October 23, 2009 @ 1:08 pm
From Phil DePaolo:
Bloomberg’s Net Worth
1996 – $1 billion
1997 – $1.3 billion
1998 – $2 billion
1999 – $2.5 billion
2000 – $4 billion
2001 – $4 billion
2002 – $4.8 billion
2003 – $4.9 billion
2004 – $5 billion
2005 – $5.1 billion
2006 – $5.3 billion
2007 – $11.5 billion
2008 – $20 billion
2009 – $16 billion (interim March figure)*
2009 – $17.5 billion
(Annual figures published by Forbes in September of each year)
It seems to be inadequately appreciated that Bloomberg’s Bloomberg LP does business with almost every major company in the city. Most of Bloomberg’s wealth comes from the sale of the Bloomberg financial terminals, not from his media company activities. A lot of media companies are not doing well these days. It is Bloomberg’s terminal sales that are likely financing his recently announced acquisition from McGraw Hill of “Business Week,” competing business publication that like a lot of others has not done very well recently.
Here’s The Atlantic:
Bloomberg considers the Business Week brand a strong draw on business people and newsmakers, two audiences that would complement its stranglehold on the Wall Street/investor type. Not only would it enhance access to newsmakers and help the company break news, it would also give Bloomberg a fresh subscriber list with new potential clients to sell its terminal.
Via Noticing New York:
While Bloomberg LP is doing business with every major company in the city, the city is busily granting companies concessions over which Bloomberg’s administration has substantial discretion.
Take one big company as an example, Goldman Sachs. Goldman has a new building in Battery Park City which was allowed to override the Battery Park City master plan, was granted extra density and tax breaks. Meanwhile, despite the fact that the city’s Conflicts of Interest Board said that he should not do so, Mr. Bloomberg calls up his business to check on terminal sales numbers. All that it takes for a big company to send money Bloomberg’s way in what could be the equivalent of a kickback or a political contribution is to order more terminals. Political contributions are not tax deductible, but paying for more terminals than you really need is.
We recognize that Boss Tweed and quite a number of other (less wealthy) politicians made a lot of money and formed companies (often secretly or in the background) to profit by business that could be done with the city or by virtue of city endeavors that involved major conflicts of interest. But was there ever a truly wealthy mayor with a personal business empire where the nature of that business meant that his empire or set of business enterprises was routinely doing business with most of the companies with which the city had commercial dealings?
Via The New York Times:
In a 2002 agreement with the conflicts board, the mayor promised to limit his involvement with his company to major decisions that would have a significant impact on his ownership value. Throughout his two terms, the mayor repeatedly insisted that he had no involvement in the firm’s day-to-day operations.
However, The New York Times reported that the mayor talked regularly to senior officials at the company about topics ranging from new data terminal sales to expansion into new markets and the general financial performance of the company. He even recruited the company’s spokeswoman.
The Times reports that much of the language of the 2002 ruling with which Bloomberg failed to comply was supplied by Bloomberg’s own lawyers. It also points out that its disclosure is antique, setting forth “Bloomberg L.P.’s top 100 customers” without update since 2002 when, comparatively speaking, Bloomberg was a considerably less bruising presence, his company’s customers now including “virtually every major financial institution in the city.” (The Roles Blur for the Mayor and the Mogul, By Serge F. Kovaleski and Ray Rivera, December 8, 2007.)
The Conflicts of Interest Board’s 2007 opinion is specifically about accommodating the mayor in the continuing acquisition of more wealth. Results speaking for themselves, that is something he had already done very well throughout his administration. Rather than generously giving money away, Bloomberg “donates” money to acquire more personal power and perhaps to acquire still more money as well. It even turns out he is driving up public expenditures on mayoral campaigns! Whereas once upon a time we were told we were going to have a mayor who was so angelically generous that we didn’t have to worry about anything, we now find that we have a mayor so financially omnipresent and capable of corrupting charity that we need to worry about everything.
Setting aside conflict-of-interest abuse of charities to enhance personal power, there is also simply the question of Bloomberg’s possible conflict-of-interest abuse to enhance his wealth at taxpayer expense. It should not be disregarded.
The possibility that Bloomberg’s terminal business could involve conflict-of-interest problems got some attention in a January 2002 New York Times article (before the Conflicts of Interest Board ruling) which is almost laughable in the way that it fails to identify the greatest possibilities for conflict-of-interest concern.
