Lindner kept stake in Castellini Co. quiet
Financier owned firm during crucial land sale
Cincinnati Business Courier - December 20, 2002
by Lucy May and Dan Monk
Courier Staff Reporters
In days, one of the last remnants of Cincinnati's old riverfront, Cinergy Field, will be imploded, blown into a million tiny pieces on the shores of the Ohio River. The timing is ironic, coming just weeks after the discovery of a missing puzzle piece for how Cincinnati's new riverfront took shape.
That puzzle piece was revealed Dec. 13 in an unlikely place, a one-page news release in which Chiquita Brands International Inc.
announced it was selling its ownership stake in Greater Cincinnati's largest produce distribution firm, the Castellini Co.
, for $45 million. Chairman Robert Castellini and members of his management team bought the company back from Chiquita for $21 million in cash and assumption of debt.
The news registered barely a blip on the business radar screen, a relatively small deal that will give Chiquita a $10 million gain and decrease its annual earnings before taxes, depreciation and amortization (EBITDA) by $8 million.
What made the deal interesting was that Chiquita, controlled until this year by Cincinnati financier Carl Lindner, had never previously disclosed that it owned Castellini, despite years of speculation that the ownership ties existed. That speculation reached a peak in the late 1990s, when some observers felt Lindner influenced the siting of Paul Brown Stadium to force Hamilton County to acquire Castellini's riverfront land. The county paid $36.5 million for Castellini's 24-acre riverfront property in 1998, although county officials now say Lindner had no impact on the decision.
Chiquita spokesman Michael Mitchell said Castellini got "the great bulk of the proceeds" from the land sale, since the real estate was owned by the Castellini family, not by the company.
Mitchell said Chiquita received a small share of the proceeds related to the county's purchase of lease agreements involving the Castellini Co.
Mitchell also said the banana company acquired "substantially all of the equity interest in Castellini" in 1988. Another news release, issued by Castellini Co., said Robert Castellini retained a majority of the voting stock.
"There was voting stock, and there was nonvoting stock," said Mitchell. "(Robert Castellini) owned a majority of the voting shares."
The voting stock gave Castellini control over the company's operations.
Both companies and Lindner, through a spokeswoman, declined to say how the ownership arrangement came about or say why it was never disclosed.
"It was not required under SEC disclosure rules," said Mitchell, "and we chose not to disclose it."
What all of that means in the context of Cincinnati's reinvented riverfront remains murky. By the time Paul Brown Stadium gave Castellini a way out of his riverfront property, Castellini had tried to redevelop the land himself for nearly a decade, first proposing a floating entertainment complex, then a mixture of hotels, retail and housing. Hampering those efforts was the fact that much of Castellini's land was in a flood plain, making it more costly to develop.
Nevertheless, Castellini was still working to develop the western riverfront when the Bengals began the stadium-development process by threatening to leave town in 1995. The Bengals' original goal was a new stadium located just west of the Roebling Suspension Bridge, a spot also coveted by the Cincinnati Reds, then owned by Marge Schott, with Lindner holding a minority stake.
After intense negotiations among business leaders and a lengthy public planning process, city and county officials moved the Bengals west. The Reds moved east, making way for The Banks, a mixed-use development that city and county leaders hope will produce housing, retail, office buildings and a hotel on the land between the stadiums.
Hamilton County Administrator David Krings said Lindner's ownership interest in the Castellini group had no impact on the county's stadium planning or negotiations. He said he wasn't even sure that he knew of Lindner's ownership stake. Other local business leaders, who did not want to be quoted, agreed with Krings that Lindner's ownership had no impact. Others aren't so sure.
Rob Fredericks, a legislative aide to Hamilton County Commissioner John Dowlin, said former Commissioner Bob Bedinghaus changed his bargaining stance on the Castellini land after receiving a phone call from Lindner. Fredericks said he attended a meeting where Bedinghaus disclosed the call.
Attorney Robert Manley, who represented several produce houses relocated by the Bengals' stadium project, said one of his clients told him Lindner directly negotiated Castellini's land sale with Bedinghaus. Manley said his client got that information from either Lindner or Bedinghaus. He wouldn't say which, nor would he identify the client.
Bedinghaus declined to comment for this story, but a local business leader, who didn't want to be identified but was close to the negotiations, downplayed Lindner's influence.
"I never saw his hand in that thing," he said.
Whatever Lindner's involvement, this much has long been clear: The Bengals siting decision added millions to the project's price tag. It meant the county had to purchase more land than originally expected and grant the Bengals concessions, including the placement of the team's three practice fields on the western riverfront.
Hamilton County initially budgeted $50 million for stadium land. In the end, it paid $68 million, including more than $1 million per acre for the Castellini property. The land-acquisition process also took longer than expected, forcing design changes and construction delays. The county once estimated moving Paul Brown Stadium further west added more than $100 million in stadium cost.
When asked if it was worth it, Krings said, "I think that the region is getting an excellent riverfront that it wouldn't have had otherwise."
Yet it has come at a cost the county continues to bear due to lower-than-expected sales tax revenues.
"Sometimes leadership is painful," Krings said.