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ONE-ON-ONE - June 2006
by Ed G. Lane
'I Can't Sleep Fast Enough'
Former Cabinet Secretary Jim Host reflects on his years in the business world and discusses issues facing state government today
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Jim Host
Since beginning his career as a sports broadcaster in 1957, Jim Host has played an active role in Kentucky business and government. His work in broadcast communications and experience in owning his own real estate, building and insurance companies led to his appointment in 1967 as Kentucky’s commissioner of the department of public information and department of parks under Gov. Louie B. Nunn. In 1972, Host founded Jim Host & Associates (later renamed Host Communications), a sports broadcasting company that has since expanded to include sports marketing.
In 2003, Host was named Kentucky’s secretary of commerce under Gov. Ernie Fletcher, a position he held until choosing to step down in Oct. 2005. Host remains active in civic and charitable campaigns and has been associated with more than 40 organizations and boards. |
Ed Lane: One of your first corporate positions was with Procter & Gamble. Was this work experience valuable in your business career?
Jim Host: I learned about accountability, reporting, and what sales really meant. I learned about branding, marketing, the introduction of new products, the retail and supermarket businesses. Of all the things I’ve done in my life, working at P&G probably gave me the best foundation for being successful in my own business.
EL: How did you get your job at P&G?
JH: At the time, I was with Bluegrass Broadcasting in sales and marketing. In fact, Hal Rogers and I were both WVLK disc jockeys together back in 1959. He was on in the afternoon and I was the evening disc jockey, doing sports and also selling.
While working at WVLK, I also put together one of the first networks that UK had – the Kentucky Central Network – and did play-by-play on it. I knew I wasn’t going to be as good as Cawood Ledford or Claude Sullivan. I felt I could sell well. I picked up a Fortune magazine one day so I could research who were the best sales and marketing companies. At that point, it was P&G. So I went to Cincinnati and applied.
P&G hired me and put me in the Chattanooga sales district succeeding a sales rep who just committed suicide. It was the only sales territory in the United States where P&G was third out of three in the market. One wholesale grocery chain called Dixie Saving Stores with 292 locations didn’t buy much from P&G. The chain’s owner bought Lever and Colgate and my job was to convert him. I have a picture someplace of the very first carload of Tide he bought. That sale caused P&G to go from third to first in the market.
EL: What brought you back to Lexington?
JH: At P&G, I was getting promoted fairly often. I advanced from Chattanooga to the Washington, D.C. market. I was working in Washington when President John F. Kennedy was assassinated. P&G was getting ready to promote me again to go to Philadelphia. I just didn’t want to work in Philadelphia and be a unit manager, so I came back to Lexington.
EL: What happened when you returned to Lexington and how did you get involved in Kentucky politics?
JH: Upon returning to Lexington, I took my real estate test and insurance exam in the same week and opened a real estate brokerage business in 1964. I still go back to class twice a year to keep my license active, just in case my business goes bad. I became president of Kentucky Mutual Insurance Agents Association in 1966 and I was on the board of the Lexington Board of Realtors. I also built about 28 houses in the ’60s and was a member of the HomeBuilders Association.
One day I received a call from Joe Johnson who was then the county judge-executive of Fayette County (before merged government). We met in (Editor and General Manager) Fred Wachs’ office at the Lexington Leader. They asked me to run Sen. John Sherman Cooper’s 1966 re-election campaign in central Kentucky.
As a result of helping Sen. Cooper, Marlow W. Cook (county judge of Jefferson County) asked me to be his campaign manager in Fayette County when he ran in the Republican primary against Louie Nunn in 1967. Cook beat Nunn in Fayette County.
The day after the statewide primary was over and Nunn won, he called and asked me to be involved in his campaign. During the last two or three weeks of his campaign, I ended up traveling with him and we got to be very close. As soon as the election was over, I was asked to serve as commissioner of public information in Nunn’s cabinet.
Gov. Nunn could not run for re-election due to the term limitation on governors. I ran for lieutenant governor on the Republican ticket and got beat – fortunately. When the campaign was over, no one will ever know how broke I was. I had sold my insurance and real estate businesses and invested all of my money in my campaign.
