Tuesday 3 May 2005

$5-Billion Sale Goes To Two Finance Groups
Neiman Marcus Sells Self Through Catalog
"Almost Threw Away Book In Recycling", Says Buyer

It sat, on Page 67 of the 2004 Christmas Catalog, a half page offering under the title; "If You Like The Catalog So Much, Why Not Buy The Company!

The listed price in the catalog, like so many other items shown in the legendary Neiman Marcus catalogs - the tanks, the desert islands, the jewels, the miniature sports cars - displayed a steep price tag - "Mid-Billions, Negotiable".

For nearly eight-months, no serious offers. A few loyal customers made cursory inquiries, however, Neiman Marcus Chief Executive Burton M. Tansky, had begun looking at other options.

Then the call came.

David Bonderman, Managing Partner for the Texas Pacific Group, had been cleaning out his home office and, after grabbing the Neiman Christmas catalog, to pitch it in the recycling bin, he thumbed threw it, landing, with surprise, on Page 67.

Texas Pacific Group, owners of J.Crew and other brand name companies, prides itself in rebuilding well-known luxury brands who have fallen on hard times. An active investor, with over $20 billion under management, Bonderman knew he had to make the move.

Bonderman reached out to Warner Pincus, Chairman and CEO of Warburg Pincus, a pioneer in raising investment capital from financial institutions rather than wealthy families, pitched a joint purchase of Neiman Marcus and the deal was set.

Tansky was quite relieved.

"More than any other item we've placed in the catalog, we worked that one over-and-over. I don't know how many rewrites we did …We wanted to get it … just right … Keeping in the tradition of the catalog".

"We looked at thousand of photos to use. We even consider putting out a special catalog, just on the company, lying out our assets, achievements, customer testimonials … much like the merchandise".

Bonderman bristled at the comparison to Victor Kiam, the late owner of Remington, maker of electric razors ("I liked the shaver so much, I bought the company").

"We're purchasing the crown jewel of American retail", he said

Neiman, with 37 stores across the nation, took an opposite approach when many big retailers were scaling back. Neiman abandoned its moderately-priced merchandise and went even higher upscale, to become the gold standard for luxury goods. The move helped Neiman Marcus maintain its most loyal and very affluent customer base.

"I know this", offered Bonderman, "that I'll be looking at everything - very carefully - before I toss anything way".

And Tansky?

"In the end, I wrote the catalog copy myself".

Visa Ends Triple Crown Sponsorship But Keeps Derby
Cites Pending Use of Child Jockeys As Means To Increase Brand

Visa is hoping that "Everywhere You Want To Be" will be at the Kentucky Derby, using your Visa Card.

Credit Card giant Visa announced yesterday that it will end its sponsorship of racing's Triple Crown and move over to an exclusive, five-year sponsorship of the Kentucky Derby.

Visa will be the only credit card accepted at Churchill Downs during this sponsorship period. Holders of Visa Signature cards will have exclusive perks, including access to tickets, the stable area and special events around the hoopla and pageantry of the Kentucky Derby.

Visa has sponsored the Triple Crown since 1996 and, to add to the luster, puts out a tantalizing offer of a $5 million bonus for any horse who wins the Triple Crown (The Kentucky Derby, The Preakness and the Belmont Stakes). Through the sponsorship, Visa has never had to pay the bonus. Six horses have won the first two legs of the Triple Crown, but all lost at Belmont.

No horse has won the Triple Crown since Affirmed in 1978.

Visa will offer, for the last time, the $5 million Triple Crown bonus, beginning this Saturday, with the running of the Kentucky Derby.

Both racing and marketing industry observers say it was the Kentucky Derby's move to using child jockeys that likely tipped the deal (See The Garlic, Friday 15 April 2005'; Derby Considers Child Jockeys From Qatar)

"This opens all kinds of doors for Visa", offered one marketing executive. "Think of all the tie-ins with children - toys, food, candy, clothes … It's gigantic …Once the other tracks start using child jockeys … They'll be bigger then Disney before long"

"I heard", said one official at Churchill Downs who asked to stay anonymous, "that some states, and courses, are seeking special exemptions, that will allow children to wager - not for money, but prizes, merchandise, vacations … All tied in with Visa's network".

Some controversy still surrounds Churchill Downs and their move to use child jockeys.

Jockey clubs and associations, as well as racing purists and child advocates and agencies denounce the move and plan on protesting at the Derby.

Legendary jockey, Lafitt Pincay, was quoted as saying "first lampposts, and booze decanters … Now this - children …"

Both Visa's and Churchill Down's announcement of the new sponsorship did not mention the use of child jockeys or the surrounding controversy.