15 Biggest Business Stories of 2015 in Rhode Island

#15

Green Airport - 3rd Best in US

T.F. Green Airport has been voted as the 3rd best in the country by the 28th annual Conde Nast Traveler Readers Choice survey. Green is the top rated airport in New England and follows only Indianapolis and Portland Oregon for best in the country.

“We could not be more pleased and proud that Green is again rated as one of the best in the US and the best in New England. This acknowledgement reaffirms that people truly enjoy using our airport for the exceptional customer service and pleasant travel experience. 

We share this latest recognition with all our travel partners, who work to ensure a safe and efficient journey and make Green one of the best airports in the country. We also thank those who took the time to vote for us in the Conde Nast Traveler’s Readers’ Choice Awards and congratulate the other airports on the list," said Kelly Fredericks, Rhode Island Airport Corporation President and CEO.

https://www.golocalprov.com/business/new-t.f.-green-ranked-3rd-best-airport-in-country

#14

The Business of Marijuana

The marijuana industry is at its early stage in Rhode Island, but controversial issues are already emerging. The state’s oversight commission has failed to meet. And there are concerns about pricing:

As GoLocal Reported:

Members of the medical marijuana community are questioning what the say are high prices and limited supply at the state's three medical marijuana compassion centers -- and are blasting the state for no legislative oversight of the facilities as mandated by law.
"Recently I've been getting a lot of complaints from patients about what's going on at the compassion centers," said Bill Cotton, who founded the B&B Medical Marijuana Evaluation Center.  "I had a patient call and tell me compassion centers are charging $240 for a half ounce, and will only sell in grams or eighths.  The average price off a caregiver is $200 an ounce -- at the compassion centers, it's $350 to $400 an ounce."

"The compassion centers are saying the caregivers are charging them too much," said Cotton.  "You'd think there would be enough on the shelves.  60% of the patients I see are on Social Security.  These compassion centers are supposed to be helping the most in need."
Cotton noted that the enabling legislation called for a legislative oversight committee -- which he says hasn't met.

#13

Potential Bankruptcy of Big Radio

The two largest radio groups in the United States are on the verge of bankruptcy according to media experts. Combined, the two groups own 75% of the radio market in the Providence market.

As GoLocal reported this month:

Most of Rhode Island's favorite radio stations may be impacted by a building Wall Street financial meltdown in the radio industry.

The two biggest radio companies in the United States are on the verge of massive restructuring or bankruptcy, as they each have billions of dollars in debt and little chance of managing the building financial obligations.

How bad is the situation?  According to one leading radio analyst, the problem is catastrophic.  “$20.5 billion in debt for iHeart — billions more than the city of Detroit when it went bankrupt.  As I have been reporting, the venture capitalists are circling the carcass for a 2017 bankruptcy.  At Cumulus, new CEO Mary Berner has done nothing new except hire another person from outside the industry…They want to go bankrupt and her experience taking Readers Digest into Chapter 11 is her qualification to be CEO,” said Jerry Del Colliano, Publisher, Inside Music Media.

iHeart radio (formerly Clear Channel) and Cumulus are both facing in economic turmoil and those two groups combined own and operate seven of the top ten most listened to stations in the Providence market. 

RADIO IN RI: SEE THE TOP TEN STATIONS BELOW

“iHeart has more debt — unplayable, at double digit interest rates and the junk bond markets just crashed.  Cumulus has about $3 billion of debt that will have to be refinanced. Both are in an industry that is trending down.  Break even is the new growth in radio.  They’re both done,” said Del Colliano.

#12

Twin River - Buys Newport Grant, Fights of Plainridge and Looks to Relocate in Tiverton

GoLocalProv broke the story of the sale of Newport Grand to Twin River — the event was the beginning of big year for casino company.

Former Providence Mayor and developer who took control of Newport Grand slot parlor in 2014 is flipping the property to Twin River Casino’s parent company according to sources close to the deal.
The Newport Casino sought to expand the gaming license to include table games, but referendum while was approved statewide, it was defeated in the host community of Newport.

#11

A Tough Year for Providence Equity

As GoLocal reported:

Altegrity, the embattled firm owned by Providence Equity which has been at the forefront of a federal lawsuit, is facing seizure from creditors, according to reports. 

On Wednesday, the New York Post reported, "Oaktree Capital Management and other lenders are a few weeks from a deal to grab control of Altegrity from private equity powerhouse Providence Equity Partners -- only six months after Providence had refinanced the company's $1.75 billion in loans."

In 2007, Providence Equity bought Altegrity, the parent firm to US Investigative Services, LLC, from two other firms for $1.5 billion, including $780 million in equity.  

The Justice Department filed a lawsuit in January against USIS in the wake of the Edward Snowden scandal, for improperly vetting Snowden and other candidates handling classified information.  