EL: After your unsuccessful run for lieutenant governor, you founded Host Communications.
JH: The company initially started as Jim Host and Associates, Inc. I was offered free office space over a barbershop for my new company. Fortunately, four days after the campaign was over, I received a call from then Lexington Mayor Foster Pettit and County Judge Bob Stephens. They wanted me to be the first executive director of the Tourist and Convention Commission. Lexington had just passed a three-percent room tax and the statute said you had to have someone running it who had three years experience in travel and tourism. I did. I had run Parks and Travel and Tourism for the state in the Nunn administration.
I asked, “How much does it pay?” They said $18,000 a year. So I asked, “Do I get a car?” Yes. “Do I get a secretary?” Yes. I said, “You can hire my company, six months trial, $1,500 a month; I’ll furnish the secretary, the office space.” And, I said I’d like the first $1,500 now. So the first office of the tourism commission was upstairs over the barbershop at 109 Walton Ave.
I took my first $1,500 check to Jake Graves, Second National Bank. Now, this is about one week after the end of the campaign. I walked in and said to Jake, “I know I owe you $76,000 plus and I just got my first check for the new business I put together – Jim Host and Associates.”
Jake opened his desk drawer and took out a deposit book with carbon paper in it. He said, “I never gave you any money during the campaign because you should never be involved in politics.” He said, “Here is $10,000 capital for your business with no interest due for six months. I only want one thing: a report from you every week on how your business is doing”.
A few years ago, I was speaking at Rotary and Jake came in. So before I introduced Tubby Smith, I told the story about what it takes to succeed in business – to have a banker believe in you. Jake got a standing ovation and he had tears in his eyes. Think about what Jake’s support meant. I didn’t have any money. I owed him money and he says here’s $10,000. Don’t worry about the interest for six months, let’s see where you are at the end of the six months. In one year, I had paid the loan off.
We had the first Tourist and Convention Commission meeting and the board told me why they hired me. “We have a real problem. If we don’t build a civic center on the west end of Vine Street, the city is going to have to give back to the federal government the 25 percent in-kind contribution it received from urban renewal for moving the railroad tracks in the ’60s to the outer edge of town.”
So I wrote on the back of an envelope how I thought we could do it: with a revenue stream of a ticket bond fee – which is still charged today – the Hyatt being built on city land with a ground lease going in to pay the debt service, the retail part, parking, etc.
So they hired me to be the first executive director of the Lexington Center Corporation. That was my second $1,500 per month retainer. Again, no employees yet. That is how the company got started and that was the early part of the ’70s.
EL: What was your involvement with the formation of the Kentucky Horse Park?
JH: While I was serving as commissioner of parks in state government, horse farm owners decided to close the farms to the public because of arson. Everyone was wringing their hands, because horse farms were a major tourist attraction.
I went to a meeting of farm managers and talked about developing a central location for scheduled farm tours. Horseman John Gaines saw that story and set up a meeting with me in Frankfort. We agreed that I would try to sell Gov. Nunn and he would sell Speaker of the House Julian Carroll on the horse park concept. As a result, the Kentucky Horse Park was born and the idea of bringing equine associations to Central Kentucky was conceived.
EL: After running Host Communications for over 30 years, you sold the company in 1999. Was it a difficult decision to sell your business?
JH: The answer is yes. I miss the relationships, I miss the contact with the people our company nurtured over time. I still keep in contact with a lot of the people. I sat on press row next to the P.A. announcer for over 25 years. I miss that. But on the other hand, I don’t miss the travel or going to work every morning at 5:00 a.m. – which I did all my life. I still get up that early.
I’m tickled to death for the Host employees. Most of the employees were shareholders and didn’t anticipate how much our stock would be worth. As a result, they all came out well. I run into people all over the country who were employees at one time or another. I take great pride in their success.
EL: In November 2003, Gov. Ernie Fletcher asked you to serve as secretary of the Commerce Cabinet. Why did you decide to accept this position?
