Crain's Detroit Business, Oct. 23, 2017 issue

OCTOBER 23 - 29, 2017

313 Presents exerts unusual control over region’s show market

PlanetM brings Silicon Valley execs in to see Detroit up close and personal

Page 3

Page 3

Auto Insurance

Philanthropy

The health care crack up

Suburban poverty is on the rise in metro Detroit

How Michigan’s auto insurance premiums became the highest in the country

Is philanthropy keeping up?

By Sherri Welch swelch@crain.com

By Chad Livengood clivengood@crain.com

Premiums by coverage type

The share of auto insurance premiums accounted for by each type of coverage. Personal injury protection has jumped from 22 percent of the total premium to 52 percent. $3 B

Comprehensive

Bodily injury

Collision

Personal injury protection (PIP)

$2 B

$1 B

0

’00

’06

’13

Michigan PIP premiums and losses

SOURCE: Michigan Department of Insurance and Financial Services

Personal injury protection premiums and costs in Michigan have skyrocketed since 2000. $4 B

Losses incurred PIP premiums collected

$3 B

$2 B

$1 B ’00

’06

’13

SOURCE: Michigan Department of Insurance and Financial Services ISTOCK ILLUSTRATION

crainsdetroit.com

Medical bills for injured Michigan motorists have tripled since 2000 to levels that far outpace normal health care inflation and the average treatment costs in larger states.

Personal injury protection coverage now accounts for the majority of auto insurance premiums. Repairing people now costs far more than repairing cars.

And despite premiums that are the highest in the country, auto insurers aren’t even making money on auto insurance.

A Crain’s analysis of in- Need to know dustry data shows total  Michigan’s cost per auto premium dollars collected accident injury tripled between by insurers for personal 2000 and 2013 to $75,600 injury protection (PIP) soared by 278 percent in  Medical costs in auto Michigan between 2000 insurance outpaced normal and 2001, while medical health care inflation by 90 costs rose by 145 percent percent to $3.2 billion, even  Industry reported average 2.9 though the number of percent loss on auto insurance motorists injured annualbetween 2005 and 2014 ly declined by 20 percent.

The self-reported data from insurance carriers reveals a major shift in the leading cause of the ever-rising cost of auto insurance in Michigan: Premiums that were once dominated by the cost of repairing vehicles are now swamped by the growing cost of treating injured drivers and passengers.

Personal injury protection coverage — which motorists are legally required to purchase — went from onefifth of all premium dollars collected from vehicle owners in 2000 to more than half by 2013. Collision coverage for fixing damaged cars and trucks declined overall by nearly 6 percent over a 14-year period in industry premiums data analyzed by Crain’s.

Reducing the medical costs in Michigan’s unique and limitless insurance for injured motorists to give drivers premium relief is at the heart of competing legislative proposals that Michigan lawmakers could take action on in the coming weeks.

SEE INSURANCE, PAGE 19

While foundations and philanthropy are focusing their grants in Detroit, poverty is quietly growing in the suburbs.

Detroiters continue to migrate to other communities, and suburbanites who once had a comfortable, middle-class life as employees of the Need area’s automotive to know sector now live in  Detroit poverty, left be- improving, but hind as the econ- suburban poverty omy moves on is rising without them.  Philanthropy Foundations largely focused and philanthrosolely on Detroit pists point to the high need in the  Regional city, their own approach, policy limited resources changes needed and a strategy of narrowed focus for increased impact.

But the needs and issues spurred by poverty don’t respect city limits.

They require not only regional approaches to addressing them but policy shifts, experts said.

They caution that if metro Detroit doesn’t take a broader look at poverty and related issues like workforce development, the downtown will come back but poverty will continue to grow in the suburbs.

Suburbs don’t usually come back like a downtown area because they don’t have the beautiful old housing that can be restored, large arts and cultural institutions and other amenities, said Myron Orfield, Earl R. Larson Professor of Civil Rights and Civil Liberties Law and director of the Institute on Metropolitan Opportunity at the University of Minnesota.

“When (suburbs) change racially and socially, they almost never turn around,” he said. “There are 60 suburbs outside of Chicago that are (now) much poorer than Chicago is.”

SEE POVERTY, PAGE 21

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C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 3 , 2 0 1 7

MICHIGAN BRIEFS

INSIDE

From staff and wire reports. Find the full stories at crainsdetroit.com

Grand Rapids-based Priority Health has signed narrow network contracts with St. John Providence Health System in Warren and St. Joseph Mercy Health System in Ann Arbor and will offer individual health insurance products when open enrollment begins Nov. 1.

Narrow network plans offer members lower premium rates if they stay in their assigned provider network.

But if they go outside the network for care, with the exception of an emergency or a preauthorized reason, they pay those medical costs out of pocket.

Despite rising premiums in the individual market in Michigan that will average 27 percent in 2018, Priority Health has been developing narrow networks that it says can reduce premiums by as much as 20 percent.

Over the past three years, Priority Health has offered three other narrow network insurance products in western Michigan that offer customers 15 percent to 18 percent lower premiums in exchange for seeing a limited number of hospitals, physicians and other health vendors, said Marti Lolli, Priority’s senior vice president of commercial markets.

“We are really excited about it. Our

State loans awarded to improve water infrastructure

The Michigan Department of Environmental Quality awarded more than $160 million in loans to improve water infrastructure systems throughout Michigan.

The program, which includes $46.7 million in principal loan forgiveness for employing green practices or meeting affordability criteria, is part of a state commitment to help municipalities take on nearly a dozen water and sewer projects across the state. With a reported $800 million annual gap in funding for water-related infrastructure, according to a

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DEALS & DETAILS

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KEITH CRAIN

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OTHER VOICES

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PEOPLE

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RON FOURNIER

Flint will get a $40 million zero interest loan to replace 6,000 water service lines.

Governor’s 21st Century Infrastructure Commission report, the loan program offers lower interest rates than the open market, a news release said.

Flint will get a $40 million zero interest loan with 100 percent principal forgiveness to replace 6,000 water service lines through the federal Water Infrastructure Improvements for Nation Act. Flint has been plagued with tainted water issues since 2014 when the city switched from Detroit’s water system to the Flint River to save money.

Other communities that received funding from the Clean Water State Revolving Fund include the East Lansing Waste Water Plant, which got $31 million with $1.5 million in principal loan forgiveness; the Great Lakes Water Authority Rouge River Outfall in Detroit, which got $38.45

Senate votes to let charter schools get regional taxes

Charter schools would receive revenue from voter-approved property tax hikes under legislation a divided Michigan Senate approved last week, the Associated Press reported.

Voters in six intermediate — or countywide — school districts have approved the so-called enhancement millages. They include Wayne and Kent — two of the largest counties in the state — along with Kalamazoo, Muskegon, Monroe and Midland.

The taxes collected go to the counties’ traditional school districts on a

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WEEK ON THE WEB

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per-student basis, on top of their state funding. The GOP-controlled Senate voted 23-14, mostly along party lines, to also let charter academies — which are publicly funded — get a share of the extra local funding.

The sponsor, Republican Sen. Dave Hildenbrand of Lowell, said the charters would only benefit when existing millages are renewed or new millages are approved.

Democratic Sen. Curtis Hertel Jr. of East Lansing characterized the legislation as “stealing, plain and simple” from public schools. He said charters would profit while not facing transportation costs and the same accountability standards.

But Hildenbrand accused Hertel of “lying.”

He said he introduced the bill because more than 14,000 charter school students in Kent County and more than 56,000 charter school students in Wayne County “are not being treated fairly.”

Where does the Southeast Michigan business community turn when it needs to find the largest business-insurance companies?

How about a list of the top 200 privately-held companies that call the region home? Crain’s Book of Lists.

BE PART OF CRAIN’S BOOK OF LISTS the go-to resource for Southeast Michigan’s business community

million; and the Otsego Wastewater Treatment Plant, which got $1.5 million with $175,000 in principal loan forgiveness.

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RUMBLINGS

These aren’t just any lists, either: with the most up to date and accurate business information on companies that spans across industries, the Book of Lists is a staple all year long.

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crains de C R A I N ’ S D E T R O I T B U S I N E S S // D E C E M B E R 2 6 , 2 0 1 6

CRAIN'S LIST: PRIVATE 200

6, 2016 17 // D E C E M B E R 2 OIT BUSINESS CRAIN’S DETR FROM PAGE 15 2016 Detroit 2 6 , Revenue Company Revenue area Worldwide EMBER Address // D E C ($000,000) ($000,000) Percent employees employees S S Rank E N Phone, website Top executive 2015 2014 change Jan. 2016 Jan. 2016 Type of business USI ROIT B ’ S D E T Inc., Farmington Hills 48334 Orleans International Earl Tushman Detroit $856.0 $758.4 12.9% 40 NA Meat importer CRAIN Worldwide area

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E 200 Ranked by 2015 reve TE AT IVA IVA 28 PR CRAIN'S LIST: nue 2015 reve 29 Ranked by ATE 200 IV R P : T 30 28 'S LIS CRAIN (248) 855-5556; www.orleansintl.com

Revenue

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00) Type Jan. 2016 T Henniges Automotive B, Auburn Hills 48326 ($000,000) ($000,0 Douglas DelGrosso 824.8 -0.2 219 7,435 Weatherstrip seals, glass encapsulation, modular sealing change Jan. 2016823.2 2014 2015 (248) 340-4100; www.hennigesautomotive.com CEO Detroit Meat importer xecutive systems and anti-vibration components executive NA Top e T 40ide 12.9%Worldw $758.4 area iness loyees 800.0 $856.0 McNaughton-McKay Donald Slominski ElectricnCo., Madison Jr., Heights 16.1 NA 550 distributor Type of bus 689.0 modular sealing loyees emp Earl Tushma lation,Electric/electronics Hills 48334 Revenue Jan. 2016 ent emp. 201 strip seals, glass encapsu 6CEO r president Inc.,, Farmington48071-4134 Weather orte 7,435 Jan and imp president Revenue ($000,000) Perc ents t 219 sealing Orleans International nge Mea -0.2 ation ,compon cha824.8 00) 645-6005; modular NA eansintl.com (248) 399-7500; renewableDelGros energy: systems and anti-vibr (734) 823.2 2014 ($000,0 so apsulation or 40 (248) 855-5556; www.orl Douglas 5 enc s 201 % distribut B www.mc-mc.com ics pon 12.9 ents electron seals, glas , Auburn Hills 48326 550 stripElectric/ $758.4 CEO NA5 Weather cutive tion com Henniges Automotive exe bra 16.1 .com i-vi 6.0 Top 689.0 tomotive ant $85 LaFontaine Automotive Group, Michael LaFontaine,7,43 768.4ems and663.3 Highland Township E 15 15.9 1,092 1,092 Automobile dealerships 800.0 ; www.hennigesau 219 syst Donald Slominski Jr., an FROM PAG pany (248) 340-4100 distributor -0.2 48357Heights owner and chairman; Com Earl Tushm ctronics Electric Co.,, Madison 824.8 president and CEO 34 McNaughton-McKay Address Electric/ele sident www.thefamilydeal.com 887-4747; Maureen LaFontaine,550 site Hills 483 (248) pre 823.2 Phone, web 48071-4134Inc., Farmington Rank NA ; ips 645-6005glas al owner DelGrosso 16.1 and president rnation Dou tl.comle energy: (734) ; renewab 1,092 Automobile dealersh Inte(248) 399-7500 1,092 689.0 rleansin 15.9 Orleans 663.3 Crabb Amerisure Gregory Co., Farmington Hills 701.4 .0 8.3 355 6; www.o 759.7 718 Property and casualty insurance company CEO Mutual Insurance 768.4 s 48326 800 ine, -555 -mc.com Hill LaFonta 855 B www.mc ) Jr., urn i Michael s (248 p insk 48331 Townshi president and CEO e , Aub tive.com , Highland dealership n; Group, tivemo Donald Slom Automotivineenn Automo owner omobile igesauto CEOand chairma (248) 615-9000; and www.amerisure.com Henniges LaFonta w.h Heights 1,092 Aut president Maureen LaFontaine, -4100; ww Madison 1,092 insurance company (248) 340 48357 y Electric Co., familydeal.com 15.9 Greenlee U.S. Farathane, Auburn Andrew Property and 48326 t 40.0casualty 2,416 3,000 Plastic injection molder, extruder, thermal compression molder and presiden ownerHills 355 700.0 718 500.0 887-4747; www.the n-McKa 663.3 hto(248) y 701.4 and8.3 -6005;(248) 754-7000; www.usfarathane.com pan president CEO McNaug .4 645 ) 759.7 com 768 ce , rgy: (734 Gregory Crabb alty insuran ton Hills 48071-4134 0; renewable eneInsurance Co.,, Farming l LaFontaine hae Carhartt Inc., sion molder Mark Valade Dearborn and casu 4.1 48126 505 t and CEO 691.0Property664.0 5,033 Apparel manufacturer Mic compres -750 presiden re Mutual chairman; molder, extruder, thermal n molder nship (248) 399 Amerisu 718 chairman and355 www.carhartt.com CEO 2,416 , c.com owner and 3,000 Plastic injection hland Tow (313) 271-8460; pressio 48331 40.0 LaFontaine www.mc-m Group, Hig 500.0 mal com 8.3 700.0 Maureen Inc., side nt 48092 omotive ; www.amerisure.com Art Van Furniture uder, ther3,622 Retail home furnishings 620.0 4.8 1,798 701.4 Archie Van Elslander 650.0 Greenlee (248) e Aut615-9000 preWarren lder, extr andAndrew turer LaFontain 759.7 ownerwww.artvan.com manufac ction mo com48326 (586) 939-0800; Hills chairman and Kim Apparel t and CEO 5,033 e, Auburn tic inje presiden ilydeal.

