The Rise and Fall of Jeff Rogers
The CEO of Pizza Inn resigned in disgrace and was smeared by the press. But his story doesn’t end there.
Three years ago, Jeff Rogers was jetting between his home in Willow Bend and his $10 million manse in Lake Tahoe for ski weekends with his wife and five children. Life was good for the CEO of The Colony-based Pizza Inn, who was earning about $1.3 million a year in salary and other compensation.
Today Rogers is unemployed. He’s been vilified in the media as yet another greedy corporate executive. U.S. News & World Report lumped him in with the likes of WorldCom’s Scott Sullivan, and the Daily Deal mentioned him alongside Tyco’s Dennis Kozlowski, calling him “impervious to public rebuke.” Even this magazine took a shot at him. Rogers would seem to serve as a case study of the profligacy that has wracked corporate America.
But not so fast. As it happens, Rogers didn’t quite deserve all that bad press. The third act of his story has been largely overlooked.
It all started in 1990, when Rogers was brought in by bank creditors to help liquidate a bankrupt Pizza Inn. Six months into the job, though, Rogers says he was spending most of his time fixing operations rather than selling off the company’s assets. So he convinced all parties involved to give him time to save Pizza Inn. And he did just that. When Rogers joined Pizza Inn, the company was worth $6 million and owed $114 million, yet he managed to repay creditors, stockholders, banks, everyone—in three years. Inc magazine awarded him “turnaround entrepreneur of the year” in 1997.
Then Rogers made two missteps that would prove most unfortunate. When the bull market was still running wild, Rogers did what many executives were doing three years ago: he borrowed money from his company to buy stock in it. Executives at larger publicly traded companies were borrowing hundreds of millions of dollars without offering anything in collateral, but Rogers secured his $1.9 million loan with his house in Tahoe and other assets.
The other misstep Rogers made was consolidating Pizza Inn’s operations into a brand-new $12 million campus in The Colony. It was an expensive undertaking, and it required reinvesting the company’s dividends, cutting off cash flow to shareholders (of which Rogers was the largest). But why lease buildings when you can afford to build your own?
Why? Because everything might fall apart. Sure enough, the legs gave out on the bull market and high-end real estate went with it. Rogers’ debt came due, and he wasn’t liquid enough to pay it. In August 2002, he was forced to resign from Pizza Inn under the Sarbanes-Oxley Act, which had been signed into law only one month earlier and which prohibits companies from making personal loans to their executives. Assuming Rogers would never repay the loan, Pizza Inn took a $1.9 million charge, erasing its fourth-quarter profits. Enter media devils armed with pitchforks for the purpose of poking fun and heaping opprobrium upon the wretched Rogers.
“It was tough,” he says. “I thought it would be impossible for us to go down—we weren’t a tech stock, and we weren’t glamorous. That just crushed me. So even when we paid dividends to attract attention and enhance value, we didn’t get the value we should have. When we stopped paying dividends to build this headquarters—that was a very significant blow to me, in terms of cash flow. It was another personal dumb decision.”
It would have been easy to declare personal bankruptcy and allow his company to take the entire hit. Instead, Rogers spent the next four months raising money. He sold his Lake Tahoe house in December, taking a hard hit on his initial investment in the place. He also sold 29 percent of his interest in Pizza Inn, or 2.9 million shares, to Dallas’ Newcastle Partners for $7.4 million (he retains 3 percent of the company). And even though no one expected him to, Rogers repaid that loan.
Rogers still owes taxes and is looking for work. But he still has the Willow Bend house—which, it should be noted, before tears are shed, is worth about $2.2 million and used to belong to Troy Aikman.
“I applied the same theory to my own personal situation to stay out of bankruptcy as I would have for a company, to turn something around and honor all debts and obligations,” Rogers says. “Pizza Inn is way too small a company to be public, quite frankly. My combined personal and business interests blew up. But I will survive, as the song says.”
Now Rogers finds himself, at age 55 and arguably in the prime of his career, sitting in that house on a hill, waiting by the phone. —Hala Habal
The man behind the $185 million failure called the CueCat appears to have reinvented himself.
You remember the CueCat, right? It was a bar-code scanner that looked like a cat. When you hooked it up to your computer and scanned a special bar code printed alongside newspaper articles, it directed your web browser to relevant pages. Belo remembers the CueCat (investment: $37.5 million). Problem was, consumers didn’t take to it.
The stillborn CueCat was the brainchild of J. Jovan Philyaw, a former infomercial producer. Philyaw—excuse us—J. Hutton Pulitzer, as he’s now calling himself, has found his next project. From the web site for J. Hutton Pulitzer and Company, a Dallas firm concerned with “global media, entertainment, education, and publising [sic]”:
“Having personally authored more than 100 ground-breaking patents and known for thrusting forward the momentum and adoption of the Internet, J. Hutton is a leading visionary in the world of marketing, product development, and entrepreneurship.”
And so humble, too!
When we reached J. Hutton Pulitzer, he was on a cellphone at Starbucks. He swore at us repeatedly but had a good explanation for everything, including why he’s trying to sell a $145,000 crystal. Then he set to changing his web site. Space prevents recounting it all here. But keep watching www.jhuttonpulitzer.com, www.museumcrystals.com, and www.vertudc.com. If you have a CueCat, scan below for more. —T.R.