JH: The governor asked me six times and after the sixth time, Ralph Hacker was doing his best to try to get me to do it. Ralph and I had been very close for many years and I kept saying no because I had no real interest in going back to state government.
Finally, the governor – through Ralph – convinced me to at least talk about it. I think probably another guy that was very critical to this issue was Mike Duncan, whom I’ve known for many, many years. I made out a list of about 35 questions that I wanted to ask the governor in a session I had with him, Mike and Ralph. The governor reviewed all 35 and I felt conditions were right for me to do it.
EL: How would you describe the initial transfer of power in Frankfort from the Democratic Party to the Republican Party?
JH: I can’t respond on how the governor recruited people, because I wasn’t involved in that phase. I was much better at recruiting people for my cabinet this time than during the Nunn administration. I was probably able to get off to a quicker start. I knew how the cabinet worked. That was a great advantage. I found state government to be much bigger.
When I was there before, there were 9,000-10,000 employees. This time there were 37,000 employees and it was much bigger in terms of the number of agencies.
EL: Was there obstruction of the new administration’s efforts by the Democratic Party?
 JH: Partisanship, this time around, was much deeper than it was before. I have always gotten along well with people of the opposite political party. I didn’t go to Frankfort this time as a bitterly partisan Republican. I just went to help my state.
There was a steep learning curve that many members of the Fletcher administration had to have. I’m not sure the total level of experience was as great as it could have been or should have been.
The governor is an extremely capable, very sensitive, outstanding human being. From day one he was under attack; there was no honeymoon.
One other thing that’s really unfair: The governor doesn’t take office until December 9, but he has to present a budget and be ready for legislators by January 5. An incoming governor doesn’t have budget and financial materials readily available especially if the opposite party is in control. The new budget director has to be loyal to the governor but isn’t yet up to speed. He or she is dependent on people who have been there, most of whom have been associated with the opposite party.
If the transition is Democrat-to-Democrat it’s OK; but if it is Democrat to Republican it’s like you fell off the cliff.
This transition was bitterly partisan. The governor wanted to make immediate changes in how things were done. In FY 2004, state government faced a $1 billion deficit in funds. Fletcher’s cabinet secretaries all dramatically cut their budgets. There were employees who resisted once you got down to the second, third or fourth level.
There were just so many issues facing the governor. The Fletcher administration made up the $1 billion deficit in that first biennium through sound business practices. When the General Assembly didn’t pass the budget, it gave the governor the tool he needed to operate state government with the same budget from the previous fiscal year. The Fletcher administration was saving the taxpayers money because the governor was able to make a lot of decisions, which historically the legislature had made during that time.
EL: Having worked extensively with the governor, how would you evaluate his job performance?
JH: His job performance is far superior to what most people may think. The whole merit system issue has clouded the public’s perception because of the negative publicity. The public has failed to recognize how well state government is being run and the fact that it is Gov. Fletcher’s leadership that has streamlined state government and eliminated waste.
If Gov. Fletcher had not had the merit system investigation, his poll ratings would be huge because of all his administration’s accomplishments in education, government efficiency, energy policy, tax modernization, branding, restructuring, the parks system etc.
If he had the opportunity to start over, the governor would probably manage more forcefully and decisively.
EL: Would you have handled the merit system matter differently from the governor?
JH: Yes. The governor has a tendency to try to make judgements based on his experience with an individual, instead of what might happen politically. If the governor knew what he knows today, he could have immediately said, “We have some people who have done the wrong thing and we’re going to stop it. I’m going to immediately call for an investigation.”
Now that’s all hindsight. The governor’s greatest strength is his humanistic approach to things. He’s a doctor and always wants to treat and bring the best out in the patient. In this case, he wanted to give the benefit of the doubt to the people who were involved.
EL: How would you describe the First Lady Glenna Fletcher?
JH: She’s the governor’s greatest strength. She’s a very smart, bright person. Glenna is his best friend and confidant, and does a terrific job of representing the state.
