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Behind a Wall of Silence, Lerner Has Built an Empire

By Adam Bernstein and Dana Hedgpeth
Washington Post Staff Writers
Wednesday, May 3, 2006

At the age of 80, Theodore N. Lerner -- native Washingtonian, shopping mall magnate and new principal owner of the Washington Nationals -- should not be a man in need of a public unveiling.

But since his days as "Silent Ted" at Roosevelt High School in Northwest, Lerner has studiously avoided the limelight, even as he built one of the largest privately held real estate companies in the region.

He was once on Forbes magazine's list of the 400 wealthiest Americans. His company, Lerner Enterprises of Bethesda, has built more than 22,000 homes and 6,000 apartments in the Washington area, and owns and manages more than 20 million square feet of commercial and retail space, including shopping meccas at Tysons Corner and White Flint. Yet Lerner remains a mystery, a conspicuous stranger to the public and to the politicians accustomed to the attention of big developers. D.C. Mayor Anthony A. Williams (D) joked to a crowd of business leaders early last month that "operators are standing by" in case Lerner cared to introduce himself.

By all accounts, this anonymity suits Lerner, who has a reputation for being less than forgiving to anyone who talks about him publicly, even in superlatives. But in buying the Nationals for $450 million, Lerner will join Abe Pollin, Daniel Snyder and Ted Leonsis in the small fraternity of Washington team owners, whose every move is debated and criticized. Some friends and associates say Lerner is likely to take somewhat of a back seat and let his son, Mark -- a 52-year-old sports aficionado and part owner of the Washington Capitals, the Washington Mystics and Verizon Center -- run the Nationals' daily operations along with Stan Kasten, a former Atlanta sports executive brought in as a minority partner.

But there is little doubt the Nationals will be run the way Ted Lerner wants them run. "Nobody tells Ted Lerner what to do," said Bill Regardie, the former editor and publisher of the eponymous business magazine. "Ted Lerner is not used to being told what to do. In the last 30 years, no one has told this man to do anything."

Lerner once fired a business partner who happened to be his brother, leading his brother to sue him, and he once took on the District government to keep a taxation error in his favor. He follows contracts "to the letter," say brokers who have negotiated with them, but he also is known to compromise.

To Gerald E. Connolly (D), chairman of the Fairfax County Board of Supervisors, Lerner is a "quiet, unassuming gentleman." Connolly said that in 2003 Lerner agreed to wait on rezoning his Tysons Corner land for greater density until the federal government kicked in its share of funding for the proposed Dulles rail project. This deal, Connolly said, was the first time he could recall a developer in the county voluntarily giving up, even temporarily, increased density, and it helped offset residents' concerns about congestion.

"I think the concerns expressed by Tony Williams [and other D.C. politicians] will evaporate when they get to know Ted," Connolly said.

During his yearlong courtship of Commissioner of Baseball Bud Selig, it was not hard for Lerner to follow Selig's expressed desire for potential owners to keep silent and not talk to reporters or make their case in public. But on at least one issue, Lerner's determination to do things his way appeared to backfire. Baseball officials made it known several weeks ago that they were not pleased with the pace at which he was lining up the African American partners thought to be critical to effectively operating a Washington team. While competing groups were highlighting such prominent partners as former secretary of state Colin L. Powell and former deputy attorney general Eric H. Holder Jr., Lerner waited until the eleventh hour to announce his partners, who joined his group when it absorbed Kasten's competing bid.

Owning the Nationals fulfills a lifelong dream for Lerner, who once said that as a young man he worked as an usher because he couldn't afford to purchase tickets for Washington Senators games at the old Griffith Stadium. Over the years, Lerner has expressed interest in owning football, basketball and baseball franchises but until now never came close to succeeding.

In 1969, he went as far as proposing to build a $20 million sports arena and convention center in Oxon Hill to lure a basketball team to the region. The arena effort collapsed over long-term financing. Lerner said at the time that it was easier to find $60 million to create suburban shopping centers.

In the mid-1970s, when a bid for the Baltimore Orioles was unsuccessful, Lerner said one reason it failed was because he talked to the media. Associates outside Lerner's inner circle predict he will approach the Nationals the way he has his real estate business: namely by using his bank accounts to hire the best talent money can buy. They also say he is unlikely to flip the team anytime soon.

"They buy and they hold on to it forever," said Leonsis, the Washington Capitals' majority owner. "They're not sellers. They're not in it to make a quick buck."

Many say Lerner will push the Nationals to become a World Series contender.

"They'll pay for the best," said Jack Schwalb, president of Senate Homes in Rockville and an acquaintance of Lerner's for 40 years. "From the president to the general manager to the third baseman to the catcher . . . he'll do whatever it takes to win because he wants a champion."

The sports team "is about building a legacy," said Marc Bassin, a real estate broker in Northern Virginia who is friends with and has done deals with the Lerners. "They've always wanted to own a professional team."

Bassin said the Lerners' signature style in business has been micromanagement. Theodore Lerner has been known to make unannounced inspection tours of his properties, checking up on tenants and making sure they keep their windows smudge-less and their floor tiles tidy. Those who fail to follow his standards have been known to receive written reprimands.

