Mystery man: Freeman emerges from shadows to help buy Preds

David Freeman, the lead businessman in buying the Predators, never has owned Predators season tickets but saw buying the team as a civic endeavor

Email | Print By Richard Lawson

08-09-2007 12:57 PM — David Freeman, the Nashville businessman leading the group to buy the Nashville Predators, has never owned season tickets for the team.

That fact probably will come as a shock to a lot of people. In one sense, his not owning season tickets could be viewed as symptomatic of what the team has faced for years – lack of substantial support from the business community for the team. But it is tough to sell tickets to someone if he isn't a big hockey fan.

Freeman's admission on the season tickets came with something of a sheepish grin, seeming almost embarrassed. His decision to put together an ownership group to buy the team had to do primarily with a sense of civic duty, good timing with the sale of his medical waste company Commodore Medical Services and a general desire to do deals.

While not a huge hockey fan yet, he is a fan of Nashville and he clearly understands from a broader view what the team has meant for the city. "My motivation with this is that it is something that needs to happen for continued development in Nashville," he said.

Then-Mayor Phil Bredesen wasn't a huge hockey fan either but knew what bringing a professional sports team here had the potential of doing for the city. The Predators came in as the city's first professional sports team and it helped reinvigorate downtown and also added a selling feature for economic developers trying to recruit companies here and companies trying to recruit employees. The arrival of the Tennessee Titans added to that.

From Freeman's standpoint, losing the team would have hurt Nashville.

A sports fan
While not a big hockey fan, Freeman is a big sports fan and certainly could become a hockey fan as he learns more about the sport. "My hockey experience historically centers around the 1980 Olympics," he said. That was the year the United States won a gold medal and beat the former Soviet Union's team to get to the final.

He has plenty of hockey fans around him in the ownership group. Freeman's counter part in putting together the group to buy the team, Herb Fritch, chief executive officer of HealthSpring, is a big hockey fan, owning season tickets as well as sharing a suite. Of course, William "Boots" Del Biaggio, currently a minority investor in the San Jose Sharks, is a big hockey fan. And, Freeman said the other investors who have yet to be named are absolute hockey fanatics.

Freeman spends many evenings coaching his 10-year-old daughter and his eight-year-old's sports team. Even his new company's name, 36 Venture Capital, is an ode to his children and their sports. The "3" is the uniform his daughter chose because it's one of the numbers in her father's "33" when he played sports. His son chose "6" because he's a big New York Yankees fan and it is one of two single-digit numbers not retired. Derek Jeter wears the number "2," which could well be retired at some point.

And, if sports talk radio station The Zone 104.5 has him on again to talk about the Predators, perhaps the hosts should ask him about the prospects of his alma mater's football team, the University of Tennessee Volunteers. "I can talk SEC sports until I'm blue in the face," Freeman said.

From the shadows
His decision to put together the ownership group, however, has put him in a position he's never experienced. He isn't accustomed to having to publicly explain his motivations for doing anything. Freeman is fairly shy, understated and soft spoken to a point that sometimes it's almost at a whisper. Nearly everyone that has come in contact with Freeman describes him in a similar fashion. One of the Predators' top brass said Freeman seems to think carefully about what he says and how he answers questions.

Freeman isn't comfortable yet with his highly public role with buying the Predators. He is dealing with it, though. "I can live with this I think – being out in the public so much," he said.

He toiled in relative obscurity by Nashville's healthcare industry standards for a dozen years building Commodore Medical Services, which he sold in May to Stericycle Inc., a medical waste management company, for an undisclosed sum.

Freeman's company office was nothing glamorous, attached to the company's facility at the end of Cement Plant Road just north of downtown. And his new office now is a house in Germantown, that had served as Commodore's sales office. It's not glamorous either and you would never know it was a business since two large bushes obscure the entrance.

Freeman grew up in Knoxville. After UT, he earned his law degree from Vanderbilt University. Initially, he went work with a Dallas law firm for a few years but wanted to be back in Nashville. He returned and went with Waller Lansden Dortch & Davis where he worked in the mergers and acquisitions practice.

There, he built relationships that later came into play in the Predators deal. Waller attorney Chase Cole's involvement with the local bidders didn't come out of nowhere. Cole, who actively helped build the group of investors, had provided some tutelage to Freeman and the two remained friends over the years. Cole said Waller had done some work for Freeman over the years. Fellow Waller attorney James Weaver, another friend, later got involved with the local bidders.

