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Dineen's vineyards is back to roots, not entrepreneur encore, after banker career

The 80-acre vineyard and winery in the Yakima Valley where Patrick J. (Pat) Dineen focuses an increasing amount of his attention isn't an entrepreneurial encore for the retired bank executive so much as it's a return to his roots on the farm.

 

Dineen, who hasn't totally stepped aside from his 40-year banking career since he chairs the board of Bellevue-based Puget Sound Bank and is one of its original investors, grew up on a dairy farm in the Midwest. "I knew that when I retired I wanted to get back into farming," he says, admitting that the dirt called to him from time to time over the years.

 
 

This is harvest time in Wine Country and thus Dineen is spending many of his days this month at Dineen Vineyards, which sits on a hillside north of  Zillah, amid a cluster of Washington State's well-known wineries, with an impressive view looking west toward the mountains.

 

It's there that Dineen Vineyard's grapes, primarily cabernet, cabernet franc and sirah, are being harvested and winemakers from many of the 23 wineries that are his customers arrive to load up their grapes.

 

Dineen only produces about 300 cases a year for his own use, either under the Dineen Vineyards label or the Kamiakin label, a second label featuring a red blend, that came into being about five years ago. Most of the 190 tons of grapes are bought  by the other wineries.

 

One of those wineries buying his grapes is Sheridan Vineyards, in which Dineen invested in 2000 after being introduced to Sheridan's founder, Scott Greer. He soon ran across a rundown apple orchard nearby that he bought in 2002 and turned into Dineen Vineyards. TheSheridan winery is built on part of Dineen's acreage and is leased back to Greer.

 

The vineyards primarily produce the three major varietals, but a total of eight different varietals are grown, though Dineen is quick to make it clear that "the viticulture is my interest in growing the grapes rather than making the wine."

 

His ongoing process of learning about the grapes includes traveling to Europe each year to visit different grape-growing regions and says with satisfaction that "I get into prestigious wineries that I wouldn't be able to if I didn't have the winery."

 

Like a number of those involved with vineyards or wineries in Washington State, Dineen first looked for land in the Napa Valley in California, but found "it was more pricey than I wanted to get into."

 

Dineen produced his first wine under the Dineen Vineyards label in 2003, primarily for personal consumption, but about four years ago he got his commercial bond to permit him to market and sell his wine.

 

"That was primarily to promote the vineyard," he said. "My plan is not to get any bigger since I'm retired. We could get bigger but chances are we won't."

 

Dineen, discussing his decision to be in the group who put up money to launch Puget Sound Bank in 2005, says "I had a good career in banking, made good money, and wasn't looking to get back into the business. But I figured I could do this with a minimal amount of time and effort. It hasn't turned out that way."

 

Dineen says Puget Sound Bank, a $200 million, single-office bank, "has a strong balance sheet. We didn't get into problems because we avoided real estate and focused on commercial and industrialized loans."

 

Dineen started his banking career with Seafirst Bank after moving West following graduation from Marquette University and five years in the Air Force. He then joined Spokane-based Old National Bank, which was acquired by U.S. Bank, where Dineen eventually served as president for Washington before he retired.

 

Looking ahead at the industry, Dineen said "we're going to see a lot of branch closures in an era when people can do their banking from anywhere. They could care less today if your bank has a branch on the busiest corner in town."

 

He notes "there aren't many healthy banks changing hands these days because banks looking to sell find that their book value is pretty much what they're being offered today."

 

"A few years ago, selling prices for banks would have been twice book value or even better for an attractive bank," he added. "Until we get back there somehow, you're not going to see much movement among healthy banks."

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Crowd funding for start-up companies is an idea that concerns angel investors

A year ago Congress had to be talked out of doubling the amount of wealth required for individuals to invest in start-up companies. Now the lawmakers are considering the idea of removing basically all qualifications so that crowds of small investors might provide capital for entrepreneurial ventures.

 

What has stirred support among lawmakers and others for using the Internet and social media for crowd-fund investing is the challenge faced by many start-up companies to find funding in this struggling economy and the promise of the jobs such companies could create.

 

It was angel-investor groups who convinced Congress of the potential disaster for start-up companies in a provision that, for a time, was included in the so-called Dodd-Frank bill passed last year. The provision would have doubled the assets required for an investor to be "qualified."

 

It wasn't that difficult to make the obvious case to lawmakers to kill that section before a vote on the Dodd-Frank bill, since most lawmakers hadn't even been aware it was in the bill.