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pre Informa Loren Baidas, www.generalrv.com chiganca (248) 237 525 568 presiden equipm ri t , Belleville ducts (248) 349-4800 6.3 5.9 dings LLC Thom Lipa president roform pro om 591.9 590 .0 559.0and CEO Sanford ip Neapco Hol 2; www.neapco.c Kurtand es and mic president chairman 627.0 vehicle and trailer dealersh -137 onalbas tion data Recreati Ann 4808948106 (734) 447 CEO Informa 597 2,4571,090 renArbor ProQuest LLC, 28.5 ges SEnterprises 453.0 Hod m/en-U lership om LLC, War Barrick Robert Barrick Inc., quest.co Royal Bill Oak 48073 dea 779.7 ds -29.3 23 551.1 ds.c NA Petroleum retailer and wholesaler 582.0 www.pro ler ; 568 Foo Baidas, CEO; Lipari(734) 761-4700 Robert w.liparifoo ve vice 5.9 icle and trai (248) 549-3737; www.barrickent.com president executi -3500; ww ional veh 559.0 Inc., Wixom 48393 Center75 (586) 447 Loren nt Baidas, General RV 0 Recreat side 591.9 pre , Novi; 483 MSX International Frederick Minturn eralrv.co Inc., Detroitt 48226 cat.com m CAT 6.2 1,150 528.0 1,09 497.0 6,000 lerBusiness process outsourcing service provider for global and www.gen an 597 gan presiden hig 349-0900 ichi (248) ford wholesa Mic w.m 28.5 Kurt San (248) 829-6300; www.msxi.com Petroleum retailer and president and CEO -4800; ww NA automotive retail segments and human capital managed service 453.0 chairman 23 -29.3 (248) 349 779.7 .0 CEO ler 582 551.1 provider wholesaing Barrick CEO; Robert or 48106 service provider for global S iler and Baidas, LLC, n-U outsourc reta 48073 , Ann Arb process Oak al m/e service United Robert Shore Financial Royal Mat Ishbia Services Troy 48083 355.6 oleum 43.5 1,405 glob 510.1 1,405 managed Mortgage banking st LLC ses 6,000 uest.co capital for PetrBusiness presiden Enterpri roqInc., 1,150 as,t Barrick s and human ProQue 6.2 NA provider 497.0 d service com 0; www.p Loren Baid (855) 888-8737; www.unitedshore.com and CEO rrickent. automotive retail segment 528.0 president g service 23 761-470 549-3737; www.ba ital manage om 48393 k Minturn (734)(248) nt and Frederic outsourcin -29.D3 side Inc., Wix preInc., human cap .7 s process 396 ents and Centerional 779Anderson United Road Services Mark Romulus CEO v.com 48226 530.2 provider ines-5.7 Inc., 500.0 1,639 Vehicle logistics for vehicle manufacturers, remarketers, t and48174 l RV ralrDetroit an presiden Internat ene il segm MSX Genera 551.1 chairm 6,000 BusMortgag banking 0; ww;w.g president and COO xi.com (734) 947-7900; unitedroad.com 0 motiveereta -090 auctions, 1,405 dealers and internet vehicle transactions nationally www.ms 1,15 349 auto ) rick 1,405 829-6300 (248(248) 6.243.5 ert Bar 355.6 r .0 Nicholson 510.1 James 497B. ters, and distributor of industrial chemicals provide-4.1 PVS Chemicals Inc.,Rob Detroit 48213 518.3 NA 497.0 remarke NA Manufacturer, Ishbia marketer nt Mat turers, side manufac 73 king for vehicle pre 528.0 480 Troy 48083www.pvschemicals.com , 921-1200; , LLC, ly logistics l Services national al Oak (313) rtgage ban president and CEO onsters t and arke 1,639 Vehicle Financia turnCEO transacti presiden 396 Min vehicle Inc., Roy United Shore -5.7 1,405 Moauctions, dealers and internetufac turers, rem s nationally ls 530.2 erprise; swww.uncke Frederick 5 nt.come.com 500.0 Anton Letica man Plastic and 1,40 ion packaging rick Ent l chemicamanufacturer nD Letica Corp., Rochester 48307-2321 arri itedshor 888-8737 and CEO 495.0 E 0.0 NA vehicle 495.0 E NA Bar(855) paper of industria or sact 43.5 sidentAnderso distribut 7; 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Inc., 518.3 ted Shore Rocheste nite tic RKA Kay Albertie, Romulus Automob 506.9 Uni -5.0andile dealersh NA 481.6 NA t 48174 Wholesale distributor of gasoline, diesel fuel, ethanol, biodie NA Plas biodiesel, presiden sident and Corp., 74 NA 7; www.u r 48307-23 Letica pre NA 497.0 F 1.5 s 481 477.4 ) 888-873 ; www.let (734) 946-2199; www.rkapetroleum.com (855 NA ., Romulu Jet A and Jet A1 products; hauler of crude oil, common carrier 484.5 managing holson Incica.com Thomas (248) 652-0557 hips 0.0 E Kenneth es B. Nic Services 48034Jam e dealers shareholder; CEO ted Road Dodge 495.0 Kari biodie l,l, biodiese E oad.com Jeep Ram,, Southfield and Uni general tedr Chrysler nt Automobil and uni owner ld , diesel fuel, ethanol, biod side 0; .0 gasoline iese Southfie pre NA of or 495 -790 Elliott, CEO nol, carrier 48213r.com Wholesale distribut ldchrysle (734) 947 NA common NA oil,, etha southfie ;Inc crude manager NA fuel ., Detroit Letica ier ; haulere,ofdies (248) 354-2950 el -5.0 1.5 F on .com products carr A1 als 506.9 n Ant Jet cals and A mic mo .4 Krater Jet 7.6 48037 433.1 1,062 465.9 2,195 and 481.6Gordon management 477 consulting firm com gasolinAccounting F vschemi Plante Moran PLLC, Southfield of PVS Che nt Albertie, de oil, Kayside 0; www.p pre distributor 484.5 managing partner ler of cru 352-2500; www.plantemoran.com 321 48174 ) 921-120 m Cos. 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Goodm Prestige Automotive ar Co., Oak om FROM PAGE 15 Company Address Rank Phone, website

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43 To showcase your brand or services in48this issue, contact 46 44 47 49 Lisa Rudy at lrudy@crain.com or call (313) 446-0630 45 48 46 49 47

48 50 51 49 52 50 53 51 54 52 55 53 56 54

50 51 52 53 54

R CITY RE/MOTO ICTU IG P TURE/MOTOR CITY PIC EB BIG TH THE

Priority Health signs narrow network contracts

goal is to offer affordable health insurance where consumers can expect savings in premiums” and receive their care in high-performing networks with quality providers, Lolli said.

The health insurance products, sold under the MyPriority product line, are tied to geography and providers. For example, the St. John Providence narrow network, called St. John Providence Health Network, covers their affiliated providers in Oakland, Wayne and Macomb counties. St. Joseph Mercy’s narrow network, called St. Joseph Mercy Health Network, covers their network affiliates in Oakland, Wayne, Macomb, Washtenaw and Livingston counties.

CALENDAR

THE BIG PICTURE/MOTOR CITY

2

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elsewhere are listed with thet address and stock top executive of their on amain Detroit-area do not have

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C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 3 , 2 0 1 7

313 Presents exerts unusual control over show market

Entertainment

Drivers of seats

By Bill Shea bshea@crain.com

The combination of metro Detroit’s two largest entertainment companies has created a business that controls a large swath of venue seating across Southeast Michigan, and gives it a market dominance seen in few cities.

What new Detroit-based 313 Presents LLC also has is negotiating leverage with artists and promoters, but it’s too soon to say definitively how consumers will be affected at the box office. What it means for the joint venture partners is almost certainly a fatter bottom line.

The Oct. 8 announcement that Palace Sports & Entertainment and Olympia Entertainment had created the 50-50 joint venture 313 Presents means that the new entity functionally controls 44 percent, or almost 100,000, of the 226,000 seats across 29 of the metro area’s major and culturally significant entertainment venues.

That makes the new company a force to be reckoned with.

The joint venture was born from the relocation of the Detroit Pistons from the PS&E-owned Palace of Auburn Hills this year to downtown’s Olympia-run Little Caesars Arena (home of the Detroit Red Wings, also run by Olympia) after 29 years in northern Oakland County. Part of the deal was a plan to combine the entertainment businesses, ending decades of competition for concerts and other shows.

313 Presents links three Olympia venues — Little Caesars Arena, Comerica Park and the Fox Theatre — with three owned or

Palace Sports & Entertainment and Olympia Entertainment created a 50-50 joint venture 313 Presents, which controls seating at area venues including the new Little Caesars Arena.

LARRY PEPLIN FOR CRAIN’S

MUST READS OF THE WEEK Why words matter Crain’s publisher and editor Ron Fournier on the perils of social media and the need for care. Page 6

Call to action U.S. Rep. Joe Kennedy III urges grassrootslevel response to health care coverage issues. Page 4

3

Need to know

 313 Presents combines most major Detroit venues  Olympia, PS&E board will oversee joint venture 

Top exec hire coming next year

operated by PS&E — DTE Energy Music Theatre, Meadow Brook Amphitheatre, and Michigan Lottery Amphitheatre at Freedom Hill.

Olympia runs two other venues, City Theatre and Soundboard at MotorCity Hotel Casino, that are not officially part of 313 Presents but functionally operate as part of its portfolio. Their seating is included in Crain’s capacity calculations.

A new business Tom Wilson, president of Olympia Entertainment and formerly the longtime top executive at PS&E, is interim president of 313 Presents. He said 313’s venues will host as many as 500 events annually, including Pistons and Detroit Red Wings games along with major touring concerts at new Little Caesars Arena. The new joint venture is handling event booking and promotion for the venues, and has launched a website (313Presents. com) and an app.

One immediate business advantage of creating a joint venture is that the database of consumer information is doubled, allowing it to better target fans for upcoming events.

“We’ll have access to a lot of data,” Wilson said.

SEE SEATS, PAGE 20

Analysis

Through Silicon Valley eyes: the Detroit difference Detroit and Silicon Valley are separated by 2,500 miles of middle America. There’s also an ocean between them in the way they think about business and success.

More than a dozen West Coast venture capitalists flew east last week to visit Detroit as part of a new mission led by Michigan Economic Development Corp.’s mobility arm PlanetM to bridge the divide.

Gathered around a table Tuesday at the The Peterboro restaurant, the California investors exchanged photos comparing the proximity of California wildfires to their homes and, between bites of beef lo mein and curry whitefish, debated the future of mobility and Detroit’s role in it.

This is the first time PlanetM, led

by MEDC Group Vice President Trevor Pawl, has brought startup funders to the state, instead of sending emissaries trekking out to California to meet with them.

At The Peterboro, the focus remained on autos — hardware and software — and Detroit.

Over drinks, seated near the window next to Brian Yee, principal at San Francisco-based Sherpa Capital, and Ryan Sarver, a Birmingham native and partner at Menlo Park,

DUSTIN WALSH dwalsh@crain.com

Need to know

 West Coast venture capitalists visited Detroit last week  Michigan Economic Development Corp.’s mobility arm PlanetM led the event  First time PlanetM has brought startup funders to the state

Calif.-based Redpoint Capital, I prodded the investors about ride-hailing services and autos’ and automakers’ stake in the future of mobility. The inquiry quickly turned into a debate. Yee and Sarver versus me. Uber versus Detroit’s automakers. Disruptor versus legacy business models.

Yee and Sarver said Uber’s grip on customers will dominate the future,

despite the very real financial challenges the company faces — it lost $645 million in the second quarter alone this year. Note that Yee’s Sherpa Capital is an investor in Uber, as well as Virgin’s Hyperloop One and Airbnb. Redpoint is an investor in valet-parking app Luxe and was an early investor in Netflix.

I countered that established players like General Motors, which operates its own ride-hailing and -sharing service Maven and invested $500 million in Uber competitor Lyft, could squeeze Uber out of the market if it so chose because it’s far easier for them to recreate Uber’s products than the other way around. That automakers would, and maybe should, win the battle for mobility supremacy. Manufacturing, after all, will continue to play a major role in how people move even if car ownership is outmoded.

A few laughs and Detroit vs. California jabs later, we agreed to disagree and enjoyed our seaweed salad. But the conversation highlighted the differences Detroit and Silicon Valley are struggling to overcome as the technology and automotive industries become increasingly interdependent.

A key difference: Yee and Sarver view Uber’s financial losses as a secondary consideration to its potential, the antithesis of Detroit’s hyper-foBrian Yee: Uber’s cus on profits. grip to dominate The drive for the future. growth at the expense of profitability has, of course, at times brought the auto industry to its knees.

Pawl sees such conversations, or arguments, as critical to his mission; creating awareness that Detroit and Silicon Valley are different but together are forging the future of the mobility business.

“There hasn’t been a lot of auto-based venture capital spending in Michigan,” Pawl said Wednesday at the Techstars Mobility Demo Day preview, which hosted the Silicon Valley cohort. “Detroit is now focused on the future, not the past, and we want everyone to know that. Why can’t we, as a state, serve as that conduit (to get more investment)?”

SEE SILICON, PAGE 20

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 3 , 2 0 1 7

4

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Joe Kennedy III calls health care leaders, patients to action at Crain’s summit

By Jay Greene jgreene@crain.com

U.S. Rep. Joe Kennedy III told an audience of 400 last week at Crain’s Health Care Leadership Summit that uncertainty in health care caused by partisan politics can be successfully fought by patients, families, providers and business leaders banding together to demand policies that work for all rather than politics that create winners and losers.

Need Kennedy, a to know three-term conJJCongressman gressman from tells Crain’s Massachusetts, summit that capped the ninth leaders must act annual Crain’s locally to influence health care event policy at the GM Marriott Renaissance JJSays relentless Center in Detroit focus must be on by arguing that a outcomes, quality bipartisan soluand costs, not tion can be politics achieved when JJKennedy has opponents of been a prominent Obamacare unvoice in the health derstand that an care debate ov e r w h e l m i n g majority of Americans want Congress to work together.

The speech drew a clear line between politics and policies.

“Politics turns the health care system into a zero-sum game where patients turn into winners and losers,” Kennedy said. “One state is a success and another state is a loser. Regardless where you stand on government’s role in the health care system, we all foot the bill. ... We have a shared goal of outcomes, quality and costs.”

“For families, health care is not political. It is deeply personal,” Kennedy said. “We cannot control our time on earth. Our loved ones might suffer. We will need to help them along in their journey. This will always guide (my approach) to health care.”

But Kennedy threw cold water on suggestions that a single-payer health care financing system, one proposed recently by Sen. Bernie Sanders of Vermont, could replace Obamacare under President Donald Trump and the Republican Congress — and even five years into the future.

Kennedy said even if Democrats controlled all branches of government in some distant future, he doubted a strong enough coalition could be mustered to pass it. He also said it is unlikely that Obamacare will exist in its current form in five years as well.

Energy should be more productively spent, he said, on short-term solutions that include passing the proposed Alexander-Murray bipartisan bill that would help stabilize the individual health insurance market for the next two years. The bill, which Trump has flip-flopped on and most recently said he opposes, also would give states greater flexibility to design health benefit policies, including increasing the age to qualify for catastrophic-type policies to above age 30.

Kennedy said he supports U.S. Sens. Patty Murray and Lamar Alexander's bipartisan efforts to garner at least 20 co-sponsors. So far, the bill has 12 Republican and 12 Democratic co-sponsors. The bill that would provide about $10 billion in “cost-sharing reduction” subsidies to help pay for out-of-pocket private insurance costs of low-income people on the insurance exchange.

AARON ECKELS FOR CRAIN’S DETROIT BUSINESS

U.S. Rep. Joe Kennedy III speaks to the Crain’s Health Care Leadership Summit on Thursday at the Detroit Marriott Renaissance Center.

“Alexander-Murray is not a perfect bill and both sides may need to make concessions to address concerns,” Kennedy said. “We need to stabilize now, then get to longer-term solutions.”

People in Michigan purchasing insurance on their own are already facing a 20 percent increase in premiums for 2018 when open enrollment starts Nov. 1. Without the federal subsidies, health insurers are expected to increase premiums an average price of 30 percent more next year.

Over the past seven years, Kennedy, 37, has taken the national stage as an advocate for health care quality, mental health system improvement, cost reduction and expanded insurance access. He has spoken out against Republican efforts to repeal the Affordable Care Act. But in his 30-minute speech Thursday, Kennedy talked more pragmatically about how health care leaders, providers, patients and their families can squelch the influence of partisan politics by collectively raising their voices to demand policies that encourage improving quality and lowering costs. And he said voices demanding that at the local level will get the attention of lawmakers.

He said Obamacare has been a success in many parts of the country, but in some states it has struggled because of a variety of factors. In Massachusetts, which approved Romneycare, an earlier version of Obamacare, the uninsured rate has fallen to 2 percent and costs are being addressed, Kennedy said.

In Michigan, the uninsured rate has been cut in half to under 6 percent and hospital uncompensated care by 50 percent. Projects born out of Obamacare, like an intervention program at Detroit Medical Center that Kennedy cited, have drastically re-

duced diabetes problems in patients.

“This is not to say that the ACA doesn’t have problems,” he said.

Kennedy said more needs to be done to promote value-based payment systems, care coordination between primary care, specialty care, hospitals and post-acute care. “We spend 20 percent (of health care costs) on end-of-life care. We need to achieve the ‘triple aim’ of improving patient experience, reducing per capita health care costs and increasing health of populations.”

