Nothing changes at TSU

tsu053107.gifAs bad as Texas Southern University’s chronic problems are, they can be resolved through a combination of forceful leadership and common sense. However, intractable local and state political forces prevent TSU’s problems from being addressed effectively. Consequently, it is somehow appropriate that the first act of the new board of trustees of TSU to address TSU’s financial problems is taken against the folks least capable of resolving those problems — i.e., the students:

Texas Southern University’s regents approved a new round of tuition increases Wednesday, with students paying 8 percent more at the historically black institution this fall. [. . .]
The tuition hike follows a 22 percent increase last year. The university had tried in previous years to hold off increases because of the potential hardship for students, many of whom are working adults or recent high school graduates from low-income families.
Regents said they voted reluctantly for the tuition increase, but the university’s financial problems required the additional revenue.

TSU’s tuition is now higher than Houston’s other open-admissions university, the University of Houston Downtown Campus, which does a better job of educating its students than TSU.
I put the over/under for the next scandal at TSU at three years.

We have a winner for EGL

Ceva.jpgAfter four months of bidding, CEVA Group PLC — a UK public limited company owned by affiliates of New York City-based Apollo Management LP — has emerged as the winner for Houston-based logistics company EGL, Inc. over the management led-private equity bid championed by EGL chairman and CEO, Jim Crane (prior posts here). Although his private equity buyout failed, Crane is certainly not a loser on the deal. His 17.4% stake in EGL has increased in value by about 60% over the past four months, which means his EGL stock has increased in value by about $125 million to around $337 million. Not exactly a bitter pill to swallow.
Although the winning bid in this type of competition is always interesting, a fascinating development was revealed yesterday in a Schedule 13D/A that EGL filed with the Securities and Exchange Commission. Get a load of this:

EXPLANATORY NOTES: This Amendment No. 8 to Schedule 13D (this “Amendment”) is being filed by James R. Crane and the other reporting persons (collectively, the “Reporting Persons”) signatory hereto as identified in the Schedule 13D filed on January 22, 2007, . . .
The Reporting Persons wish to make clear that Mr. E. Joseph Bento, who was one of the signatories to the Schedule 13D filed on January 22, 2007 and to Amendments No. 1 through 7 thereof as previously filed, was not a signatory to Amendment No. 8 to the Schedule 13D and is not a signatory to this Amendment.
The Reporting Persons have excluded Mr. Bento as a signatory and as a member of the group because they believe, based on reliable information, that Mr. Bento, while purporting to cooperate with the Reporting Persons in their offer to acquire the Issuer, in fact has been secretly and improperly cooperating with Apollo Management VI, L.P. and its portfolio company, CEVA Group Plc (collectively, “Apollo/CEVA”) in the competing offer by Apollo/CEVA to acquire the Issuer.
The Reporting Persons further believe, based on reliable information that, while holding himself out to the Reporting Persons as a person cooperating with the Reporting Persons’ bid for the Issuer, Mr. Bento in fact has, without the prior knowledge of or permission from the Reporting Persons, improperly shared confidential information relating to the Reporting Persons’ bidding strategy and other confidential information regarding the Reporting Persons’ offer to acquire the Issuer. The Reporting Persons cannot give any assurance that prior statements of Mr. Bento in the Schedule 13D as to his intentions were in fact truthful and accurate.
The Reporting Persons intend to explore all appropriate remedies, including legal action for damages and other relief, that they may have against Mr. Bento.

Well, you certainly don’t read excerpts like that every day while perusing SEC filings!
It’s a bit difficult to know at this point what the claim against Berto would be. It would not appear that EGL or its shareholders have been damaged by anything the Berto is alleged to have done. Although Crane’s group may have been hurt in its effort to become the winning bid by information that Berto supposedly provided to Apollo/CEVA, it’s not as if Crane and his group were prevented from continuing to bid on the company. That Crane and his group might have been the successful bidder at a lower price but for Berto’s supposed leaking of confidential information doesn’t seem like much of a basis for a lawsuit because that lower bid would have come at the expense of EGL’s shareholders to whom Crane and his management team still owed a fiduciary duty. So, we’ll just have to stay tuned on that potential litigation front.
At any rate, one has to tip their hat to EGL’s Special Committee of the Board of Directors, its counsel (Andrews & Kurth) and its financial advisors (Deutsche Bank) — they really played these two competing bidders off on each other brilliantly. Although at first CEVA/Apollo appeared to be a tire-kicker, they turned out to be a motivated buyer because EGL represented a special opportunity to acquire a substantial freight forwarding business that could be integrated with CEVA’s existing contract logistics business. On the other hand, EGL was Crane’s baby, so the board knew that his group would also fight hard to retain control. In the end, Apollo/CEVA paid an extremely favorable price for a company that has not been doing all that well over the past couple of years and certainly was not considered a hot property in the marketplace. EGL shareholders did not quite get their 52-week high stock price of $51.49, but they did end up receiving almost a 60% premium on their $29.78 share price when this all started.
Suffice it to say that such a premium would have been realized had Ben Stein been calling the shots.