Major Implications for Providence Equity

In January, GoLocal's Dean Starkman reported on the precarious situation Providence Equity -- founded by Brown grad Jonathan Nelson -- has found itself in, in the wake of the Snowden fallout.

As GoLocal previously reported:

A blockbuster federal fraud suit filed yesterday against the Virginia security contractor charged with vetting Edward Snowden is having massive reverberations – and nowhere more so than in Providence, where it threatens the legacy of one of Rhode Island’s top financiers and favorite sons.

The Snowden case, the biggest U.S. security leak since the Pentagon Papers, may seem like a remote affair, involving a lone security analyst based in Hawaii who leaked National Security Agency files in Hong Kong, now lives in limbo in Moscow, and has President Obama and the Washington policy establishment grappling with the fallout.

#10

Projo's  Decline

The Providence Journal recorded another tough year. The paper was faced with more layoffs and buyouts, the copyediting function was cut, the paper faced a federal complaint by the teamsters, their office were shrunk by 82%, and the cost of the paper was doubled in March to $2.

Two local news organizations claimed the Projo lifted their content

The Providence Journal has been called out for plagiarism for the second time in two weeks for lifting another news organization's journalism.
On Tuesday, in the midst of the breaking Gordon Fox plea on federal crimes, a WPRI-12 political reporter called out the Providence Journal in a tweet for copying word for word a paragraph of a WPRI article that had been published earlier that morning. The Providence Journal had copied one entire paragraph of the WPRI story.

The Tweet by Ted Nesi at 9:15 am included the two clips with the identical language, “These two final paragraphs look awfully similar, @Projo…” 

This is the second time in the past ten days the Providence Journal has been called out by a competing news organization for plagiarism.  On February 22, GoLocalProv reported that GoLocal’s lawyers had filed a complaint with the legal counsel of the Providence Journal’s parent company, GateHouse Media, for “free riding” on GoLocalProv’s journalism.

#9

Tourism in Rhode Island

2015 was a big year in tourism. First, it was a banner year for tourists in RI. The great weather, Volvo Race, and all resulting in a positive impact on the economy.

Three of Rhode Island’s best known attractions were involved with high profile lawsuits and the state dramatically revamped its tourism strategy. Rhode Island upped the budget and then selected two out of state firms to revamp the messaging and advertising.

As GoLocal Reported:

Three Rhode Island tourism icons are facing legal battles as the summer of 2015 gets underway -- the Ocean Mist in Wakefield,  and in Newport, Touro Synagogue -- and the Breakers Mansion. 

Ocean Mist vs South Kingstown

The popular oceanfront bar has been fighting a battle to stave off construction of a new seawall in Matunuck for years now, and the war of attrition continues. 

An online petition to "Save the Ocean Mist" had garnered over 5,300 signatures in an effort to drum up support to draw people to a Coastal Resources Management Council hearing in June of last year, but the CRMC voted in favor of the town -- and the construction of a new seawall -- by a vote of 5-4

"The Town of South Kingstown wants to build a seawall which will be built along the road, at the cost of the tax payers for several million dollars. Our position is that it will destroy the beach, it will destroy the Ocean Mist and will not protect the road, the water main or the people of Matunuck," wrote the petitioners. "Not only will their proposed wall not protect anything, the act of drilling the sheet piles for it will most likely damage the Ocean Mist irreparably."

In light of the recent legal developments, the town of South Kingstown is moving forward -- but not without a challenge from the Ocean Mist owner Kevin Finnegan -- and lawyer Bill Landry.  

"The Town anticipates that its construction contractor will mobilize soon after Labor Day 2015 and work throughout the winter season, with an anticipation project completion on or about Memorial Day 2016," said South Kingstown Town Manager Stephen Alfred.  "Mr. Finnegan has outstanding a count for “Negligence, Trespass and Nuisance” which in essence claims that the town’s course of action in building the sea wall violates a “duty of care” that property owners owe to each other not to inflict substantial damage to the other’s property.  He claims that our building of the sea wall threatens Ocean Mist with immediate and irreparable harm to his property.

#8

Superman - Domino Effect

It is still empty and the effect it is having on the value of commercial real estate is significant. The Superman building may have no value which creates a drag on the value of other building. 

As GoLocal reported in a series of artilces:

Now the new owners of the Providence Journal Building are seeking a major reduction in the assessed value 

Will a new appraisal of the Providence Journal building that is two-thirds less than what the city last had on the books have a spillover effect to the rest of the city’s commercial real estate tax base?
GoLocal reported Thursday that a battle is brewing between lawyers and appraisers worth millions over the next decade centering on the Providence Journal Building on Fountain Street. The building had last been assessed by the city at just over $10 million, while new owner Buff Chace purchased the property this year for $3.2 million -- and a third party appraiser just pegged the value at $3.6 million. 

