Bowl?

And if a nearby Gaylord hotel is part of the criteria for where the headquarters is located, well, there is the Gaylord Texan in the Dallas suburb of Grapevine.

Landing a headquarters usually is considered the grand prize for economic development business. Economic developers here have been quite successful over the past several years attracting a few — Nissan Americas being the most notable.

They don't like to lose an existing headquarters, either. They will react quickly if they get a whiff of a company being recruited out of here and do their own cajoling to make sure they stay put. But there’s not much they can do if the company has been bought and the buyer is partial to its own hometown.

Caremark Rx is one example of that.

Nashville lured the company here in 2003, haling it as a major coup for the city. Three years later, Caremark was bought by drugstore chain CVS and now Nashville is left with a subsidiary.

So the headquarters of the merged company stayed in Woonsocket, R.I. Who wouldn't want to stay in Woonsocket?

Headquarters are important, economic developers will say, because the decision makers are located there. The salaries tend to be higher as well, and those executives tend to be more involved with the community than management of a subsidiary does.

And subsidiaries can come and go at the whim of decision makers at a headquarters far away.

With Gaylord, there may be some who will suggest that the Gaylord that exists today is a shell of what it once was in terms of involvement with the community. Certainly, Reed is no E. W. ‘Bud’ Wendell, a long-time Gaylord CEO, who was heavily involved with the community. Jack Vaughn, a top executive at Gaylord, had quite a bit of sway in Nashville, too.

Gaylord entered Nashville in the early 1980s when it bought the Opryland Hotel, Opryland USA theme park, the Grand Ole Opry, WSM-AM and FM radio stations from American General, which had acquired the properties in taking over National Life & Accident Insurance Co.

Once here, Gaylord launched The Nashville Network and later bought into Country Music Television.

The company went public in 1991 and Edward L. Gaylord, the Oklahoma businessman who engineered the acquisitions, sought to have the headquarters close to where the money was being made. Gaylord had substantial sway here, wielding when the company sought to expand and won tax breaks for the hotel’s Delta expansion.

After Wendell retired, the company's Nashville business began to evaporate. Terry London took the helm and the company started shifting focus. London oversaw the sale of CMT and TNN. The theme park was closed and a mall built. Plans were put in place for building hotels elsewhere.

London took the company into Christian-oriented business, particularly Internet-related. But the entry into the Internet world turned out to be ill-timed because the bubble burst in that sector and out the door he went.

Later, Reed focused the company on hotels and conventions, paring more Nashville assets, including a stake in the Nashville Predators, an investment that helped get the team here. But the Gaylord name is no longer on the arena in which the hockey team plays.

Reed has influenced how the city markets itself and stepped up when former Mayor Bill Purcell asked the company to sponsor the Music City Bowl.

But folks can’t point to much more.

If Rowling succeeds in the shareholder battle and eventually gains control of the company, it's a good bet that he will find cost efficiency with operating Gaylord Hotels in conjunction with his Omni Hotels.

And that could mean the Bud Wendell Building will be emptied and sold.

The Chatter Class appears Mondays in The City Paper. Comments may be sent to editor@nashvillecitypaper.com

Filed under: City Business
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By: nashbeck on 12/31/69 at 7:00

I really hope this does not happen. Gaylord, please stay in Nashville!!!!!

By: BigPapa on 12/31/69 at 7:00

Terribly scary to think about Nashville losing Gaylord. Although there has to be some sense or Karmic justice if anyone responsible for the closing of Opryland ends up getting tossed out on their tail end. The sad thing is that Nashville ends up a double loser.

By: develop12344321 on 12/31/69 at 7:00

Sets a classic battle against the Music City Center!

By: JeffF on 12/31/69 at 7:00

develop you may be on to something. Could this be a negotiation point? Gaylord may not be too happy about the public taxing authority being used by the competition to compete with its own offerings. Gaylord has used some public assistance in the past yes, but now they are faced with the downtown Hilton and other hotels having a big facility built for them completely for free of charge, without them even having to pay operations costs.

By: producer2 on 12/31/69 at 7:00

That is a bit of a conspiracy theory going there. This article is totally speculative in terms of a buyout of Gaylord. It has no bearing or relevance with the MCC. If anyting it strengthens the need for the MCC, but truly is not a part of the equation. This is just a what if scenario like saying Cracker Barrel is going to move if Disney buys them. IF is the operative word here.