Republican efforts to repeal and replace Obamacare are not over. Already Congress has voted twice in the past several months against a repeal effort, but Trump continues to call for another vote to undo Obamacare.

However, Kennedy said he could not predict what Congress will do this year with health care bills, just as he said he can’t predict Trump’s tweets from minute to minute.

“Republicans in Washington had everything they needed, a mandate to defeat the ACA. Nobody would have bet against them,” said Kennedy.

But then, he said, “something remarkable happened. Patients, advocates, insurers, doctors all came to Washington and told vulnerable, painful stories. Congress flinched.

(The public) can still exert pressure on Washington” politicians.

Kennedy thanked providers and business leaders, and many others, for coming to Washington or state houses and encouraged more grassroots action. “Hold us accountable and we will do better.”

He also gave advice to advocates wishing to make a difference in Washington. “It is hard to argue in the abstract,” he said. “You gotta keep it local.”

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 3 , 2 0 1 7

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OPINION COMMENTARY

EDITORIAL

A lesson in why words matter Duggan deserves, needs second term W

F

our years ago, Mike Duggan ran the most improbable campaign in Detroit history.

He was coming back into government from the business community in a city with a reputation for being hostile to business. He moved back into Detroit from Livonia in a city suspicious of outsiders and suburbanites. He was a white man in a majority African-American city. And he was forced to run a write-in primary campaign.

And yet he won.

This year, Duggan is a heavy favorite to win a second term over former state Sen. Coleman Young II. He deserves it.

In his first term, Duggan sent a clear message: From the ashes of bankruptcy, Detroit is open for business.

He famously got the streetlights working again (with some federal help). He targeted building small businesses and putting blighted properties back into productive use with the Motor City Match program. He smoothed out bureaucratic hurdles that have stymied businesses for generations.

A demanding boss, Duggan brought a CEO’s passion for data — and has used it to demand improvement and change, no excuses, just as he did when he headed the Detroit Medical Center. Where no data existed, he demanded it. And when the numbers weren’t good enough, he has held his lieutenants accountable.

That was part two of his message and his genius: Detroit was not only open for business, but for the city’s government, business as usual was not going to be good enough anymore.

Duggan has benefited from a once-in-a-lifetime respite from regional infighting, a cooperative, can-do spirit among government, business and nonprofits forged in the throes of the city’s bankruptcy.

Duggan has shown that he’s able to take advantage of that spirit and nurture it. Just look at the cooperative effort to lure Amazon.com.

The latest effort is to push the resurgence of downtown and Midtown out into the neighborhoods. He has made selling big corporations like JPMorgan Chase on the ROI of investing in the neighborhoods one of his signature achievements. The city needs him to continue to expand those relationships.

But it’s not enough to say Duggan deserves re-election because he’s done a good job and started making real change in a city synonymous with municipal dysfunction.

It’s more of an imperative: He needs at least another term to institutionalize the culture of action and accountability he is creating. To make it harder for the city to backslide when he inevitably turns the Manoogian Mansion over to his successor. To reinforce and expand the virtuous cycle that has made Detroit a city on the rise.

ords matter. I know this because I make my living stringing them together.

Jokes about terrorism aren’t funny. I know this because I once made a living covering terrorist acts.

Social media is no place to be casual about one’s words or jokes. I know this because I constantly remind my colleagues at Crain’s Detroit Business that we represent the company, even in our off hours and in public spaces — and that includes social media.

All this to say: I owe Grace Keros and her employees at American Coney Island an apology.

While on vacation earlier this month, I looped myself into a friendly Twitter debate over which is the best of two great downtown institutions: Lafayette Coney Island or American Coney Island.

The debate goes back to the early 20th century, when Greek immigrant Gust Keros arrived in Detroit and started selling hot dogs, shining shoes and cleaning hats from a cart on the corner of Michigan Avenue and Lafayette Boulevard.

In 1917, he opened American Coney Island at the same location and, in 1924, Keros brought his brother to America. The brother opened Lafayette Coney Island next door to American Coney Island, using a different chili and hot dog.

About 30 years ago, the brother sold Lafayette to his employees.

Though the businesses are no longer tied by family, the friendly competition remains.

“I don’t care when people fight and joke about which they like best,” Grace Keros told me. “I know we’re the best.”

Grace is the granddaughter of Gust Keros. Along with her brother, Chris Sotiropoulos, Grace has built American Coney Island into a culinary empire, with restaurants at the Detroit Zoo and the D Hotel in Las Vegas. In 2005, the company introduced its Coney Kits, popular with fundraisers and Detroit expats who want to make their own Coney dogs.

I was one of those expats, a long-

Grace Keros and her father, Chuck Keros.

RON FOURNIER Publisher and Editor

“I don’t care when people fight and joke about which they like best. I know we’re the best.”

Grace Keros

time customer of both restaurants. I tend to favor Lafayette, but that’s not the point of this column. I owe Grace and her employees an apology because of the way I sided with the competition: through a joke that played off an internet meme

CRAIN’S DETROIT BUSINESS

meant to mock those who exploit terrorism for political purposes.

If you don’t eat at Lafayette Coney Island, I tweeted, the terrorists win.

Grace Keros thought I was calling her and her employees terrorists.

“There’s nothing funny about that word,” she told me. “It’s dangerous.”

I wasn’t calling anybody a terrorist. The “terrorists win” meme is actually an antidote to hate speech, and nobody who follows my account flagged it as anything more than a benign joke. But still — I know that words matter. I know that jokes about terrorism aren’t funny.

I know that social media makes it too easy to hurt people unintentionally.

I explained all this to Grace over lunch the other day at American Coney Island. It was delicious.

Ron Fournier is publisher and editor of Crain’s Detroit Business.

Catch his take on business at 6:10 a.m. Mondays on the Paul W. Smith show on WJR AM 760.

We are finally getting it

T

his past weekend, the College for Creative Studies was to stage its 36th wine auction, raising several million dollars for scholarships. The week before, the Detroit Children’s Fund had a great dinner in Corktown and they, too, raised a lot of money for education.

It was a pleasure to see Nikolai Vitti, the new head of Detroit Public Schools Community District, among the attendees.

I’m getting the feeling that people in Southeast Michigan are finally realizing just how important education is — for our children and the future.

Whether it’s charters, traditional

KEITH CRAIN Editor-in-chief

public schools or colleges and universities, education is the key to our future. Maybe that’s why I chair the board for CCS and my son KC chairs the board of the DCF. We both be-

lieve in the importance of education.

Michigan has some of the best colleges and universities in the land. No one disputes that. We have some terrific private high schools and some good public schools. But overall, our public schools need some work. In one measure, a standardized national test from 2015, Michigan ranks 41st among the states for fourth-grade reading and 42nd in fourth-grade math. That’s statewide, not just Detroit.

The positive seems to be that everyone acknowledges our public schools need some help. And it looks like we are concentrating on improving these schools so everyone can be

proud. Superintendent Vitti spoke in September during the Detroit Homecoming, outlining a program that seems realistic and doable.

It will no doubt take some time to turn around Detroit’s public schools; they’ve been in disarray for decades.

But everyone seems to be watching and, most importantly, caring about the quality of our schools. That’s a big difference from a decade or two ago.

We’ve had a big dichotomy in our education system: Great public colleges and universities and not-so-great K-12 public schools. Oddly, we’ve never been able to get enough synergies between these two systems — and

many of these universities train future teachers — to make a difference.

Finally, we have deep interest and commitment to make K-12 education great again.

It is not going to happen overnight.

But at least in Detroit, it seems to be heading in the right direction. There’s more giving in Detroit instead of headlines about stealing.

Education, all forms, is essential to our community’s future. It is an essential partner with business. Let us hope that business continues to support education at all levels. It is in everyone’s best interest, today and tomorrow.

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 3 , 2 0 1 7

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Amazon bid exposes Michigan’s brain drain, opportunity to fix it

A

mazon Day came and went last Thursday in America’s cities.

That was the deadline for Detroit, Grand Rapids and dozens of other cities across the country to send the online retail behemoth a pitch for why Amazon should build its second headquarters in their town.

For Michigan’s business, academic and political leaders working on Detroit’s and Grand Rapids’ bids for Amazon HQ2, the past six weeks have been a whirlwind exercise in economic planning and introspection about our many collective strengths and weaknesses, particularly in education.

Michigan’s brain drain over the past two decades came into full view as leaders working on Detroit’s proposal found out something few people have been paying attention to: We’ve been exporting our talent to fill Amazon’s cubicles in Seattle for years.

Since 2010, Amazon’s hiring of graduates of the University of Michigan’s MBA program has increased two-and-a-half-fold, UM President Mark Schlissel told Crain’s.

“My understanding is we’re their No. 1 source of MBAs and their top two or three source of engineers,” Schlissel said in an interview Wednesday. “They really love our students.”

The brainstorming about how Michigan could possibly meet the talent demand Amazon would create by bringing 50,000 jobs to De-

CHAD LIVENGOOD clivengood@crain.com

Need to know

JJLast Thursday was the deadline to send a HQ2 pitch to Amazon JJBrainstorming has given rise to serious discussions on state-level higher education strategy JJSnyder’s administration expected show

how Michigan will boost its investment in STEM education

troit has given rise to serious discussions on state-level higher education strategy.

During the past decade, when the state’s auto-dominated economy was in a precipitous decline, Michigan’s higher education policy and strategy was largely focused on steadily reducing state taxpayer support for public universities and community colleges to balance the state’s budget.

Since Gov. Rick Snyder took the last 15 percent chop in 2011, state funding has been marginally restored with various strings attached, some of which focused on boosting

the number of graduates in the fields of science, technology, engineering and math (STEM).

University leaders have mostly gone along to get along with legislators, agreeing to keep tuition increases in line with inflation in exchange for the restored funding (total state spending on higher education is $1.63 billion this fiscal year, about $316 million less than in the 2002 fiscal year before the cutting began).

But pleas for a more robust reinvestment in higher education have been largely ignored. And there has been little discussion in Lansing on what exactly is the strategic goal of the state’s education system.

Amazon’s surprise announcement in early September of its intent to establish a second headquarters outside of Seattle that would rely heavily on a highly talented labor pool has spurred some of the state’s business and government leaders into action.

Gov. Rick Snyder’s administration was expected to lay out to Amazon how the state will boost its investment in STEM education programs, particularly certificates in computer coding and other information technology jobs that don’t necessarily require a four-year bachelor’s degree.

The governor has publicly referred to the initiative as a “Marshall Plan for talent” — drawing a vivid comparison of rebuilding Europe after World War II and rebuilding what

most view as a broken education system in Michigan.

“Our hope is to impress upon Amazon or any new employer that wants to come to Michigan that we’re already working on our education system,” said John Walsh, director of strategy policy for Snyder.

Details of the proposal and how much financial commitment the state will make were not being made public last week because of the competitive nature of the Amazon bid, Walsh said.

Snyder will make a budgetary proposal to lawmakers early next year that will focus building a more coordinated career and technical education system, spokesman Ari Adler

said, “but do it in a big picture sort of way.”

Schlissel, who is still a relative newcomer to Michigan having arrived in Ann Arbor just more than three years ago, said he’s been surprised by the sudden “momentum” the Amazon bid has created for getting a unified strategy on talent development.

“Even if we don’t win the Amazon competition, I think one of the beneficial byproducts is bringing together government, private business and academic leaders to formulate training programs at the scale we need to be competitive in the future for internal and external business development,” Schlissel said.

health care, all through my job as a pizza server and bartender at a Queen Anne Pizzeria.

In contrast, after I moved to Detroit, I was making $3.38 an hour, making $11-45 a shift in tips and lived without health care at a service industry job in Midtown.

Anyone can easily see that my quality of life dropped when I moved to a city that does not require em-

ployers to pay their workers a livable wage and forces them to rely on the whims of customers.

The solution for Michigan tipped employees does not have to be as black and white as Barron argues.

Employers can still pay workers a livable minimum wage and still allow customers to tip. This is how my employer operated in Seattle and this is how my most recent employer Pie Sci

Pizza operates now.

Tipped employees can demand both. While Seattle might aim a little too high with the goal of $15 minimum wage, I am advocating for a state and employer that believes my time and energy are worth a livable wage, which is certainly more than $3.38 an hour.

Taylor Gawlik Detroit

BLOOMBERG NEWS

Cities across the country, including Detroit, are making a bid for the second Amazon headquarters.

LETTERS

Lawmakers’ inaction on no-fault a travesty A recent Crain’s column by Chad Livengood (Oct. 16 issue) appears to suggest that there is insufficient support for a current bill (House Bill 5013) that seeks to offer motorists tiered choices for personal injury protection medical coverages, reduce same-procedure medical fees, while reducing insurance rates/premiums and the number of uninsured drivers in Michigan.

If accurate, then it should be considered nothing short of a travesty and an embarrassment for Michigan lawmakers who appear to blatantly favor special interest lobbyists over the well-being of their constituents.

Michigan is widely known as the state with the highest insurance rates in the nation, which affects not only Detroiters to a greater extent but all state residents to a lesser extent.

While perhaps not perfect, HB5013 does the most to correct these injustices to our residents. Frankly, to allow the special interests (insurance companies, hospitals, lawyers, etc.) to win over regarding insurance reform for their own financial benefits would only mean Michigan families

and the general public will again lose and continue to suffer every day.

As a nonprofit social enterprise serving the transportation needs of low-income families with dependable, reliable, once-donated vehicles, we are uniquely qualified to confirm the dire impacts the current Michigan no-fault insurance law has on our clients. Although our present law was apparently crafted in the 1970s to lower costs for Michigan motorists, this has never happened due to greed and other factors. Let’s not let history repeat itself this time.

Most believe the [sacred] $18-plus billion Michigan Catastrophic Claims Association fund should be more than adequate to meet the infrequent needs over other medical coverages limits.

Ladies and gentlemen, it’s time to stop the gamesmanship, the unfair rating practices, the price-gouging, etc., and provide real relief to your real constituents … the Michigan voters and their families.

Murray Davis Director, external affairs Vehicles for Change Detroit

Employers can pay livable wage and allow tips After reading Simone Barron’s article about the culture of tipping in the restaurant industry, I (a recent transfer to Detroit) had several issues with many of her statements regarding minimum wage in Seattle and Michigan.

The most glaring problem with this article is that it misleads the reader into thinking that the minimum wage for every employee in Seattle is $15 an

hour and that this wage increase has happened or will happen all at once.

If anyone takes the time to research the Seattle policy, they will find it is being phased in over time and the minimum wage varies depending on the size of the employer and whether they supply benefits.

Before I moved to Detroit, I was making $10.50 an hour, making $30100 a shift in tips and was provided

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8

Duo Security sets Michigan record UM tech transfer for VC funding round with $70 million office sets record

By Tyler Clifford

Funding rounds

By Tyler Clifford

Ann Arbor-based Duo Security Inc. has raised a venture capital funding round of $70 million, the largest round of venture capital funding in Michigan’s history.

Need It tops Ann Arto know bor-based Millen Duo Security do Therapeutics tops Millendo Inc.’s 2016 Series B Therapeutics for round of $62 milhighest funding lion, Michigan round in Michigan Venture Capital Association Asso Round was led ciate Director Emby Meritech ily Heintz said.

Capital Partners Duo’s Series D and Lead Edge investment round Capital Managewas led by Palo ment Alto, Calif.-based  Ann Arbor Meritech Capital cybersecurity Partners and New company has a York City-based post-money Lead Edge Capital valuation of $1.17 Management billion LLC, while picking up two new investors: Foster City, Calif.-based Geodesic Capital and Switzerland-based Index Ventures. Existing investors Menlo Park, Calif.-based Redpoint Ventures and Palo Alto, Calif.-based True Ventures also participated. Pleasanton, Calif.-based Workday Inc., a new strategic partner, also participated in the round.