Department of Dead Wood
Kids today kill us. Not only are they walking around with their pants falling off, but they’re not reading. In 1972, the National Opinion Research Center found that 47 percent of respondents between the ages of 18 and 29 said they read the newspaper every day. By 2000, that percentage dropped to 18. One researcher predicted the number will drop to 9 by 2010, and we predict their pants will be around their ankles by 2012. Below, you’ll see new readership numbers for the largest papers in the top 25 most populous cities. The second column shows the number of adults who read the paper, on weekdays. The third column shows “penetration,” or the percentage of adults in the city that the papers reach. Looking at the dismal numbers, and understanding that they’re dismal in large part due to the sorry youth of today, you’ll understand why the Morning News is considering publishing a new tabloid for kids who don’t read. Anyone remember the Met?
OPEN MOUTH, INSERT FOOT
“As a police chief, I would have liked to see him dragged down the street in handcuffs.”
—TERRELL BOLTON, speaking of Cowboys player Dwayne Goodrich. A police spokesperson later said that Bolton thought his remarks were made in confidence, even though he was speaking to 40 or so members of the media.
NINA KOTOVA, as her name would suggest, has a thick Russian accent. And she vill teel you about ze theengs she loves. The 33-year-old model turned cellist loves to play Carnegie Hall and the Great Hall of the Moscow Conservatory. She loved recording her latest CD, Nina Kotova: Bloch, Bruch, Kotova. In fact, Nina loves playing the cello and has since she was 5. “Playing the cello is a different kind of love,” Nina says. “It takes so much energy, and it’s not always pretty to look at, but you sacrifice in a beautiful, positive way.” Nina also loves her Highland Park home, which she is restoring with her husband, whom she loves. And Nina loves Dallas. “I think it’s romantic here,” she says. “I love going to the theater in Turtle Creek with my husband, and I love the Meyerson.” But there’s one thing Nina doesn’t love and that’s bananas. “I had taken a stage-fright class once and they told me to eat bananas,” she says. “But they smell too strong, so I just stretch and breathe before I go onstage.” Nina’s current world tour will bring her to Temple Emanu-El on April 13. —Kristie Ramirez
QUESTION & ANSWER
BRADLEY HUNTER WELCH is the organist of Highland Park Presbyterian Church. He will compete in the triennial Dallas International Organ Competition, the finals of which will be held at the Meyerson on March 18. Welch, 27, won third prize and the audience prize at the previous competition in 2000.
D Magazine: If you make it to the finals, do you think you’ll be nervous playing that huge organ?
Bradley Hunter Welch: Of course there’s going to be a little bit of pressure there. On the other hand, having gone through it three years ago, I know what to expect.
SIGN OF THE TIMES
Dallas has been erecting “intelligent” message signs across the city. By month’s end, 26 should be in place, flashing warnings about traffic accidents, severe weather, and missing children. The city plans to have 48 of them up by 2007. But some folks aren’t pleased. In neighborhoods like Preston Hollow, pictured here, the signs look a bit—how do you say?—ugly.
The inside story of how David McDavid ruined his chances of everbuying the Dallas Stars.
A series of recent news stories concerning the involvement of local car dealer David McDavid in the pending sale of the Stars hockey franchise has given rise to an amusing game of “wha’happened?” among the smart money crowd.
On January 12, citing unnamed sources, the Dallas Morning News identified McDavid as the leader of a group that was among four other potential endgame bidders in the hush-hush Stars auction process. A few days later, McDavid confirmed his involvement and declared that his discussions with Stars majority owner Tom Hicks had recently turned “more serious.”
These developments were not surprising. Since having a substantial investment in the Dallas Mavericks held hostage under the regime of Ross Perot Jr., McDavid has been vocal about his intention to gain actual operating control of a sports franchise. And since McDavid is no shrinking violet with regard to personal publicity—right, Widetrack?—it seemed inevitable that his name would surface sooner or later.
Yet, within days of these disclosures, a turn of events derailed McDavid’s aspirations. First, an irritated Tom Hicks declared a moratorium on further disclosures from the supposedly confidential sale process that, in reality, was leaking worse than the Exxon Valdez. Then sources from within the Stars camp informed the News that Hicks had called a meeting with McDavid and that talks between the two had “cooled” as a result. Read: McDavid was out.
Why would the Hicks team unnecessarily announce the disqualification of one of his precious few final-round bidders? Persons working with Hicks believe that the Stars owner was angered by McDavid’s comments to the press—”grandstanding like Antonio Bryant,” as one source put it—which arguably violated a confidentiality agreement governing McDavid’s conduct. These same sources further speculate that McDavid himself may have engineered the January 12 leak so that his name would be prominently paired with higher-profile known bidders such as Cuban chum Todd Wagner and billionaire Sam Wyly.
The smart money also wonders whether McDavid even had the financial muscle to handle the transaction, valued somewhere in the neighborhood of $225 million. While McDavid is believed to have reaped substantial cash from the sale of his auto dealerships to Asbury Automotive Group several years ago, the value of his stock in the surviving corporation is down by more than 60 percent since mid-2002.
“McDavid wants to be the man so badly,” says a person familiar with the sale process. “But the capital needs of a professional sports franchise can strain even the budgets of the mega-rich. Look at Tom Hicks. And McDavid is clearly no Tom Hicks.”