By: nashbeck on 12/31/69 at 7:00

Gaylord and the MCC apply for completely different conventions. I agree with Producer2 that if anything it strengthens the need for a new convention center. I really hope Gaylord stays in Nashville regardless.

By: JeffF on 12/31/69 at 7:00

I have got to see how losing Gaylord strengthens the argument for a center downtown. Please enlighten us how a center designed to provide for low paying, low benefit tourism jobs is better than a corporate headquarters with high paying jobs. Especially since that headquarters pays property taxes. Don't drop a statement without being able to back it up.Here is my backup:http://www.bls.gov/news.release/empsit.t16.htm

By: JeffF on 12/31/69 at 7:00

Just in case you have trouble with statistics, that average national wage is $18.37/hour. The "hositality industry" has the lowest average amoung all industries of $11.04. The only industry in the past with a lower average than tourism/meeting/hospitality is the "Plantation Industry" but that has been illegal for some time. The Bureau of Labor Statistics does not list "day labor" and "migrant farm worker" as industries but I am sure that tourism would be close to those.By all means lets spend a billion dollars on low paying jobs. We have referendum supporters to pay off.

By: producer2 on 12/31/69 at 7:00

typical, you produce statistics for non supervisory or hourly laborers and do not include anyone else (and there are thousands) who work within the framework of tourism. Not everyone falls into that catagory (but many are happy to have those jobs)

By: JeffF on 12/31/69 at 7:00

actually those figures are included on other charts provided on the department of labor statistics web sites. Those wages are the lowest amount other industries as well. Plus the percentage of supervisory positions in tourism is second worse, only manufacturing has a lower percentage of supervisory positions. The main difference is that manufacturing pays supervisory and non supervisory employees about 30-50% more. Bottom line, if you work front line or supervisory in the hospitatlity industry you are being taken advantage of big time. The wage and benefit gap between tourism and other industries stays pretty constant between good and bad economic times so I guess you have consistency to look forward to.

By: producer2 on 12/31/69 at 7:00

Really do you think the GM of the hotel or the sales departments or the chefs or restaurant owners or banquet managers or curators at the museums or Hall of Fames or Symphony Centers or construction workers who are building these venues or cab drivers or musicians or decor companies or AV companies or meeting planners or any one of a hundred other businesses that make their living off tourism and meetings feel that way. I would think that they are all happy since they chose that profession and HAVE A JOB. Your supposition of the facts are skewed at best. This is not Dollywood, this is a HUGE industry (although Dollywood does ok for itself) that you clearly have no grasp of.

By: JeffF on 12/31/69 at 7:00

I am sure the people in other industries are happy that those people chose lower paying jobs, reduces the competition for the high-paying ones. Here are the facts: Williamson County invests in the business of headquarters and regional offices. They apparently perceive their local hotels as items necessary for the real businesses to get their work done and tax them accordingly. Construction workers are employees to build things for private companies, expanding to tax base and providing long-term jobs that are more resistant to economic downturns. The history nuts rattle the sabers for "historic tourism" but that is not the priority. Williamson County is now the place for real jobs.Nashville on the other hand is pushed into investing in the lowest tier of industry, tourism. Every capital item is examined as to whether it will further along the tourism agenda. Although there has been zero quantifiable payoff for each of the projects built so far, more is always needed. The hotels are viewed as the lodging for tourists and since Nashville is a tourism-first town they are taxed accordingly with the third highest taxes in the country. Nashville is not the home for permanent corporate relocations, simply a stopping off point into the new offices are available in Maryland Farms or Cool Springs. Corporate Campuses are resisted at the behest of downtown development (mostly tourism) interests. Private facilities are competed with fiercely for the stagnate meeting market (10 years of zero or negative growth). Economic Development officials throw a huge celebration whenever a low-pay call center is announced in Metro. The Metro Mayor is an invited guest for announcements of expansions in Williamson. Williamson's growth is adopted as Nashville growth although Nashville yields no actual benefit since no corporate headquarters employee would dare to live in Metro and inflict those schools on their kids. Metro Schools, educating the next generation of quasi multi-lingual hotel maids, busboys, and part-time convention center service staff.

