Larry H. Miller Group History

Address:

5650 South State Street
Murray, Utah 84107
U.S.A.

Telephone: (801) 264-3100
Fax: (801) 264-3198

Private Company
Founded: 1979 as Larry H. Miller Toyota
Employees: 3,500
Sales: $1.4 billion (1997 est.)
NAIC: 551112 Ofices of Other Holding Companies; 44111 New Car Dealers; 44112 Used Car Dealers; 711211 Sports Teams & Clubs; 51312 Television Broadcasting; 532112 Passenger Car Leasing; 23311 Land Subdivision & Land Development; 44819 Other Clothing Stores; 53112 Lessors of Nonresidential Buildings

Company History:

The Larry H. Miller Group is a diversified operation that includes 36 auto dealerships in seven states: Utah, Idaho, Arizona, Oklahoma, New Mexico, Oregon, and Colorado. Those Toyota, Honda, Subaru, Dodge, Chevrolet, Cadillac, Jeep, Eagle, Chrysler, Plymouth, Lexus, Oldsmobile, Ford, Mazda, Pontiac, Mitsubishi, Acura, Buick, and Geo dealerships, the origin and heart of this complex group of companies, rank the Miller Group as the tenth largest car dealership in the nation. From 1979 to 1999, Larry Miller, the company's founder, had sold about 420,000 cars. Through his group of companies, Miller also owned the Utah Jazz team in the National Basketball Association, the Utah Starzz of the Women's National Basketball Association, and Salt Lake City's Delta Center, the home of the Jazz and Starzz, which also is used for concerts, other entertainment, and business conferences. Miller's additional business holdings include KJZZ-TV and the Jordan Commons office/entertainment complex in Salt Lake City and 28 Fanzz sports apparel stores in five states.

Miller's Background

Born in 1955, Larry H. Miller grew up in Salt Lake City, the son of an oil refinery worker and a homemaker. Even in the sixth grade, Miller demonstrated his entrepreneurial bent by using money from his paper route to acquire more marbles, baseball cards, stamps, pennies, and pigeons than any other kid on his block.

After he graduated from West High School in 1962, he worked as a framer in his uncle's construction company. But in November 1963, with the end of the building season, Miller found a job at American Auto Parts as a driver and apprentice counterman. In 1968 he took another position as a parts manager at Peck & Shaw Toyota in Murray, a Salt Lake City suburb.

In the meantime, Miller honed his skills as an outstanding softball pitcher for Salt Lake City adult teams. To play in a fast-pitch league, he moved to Denver, where he became the parts manager of the Stevenson Toyota dealership. In three years Miller turned around that dealership's parts operation from one of the poorest in sales to become Toyota's national leader. It became the first Toyota dealership in the nation to sell $1 million in parts and then $2 million in one year. "Larry did a phenomenal job," said Gene Osborn, a partner in the Denver dealership, in the May 2, 1999 Salt Lake Tribune, adding that "He was intense and committed to his job."

In his mid-thirties, Miller worked 90 hours a week as the operations manager of five Denver Toyota dealerships, but bigger opportunities soon arose for the ambitious man with a growing family.

The Early Car Dealerships: Late 1970s

In 1979 Miller was looking for something new after Gene Osborn left to start a solo dealership. While in Salt Lake City to attend a wedding, Miller visited Hugh Gardner, a friend who was a partner in Universal Toyota in Murray. After years of asking Gardner if he would sell his dealership, Miller was surprised when Gardner finally consented. On April 6, 1979 Miller paid Gardner $20,000 in earnest money. He also used the rest of his own savings and a $200,000 bank loan to pay Gardner, then agreed to pay the balance of the $3.5 million price in $17,000 monthly payments for ten years. Deep in debt, Miller risked much in 1979 when he began buying his first dealership. "If I'd stopped to think about it, it would have scared me and I probably would not have done it," recalled Miller in the May 2, 1999 Salt Lake Tribune.

In any case, the new car entrepreneur did not rest on his laurels. Later in 1979 he purchased a second dealership in Spokane, Washington, but later sold it. In 1980 he bought an undercapitalized dealership in Phoenix that turned out to be his best-selling operation. In 1983 Miller paid about $2 million for Gordon Wilson Chevrolet in Murray, and by 1984 he owned six dealerships.