Now that’s a low blow!

Rice%20billboard.jpgThis earlier post regarding the Texas-OU rivalry noted Jay Christensen’s clever college football digital billboard contest over at the sporting Wizard of Odds. The likes of Texas and Oklahoma have pretty thick hides, but now the competition has generated this billboard on little Rice University, which is still trying to figure out how to profit from being a sacrificial lamb in the big-time college football wars. I don’t think this particular billboard will be the basis of the Owls’ advertising campaign for the upcoming football season. ;^)

Passport hell

passports.jpgQuestion: What do you get when changes are made in the processing of a governmental service that, even in the best of times, doesn’t really function all that smoothly?
Answer: According to this Lisa Falkenberg/Chronicle column, a real mess:

The scene at the George Thomas “Mickey” Leland Federal Building in downtown Houston resembled a soup kitchen. Outside, tired-looking people crowded benches and sprawled on grass. Inside, State Department guards kept teeming hordes at bay in the lobby so they wouldn’t add to the lines, snaking through hallways outside the fourth floor passport office.
“We started out in a line to get in a line to get to the elevator so that we could get in a line to get a number to wait in another line,” Prothro told me.
Applicants, from El Paso to Oklahoma City, waited like cattle in holding areas, clutching suitcases, gripping manila envelopes of itineraries, some frantically calling congressmen for help. Even those with appointments were shooed by guards to the rear of the line.
The nationwide passport backlog ó prompted by a federal law that took effect in January requiring U.S. citizens to obtain passports before flying to places such as Canada, Mexico and the Caribbean ó was exacerbated this week in Houston by two days of computer system failures, said Eric Botts, assistant regional director.
The crowd grew so large, it presented a fire hazard.
“I can certainly understand people are frustrated,” Botts said.
Botts said his staff has worked overtime, doing “everything humanly possible” for the past two years to meet surging passport demand. Each day, the office may get 500 e-mailed or faxed congressional inquiries about cases, and 800 from the national passport information center. He said his office has a backlog of 90,000 passports.
By midday, passport purgatory quickly deteriorated into passport hell. Around 3 p.m., a worker delivered grim news to an outside line:
“If you’re here trying to get a passport today, that’s not going to happen,” he said. “I don’t know why they sent all of you here. As you can see, they sent thousands of people here. There’s no way an agency this small can handle all this work.”
Inside the stuffy office, more than 250 people, including screaming toddlers, waited in line or in plastic chairs, staring at Fox News, sharing gripes in every language and glaring anxiously at passport agents behind thick glass windows. Many went several hours without eating or drinking, for fear of losing their spots in line. [. . .]
Occasional applause erupted when someone emerged with a passport. These lucky few adopted a distinctive swagger and a wide grin as they coveted their hard-earned treasure.

“Superstar historian”?

doug%20brinkley_large.jpgPlease excuse three straight posts bashing various Chronicle articles, but this Chronicle/Allan Turner reads like a press release from Rice University regarding the institution’s hiring of former Tulane University history professor, Douglas Brinkley:

The man who once took a busload of college students on a madcap tour of the nation’s historic and natural wonders, including the Grand Canyon and author Ken Kesey’s farm, may be just what Rice University’s austere public policy think tank needs to make itself a household name.
That, at least, was the hope on Thursday as university officials explored the possible benefits of their latest faculty hire ó New Orleans superstar historian Douglas Brinkley ó might bring to Rice and its Baker Institute of Public Policy.
A protege of best-selling historian Stephen Ambrose and a regular commentator for CBS News, Brinkley is renowned for his ability to make complex ideas understandable. He is a prolific author, and his 700-plus page tome chronicling Hurricane Katrina’s devastation of New Orleans and the Mississippi Gulf Coast will receive the prestigious Robert F. Kennedy Book Award later this month.
Brinkley, said Baker founding director Edward Djerejian, could be “a bridge between the world of ideas and action,” helping the institute spread its policy recommendations to the general public.
“He’s going to bring us a huge amount of visibility,” added Rice humanities dean Gary Wihl.

