Empire of the Sons

Banker and Twins owner Carl Pohlad spent a lifetime doing deals—transactions that made him one of the richest men in America. Yet his most ambitious plan may have been his most personal one: grooming his three sons to make the family synonymous with Minnesota business.

THE SNOWS OF JANUARY have long ago melted into the now-verdant fairways of Edina’s Interlachen Country Club, and the sights and smells of the well-manicured grounds are easily taken in from the home where Carl Pohlad and his wife, Eloise, lived for much of their lives. Six years ago, when Eloise passed away in the bedroom of that home, the couple’s three sons—Jim, Bob, and Bill—made eating Sunday brunch with their dad a permanent part of their schedule. That ended last January, when Carl, the 93-year-old patriarch of the family’s business empire—a man listed by Forbes as the 102nd-richest person in America—died in his sleep.

A few days later, each of the sons eulogized their father before 1,400 mourners at the Basilica of St. Mary in downtown Minneapolis. But that next Sunday, Jim, Bob, Bill, and their spouses were back at their father’s house, meeting for brunch once again. In the weeks and months that followed—as winter turned to spring, and spring turned to summer—the three sons continued to take turns rustling up the Sunday meal, even while they couldn’t help but wonder when the ritual will have run its course. “At first we thought it would be really weird and creepy,” says Bob. “And it was sad, but it wasn’t bad either. And so we have continued doing it. I don’t know how long we will keep going. You go into my dad’s house, and I used to do it every day, and it is exactly the same. Except it’s not.”

The same, but not: In the wake of Carl Pohlad’s death, that phrase could just as easily be used to describe the family’s business interests, a bundle of enterprises that focus on three industries: banking, beverages, and baseball. It is a portfolio that Carl built with his inimitable stamp, a blend of charm, tenacity, and intuition—and an uncanny ability to create and exploit opportunities to buy out smaller players in those industries. “Carl had a great nose, maybe the best sniffer in the world,” says Irwin Jacobs, the erstwhile corporate raider and current president and CEO of boat-builder Genmar, who engaged in numerous business forays with Pohlad, including part-ownership of the Vikings. “He could smell a deal and put it together in his head quicker than anybody else.”

Of course, dealmaker is not how most Minnesotans think of Carl Pohlad. Most Minnesotans will forever associate him with the Minnesota Twins. And while some will be eternally grateful that he “saved” the team by purchasing it from tightwad Calvin Griffith and building the teams that won two World Series, others will never forgive him for effectively blackmailing the citizenry: first by signing a letter of agreement to sell the franchise to a Charlotte businessman, then by agreeing to contract the team out of existence in exchange for $150 million from his fellow Major League owners. That neither threat came to fruition while a new baseball stadium, funded primarily with taxpayer monies, is set to open next year has only cemented his reputation as a shrewd negotiator—and a heartless cheapskate.

Yet for all of his acumen, all his money and notoriety, its clear that Carl Pohlad’s greatest enterprise wasn’t banking or baseball. It was to orchestrate the grand vision of his family legacy, to quietly, painstakingly position his clan to become a modern-day version of the Daytons and the Pillsburys—to become the First Family of Minnesota business.

AT THE BASILICA, Bill Pohlad described his father’s life as something out of Twain or Steinbeck, or like the mythical cowboys that Carl himself invented for the tales he told the boys at bedtime. Bill wasn’t exaggerating. The Carl Pohlad biography is a picaresque tour of hard-bitten 20th-century Americana, iconic in its grit, heroism, and rags-to-riches arc.

The son of a railroad brakeman, Carl was born and raised in Iowa before heading west. As a young man playing football at a California junior college, he was recruited to play for Gonzaga University by the school’s most famous alumnus: Bing Crosby. He boxed as a prizefighter, though he did so under an alias so he could keep his pugilistic persona distinct from his business pursuits. He worked as the muscle on bank collections during the Great Depression. He rode the rails like a hobo, growing hungry enough to poach and slaughter a sheep at least once. And he was a hero in World War II, earning three Purple Hearts and two Bronze Stars.

The post-war years were clustered with milestones for Pohlad. He married Eloise in 1947. His first born, Jim, arrived in 1953, then Bob in 1954, and Bill in 1956. At the same time, he was trying to forge a career. Carl had gone into business with his brother-in-law, Russell Stotesbury, in Iowa before the war. By the early 1950s, the pair acquired Marquette Bank in Minneapolis. Not long after, however, Stotesbury died unexpectedly. Just like that, Carl was the president of a bank, working without his longtime business partner, and responsible for a trio of infants.

