Investor Never Lost Faith In Hartford

April 16, 2006 -- Jeffrey B. Cohen -- Hartford Courant

Lawrence R. Gottesdiener was part of a group of boys who grew up on a mostly Jewish street in a New London neighborhood not far from Ocean Beach.

It was a close-knit neighborhood where doing well in school mattered, but so did sports. He and his friends played endless games of football, basketball and baseball - and, friends recalled, there were times when Gottesdiener was among the last guys picked when the teams were chosen.

"He was a grinder," said Stuart "Stuie" Hendel, who used to call Gottesdiener "Fats" and has known him since he was 3 years old. "He wasn't the skinniest kid on the block, but he worked and worked, and, when he was 15, all of the sudden he became the fastest kid."

"Just because he worked."

Now, Gottesdiener is the most significant real estate developer in Hartford, with a half-billion dollars' worth of holdings in the city, a third of his Northland Investment Corp.'s $1.4 billion national portfolio. Until now, he has made his money largely by buying what other people didn't want.

Somewhere along the way, though, his passion for undervalued real estate turned into a passion for what he thinks is an undervalued city. He is not shy in admitting that he wants to be the guy who changes Hartford once and for all, and he thinks a key to doing that is bringing major league hockey back to the city.

But as Gottesdiener moves from the realm of what he knows - building buildings - to the league of what he doesn't - building a sports franchise - even he admits that the idea has some of his trusted investors on edge.

"Fortunately, we have made a lot of money for our investors, so we don't get a lot of second guesses," Gottesdiener said last week. "But there are certain investors that are ambivalent about the hockey thing. They see it as a bit of a stretch."

Gottesdiener is unapologetic and undaunted, although many still view the idea of the NHL's coming back to Hartford as a quixotic quest. He has set his mind on hockey and a new arena to house it. He says he is pushing himself - and the city.

"If you're not in the game," he said, "you're out of the game."

Eight Hundred Cards

There was a time when Gottesdiener, Hendel and other boys in their New London neighborhood got into baseball cards big time. They played a flipping game, throwing the cards to the ground until two colors matched. The player who made the match got to take the whole stack beneath.

One day, the group of boys decided to hold a card-flipping extravaganza, recalled Hartford writer Rand Cooper, who grew up near Gottesdiener and Hendel. All the boys dreamed of big winnings that day, but Gottesdiener and Hendel had a plan.

"They had formed a card corporation," Cooper recalled. "We ran into these guys, and they were so heavily capitalized, they had like 800 cards in their corporation ... and they just completely cleaned us out. I didn't have the resources. I walked out at the end of the day, groggy, empty-handed, and Stuie and Larry had, even at age 11, pretty impressive capitalization.

"And a fairly ruthless attitude toward the competition."

The card monopoly was only one of several enterprises Hendel and Gottesdiener would undertake. Another one of their joint ventures was a plan to sell calendar ads to area colleges. It was a deal that another friend, West Hartford orthodontist Barry Rosenberg, said made the two high school students three times as much money in a matter of weeks than most kids make in an entire summer.

Cooper, who lost his cards to the young corporation, still keeps an eye on Gottesdiener's progress. He remembers the developer as the funny one, a gifted talker, the guy who gave other guys nicknames like Monster, but not necessarily a future sports figure.

"Even within our 11-year-old pecking order, there are the guys who are picked first ... and there are the guys who end up hiking the ball," said Cooper, who grew up just blocks from Gottesdiener's Admiral Drive home. "As I recall, Larry was a frequent hiker."

But he's not surprised by Gottesdiener's success, or his newfound ambition.

"We joke down at the JCC where I play basketball about what we would give up to be able to slam dunk once," said Cooper, who now, like Gottesdiener, has reached middle age. "It's poignant and absurd to see all these guys who are still in some ways 13 when they get into the gym."

"Larry is still 13," Cooper said. "But he has a half a billion in real estate to back it up."

A New Hartford

Gottesdiener made his first real estate play in Hartford in 1997. The Whalers had just left town, and the collapse of the Hartford franchise led to the collapse of someone else's deal to buy a downtown office building known as Metro Center. He was looking to get into Hartford, and he was looking to buy low.

"We moved in, we cut the price, and we bought it," Gottesdiener said.

The building, he says, was a risk. It was empty and it was in a market that ranked almost last in desirability of office space. The public unveiling of Adriaen's Landing was still more than a year away.

