During a timeout, the camera momentarily leaves the players and coaches’ bench, leaving behind the titanic struggle between players Shaquille O’Neal and Kobe Bryant, Richard Hamilton and the Wallaces, and coaches Phil Jackson and Larry Brown, switching to the crowd in the arena. There, not in one of the luxury seats, can be seen a smiling old man, with a young woman decades younger seated next to him. Many people believe that this man, almost unknown to basketball fans, deserves the credit for what was one of the biggest finals upsets in National Basketball Association (NBA) history. William (Bill) Davidson, owner of the Detroit Pistons, is one of the most powerful and influential people in US sports today.
Basketball, however, is only one of Davidson’s activities. “Forbes Magazine” lists him as one of the hundred richest Americans, and as one of the three hundred richest people in the world. At the age of 81, Davidson still doesn’t miss a day’s work. The company he heads, Guardian Industries, is one of the three most profitable in the glass industry, and one of the world’s most successful private companies, with an annual turnover of $4-5 billion. His personal fortune is estimated at over $2 billion, and some believe it may even be $1-2 billion more than that.
The US business community first encountered Davidson in 1955. By that time, he had finished his US Army military service in WWII, studied law, and practiced law for a short time. Up until then Guardian Industries was a family glass processing business, managed by Davidson’s uncle, whose young nephew changed the company’s business. He bought large quantities of leftover glass, and processed it into safety glass for windshields. In 1957, only two years after he began working at the company, Davidson was appointed president of Guardian. He expanded the company’s business into glass manufacturing for the auto industry, and later into plate glass for the walls of modern office buildings, fiberglass-based insulation products, and the marketing and sale of building materials through a chain of stores.
He did it his way
As one whose attitudes were shaped in the America of the 1950s, Davidson is first and foremost an individualist and ideological capitalist. He has invested $30 million in a program at the University of Michigan William Davidson Institute to train managers from countries formerly in the Communist bloc to function in a free economy. This investment in the next generation has more than once yielded dividends when he promotes his business in those countries.
Global glass consumption is continually rising. The European, US, and Japanese market are on the verge of saturation, with growth confined to the pace of general economic growth, but consumption of glass for industry is rising sharply in countries like China, Russia, Brazil, and India. Davidson’s future expansion plans rely on these markets.
Davidson leaves his mark on almost every aspect of his business: vision, finding new markets, finding talented people, and delegation of responsibility are among his trademarks. "A lot of people give you room to succeed. He gives you room to fail. You feel like it's your own company, even though it never is," one of his assistants says.
Davidson and Pistonmania
The Detroit Pistons basketball team has made those who predicted a 4-0 Los Angeles Lakers sweep in the NBA finals eat their words. The Piston’s 4-1 victory typified Davidson’s management style; Pistons general manager Joe Dumars and coach Larry Brown enjoy absolute freedom of action. Owner Davidson intervenes only in large player trades, such as the one that brought Rasheed Wallace, the backbone of the team that the Pistons are building for the coming years.
The Pistons were Davidson’s first investment in sports. In 1974, he led a group of investors that bought the team from the late Fred Zollner. In 1988, Davidson decided on the move that is now considered the peak of his business career in professional sports he built The Palace of Auburn Hills arena, near Guardian’s headquarters. The arena, which cost $100 million, raised quite a few eyebrows. Many of his close associates tried to dissuade him from what appeared at the time to be sheer waste. Today, the arena is one of the world’s most successful spectator sports facilities.
Ice hockey, too
The Detroit Pistons constitute only part of Davidson’s involvement in professional sports. Six years ago, he bought the Detroit Shock, a team in the Women’s National Basketball Association (WNBA), and five years ago, he acquired National Hockey League (NHL) team the Tampa Bay Lighting, which has just won the Stanley Cup the NHL championship. A year later he bought the Detroit Fury of the Arena Football League (American football), and three years ago, he became a partner in the Tampa Bay Storm, another Arena Football League team.
What attracts Davidson to professional sports? Investment in sports is usually confined to businessmen trying to increase their public exposure beyond the business community. In Davidson’s case, however, this generalization does not hold. He is fanatical about his privacy, almost never appears in the media, and does not sit on the players’ benches of his teams (even in the stands, he prefers sitting among the fans).
Sources in Davidson’s immediate circle explain Davidson’s attraction to sports by saying that he has the soul of an athlete, and is addicted to competition-derived energy. In the US, professional sports make it possible to compete on the highest professional level, against the wealthiest and most talented people. Being involved in managing competitive sports teams requires more than just being ordinarily rich. Today, to play this game, you have to be a real tycoon.