And so he began making deals. A lot of deals. Many states, including Minnesota, had laws on the books prohibiting bank branches at the time, which meant that the industry was dominated by small independently owned operations. In the mid-1950s, Pohlad began buying those operators up, though he would usually retain the bank’s name and identity. By 1980, he controlled 30 banks.

During that same period, Pohlad’s instincts accurately surmised that Pepsi’s nationwide ad campaign, based on competitive taste tests, would eat into Coca- Cola’s market hegemony, and he began snapping up dozens of Pepsi franchises.

Be they banks or bottlers, the businesses were primarily family-run operations in the heartland, many of them lacking the additional capital required to compete in the dynamic market of the ’60s. Over time, Pohlad concocted a brilliant deal-making mechanism. Because capital-gains taxes were so high, and because many of the owners didn’t really want to retire so much as retain job security and establish the prospect of a safe landing later in life, he retained their management at a handsome wage and amortized the purchase with profits from the seller’s own company. The strategy was a forerunner to what would come to be known as leveraged buyouts.

At its peak, the holding company for Pohlad’s Pepsi franchises was a Fortune 500 firm generating about $800 million in annual revenue. “From Monday through Friday Carl was a banker, but flying around on the weekends, he was an entrepreneur,” says Don Benson, one of the men from the Arthur Andersen accounting firm who crunched numbers for Pohlad and among a trusted inner circle of advisers. “Carl always wanted to come away from a successful negotiation with something in writing signed by both parties. Sometimes it was the back of an envelope or a scrap of paper—nothing enforceable—but Carl believed in the psychology that the seller would be more likely to follow through on the deal.”

From the beginning, the Pohlad boys had a front-row seat on the action. They all remember the plane rides: Carl may have worked too long and too hard to be much of a presence in his sons’ lives during the week, but on Saturdays he would load them into his small company plane for his business trips to the Dakotas or Iowa. The aircraft was drafty and noisy and he often had to prep on the way out—with newspapers and spreadsheets draped across his knees—but even that face time was better than none at all. Besides, what kids don’t enjoy a little airplane adventure? And, once they’d landed, it was a chance for them to see the old man in action. “I loved those trips,” says Bill, the youngest Pohlad son. “Not just because of being with dad, but as we got older, watching him do business.”
 

 

STILL, WHEN YOUR FATHER is Carl Pohlad—a child of the Depression who became a billionaire—you can’t help but develop an acute sense of class consciousness. Even in relatively tony Edina in the 1960s, attending Our Lady of Grace elementary, and even before your dad purchases the Twins, you can be riding your skateboard or playing in a pickup game with your friends and feel a little self-conscious when your mother pulls up in a new Cadillac with big flared fins.

You also know that your father is one of the earliest movers behind a prominent, well-connected local politician—Hubert Humphrey, champion of the little guy. And while you and your family live with the tact, rectitude, and sense of decorum that befits your social standing, you have a sense of your father’s formative, hardscrabble experiences; how he often makes himself soup out of ketchup and bouillon cubes. You know that there’s a World War II–era machine gun lifted from an enemy soldier stashed in your basement (even if your parents have never mentioned it), and you’ve heard your father running into the living room in the midst of a nightmare, yelling “Watch out!”

Your mother and father raised you to know the linkage between privilege and obligation, in other words. You’re not some spoiled brat. And yet, you fly to North Dakota the way other families drive to the lake. You’ve seen your father wheel and deal to create the luxury you now enjoy. He’s never come out and asked you to follow in his footsteps and he never will. He doesn’t have to. But he has said, more than once, you and your brothers need to stick together: “Don’t ever let lawyers and spouses come between you and interfere with your relationship.”

Bob Pohlad, the middle child, describes the feeling. “There is not this rivalry between the three of us. Instead, we very much share this sense of good fortune. We were fortunate enough to have parents who raised us the way they did, and to have respect for all the effort that went into that. It didn’t happen by chance. My dad worked a great deal. He wasn’t the kind of guy who would be at every sporting event, but there was never this sense of ‘Gee, my dad wasn’t there.’ Not at all. My dad was working to do what he loved, to provide for his family, and my mom was always there as a counter balance, as the supportive, day-to-day person. Because of them, I could be at my kids’ sporting events. What my parents did for me allowed me to do that.”

