Jacobs family wants international expansion for Delaware North, but stay private - The Buffalo News

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Jacobs family wants international expansion for Delaware North, but stay private

The Jacobs family has no desire to take Delaware North public as it seeks to grow, but it does want to expand its international business by tapping opportunities in continental Europe, Asia and fast-growing Latin American markets such as Brazil and Chile, a company executive and family member said Thursday evening.

Jerry Jacobs Jr., son of CEO Jeremy Jacobs and a principal of the Buffalo-based hospitality giant, said the company’s status as a private enterprise has enabled it to stay true to its values of integrity, transparency, hard work and discipline, without worrying about Wall Street.

“We’ve been able to stay focused on what we believe are core virtues and principles that strengthen our organization, and we’re not responding to pressures from the public market,” he said. “We think that by being private, we can stay true to what is important to us.”

Jacobs spoke during a wide-ranging discussion at the annual meeting of the World Trade Center Buffalo Niagara, in which Rich Products Corp. CEO William Gisel posed a series of questions to him about being a private company, the challenges of family leadership and raising wealthy children, the family’s deep history of professional sports ownership and the company’s local philanthropy.

In particular, he spoke about where the company sees opportunities for growth internationally. The World Trade Center group seeks to promote trade. Jacobs said the company’s opportunities in the United States are largely tapped out. Its Sportservice division is already a $750 million operation and might be able to grow to $1 billion but not much more. The same is true for its airports concessions, and even its parks and resorts and gambling businesses.

“There’s a limited universe for that,” he said. “We are reaching a size where we need to look outside the U.S. for growth, and we need to find places we’re comfortable growing.”

The problem, he said, is that they’ve tried that. “We’ve seen a lot of places, and a lot of them aren’t so comfortable,” he said.

In Russia, for example, Delaware North got a concessions contract for the Moscow Circus. Its local partner received an extortion demand, and he ignored it. The next day, he was assassinated in front of his house.

“We pulled out. We pulled everyone immediately, put them on a plane and got out of Dodge. It just wasn’t worth it,” Jacobs recalled.

In South Africa, the company had contracts at an airport and running a food-service operation for rural schools in the bush. At the airport, it would promote good employees to supervisor positions, and they wouldn’t show up the next day.

“Turned out, we were promoting these folks over their tribal leaders, and if they were to assume that role, they could get killed,” he said. “It took us awhile to learn that.”

The school feeding operation was on the border with Angola, in what was then the territory of South-West Africa, where a war was going on. To get there meant flying early in the morning, very low, over a dry lake bed. When Jacobs asked the pilot why they couldn’t go higher, he was told “if we go any higher, they’ll shoot us down.” The company has also followed the business flood to China and India, also with challenges. “China can be no fun. China can be a little dicey. India’s even tougher,” he said. “We looked at India. We really tried to get into India, and it just isn’t a fit with us culturally ... And China is a moving target. The government changes the rules on you. So those aren’t high on our list.”

Currently, the company does have operations in the United Kingdom, which Jacobs hopes to leverage to expand into the rest of Europe. It also operates in Australia and now has a contract at the Singapore Sports Hub, which he hopes can be used as a springboard into Malaysia and Japan.

Scandinavia, particularly Finland and Sweden, are also thriving economies, he said. Other options include Brazil, with 300 million people, and Chile, one of the fastest-growing and wealthiest economies.

email: jepstein@buffnews.com

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