Leonsis said he went to a Washington Redskins game with Mark Lerner a few years ago, and as they were walking out, "I saw him shaking his head and looking down. I asked him, 'What's the matter?'

"He said: 'This floor is dirty. If I owned this stadium, you'd feel like you could eat food off this floor. Go to any of our buildings and tell me if you don't feel that way.' "

In the view of Fay Vincent, Selig's predecessor as commissioner, "Baseball could stand someone who pays a lot of attention to details."

Vincent, who had been an executive with Columbia Pictures and Coca-Cola, said he would warn any new owner not to expect to run a baseball franchise like any other operation. He said new owners, who often are successful in other businesses, can't just aim for profits. They have to spend a great deal of money to get the best and often most-expensive players.

"In the mall business, you try to hurt your competitors," Vincent said. "In baseball, your competitors can hurt you very badly without you doing anything about it." He was specifically referring to Yankees owner George Steinbrenner, who sets the pay scale for compensation "and you're stuck with it."

Tom A. Bernstein, a New York developer who has done a deal with the Lerners and is a former partial owner of the Texas Rangers, said the Lerners are unlikely to "pretend they've got all the information" when it comes to running a team.

"They'll surround themselves with enormously knowledgeable people who have great qualities," Bernstein said. He said being a baseball owner is akin to "being the guardian of the local dreams."

Raised in an observant Orthodox Jewish family, Theodore Nathan Lerner did not use electric lights or listen to the radio on Saturdays, the Sabbath. He graduated from George Washington University law school and began a steady ascent in the real estate world.

When a local builder challenged him to sell 25 homes, Lerner rose to the challenge.

"It was the middle of November," Lerner once told Washingtonian magazine. "I had one house completely wrapped in cellophane with a huge red bow. Santa Clauses stood on each corner." He sold 100 homes, convincing him he had a "feeling for real estate."

In the mid-1950s, when enclosed shopping malls were still a novelty, Lerner got into the business through Isadore M. Gudelsky, the former sand-and-gravel man who built up enormous real estate holdings in the Washington suburbs. Their Wheaton Plaza project became one of the most successful shortly after it opened in 1960.

Lerner soon won over Fairfax County planners with his ideas of how to develop the apple orchards and cow pastures around Tysons Corner. In doing so, he beat out James W. Rouse, the Maryland shopping mall pioneer who went on to develop the planned city of Columbia, Faneuil Hall in Boston and Harborplace in Baltimore.

To keep out competition, Lerner and some partners bought more than 100 acres of farmland across from Tysons Corner Center and eventually built what is now Tysons II. Although the mall became one of the most popular shopping centers in the country, Lerner's relations with some of his partners unraveled.

H. Max Ammerman, one of Lerner's partners in his Tysons mall deals, told a reporter shortly before his death in 1988 that Lerner "was a hard-nosed guy.

"If he didn't get his way, he was a terror," Ammerman said. "Meetings would end up in verbal fights."

When the D.C. Department of Finance and Revenue mistakenly assessed one of his downtown properties at $2.90 a square foot instead of $290 a square foot, Lerner balked at the correct price and the resulting tax lien placed on the property. Lerner's lawyers instigated a lawsuit charging that the lien amounted to slander and libel. In the end, Lerner and a partner reportedly agreed to a $675,000 tax payment, about $160,000 less than the District sought.

Lerner ejected his younger brother, Lawrence, as an officer and director of their property management firm. In the mid-1980s, Lawrence Lerner sued Theodore Lerner, charging that he had been cheated out of tens of millions of dollars over the years. Despite a settlement in 1987, Lawrence Lerner had to return to court to enforce the agreement.

Ted's son, Mark, who lives in Georgetown, entered the family business right after graduating in 1975 from George Washington University with a bachelor's degree in business and public management. Mark Lerner, his father and brothers-in-law collaborate, say colleagues and competitors, on every deal they do. Ted Lerner once told The Post that "it's far more important to pick the right partner in a real estate venture than to pick the right wife."

Even those who have felt Lerner's wrath acknowledge his generosity. He and his wife, the former Annette Morris, started a philanthropy, the Annette M. Lerner and Theodore N. Lerner Family Foundation. In 2003, the last year on which records are readily available, the foundation gave away more than $2.5 million. The largest recipients were George Washington University, which got $500,000, and his synagogue, Ohr Kodesh, a Conservative congregation in Chevy Chase, which received $505,000.

The Lerners still live in the Chevy Chase home where they raised their children, a house assessed at $1.2 million. They also spend time at a second residence in Palm Springs, Calif.

As Lerner takes over as the owner of the Nationals, many of his business associates said they don't expect to see much flashiness from the Lerners. His reluctance to step into the public spotlight is rooted in his upbringing as the son of immigrants, said Bassin, the real estate broker.

Even if Mark Lerner is doing more of the day-to-day operations and wants to get more publicity as a baseball team owner, many say he'll still defer to his father. "They like to keep things on the down low," Bassin said. "That's the way they do business. They know what they have. They're not flashy about it."

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