“Superstar historian”? That characterization of Brinkley is certainly not shared by all in the academic community, as noted in this earlier post regarding this William McCrary review of Brinkley’s Hurricane Katrina book:

Let me confess that I haven’t read all of the writings of Douglas Brinkley. I doubt that anyone — perhaps not even Mr. Brinkley himself — has ever done that. He is a veritable … deluge of literary productivity, with books to his credit on a dizzying array of subjects, ranging from Beat poetry to Jimmy Carter, and from Henry Ford to, most recently, the failed Democratic presidential candidate John Kerry. Indeed, the range of his literary productions is so wide as to seem indiscriminate. But his bestknown writings seem to have three things in common.
First and foremost is their relentless mediocrity. I cannot think of a historian or public intellectual who has managed to make himself so prominent in American public life without having put forward a single memorable idea, a single original analysis, or a single lapidary phrase — let alone without publishing a book that has had any discernable impact. Mr. Brinkley is, to use Daniel Boorstin’s famous words, a historian famous for being well-known.

For what it’s worth, I have read both Brinkley’s book on Hurricane Katrina and Jed Horne’s Breach of Faith: Hurricane Katrina and the Near Death of a Great Ameican City (Random House 2006). Horne’s book is a good read and far superior to Brinkley’s book, which is borderline unreadable.
Moreover, this skeptical view of Brinkley’s academic talent is not new. Back in 1999, Slate’s David Platz penned this well-know article about Brinkley taking advantage of his friendship with John F. Kennedy, Jr. to publicize himself after Kennedy’s death in a plane crash:

According to the Washington Post, Brinkley cut a $10,000 deal with NBC for a week of exclusive Kennedy commentary, but then agreed to provide it pro bono. Editors at George [Kennedy’s magazine] are reportedly so annoyed about Brinkley’s death punditry that they have dropped him from the masthead.
Even amid this week’s staggering hyperbole, Brinkley’s emotional profligacy has distinguished him. He is, as he rarely fails to remind his audience, 38 years old like Kennedy, a vegetarian like Kennedy, and a Sagittarius like Kennedy. That identification with Kennedy accounts in part for Brinkley’s tenuous proposition: that Kennedy’s death is the signal event of his generation, the moment Gen X lost its innocence. In the opening paragraph of his New York Times op-ed, Brinkley opined: “It’s as if suddenly, an entire generation’s optimism is deflated, and all that is left is the limp reality of growing old.” Kennedy’s death may have affected his friend Brinkley this way. I am not sure anyone else outside Kennedy’s circle was so moved.[ . . .]
Brinkley’s sunniness and ardor are appealing, but his public history has its shortcomings. His idols, Ambrose and Schlesinger, have won the admiration of the academy and the public. Brinkley has won the public but has not wowed the academy. Some of his colleagues’ dismay is simply jealousy of his entrepreneurship, but some is more substantive. His books read like good journalism–and that’s no insult–but they are not great history. “He has made no analytical contribution at all,” says one Ivy League historian who professes to like Brinkley.

I am glad that the Chronicle considers Rice’s hiring of a history professor is newsworthy. However, for the Chron article not even to mention the well-known doubts about the academic merit of Brinkley’s work is the type of cheerleading usually reserved for the Chronicle sportspage.

Rationalizing the latest boondoggle

Houston%20Dynamo%20stadium.gifHoustonians are currently enduring the rationalizations of a couple of boondoggles, a big one and a relatively small one. The Chronicle is always a good source for these rationalizations, such as this romantic interlude from Chron soccer writer Glenn Davis regarding the proposed downtown soccer stadium:

[A] downtown stadium will be an unparalleled vehicle for promoting soccer. Stadiums out in the hinterlands in MLS are still trying to prove them-selves as a magnet for fans.
Fans migrating to stadiums located in the inner city can become a part of a ritual.
When I was growing up in New Jersey, my father used to take me to sporting events at Madison Square Garden in the heart of New York. The ritual began as we left the house.
Take the train from the suburbs to Hoboken, N.J., then jump on the Path train (subway) under the Hudson River. As we exited the Path and scrambled up the steps to the street, a whole new world opened up.
The streets of Manhattan were alive with vendors, scalpers hawking tickets, and fans of the New York Rangers or Knicks. The air crackled with competition and excitement.
For a kid from the suburbs, this was like going into a new world. To this day, these impressions are indelible in my mind. Whether going to Madison Square Garden or to Giants Stadium to watch PelÈ and the New York Cosmos, I always felt that sense of anticipation.
[Dynamo CEO Oliver] Luck has told me his ritual with his father was taking public transportation to go to Cleveland Indians games.
Stadiums in the U.S. have in many cases become soulless, with their flight to the suburbs and attempts to woo fans more for the buildings and their amenities than why they were built in the first place.
Stadiums should be a meeting place for like individuals from all ethnic and cultural backgrounds who come together with the common bond of a sport.

