Generation of Wealth by Donald M. Hall

Author:Donald M. Hall
Language: eng
Format: epub
ISBN: 978-0-615-99202-0
Publisher: Nodin Press
Published: 2014-04-09T04:00:00+00:00

7

A METEOR

Then came Quarterback Sports Federation, Inc., a stock financed by a local brokerage firm. The name of the new company sounded like a group of quarterbacks collaborating in some way; maybe a Monday morning gathering of would-be athletes kibitzing the weekend games. But what’s a federation, anyway? A league? And what business are they in? It might involve more than football, since sports is an all inclusive word. Grandiose rhetoric seemed to be making a comeback in company names, but when the public learned that Quarterback Sports Federation was in the restaurant franchising business—that is, serving food—everyone felt they understood.

Stockbroker Tony Gould remembers that the company was originally set up to sell deodorants and cosmetics but decided to switch to hamburgers. Such a move meant the company would be an early entry in the same business McDonalds was succeeding at with many hundreds of outlets, and this was generally known since Ronald McDonald was already appearing on television in 1966. A & W, another popular chain, might have been considered a competitor, but it championed root beer. Thus, the new company represented opportunity. Investors had the understanding that Vikings football players, including quarterback Fran Tarkenton and teammate Bill Brown, were early investors in the stock. This increased public interest and gave some credence, however slight, to the company’s name. After the offering there were a little over 100,000 shares outstanding—a quantity large enough for orderly trading if the public showed moderate interest, but also small enough to be manipulated by a cabal of market players should they decide to do so.

A market quote on Quarterback first appeared at 1.4 bid, 2 ask, in the Minneapolis newspaper on February 8, 1966. Two weeks later it was at 6.4 bid, but by August it had dropped to .7 bid. The company reported revenues of only $34,000 in the fiscal year ending June 30 and lost 25 cents a share. A person who bought at the $2 level probably held his breath and wondered, Is this going to be another balloon gone soft? But by year end, the stock recovered to 2.2 bid. That’s better, he likely thought. I’m ahead now. Might as well let it play out.

One of the company’s first restaurants was on Oak Street near Memorial Stadium on the University of Minnesota campus. The roof of the building curved to a point at the peak, suggesting half a football. Catchy, the investor thought, and a good location too. Students should love it. Word began to circulate that the company was negotiating franchises. By the following May, the stock had reached 8 bid, a new high. If I sold now, I would be making four times my money in a little over a year, the investor calculated. That evening he said to his wife, I own this little stock called Quarterback. Some of the Vikings are involved. So far it’s up four times. What do you think?

Sell it, she said. Be grateful.

But they’re offering franchises for restaurants. Everyone has to eat.

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