NEW YORK -- Sam Nassi bought a professional basketball team that loses $2 million a year because he wanted something to love.
His regular business makes oodles of money but isn't overly lovable, he says. He is the country's leading liquidator of distress merchandise and bankrupt companies.
But his real love is the Indiana Pacers of the N.B.A., which he bought for $8 million and which still operates in the red.
Nassi has been called a 'corporate morticians,' but he says he prefers to be called a corporate surgeon. He is embarking right now on the biggest liquidation in the country's history, the $1 billion sellout of F.W. Woolworth's Woolco discount department store division. Woolworth itself is not dying.
Nassi's next biggest job, the $600 million liquidation of W.T. Grant & Co., was indeed a funerary proceeding. But it was a tidy job and a profitable one for Grant stockholders and Nassi. He says he realized $400 million more out of the Grant liquidation than the variety store chain's management had hoped for, and his firm earned $7 million in commissions.
More recently Nassi has been involved in liquidations of the Field's and Korvette discount store chains, and of big divestments for the May Co., Revlon, Mattel, Timex, Spalding, Food Fair, Franklin Simon and Hearn's. He also is currently involved in the sell-off of the last 2,000 DeLorean sports cars.
Nassi got into this business in a strange way. He says it took him 50 years to learn that 'closing stores paid a lot better than opening them.'
He found this out after going through the traumatic experience of building up a 37-unit chain of White Front discount stores for Interstate Department Stores in the 1960s, then seeing it go under in the wave of discount chain flops of the late '60s and early 1970s. Interstate gave him the job of liquidating White Front and his commissions on that earned him more in a few weeks than he'd ever been able to earn in a year.
Since 1971, he has sold off around $3.5 billion worth of distress merchandise and closed a lot of store. But he says most of his jobs are to help companies cure their ailments and problems and leave them in a healthy thriving condition.'
But that still means closing lots of stores and being involved in a lot of lost jobs, which is why he bought the Pacers. He wanted something he could build up as a permanent institution. Never an athlete himself (although he plays a good game of tennis), he has been a sports fan all his life. He was a Dodger baseball fan in his boyhood in Brooklyn until his mother took him to California after she remarried.
The Indianapolis basketball team, in its way, is a much tougher challenge than liquidating a business or rescuing a ailing retail firm and restoring it to profitability, Nassis says.
'Of the 23 clubs in the National Basketball Association, I think at least 18 are losing money,' he said. He said he paid $8 million for the Indianapolis team and he hasn't had 'even a ridiculous' offer from anyone else to buy it from him.
But he also has a substantial investment in the arena where the team plays. He says the arena would cost $60 million to replace and his interest in it makes it worthwhile to keep on absorbing the Pacers' annual loss for a while.
'We have the best coach in pro basketball in Jack McKinney and we'll try to build the team up,' he added.
But he concedes that, up to now, the Hoosiers in Indianapolis have been too enamoured of their local college and high school basketball to get excited about the professional game and he will have to give them a very good team before they will catch fire. That is a quite different kind of challenge from what Sam Nassi has been used to in recent years.
Nassi majored in merchandizing at the University of Southern California after going through Lincoln High School and a brief term at City College in New York. In World War II, he flew 38 missions as an Air Force navigator in the Italian theater. After leaving college, he went into merchandizing and thought he was doing extremely well at it for about 15 years.
'What I didn't realize,' he said, 'is the same thing most of the companies I'm called in to help now didn't realize -- over-expansion is the big delusion. If you keep on opening stores, you can hide unpleasant truths, expense all sorts of things and keep moving. The chickens come home to roost when you have to stop opening new stores.'
Nowadays, Nassi lives in Beverly Hills, Calif., with his wife of 35 years, Anka. He has three children and four grandchildren.
Tennis -- he has private courts in Beverly Hills and the Las Costa resort area -- and the basketball team are his big interests outside of business. He likes comfortable living. A few years back he raised lots of eyebrows by having four Rolls-Royce automobiles at once. That seemed a bit much even for southern California. He's down to two Rollses now.
He also spends time worrying about his weight and admits that's one of the big reasons for his devotion to tennis.
He admits he has been burned a couple of times on liquidation deals, once in Canada and once in Puerto Rico. 'I perfer doing business in the mainland states,' he said drily.
Nassi does most of his business by telephone. He has only a small office staff but has lists of some thousands of temporaries who work him on rush assignments. He uses employees of the firms for whom he is liquidating to some extent but says liquidations usually are a rush job, so he must have people who know him and understand his policies and methods.
Nassi does not just come in as an agent: usually his firm actually finances the liquidation, making arrangement with a bank to buy the stock to be sold off. Often, Nassi puts up a large part of the cash himself.
And he says no liquidation is too big or too small for Sam Nassi to consider.