It's also at Waller where Freeman saw the issues with medical waste disposal and began to develop the idea for his company. It was an interesting time in the early 1990s for medical waste regulation. Laws and regulations came out at the time after syringes and other medical waste began washing up on beaches on Long Island, causing closures. That brought a raft of new laws and regulations.

He and another young Waller attorney Greg Siskind researched and wrote a book titled "The Medical Waste Handbook." It was 1,000-plus pages of dry but, at the time, needed material. "It was probably the size of the Manhattan [phone book]," Siskind said.

Siskind said the book went out of print six or seven years ago when the topic was no longer hot. Still, he said, the royalties were nice and gave him enough to make a down payment on a West End office condominium for his own law practice as he switched into immigration law. He is a partner in Siskind Susser Bland based in Memphis but has a Nashville office.

Coincidentally, Siskind and Freeman have come full circle in their professional lives to a certain extent. A big piece of Siskind's firm's work includes representing some 30 minor league hockey teams on immigration issues.

Freeman said the coincidences don't end there. He recounted a time in law school when George Gillett, an American business titan who now owns the NHL's Montreal Canadiens, spoke at the Vanderbilt law school. Chris Whitson, an attorney with Sherrard & Roe who represents the Predators was a third-year law student with Freeman. Tom Sherrard, a partner in the firm and who also represents the team, was the teacher who brought Gillett in to speak, Freeman said. He said that the local group sought out information from Gillett as they were putting together the deal. "George gave us some tidbits here and there on the league," he said.

Building a company
For Freeman, the research and the book prepared him for starting a medical waste management company. "Nothing like writing a book to become an expert in something," Siskind said.

Freeman said he hashed out the idea with three other guys. Through that, they settled on a name Commodore since two of the other guys were at Vanderbilt. None of the others ultimately joined the company. He said they told him they had to get jobs since he could start the company while he had one.

"The first two or three years it was nothing more than a couple of hours a week," he said. The company had been a medical waste broker. "In '94-'95 is when it became real."

That is when the company made four acquisitions and converted from brokerage to hauling medical waste. To grow through acquisitions, he said he relied on bank debt and seller financing instead of equity investment from outside investors. With his legal background in mergers and acquisitions, Freeman said he handled 20 or more of the company's acquisitions himself.

About the same time he was building his company, another one was on a parallel track – Stericycle Inc. based in Lake Forest, Ill. Stericycle went public in 1996 and expanded through acquisitions as well, a lot of them, and now generates nearly $1 billion in annual sales. "They've done 125 or so of these over their history in the past 10 years and integrated them successfully," said Ryan Daniels, an analyst with Chicago-based investment banking and asset management firm William Blair & Co. who tracks the company.

Selling out
Freeman said his company had grown to the second largest in the industry. If that is accurate, there is a tremendous distance between No. 1 and No. 2. Daniels said Commodore's annual revenues are probably between $15 million and $20 million. Stericyle reported $233 million in revenue in the second quarter alone.

Apparently, Stericycle paid Freeman a handsome price for his company. But he wouldn't disclose it. Stericycle lumped the acquisition in with four others in its latest quarterly report and didn't detail the price.

Freeman received cash and a note in his deal. Stericycle listed $51 million in cash used for acquisitions and another $37.2 million in notes payable for certain acquisitions. Daniels estimated that Stericycle may have paid between $35 million and $50 million for Commodore. Daniels said Stericycle doesn't typically give specific details of acquisitions it makes because they aren't material, making it difficult to determine how the company sets acquisition prices.

The only possible measure is the deal announced last month in which Stericycle agreed to pay $54 million for MedSolutions, a Texas-based medical waste management company. Terms of the deal are available because MedSolutions files SEC reports. The company reported $12.8 million last year with a net loss of $806,601.

Stericycle's stock has been on a pretty steady rise since it went public. It did a two for one stock split in May. And over the past few weeks, the stock has climbed about $9 per share, closing yesterday at $52.08.

When asked whether he thought he should have been paid in cash and stock, his answer was perhaps telling in how and why he chose to take on owning the Predators. He said there's too much risk in owning stock. "I tend to only like to take risk when I have control," he said.