I almost broke into a solo of Kumbaya over that one. At least Chronicle sportswriter John Lopez is more realistic, if not more persuasive, of the real basis for public financing of another downtown stadium:

The predominantly white fan base that follows the Astros got theirs. The largely white and black fan base of the Rockets got theirs, too.
What about Dynamo fans? What about the fan base that has been estimated at roughly 45 percent Hispanic, 45 percent white and 10 percent Asian? [. . .]
On paper, yes. It has to make sense. But in the eyes of many, it’s also about getting the same things the Astros, Rockets and Texans fans got. Acknowledgment.

Or, as Kevin Whited muses: “So, we need a new soccer stadium downtown so that Houston can be more like Manhattan, and so that fans of what is a minor-league sport in the United States won’t cry racism?”
Meanwhile, Dennis Coates, a professor of the University of Maryland Baltimore County, provides the following persuasive analysis of the lack of any economic merit to a similar initiative to build a downtown arena in Baltimore:

Studies like that done by KPMG about a new arena for Baltimore have been thoroughly discredited by independent observers. They are much like the predictions of psychics. While a psychic’s predictions of the future are rarely assessed for their accuracy, the predictions of stadium benefits have been thoroughly scrutinized by a wide array of independent researchers. There is almost no support for any of the predictions made by the stadium and arena benefit psychics when those predictions are compared to data on what actually happened. The bottom line is the feasibility studies are more a PR process than a fact finding one. I urge you to not buy into the PR as if it is objective science.

Thus, the local debate regarding another downtown stadium is off to an inauspicious start. If proponents of the stadium deal admit in campaigning for the deal that the economic benefits of the deal are questionable, but that the intangible benefits to the community override the financial risk of the deal, then most reasoned opponents of such deals would at least be satisfied with the debate of the issues. They might not be persuaded to support the deal on that basis, but at least they would have the comfort that the public’s assessment of the deal would be based upon an honest presentation of the issues. As it stands now, the presentation of the economic issues in most stadium campaigns is muddled by highly questionable assertions of direct economic benefits derived from such deals. Here’s hoping that the Chronicle will at least promote truth in advertising in regard to the debate over the downtown soccer stadium deal.

This boondoggle is getting personal

JohnOQuinnRobertsonStadium_all.gifWell, at least the city’s proposed financing for this boondoggle is less than this one ($80 million versus $150 million plus who knows how much?).
But really. How many new and well-furnished high school football stadiums are located in the Houston area that would be more than acceptable for what amounts to minor league soccer? Half a dozen? At least the major league football and baseball teams could argue that the city’s facilities were no longer adequate when compared to other cities’ major league football and baseball stadiums. What is soccer’s reasoning? That the local governments financed stadiums for football, basketball and baseball, so it should do the same thing for soccer, too?
However, what really gripes me about all this is the proposed location for the soccer stadium — it’s smack dab in the middle of where I park for Stros games. ;^)

Rationalizing a boondoggle

dome.jpegAnne Linehan over at BlogHouston.net continues to do a fine job of following the various rationalizations of several local governmental types over how to justify public financing for the proposed the Astrodome hotel project (Charles Kuffner comments, too). The latest proposal being floated is to give the deal $150 million in hotel and sales tax breaks over a ten year term to facilitate about half a billion in private financing for the deal. The rationalization is that the rebates are worth it because the tax revenue wouldn’t be there in the first place but for the hotel generating it. Plus, the hotel really is a good thing for Houston, so why worry about a measly $150 million over the long term?
Putting aside that dubious reasoning for the moment, the reason that this project is a boondoggle isn’t because of $150 million tax rebates over ten years. On a boongoggle of this potential magnitude, that’s peanuts. The real financial risk comes when the hotel falters in paying its private financing. In almost every case, the local government that backed the facility will be placed in the difficult position of either putting up additional funds and security for the project or face the politically untenable position of watching the project fail. Guess what politicians usually vote to do when the alternative is to be embarrassed with a failed deal on their watch?
The problem with boondoggles of this type is that they “eat” — they must be fed money when the operating losses start mounting. There is a reason that the promoters of this deal can’t arrange private financing. That is a reason for the county government to back off the deal, not to embrace it.