Duo Security has raised a total of $119 million since it was founded in 2010 in the following rounds:

The University of Michigan’s faculty, researchers and startups reported a record 444 inventions this year.

Researchers topped last year’s 428 inventions to continue its streak of five straight years of more than 400 inventions, a UM news release said.

The UM Technology Transfer Office tallied 172 U.S. patents this year, up from 135 last year, and signed 173 licensing deals with companies looking to commercialize the research, the release said.

The office transfers inventions developed at the university to the private sector, according to its website.

This year’s licensing deals led to $14.6 million in revenues, with a dozen going to new startups, the release said.

Among the honorees at UM Tech Transfer’s 17th annual Celebrate Invention reception Wednesday were

tclifford@crain.com



$1 million in seed funding



$6 million Series A



$12 million Series B



$30 million Series C



$70 million in Series D

This brings Duo Security’s total funding to about $119 million, it said in a news release.

The cybersecurity company now has a post-money valuation of $1.17 billion, which bests Ann Arbor-based Esperion Therapeutics Inc.’s $1 billion for the highest venture-backed company in Michigan, Heintz said in an email.

University of Michigan alumni Dug Song and Jon Oberheide, a Troy native, launched Duo Security in 2010. Song, the CEO, said cybersecurity has become the biggest geopolitical nuisance with the threat of data breach to every industry.

“Duo pioneered cloud-delivered security by making user access easy, effective, and trustworthy,” he said in a statement. “With this investment, we will continue to innovate solutions to the world’s most fundamental security

tclifford@crain.com

Dug Song: Duo will continue to innovate.

Jon Oberheide: Helped launch Duo Security in 2010.

“Duo pioneered cloud-delivered security by making user access easy, effective, and trustworthy.”

Dug Song

Need to know

medical device supplier Brio De UM Tech vice LLC, artifiTransfer records cial intelligence 444 inventions software provider Neurable LLC  Research led to and research 172 new U.S. management patents software provider  More than 170 in Ripple Science licensing deals Corp. All three brought in $14.6 startups are million in revenue based in Ann Arthis year bor.

“The continuing success of our faculty and technology transfer reflects the relevance of our research to real-world applications that can benefit the public,” Vice President for Research S. Jack Hu said in a statement. “And the record number of invention disclosures shows increasing participation from faculty across campus.”

problems, expand our global reach, and accelerate our leadership position in the industry.”

With more than 500 employees Fiscal Periods: July 1 – June 30 across the globe, Duo Security now 8 C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 , serves more than 10,000 customers 2011 2012 2013 worldwide, the release said. The comSPECIAL Inventions 322 368 421 pany names Los Angeles-based ParaREPORT mount Pictures Corp., Menlo Park, CaPatents 87 101 128 lif.-based Facebook Inc. and Licensing Deals 101 123 108 Seattle-based Zillow Group Inc. among its clients.

Startups 11 11 9 Song is a member of the 2012 class Deputy Director, Education Program, of Crain’s 40 Under 40.

Source: University of Michigan

UM Tech Transfer Metrics

40 under 40 TOP 60 RISING LEADERS

2017

2014

2015

2016

2017

439

422

428

444

132

159

135

172

148 164 Caroline Altman Smith, 37 14 19

The Kresge Foundation “At the end of day, we’re trying to help more students graduate college.

Undergraduate college degrees is our north star.”

ARE YOU READY TO MEET THE

These 40 people have a few things in common: whether they work in business, public service or for a nonprofit, they’re making big decisions, We’re bridging the gap between two influential generations in bold the moves workforce for one and leading ourin region into the future. is a one their Twenties powerful evening. A celebration of Crain’s 40 under Forty and 20 Selected by our editorial stop destination to rub elbows with some of Michigan’s most promising young professionals. team from nominations to represent a diversity If you want to see the state’s next generation of leaders, this is a room you’ll want to be in. of businesses and backgrounds, they’ve all made a difference for Detroit.

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Altman Smith, Caroline 8 Bazzi, Mariam 19 Benson, Jocelyn 20 Bernalostos-Boy, Juliana 8 Bishop, Adam and Jacob 9 Cobbina, Awenate 26 Connors, Brian 17 Donnelly, Graig 15 IN THEIR UNDER Farmer, Nicole 20 ROOSTERTAIL, DETROIT Faust, Harmony 9 TWENTIES FORTY Gram, Neal 9 Harrison, Clarinda 10 Hoff, Kyle 16 TITLE SPONSOR TITLE SPONSOR Hoover, Spencer 10 Hoyle, Kimberly 12 Hussain, Syed 13 Kiriluk, Quinn 27 Lambert, Chris 28 Linn, Emily 29 hen DSM Engineering Plastics Lutz, Rachel 14 wanted to open an R&D center for its North American headquarters Malcoun, Joe 11 in Troy, it picked Juliana BernalosMamou, Ed 12 tos-Boy to lead the $2.4 million projMann, Sean 21 ect. She finished it ahead of schedule.

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Williams, Her connection to DSM, a multiRick and Yolanda 27 national company with revenue of Wilson, Deidra 11 nearly 8 billion euros, began with an

THURSDAY

NOV. 16 5:30 P.M. - 9 P.M.

A 173

s deputy director of the Kresge Foundation’s education pro173 gram, Caroline Altman Smith manages a portfolio of 65 grants repre12senting more 12 than $30 million in multi-year grants.

She was named to the position seven years after joining the Troybased foundation as a program officer in education and a promotion to senior program officer in 2010.

The grants fund efforts around the country aimed at helping more low-income and students of color get into college and successfully graduate. Locally, the grants support initiatives including building capacity of the Detroit College Access Network, launching Wayne State’s Undergraduate Student Success Initiative and an initiative connecting academic and career pathways at Macomb Community College.

“At the end of day, we’re trying to help more students graduate college.

Undergraduate college degrees is our north star,” Altman Smith said.

Altman Smith was also tapped in 2010 by the foundation’s president to lead a $1 million cross-departmental team focused on strengthening infrastructure for nonprofits, in addition to her regular responsibilities.

Initially, the program funded nonprofit capacity building and leadership development. Two years ago, the team narrowed its focus to nonprofit leadership as its budget doubled to $2 million.

After a year of surveying needs and researching capacity building service providers, the team, led by Altman Smith, re-launched the leadership development program. Currently, it has 130 grantees from around the country, including 19 Detroit-based nonprofits.

The corporate world has long understood how important it is to invest in its employees’ talent and leadership development, but the nonprofit world has lagged behind, because they put every spare dollar into mission and don’t prioritize professional development for their staff, Altman Smith said.

“We’re providing them money specifically to invest in their staff.”

— Sherri Welch

Juliana Bernalostos-Boy, 32

R&T Manager, Americas, DSM Engineering Plastics Inc.

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10

Some on Medicaid must adopt a ‘healthy behavior’ or lose coverage

By Jay Greene

Need to know

jgreene@crain.com

An estimated 20,000 people enrolled in Healthy Michigan, the state’s Medicaid expansion program, could lose public coverage next April because they have not participated in at least one healthy behavior such as smoking cessation since signing up for the program.

Under a federal waiver approved in late 2015 for Healthy Michigan — a Medicaid program in Michigan allowed by Obamacare — about 3 percent of the 650,000 people enrolled with incomes 100 percent to 138 percent of the federal poverty level and not medically frail could be forced off the program.

The Michigan Department of Health and Human Services, which is partnering with five managed-care organizations to cover all 83 of the state’s counties, is working on a plan to encourage those disenfranchised Medicaid members to sign up for private health coverage on the insurance exchange. The members will be eligible for federally subsidized premiums for the plans.

The five participating commercial insurers offering individual health benefit products on the exchange are Meridian Health Plan of Michigan, Priority Health, McLaren Health Plan, Total Health and Blue Cross Blue Shield of Michigan.

But the newly enrolled former Healthy Michigan Medicaid members will face higher costs and they will not have enhanced dental coverage as they had on Medicaid, making it uncertain how many will opt for coverage at all after they are terminated from Medicaid.

Healthy Michigan federal waiver will require an estimated 20,000 members to purchase private health insurance plan in April 2018 J

J Those Medicaid members still have time to adopt a “healthy behavior” before they lose coverage J Five managed care organizations are offering health benefit plans to replace public coverage in all 83 state counties

Chris Priest, director of Medicaid with the MDHHS, said the state will begin outreach efforts with the participating HMOs to encourage those 20,000 Healthy Michigan members to see their primary care doctors and engage in a healthy behavior before the April deadline. He said he hopes those numbers will decline by February when the state will update its numbers.

“These are individuals (who) because they are not medically frail, they don’t have the conditions that would be really costly. We want those folks to be engaged in their health for preventive care,” said Priest, who did not have an estimate on the percentage of Healthy Michigan members who will purchase an individual plan.

Healthy behaviors include certification by a primary care physician that the Medicaid member received a health risk assessment and acted on medical conditions, including participating in smoking cessation or obesity reduction programs.

Healthy Michigan began in April 2014 and signed up more than 150,000

beyond its projected first two years’ enrollment of 450,000. As of Oct. 9, Healthy Michigan has 652,697 enrollees.

Michigan received two waivers from the federal government to enable Healthy Michigan. The first waiver, which went into effect immediately, required enrollees with incomes between 100 percent and 138 percent of the poverty level — families of four with household incomes from $24,000 to $34,000 — to contribute 2 percent of their income to health savings accounts. The program also allows participants to lower their cost-sharing based on participation in healthy behavior programs.

The second federal waiver, approved in December 2015, required participating adults to engage in at least one “healthy behavior” during their Medicaid coverage or be dropped from the program after April 2018. Some 85 percent of Healthy Michigan members have engaged in primary or preventive care and qualified to stay on the Medicaid program, Priest said.

Plans for each county Marti Lolli, Priority Health’s senior vice president of commercial markets, said managed care organizations initially declined a state invitation earlier this summer to participate in the private health insurance option because of uncertainty over the Medicaid waiver program.

But after several months of discussions with the state and some tweaking of the program, Priority, Meridian, Total and McLaren agreed to offer two

Chris Priest: State will begin outreach efforts.

Sean Kendall: Trying to contact members.

benefit plans each in the Lower Peninsula’s 68 counties where they are licensed to operate. However, the state still needed coverage in the 15 counties of the Upper Peninsula. Blue Cross agreed to participate, giving the state coverage of all 83 counties.

Lolli said MDHHS eased some administrative rules and allowed greater price flexibility to encourage plans to participate to cover the small former Medicaid population.

Priest said health plans had some reservations early in planning, but changes in the program structure led to all five health plans participating.

“There are a lot of challenges in the individual market and moving more business there,” Lolli said. “It is very concerning to not know how many people, what their health conditions are and whether they would engage with a health plan.”

Lolli said Priority and the other health plans became comfortable with the state’s plans and signed on. She said, however, the population of Healthy Michigan members the state is targeting have been historically one of

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the most difficult of all because while they signed up for coverage they have not engaged in a healthy behavior.

“We have done a lot of enrollment education and contacting primary care doctors to get members into their offices,” Lolli said.

Priority Health covers about 120,000 Medicaid members and expects 2,000 to 3,000 of those will end up moving to the individual market.

Kathy Kendall, president of McLaren Health Plan, said McLaren agreed to participate to help the state meet the waiver requirements, protect the Healthy Michigan program and ensure the health care delivery system is stable.

“At risk was the Healthy Michigan plan ending and 600,000 return to uninsured” with emergency departments clogged up, Kendall said.

McLaren, which has 60,000 members in Healthy Michigan, was approved by the state for 45 of the 68 counties in lower Michigan, but with the help of new health system partners, Kendall said McLaren now has Medicaid benefit plans in 64 of 68 lower Michigan counties.

Helen Stojic, spokesman for Blue Cross, said Blue Cross agreed to cover individuals in 15 UP counties who will transition from Healthy Michigan to PPO marketplace coverage. Blue Cross has about 83,000 Medicaid members covered through its subsidiary, Blue Cross Complete.

“We’re pleased that several health plans in addition to Blue Cross have stepped in to help these individuals with coverage,” Stojic said.

Stojic said Blue Cross plans to offer Medicaid members a variety of ways to complete a healthy behavior, including offering free preventive services, annual check-up, online office physical and behavioral health visits and a variety of other online tools to receive information on wellness care and managing chronic conditions.

Sean Kendall, president and COO of Meridian Health Plan of Michigan, said the state’s largest Medicaid HMO with more than 560,000 members has been trying to contact members who have still not complied with the healthy behavior requirement. Meridian has about 8,500 covered in a private insurance product on the exchange.

“My goal is to take as many Healthy Michigan members as possible,” Sean Kendall said. “If they need to transition over, we want to have a plan for them.

People come in and out of Medicaid and they transition out depending on their employment status.”

Sean Kendall said those former Healthy Michigan members purchasing a private plan will have challenges because they will need to pay additional costs to be covered. Costs include premium sharing and some out-ofpocket costs. “The state has agreed to pay us and do the collecting from the members,” he said.

Priest said collecting premiums from the newly enrolled commercial members won’t be a problem for the state.

“We do it today with Healthy Michigan” to collect 2 percent premiums and contributions to health savings accounts, he said. “We have operations and mechanisms in place to collect it. ... It is not a large cost, and not a big fiscal impact now.”

Priest said those who do not pay will have their tax refunds garnished, but they will not be locked out of the program for nonpayment.

Jay Greene: (313) 446-0325 Twitter: @jaybgreene

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11

Former Garden Fresh site turns to production for other food firms

By Sherri Welch swelch@crain.com

An Inkster building that previously housed production for Garden Fresh products is finding new life as a food processing and packaging site that’s helping other local food companies grow.

Garden Fresh Founder Jack Aronson sold the building for $1 to Eastern Market Corp. in Detroit to provide another link in the local food processing chain.

Eastern Market is leasing the 14,500-squarefoot site on Michigan Avenue near John Daly Street to Feast LLC, a processing and co-packing company formed by three local food Jack Aronson: companies that Sold Inkster have launched building for $1. production of their products there.

The food makers behind Feast are: Amit Makhecha and his M&R Ventures, a maker of chutneys and other products; Marcia Nodel and her daughter-in-law Michal Nodel of Marcia’s Munchies pickles; and Scott and Suzi Owens of Scotty O’Hotty hot sauce, salsa and pickles.

Beyond production for the three stakeholder companies, Feast is offering the same services to other small and medium-sized companies producing acidified products such as salad dressings and mustards and other shelf-stable products such as jams and jellies.

Those local food companies can contract services from Feast for products from start to finish, from recipe development and processing to bottling/packaging or co-packing and private labeling production and labeling.

Feast secured a $180,000 loan to purchase equipment for the new center from the Michigan Good Food Fund, made through lender Northern Initiatives.

The new operation, which is licensed under the Michigan Department of Agriculture and Rural Development and registered under the Food and Drug Administration, is expected to create six full-time jobs to handle contracted food production and co-packing for client food companies.

Feast has already assumed production of Mucky Duck mustards for the brand’s founder, Dave Zilko, former vice chairman of Garden Fresh before its sale to Campbell Soup Co.’s Fresh division in 2015.

Previously, Zilko, who served on the board of Oak Park-based Forgotten Harvest, had contracted with Forgotten Harvest’s Hopeful Harvest Foods Inc. subsidiary for production of the mustard.

Forgotten Harvest exited the for-profit food processing business last year to focus more intently on its food rescue mission.