EL: Is the merit system issue and the governor’s indictment a serious matter that Kentuckians should be concerned about?
JH: Ernie Fletcher is the first governor to ever be indicted for a misdemeanor. There’s never been anybody indicted for merit system violations and there have been numerous merit system violations since the 1960s. In the Fletcher administration, we’re talking about 20 merit system violations out of 32,000 merit system state employees.
The issue should have all been handled by the personnel board. If there were any violations, the employees would have been put back to work, back pay made up. That’s happened many years in this state, but Gov. Fletcher’s political opponents made up their mind that this is something that could be hung around the governor’s neck from day one. Was wrongdoing done? Yes, sir. Should it have been corrected? Absolutely. Did the governor try to correct it? Yes, sir. Did he get rid of some people who were involved? Yes, he did. Could it have been handled better? Yes.
In comparison, did the governor steal the first penny from anything? Would he ever take a bribe? So you have to ask yourself, is Gov. Fletcher a criminal? Absolutely not. Is this governor a bad person? Absolutely not. Is this governor the kind of person you want representing you wherever you go? Absolutely. Is he honest? Absolutely. So then you start asking yourself, what is this indictment all about?
It’s all about the people who manipulated the system for decades. They say this isn’t about the past, this is about upholding the law now. There been abuse in the past, much more than in the Fletcher administration.
Attorney General Greg Stumbo went through every cabinet trying to find violations in the merit system and couldn’t find them. Investigators went through my cabinet because the park system historically had been one of the Democrats’ political dumping grounds. They couldn’t find the first violation of the merit system. During the next three, four or five months, Kentuckians are going to wake up and say, “Wait a minute. What is this really all about”? Democrats don’t want a Republican governor and his administration in power. They want to come back in and regain control.
EL: Do you feel that Kentucky’s major newspapers have fairly reported on the merit system issue?
JH: They have gone overboard; the Herald-Leader more so than the Courier-Journal. The news reporting has probably been more accurate than the editorial commentary. The reporters have tried to report what they see; the editorial boards have reported what they feel. You can always take issue about how somebody writes or says something; having been a journalist from the radio and television side I understand that.
There’s no question that both papers were opposed to Ernie Fletcher getting elected. They weren’t for Fletcher then and they look forward to when he leaves office. It has been that way for a long time and I’ve never known editorial boards to elect a governor.
The newspapers didn’t have anything to do with electing Ernie Fletcher and they certainly did not have anything to do with electing Sen. Mitch McConnell or Republicans generally. Political leaders have to go to the public with what they feel strongly about and are trying to do. I’m not sure the Fletcher administration has done as good of a job as it could in communicating the positive things it has done.
EL: The governor has had a lot of changes in press secretaries.
JH: I served as an interim press secretary for three months. A lot of the changes have been caused by the pressures of the job; it’s a very high-profile, tough kind of job. The press doesn’t take any prisoners as to what their demands are. If you are doing your job right you are responding as quickly as you can. I did that job for three months while I was also running the Commerce Cabinet. I can tell you the pressures of both were as much as I wanted.
EL: How would you evaluate Attorney General Greg Stumbo’s management of the merit system case?
JH: It has been very political. Greg Stumbo has shown why he was majority leader of the House of Representatives. He has shown why he got a number of projects back to his home area. He’s a savvy, extremely political person.
EL: As commerce secretary you made substantial changes in your cabinet. Could you make a brief comment on each of these subjects?
State branding
JH: When I got to Frankfort, I found there were 52 different logos being used by various state agencies to explain what services they provided. There was no coordination of advertising and marketing; 13 different advertising agencies were handling the state’s business. I felt strongly that the state needed to have one central campaign throughout all cabinets. “Unbridled Spirit” has been a huge success. Kentucky is on the way to having a permanent brand that people accept and like.
EL: Kentucky State Parks
JH: There was no reservation system in state parks when the Fletcher administration came into office. The only way a person could reserve a room was to call the park. I’m convinced to this day that was so local politicians could control a particular park in terms of keeping rooms for their friends. When the Democrats controlled state government, they had a political patronage person in each county who approved jobs and the people who got hired. Don’t tell me about the merit system issues when the fact is that every single person who came to work for the parks system, including summer jobs, was approved by local patronage. That does not happen now.
