Edward J. DeBartolo: The Pharaoh From Youngstown

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From Cleveland Magazine, July 1976

"Ladies and gentlemen, you might think there won't be a palm tree left in Florida," says a fiercely smiling Bill Richmond, slick as a sideshow barker. "Because there will be 82 of them planted in this mall . ..."

Richmond, oozing charm he bottled and brought up with him from his native Tennessee, is squiring representatives from some 50 of the country's leading newspapers who are in Cleveland for a national gathering of real estate editors. At this moment they are getting a firsthand preview of a $175-million undertaking billed as "the world's largest and most beautiful shopping complex": gargantuan Randall Park Mall, 2.2 million sprawling square feet, suburbia's most spectacular new temple for the mercantile arts. This self-contained, climate-controlled colossus sits on a 144-acre plot that is bounded by Emery Road to the north, Northfield Road to the east, Miles Road to the south and Warrensville Center Road to the west — a sizable hunk of the tiny village of North Randall in southeastern Cuyahoga County. It is scheduled to open for business next month, on august 11.

But it is now mid-spring, still three months to the grand opening, and Richmond, who is Randall Park's manager, is showing off what is yet only a vast shell — floor ceiling and walls, that's all. Nothing but the naked mall interior, gray emptiness broken only by the winding ramps and twisting crossovers that interconnect the two levels of the huge place.

"The floors are a terrazzo tile made especially for us in Mexico," says Richmond, whose practiced patter is amplified by a portable sound system that is being lugged dutifully by a brown-shirted security officer. "And if I may quote Mr. DeBartolo, 'We buy their entire production.'" He squeezes out another broad smile.

At mention of his name, a small, slender man in a black silk suit turns his head in Richmond's direction and smiles faintly. His glance is strangely piercing, perhaps because his face has a falcon-like quality — dark, deeply set eyes topped by tufted eybrows, a strong, angular nose and a tucked chin. Edward J. DeBartolo of Youngstown, world's biggest developer of shopping centers, has been walking alone, ahead of the tour group, his right hand thrust into a side pocket of his suit coat, apparently lost in private thought about Randall Park — his largest, most costly project ever.

"Standing at this end of the mall and looking to the other end," Richmond goes on, "it is a distance of 1,100 feet." A few oohs and aahs rise up from the real estate editors, all of whom had been offered liberal quantities of alcohol before embarking upon this hike. Then, too, nearly all these grown men and women, the creme de la creme of what passes for real estate journalism, are also wearing toy hard hats.

The hats are bright yellow plastic, and each bears a little white sticker which reads: "Randall Park Mall, Developed/ Owned/Operated by the Edward J. DeBartolo Corporation."

More than absurd, though, the scene is strange ... even otherworldly. The dust of construction fills the light as it filters down in shafts from the high ceiling, and it is easy to imagine that the cavernous interior hazily visible through the diffused light is actually an especially well-preserved archeological marvel a thousand years hence, a surviving monument to American life, circa 1976, around the time of the United States Bicentennial ... a striking exemplar of that phenomenon of the post-World War II period, the suburban shopping mall ... alas, only a bare skeleton now, long since missing its amenities and colorful detail ... live palm trees, for instance ....

Yes, the tour guide for this archeological site might say, the ancient Egyptians had their pyramids, the Greeks their temples, the Europeans their palaces and cathedrals — and the Americans, well, they had their malls.

Ed DeBartolo, the Pharaoh from Youngstown, would enjoy having Randall Park Mall pointed to as a symbol of this age — and, in a real sense, it is that. Since 1948, when he started up his business, DeBartolo has developed more than 100 shopping centers and malls, successfully pinning his fortunes to the revolution that was swiftly altering the American lifestyle - the thousand -megaton boom of suburbia. Since then, plainly, the shopping malls that he and rival developers plunked down amid the suburban spread have become the very heart of the beast. Like it or not, every suburbanite knows that the shopping mall is more than a store; it is also the social, cultural and recreational hub of suburban life, much like the town square of an earlier era. And as every urban planner knows, each new mall almost surely drives another nail into the coffin of decaying urban centers nearby. ("We're not trying to defeat downtown," counters DeBartolo, who also said at the onset of construction at Randall Park that downtown Cleveland "better get on its horse and run." He now adds, defensively: "That, wasn't a threat. That was a challenge. And who picked it up? No one.")