Each of the three Pohlad sons developed distinct personalities early in life that never really changed. That’s the opinion of Pat Stotesbury, the son of Carl’s deceased business partner, who hung out with the boys so often that they still refer to him as a fourth Pohlad brother. Jim has always been droll, brainy, and athletic; Bob charismatic and fun-loving; Bill shy and artistic.

Those traits are reflected in the paths the sons took and the roles they’ve assumed in the management of the family businesses. Jim, the oldest, charted the course of an heir apparent, never really considering anything but going to work for his father. “For a long time, since back in high school and early college days, it seemed like it was always—well, at least for me—what we would do,” he says. And so, like his father, he went to Gonzaga, transferred to the University of Southern California, and earned a degree in business administration. After graduation, he went to work for the Arthur Andersen accounting firm, the same firm that provided Carl his two most trusted lieutenants, Don Benson and Ray Zehr.

The next step was inevitable. “Dad always said it was my idea, but maybe it was his idea that I come back here to work,” Jim says wryly. “After about three years, I was doing the same thing here I was doing at Arthur Andersen, which is basically financial analysis.”

Bob, the middle son, was more complicated. Where Jim and Bill were impeccably behaved by the standards of the ’60s, he was more candid and socially confident. Or, as he puts it, “I did all these kinds of things that either I got caught doing or I came clean about.” Carl’s response? “I could feel a sense of disappointment from him that was worse than any anger.”

That might explain the biggest rebellion that never happened. “Ever since November 22, 1963, I had wanted to be in government, and I held to it,” he says. “I was a huge admirer of President Kennedy and of Bobby Kennedy.” One Sunday night the summer after Bob graduated from Arizona State University, Carl was barbecuing burgers out by the garage when Bob told him he had a chance to go to Washington and work for Senator Humphrey. He wasn’t totally sure whether he wanted a career in politics, Bob conceded, but this would help him figure it out.

Why don’t you go learn business instead? Carl replied. If you like it, it can be a good stepping stone into the political world. If you don’t, you can check it off the list and go do what you want.

“He said, ‘I think you should learn the Pepsi business,’” Bob remembers. “‘I’ll give you your choice: You can go to Fargo, North Dakota, and learn the Pepsi business or go to Tulsa, Oklahoma, and learn the Pepsi business.’”

It was a classic Pohlad proposition. Carl waited for Bob to raise the subject, then made a counteroffer that suggested the illusion of free will: a moot choice between two remote areas of the country, where his personable son could learn all phases of the soft-drink-franchising business.

Bob chose Tulsa, and stayed for seven years. It’s where he and his wife, Becky, brought two of his three children into the world. “We had 600 employees and he interrelated with all of them,” says Phil Hughes, the ex-franchiser who operated the facility. After starting in marketing, Bob moved up to being a system manager and eventually a regional manager. Then, in 1986, Carl sold and merged almost all of his bottling assets back with Pepsi, a move that essentially put Bob out of a job.

Carl, of course, did hold on to a couple of franchises, located in neighboring North Dakota. And now that Bob had received such good experience and mentoring, hey, wouldn’t he be the perfect person to come back home and manage them?

Then there was Bill, the youngest, a round hole struggling to fit into the square peg his father had created for him. Today, operating out of Minneapolis as River Road Entertainment, Bill is a force to be reckoned with in Hollywood, the guy who provided crucial funding (unofficially Carl’s largesse, perhaps, but Bill’s creative intuition) for the Oscar-winning movie, Brokeback Mountain. And there is perhaps no bigger champion of the Oscar-winning actor and director Sean Penn than Bill Pohlad—River Road has worked with him on numerous occasions and produced Penn’s directorial debut, Into The Wild.

“Bill is a genuine, funny, shy, creative person who has always been somewhat eccentric. And what he lacked for many years was the confidence to spread out and be more of himself. Part of that was because of this very powerful man casting a shadow,” says Bill’s friend Stephane Connery, who, as the son of actor Sean Connery, knows a little something about daunting fathers.

Bill wanted to go to film school, but Carl gave him the same spiel he gave Bob—get a business background and then explore your options. So Bill dutifully did four years at Gonzaga, studying business and accounting. He used his new degree to land a job as an advertising copywriter while writing film scripts on the side, but soon found himself back home doing marketing work for the family businesses. As he aged into his thirties, he finally followed his heart, founding River Road with two friends in 1987 as a means to develop film projects. Carl counseled against it. “He would say it was a bad idea, but never said, ‘And you’re not going to do it.’ He would just point out the chances of it being a success,” Bill says.