Outside the sports arena, Davidson is considered one of the largest donors, mostly to music and Jewish tradition. His charity interests run from the Detroit Symphony Orchestra to archeological excavations in the Jerusalem region. Here, too, his philanthropy appears free from personal interests; he simply gives money for things he cares about. Something else he cares about is his current wife, Karen, who is much younger than he is, and who appears at his side at almost all of Davidson’s public appearances (other than sports and cultural events, these appearances are few and far between). His two children from a previous marriage, Ethan and Marla, are totally uninvolved in their father’s huge business interests.
”I just think he likes to operate under the radar,” says Tom Wilson, one of Davidson’s right hand men. “He's the most down-to-earth billionaire you could ever know."
This winning combination has unexpectedly led his teams this year to the championships of the NBA and the NHL.
Davidson’s business in Israel
Quietly, usually without attracting headlines, Davidson has invested over $200 million in Israel. All his investments have yielded him big profits. He is also one of the largest philanthropists. For Davidson, investments are investments, and donations are donations. He invests only when it is worthwhile for him, only when there is a good chance that his preliminary requirement will be fulfilled a return on capital of 14% or more, the usually rate in the US.
Davidson won’t touch investments likely to yield the average return in Israel. That’s why he has been investing less in Israel. Another reason is that Oded Tyrah, his business representative in Israel, has been busy in recent years in his job as president of the Manufacturers Association of Israel. Tyrah finishes his second and last term in this position in January 2005, and will return to his job as chairman and president of Phoenicia America-Israel (Flat Glass). He will also resume his search for good investments for Davidson, also under the Phoenicia name. This plan is already evident. Phoenicia is showing interest in acquiring holdings from one of its main suppliers, Negev Industrial Minerals.
Davidson is being mentioned as showing interest in the acquisition of Israel Discount Bank (TASE: DSCT). “At this stage, it’s still casual,” associates say. He is apparently one of those who bought the state’s draft offer for sale for the bank.
Davidson owns glass and parts factories all over the world. His biggest investment in Israel was in Phoenicia Haifa, which he and then-CEO Tyrah bought from Koor Industries (NYSE: KOR; TASE: KOR) in 1989. This acquisition was made jointly with a close friend, Detroit real estate and communications businessman David Harmelin, who first brought Davidson to Israel.
Several years later, in 1993, they set up a new factory in Zippori with an investment of $120 million. Phoenicia America-Israel is a private company; that’s Davidson’s ideological preference. The company produces flat glass, layered glass, bulletproof glass, burglarproof glass, laminated safety glass, pattern glass, mirrors, etc. 85% of production is for export. The company has been profitable for years, and last month set an all-time one-month sales record of NIS 32 million.
Another of Davidson’s long-standing investments in Israel is Orbot, which was later merged into Orbotech (Nasdaq: ORBK). He made a long-term investment of $13 million, carefully keeping his stake below 10% in order to avoid becoming a party at interest. He has already sold most of his investments at handsome profits, all of which he donated for technological education.
What happened at Delek?
When Yitzhak Tshuva made the Delek Group (TASE: DLEKG) deal in 1998, Davidson was slated to be a major partner. Something went wrong; just what is not completely clear to this day. It is believed that the two men lacked personal chemistry, and simply did not suit each other.
Another deal was the founding of America Israel Investments, a large real estate partnership, with great expectations. Davidson’s partners in this case were Epsilon Investment House chairman and CEO Shmuel Frankel and America Israel managers Danny Marian and Shimson Harel. Some time later, Davidson sold his share to Marian and Harel at a profit of 90% on the equity invested, the company repaid his loans, and Epsilon also sold its share.
Davidson, who visits Israel once or twice a year, has owned a bloc of IDB shares for years, since the days when the Recanati family controlled the group. These shares have been gradually sold in recent months, leading Davidson with a small stake. What did he get out of it? As usual, of course, a nice profit.
Davidson is regarded a big donor, both in Israel and the US, who goes about it quietly, just like in his business. His contributions are concentrated in technological education and in international marketing of technological industries. He has contributed over $20 million to the Weizmann Institute of Science, $7 million to the Technion - Israel Institute of Technology, where his original intention was to found a marketing school. He has also contributed tens of millions of dollars for Jewish education in New York, to the Department of Economics at the University of Chicago, and to other recipients. He is also a big admirer of archeology in Israel. He has given generously to the Israel Antiquities Authority for an archeological garden and visitors’ center near the Western Wall in the Old City of Jerusalem. The Davidson Park is now considered one of Jerusalem’s most impressive tourist sites. By the way, Davidson’s grandfather is buried on the Mount of Olives.
Published by Globes [online] - www.globes.co.il - on June 16, 2004