In a historical nutshell, the effect of the shopping mall has been profound — and Ed DeBartolo, as the largest mall developer of them all, has done as much as any man during his lifetime to change fundamentally the way Americans live.

The evening's tour is finally over now, and a chartered bus makes its way slowly across the unpaved Randall Park parking lot. Its destination is the nearby Holiday Inn-North Randall, which DeBartolo also owns, where the real estate editors will be feted to more drink and a lavish buffet. Standing at the front of the bus, DeBartolo leans close to Bill Richmond, who is in contact with the Holiday Inn by walkie-talkie, and says above the din, "You did a nice job in there."

"Thank you, sir," Richmond replies.

"You forgot to tell them how big it is."

Ed DeBartolo is himself big, bigger than life in some ways. And if his malls hold symbolic importance to the American way of life, so does he. Indeed, DeBartolo could be called a man for the Bicentennial. His story is a living testimonial to the Great American Dream — for better or for worse.

Raised by a stepfather who was born in Italy and could neither read nor write, DeBartolo in his late 60s today is one of the most successful self-made men in American business - and possibly the richest in the state. The dimensions of his personal fortune are withheld from inquiring visitors, although a New York Times Magazine article three years ago estimated the figure at $200 million. No doubt it is higher today. A Youngstown businessman - and no friend of DeBartolo - recalls an auto ride past the headquarters of the DeBartolo Corporation with Governor James A. Rhodes, himself a self-made man and shrewd judge of horseflesh. Rhodes remarked offhandedly, "Eddie DeBartolo, in assets, is the wealthiest man in Ohio."

Certainly the assets of his privately held company are impressive enough. Like an Onassis, DeBartolo has created an empire that is delibi~rately labyrinthian - each venture is a separate corporation, with the parent company in Youngstown, wholly owned by his family, as the urnbrella organization. Even the parent, however, has an alter ego. According to court records, Edward J. DeBartolo, Incorporated, is a Delaware company. It is registered to do business in Ohio as the Edward J. DeBartolo Corporation. Its subsidiary assets currently include 26 regional malls in nine states (seven others, not including Randall Park, are in various stages of construction and another 25 are on the drawing board; five of the operating malls and eight of the malls under construction or development are joint ventures, usually in conjunction with the real estate arm of a major retailer), three race tracks (including Thistledown, across Emery Road fiom Randall Park, acquired in 1960), an international port in Toledo, controlling interest in three Florida banks, four Holiday Inns under franchise, an executive office park in Summit County with tenants the likes of Allstate, as well as other sizable investments.

It has been all of 15 years in coming, since DeBartolo purchased- the property in 1961 and subsequently demolished the race track for which the mall is named. The intervening years brought zoning hassles, prolonged and costly court battles, a slumping economy and 360 drawings and revisions of the mall blueprint. Even now there remains a serious division of opinion about the mall plan. DeBartolo promises six major department stores, including a Halle's of some 145,000 square feet. Negotiations for such a store did occur, but, according to Robert E. Rasmussen, Halle's senior vice president and general manager, no deal was finalized. Asked why DeBartolo's architectural drawings clearly depict his store, Rasmussen replies, "I think just a simple statement that we have not committed is all I care to say." The issue, retail industry sources say, may end in yet another legal fight.

Nonetheless, so determined was DeBartolo to complete his "showplace," as he is fond of calling Randall Park, that he refused even to recognize some potential hazards. As steel girders were being raised for his giant, for instance, other developers were proclaiming that huge regional malls had already become dinosaurs, facing certain extinction. Changed market conditions, rising gasoline prices and other factors, they argued, necessitated ... ore humble endeavors - "minimalls," as they are known in the trade.

There was another fear whispered by some local real estate and retail people. In recent years, the residential area surrounding Randall Park has become heavily populated by blacks. Would this alone cause white suburbanites to stay away in droves? Would the threat of crime, real or imagined, scare off shoppers? Heavy-duty security, including a mall security control booth in full view, where shoppers will be able to see 20 closed-circuit TV cameras being monitored, is intended to allay such fears. Still, many wondered aloud if that would be enough. DeBartolo, they said gravely, was taking a hell of a gamble.