 

Now angel-group leaders are raising an alarm about the implications of the crowd-funding idea. But they may face a greater challenge because of the arguments of supporters, which include not just key lawmakers but the Obama Administration as well.

 

The proposal, which has already had a hearing in the House, is to allow exemption from SEC registration requirements for those trying to raise up to $5 million. As with a similar effort to tone down requirements for small public companies, the goal is to find new job-creation engines.

 

A high-visibility proponent of crowd-fund investing is an evangelical entrepreneur named Sherwood Neise of Miami, who told a Congressional subcommittee a couple of weeks ago that crowd funding could bring in as much as $500 million and lead to creation of 1.5 million new jobs over the next five years.

 
 

 

"What we are proposing is a jobs initiative that everyone should like since small businesses and entrepreneurs are the long-term engines of our economy," Neise said. "However, they need capital to grow and that has dried up since the 2008 financial meltdown."

 

Comments like that resonate with many, including the Obama Administration.

 

But not everyone likes his plan, specifically leaders of angel-investor groups, a number of whom I traded e-mails with to seek their thoughts. Angels have traditionally been the sources of capital for entrepreneur and start-up companies that need funding beyond what's called the "friends and family" initial source of money.

 

Bill Payne, viewed by many as the dean of angel investors, says "I find Neise's claims laughable," offering statistics that could cause pause if they reach the same ears as those who heard Neise's pitch.

 

Payne noted that Kauffman Foundation statistics suggest that about $100 billion from all sources, angels and VCs and friends and family, flows into start-up companies and they create 3 million new jobs a year.

 

"That computes to $33,333 per job," Payne said. "Now along comes Mr. Neise claiming that his idea would create jobs for $333 each. Are you kidding me?"

 

 


Payne, who has been an angel investor in a number of startups in the Northwest and elsewhere, added: "It's very simple from where I sit: I am not in favor of any investment vehicle that allows unaccredited investors to fund startup companies.  It is very high risk and the invested dollars are totally illiquid." 

 

Tom Simpson, who guided one of the Northwest's most successful venture-capital firms and now oversees a couple of angel-investor groups in Spokane, said it's important for "faster, cheaper and easier processes to attract investors to both young private and public companies."

 
 

 

But he said "any new regulations or processes to reduce the time and cost of raising money still need to provide prospective investors with sufficient product, market and management information, comprehensive financial data and specific risk factors to make an educated, informed investment decision."

 

Villette Nolon, chair of the Seattle-based women-angel group Seraphs and founder of the internet-based business Homesavvi.com, says that "while the intent of this idea is good, the outcomes would be disastrous."

 

"Legitimate businesses who would try this route would be extremely disappointed in the result, as truly sophisticated investors are highly unlikely to fund companies sight unseen, even at low amounts," she said. "That leaves only speculators who would be attracted by the idea of making a quick buck, and who could get very, very burned."

 

Gary Ritner, founder and heads the Seattle-based Puget Sound Venture Club, says the $10,000 proposed as maximum investment by a crowd-source investor "is too small" and the $5 million proposed maximum for the entrepreneurial startup "is too large, and not necessary."

 

But he added "we have to get capital flowing and, in concept, I like the idea of crowd funding."

 

Perhaps the major concern shared by angel investors and others is that a backlash could occur down the road if Congress hears of abuses and horror stories and decides crowd funding was a bad idea and things need to be made tighter to protect investors.

 

The concern is summed up by one who noted that "when the pendulum swings back, lawmakers always have it swing too far."

 

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Support grows for proposals to create jobs by easing some of investor protections

The mounting pressure on Congress and the Obama Administration to find some job-creating ideas to jumpstart the ailing economy is stirring growing interest in a couple of Congressional proposals that would lessen investor protections for the sake of allowing businesses more growth opportunities.

 

One proposal, already filed as a House bill by Rep. Ben Quayle, R-AZ, with the intent of accelerating the growth of younger companies, would suspend for most newly public companies what many view as a costly and troublesome provision of the Sarbanes-Oxley Act.

 

Quayle's proposal would allow a much greater number of public companies to opt out of Sarbanes Oxley Section 404, which requires public companies to disclose the scope and adequacy of their internal-controls structure. The measure would raise the current $75 million market-value threshold for reporting to $1 billion.

 

The other proposal would help entrepreneurial and start-up companies, many currently  hamstrung in their ability to attract growth capital, to reach large numbers of investors for limited amounts of money via the internet in what's being called crowd-fund investing.

 

The proposals have come to center stage only in the last couple of weeks. And each has attracted growing support from those who contend the measures are vital to the goal of job creation. And each is also starting to stir opposition from those who question the idea of setting aside shareholder and investor protections.