Kirby & Westheimer — high crime area?

Atm_photo.JPGWell, it’s not every day that one receives an email such as the one below from a young female attorney at a prominent Houston law firm. For those unfamilar with Houston, the intersection of Kirby and Westheimer is a popular commercial area between two of the toniest residential neighborhoods inside the loop in Houston, River Oaks to the north and West University to the south:

From: (Name withheld)
Sent: Sunday, May 06, 2007 9:14 PM
To: (list suppressed)
Subject: Personal experience you don’t want happening to you – please share with others if you like
Dear friends,
First of all, I am fine … but earlier today I had an experience that I’m sharing with you so that you will be careful.
After going for a run with [deleted] today, I went to get cash at the Sterling Bank ATM near the Taco Milagro on the corner of Kirby and Westheimer (Upper Westheimer District, Houston). It’s a busy area, and it was still daylight. The ATM fronted on Westheimer. There were lots of people out on the patio at Taco Milagro [a popular local restaurant], just 50 yards or so away.
I got out of my car, locked it, and went to the cash machine. As soon as I had put my card into the machine and entered my PIN, a woman came up and stood right next to me on my left, put a gun in my side and told me that she wouldn’t shoot me if I didn’t scream and gave her $800. I had only punched in $200, so she grabbed that and told me to get $800 more.
My bank has a $400 daily limit (I have since learned), so after trying $800, $700, $600 and so on, I was able to withdraw $200 more. During this time she repeatedly told me not to scream or she would shoot me, and asked many times for my PIN code. I didn’t speak to her and didn’t answer her question, and all kinds of things were going through my head – mostly was she going to use the gun, but also would she steal [my boyfriend’s] car (which I was driving), my purse (which I was holding), my rings (which I was wearing), the receipt which showed our bank balance.
After withdrawing the second round of cash, she grabbed the money, told me to stay where I was, and took off. After ten seconds or so, I turned around and realized she had run across the little side street just east of the ATM, jumped into a car that took off just as I looked over that way. I tried to see the license plate, but they were just far enough away that I wasn’t able to make out the numbers, although I did make a mental note of the kind of car and the way they headed out. I had grabbed my receipts as soon as I was sure she (and the gun) were gone, and got back in my car to get home asap.
HPD came to our house and took down the case. I am pretty sure they will be able to see the woman on the videotape from the ATM because she was standing right next to me the whole time, and I had the receipts that showed the exact times of the two transactions.
All I can say is: be careful about ATM’s. The police said that robberies like this are happening all over the city, in broad daylight, in good neighborhoods. They look for easy marks (women by themselves) and they have it down to a science. I am so lucky that I wasn’t hurt – and she didn’t steal the car, my purse and jewelry, etc. Maybe you will be more careful than ever before and this – or worse – won’t happen to you. The entire episode made me realize that every day we are in seemingly harm-free situations that can quickly turn into dangerous situations.
Much love from Ella Lee Lane, NOT Ben Taub Hospital – Be careful!
p.s. If you are reading this, please promise you won’t tell my parents or in-laws about this. They worry enough as it is!

Rearranging the deck chairs at TSU

tsu2.gifSo, the regents who Texas Governor Rick Perry appointed to oversee Texas Southern University have now all resigned as a result of the latest edition of the chronic scandals at the institution. Governor Perry now plans on appointing five new regents, although it remains unclear where he is going to find five saints to step into the current TSU mess. Plus, there is no reason to think that Governor Perry’s new regents will be any better equipped to deal with TSU’s problems than Governor Perry’s former regents.
Governor Perry’s response is the typical band-aid approach to dealing with TSU’s problems that have been the norm for decades. As noted earlier here, TSU’s problems are systemic and cannot be resolved without rethinking and redefining the university’s purpose. Based on Governor Perry’s approach, you can count on that we will be discussing the next scandal at TSU in a few years.
As a matter of fact, it didn’t even take that long.
Update: The former TSU chief financial officer who was involved in the most recent TSU scandal was convicted today of misapplication of fiduciary property over $200,000. The jury is now hearing the sentencing phase of the trial.