A few in the local real estate industry still think Randall Park is sheer folly. "That place is going to be a little Harlem," bluntly asserts one prominent Cleveland shopping center developer, a DeBartolo competitor who refuses to be named. Others are waiting and watching, skeptical that Randall Park will be able to attract the smaller commercial tenants which aie essential if the mall is to be profitable. With the exception of Higbee's, which is leasing its space, the other four committed department stores — J.C. Penney's, Sears, May Company and Joseph Horne of Pittsburgh — all own the property on which their stores are situated. They will pay Randall Park nothing but the maintenance fee. Such an arrangement is not unusual. The relationship between the department stores — anchor tenants, as they are called — and the mall is symbiotic: The anchors lure the crowds, then the crowds also shop the "parasites," the specialty shops. The parasites, typically, pay either a fixed rent or a percentage of sales — whichever is greater — plus the C.A.M. (Common Area Maintenance) fee. They are the vital profit makers for the mall owner.

Because Randall Park has been extremely expensive to construct — DeBartolo estimates the cost at about $80 per square foot — the tenant rents are high. Why, the skeptics ask, should a prospective tenant pay from $6.50 to $22 per square foot of space, or a sales percentage, when the same space can be had at, say, Southgate shopping center, only a mile away, for about $5 per square foot?

Needless to say, DeBartolo scorns such concerns, and in late May said his mail had already been 85 per cent leased. A hundred or more of the predicted 260 specialty shops, he pledged, would be ready for the August grand opening. The appeal of Randall Park for merchants does seem strong - as is perhaps best illustrated by the May Company, which is opening a new store at Randall Park while keeping an old one at Southgate. Explains store president Denny Arvanites: "Randall Park is so big and potentially so regional, that the prospect of not being~ in it was frightening to us."

For richer or for poorer, Randall Park will be an important addition to the DeBartolo Corporation portfolio for decades to come. Yet lumped into the company's total assets, even multi-million -dollar 'Randall Park appears dwarfed. William Pfaus, company financial vice president, puts a total value on their far-flung enterprises "in the mid nine figures." Curiously, DeBartolo himself offers a considerably higher total.

"Close to a billion dollars," he confides in a confidential whisper. "It's a bigggg operation." He savors the sound of it.

DeBartolo is quietly lunching at the rear of a restaurant in his Holiday Inn-North Randall, where he also maintains a suite. After the main course - a specially prepared sampling of chicken, pork and roast beef — a plate piled invitingly with chunks of fresh melon arrives, unordered. The waitress sets it in front of him wordlessly and leaves.

"But goddamn it, the exciting part is what can be done with a non-publicly owned company," DeBartolo adds, He ha~ obviously struck a favorite refrain, for it brings a sudden shift in temperament. The soft-spokenness is replaced by a raw intensity that is startling — all the more so, since he also drives a bony forefinger into his listener's lapel, jabbing home his message. "The only way it can work and be successful is if there is somebody calling the shots — boom, like that . . . . " His open palm slaps the table. "Boom, make the decision."

Pausing to pop a piece of watermelon in his mouth, he resumes the rapid-fire discourse: "For instance — Randall Park. We continued with this big, monstrous complex when the economy of this country was the worst since the Depression of the Thirties. Now what publicly owned company would have condoned that? A non-publicly owned company can be more exciting and do more for the company and for the world than ... anything."

His own "non-publicly owned" company is housed in the unprepossessing Edward J. DeBartolo Building, a two-story brick affair in Boardman Township, just south of Youngstown. Parked at the front entrance are a shiny black Mark IV Continental, DeBartolo's auto, and a maroon Mercedes 450-SL, driven by Eddie, Jr., 29, DeBartolo's only son, a vice president in the company and heir apparent to its control. Years ago the elder DeBartolo began preparing his son to someday take his place - putting him to work in his teens doing lowly maintenance jobs at the company's shopping centers, keeping in daily contact while the boy was away at school, introducing him gradually to every facet of the business.