The parks’ new central reservation systems resulted in increased occupancy. We also instituted an overall training system in all parks.
The Parks Department found 72 cars that were up on blocks and insurance had been paid on those cars for as long as 10 years. We went park by park and analyzed the whole transportation system. As a result, parks saved a significant amount of money again. Our parks system has made dramatic changes.
EL: Why did you decide to resign as secretary of the Commerce Cabinet?
JH: I told the governor I would give him two years. I was very focused on what I was doing and hadn’t taken a day off. I threw myself into the job like I would do with my own business. I felt strongly that if I didn’t stop at 68 years old that the job was going to stop me. So it was a health issue.
If I had been 10-15 years younger, I might have stayed a little bit longer. At the time I resigned, everything in the cabinet was positioned right and I could turn it over to Commissioner of Parks George Ward who understood everything the Commerce Cabinet was doing. He’s done an outstanding job since he succeeded me and I don’t feel the cabinet has missed a beat.
EL: Since your resignation, Gov. Fletcher has asked you to head the Louisville Arena Authority and the 2010 FEI World Equestrian Game Commission. What is the current status of Louisville’s new arena?
JH: We’re on the two-yard line, first and goal. We’ve got five memorandums of understanding that need to be done in the next 30-60 days with various components to finish the initial stage so we can begin demolition of the LGE riverfront property. We’ve very close. The arena authority has done a terrific job.
We will be interviewing five companies that want to be the construction manager. We are also going to pick an accounting firm through the RFP (request for proposal) process. So we are making huge strides. We’re hoping to open the arena in the first quarter of 2010, but no later than basketball season of 2010.
EL: Are you concerned about the arena’s long-term operating costs? Government often builds a monument but can’t afford to operate it.
JH: We are using the same kind of revenue streams in Louisville as the Lexington Center has used successfully – except much larger. We have a debt service reserve built into the arena proforma. We have a large surplus in the revenue estimate. There is no reason the Louisville Arena shouldn’t be as successful as Lexington Center.
Now does that mean I’m giving you a thousand percent guarantee that it’s going to be successful? I can’t answer that because it’s going to be up to the Kentucky State Fair Board when they operate it. This agency has excellent track record of operating the Kentucky Exposition Center and the Kentucky Convention Center properly, so there’s no reason to think they won’t operate the Louisville Arena just as well.
EL: What about the revenue loss for Freedom Hall ?
 JH: The arena has agreed to make up any shortfall to the Exposition Center caused by convention business moving from the fairgrounds to downtown. The fact is that Freedom Hall has to hold up bookings because it does not get the basketball schedule from U of L sometimes until September. The Expo Center is a different type of facility than the downtown arena. It attracts a lot of agricultural events and various truck and car shows that need to use Freedom Hall. So with improved availability, we anticipate the fairgrounds will attract a lot more events. The Exposition Center, when renovation in finished, will be in the top five of all facilities of this type in the United States.
EL: I would appreciate your comments about the following executives who are working on the 2010 FEI Games.
Tandy Patrick, chair of the Kentucky Horse Park
JH: Of all the volunteers, she may be the best with whom I’ve ever worked. Tandy is very talented. She has a saddle-bred background; owned them all her life. She is a highly qualified attorney with Greenebaum Doll & McDonald. Without her I don’t think the Horse Park would have been anywhere close to getting the FEI games. She is very understated, never accepts praise. She is just terrific.
EL: John P. (Jack) Kelly, new CEO of 2010 FEI Games
JH: Jack Kelly is a former head of the Goodwill Games for Turner Broadcasting, former head of two different Olympic festivals, and was a finalist for the head of the United States Olympic Committee in 1990. He is currently chairman of USA Baseball. I’ve known of him for years. As CEO of the Houston Sports Commission, Jack was responsible for the NCAA Final Four going there. I checked him out and he got glowing reports. We wanted somebody with experience in marketing, sales, and understanding budgets.