“Feast is a first step in Eastern Market Corp.’s program to accelerate food business in Michigan and will fill the current void that exists for food entrepreneurs looking to ramp up production and move their business to the next stage,” Mike DiBernardo, director of food innovation programs for Eastern Market Corp., said in a release.

DiBernardo served on Feast’s

Need to know

JJFormer Garden Fresh site now providing

space for other local food companies

JJThree local food makers have launched the new venture JJSite offers contracted food production services from start to finish

board of directors and served as a consultant in developing the new site, along with the Michigan State University Product Center.

Each of the co-owners in the new venture have met challenges in their quest to grow and expand, Scotty O’Hotty’s Scott Owens said in the release.

“We’re beyond thrilled to be using even more local resources and expanding our state-of-the-art manufacturing process to feed and employ more people.”

The new processing site is only five miles from the Taylor building where Aronson is installing a new high-pressure processing line to offer local food processors the same preservative-free, fresh food preservation technology that enabled him to take Garden Fresh Salsa global.

While glass bottles cannot be put through the HPP process, which subjects foods to very high pressure, plastic bottles can, Aronson said.

Marcia’s Munchies Cherry Pops pickled cherry tomatoes are processed at a Feast LLC plant in Inkster.

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Detroit continues to justify its moniker as a Comeback City with new restaurants, brandname retail, residential development and a new hockey arena.

Much of the initial revitalization has been concentrated in the urban core of Midtown and downtown, where there’s a growing concentration of businesses and residents.

While JPMorgan Chase & Co. is investing significantly in those areas — along with investments in TechTown and in Eastern Market — the company also is investing in struggling neighborhoods. Chase invested more than $100 million in Detroit between 2014 and 2017 and now expects to reach $150 million by 2019.

“We’re very focused on developing a robust, small business community, like what’s developing here in the Live6 area,” said John Carter, Michigan Market leader at JPMorgan Chase, which has been doing business in Detroit for more than 80 years.

Live6, the Livernois–McNichols (Six Mile) corridor in Northwest Detroit, once had thriving residential neighborhoods and shopping districts. But as the economy waned and population loss soared, stores shuttered and jobs disappeared.

Tosha Tabron, vice president for Global Philanthropy with the firm, said JPMorgan Chase made investments based on conversations that occurred over long periods of time with multiple partners and stakeholders. Now, area businesses are opening and thriving, jobs are being created and homes rehabbed and developed.

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Beyond the gate

Chase Cantrell: Wants Detroiters to feel invested in the redevelopment of their neighborhoods.

John Carter: Chase is focused on developing robust small business environment in neighborhoods.

Chase10.23.indd All Pages

“Part of creating a great community is having amenities — bars, restaurants, coffee shops — as well as everyday business services like dry cleaners, banks and pharmacies. But the commercial corridor is just one part of the strategy,” said Michael Forsyth, co-director of Live6 Alliance, a nonprofit working to activate vacant spaces and enhance public safety. “It really starts with the people and anything we can do to provide economic opportunities.”

It starts with dreamers like Jevona Watson.

By day, Watson works as an attorney. In whatever downtime she has, and with funding from Motor City Match, the northwest Detroit native is working to open Detroit Sip, a coffee shop on McNichols Road just west of Livernois.

Watson envisions Detroit Sip as a place where students at nearby colleges can study or hang out.

“University of Detroit Mercy and Marygrove College students could live here for four years and never really venture outside of the gate,” she said.

The gate around Detroit Mercy has been a source of contention for area residents since it was built in the early 1980s. For some, it implied the university was closing itself off from the sur-

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Measuring impact Since 2014, JPMorgan Chase has: ■ Infused $50 million in community development funds through Invest Detroit and Capital Impact Partners to create or preserve 800 units of housing, 800 jobs and more than 175,000 square feet of commercial space; ■ Invested $5 million in a new Strategic Neighborhoods Fund, a partnership between Invest Detroit, Detroit Development Fund, and the Opportunity Resource Fund to build housing and add services in the Livernois-McNichols, West Village and Southwest Detroit neighborhoods; and ■ Provided $3.3 million in capital for Detroit Development Fund to make loans to 40 minority-owned small businesses.

rounding community. Will Wittig, dean of the School of Architecture at Detroit Mercy, acknowledged the community and “many” on campus hate the fence, though some parents view it as necessary.

Nevertheless, Wittig said, the university wants its students to be active in the neighborhood.

“We want, eventually, that there is no boundary, there is no edge between the university as an island and the neighborhood as its surrounding context,” he added. “Our dream is to be a true urban university — to be integrated into a thriving neighborhood.”

In 1994, Detroit Mercy founded the Detroit Collaborative Design Center to “create sustainable spaces and communities.” Its neighborhood revitalization strategies beautify vacant spaces, turn auto-centric streets into walkable spaces with bike lanes, and create common areas such as Lollo Park on Puritan Avenue in the Live6 corridor and The Alley Project on Detroit’s Southwest side.

Although Marygrove College recently announced plans to discontinue its undergraduate program, it will continue its graduate teaching program and, administrators hope, also boost interaction with the community.

“It is my dream… to have the vibrant population of people on campus that were there when I was a student at Marygrove (in the 1970s),” said Marygrove President Beth Burns. She pointed to the Charles McGee sculpture gifted last year to the Community Commons, a placemaking space created to unite the community.

Public-private cooperation Leveraging partnerships is essential, said Michael Smith.

The director of strategic neighborhoods for Invest Detroit said his organization partners with stakeholders involved with community leaders who can guide them to the opportunities and around inevitable obstacles. Invest Detroit is working with JPMorgan Chase and Detroit-based commercial real estate developer The Platform on commercial and residential investment.

The hope is that success in these neighbor-

A fence lines Livernois Avenue outside University of Detroit Mercy. “We want, eventually, that there is no boundary, there is no edge between the university as an island and the neighborhood,” said Will Wittig, Dean of University of Detroit Mercy School of Architecture.

ABOUT THIS REPORT: JPMorgan Chase & Co. and Crain Content Studio, the custom publishing division of Crain’s Detroit Business, recently brought together leaders in business, education, community activism and philanthropy to talk about the unique opportunities — and challenges — of investing in Detroit neighborhoods. The conversation, moderated by Crain’s Editor and Publisher Ron Fournier, took place at the Live6 Alliance headquarters in Northwest Detroit.

hoods leads to them being models for future neighborhood development and encourages future investment.

“Unless this work produces results that are sustainable, it won’t be replicable,” said The Platform founder Peter Cummings, known for his development of Orchestra Place in Midtown and for his recent purchase of the Fisher Building in New Center.

Cummings said he sees Detroit as “the great urban lab of America.” One test is in redeveloping the large Fitzgerald neighborhood — bounded by Livernois Avenue and Wyoming Street and Fenkell Avenue and West McNichols Road — which requires rehabbing more than 100 homes and 230 vacant lots in the 10 blocks between Detroit Mercy and Marygrove.

He said once residents see money being successfully invested in their neighborhoods, they’re going to want to invest in their own homes.

“We need to work with people like Tosha and John (at JPMorgan Chase) to figure out how we

can come up with an affordable, sort of small loan program to help those people, who I think are the real heroes in the city of Detroit. Those people who have hung on and who’ve made their payments and who’ve kept the fabric of community alive.”

Neighborhood needs Many residents in the Live6 corridor cannot afford to attend Marygrove or Detroit Mercy, both private schools, said resident Raymond Ware.

Ware, who turned his barbershop into Metro Detroit Barber College in 2009, said the area needs more trade and vocational schools to give residents education options.

Detroiters also could use education on how to assess, invest in and develop their own neighborhoods, said Chase Cantrell, founder of Building Community Value, which works with community leaders, entrepreneurs and investors to re-imagine and rehabilitate communities.

“We use the term placemaking, … being able to give people the vision and the understanding that they have power to actually determine their own futures, determine how their communities can look,” Cantrell said.

He said community educators would be able to direct people to the resources they need to get through the process.

Cantrell and Smith also agreed it’s important that developers and investors ask residents what they actually want and what role they want to play in the redevelopment of their neighborhoods.

“It starts with listening.

“When you ask any member of the community — it doesn’t matter if they’re 3 years old or 98 — ‘What’s your dream for the community?’ people have an answer,” Smith said.

“It could be education. It could be opening a small business.

“So the goal is to ask and then the goal is to plug them in and connect them to the resources.

Build that bridge.”

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CALENDAR WEDNESDAY, OCT. 25 Launching a Local Sports Organization to Drive Economic Impact.

11:30 a.m.-1:30 p.m. Detroit Economic Club. Leadership from Detroit’s sports teams, the Detroit Sports Commission, Detroit Metro Convention & Visitors Bureau, media and the business community have joined forces to form the Detroit Sports Organizing Corp. with a mission to win large Super Bowl-sized sporting events for Detroit. Panel includes: Arn Tellem, vice chairman, Palace Sports & Entertainment; Tom Wilson, president and CEO, Olympia Entertainment; Rod Wood, team president, Detroit Lions. Ford Field. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

FRIDAY, OCT. 27 Things That Go Bump in the Workplace — A Survivor’s Guide to Employment Nightmares. 8:00 a.m.noon Plunkett Cooney. Topics to include: compliance with civil rights law, recent case law developments, investigation strategies and practical recommendations for managing employment risk. Detroit Athletic Club.

Free. Contact: Stephanie Pegg, phone: (248) 901-4028; email: spegg@plunkettcooney.com; website: plunkettcooney.com The Talent Journey Conference.

8 a.m.-2 p.m. Auburn Hills Chamber of Commerce. Conference tackles attraction and retention issues and brings together executives, higher education and resources for different industry sectors including: advanced manufacturing and skilled trade, technology, healthcare, automotive and engineering and professional services. Marriott Auburn Hills Pontiac. $99 members; $149 nonmembers. Contact: Courtney Woods, phone: (248) 853-7862; email: cwoods@auburnhillschamber.com; website: business.auburnhillschamber.com/events Transforming Healthcare. 11:30 a.m.-1:30 p.m. Detroit Economic Club. Toby Cosgrove, president and CEO of Cleveland Clinic, will explore national healthcare trends and industry disruptors. MotorCity Casino Hotel. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org

UPCOMING EVENTS

Bill Ford

Disrupting The Future: A Conversation With Bill Ford. 11:30 a.m.-1:30 p.m.

Oct. 31. Detroit Economic Club.

Ford, executive chairman of Ford Motor Company, talks about what

it will take to embrace technology trends, the reality of smart mobility and the expected impact on the auto industry, Detroit and society at large.

Ford Field. $45 members, $55 guest of members, $75 nonmembers. Website: econclub.org State of the Region. 11 a.m.-1:15 p.m. Nov. 1. Detroit Regional Chamber. The Detroit Regional Chamber’s fourth annual release of the State of the Region report, providing an economic overview of the 11-county region. Cobo Center. $50 members; $100 nonmembers. Contact: Jordan Yagiela, phone: (313) 596-0384; email: jyagiela@detroitchamber. com; website: detroitchamber.com Women of Influence Lecture Series.

6:30-8 p.m. Nov. 1. The Community House. Barbara McQuade, professor of law, University of Michigan Law School; former Barbara U.S. Attorney, McQuade Eastern District of Michigan. $15. The Community House, Birmingham. Contact: Program department, phone: (248) 6445832; email: program@communityhouse.com.

Elf on the Shelf: Chanda Bell. 8-10

a.m. Nov. 2. Adcraft Detroit. Chanda Bell wrote and researched how to self-publish her family’s publishing company’s flagship title, The Elf on the Shelf®: A Christmas Tradition. Bell serves as co-CEO overseeing marketing, product development, design and digital departments at the company. The Community House, Birmingham. $40 members; $65 nonmembers. Website: adcraftdetroit. com Ninja Innovation. 6-10 p.m. Nov. 2.

British American Business Council of Michigan. Gary Shapiro, president and CEO of Consumer Technology Association, will share the strategies that make businesses and regions successful, providing a framework for both understanding and action.

Birmingham Country Club. $150 members; $175 nonmembers; $125 young leaders. Contact: Helen French, email: babc.michigan@ gmail.com Strengthening Urban Communities by Creating Opportunities for Minorities in Business. 11:30 a.m.-1:30 p.m.

Nov. 6. Detroit Economic Club.

John Rogers Jr., John Rogers chairman, CEO and chief investment officer, Ariel In-

vestments, will discuss how to create economic opportunity for people of color in businesses despite the barriers those communities face. Westin Book Cadillac. $45 members, $55 guest of members, $75 nonmembers.

Website: econclub.org Emerging Intellectual Property Legal Trends for 2017 and Beyond.

7:30-11 a.m. Nov. 7. Original Equipment Suppliers Association. Warner Norcross & Judd attorneys Janet Ramsey, Gregory DeGrazia, Michael Azzi, Vito Ciarvino and Deloitte consultant Christopher Ongena will discuss IP legal and strategic decisions as well as challenges that may impact business. Detroit Marriott, Troy. $125 members before Oct. 24; $175 nonmembers before Oct. 24; $175 members after Oct. 24; $225 nonmembers after Oct. 24. Contact: phone: (248) 952-6401; email: info@oesa.org.

Crain’s Health Care Heroes. 8-10:30 a.m. Nov. 7. Crain’s Detroit Business.

Crain’s Health Care Heroes represent consummate professionals working within the health field. These heroes are innovators who are dedicated to helping save lives and improving access to care. Gem Theatre, Detroit. $85; $60 young professional ages 2135. Contact: Kacey Anderson, phone: (313) 446-0300; email: cdbevents@ crain.com, website: crainsdetroit. com November Economic Development Forum. 8-9:30 a.m. Nov. 8.

Troy Chamber of Commerce. A year in review and outlook for 2018 by local industry experts. Rehmann, Troy.

Free members; $10 nonmembers.

Contact: Jessica Hruska, phone: (248) 641-1606; email: jessica@troychamber.com; website: troychamber. com 2017 Michigan CEO Summit. 8 a.m.-2 p.m. Nov. 9. Business Leaders for Michigan.

Keynote speaker is Andrew Liveris, executive chairman, DowDuPont. Other speakers include: Andrew Liveris Brian Walker, president and CEO, Herman Miller Inc.; Jim Hackett, president and CEO, Ford Motor Company; Mike Miller, director, Google Technical Services; Phil Hagerman, chairman and CEO, Diplomat Pharmacy. Panel includes: Linda Blair Apsey, president and CEO, ITC Holdings Corp.; Florine Mark, president and CEO, The Weight Watchers Group Inc.; Sandy Pierce, chairman, Huntington Bank; Lou Anna Simon, president, Michigan State University. Westin Book Cadillac. $150. Contact: Jennifer Hayes, phone: (313) 259-5400; email: jenniferh@businessleadersformichigan. com; website: businessleadersformichigan.com.

Leaders in Complex Business Lawsuits and Class Action Litigation www.millerlawpc.com (248) 841-2200/ www.millerlawpc.com 950 West University Drive / Suite 300 / Rochester / Michigan / 48307 / (248) 841-2200

To submit calendar items visit crainsdetroit.com and click “Events” near the top of the home page. Then, click “Submit Your Events” from the drop-down menu that will appear.

Fill out the submission form, then click “Submit event” at the bottom of the page. More Calendar items can be found at crainsdetroit.com/events.

Crain’s Health Care Heroes are innovators that are dedicated to saving lives and improving access to care.

NOVEMBER 7 8 – 10:30 AM GEM THEATRE, DETROIT Register at crainsdetroit.com/events

$85 INDIVIDUAL TICKETS $80 TICKETS FOR GROUPS OF 10+ $60 YOUNG PROFESSIONAL TICKETS

F e at u r i n g

A CONVERSATION WITH DAN AND NICK GILBERT Dan Gilbert will sit down with his son Nick, who has a rare nerve disorder, to have an intimate discussion about the caregiver support that has helped him over the years.