The big black car suffers from too many short runs as DeBartolo drives to and from work. His large but not extravagant home - a white, 12-roorn ranch-style house with colonial pillars at the entryway — is only 1,200 feet away. DeBartolo wants it that way. He hates to waste time.

Anyhow, most of his traveling is done the speediest way possible — by air. Behind the DeBartolo Building is a grassy airstrip, where the company's single-engine Super Helio Courier STOL plane — a three-passenger craft designed for short takeoff and landing - has an easy 15-minute flight to Randall Park. It swoops down for landing on a section of parking lot not yet open to the public. (More than one curious visitor to the mall during construction has been taken aback to find rows of barrels closing-off a strip of the parking lot, with signs posted reading: "Caution, Aircraft Landing Area.") In dry weather the STOL plan can also touch down on the infield at Thistledown, where DeBartolo often spends time on weekends. As the slight figure in black, carrying a large briefcase, trudges across the grass, he is typically greeted from the grandstand by a rousing Bronx cheer.

Most often, however, the STOL whisks DeBartolo from the office to nearby Youngstown Municipal Airport, where the company twinengine Learjet is hangered, the sleek, orange-and-white "Echo Delta." A million-dollar-plus aircraft that costs $650 an hour to fly. Like the STOL, it is piloted by the DeBartolo "Aviation Division," a crew of three full-time pilots who log 250,000 miles a year.

This private air force enables DeBartolo to routinely pursue a work day which few businessmen can match — a day of nearly perpetual motion.

"If the boss is flying to New York City," says Robert J. Schreiber, company vice president and chief counsel, "he'll walk out the door to the STOL, which takes him to the running and waiting Lear. Then he'll fly to Newark, where a limousine is waiting to take him into Manhattan. He'll usually have five or six appointments set up with the heads of the big retail chains, like J.C. Penney, or with the financial institutions we do business with. Or maybe he can get some top department store executive out of his office, which isn't easy, and fly him down to Florida to see a site. After a stop for lunch, we'll have him back the same day - and the boss will probably close the deal on the flight back."

DeBartolo himself will be back home in Youngstown for dinner, with his wife, Marie, and second child, daughter Marie Denise, 25, who lives with her parents and is also personnel director for the company. The small DeBartolo household is tightly knit, a fact DeBartolo is proud of As he once boasted to Chuck Perazich, assistant sports editor of the Youngstown Vindicator.- "Hell, I'm home more with my family than the average steelworker. I may have been in Texas for lunch, but I'm home for dinner," Incredibly enough, it is probably true.

Expensive to own and fly as they are, it is also true that the airplanes have proved an invaluable business tool. They are impressive, certainly, to prospective business associates. But more important, DeBartolo, after years spent cruising through the clouds, is said to possess one of the keenest knacks in the business for evaluating the potential of new mall sites from 2,000 feet overhead. And, of course, he also gains mobility and speed that cannot be matched by competitors still on the ground. "The name of the game with us," he delights in repeating to associates and employes alike, "is speed."

The pace DeBartolo sets is extraordinary even without the aircraft. For years people have wondered what makes Eddie run. Sleeping an average of four or five hours a night, he rises daily - 365 days a year - before dawn. He is at his desk before 6 a.m. and ready to do business before that. "The first time I met him," a Cleveland business executive says in undisguised awe, "he gave me his home number and said to call at 5:30 in the morning if I wanted to talk deals."

From his early-morning start, DeBartolo's typical working day stretches well into evening - 15 hours is normal, more is not unusual. This grueling routine is repeated six days a week, then shortened to around seven hours on the seventh. Week after week, with never a break of more than a day or two. DeBartolo boasts, in fact, of never having taken a vacation in his life. The very concept of vacation is alien to him, and he merely tolerates such desires by his employes.

"I just like to get up every morning," he says, "and keep on moving and moving and moving. Any of us is liable to go any minute, but I got news for you —I'm going to keep going until somebody hits me in the face with a spade. Period."

What makes Eddie move so fast, he tells you, are the three germinal influences of his childhood and early adult life: growing up poor, the Depression, the war.

Says DeBartolo: "I was shaped by that stuff. What the hell, I was hungry when I was a young boy. I was hungry when I was in my teens. You weren't accustomed to money, to anything being handed to you. I never knew-anything more than just banging my brains out working. I'm not talking about brains or ability. I'm talking about having guts and staying power."