"On the other hand, we stole it," he said, explaining that he paid $10.75 million - or $16 a foot - for a building that, newly constructed, would cost $250 a square foot to build. "We told our investors ... you have to be prepared to lose your money. We're either going to make a fortune or we're going to lose a ton."

Gottesdiener thought it would take four years to fill the building, but Northland worked hard and got lucky, leasing the majority of the building to a major corporate client within nine months, and making a lot more than its money back.

"When he made his first move into Hartford with Metro Center, a lot of people thought he was nuts," said Robert Danziger, who founded Northland and ran it from 1970 to 1995. "People in the industry said, `I don't care if it's an empty building, there's no market there.'"

"In real estate, you have to have the vision, you have to have confidence in your vision, and you have to have the ability to persuade others to come along with you," said Danziger, who sold Northland to a group of partners who, in 1996, sold it to Gottesdiener. "You obviously don't want to put up all the money yourself. So they must be persuaded that they want to follow you. And he clearly has that talent."

Before getting into real estate, he worked as a used car salesman in Meriden, a lawyer, and a real estate apprentice in Boston. He made his first move in 1991 - a $25 million portfolio of six apartment communities in Houston and Austin. His father was his first investor.

In Hartford, once he had Metro Center in his portfolio, Gottesdiener upped the ante. In 1998, Northland came up with the idea for Hartford 21 - a luxury apartment complex with retail space on the site of the former Civic Center mall.

It was a new way to think about downtown - home not only to shops and offices, but to high-end residences. It was a $160 million plan that needed roughly $40 million in state funding and significant city financial incentives to work.

For part of that, Gottesdiener had to have a visit with Mayor Mike Peters, who vividly remembers the meeting. "We were both in each others' faces," Peters said.

Peters told him that they were close to a deal, but that the city had a process to follow. Gottesdiener didn't like that one bit, and he let Peters know it.

"Sometime it rubs the wrong way," Peters said of Gottesdiener's negotiating style. "But at the end of the day, you find you're in agreement with him. At least I did."

Not everyone does. Recently, when the state was looking for a developer to be Front Street's newest rainmaker, Gottesdiener made the state a pitch:

He would develop Front Street, Gottesdiener said. If you like me, pick me, he said. But he's not going to go through the state's beauty contest of selection, recalled officials who were there.

In the end, the state went with someone else.

NHL Dreams

On a chartered jet last week, Gottesdiener looked relaxed, in wide-legged blue jeans, a white T-shirt, a blue-striped button-down, and shoes with no socks. He was on his way to St. Paul, Minn., to find out how one state lost its NHL team, got a new one, and built it both a new arena and a new statewide franchise.

With his press person, his acquisitions and development manager and his attorney watching, Gottesdiener gave careful answers to why hockey, why Hartford, and why now.

"I'm from New London, my grandfather was a mailman in Hartford 40 years, my mother grew up in the city," said Gottesdiener, who is 47 years old and divorced and has three children. "There's definitely an emotional connection that I have. And I'm not sure that's smart. You're not supposed to get emotional. You're supposed to be about money."

"But we're trying to change Hartford permanently," he said. "We're not trying to come in and make money. We're not doing yesterday's Constitution Plaza, to come in and make our development fee and leave."

Gottesdiener originally said he'd consider building an arena first and then getting a team. But he has changed his strategy, hired a broker and is now shopping for an NHL franchise, convinced it is the only way to make the deal work.

Although Gottesdiener's original $250 million idea called for a new arena outside of the immediate downtown area, he said he would also consider building on the Civic Center site itself, provided he can knock down the Church Street garage.

The hurdles are many.

First, Gottesdiener would have to find an NHL franchise to buy - and move. The Pittsburgh Penguins, the only team definitely up for sale, is working on a deal to remain in Pittsburgh.

Other cities are also interested in hockey, including Kansas City, which has a new, 18,500-seat downtown arena ready to open in the fall of 2007.

Then, Gottesdiener would need to convince other owners in the NHL that Hartford is worth a second chance.

Gottesdiener would also need to persuade local and state officials to buy into the plan. A new arena could cost at least $250 million and would require heavy public subsidy. He also admits that he has yet to gauge the corporate support for the dozens of high-end boxes that a new arena would need.

Even Hendel, one of Gottesdiener's early business partners, says the "grinder" is "going out on a limb."

"Hockey has had a lot of problems lately, and given the players' strike, they lost a whole season, you're taking risk," he said. But, then, Gottesdiener may be on to something, he said. "Larry could be buying low, too."