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Community focused.

Detroit-based.

Giving back to the city and community we are proud to call home.

PEOPLE ENERGY/UTILITIES Randal M. Brown to general counsel, Great Lakes Water Authority, Detroit, from deputy corporation counsel, Wayne County, Detroit.

J

REAL ESTATE J Larry Kelly to senior vice president — industrial division, Lee & Associates of Michigan, Southfield, from sales associate, Signature Associates, Southfield.

Wes Robertson to director of operations, Pioneer Homes, Detroit, from practice manager, J. Alan Robertson, MD PC, Eastpointe.

J

To submit news of your new hires or promotions to People, go to crainsdetroit.com/peoplesubmit and fill out the online form. Please limit submissions to management- or partner-level positions.

DEALS & DETAILS cbisecure.com

| 800.747.8585 | help@cbisecure.com 1260 Library Street | Detroit, MI

ACQUISITIONS & MERGERS J Bar’s Products Inc., Holly, a manufacturer of automotive repair and performance chemicals, has acquired Hy-Per Lube Corp., Seattle, Wash., a manufacturer of additives.

Websites: barsproducts.com, hyperlube.com.

CONGRATULATIONS TO THE 2017 DETROIT WOMAN OF THE YEAR

J NSF International Inc., Ann Arbor, a public health and safety organization, has acquired Prosystem AG, Hamburg, Germany, a medical device consulting firm specializing in regulatory affairs and clinical evaluation. The company will be known as Prosystem. Websites: nsf.org, prosystem-ag.com.

J Spalding DeDecker, Rochester Hills, a national civil engineering and surveying firm, has acquired Raymond J. Donnelly & Associates Inc., Troy, a Metro Detroit survey firm.

Websites: sda-eng.com, rjdsurveyors.com.

EXPANSIONS

Andrea Roisman Stephen’s Soldiers

The Leukemia & Lymphoma Society congratulates all the Man & Woman of the Year participants. Their efforts and commitment have made an impact in the search for cures and effective blood cancer therapies.

For more information visit www.mwoy.org/mi or call 248-581-3900.

J AirTime Trampoline & Game Park, Troy, will be opening its sixth location in Ann Arbor in November. The 24,000-square-foot facility will be located in the Cranbrook Village Shopping Center at 800 W. Eisenhower Parkway. Website: airtimetrampoline.com.

NEW PRODUCTS J BorgWarner Inc., Auburn Hills, is supplying its all-wheel-drive transfer case for Jaguar Land Rover’s Range Rover Velar SUV. BorgWarner is also supplying its regulated two-stage turbocharger for Daimler’s latest 2.9-liter six-cylinder inline diesel engine OM 656, which is initially featured in the Mercedes-Benz S-Class launched in 2017. Website: borgwarner.com.

Submit Deals & Details items to cdbdepartments.com.

SPOTLIGHT McLaren Oakland hospital names CEO

Margaret Dimond has been named CEO of 338-bed McLaren Oakland hospital in Pontiac. Her first day is Nov. 20.

Dimond succeeds Barton Buxton, who had been CEO of McLaren Oakland since February. He replaced Chad who Margaret Dimond Grant, went to McLaren Flint Hospital in December.

Buxton left McLaren Oakland in July to focus his efforts in growing the McLaren Homecare Group, where he is CEO. Dimond, who previously was CEO of Karmanos Cancer Hospital, returns to McLaren Healthcare Corp. after an 18-month stint as CEO of Ascension Health’s Crittenton Hospital Medical Center in Rochester.

She earned her bachelor’s and master’s degrees in social work, has a master’s degree in public administration from University of Michigan and a philosophy doctorate from Michigan State University.

Dresner Foundation appoints new executive director

The Dresner Foundation has appointed Virginia Romano as its new executive director.

Romano was promoted from managing director of programs to the new leadership position, she said.

R o m a n o’s new role replaces the poVirginia Romano sition of CEO, which was held

by Kevin Furlong. Furlong has transitioned to chair of the West Bloomfield-based foundation’s board of directors. He will also continue in his role as CFO. “As I concentrate on the financial part of the organization, Virginia will bring tremendous experience and leadership to lead the foundation going forward,” Furlong said in an emailed statement.

Beaumont chooses Dearborn hospital president

David Claeys has been named president of 632-bed Beaumont Hospital, Dearborn.

Claeys, 48, has served as interim president of Beaumont’s Dearborn hospital since April, when Kelly Smith left the post for another position, Beaumont David Claeys Health said. He previously was in a variety of administrative and clinical jobs for 12 years at 520-bed Beaumont Hospital, Troy.

SD C R A I N ’ S D E T R O I TCRAIN B U’S I ETROIT NESB SUSINESS // O C T O B E R 2 3 , 2 0 1 7

October 23, 2017

Page1717

Terrible Tigers still among the tops in TV ratings

By Bill Shea

Tigers on TV

The Detroit Tigers, despite winding up with the worst record in baseball, were still an elite team this year when it came to TV ratings.

Though viewership fell, and got worse over the course of the season as the team shed players and hope, ratings that are still among the top 10 in baseball will mean a lot when the Tigers and Fox Sports Detroit are expected to work Need out a new broadto know cast rights deal J Tigers’ 4.48 that could top $1 household rating billion-plus over ranks 6th in MLB a decade or more.

After a decade J Ratings are of contending, down 53% since this year’s woeful 2013 on-field perforJ Nearly 1M fans mance isn’t exstreamed Tigers pected to affect games online in how much the 2017 network pays the team under the next TV deal because both sides will take the long view, industry insiders say.

It behooves both sides to lock in terms that shield them from immediate audience fallout from what happens on the field.

For at least the short term, data shows that the two primary audience metrics for Tigers baseball — game attendance at Comerica Park and ratings on local TV — are declining. Offsetting some of that TV decline is digital audience growth for Tigers games on computers and mobile devices, and the fact that the Tigers still dominate local TV viewing when they’re on.

For example, FSD’s 81 Tigers games during prime time this season averaged a 4.64 household rating, which was the top programming across the Detroit market — something advertisers covet.

So even while rebuilding, the Tigers have negotiating leverage for their next local TV deal, which will provide a significant portion of the team’s annual revenue.

Their current broadcast rights deal with Southfield-based Fox Sports Detroit, owned by Fox Broadcasting Co. in Los Angeles, is for 10 years and pays the Tigers $500 million. The contract was announced in 2008 and is believed to run from 2011-21 — no one involved has publicly disclosed the terms.

A replacement deal or extension could be announced any time before then, but neither the network or team has been willing to comment on the topic.

These are the average household TV ratings for Detroit Tigers games aired on Fox Sports Detroit for the past six seasons. The ratings’ rank across Major League Baseball is in parenthesis:

bshea@crain.com

The numbers Fox Sports Detroit’s 151 Tigers broadcasts averaged an overall 4.48 household rating this season, sixth among MLB’s 29 U.S. teams (which combined to average a 2.91 rating this season, according to data from SportsBusiness Journal). “At a time when the Tigers are just plain bad, the fan base is just so passionate. They care so much,� said Greg Hammaren, FSD’s senior vice president and general manager.

Still, as the Tigers’ fortunes slid, so did their ratings.

FSD’s Tigers game averaged a 6.25 rating when the season began in April, and tapered off to a 1.06 by October — a trend that reflects the team fading in the standings and trading away star players.

J

2017: 4.48 (6th)

J

2016: 7.01 (3rd)

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2015: 6.21 (4th)

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2014: 7.72 (2nd)

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2013: 9.59 (1st)

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2012: 9.21 (1st)

Forbes estimated the Tigers had $275 million in total revenue during the 2016 season, and had negative $36.4 million in operating income.

The long view

Source: Nielsen via SportsBusiness Daily

Cleveland led all of baseball in local ratings with a 8.33 average on Foxowned SportsTime Ohio, and Oakland was at the bottom with a 0.56 rating on NBC Sports California.

Tigers telecasts in 2017 were down 36 percent from last season’s 7.01 household rating for the network’s slate of Tigers games, according to Nielsen Co. viewership data for the Detroit market. Ratings for FSD’s Tigers broadcasts dropped an MLB-worst 36 percent from 2016, and they’re down 53 percent since peaking with an MLBbest 9.59 average rating in 2013.

One rating point equals 1 percent of the total TV households in a market, and Detroit has 1.85 million TV-watching households.

Eighteen of MLB’s 30 teams saw ratings declines this year, SportsBusiness Journal reported. Television watching in general is declining as people “cord cut� and shift to consuming entertainment, news, sports and other information on a proliferation of devices.

That’s why TV ratings don’t tell the full audience story, Hammaren said.

The ratings don’t account for games watched online and via mobile devices, or at bars and restaurants. And that growth is important data to put Tigers audience measurement into proper context, Hammaren said.

Tigers games had nearly 1 million game streams this season on the Fox Sports Go app, Hammaren said, and social media content on major platforms such as Facebook, Twitter, and Instagram is growing in terms of audience consumption. It’s unclear how that compares to other teams because such data isn’t being disclosed and remains relatively new.

Digital users spent an average of one hour per game watching it streamed online this season, up from 48 minutes a game last season, Hammaren said.

Aside from local cable and satellite providers, FSD’s Tigers games are available on an expanding number of platforms such as Hulu, Sling TV and Sony VUE.

Ad effects Marcia Holland Turner, the network’s vice president and general sales manager, and Hammaren acknowledged that digital revenue and eyeballs don’t completely offset declines from broadcast TV, but they both said the gap continues to narrow in terms of the value of digital versus broadcast ad dollars and viewership. “It doesn’t fully mitigate the loss of linear viewers, it does mitigate it substantially,� Hammaren said. The industry is still working on a standard methodology of recording and reporting digital and social media consumption data akin to the traditional Niel-

For at least the short term, data shows that the two primary audience metrics for Tigers baseball — game attendance at Comerica Park and ratings on local TV — are declining.

sen numbers, he added.

Fox Sports Detroit specifically sells ads separately for social media and for streaming, and there are about 150 advertisers for the TV broadcasts.

Ten percent of advertisers use all three channels. “From a business standpoint, the Tigers are healthy. From a consumption standpoint, the Tigers are healthy,� Hammaren said. “It’s just changing on how people are consuming Tigers baseball. Some are consuming it in larger real-time chunks, others are consuming it in smaller chunks.�

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Hammaren said that advertisers may seek discounts because of the declining ratings, but gains in digital offset some of that. He predicted the network’s revenue next year will remain “neutral� versus 2017, but declined to discuss specific financial data.

Media industry analysts S&P Global Market Intelligence, based in New York City, predicted before the season that FSD would generate $189 million in overall revenue against $147 million in operating expenses, with the majority from Tigers games.

The network also broadcasts Detroit Red Wings and Pistons games.

The solid ratings, even while the team struggles, mean the short-term win-loss record doesn’t matter for long-term business purposes, said Lee Berke, president and CEO of Scarsdale, N.Y.-based sports media consulting firm LHB Sports, Entertainment & Media Inc. He’s a consultant for teams negotiating broadcast rights deals. “Bottom line, the Tigers will still dominate summer programing.

Weeknights and weekends, (they) will be most watched on that day,� Burke said. “There are very few properties, sports or entertainment, that can provide that level of consistency for years and decades. That’s the strength of baseball, six months-plus of solid entertainment and a loyal fanbase.�

He predicted that the $50 million the Tigers get now annually from FSD could double to $100 million or more annually under a new deal. “Given the permanent success of Tigers baseball on Detroit television, it’s a valuable, valuable property,�

Burke said.

Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19

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Oakland County launches entrepreneur boot camp

By Tyler Clifford tclifford@crain.com

Oakland County is piloting an entrepreneur boot camp to help residents tap into $5 million in microloans from Huntington Bank.

The Financial Literacy Bootcamp for Entrepreneurs, made possible by a $50,000 grant from Huntington, offers free counseling services on business acumen and the microloan application process to residents for one year. The one-time grant allowed JVS Detroit to develop the boot camp curriculum and train its two counselors who staff the empowerment center.

“Sometimes the paperwork can be difficult and confusing,” said Oakland County Treasurer Andy Meisner, whose office’s Financial Emp ow e r m e nt Center, a joint program with JVS Detroit, launched the program WednesAndy Meisner: day. “Sometimes Goal to engage just getting basic entrepreneurs. information about finances and a business plan helps, so that they can start their business career with strong financial fundamentals.”

The goal is to engage more than 20 entrepreneurs in the county by tailoring services to their specific needs, Meisner said. Residents can receive help to make a business plan, direction to alleviate barriers to funding such as credit problems and consultation on the paper process to access up to $250,000 in microloans, the news release said. The microloans come with interest rates between 6.5 percent and 8 percent.

Meisner said he is particularly interested in boosting the number of businesses in Pontiac, the county seat that has not seen as much resurgence as other cities in the area. He wants to tap into talent and would-be entrepreneurs who have great ideas but need

knagl@crain.com

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For more information visit www.mwoy.org/mi or call 248-581-3900.

JJOakland County launches entrepreneur boot camp with $50,000 Huntington Bank grant JJCounty will target entrepreneurs in Pontiac JJJVS Detroit offers business counseling services

direction.

“It’s all about building out our entrepreneurial ecosystem in Oakland County. There’s a lot of talk about the entrepreneurial ecosystem in Detroit that is thriving and kicking on all cylinders,” Meisner said. “We also have one in Oakland County, and now we have a one-stop shop where you can get help with your business.”

The counselors will be available Tuesdays and Thursdays until Sept. 28, 2018.

Oakland County has teamed on other programs with banks, including Flagstar, to promote the institutions and stimulate investment in Pontiac and surrounding cities. Meisner said he will encourage Huntington to extend the boot camp’s lifespan with an annual grant.

“We’re hoping to beef it up. We want to secure an annual commitment that will ensure greater staffing commitments,” he said. “We will look at the results. I think you really have to analyze your results and stick to performance measures.”

The Financial Empowerment Center is modeled after a program that businessman Michael Bloomberg developed during his tenure as mayor of New York City from 2002-13, Meisner said. The center invites residents to visit the treasurer’s office to learn about and use additional county resources.

The treasurer’s office received a $25,000 grant from Lansing-based Community Economic Development Association of Michigan in 2014 to establish the center through a public-private partnership with JVS Detroit, which is based in Southfield.

$5 million program launched to help minority developers

By Kurt Nagl

Michael Barry Mission IS Possible

Need to know

With a $500,000 assist from JPMorgan Chase & Co., Capital Impact Partners is committing $5 million to help minority real estate developers grow their businesses in Detroit.

The Equitable Development Initiative program will provide critical training opportunities and access to capital, a news release said.

JPMorgan’s two-year investment will be put toward “catalytic capital, oneon-one mentorship with local experts, and formalized training” to boost minority developers during the city’s economic recovery, it said in a release.

The two-year program is designed to kick-start the development of smalland midsize mixed-use, multifamily residential projects in the city’s mixeduse corridors.

Headquartered in Arlington, Va., with offices in Detroit, Capital Impact Partners provides loans and financial services to underserved parts of the country.

The company found that of the $152 million loaned to Detroit from 2006 to 2015, projects led by minority developers received only 10 percent of the fi-

Need to know

JJ$5 million program to support minority real estate business owners in Detroit JJChase investing $500,000 as part of $150 million commitment to Detroit JJProgram will help finance and train minority developers

nancing. With 50,000 minority-owned small businesses, Detroit is the fourth-largest city for minority entrepreneurship in the country.