His natural father died when Eddie was small, and the job of raising him fell to his mother's second husband, Michael DeBartolo. The family lived in an Italian neighborhood on Youngstown's south side. Although small for his age, Ed was put to work early on the sidewalk and driveway jobs that were the mainstay of his stepfather's struggling paving business.

"He worked like a damn mule," DeBartolo says of his stepfather. "I owe everything to him. He was tough."

Apparently the long hours they put in together were rewarded. The small paving jobs gave way to larger ones, then to heavy construction. But Ed was disturbed by the chronic ups and downs that the construction business — dependent on contracts from developers or governmental bodies — suffered. "We'd have some good years in paving, and we'd buy a lot of tractors and other equipment. Then the next year, we'd die with all this damn iron! When I was in my early 20s, I decided I wasn't going to let anybody guide my destiny. I decided to get into the development end of everything."

By then he had been graduated from Notre Dame with a degree in civil engineering. A fellow member of his Class of 1932, a Chicago lawyer named Leo Schiavone, remembers DeBartolo as a freindly guy with a thin mustache who "lacked the boisterousness and aggressiveness some of us had." During the early Forties DeBartolo was already dabbling in real estate and business was good.

At World War 11's eruption, a somewhat reluctant DeBartolo found himself in the U.S. Army Corps of Engineers, where he eventually earned a field commission as a 2nd lieutenant while serving in the Pacific. Military life proved worthwhile, however. He learned to become expert in matters of topography, a skill he would put to use in later civilian life scouting for mall sites. And he became accomplished in another endeavor - poker playing. Often he would risk most of his paycheck, he has told Alan Huff, who, as DeBartolo's chief pilot today, probably knows his boss as well as anyone in the company. "But usually," Huff hastens to add, "he won."

If he had not been sure of it before, DeBartolo learned in the Army that he had the gambler's instinct. Even as a hustling youngster, Ed had found time to indulge in a favored pastime of his neighborhood - risking a coin or two in a game of chance. He liked to shoot craps. Indeed, it is still something of a joke in Youngstown that if even a dollar craps game gets underway, DeBartolo can smell it. And that if he follows his nose to the action, he will probably win.

Not that he has time to hunt up the local game anymore. DeBartolo has long since gone on to gambling for bigger stakes in high-rolling citadels such as Reno and Las Vegas. But more importantly, real estate development itself is always a gamble, a calculated risk. The most successful developers, Debartolo included, are those who are best at figuring the odds. And they love the game.

Back in Youngstown after the war, it did not take DeBartolo long to figure where the best gamble was: home construction. The vets returning home needed brand-new roofs to put over the heads of their wives and soon -to-be-arriving bambinos, and government-insured mortgage loans gave them the means to pay for them. Scores of prefab DeBartolo homes quickly dotted the Youngstown area.

As he looked around, however, watching whole new neighborhoods sprouting on the outskirts of the city, DeBartolo saw, that a greater gamble was worth taking. These new tract homes needed drugstores and five-and-dimes, and downtown Youngstown seemed far away. As far back as the 1930s, a few small shopping centers and department store branches had been successfully developed in California and elsewhere. But the crazy notion that there could be an alternative to downtown shopping was still considered dangerous. DeBartolo and other visionary entrepreneurs around the country sensed that the time was right to introduce that crazy notion to the rest of America. In 1951 he took his first big plunge, building a strip of stores south of Youngstown still known today as Boardman Plaza.

The risk was considerable. The area was almost country. DeBartolo relishes telling how he was standing on the plaza's newly poured sidewalk, when he overheard a prominent Youngstown realtor say to another: "I'll give this place six months to fold." It still prospers today, now greatly expanded, the heart of what is known locally as the "uptown shopping district." Proudly, DeBartolo still owns it.