Undeterred, Bill hit up his friends and family—and Carl’s friends—for money to bankroll Old Explorers, a feature film starring James Whitmore and Jose Ferrer, which Bill wrote, directed, and co-produced. Artistically, it was a decent debut. Financially, it was a disaster. “Never saw one dime back,” Bill says, still wincing at the memory. “It was bad. This was my dad’s money and the money of all his friends. I remember thinking, forget it, I’m never doing this again.”

He plunged into grunt work, doing industrial and promotional films, and became desperately unhappy. Only then, bottoming out, was he able to find common ground between his dreams and his father’s legacy. “I still wanted to make movies, be a writer-director. But I wasn’t acting like an adult in the business sense. I decided I was going to stop trying to be a director, at least temporarily, and actually use what dad had given me and try to figure it out as a producer.

“I literally remember going out to Los Angeles those first few times afterward, thinking, ‘I am going to be a different person here,’” Bill says. “I was no longer this struggling artist; I was channeling my dad, the guy I had seen in those meetings. And it worked. The breakthrough happened in these conversations, which led to other conversations with Universal and with Focus Features, our specialty distributor, and we ended up doing a first-look deal with them. That led to Brokeback Mountain.”

Despite Carl’s lack of enthusiasm for Bill’s career choice, Bill defends his dad. He points out that with the two older brothers away at college, Carl indulged Bill’s infatuation with Grand Prix auto racing, a world of international jet setters that provided Bill with his first connections to Hollywood figures such as the Connerys, Robert Redford, and Sydney Pollack. (Bill claims Carl was also beguiled by this world, but was too practical to do more than attend a few races.)
 

 

AS THE LONG, GRADUAL DECLINE in Carl’s health lingered into his nineties, there was ample time for the patriarch to try and choreograph the future course of his family’s business affairs, a plan that was as obvious to his sons as it was important to Carl.

It’s clear that Jim Pohlad is first among equals—and loath to admit it. Jim was heavily involved in the Pohlad family’s largest expansion away from their banking-beverage-baseball roots: the 1998 purchase of two large commercial real-estate companies, United Properties and NorthMarq Capital. More recently, he has been at the forefront of administering to the Minnesota Twins and to the Marquette Financial Companies, which, despite the sale of significant banking assets to what is now US Bancorp in 1992 and to Wells Fargo in 2001, remains the largest segment of the Pohlad family business conglomerate. He is the one who works directly with Carl’s most-trusted advisors. “Jim readily understands the current environment for banking and finance,” says Benson. “He is the leader to whom we all look for direction.” Adds Bill Pohlad, “Jim likes to say he’s not really running the business. But we want him to, because we like being able to run our own things, too.”

Yet Jim never passes up an opportunity to downplay his influence. He is quick to mention that Bob holds sway over beverage and bottling issues, and he notes that Bill calls the shots on the film-production business. But Bob is the CEO of Pepsi Americas, a public company in which the Pohlads own a minority share. “My dad really had no involvement in that, other than to act as counsel and advisor to me. It is fair to say it is my baby, but that I know from where I was born,” Bob says. River Road Entertainment company was something Bill founded, then appended to the family portfolio.

There are good reasons for Jim’s self-effacement. First of all, it follows Carl Pohlad’s dictum: Let nothing get between you and your brothers. “Stories of families in our situation being torn apart are probably more numerous than the opposite,” says Jim. “It could happen to us. I don’t expect it will, but it has only been a couple of months since my father died, so we don’t know.”

Jim refusing to crow about his primacy also safeguards against dissension and promotes sentiments like this one, from Bob: “It is really very simple: Jim runs the family businesses, Bill does his movie thing, and I am operating a public company with the Pepsi business. We get together a couple of times a week for lunch or whatever, to keep each other informed,” Bob says. “Like yesterday, we didn’t even know we’d all be free, then at 10 minutes to 12 we made a lunch date and solved some stuff—and it was big stuff.

“We really trust each other,” he continues. “If it was legal, I would let Jim or Bill sign anything on my behalf and I would never have to know about it. I would be just fine with it.”