Once again, Bloomberg’s ostensibly charitable nature is the grist used in a PR feint: The Times article reports about how Bloomberg, L.P. is “donating” 35 Bloomberg terminals to the city for use by members of the mayor’s staff together with “seven other terminals that were previously being leased by the city’s financial departments” in order to pay “heed to conflict of interest laws that forbid elected officials to sell goods and services to the city.” (See: Mayor Brings His Gadgets, And Thorny Conflict Issues, by Edward Wyatt, January 6, 2002.)
The article almost puffs over the nonviolation of conflict of interest rules:
Mr. Bloomberg and his company will receive no direct financial advantage from the city’s use of the terminals — and as a donation, the terminals violate no conflict of interest rules
”The reason for the donation was to alleviate the potential conflict of interest,”
For `balance’ the article fusses over the “reputational capital,” that might be created by the “the commanding presence that the Bloomberg terminals will have at City Hall” . . . “an asset that has value even if it does not show up on a balance sheet” according to “Kevin T. Jackson, an associate professor of business ethics at Fordham University.”
In fact, by the article’s fourth paragraph, it is still talking about how the appearance of the Bloomberg terminal “at City Hall put the Bloomberg, with its sleek monitors and acres of flat-screen space, on the public stage as an object of desire” is a “a product placement that would make any marketing director salivate.”
Albeit that product placement and reputational capital idea is a valid concern, what goes unstated in the article is the slightest thought that placing the terminals on “the public stage as an object of desire” can also send a clear message about how easy it could be to deliver benefits equivalent to a kick-back.
This is why it is a critical concern that the Times reported, as noted above, that for years thereafter (emphasis supplied):
the mayor talked regularly to senior officials at the company about topics ranging from new data terminal sales . . . .
Sales of Bloomberg terminals were shooting up in the years just before running for mayor when Bloomberg’s billionaire fortune essentially doubled, according to data available for 1997, 1998 and 1999. (See: The Company He Keeps (for Now), NY Times by Timothy L. O’brien, March 20, 2005.)
But increased sales do not correspond in arithmetic proportion to increases in profit. The industry is somewhat of a diminishing marginal cost business; after a point, most costs have been paid for, so sale of each additional terminal beyond that point is essentially gravy.
If you analyze it, all it takes for New York financial firms to deliver quid-pro-quo benefit to the mayor in a virtually undetectable fashion is for them to order more Bloomberg terminals than they otherwise want or need. And, as noted, each additional terminal is almost pure gravy, pure cash to Bloomberg. For the years that the mayor has been in office, Wall Street has been far and away that largest sector of the city’s economy and, as the Times asserts, Bloomberg does business with “virtually every major financial institution in the city.”
The Times article on the “donated” terminals said that the terminals had been given in part because of Bloomberg’s own comfort with the system:
The donations are not an attempt to further market the Bloomberg name, his aides said. ”It was just the fastest way to get the office set up with computers,” said William T. Cunningham, the mayor’s communications director, who added that the system is the one that Mr. Bloomberg is most comfortable with.
The new hardware lets users get e-mail messages, do word processing, make spreadsheets, surf the Internet, as well as gain access to the news services and financial market data typically offered to Bloomberg customers, all without the bother of flipping between windows on a single screen.
But the system Bloomberg was switching everybody at City Hall over to was not necessarily designed for everybody else’s comfort, as reported in the later 2005 Times article about Bloomberg’s terminal business:
Early Bloomberg users needed to pick their way around the terminals using arcane commands and interfaces, many of which persist today. Mr. Bloomberg believed that once people were trained in how to use a Bloomberg terminal, no matter how confusing, it would make them less inclined to switch to other systems. He also insisted that every new service or data point be bundled inside the Bloomberg and never sold separately, increasing the value of the machine and allowing the company to charge a premium to use one.
Given the lack of separation between Bloomberg business interests and Wall Street, we must inevitably speculate skeptically about poor financial leadership of the Bloomberg administration.
Should anyone feel confident of sufficient separation between the worlds of big mega deal city administration assisted real estate development and the Bloomberg private wealth businesses that are growing so fast. The answer is no, given the troubling conflicts we see at the highest level of the Bloomberg’s administration and business involving Daniel Doctoroff, Patricia Harris and Michael Bloomberg himself.