Just down the road, almost to DeBartolo Corporation headquarters, is Southern Park Mall, evolutionary heir to that humble, 25-year-old plaza. Southern Park, another former race track site, is a 1.2 million square foot regional mall that DeBartolo opened in 1969. In brief, the evolutionary process was this: The early strip plazas gave way to L-shaped and U-shaped centers, which by the late Fifties had become two parallel strips — in effect, open malles. It was then but a simple step to throw a roof over them, creating the climate-controlled enclosed mall, which grew bigger and bigger during the decade of the Sixties. One such project was Great Lakes Mall in Mentor, which DeBartolo opened in mid-1961, when most of Lake County was open field, commercial nurseries and sleepy villages. It was not until later that DeBartolo finally managed to coax the May Company to risk a store there. He succeeded, reportedly, only after selling the store the land on which to build for the grand sum of $10.

By the middle Sixties the huge regional malls had become as American as a Sears next to a Thom McAn next to a Petrie's next to a Richman Brothers . . . in other words, as American as the suburban shopping experience itself. DeBartolo decided to sell more than 60 of the company's early plazas and centers. and to pour his resources into building regionals faster than anyone else in the game. He already had the land needed, in many cases, since the company had bought up about 20,000 acres nationally.

DeBartolo built Akron's Summit Mall in 1965 and Richmond Mall in Richmond Heights the following year, but he had already put up a regional complex near Baltimore and would soon follow with others in Indiana, Florida, New York, Tennessee, Texas, New Jersey and Colorado.

His malls now under construction will expand the empire into Pennsylvania - a joint venture is underway with U.S. Steel on Pittsburgh's south side - and Georgia. Future projects will take the company into Wisconsin, Washington, Virginia, California - and Strongsville, where 1979 is projected as the opening date for a mall being developed jointly with Jacobs, Visconsi and Jacobs Company of Cleveland.

As DeBartolo malls sprang up around the country, the company also began diversifying — creating the Toledo Foreign Trade Zone, for instance. Opened in 1961, it remains the only lake-based facility of its kind in the nation. Foreign goods are imported into it free from duty, to be stored, processed, repacked, assembled or manufactured within the zone — which, incidentally, has seven of its own smelting furnaces to process ores. Duty is paid only when the finished product leaves the zone. Expanded now to eight times its original 50,000 square feet, it handles millions of tons of goods annually, including all Volkswagens bound for the Midwest and enormous quantities of Canadian liquor.

With such successes came a marked popularity with the money market. Today DeBartolo obtains financing for his projects from the nation's largest lenders, primarily major insurance companies such as Massachusetts Mutual, New York Life and Prudential. "Our deals are normally in the $20 to $50 million range," says financial vice president Bill Pfaus, a relaxed man who spouts million-dollar figures as if they were the prices of milk and bread. "There are only a dozen or so lenders who can handle that."

The company borrows from $100 to $150 million a year, Pfaus says, but it is in the enviable position of being able to finance its own construction internally until the right loan deal can be found. "We have two projects right now in Florida which are both 70 per cent completed," he continues. "And we are just arranging the construction loan on one. Fortunately, we went into the recent tough economic period cash heavy. We had close to $50 million in the till."

That cash allowed DeBartolo, for example, to pour $27 million into Louisiana Downs - the company's third race track - near Shreveport. It opened last year. (The other DeBartolo track, purchased in 1973, is Balmoral, south of Chicago.) Until he withdrew from the deal, Louisiana Downs had been a co-venture with Kemmons Wilson, chairman of the board of Holiday Inns. According to a former DeBartolo employe, DeBartolo and Wilson found each other in 1971, shortly after the opening of DeBartolo's Raleigh Springs Mall in Memphis, Tennessee. A local manager of this motel chain — its world headquarters is in Memphis — was inspired to display on his outdoor billboard: WELCOME EDWARD J. DE BARTOLO. The man from Youngstown was thrilled. He called Wilson to express his appreciation, and within months he and Wilson were already teamed up on several deals, including the Holiday Inns that DeBartolo has since built.

Back in the hardscrabbled early days, though, well-heeled money partners such as Wilson were nowhere in sight. Neither were the Establishment lending institutions, even in Youngstown, where the big banks were wary of this intense, slightly rough-edged Italian named DeBartolo. "You did most of your financing with the small banks," DeBartolo concedes. "But let's face it. Everybody was set downtown in those days. Nobody had a branch bank outside of downtown. It was a selling job. You can't say it was totally a name or a nationality. The concept was new,