“Look, the [Vision] appraisal wasn’t smart on that property,” said Providence real estate professional Tom Sweeney of the city's last assessment. “The best indicator as of December 31, 2015 is what it sold for, no question in my mind.  Of course [other] people will try and come in and use that -- but people will be asked for their rent roll.”

The development comes on the heels of Moody’s revising its outlook to "negative" for the city. 

“Owners and property developers want to be treated fairly and play on a level field. Providence does not have a business friendly reputation. This is why there are few cranes in the sky in Providence and very few new businesses coming to the city or planning to expand in the city,” said URI Distinguished Professor of Business Edward Mazze.

“Most if not all owners of large commercial properties in Providence will probably consider getting their property(ies) reappraised to lower their taxes. Lower tax payments go directly to the bottom line of a business,” continued Mazze. “Many commercial properties in Providence have lost some value as a result of the 2007 recession, the poor image of the State as a place to do business and the movement of businesses from Providence to suburban areas, other states and to people's homes. Three common signs seen in Providence are building for rent, building for lease and building for sale.”

Superman Impact —  The Industrial National Bank building being empty had a major impact on one real estate investor.

While the actual new appraisal of the Providence Journal building by the city remains to be determined by the city, former Providence Mayor — and real estate investor and developer — Joseph Paolino said that the Journal building is not the biggest issue for Providence, in his opinion.
“The City of Providence will have their own appraisal, that's the owner's take,” said Paolino of the new $3.6 million appraisal of the former Journal building. “You have to see what the income is in the building, how much money the owners are putting in, and what their projections are.”

“I think the biggest problem is Superman, because it depresses everything around it,” said Paolino of the empty iconic Industrial National Bank building downtown. “To me that's the key --- more so than the Journal building.”

Paolino, who bought three properties nearby downtown back in 2014, said the revelation that the Industrial National Bank building was empty had cost him a mortgage with a major lender.

#7

Downtown Hotels

In a City that has not seen a crane building anything in years you would think it would be easy to build a hotel or two, but as GoLocal unveiled in 2015, it isn’t.

See this piece from earlier in the year:

The impasse over the Procaccianti Group's extended stay hotel proposal at the Fogarty Building downtown has pitted construction workers who say they need the work, against hotel workers union. Hotel workers have been battling with Procaccianti Group over working conditions and wages at the Renaissance and Hilton hotels for years. The question is will more hotels create more jobs and, thus, help raise wages.
The Procaccianti group is looking for a tax stabilization agreement from the city for twelve years for the project, saying it would created up to 200 temporary jobs -- but arguments over permanent jobs -- and the quality of those jobs -- is dividing both unions and city council members, with the measure on hold until the council comes back in session later in August. 

#6

Deepwater

The emergence of Deepwater Wind as a national leader in offshore wind is coming to realization. The project is the national model and could help to transform RI’s economy.

As GoLocal wrote in October: 

Deepwater Wind's five turbine Block Island Wind Farm will be the first offshore wind farm in the nation, located just three miles off the southeast coast of Block Island.
The wind farm will export 90% of the island's power back to the mainland through an undersea transmission cable, the Block Island Transmission System.

“We’re incredibly proud to be at the forefront of a new American clean-tech industry,” said Deepwater Wind CEO Jeffrey Grybowski. “This moment has been years in the making – and it’s just the start of something very big," said Deepwater Wind CEO Jeffrey Grybowski.

The project will supply over 100,000 megawatt hours annually and reduce energy costs for the island and air pollution across southern New England for years.

#5

Volvo and Coming Back to Newport

The Volvo Races of 2015 was a dramatic success for Newport and Rhode Island and now the race is coming back.

As GoLocal was first to report:

GoLocalProv has learned that the successful Volvo Ocean Race will return to Rhode Island to 2018, pending the execution of the long negotiated contract.

According to multiple sources involved in the effort to return the successful race to Newport, an announcement may be held as early as Friday of this week.

The race drove tens of millions into the Rhode Island economy. Efforts to reach Brad Read of Sail Newport, the local non-profit who hosted the event have been unsuccessful.

Before the Volvo Ocean Race left Newport for Lisbon, Volvo Ocean Race CEO Knut Frostad shared with the media that the Newport stopover saw the most visitors (quadruple that of any previous North American Stopover) since the race started visiting North America in 1989-’90, and he noted the enthusiasm of local residents.

“I’ve been to an American stopover seven times now and can’t recall anything as good as this,” Frostad said of Newport last May. 

Frostad also said that although it took a while for the race to visit Newport, a key to returning would be a strong commitment from governing officials. Frostad noted that Rhode Island Governor Gina Raimondo and RI Senate President Teresa Paiva Weed were committed to bringing the race back to the City-by-the-Sea. 

