Get SF Weekly Newsletters
Pin It

Fall Into the Cash 

Let's hope the Fishers use it to clean up the messes they've created.

Wednesday, Apr 23 2008

Don Fisher, the iconic founder of the Gap stores, is known for the messes he and his sons step into. A few years ago, he invited a boycott of his company by bringing his sons into the side business of cutting down rare redwoods. The idea, Fisher said in his autobiography, was to improve the family cash flow.

During the 1990s, Fisher persuaded his sons to invest in the illegal-drug operation known as the San Francisco Giants to keep the team from moving to Florida. In 2005, his son John Fisher then bought the Oakland A's just as the baseball steroids scandal was heating up.

Two years ago, John Fisher contributed to the defeat of a ballot initiative that would have given California's 4-year-olds universal, free public preschool. Don Fisher spends portions of his vast fortune financing and lobbying on behalf of charter schools, which he values in part for their potential to undermine teachers' unions.

Last year's top San Francisco political drama involved a failed Fisher-backed ballot initiative that would have helped clog the city with traffic by increasing parking spaces for cars.

On June 1, the Presidio Trust will release an environmental review for a controversial plan to house Fisher's massive art collection in a $100 million building in the park's old post area. "You mean build a huge iconoclastic building in one of the great historic districts in America to ruin it?" is how Fisher political opponent and S.F. Board of Supervisors President Aaron Peskin described that move. Earlier this month, a National Park Service official formally added his voice to this criticism, possibly laying the groundwork for a messy citizens' lawsuit seeking to halt Fisher's museum on historical preservation grounds.

In other words, the Fisher family has long been perceived as a scourge on San Francisco. Thanks to a recent $400 million family cash infusion, obtained by partially bailing out of Gap Inc. shares, the Fishers have an opportunity to inflict more of the same — or to turn their bad-citizen image around.

Perhaps instead of using family money to saw down ancient endangered forests, worsen the lives of families with young children, and turn the Presidio's national park area into a temple to tycoon megalomania, the family could use the new money to undo some of the bad that their older money has done. Perhaps John Fisher could use his A's perch to lobby for real — rather than the currently bogus — drug testing in baseball. The Fishers could undo the damage of their campaign against public preschool by repenting, and backing a new pro-preschool ballot initiative. They could end their campaign against the teachers' union, and enable an agreement to allow the private charter schools they support to become unionized. The Fishers could turn their family redwood logging operation into a nature preserve. And Don Fisher could abandon his Presidio museum plans — saving a bundle on potential lawsuit costs — and use the money to convert the Gap Building at Folsom and Embarcadero into the art museum it was initially designed as.

The Fishers are apparently in the process of gradually falling out of the Gap. Family members might think about using the money to fill gaps in their weakened legacy.

Receiving far less attention than the Fisher clan's proclivity for stepping into messes is a muddle the Fishers are quietly, gradually, stepping away from: Gap Inc. itself.

According to announcements in the company's financial statements, during the past two years family members and the entities they control were expected to sell more than $400 million in Gap stock back to the company. They were to have cashed out $250 million last year, and $158 million this year.

As of last year, the Fisher family owned 34 percent of the company's shares, public filings say. Given that we're talking about a $14 billion corporation, the family is cashing in only a bit more than 9 percent of its Gap holdings. Percentagewise, that's the kind of portfolio diversification some of us do when we buy a pair of pants.

Notwithstanding, when insiders sell large blocks of shares — and the Fishers are the ultimate Gap insiders — it can be perceived as a signal that they've lost faith in the company's future growth. Retailers, Gap included, face a potential bloodbath in the current recession. The company recently enjoyed a stock price uptick after Gap Inc. announced it was essentially cannibalizing itself. The company last year cut 2,200 jobs, closed its matron-focused Forth & Towne division, and announced it would close 35 more Gap stores than it opens this year. The company says it will shrink its sales floors. And, if one is to believe a Gap employee blog, the company has been telling its sales staff to focus more on pushing Gap credit cards instead of customer service.

But the Fishers' share sell-off is actually of limited use in predicting the company's possible ill fortunes because of the highly public, systematic manner in which it has been performed. During the past two years the company has made public a series of Fisher-family share repurchase agreements, and has followed up with a press release announcing the family's sale of shares.