 

Each proposal merits an in-depth look and thus in this first of two columns we'll examine the discussions surrounding Quayle's bill, the support being gathered for it and the comments of those expressing concerns.

 

Next week's column will focus on the crowd-funding proposal, including a look at those backing it and the concern it is stirring from many angel-investor leaders, particularly those up and down the West Coast.

 

Quayle's bill would allow public companies with market valuations below $1 billion to opt out of Sarbanes-Oxley Section 404 for the first 10 years after going public. The original Sarbanes-Oxley Act was amended in last year's Dodd-Frank Wall Street Protection and Consumer Protection Act to create the under-$75 million exemption.

 

Quayle and supporters of his measure, including the entrepreneur-focused Kauffman Foundation, contend that the costs for complying with the requirements of this section of Sarbanes-Oxley can exceed $1 million for new companies and can cost them up to $20 million in loss of valuation.

 

Quayle's measure is close to a plan outlined by the Kauffman Foundation a few months ago as "a set of non-partisan ideas to jump-start the ailing U.S. economy and increase job creation by accelerating the growth of startups and young businesses."

 

Kauffman, the nation's largest non-profit foundation focused on entrepreneurs, noted that the role high-growth startups play is vital to assure U.S. economic strength.

 

"Virtually all of the growth in U.S. jobs has been driven by the formation of firms less than five years old, and these new firms have been disproportionately responsible for commercializing the cutting-edge innovations that characterize modern life," the Foundation said.

 

"I believe this bill is an important step as we  try to increase the number of companies that go public in the United States," said Robert Litan, Kauffman's vice president for research and policy. "The ability to raise capital in public markets will be essential as new companies create the jobs required to put Americans back to work."

 

One of the most pervasively visible proponents of both lowering the regulatory barriers for newly public companies and the proposal for crowd-fund investing is a Miami, FL, entrepreneur named Sherwood Neise, who has testified before Congress about both. He was co-founder of a company called Flavorx, which added flavors to medicine, that went public and was later sold.

 

In 2006, he was among those decrying what he called the "unintended consequences of Sarbanes-Oxley on small businesses," saying that meeting 404's requirements "ate up 14 percent of our net income."

 

But among those urging caution is former SEC Chief Accountant Lynn E. Turner, who said in an e-mail that contained the subject line "Short Memories:" "Clearly people have forgotten the hundreds of billions in dollars of losses investors suffered during the corporate financial reporting frauds, and the tens of thousands of jobs lost."

 

Neil McReynolds, a corporate-governance consultant in Seattle, said that while the original Sarbanes-Oxley requirements created some real cost and regulatory problems for smaller public companies, the changes brought about by the Dodd-Frank bill corrected some of those.

 

McReynolds, who has been a member of a number of boards of private companies and consulted with boards of public companies, said that while extending the exemption to $75 million cap companies, as Dodd-Frank did, made sense, "extending the exemption to $1 billion companies may be a bit of a stretch." He added that "there's still value in disclosure and internal controls."

 

Sharon Philpott, managing partner of national accounting firm BDO's Seattle practice, agreed, saying her firm supports the positions of the CFA Institute, Center for Quality Audit and the Council of Institutional Investors, who have all urged caution against further exemptions from Sarbanes-Oxley.

 

In the end, success or failure of expanding the exemption for internal controls may hinge on whether the pressure for jobs trumps the pressure to protect shareholders and investors.

 

 

 

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Jon Huntsman's Senior Games dream 25 years on

Jon Huntsman Sr.'s vision was that an event called the World Senior Games, even if held in a remote corner of Southwest Utah, would eventually draw thousands of what others might dismiss as the elderly for the chance to recreate and compete with their peers.

So it is that 25 years after their founding that the games this year will attract about 10,000 seniors who, over the next two weeks, will compete in everything from track and field to badminton, pickelball, lawn bowling, volleyball, square dancing and even bridge. Some of the competitors are in their 90s.

john and karen huntsman
Jon and Karen Hunstman from Games website

The event, under Huntsman's fathering, has grown over its quarter century into a major tourism attraction in Southern Utah and thus a major opportunity to expose the now rapidly growing city of St. George during its most appealing fall season. You can't drive far beyond the red rock mesas, what is referred to locally as "color country," that edge the city without encountering the aspens that by early October stretch north and east toward various national and state parks.

