From: indigo
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Houston arts, charities feel heat of Enron's meltdown
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By Flynn McRoberts
Tribune staff reporter
January 15, 2002
HOUSTON -- Enron's two skyscrapers tower over this city's downtown. The Houston Astros' new retro-ballpark, at least for now, bears the name Enron Field.
And, thanks to a $3 million pledge from the family foundation of Enron's CEO, Rice University had plans for the Ken Lay Center for the Study of Markets in Transition.
By the looks of it, the stunning business failure known as Enron would seem to be the official sponsor of all things Houston.
But, just as the books at the dethroned king of energy trading proved deceptive, Enron's impact on the Texas city is less than what may meet the eye.
Coming as other big-name local employers such as Compaq and Continental Airlines struggle with problems of their own, Enron's collapse certainly damaged the civic ego and left thousands of employees without jobs or retirement benefits.
But, compared to Houston's wrenching oil-bust experience of the mid-1980s, the latest episode is the municipal equivalent of flickering lights, not some monstrous power outage.
About 4,500 residents lost their Enron jobs recently; 250,000 Houstonians lost work when oil prices dropped during the Reagan administration.
Once the 7th largest firm
Enron, with its new products that offered protection against all forms of market swings, is emblematic of why this sprawling city is not about to tumble along with a company that was, until recently, the nation's seventh largest: Houston no longer bets the ranch on oil and gas.
Enron's impact is "relatively small because this is a firm debacle, not an industry problem," said Barton Smith, director of the University of Houston's Institute for Regional Forecasting, "whereas Houston's experience in the '80s was an industry collapse."
Even the energy trading business is not expected to be greatly hurt by the implosion of the company that pioneered it, experts here say. Companies up and down Houston's so-called Energy Alley and beyond are salivating at the prospect of picking up Enron clients.
"The market is much bigger than just one player," said Terry Francisco, a spokesman for Duke Energy Corp.'s energy marketing subsidiary.
Still, Enron's troubles are being felt here in numerous ways, particularly by arts and charitable organizations that enjoyed the largess of its executives.
Enron money, for instance, helped Houston's Museum of Fine Arts to mount the "Jewels of the Romanovs" exhibit a few years ago.
The pressing question for Enron's philanthropic beneficiaries deals with how much of its corporate pledges will come through in the next two or three years; there have been scattered reports of bounced checks.
But Peter Marzio, director of the Museum of Fine Arts, Houston, counseled against assuming those donations won't be made. "This museum had not a single unfulfilled pledge during the oil bust of the '80s," he said. Other companies took up the slack, and individuals made good on their promises.
As for Enron, which accounted for $1.3 million of the fine arts museum's $35.5 million in donations over the last three years, "the personal pledges are set," Marzio added. "I'd be shocked" if those don't come.
Nevertheless, what has been lost in the wreckage of Enron is an essential part of the Houston business community's self-image: that people kept their word.
"There always has been this notion that you look the guy in the eye, shake hands and have a deal. At least that was the folklore," Marzio said. "It won't even be folklore anymore."
The Enron bankruptcy also has left no small number of little indignities for the executives in charge of the failed company.
The Lay Family Foundation had pledged $3 million to help create the Ken Lay Center at Rice, which was to be named for Enron CEO Kenneth Lay. But only part of that gift has arrived, so its fate is unknown.
`Analyzing the Analysts'
So is the fate of the Enron Finance Seminar Series, which featured an ironically timed presentation last October entitled "Analyzing the Analysts: Career Concerns and Biased Earnings Forecasts."
Bala Dharan, a Rice accounting professor, has planned a Jan. 31 presentation. He is calling it "The Enron Meltdown: Was it an accounting failure, a business failure or a regulatory failure? What can we learn?"
To a large degree, though, Houston already has learned its lesson. In the early 1980s, 82 percent of its economic base was related to energy, according to Smith of the local Institute for Regional Forecasting.
With the addition of computer, medical technology and other companies in the last decade, energy now accounts for about 49 percent of that base.
One other thing that could be lost is the Enron Field sign on the Astros' ballpark. Club officials say Enron is paid up on its naming-rights contract and will remain so for some time.
Nevertheless, Pam Gardner, the team's president of business operations, said Monday: "For us, it's a day-by-day thing. . . . We're not in a position to go out and test the market. [But] we certainly have had inquiries."
Copyright (c) 2002, Chicago Tribune
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