"If [Gap Inc.] were about to shit the bed, this isn't how you'd get out," noted one Wall Street analyst who didn't wish to be identified because he cursed.

The company, for its part, calls the sell-off "normal investor diversification."

So the question becomes not what the founding-family share bailout means for Gap Inc., but what the Fishers' increased liquidity means for San Francisco.

Will they use this money to underwrite more baseball drug abuse? Figure out some other way to hold down low-and middle-income families with preschool-age children, as they did when they helped defeat the 2006 preschool-for-all initiative? Or will they grow the empire of Fisher-backed charter schools until they finally bust the Fisher-despised California Teachers' Association?

Perhaps. Or they could experience a Scroogelike moment of atonement, and use their $408 million for truly worthy causes, such as undoing the damage they've already done.

The ethos of San Francisco's homegrown "progressive" movement is concerned less with traditional left-wing issues such as poverty, the environment, and racism more than with fighting against changes in the local physical environment. San Francisco's best days are behind it, this rearview-mirror-gazing sensibility says. So don't alter anything.

During the 1980s, these residents fought to stop the construction of skyscrapers. In the 1990s, they rose up to battle live-work lofts. Currently they're strategizing and propagandizing to prevent the construction of apartments in areas of the Mission, Potrero, and SOMA neighborhoods, citing a mysterious need for a midtown "industrial preservation zone."

In their efforts to freeze San Francisco in time, this group has a potential patron saint — an S.F. Mumia Abu-Jamal, if you will — in local real estate investor Luke Brugnara. This great man is currently facing charges of tax evasion and endangered-species poaching. If local progressives truly believe in the preserve-it-in-amber ethos they profess, they should join the incipient popular movement, launched this very moment right here, to prevent the IRS and government wildlife officials from throwing Brugnara in jail.

Brugnara was no idle S.F. progressive. He backed his heroic dreams for a fully-preserved city by risking more than $32 million. Brugnara put his personal prestige on the line, and, according to a new IRS indictment, he now risks going to prison for three years as punishment for the way he supported the cause.

In 2002, Brugnara laid out his vision of a San Francisco–themed casino in Las Vegas for SF Weekly's Jeremy Mulman: "You'd enter over the Golden Gate Bridge with water running under you," he enthused. "You'd have a cable car going up through a mock skyline, past Victorian homes and everything. I mean, it would be like one of those things you'd see in a snow globe, a condensed version of the entire city, with Coit Tower and the [Transamerica] Pyramid if we could get rights on the Pyramid. ... You could have a Chinatown full of slot machines. You could have the Castro District ..."

Like the current preserved San Francisco, where rents and property values continue upward because new buildings rarely get built, Brugnara's San Francisco in Las Vegas would have been exclusively for the rich and totally kitschy and annoying. It would have been, in other words, a monument to the San Francisco that progressives have so far built.

Tragically, Brugnara's erstwhile plans to turn his $32 million purchase of a decrepit Vegas Strip casino into a grandiose San Francisco–themed resort crapped out. The Nevada Gaming Commission determined he was not fit to hold a casino license, thanks to a past that included alleged threats of violence, medical-waste dumping, and other perceived slights. In 2002 he sold most of his Vegas lot, earning a profit of $8,458,399, according to an IRS indictment, which earlier this month charged him with failing to report income on his tax returns. If convicted, Brugnara could face three years in prison. That doesn't include recent charges he's facing for allegedly poaching endangered trout on a 200-acre property he bought near Gilroy with cash earned selling properties at the start of this century.

San Francisco progressives: Keep Luke Brugnara free.

About The Author

Matt Smith


Subscribe to this thread:

Add a comment

Popular Stories

  1. Most Popular Stories
  2. Stories You Missed
  1. Most Popular


  • clipping at Brava Theater Sept. 11
    Sub Pop recording artists 'clipping.' brought their brand of noise-driven experimental hip hop to the closing night of 2016's San Francisco Electronic Music Fest this past Sunday. The packed Brava Theater hosted an initially seated crowd that ended the night jumping and dancing against the front of the stage. The trio performed a set focused on their recently released Sci-Fi Horror concept album, 'Splendor & Misery', then delved into their dancier and more aggressive back catalogue, and recent single 'Wriggle'. Opening performances included local experimental electronic duo 'Tujurikkuja' and computer music artist 'Madalyn Merkey.'"