I've been drawn to the games because of the "world" name since I first heard of them in 2003 and made up my mind to compete in the 100 and 200 meters in my age group once I learned that they weren't really world games. That means some competitors really were world class while others like me, who weren't, could still compete, and that's always been the magic draw.

In that 2003 competition, I managed to finish sixth in both the 100 and 200 out of fields of 24 in each event. But the reality was that those at the front of the pack in both events were, in fact, world class and thus it was satisfying just to be in the same race in which I could see them in the distance.

The two guys way out ahead that day were a Southern California pharmacist named Gary Sims, who had never run competitively until he was 50, and John Ross, a professor at the University of Edinburgh who was European champion in both events earlier that same year. They've been dueling it out each year since. Sims holds the meet record for both the 100 and 200 in the 70-74 age group and Ross the meet record for the 100 in the 60-64 age group.

I'm entered as a competitor in the games again this year in the 100 meters for the 70-74 age group and will be looking forward to seeing Sims and Ross in the distance ahead of me as the race unfolds, a bit of familiarity that's important since age brings brushes with the unfamiliar as part of its baggage

There's a special import for me with this year's trip to St. George in that it's an outgrowth of my new-found commitment to do today what I might yesterday have put off until tomorrow. Successful recovery from colon cancer surgery in late May while various friends are battling the disease, or have lost their battles, prompts my new "do it today" mantra.

The games were actually founded by a dreamer named John Morgan Jr. who envisioned and named the games.

 Two years later, Huntsman, founder and CEO of what would eventually be the world's largest chemicals company, caught the vision of the event's potential for the region and the state. Thus he and his wife, Karen, became the major sponsor of what has ever since been the Huntsman World Senior Games.

The visitors the event has attracted each fall may well have had at least something to do with the dramatic growth of the area, with St, George becoming one of the nation's fastest growing metropolitan areas from 1990 on, now with a population of 75,000.

And in that growth and advances in the economy may be the lesson of Huntsman's vision that other states and regions might emulate.

Huntsman, 73, has stepped up to executive chairman of what is now a publicly traded (as of 2005) $9 billion world's largest chemicals company with 12,000 employees. But he and Karen still open each year's Senior Games event, where the participants now number in the thousands each October.

Huntsman is, of course, the father of the former Utah governor, China ambassador and a Republican presidential hopeful, Jon Huntsman Jr.

All of which brings me to the final point about the Jon and Karen Huntsman and their commitments to community in Utah.

It was after his surgery for prostate cancer some 15 years ago that Huntsman set out to establish a world-class cancer research and treatment center, a dream he's pleased to say is now realized with the Huntsman Cancer Institute and Hospital in Salt Lake City.

The Huntsman family continues to serve as principal benefactors and fundraisers for the Huntsman Cancer Institute with what he describes as "the ultimate goal" of eradicating the most challenging forms of cancer.

And it's on that final note about the Huntsmans' commitment to community and overcoming as great a challenge as cancer that I sense a common thread in their commitments and the commitments of those who travel to St. George each year to participate and compete.

The producer of a recent movie on the senior games said: "What drew us to the senior games was the positivity. These people have an unparalleled zeal for life. When you're 90 and 100 years old and have endured life's challenges and still have such a positive attitude, it's beyond impressive. We felt it was worth a film."

In a sense the producer summed up in his way what's become my view: Life is a race to be appreciated for the joy of participation and whether world class -- or a bit slower --making in to the finish line ahead of cancer, or any other physical or mental obstacle, is really the sweetest race to win.

 

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Before basketball at Gonzaga there was football

Before there was basketball at Gonzaga, there was football. And just as a Stockton (John) in the backcourt in the mid-80s set the stage for the Spokane school's subsequent hoop prominence, a Stockton (Houston) in the backfield 60 years earlier keyed a 20-year quest in which Gonzaga sought to use football as the key to fame.
 
Appearances by Gonzaga University basketball teams in NCAA post-season play have become almost the norm over the past decade. But the Bulldogs also made a post-season appearance on the football field, a Christmas-day game in 1922 that was intended to match Gonzaga against Notre Dame.
 
The idea for the long-ago game was a promoter's dream: a post-season contest between the Notre Dame team of Knute Rockne and the Gonzaga team coached by Charles E. "Gus" Dorais, the man who had quarterbacked the Irish while Rockne played end.
 
This is the story of how that game came about and the effect the outcome had over the next two turbulent decades as Gonzaga pursued a dream of gridiron glory, only to become entangled in a morass that threatened financial ruin for the tiny school.
 
Gonzaga, like Notre Dame, had been calling itself the fighting Irish for years. In fact, the nickname bulldogs was used for the first time in 1921.
 