And, fairly or not, watching his father get savaged over baseball contraction agreements and stadium negotiations also encourages Jim, the son most involved with the Twins, to keep a low profile. “One of the things that helped the boys learn is the significant negative publicity that came with their ownership of the Twins,” says Ray Zehr, who has long been a trusted advisor to the family. “It brought that second generation together and helped them mature. You become proactive and want to do something about it, but you learn when somebody sticks a microphone in your face, what comes out is not always what is intended.”

When Jim stopped by the announcer’s booth during the televised home opener of this year’s Twins season, listeners were probably surprised that he didn’t echo play-by-play man Dick Bremer’s enthusiasm for him taking control as overseer of the ballclub. Told two months earlier that a lot of people think he has a great job, Jim responded the same way. “A lot of people would feel this is a great job,” he says. “We are lucky. Is it a great job? No, not any greater than being head of any other organization of significance. It is not better than being chairman of Wells Fargo or Target or whatever.

“The Twins doesn’t take that much of my time,” Jim emphasizes. “Baseball is a fun business, but it is not a super-complicated business from a standpoint of your revenue streams. You sell tickets and you sell advertising. Now, I’m not talking about the player judgments. We have very capable people to do that part.”

In those statements is a pretty clear template of how the ballclub will be operated in the post-Carl Pohlad era. As much as possible, the family will regard the ballclub as a business, and make business decisions. The greater revenues generated by a new ballpark will loosen the purse strings, but only so far. It certainly won’t affect the Twins’ tradition of long-term stability in its management and front office, and its emphasis on scouting and other forms of value-added talent evaluation. New general manager Billy Smith and manager Ron Gardenhire don’t have to worry about their jobs anytime soon.

“I think my management style is probably closest to my dad’s, which was pretty much hands-off,” Jim says. “He had a great sense of people and once he made a positive judgment he would let them operate the business as if they owned it themselves, which in many cases they had, previously. I believe in that style and have adopted it. It has been tattooed onto my brain.”

Jim is reserved by temperament and training. Both Bob and Bill have their offices on the top floor of the 40-story RBC Plaza in downtown Minneapolis. Visitors receive a dazzling, panoramic view of the city and off into the horizon. Jim’s office is located down on the plaza’s 38th floor, and the desk and chairs are arrayed away from the windows. Before agreeing to be interviewed for the story, he asked for one assurance: That the story not be the magazine’s cover story. “Jim has a quiet personality. People try to anticipate what he is thinking, but you can’t read him. He’s like his father that way,” says Zehr.

But Jim is also shrewd and rational enough to realize that, in some very important ways, he is not like his father at all. “I know I don’t have the intuitive sense that he had and I’m probably not as good a judge of people as he was. You just take whatever the three of us have and put it together and hope that it comes acceptably close to what he had.” Asked if it bothers him to be in that position, Jim’s response is immediate and unequivocal. “No, because what are the odds? There were millions of people born under the same conditions that Dad was born under; for whatever reason, he rose to a level that not many others reach. The chances of even one of the three of us doing that are not very good, never mind all three of us.”

Meanwhile, the economy has devastated banks and commercial real estate. “The conditions out there, they probably haven’t been this way since my father was very young,” Jim says carefully.

“I think it is unfair to ask any of them to fill Carl’s shoes,” says Irwin Jacobs. “The kids didn’t come from the railroad and the Depression; they were in a warm, wonderful family. Because of that they feel blessed and responsible to society. They have all chosen to come home and live here and be very philanthropic. They will add prestige to the name Pohlad.

“Carl could make aggressive decisions, get something done in 30 minutes,” Jacobs adds. “I can tell you there is no chance the boys will do that, and you can’t expect them to. But these are different times, where [Pohlad family] assets need to be preserved and grown instead of made out of nothing. I think five or 10 years from now you will see the Pohlad empire be greater than it is today.”

One bold move undertaken in recent months was the purchase of two automobile dealerships from Denny Hecker. It was a classic Pohlad gambit—swooping in when the value of the properties was low and the owner was in financial distress.

But the transaction also created other opportunities; it carved out a new piece in the portfolio for a third generation. The dealerships are going to be operated by Bob’s oldest son, Tom, who is not the only grandchild currently involved in the family’s businesses. Bob’s middle child, Joe, is working his way up the Twins’ organizational chart. And there are five other Pohlad grandchildren who will soon be old enough to work, to perhaps one day find a place in the organization.

Britt Robson is a Minneapolis-based freelance writer.

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