EL: John Nicholson, executive director of Kentucky Horse Park
JH: John is the president of the 2010 Foundation and executive director of the Horse Park. Without John being the glue during the last seven or eight years, the Horse Park wouldn’t be close to what it is. John is accepted by all of the horse organizations that come into contact with him as being one of the most competent people in the country.
He’s a non-merit employee so in essence he could have been replaced. Having been so closely associated with the park as I have been over a period of time and knowing his professionalism, I didn’t move him or recommend that he be moved. That’s probably one of my best personnel decisions.
EL: Rob Hinkle, CAO of 2010 FEI Games
JH: Rob Hinkle was a Disney employee. John Nicholson recruited him to the Horse Park. The chief administrative officer position is perfect for him because he is an equestrian rider; he understands the sport and has been deeply involved in organizing all the events at the park. He developed relationships a long time ago with FEI officials internationally and helped put together the winning bid. He and Jack Kelly will be a great team.
EL: John Long, USEF CEO
JH: If there is a dream person to work with, it would be John Long. John is the chief executive officer of the U.S. Equestrian Federation and former president of Churchill Downs. There is a three-legged stool on the executive committee of the 2010 FEI Games. It’s me as chairman, John Long, and Michael Stone (interim secretary-general of the FEI). The three of us are the governing body of the 2010 games. Jack Kelly reports to the chairman of the 2010 games.
EL: What are some of the major benefits of the 2010 games for Kentucky, the equine industry, and the Kentucky Horse Park?
JH: From an economic development point of view, Kentucky will have the top CEOs from Europe – and their sons and daughters – coming to these games because of the demographics the FEI Games attract. The equestrian sport is huge in Europe. The games will be attracting people who have never been to Kentucky. The games will create a huge economic development benefit for years to come.
The event will attract a huge number of people and create a $200 million potential impact. Pre-game events will also draw a large number of people and the Horse Park will soon announce another huge event that will have a major economic impact on the area prior to 2010. It is our dream going forward to create a U.S. Equestrian Masters event that will take place in the fall starting in 2011.
EL: Since your “second retirement,” you have expended a great deal of time working on the Louisville Arena and the 2010 FEI Games. What does your wife, Pat, have to say about your ongoing involvement?
JH: She loves to see me happy and she knows that I’m not one that is going to sit around the house. If I wasn’t working on these projects, then I’d probably be doing something else. Start another company or two. I’m not going to slow down, but I’m going to do it on my own schedule and time. Pat and I traveled overseas three years ago and loved it. So we want to travel more.
EL: Looking back over your highly successful career in sports, business, and politics, what advice would you offer young men and women who are recent graduates from Kentucky’s colleges and universities?
JH: Take every English course so you can to learn how to write. Young people have learned to write on computers, but haven’t learned about journalistic style, grammar, and punctuation. You can’t learn to write with spell check.
Take every speech course you can. Learn how to communicate, because you will never be successful in business or life if you don’t know how to communicate verbally or with the written word. Those are the two pieces of advice I give every young person.
EL: How can young adults be successful after graduating from school?
JH: Tell the truth and never deviate from the truth even when it hurts. Do not deviate from doing things the right way. With integrity and character you can build great companies. Hire people with great attitudes. Negative people are bad apples and good companies spit them out. There is no substitute for hard work and there are no short-cuts to being successful.
EL: If you could live your life over again would you do anything different?
JH: The answer is there isn’t one thing I would do over. How could anyone ever build a relationship business from scratch, be in the sports business all your life, be able see every sporting event you wanted to attend, and run major associations that took me all over the United States and the world (and have regrets)?
If I had it to do if all over again, I wouldn’t change a thing. I’ve loved every minute of every day I’ve spent on this earth to the point that my favorite expression is “I can’t sleep fast enough.”
Ed G. Lane is chief executive of Lane Consultants Inc. and publisher
of The Lane Report.
edlane@lanereport.com
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