According to the Utah Division of Corporations, on December 30, 1986 the new Larry H. Miller Corporation was created as a Utah corporation. It consolidated Cottonwood Chrysler-Plymouth, Inc; Miller Imports Ltd.; Larry H. Miller Hyundai; Larry H. Miller Leasing; and Larry H. Miller Toyota.

In October 1990 the Larry H. Miller Lexus dealership was officially dedicated at 5701 South State Street in Salt Lake City. The new $2.8 million, 16,000-square-foot dealership offered two cars made by the Toyota division: the smaller, less expensive ES 250, and the upscale LS 400 that competed with Mercedes Benz, Jaguar, BMW, and the Nissan Infinity.

By 1990 Miller owned 16 dealerships in Utah, Colorado, New Mexico, and Arizona, and was ranked as Utah's largest car dealer and the seventeenth largest in the nation. He employed 1,500 in the four states. In 1989 he sold 21,953 cars and recorded gross revenues of $310.77 million.

Such fast-paced growth required some changes, however. "We made a major change in our management style about two years ago," said Miller in the November 1990 Utah Holiday. "For the first eight years, we managed primarily on a basis that we would be successful if we continued to market and merchandise aggressively, and continued to grow and control expenses reasonably well. The last two years taught us we couldn't do that. We've made a lot of adjustments and started to utilize very stringent cost control methods." Because of the tough times, Miller said there had "been a certain number of casualties ... And I don't think there's any question that there are too many dealers."

Ownership of the Utah Jazz: Mid-1980s

Meanwhile, the professional basketball team Miller would eventually buy struggled on the court and at the box office. Original owner Sam Battistone in 1974 had started the New Orleans Jazz and named the club for the birthplace of jazz music. Although the team had star "Pistol" Pete Maravich, in five seasons in New Orleans it failed to win even half its games.

Battistone moved the franchise to Salt Lake City, where in its initial 1979-1980 season it continued its losing ways. But colorful Frank Layden, who became head coach in 1981, helped to turn things around eventually. Key players drafted during this period were Mark Eaton, the center from UCLA, in 1982; Thurl Bailey from North Carolina State in 1983; and little-known guard John Stockton from Gonzaga University in 1984. The Utah Jazz in the 1983-1984 season achieved their first winning record and for the first time went to the NBA playoffs.

In spite of the winning season, by 1985 Sam Battistone had lost $17 million after 11 seasons of owning the Jazz. Larry Miller was concerned about the persistent rumors the Jazz might leave small-market Salt Lake City for greener pastures. In 1985, as a successful car dealer, he was asked if he would like to be one of several investors each putting up $200,000 to support the team and become limited partners.

Miller declined because he felt that piecemeal approach would not work, but he negotiated another deal. On April 11, 1985 he purchased half of the Utah Jazz for $8 million from Sam Battistone. Then 14 months later he paid about $14 million for the second half of the Jazz franchise. Of course, he borrowed much of that money, thus assuming major debts for the second time in his career.

Miller's first season as the Jazz owner, 1985-1986, was also the first for Karl Malone, drafted in 1985 after playing at Louisiana Tech. Initially, Malone knew little about Utah and was disappointed with the draft result. Writer Clay Latimer wrote, "When Karl Malone arrived in Salt Lake City in 1985, he couldn't make a free throw, hit a jumper, decipher a game plan, and he lacked the emotional resources and ruthlessness to make himself into a first-rank power forward, according to his plentiful critics. The Utah Jazz, meanwhile, was a burlesque of an NBA franchise."

Jazz coach Frank Layden saw Malone's potential, which eventually earned him the nickname of "The Mailman" for delivering what the team needed. By his third season, Malone averaged more than 25 points per game. With guard John Stockton wracking up record numbers of assists, Jazz fans loved to hear the phrase "Stockton to Malone" again and again.

After putting together a winning combination, Frank Layden early in the 1988-1989 season resigned as the Jazz coach to become its president. Assistant Coach Jerry Sloan, a former NBA star, took over as head coach.

The Delta Center and Other Ventures in the 1990s

With his car dealerships and Jazz ownership a success, Larry Miller decided to go into debt for a third time&mdashø build a new sports and entertainment arena called the Delta Center. The Salt Palace simply was not large enough to hold a sufficient number of Jazz fans. So in 1990 Miller invested $5 million of his own money and borrowed $66 million to build the new sports/entertainment center that seated more than 19,000.

