Profile: Wayne Huizenga: Fast-forward to domination
Garbage, videos and cars - this billionaire knows what makes America tick, write Steve Matthews and Nick Gilbert
Sunday 17 August 1997
Huizenga made one of several business fortunes from building Blockbuster from a sleepy five-store business into an international empire before selling out to film and TV group Viacom Inc for over pounds 5bn in 1994.
The short, bald 59-year-old is also likely to be the man who rents the British tourist a holiday car. Huizenga is the chairman of Republic Industries, a vast US company which owns National Car Rental Systems and Alamo Rent- A-Car and is second only to Hertz in the car rental sector.
Last week Huizenga swooped in the UK, agreeing to pay pounds 95m for EuroDollar Holdings in what may be the start of an acquisition spree in Europe. In offering EuroDollar shareholders 190p a share, Huizenga was being generous: before the deal was announced the shares were at 118p, way below the 225p at which EuroDollar started trading in July 1994.
Huizenga's UK competitors are less thrilled. By adding EuroDollar's revenues of pounds 107m to Alamo's UK operation, Huizenga's car rental business leapfrogs Avis Europe to number one in the UK. "We consider him a formidable competitor," says Alun Cathcart, chairman of Avis Europe.
Remarkably, Huizenga has been in the car business for less than 12 months. In buying National and Alamo, the billionaire has opted to take Republic into a business where profit margins have been notoriously low. In the US, rental firms are lucky to make 5 per cent profit on revenues. "You can rent a car for $35 a day - about the same as it cost 10 years ago," says Geoff Corbett, head of Republic's European car rental business. "The joke in the US is that it costs more to rent a tuxedo for 24 hours than a car."
EuroDollar in the UK makes nearer 8 per cent on revenues, in itself one good reason for Huizenga's interest. The other, says Corbett, is the chance to "dramatically increase" the number of American tourists who will opt for a EuroDollar rental in the UK.
Number two in car rental in the US, number one in the UK in less than a year. Huizenga has always been a man in a hurry. As a young garbage collector in Florida he'd get up at 3am to drive trucks, then would shower before making a full day's worth of sales calls. In little more than a decade his company, Waste Management Inc, became the world's largest rubbish disposer. In the 1980s he repeated the trick, opening a Blockbuster store every day until it became the world's largest video rental empire.
"Some people dream of success, while other people get up every morning and make it happen," he has said. Now he's targeting car sales as well: in the past year Republic Industries has become the US's largest new car seller acquiring, on average, a dealership every two days. The 153 dealers should generate more than pounds 3bn in revenues this year.
Rounding out his holdings, Huizenga has built a chain of 14 AutoNation USA used car megastores. This gives him the opportunity to sell ex-rental cars through his own outlets: handy if car makers begin to offer less generous buy-back terms to rental fleet owners. "We want to meet your full transportation needs," says Huizenga. Renting, selling, financing and servicing cars provides "a cradle-to-grave approach".
His work habits haven't changed much since his garbage truck days, with work often starting before dawn and extending into the evening. He travels at night so he doesn't break into the working day. Recently his wife Marti insisted he take off one day a week, Saturday, when he often plays golf. "We operate under the philosophy that we are no smarter than our competitors," says Huizenga. "If you want to accomplish twice as much, you have to work twice as hard."
His fortune, estimated at over pounds 1bn by Forbes magazine, hasn't come only from hard work. His timing is remarkable, and he won't hang on to a business unless it makes money. He left Waste Management in its glory days and sold Blockbuster at its peak in 1994: shares in new owner Viacom have performed poorly since.
Huizenga knows when to cut his losses. Earlier this year he put up for sale his prized but unprofitable Florida Marlins baseball team, boasting that the team would have a good season even if he wouldn't stand for losses much longer. He continues to control the Miami Dolphins football and Florida Panthers ice-hockey teams.
None of his businesses has had the same potential as Republic Industries. Huizenga insists Republic is nowhere near saturating the market and projects a 50 per cent gain in revenues to over pounds 9bn next year. He joked to shareholders that he only wanted half the $1,000bn auto market. He won't set a target, but says even 2 per cent would create a huge company.
Huizenga has a vision of a transformed car industry in the US, one in which retailing costs have to be cut to counteract the impact of rocketing new car prices at the factory. Huizenga says too that customers hate the unpleasantness of haggling over price.
Yet Republic, Huizenga's most rapidly-built empire, is his most sprawling: it also includes waste collection and security services. "It looks an awful lot like the multi-industry conglomerates of the 1960s" which were broken up, said Morton Richter, president of Richter Asset Management, which sold 162,000 Republic shares held at year-end. "You get so big there's nothing left to buy. Your rate of earnings increase must slow."
Huizenga's challenge in the car sales business is far more daunting than the refuse and video industries. Selling cars is a much more volatile business. Investors have recognised this: after a two-year rise Republic shares have halved in value in the past six months. "If there's a big downturn, there's going to be a slaughter," says Sheldon Sandler, managing director in corporate finance for US securities firm Ladenburg, Thalmann & Co.
Meanwhile Huizenga has not been afraid to tangle with such major car makers as Toyota and Honda. Republic is in legal battles with both as his acquisition of dealerships clashes with the restrictions they try to impose on the number of dealerships owned by one company. The AutoNation used-car chain continues to spew red ink, losing over pounds 11m in the second quarter, though Huizenga says it will make money next year.
None of this seems to bother Huizenga. "Wayne has a self-deprecating wit. He is always making fun of something," says George Johnson, who sold his South Carolina waste company to Huizenga 20 years ago.
Yet the billionaire is hardly shy and retiring. Huizenga was mobbed by adoring shareholders at the May annual meeting in Fort Lauderdale, Florida. Dozens asked for autographs, and one insisted he kiss her baby. He took the stage to music from the Indiana Jones movies, and the show included clips from John Wayne films. The Duke rides again.
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