Back in Race : After Putting Massachusetts Recovery in Book, Financial Firm’s Head Resumes Campaigning

Four years ago, Foothill Group Chairman Don L. Gevirtz wrote a book called “Business Plan for America--an Entrepreneur’s Manifesto” published by G.P. Putnam’s Sons. In one section, Gevirtz wrote about what he called the “miraculous entrepreneurial rebirth” going on in Massachusetts during the early 1980s.

It was during a swing through Boston while on a promotional tour for the book that Gevirtz was introduced to Massachusetts Gov. Michael S. Dukakis, who would later make the so-called “Massachusetts miracle” a cornerstone issue of his presidential campaign. It also would become a key issue among Dukakis’ critics, who maintain that the miracle happened in spite of him.

Gevirtz and Dukakis dined together, forging a friendship that included periodic chats on the telephone and a few meetings each year. In 1986, Gevirtz said, he suggested over dinner that Dukakis consider running for president, a suggestion he said the pragmatic Dukakis brushed off at the time because he was busy running for reelection.

Gevirtz, who heads the financial services company based both in Agoura Hills and Century City, has become more than a friend to Dukakis. Gevirtz has become one of Dukakis’ main fund-raisers in California and has served as a key adviser to the campaign. He also is in Atlanta this week at the Democratic National Convention as a Dukakis delegate.

“If you draw circles, maybe I’d be out there somewhere in the second circle. I’m definitely not in the inner circle,” Gevirtz said.

Still, for Gevirtz, 60, involvement in the Dukakis campaign has been something of a rebirth as an important Democratic Party businessman.

He latched on early to the presidential campaign of another relatively unknown governor, Jimmy Carter, and became a key adviser and co-chairman of his campaign in Southern California. Gevirtz was in the running to become the head of the Small Business Administration during Carter’s presidency, but didn’t get it. Instead, he was named to Carter’s Commission for the Eighties.

Gevirtz is a 6-foot, 2-inch, native of Kokomo, Ind. He was an all-conference basketball player in the 1940s on his high school team, losing one year in the Indiana state finals. He won a basketball scholarship to the University of Southern California, where, he said, he “sat on the bench for four years” while earning a degree in business administration.

Gevirtz is something of a Democrat in the 1970s mold, reminiscent of former Gov. Edmund G. (Jerry) Brown Jr.

Gevirtz said he and his wife bought a 75-year-old home on 10 acres in the wealthy Montecito area near Santa Barbara after a weekend visit to a Zen Buddhist monastery in Northern California, where they decided they needed a quiet place to go on weekends.

One of the reasons Foothill maintains a corporate base in Agoura Hills is that the company’s Foothill Thrift and Loan is based there. Gevirtz has maintained an office in Agoura Hills since January, 1987, putting him 90 minutes closer to his Montecito home than he is when he drives to Foothill’s Los Angeles office.

The 1980s turned out to be a difficult time for Gevirtz’s business. Foothill, which Gevirtz founded 20 years ago with John Nickoll, who is now Foothill’s president, went through a wrenching time.

The primary reason was $50 million in bad loans made to small machine tool suppliers to the Texas oil and gas business. By mid-1983, earnings began to tumble. In 1985, Foothill lost $5.8 million on revenue of $58.7 million.

“At the same time the oil glut hit Texas, the Japanese cut the prices of machine tools by 50%. That was the collateral for our loans,” he said.

Author Ridiculed

The timing couldn’t have been worse for Gevirtz, coming about the time his book was published. Some articles ridiculed him for suggesting ways business should be run when the one he headed was in so much trouble.

“Los Angeles tycoon Don Gevirtz has all the economic answers. So why are so few listening?” asked California magazine.

Gevirtz and Nickoll brought in new management at Foothill Capital in the wake of the Texas tool massacre, and tightened credit policy. In 1987, the company’s earnings more than doubled to $7.8 million from 1986, with revenue rising 27% to $76.3 million.

On Monday, the company said its net income rose 64% in the second quarter that ended June 30 to $3 million, and 64% for the six months to $6 million. Revenue climbed 18% to $22.7 million in the quarter, and 18% to $44.1 million for the six months.

He and Nickoll each own about 5% of Foothill’s stock, worth more than $2 million. The largest shareholder is Santa Cruz Resources, an investment subsidiary of Tucson Electric Power Co. that owns about 37% of the company’s Class A common shares.

Asset-Based Lender

Foothill calls itself an asset-based lender. To insure that it will get its money back, it looks for value in a borrower’s equipment, bills owed to the company from customers and other assets.

MacGregor Sporting Goods used assets that included 12,000 baseball caps as collateral. Jetcopters, a Van Nuys company that supplies helicopters to the movie business, used helicopters as part of its collateral for $750,000 in financing earlier this year to refinance debt.

Last year, Foothill provided a $12-million line of credit to the Los Angeles Lakers and Kings because, Gevirtz said, the club’s banks weren’t providing the kind of support they wanted at the time. He would not say what kind of collateral secured the loan, but confirmed it wasn’t Magic Johnson.

Foothill also often takes on sickly companies, giving it the reputation, as one recent magazine article put it, for being a “lender of last resort.”

Gevirtz dislikes the term. “People come to Foothill when they need an innovative approach to lending in transactions the banks can’t do.”