Jay Francis, senior vice-president for marketing, negotiated with Smith's Food & Drug Centers and Franklin Quest (later renamed Franklin Covey) before the Jazz sold Delta Air Lines the rights to use its name on the new facility. Owner Larry Miller disliked such commercialization of sports but realized it was an economic necessity as the cost of players' salaries and operating expenses escalated faster than ticket prices.

Francis also played a crucial role in selling the Delta Center's 56 luxury suites. Originally, in 1990 and 1991, one could buy a suite for $50,000 to $95,000 a year. But like everything else in the NBA, including season tickets and players' salaries, the cost of the suites increased to between $78,000 and $130,000 in 1999.

On October 9, 1991 the Delta Center was dedicated, and the Utah Jazz played their first game in the new arena that fall. On October 22, 1991 the Delta Center held its first rock concert when the group Oingo Boingo came to Salt Lake City. President J. C. O'Neil of United Concerts, in the September 19, 1991 Salt Lake Tribune, said the new building's seating capacity, along with better power sources and improved access for those with disabilities, made such concerts possible. Another feature was the Sony Jumbotron Video System, a four-sided 9-by-12-foot screen that showed both live performances and instant replay, more important for sports teams. Scott Williams, the Delta Center's general manager, reported that its designers took good ideas from other sports arenas and that it closely resembled Milwaukee's Bradley Center.

Although the Delta Center hosted mainly sports and entertainment, large business meetings also have been held there. For example, Dexter Yager, a major Amway distributor, held annual conventions in the Delta Center, attracting thousands of people who booked most of the city's hotels.

In January 1993 Miller finally realized that his business success had cost him a lot of time away from his wife Gail and their children. In line with his Mormon beliefs, Miller found more time for his children and grandchildren as the decade progressed, while still promoting his businesses.

A popular speaker, Miller once spoke at a college symposium for 11 hours straight. He even said in the November 1996 HomeCourt magazine, a Jazz publication, that he did not sell cars or own the Jazz for a living. "What I do for a living is talk."

After five years of owning the Golden Eagles, a professional hockey team in Salt Lake City, in 1994 Miller sold the team that had lost about $1 million each year. The franchise left the city and became the Detroit Vipers.

To promote his businesses, including the Utah Jazz, his car dealerships, the Delta Center, KJZZ-TV, Pro Image retail stores, and Salt Lake City's Thrifty Car Rental, in 1995 Miller started his own in-house advertising agency called LHM Advertising. Working out of the Jazz headquarters in the Delta Center, Jay Francis, the Jazz marketing vice-president who managed the new ad agency, said it used direct mail and telephoning to market the businesses, in addition to more traditional methods like radio, billboard, and TV advertising.

In 1996 the NBA Board of Governors approved the formation of the Women's National Basketball Association (WNBA), and Salt Lake City was chosen as one of the eight cities to sponsor charter teams. Larry Miller's Utah Starzz thus helped make women's basketball history.

In June 1999 the WNBA's 12 teams started the league's third season. After a rocky start, the league was maturing. For example, its teams enjoyed an average attendance of 10,000 fans per game in the 1998 season, far more than had been expected.

The retail division of the Utah Jazz had started in March 1987 when the Jazz purchased four ProImage shops that sold sports apparel and other gifts and souvenirs. In 1996 the Jazz ended any association with ProImage and changed the name of their stores to Fanzz. By March 1999, 28 Fanzz stores, including 15 stores in Idaho, California, Colorado, and New Mexico, sold items with the Jazz logo, as well as hats, shirts, and other items promoting the Utah Starzz, Utah's college teams, professional teams in other cities, and two teams not owned by Larry Miller--the Utah Grizzlies professional hockey team and the Salt Lake Buzz minor league baseball team. Although retail sales were a minor part of Larry Miller's businesses, the Fanzz stores were profitable. Shauna Smith pointed out in 1999 that, "Few NBA teams have ventured into the retail business. Teams like the Phoenix Suns, Detroit Pistons, and Orlando Magic are involved in the business, but no team comes even close to the retail involvement of the Utah Jazz."