By: nashbeck on 12/31/69 at 7:00

JeffF you completely ignored Producer and my statement and used some stats to prove a different topic. The fact of the matter is that if Gaylord relocates, so will their convention business outside of downtown. Therefore Nashville will be left with one form of Conventions, those directed towards downtown. The same downtown convention center that qualifies for 20% of the convention business. The MCC will qualify for 80%. Why not have both convention centers, since both apply to different conventions? Producer2-You forgot to add BNA to the list of corporations that will benefit from the MCC brining in thousands of people to Nashville via the airport. JeffF- Williamson County is only effective in their investments because businesses know that Nashville is 15 minutes away. Without Nashville and the tourism we have invested in, Nashville would not nearly be the great city it is today. Without Nashville's investment, Williamson County could not attract nearly as many businesses.

By: JeffF on 12/31/69 at 7:00

Read again, the Opryland Hotel is not relocating, the corporate offices of Gaylord would be relocating according to this article. The meeting facilites at Opryland are not being threatened with the move.Which of Nashville's investments are sending those headquarters to Williamson? The airport? The closed landport? The current convention center? The downtown library? The Arena? The pedestrian bridge? The high hotel/motel tax?Corporations do not locate in cities because they are great tourist destinations. If so then Branson and Orlando and Hawaii would be killing everyone. Tourism cities are just nice places to visit on the way between cities where business is actually done. Luckily Nashville has a few companies still who were here in spite of the constant focus on hospitality. Unless you think HCA and Vanderbilt Hospital are here because people like to visit the Hall of Fame and Tootsies. As previously mentioned, the modus operandi of all convention center expansion has been to focus on the meetings they are not currently large enough to hold. There is a finite number of those meetings and they are getting smaller in number. They are also shrinking in attendance. On the flip side, dozens of new or expanded centers have sprung up to chase the shrining market. Now the large centers are refocusing on the smaller meetings they were hosting previously with the small centers. None of the centers anywhere have met the lofty expectations (advocate and consultant backed numbers) for growth, many of them actually are seeing less visitors, less hotel nights, and are selling meetings at a loss to compete. The next step in the play book is to play off the disappointing numbers are a result of either a lack of headquarters hotel (coming soon a publicly owned hotel also losing money ad driving down local room rates)or a continuing lack of space (requiring an even more grandiose expansion). We are apparently trying to chase other cities' disastrous investments with our own equally bad investment. Lets enjoy the paid off convention center. It is a real cash cow apparently what with the profits it is making. Producer tells us that there is no general taxpayer money going into any of its operations anymore. We are at a good frictional stopping point. Further investment increase debt without any possibility of success. Just imagined, derived multiplier mathematics that cannot be verified. I present you with measurable, verified true statistics regarding the foolishness of investment in this deep well of an industry. I get pie-in-the-sky numbers of 80% of meetings without indications that we will get enough of those to make this half-billion PLUS dollar investment really work. I tell you of all the cities that have failed in this same game, and I get a list of top twenty cities for conventions by attendance without notation of the red ink they are living in. Producer one told me numbers I was once using was outdated, that things will change soon in this dying industry. We are now looking at 10 years of stagnation or declines. This is not a cycle, this is officially a pattern indicating a societal change. Someone should let convention advocates in all the cities know to start looking for jobs elsewhere. The communications age is here and we do not need the horse and buggy convention business much longer. The Shriners and Legionnaires are dying off and with them go that quaint tradition of annual conventions. Now the Apple meetings are going away. A new era is dawning, join us. Invest in real businesses that pay real wages to everyone. The meeting industry is so dead that even the Obama stimulus plan of wasteful dead-end spending manages to ignore it.

By: producer2 on 12/31/69 at 7:00

If you only new the truth...well actually you wouldn't know it if it bit you in the face. Nice try, you are right about one thing, A New Era Is Dawning and since you were so sure about your can't loose President and English Only I guess that new era does not bode well for you.

By: nashbeck on 12/31/69 at 7:00

I will agree to disagree.

By: m12462 on 12/31/69 at 7:00

The Opryland Hotel has not been the same since Jack Vaughn left. He was the best hotel man in the country! We miss you Mr. Vaughn!!!