According to legend, the decision on whether Rockne or Dorais would be hired as Notre Dame's new head coach came down to a coin flip that Rockne won. Dorais stayed a year as the assistant then headed to Spokane in 1920, sought out by the little Jesuit school to fulfill its dream of national prominence through football, starting with hiring a "dream" coach.
 
Dorais spent his first couple of seasons beginning to build a reputation among Northwest schools. Then in 1922, Houston Stockton, John's grandfather, who had been singled out for All-American honorable mention as a freshman at St. Mary's in Oakland the previous year, transferred to Gonzaga.
 
Stockton quickly began to make his mark as a Bulldog. In the home opener in a new $100,000 stadium before an overflow crowd of 5,600, Stockton turned in a stunning single-game performance, scoring six touchdowns and kicking 10 conversions for 46 points as Gonzaga beat Wyoming, 77-0.
 
The Bulldogs beat College of Puget Sound, 34-0, Montana, 37-6, and Montana State, 12-0, in a Bozeman snowstorm. They lost 10-7 to Washington State College on a late-game field goal.
 
Then came the official invitation from San Diego officials for the dream-game clash between Rockne's and Dorais' teams. But Notre Dame was upset by Nebraska in its season finale and Rockne decided to turn down the invitation.
 
 So West Virginia, undefeated in the 1922 season, victor over the Pittsburgh team that went to the Rose Bowl that season and a club generally regarded as one of the two or three best in the nation, was invited instead.
 
The odds against Gonzaga were overwhelming and the way the game unfolded bore that out as West Virginia took a 21-0 lead into the fourth quarter. Then Gonzaga found itself. The Bulldogs scored two touchdowns, one by Stockton, in 10 minutes. With two minutes to go, Stockton (who rushed for 110 yards that final quarter) found future Gonzaga coach Mike Pecarovich in the end zone. But he dropped the ball. Final score: West Virginia 21, Gonzaga 13.
 
The game got an eight-column headline in the New York Times sports pages as Gonzaga won praise from coast to coast, lauded as "the Notre Dame of the West." A Chicago Tribune sports writer enthused that "West Virginia won. But it wasn't a Christmas present. Pulling a bone from an angry bulldog is not like getting a toy drum from Santa Claus."
 
Dorais and Stockton teamed for two more years, including an undefeated 1924 season. Then Stockton moved on to professional ball with the Frankfort Yellowjackets, predecessor to the Philadelphia Eagles, and Dorais headed for the University of Detroit where he spent most of his coaching career.
 
A number of great players followed Stockton as Gonzaga stars. George (Automatic) Karamatic, who won a place on the 1936 All-America team, and Tony Canadeo, known as the "Grey Ghost of Gonzaga" for his prematurely gray hair, went on in pro ball to set the Green Bay Packers single-season rushing record.
 
Ray Flaherty, a member of the 1924 undefeated team, subsequently starred with the New York Giants for nearly a decade. Then he became coach of the Washington Redskins, guiding them to two NFL titles and five division titles, with his teams always including a cadre of Gonzaga players whom Flaherty routinely drafted..
 
The outbreak of war ended Gonzaga's football program, one that was doomed to end at some point, having cost the school $60,000 in its worst year and providing less than a dime of profit in the best.
 
 It's been almost seven decades now since the blue-and-white uniforms were packed away for the last time. And 60 years since the dilapidated wooden grandstands of Gonzaga Stadium were razed to make room for the Crosby Library.
 
 Old photographs carefully packed away in the basement of the Administration Building are the last tangible reminders of the days when Gonzaga pursued the mirage of big-time college football fame.
 
Gonzaga was among the first of a score of little colleges, mostly private schools, around the West to pursue an Ozymandian delusion that football could be the ticket to a wealthy campus and national renown.
 
Down through the years, sports has inevitably been the vehicle that colleges and universities have sought to use to gain prominence and recognition, as Seattle University is doing in seeking to restore the one-time luster of big-time basketball at the school.
 
For Gonzaga, basketball has indeed brought the prominence and financial success that football was never destined to do. But football will always be the ghost in Gonzaga's closet.
 
(The above is gleaned from old files compiled from long-ago newspaper clippings by a then-Gonzaga student who imagined that a book on Gonzaga football awaited in his journalistic future. But all that really came of that research was an article in the student newspaper in the mid-60s that stirred a short-lived student movement to revive football. The effort died quickly when the then-basketball coach advised a skeptical administration that the cost of athletic tape alone would be $20,000.)

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