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NOLAN FINLEY

Dan Gilbert: A man of 2 center cities

Nolan Finley
The Detroit News

Cleveland — Dan Gilbert has a fast answer when asked why someone who made billions in the mortgage business would take on the far less lucrative enterprise of rebuilding two of America’s most broken cities.

Asked what he'd do if a Cavaliers player decided to kneel during the national anthem, Gilbert said, “I hope we don’t ever have to come with that.”

“Because we can,” Gilbert says, then lest that sound like the boasting of a super rich guy, explains his deep pockets give him the freedom to not worry about the risk to the corporate bottom line of betting so much on Detroit and Cleveland.

“We can, and it’s a good thing. And it’s challenging. And it’s extremely impactful in a positive way if we’re successful. And it’s fun.”

The man the Wall Street Journal dubbed the “King of the Rust Belt” is clearly having fun on this day, having just finished the parade and rally in downtown Cleveland to celebrate his Cavaliers’ NBA championship. The streets were so packed with revelers it took three hours longer than anticipated for the cars and floats to complete the route.

Perched in the back of a pickup, Gilbert was serenaded by chants of “Dan the Man!” and “Thank You, Dan!” From his view, it was about more than bringing a sports championship to a city that hadn’t had one in 52 years.

“It’s about a city that has been down for generations,” says the Quicken Loans Inc. founder and chairman, who helped woo the Republican Convention to Cleveland next month and has an expanding footprint in the city. “It’s a burden lifted. This curse, this stigma, as crazy as it is that a professional sports team is taken way too seriously, but that’s the way it is.

“The second thing is now we can go forward and feel good about our city and ourselves.”

That was the charge Gilbert gave fans wedged into Cleveland’s downtown mall: “Take it from here and rebuild your city. There are cranes in the air — keep the winning going.”

The T-shirts on the crowd in Cleveland conveyed a familiar message of defiance. “Defend the Land” and “Detroit vs. Everybody” express the common chip on the cities’ shoulders and their perceived underdog status.

Gilbert offers Big 3 vision downtown

Quicken Loans’ Dan Gilbert gets political ... sort of

Cleveland was the Mistake on the Lake. Detroit was the Murder City. Both former Midwestern manufacturing powerhouses saw their economic bases and populations plunge over the past 40 years. Cleveland once had more than 900,000 residents; now it has just under 400,000. Detroit and Cleveland frequently rank one and two in cities with the largest population loss.

And both experienced a massive migration from city to suburbs.

Cleveland’s downtown, however, lost less of its skyline to the wrecking ball, even though many of the buildings stood empty for years. By the time Gilbert arrived in 2005 as the new owner of the Cavs, it was as if the central city had been hit by a neutron bomb, wiping out the population but leaving the structures intact.

While Cleveland’s downtown had crumbled physically less than Detroit’s, the morale of the people had plunged much deeper.

“When we got here, people were down on this place,” Gilbert says. “It was, like, ‘Why would you even invest here?’ I was shocked. I think it would have been hard to find anyone who would have said to a Detroit visitor back then bad things about our city. Some of that pessimism and negativity comes from the incredible concept that Cleveland hadn’t had a sports team championship in 52 years. They thought of themselves as losers. It magnified the economic issues.”

While Gilbert, apart from his Quicken role, is largely known in downtown Detroit as its landlord, in Cleveland his footprint is in sports and entertainment. After buying the Cavs and acquiring operating rights to what is now known as Quicken Loans Arena, or The Q, Gilbert added a minor league hockey team and an arena football team to his Ohio portfolio. Then he bankrolled the statewide ballot initiative that brought casino gambling to Ohio.

Only recently has Gilbert moved into real estate development, buying The Ritz-Carlton hotel, which is attached to the arena, a nearby downtown retail strip, and the historic Higbee department store building, which now houses a Quicken web center and the Jack Casino. His companies employ 4,000 in the region.

“Virtually everything we’ve done in Cleveland is attached,” he says. “It’s more opportunistic. It’s a puzzle piece.

“We use the word threads. Seeing the connections between things. Between physical things. Between companies. Between the city and the businesses, between business leaders.