Minority developers in the program can use funds to finance mixed-use real estate, affordable multifamily housing and commercial and retail developments in the city.

Capital Impact Partners is seeking to raise more capital for the program and will cover the balance of the $5 million in the form of senior debt for real estate development projects, a company spokeswoman said.

The JPMorgan investment is part of the New York City-based bank’s $150 million commitment to Detroit. In 2014, it announced a $100 million investment over five years; it announced this year an additional $50 million.

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 3 , 2 0 1 7

INSURANCE FROM PAGE 1

As lawmakers and special interest groups wrangle over reform, recent state filings from several of Michigan’s largest carriers show that the cost of personal injury protection continues to rapidly rise and often faster than any other category of car insurance, a Bridge Magazine review of insurance premiums showed. (This story is part of a cooperative project by Crain’s and Bridge.)

Between 2013 and October of this year, AAA of Michigan’s base rates for personal injury protection jumped nearly 80 percent and now comprise more than 95 percent of the base rates for mandatory coverages and 88 percent of all coverages, including collision and comprehensive.

For Home-Owners Insurance Co., personal injury protection rates jumped 46 percent from 2013 to 2017 and comprise 88 percent of the mandatory coverage base rate.

“The crisis is undeniable,” said Mark Bernstein, a Farmington Hills personal injury attorney who favors Detroit Mayor Mike Duggan’s plan to drastically reduce medical costs. “Nobody can say with a straight face that there isn’t a problem that needs to be addressed.”

But a political stalemate has hung over the Capitol for years as a term-limited Legislature that loses dozens of members every two to four years has been unable to find a compromise that ensures lower insurance rates without gutting what’s regarded as the best medical coverage for auto accidents in America.

“The trouble is, nobody appears to be willing to really put drivers first — because they’re all just making way too much money,” said Bernstein, whose family law firm represents injured motorists in so-called third-party “pain and suffering” lawsuits against at-fault drivers.

With no statutory limits on how much money Michigan hospitals and doctors can charge in a system that’s beset by nearly constant litigation, the average cost per auto accident injury claim topped $75,600 in 2013.

That’s more than five times the next highest state, New Jersey, which recorded a $13,630 average in medical costs for each injured motorist.

“I don’t know of anything that has a claim severity that remotely approaches $75,000 per claim,” said Jim Lynch, chief actuary at the Insurance Information Institute, a Washington, D.C.-based industry group. “I think that’s up there with flood insurance.”

Larger no-fault states like New York and Florida, which have set prices for medical care for injured drivers and caps on total costs, had average medical expenses in 2013 of $7,876 and $7,002, respectively, according to the most recent data available from the National Association of Insurance Commissioners.

New York’s medical cost per driver decreased by nearly 3 percent from 2000 to 2013, while New Jersey had a 12 percent increase and Florida’s costs rose by about 9 percent.

Michigan’s average cost per motorist soared by 210 percent during those 14 years, according to industry data.

The tripling of costs per injured driver and passenger between 2000 and 2013 outpaced medical inflation for that period by nearly 90 percent, a Crain’s analysis show.

“Medical costs are going up anyway, but when you have a blank check it is not surprising that people are taking advantage of that,” said state Rep. Lana Theis, chair of the House Insurance Committee.

19

Michigan’s costs dwarf others

Michigan’s total spending on care for injured drivers dwarfs that of New Jersey, a no-fault state that has about the same number of licensed drivers, and even New York and Florida, which have far more. $4 Billion 10-year % increase

Michigan

77.7%

New Jersey -29.2% -29.2% New York 16.6% Florida

$3 Billion

77.7% 16.6% 13.7%

13.7%

Auto insurance industry losses

$2 Billion

$1 Billion

’04

’05

’06

’07

’08

’09

’10

’11

’12

’13

SOURCE: National Association of Insurance Commissioners annual auto insurance database reports

More online

Escalating losses, lawsuits

JJGo to crainsdetroit.com for an explanation of how where you live has an enormous effect on your insurance – and those rates are rising in many suburbs. Also, look up your own ZIP code to see how you’re rated.

Legislative impasse Michigan’s highest-in-the-nation auto insurance rates have spawned a perpetual state of lobbying war in Lansing between insurers who want to lower their liabilities and become consistently profitable and the hospitals, medical clinics, lawyers and injured drivers entangled in a no-fault auto insurance industrial complex they’re fighting to preserve.

“It depends on who you’re sleeping with,” said Jerry Acker, a personal injury attorney and managing partner of Goodman Acker, P.C. in Southfield.

“The hospitals want the money. The insurance companies want the money.”

Theis, R-Brighton Township, is sponsoring legislation backed by Duggan and House Speaker Tom Leonard that would greatly curtail medical spending in auto insurance by allowing drivers to opt out of unlimited lifetime personal injury benefits in exchange for a lower-cost plan.

The reform plan in House Bill 5013 would allow drivers to opt out of unlimited medical coverage for two coverage tiers of $250,000 and $500,000 that would no longer give them access to Michigan’s catastrophic injuries fund that currently covers medical bills exceeding $550,000.

The $250,000 plan has been widely criticized because just $25,000 could be used for post-hospitalization care, such as out-patient surgery, rehabilitation or reimbursement for lost wages.

To make medical care dollars go further, the Republican legislative leaders and Detroit’s Democratic mayor want to impose Medicare-level payment rates that could cut medical payments in the auto insurance system for some procedures by as much as two-thirds.

A bipartisan coalition of legislators allied with the hospitals, trial attorneys and the most catastrophically injured drivers have proposed less drastic cost-controls.

Lawmakers remain deeply divided over paring back what’s considered

spent $1.46 on medical costs in 2012 for every dollar they collected. Florida’s insurers spent 75 cents of every dollar they collected for personal injury claims.

“That’s not sustainable,” said Lynch, the insurance industry actuary. “Insurance companies have other expenses.

Agents make commissions. Then you’ve got your internal expenses.”

the best medical care in America that money can buy for injured drivers and passengers while the insurance industry continues to set individual rates based on where a motorist lives, their education level, credit score, marital status and other factors that have nothing to do with driving.

“The right approach is to contain costs and ensure rate relief to Michigan drivers without cutting the benefits people need when they’re in catastrophic car accidents,” said Rep. Tim Greimel, an Auburn Hills Democrat opposed to Duggan’s plan.

The insurance claims data analyzed by Crain’s do not account for the medical costs of injured drivers paid by the Michigan Catastrophic Claims Association, which assesses all insured vehicles a $170 annual fee to cover long-term care costs exceeding $550,000.

Critics of the Duggan-Leonard-Theis plan contend that offering drivers the $250,000 coverage option will put financial strain on the catastrophic claims system as they flock to insurance plans with lower prices.

“It’s going to increase costs there potentially because you’ll have less people paying in,” said state Rep. Michael Webber, R-Rochester Hills.

Complicating efforts to find compromise in Lansing are divisions among the different businesses involved over putting into state law set payment rates for medical providers and mandated double-digit rollbacks in the premiums insurers can charge in a competitive market.

The Michigan Health & Hospital Association has offered in the past to voluntarily freeze its charges for a set period of years, but has steadfastly resisted a government-mandated fee schedule.

“For the providers, that’s like us coming out with a proposal that says auto insurers can’t use ZIP codes to set their rates,” said Chris Mitchell, senior vice president of advocacy for the hospital association. “It’s what I would consider a poison pill.”

For this report, Crain’s studied 14 years of auto insurance industry data and found a dramatic increase in medical expenses, even as the number of drivers and passengers injured decreased by about 10,000 annually between 2000 and 2013.

Auto insurers are required to file their geography-based insurance rates with the state Department of Insurance and Financial Services. Bridge Magazine analyzed that data in partnership with Crain’s to examine how personal injury protection drives up the cost of insurance in Detroit and its surrounding suburbs to some of the highest rates in the country.

Individual companies do not have to publicly disclose their annual claims data, leaving the industrywide reports as the only publicly available information about how much money insurers collect and spend on damaged vehicles and injured riders.

The industry data lags behind by three years as insurers adjust their losses based on collision claims and medical bills, an increasing number of which are settled in litigation that now accounts for two out of every five lawsuits filed in Michigan courts.

The skyrocketing premiums collected by insurers and losses incurred for medical costs corresponds with a decade-long 130 percent statewide increase in the number of lawsuits between drivers and their medical providers and auto insurance carriers.

At Bronson Healthcare Group, the Kalamazoo-area hospital system spent $1.3 million in the first six months of this year on lawyers chasing $6.6 million in unpaid bills from insurers that were eventually paid, said James “Chip” Falahee Jr., senior vice president of legal and legislative affairs at Bronson.

“Sometimes insurance companies take positions that are so out there, that the courts say, ‘No, that is a specious defense’ and they have to pay,” Falahee said.

The costly litigation can vary year to year, causing unexpected spikes in losses and subsequent rate increases by insurers.

In 2012, the cost per injured driver hit a high-water mark of $83,800 per claim, as the industry as a whole reported spending $3.76 billion for personal injury protection benefits compared with about $2.6 billion in premiums collected.

By comparison, Florida’s costliest year was 2010, when insurers in the Sunshine State shelled out $2.84 billion for eight times as many injury claims as Michigan had in 2012.

Put differently, Michigan insurers

For the overall insurance industry in Michigan, private passenger auto insurance has become a perennial money loser, while other lines of property and liability insurance remain profitable.

The industry as a whole reported an average loss of 2.9 percent on auto insurance between 2005 and 2014, turning a profit in just three of the last 10 years, according to profit-and-loss data all insurers submit annually to the National Association of Insurance Commissioners.

“In Michigan, when it comes to auto (insurance), it’s a losing proposition,” said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan, the industry’s lobbying arm in Lansing.

Between 2005 and 2014, insurance companies posted an average profit margin of 9.6 percent on workers compensation insurance that Michigan employers are required to purchase to cover the costs of workplace injuries.

In 2011, the insurance industry in Michigan reaped a 7.1 percent average profit on workers’ compensation, while posting a 13.9 percent overall loss on auto insurance.

Unlike auto insurance, the workers comp system has a state-imposed schedule of rates doctors and hospitals get paid for treating injured workers.

“The reality is, yeah, insurance companies make money — they make money on work comp, for the most part,” Kuhnmuench said.

But the largely unregulated nature of Michigan’s “file and use” auto insurance system in which the state’s insurance commissioner lacks the power to reject rate increases has fueled speculation that carriers are getting rich on the backs of motorists.

“In Michigan, the auto insurers have this cartel-like, wonderful business where we’re required by law to purchase no-fault (coverage) but Michigan’s insurance commissioner doesn’t know what the profit margin is of the companies selling it,” said Steven Gursten, a personal injury attorney at Michigan Auto Law in Farmington Hills. “I have a feeling that they’re not losing money."

Industry data shows the insurance industry as a whole has softened the blow of medical losses in some years by collecting more premium dollars for collision, comprehensive and bodily injury than they experienced in claims. Michigan’s auto insurance companies collectively posted annual profits in all three of those categories in the 14 years of publicly available reports analyzed by Crain’s.

In 2010, for example, the industry reported an overall loss of $317 million on personal injury protection — at a cost of $61,000 per claim — while posting an overall $384 million profit. Before taxes and overhead, profits from collision coverage alone topped $454 million that year, the auto insurance data shows.

“Clearly, Michigan is a difficult place to do business for auto insurers,” Lynch said. “If they were making tons of money, they wouldn’t be trying to get the laws changed.”

Bridge Magazine Reporter Mike Wilkinson contributed to this report.

C R A I N ’ S D E T R O I T B U S I N E S S // O C T O B E R 2 3 , 2 0 1 7

20

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Creation of 313 Presents means it will go to L.A. to negotiate with the major promoters as a single entity for metro Detroit’s major venues, Wilson said, which provides one-stop talks and flexibility in choices for acts.

One of the event industry’s leading observers says the creation of 313 Presents should boost efficiencies and revenue, especially now that Little Caesars Arena is open.

“It struck me as a logical move.

Both entities are moving into the same venue. Rather than try to compete, it makes sense to work together,” said Gary Bongiovanni, longtime president and editor-in-chief of concert industry trade magazine Pollstar. “They have significant scale but they’re not a behemoth. In Detroit, they’re the only game that matters.”

Wilson echoed that comment: “It’s one of the biggest (entertainment venue) companies in a local market, if not the biggest in America,” he said.

The dominance may not automatically mean higher ticket prices, because of the peculiar nature of show business economics. Bongiovanni said competition among arenas can create higher ticket prices, he said, because they bid up the price to host the show or event. With a single venue, there’s no bidding and no increase to pass along in the form of pricier tickets.

313 Presents, whose name was created by Detroit’s Gyro Creative Group, will have about 40 staffers, taken from Olympia and PS&E. It’s not known if either company cut jobs to create the JV. 313 Presents operates out of Olympia’s Fox Theatre headquarters. It hasn’t been disclosed how big 313 Presents will be in terms of revenue.

PS&E and Olympia are privately held.

Some of the 313 Presents ventures are among the busiest globally in terms of ticket sales, according to Pollstar.com data.

For amphitheaters, DTE ranked third in the world with 528,057 tickets sold last year. Freedom Hill was 67th with 91,517 tickets sold and Meadowbrook ranked 73rd with 81,650 sold. The Fox Theatre was ranked 12th in the world among theaters by ticket sales in 2016 with

SILICON FROM PAGE 3

The state knows it needs Silicon Valley. Right now, the popular perspective is that it is leading the pack toward mobility. California’s techtropolis is leading, as the bleeding edge. Just as Uber can’t rectify its balance sheet, electric-vehicle darling Tesla Motors is fumbling its attempt at mass production — the California automaker continues to miss production critical deadlines for rollout of its Model 3.

Liz Tariq, head of brand and communications for Sherpa Capital and partner at Sherpa Foundry, which connects corporate members to startups, is helping Pawl and the MEDC connect to Silicon Valley. The state contracted Sherpa to make those connections. It’s fortuitous that Tariq is now a Detroiter. She moved to Detroit from Silicon Valley in January after her husband, Musa Tariq, left Apple to become the chief brand officer for Ford.

“The Valley has a much higher tol-

313 Presents controls seating at DTE Energy Music Theatre.

328,167 sold.

The now-closed Palace was 53rd globally among arenas with 313,486 tickets sold, which doesn’t include Pistons games. Joe Louis Arena, former home of the Wings, was 143rd with 101,496. Little Caesars Arena, which opened in September, won’t be ranked until the 2017 arena list is published.

New music 313 Presents may venture into territory its parent firms didn’t much get into: The press release announcing the creation of 313 Presents said the joint venture will also “create more opportunities to support local and emerging artists” but didn’t disclose details.

Bongiovanni said there is a business risk in booking local and newer acts because they may not sell enough tickets to cover the costs. He defined a risky show or event as “anything you wouldn’t consider a guaranteed sellout.” Major promoters and venues often shy away from such risks because even established touring acts have narrow profit margins.

313 Presents controls smaller stages that ameliorate the risk. Local and new acts — or established entertainers looking for a more intimate venue — could get more opportunities to play the 430-seat City Theatre or the 2,405-seat Soundboard at MotorCity Hotel Casino, Wilson said. erance for risk and failure; plus you have the density of talent and capital.

But here, you have hundreds of years of domain expertise and manufacturing infrastructure that the Valley can’t touch,” she said. “Because auto is king here and in the Valley tech is king, that causes a really interesting tension in this sort of self-driving arms race we are living in. The bottom line is that no one knows exactly how this is all going to play out, but so much good can come just from getting people around a table and outside of their respective echo chambers to debate this stuff and hear a different perspective.”