In 1999 the financial world considered the Utah Jazz to be one of the NBA's best managed franchises. In March, Morgan Stanley along with First Security Bank of Utah helped refinance the $50 million that Larry Miller still owed on the Delta Center. Investors were encouraged by the Jazz's strong fan base, aided by the team's HomeCourt magazine started in 1998 and increased season ticket sales. Investors also knew that the Utah Jazz had gone to the NBA finals two years in a row in the late 1990s and consistently for many years participated in the playoffs, thus making them one of the NBA's best teams. Standard & Poor Corporate Rating Service gave the March 1999 refinancing a "low-A" grade, the highest it had ever given for a sports or entertainment deal. In addition to Miller's Delta Center debts, in 1999 he also owed about $92 million for buildings and land used by his car dealerships.

After opening his first Sandy car dealership a few years earlier, Larry Miller sought ways to promote business and entertainment in the Salt Lake City suburb. He and other car dealers invested in a huge AutoMall in Sandy. In addition, in 1997 Miller purchased and then demolished the old Jordan High School on 9400 South State Street in Sandy. At a West High School assembly, Miller told the students that in 1962, his senior year at West High, the school lost the state basketball championship to Jordan High School. "It has been a burr under my saddle," added Miller jokingly in the January 17, 1998 Salt Lake Tribune. "So, I bought the old Jordan High and tore that sucker down. It took 35 years, but we got even."

Then Miller began construction of a new office and entertainment building called the Jordan Commons. It was planned to include 270,000 feet of office space, a 35,000-square-foot Mexican restaurant, and a 16-screen multiplex theater. By January 1999 the ten-story complex was half completed. Miller had invested $20 million in the Jordan Commons by May 1999 and was looking at spending about another $90 million to finish that project.

In late 1998, also in Sandy, Miller began construction of a two-story Larry H. Miller Entrepreneurship Training Center in partnership with Salt Lake Community College. Miller planned to give the $7 million building, land, and accompanying parking lot to the college. Sterling Francom, director of the college's entrepreneurship program that started in 1990, said in the November 12, 1998 Deseret News that the new facility would "be able to accommodate upwards of 5,000 to 7,000 people annually through the training program. ... There's no other place in the country that will have such a thing as this."

"I have to consider myself fortunate," said Larry Miller in the November 1990 Utah Holiday. "It's proof the American dream is alive and well." To encourage others to take the risks necessary to fulfill their dreams of owning their own business, Miller supported Salt Lake Community College and other programs with not only funding but also his time. For example, he taught a graduate class on entrepreneurship at the Brigham Young University School of Management.

In 1999 Miller's companies were overseen by two men. Richard Nelson served as president of the Larry H. Miller Group of Automotive Companies. Dennis Haslam, who had founded the law firm of Winder and Haslam, had served since 1997 as the president of the Larry H. Miller Group of Sports and Entertainment Companies.

Although Miller took numerous risks trying new business ventures, his management style also included long-term relationships. For example, he helped veterans John Stockton and Karl Malone start their own dealerships in the late 1990s. Three of his vice-presidents by 1999 had served a combined 54 years with the Utah Jazz: David Allred, vice-president, public relations; Jay Francis, senior vice-president, marketing; and Grant Harrison, vice-president, promotions and game operations. Jazz President and Utah Starzz Coach Frank Layden also spent many years with the Jazz. "Hot Rod" Hundley was the voice of the Jazz on both radio and TV for about 25 years. Such continuity, somewhat rare among other professional teams and businesses, might have seemed old-fashioned, but it was part of Miller's formula for continued success.

Principal Subsidiaries:Larry H. Miller Corporation-Colorado Inc.; Larry H. Miller of Colorado Springs Inc.; Larry H. Miller Subaru Ltd.; Larry H. Miller Arena Corporation; Heritage Imports Inc.; Larry H. Miller Corporation-New Mexico; Larry H. Miller Corporation-Oklahoma; Jazz Basketball Investors Inc.

Principal Divisions:LHM Advertising; Fanzz; Larry H. Miller Leasing; Larry H. Miller Toyota; First Western Heritage Leasing; Prestige Leasing; Larry H. Miller Real Estate; Larry H. Miller Chevrolet; Larry H. Miller Chrysler Plymouth-Jeep Eagle; Landcar Management.

Larry H. Miller Group History

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