#4

PawSox (see additional next week’s biggest stories of 2015)

It was supposed to be a bit of a homerun. The PawSox new ownership was a dream team with a net worth of billions, their front man was one of Rhode Island's best deal makers and they had the early support of some key elected officials including newly-elected Providence Mayor Jorge Elorza.
Now, just about six months later, the project collapsed.

Jim Skeffington died unexpectedly and left the project without a leader for several months, but the issues, miscues and the size of the financial demands have been some of the biggest factors.

#3

Start Up Economy

The future to Providence's economic recovery may hinge on the shoulders of startups.

As GoLocal reported:

Providence has been ranked as a top market to found a company outside of Silicon Valley and New York -- and leaders in the Rhode Island startup industry are saying that the coming year could present significant opportunities in the market. 
Based on criteria of affordability, availability of capital, success of early-state companies, and a community of entrepreneurs, new research company DataFox placed Providence in its fifteenth - and final -- spot on its "2015's Best City to Found a Startup" list.     

"Though Rhode Island's economy took a hit during the recession, its tech scene remains a bright spot and source of pride. The cost of living is much lower than nearby Boston, and Providence boasts intellectual and cultural capital to spare. The city stands out in our study for the rapid growth of its young startups, as well as its affordability high density of entrepreneurs," wrote DataFox. 

#2

Nabsys

The exclusive reporting by GoLocalProv on the collapse of the once promising Nabsys unveiled the loss of millions to the State of Rhode Island and costing Governor Gina Raimondo’s own Point Judith Capital millions as well.

GoLocal has also learned more recently that former CEO Barrett Bready has purchased the assets of the company from a workout group for just $500,000. The company had raised approximately $50 million.

When GoLocal first broke the story in September:

Providence-based startup Nabsys -- who had raised about $50 million and was considered a rising rock star in the genome-mapping world -- has closed its downtown office.  
The company, which had been most recently located at 60 Clifford Street in Providence, was shuttered on Friday, with a For Lease sign in the window.  A parking lot attendant across the street said that the forty plus employees had previously parked there were gone.

According to multiple sources and Valentin Dimitrov, who served as the Manager of Detector Design and Evaluation for Nabsys since 2010, told GoLocal the company has been "closed for a couple of weeks now."

The company was able to secure win after win of venture and equity funding, including funds from Rhode Island's Slater Fund - who featured Nabsys as one of their successes. Governor Gina Raimondo's venture fund invested in Nabsys and the now-Governor served on the company board. Raimondo's venture fund, Point Judith Capital, manages millions for both the State of Rhode Island and the City of Providence.

#1

Teespring Leaving RI

Maybe the saddest economic story GoLocal broke in 2015, was the loss of Teespring. The startup company that was nurtured at Brown is on every business magazines hot company list, but not only did the superstar company leave RI, but neither state or city officials did anything to retain them.  

Sadder yet, a GoLocal investigation shows that no one in state government even knew who the company was.

A GoLocalProv public document request to the Governor’s office, Commerce Corporation, Providence Mayor’s office and Providence economic development officials found that none of them had a single meeting with the Teespring in 2015. The company tagged as one of the hottest in America has announced it is moving to Kentucky and California.
In 2014 and 2015, Teespring raised $55 million in venture capital funds from many of the top funds in the country. The Brown start-up has been compared to an Uber and AirBNB type of company and is expected to do over $200 million in sales in 2015. All of this business momentum is great news for the Brown University - spinoff, but the bad news it will be growing and hiring in San Francisco and Kentucky and not Rhode Island.

"I am not surprised. Many of our economic development officials are not businesspeople. They have their "model" of what they think Rhode Island needs. These officials are looking for "home runs"  -  find a new business that will create jobs even if the business may not be good for the state," said URI Distinguished Professor of Business Edward Mazze. "They do little for existing businesses and specifically for businesses that could use professional help in management and financing. They introduce programs that can't be implemented  because they do not understand the basics of operating a business in Rhode Island."

What may have been the perfect RI start-up who raised over $50 million in venture funding is moving its operations to San Francisco and Kentucky.  Teespring is considered by some in the venture world to have the elements to be one of those great companies - an Amazon, Google or Uber. The company is eliminating 70 jobs in Providence and announced 300 new jobs in Kentucky.
The now, San Francisco-based Teespring manufactures and sells T-shirts designed by people around the world.

Brown University grads Walker Williams and Evan Stites-Clayton founded the company and Betaspring helped to nurture it.  In early 2014, GoLocal tagged them as one of the sites 14 to Watch in 2014.

It was suppose to be the perfect RI story - young Brown grads, developed in RI, a company model that combined tech with manufacturing and tens of millions of venture funding.