The new perspective, particularly form California, is Detroit must participate in the mobility debate.

“There’s a relatively new recognition that not all great ideas come from Silicon Valley,” said Steve Parkis, who grew up in Battle Creek and later became an executive at Disney Co. before becoming an investor and entrepreneur-in-residence at Silicon Valley’s Playground Digital.

James Schwyn, CTO at Troy-based Valeo North America, attended sev-

CRAIN’S DETROIT BUSINESS

“We can make it work for anybody at any time,” he said.

313 Presents also will gin up new entertainment options using some or all of its venues together, Wilson said.

“We have the ability to think bigger and do bigger and more, whether it’s festivals or other things,” he said.

The JV will rely on the major outside promoters to book the big shows, with Little Caesars Arena as the anchor of the business. Olympia and PS&E have long relationships with the nation’s two largest promoters, Beverly Hills-based Live Nation Inc. (which also competes with 313 Presents locally as owner of St. Andrews Hall and lessee of the Fillmore), and Los Angeles-based AEG Live, which is a wholly owned subsidiary of The Anschutz Corp.

Sandwiched between Pistons and Red Wings games will be the major touring acts brought to Detroit by Live Nation and AEG. “Every major act that’s out on tour is going to want to play there. That building is going to be hard to get into,” Bongiovanni said.

“No one is bidding against Live Nation to put on a show,” he said, noting that Live Nation has had favored status with Olympia for many years and he expects that to continue under 313 Presents.

Bill Shea: 313 (446-1626) Twitter: @Bill_Shea19 eral of the events with the investor faction.

“We’re all pursuing tech,” Schwyn said at the Techstars event. “They have a much different approach to business, but we have to find ways to stay connected, to not be isolated from what we can offer each other.

Exploring these ideas is the only way we’ll all succeed.”

Schwyn’s right about collaboration. It’s necessary. The California investors will make their money.

Some of their investments will be home runs, others flops. But, ultimately, Silicon Valley will succumb to the longstanding manufacturing prowess and financial discipline of Detroit’s legacy automakers.

In 50 years, when autonomous driving and mobility are no longer buzzwords, the world will probably have forgotten about Uber. GM and Ford will be different companies, but profitable ones.

Or maybe I’ll eat my words with a side of seaweed salad.

Dustin Walsh: (313) 446-6042 Twitter: @dustinpwalsh

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POVERTY FROM PAGE 1

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By the numbers More than one in every three people lived below the poverty line in Detroit last year, versus one in nine in the suburbs.

But a higher total number of people live in poverty in Detroit’s suburbs than in the city itself.

According to data released by the U.S. Census Bureau in September, Detroit had about 235,000 residents living below the poverty line and a poverty rate of about 36 percent last year, said Alan Berube, senior fellow at the Washington, D.C.-based Brookings Institution.

In 2016, the poverty line was $12,486 for a single individual under the age of 65 and $24,563 for a family of four.

To compare Detroit with other big cities it analyzes, Brookings combines the data for Detroit and Warren — an inner-ring suburb with a significant population and high number of jobs vs. the population — to create a “central city” designation.

Last year, the Detroit-Warren central city had the third-highest poverty rate among central cities in the 97 metropolitan areas across the country studied: 260,000 poor people, or 33 percent of the two cities’ combined population, Berube said.

In the rest of the metropolitan statistical area, which Brookings labels “the suburbs,” 373,000 people lived below the poverty line, a poverty rate of 11 percent.

The figure includes Lapeer and St. Clair counties but not Washtenaw County.

There was a drop in poverty in the city of Detroit last year, but no statistically significant drop in the suburbs, Berube said.

Low-wage jobs, older housing stock that is less expensive and drawing lower-income populations and the loss of manufacturing jobs are spurring the growth of poverty in metro Detroit’s suburbs, Berube said.

While the poverty situation does not look as dire today in the suburbs as it does in Detroit, “If we were we to ignore it for too long, things could head in a very troublesome direction and eventually outdrift the capacity of these places to help their residents in need,” he said.

Regional philanthropy The need in Detroit is still so deep, and the scale of philanthropic resources so small in comparison, that it’s perfectly rational for any foundation to put all of its resources in the city to meet that need, Berube said.

But as Detroit continues to recover, you’ve got to have a regional game, too, he said, to apply what is learned in Detroit to serve families with similar needs in the suburbs.

That’s hard; it puts pressure on philanthropy to be everywhere at the same time. “But we should not take our eye off the suburban ball, because suburban poverty is not going away,” Berube said.

The list of local and national foundations working exclusively or predominantly in Detroit is long. It includes Ford Foundation, the Hudson-Webber

Foundation, John S. and James L. Knight Foundation, Max M. and Marjorie S. Fisher Foundation, McGregor Fund, Kresge Foundation, Skillman Foundation and W.K. Kellogg Foundation.

About half as many are working regionally, including the Community Foundation for Southeast Michigan, Fred A. and Barbara M. Erb Foundation, William Davidson Foundation and Ralph C. Wilson Jr. Foundation.

“We have to think regionally,” said David Egner, president and CEO of the Wilson Foundation. “If we don’t do that … we won’t get the best we can get that can be replicated.”

A $2 million grant to a head start fund housed at the Community Foundation from Wilson came with the requirement that it provide support to three suburban locations in Wayne, Macomb and Oakland counties, Egner said. The aim is to expand best practices beyond city borders.

“We need to pay attention to the demographics throughout the (region),” said Mariam Noland, president of the Community Foundation for Southeast Michigan. “Lots of things are shifting.”

Lifting up the urban core The region’s view of Detroit as a drag on suburban communities’ future health was overwhelming a decade ago, said Rip Rapson, president and CEO of the Troy-based Kresge Foundation.

The need for a metropolitan area to have a healthy core to prosper led Kresge to shift its focus to the city.

“Although we’ve made almost unimaginable progress over the last decade, we are nowhere near where we need to be,” Rapson said.

It’s right for the region to keep its eye on the challenges the suburbs face, Rapson said.

“But Kresge has only so much money, time and energy, and we will, for the foreseeable future, spend that on helping Detroit resume its rightful place as one of our nation’s great cities through inclusive growth and opportunity.”

The Battle Creek-based Kellogg Foundation is interested in changing systems more broadly, said President and CEO La June Montgomery Tabron.

“We want to improve the lives of all children; however, we must determine best practices in place and then scale.”

“In essence, it’s an approach of targeted universalism — of addressing the early childhood education needs in Detroit, and using this evidence more broadly toward a larger impact in the future,” Montgomery Tabron said.

Skillman shifted a dozen or so years ago away from work in Pontiac to focus exclusively on Detroit’s schools and neighborhoods.

“But we understand Detroit is not an island,” said CEO Tonya Allen. “I don’t think there is a rationale that warrants us to move out of Detroit’s recovery work. But there is a rationale to figure out how we make that inclusive — working on poverty alleviation and reduction ... and making investments in other communities which are suburbs.”

Sherri Welch: 313 (446-1694) Twitter: @SherriWelch

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22

THE WEEK ON THE WEB

RUMBLINGS

DMC in talks to build sports medicine facility

Detroit Children’s Fund makes $5M investment

OCTOBER 13 - 19 | For more, visit crainsdetroit.com

T

he Detroit Medical Center is in negotiations to build a sports medicine facility jointly for the Detroit Red Wings and Detroit Tigers sandwiched between the new Little Caesars Arena to the south and the under-construction Wayne State University Mike Ilitch School of Business to the north, Crain’s has learned.

Two sources with knowledge of the discussions who requested anonymity said the facility would also serve the general public, not just the teams; one of them said planning for the facility has been “off and on” for the past five years, with discussions becoming more serious in the past year.

Another source familiar with the discussions said the project’s size and cost have not yet been determined, but construction could begin in the first quarter next year if a deal is sealed. A fourth source said plans at some point in the past year were for a five-story building offset from Woodward Avenue.

An official for DMC and Olympia Development of Michigan said they would not comment at this time.

A DMC source said the hospital system has been interested in developing a high-profile, one-stop-shop sports medicine center to serve professional athletes and the public. It would be a model for other DMC medical specialty lines that the health system wants to develop in the future.

Little Caesars Arena anchors the District Detroit, 50 blocks of redevelopment mixed-use projects led by the Ilitch family, which owns the Red Wings and Tigers. The arena opened last month for the Red Wings and the Detroit Pistons.

Separately, the Pistons are building a new team practice and medical facility north of the arena in the TechTown area. It will be managed by Detroit-based Henry Ford Health System.

T

KURT NAGL/CRAIN’S DETROIT BUSINESS

Hundreds attended The Parade Party’s event Wednesday in Detroit unveiling the new Art Van Thanksgiving Parade float.

Detroit digits A numbers-focused look at last week’s headlines:

$70 million The largest round of venture capital funding in Michigan's history, raised

by Ann Arbor-based Duo Security Inc.

5,000

The number of people expected to attend the Women's March's Women's Convention at Cobo Center Oct. 27-29.

28.6%

The amount by which metro Detroit's housing inventory fell in September, compared with the same month last year.

BUSINESS NEWS J Derq Inc., one of 11 firms in the current Techstars Mobility class, has raised a seed funding round of $1.5 million and is opening an office in Detroit to serve as its U.S. headquarters.

J The Parade Company unveiled Thanksgiving Parade presenter Art Van’s new float last week.

J Detroit Blows, a specialized blowout and hair styling salon, opened last Monday in the Z Garage in downtown Detroit.

J Detroit-based online market StockX is expanding its merchandise by adding streetwear labels to its catalog of sneakers, watches and handbags.

J A new fusion restaurant called Cork and Gabel plans to join the strip of popular eateries in Detroit’s Corktown neighborhood.

J Home Rehabilitation Services of Michigan LLC is closing its facility in Commerce Township and permanently laying off its 113 employees there.

J The private Detroit Country Day School system is spending $30 million in a major overhaul that in-

cludes expanding classrooms.

Ash & Erie Inc. appeared on a “Shark Tank” episode that aired Sunday.

J Kmart will lay off 127 employees at its St. Clair Shores location as it prepares to close the store and sell the lot to Kroger Co. J Technology Install Partners has acquired Livonia-based Security Designs, expanding its footprint outside its Cleveland headquarters.

J General Motors Co. is donating $5 million to The Henry Ford, Automotive News reported.

J Groundbreaking is set to take place in the next month on City Club Apartments CBD Detroit, a project with 288 residential units and retail space on the site of the former Statler Hotel in downtown Detroit.

J Wayne State University’s new marketing campaign, Warrior Strong, aims to show the institution’s growth since it launched the Aim Higher campaign eight years ago.

J

J Steve Ballmer, Stephen Ross, Dan Gilbert and more with Michigan ties are on Forbes’ list of the country’s richest sports team owners.

OTHER NEWS J Immigration and Customs Enforcement is seeking information about potential facilities within 180 miles of Detroit that could be used as one of four new detention centers for illegal immigrants.

J The city of Detroit and neighborhood partners broke ground on the new 2.5-acre Ella Fitzgerald Park and a new community center in the Livernois-McNichols area on the city’s northwest side.

J Larry Leinweber and Claudia Babiarz donated $8 million to the University of Michigan through the Leinweber Foundation. The endowment will be put toward the Michigan Center for Theoretical Physics in the school’s College of Literature, Science and Arts. The center will be renamed Leinweber Center for Theoretical Physics.

J Walker’s Legacy honored 25 women of color leaders in metro Detroit at the association’s second annual Power 25 Awards last week.

J Detroit’s MoGo bike share service reached its 100,000-ride goal after five months of operation — more than six months ahead of when it expected to reach that milestone.

J The Michigan Department of Environmental Quality awarded more than $160 million in loans to improve water infrastructure systems in metro Detroit, Flint and other areas of and throughout Michigan.

OBITUARY J Helen DeVos, a philanthropist from Grand Rapids known for her support of children’s health, Christian education and the arts, died in Ada Township at age 90 last Wednesday.

he Detroit Children’s Fund has made its first investment, a $5 million grant to New Paradigm for Education, a Detroit charter school operator whose schools perform above state averages.

The grant is supporting a charter operator, but the fund is governance-agnostic, said Jack Elsey, executive director of the Detroit Children’s Fund.

“We are (now) planning a couJack Elsey ple of talent development programs for school leadership teams,” both in the Detroit Public Schools Community District and other schools in the city, he said.

“And we’re in conversations with the district to invest in other ways.”

Founded and incubated by the Skillman Foundation starting around 2009, the Detroit Children’s Fund, now an independent nonprofit, intends to make big bets on high-potential nonprofits and leaders.

It’s set an ambitious goal to expand high-performing schools by creating 25,000 seats for K-12 students in strong Detroit schools by 2025. Today, only about 6,000 of the 85,000 seats in all Detroit schools are in high-performing schools, Elsey said.

The fund hopes to hit its goal by helping high-performing schools add more seats, bringing proven

models from other parts of the country to Detroit and investing in leadership talent development.

“If we get to that goal, we’ll quadruple the number of leaders and teachers working in high-performing schools,” Elsey said, which would help bring parents back to the district.

To hit that goal, early estimates are the fund will need to raise between $75-100 million over eight years, said Nick Karmanos Jr., who joined the fund as chief advancement officer in March.

So far, the fund has raised nearly $16 million, including a $2 million grant from the New York-based Ford Foundation and $2 million from General Motors Co., Karmanos said in an email.

Its inaugural annual dinner Oct. 14 at The Factory in Detroit raised $1.55 million, drawing 240 people.

The amount raised included a $775,000 matching donation from Detroit native Adam Levinson, managing partner and chief information officer of Graticule Asset Management Asia Pte. Ltd. in Singapore, and his wife, Brittany.

Levinson pledged $10 million to the fund in 2014 and matched gifts made by his fellow expats at the 2016 Detroit Homecoming event.

Chairing the inaugural dinner were local philanthropists and education advocates Gretchen Davidson, Kelle Ilitch and Ashley Crain, wife of Crain Communications Inc. President KC Crain, who is chairman of the fund’s board.

Huron Capital acquires interest in Hansons

D

etroit-based Huron Capital Partners LLC has acquired a controlling interest in Troybased Hansons Holdings LLC, a home repair and innovations company that installs replacement windows, roofing and siding.

The deal was in partnership with the company’s management. Hansons has eight locations throughout Michigan and northern Ohio and is known for its jingle “1-800-Hansons … Get it done.” Hansons plans to use the investment to expand into new markets and offer new products.

Terms were not disclosed. It was the first investment from Huron’s $575 million Huron Fund V LP. Huron began raising the fund last October with a target of $550 million but it was subsequently oversubscribed. It is the largest private equity fund raised in Michigan since 1999, when Questor Partners raised $865 million.

“We’re really excited to be partnering with Hansons. This is a marriage of a great private equity company and a great Michigan brand,” Brian Demkowicz, Huron’s managing partner, told Crain’s.

“I’m proud of the brand and business we’ve built at Hansons, and I’m confident Huron Capital is the right partner to help us continue our

Brian Elias

Sean Roberts

growth,” said Hanson’s CEO Brian Elias.

Huron typically invests in companies with between $20 million and $200 million in revenue, with the investment generally ranging from $15 million to $75 million. Demkowicz said this deal falls in those ranges.

“Huron Capital has a history of investing in marketing services and consumer businesses, making Hansons a great fit,” said Sean Roberts, a principal at Huron Capital.

Hansons has operations in the Detroit area, Ann Arbor, Saginaw, Lansing, Grand Rapids, Kalamazoo and Toledo. It has about 500 employees.

Roberts said Port Huron and Traverse City are two possibilities for geographic expansion.

Hansons was represented by Angle Advisors, an investment banking firm based in Birmingham.

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