“That’s the part we have a real hard time with in Detroit. There are so many things we miss. We should be more holistic and look for the relationships that can make everything better. You can’t accept the premise of the people who use the spread sheet as their god. Significant things of value can be created that you can’t measure right away.”

Gilbert doesn’t intend to be the largest investor in downtown Cleveland, nor its fairy godfather, though Quicken did divert $7 million in tax increment funds slated for redevelopment of the Higbee building to the restoration of Public Square, the city’s downtown park. And he lobbied for nearly $100 million in federal blight remediation funds for the city.

While his efforts in Cleveland are smaller, there is similarity in his approach to the two cities. Basically, Gilbert says, he wants to create a cool environment for his employees in hopes of attracting and retaining top talent. There’s no point, he says, in renovating the building they work in if the rest of the neighborhood is falling apart.

“When you get past the point of no return, you have to buy everything,” he says. “Because it only takes a few bad landlords to screw everything up. It’s almost like defensive buying. We hold them until the right user comes.”

Cleveland on June 22 celebrates the Cavs’ title. The city’s downturn left much of its skyline intact, but emptied many of the buildings.

Cleveland more cohesive

One advantage Cleveland has over Detroit, Gilbert says, is cohesiveness, a more united vision for what its downtown needs.

He cites “the decisions made on big things in Detroit, like casinos. We’re going to put three casinos in Detroit — should we put them together on Woodward, together on the Riverfront, or should we put them on exits where people can come in, never touch the ground and leave?

“The things that matter get glossed over. Still today they don’t understand the impact of that stuff.”

That extends to the QLine, the Woodward Avenue rail financed largely with corporate and foundation money, including a large contribution from Quicken.

“People wanted to put it down the center of Woodward,” he says. “I was emphatic. I went to all these other cities. People told us, ‘No, you put it curbside.’ People were not going to stand in the middle of a road. But it was easier and quicker to put it down the center.

“We won that.”

Cleveland’s civic groups — the Greater Cleveland Partnership and Downtown Cleveland Alliance — provide that city a base of business support Gilbert says has eroded in Detroit.

“The Detroit Renaissance (now Business Leaders for Michigan) was (supposed) to bring back downtown Detroit after the riots,” he says. “Then they change it to an all-Michigan thing and move it to Ann Arbor. Where’s the outrage? It’s absolutely outrageous.”

The elephants are coming

Cleveland, though its downtown recovery is still a work in progress, made a big play in winning the 2016 Republican National Convention, which begins July 17.

The city had to scrape up hotel rooms from throughout the region to make the numbers work, and there’s still concern it’s light on downtown restaurants, bars and other venues to entertain 50,000 convention goers.

But Gilbert says it will be a huge boost.

“It’s going to come only a few weeks after winning the NBA championship — winning is important,” he says. “So now we win the championship, now we host the Republican convention and it goes really well and reflects well on Cleveland. It’s almost more important to the people here than to those attending because investment is all about confidence. Do I believe in the future of this environment? Is it going to be good?”

So what about Detroit? Is it ready for such a large national stage?

“Detroit for sure is ready,” he says. “Detroit has way more capacity for a convention.”

One advantage Cleveland has over Detroit, above, Dan Gilbert says, is a more united vision for what its downtown needs.

Detroit move pays off

When it was headquartered in Livonia, Quicken was a significant company. But neither Quicken nor the total Gilbert empire would be where it is today without the move downtown in 2010, Gilbert believes.

“We would not be near the company we are today, because of the things you can’t measure,” he says. “The most valuable things. The connectivity. Inspiring innovation. Interesting spaces that can attract the best and brightest. Having a company mission that pumps people up for their day job.

“None of that happens in the suburbs. Although the costs may be higher, revenues are significantly higher and profitability is higher.”

Still, sometimes the magnitude of his Detroit reach gives him pause.

“I get overwhelmed and get anxiety that we’re doing too much,” he says. “But it’s an enormous challenge to connect the dots and pull the levers and spin the dials and make it all work.

“To me it’s just a great investment. And we don’t need the money personally. We just pour it back into the city. People forget that wealth is created by people. It’s not just some pie that gets delivered and the citizens split it up.

“So let’s create wealth and jobs and have fun doing it.”

Dan Gilbert is having tons of fun playing in two faltering cities that had lost their sense of humor, and much of their hope, and are now finding both again.