THE INSTITUTE OF TEXAN CULTURES
Oral History Office
SUBJECT: Changes in San Antonio last 25-30 years
INTERVIEW WITH: William E. Greehey (Tape 1 of 1)
DATE: 31 August 1995
PLACE: Mr. Greehey's office
INTERVIEWER: Sterlin Holmesly
H: Interview with William E. Greehey, head of Valero Energy Corporation, in his office, August 31, 1995. This is Sterlin Holmesly.
G: I'm Bill Greehey, Chairman and Chief Executive Officer of Valero Energy Corporation.
H: How long have you been in San Antonio, Bill?
G: I came to San Antonio in January of 1979.
H: Okay. So that was ... the point of departure on this usually is HemisFair, and that was eleven years before. What brought you to San Antonio? What were the events?
G: I was the President and Chief Executive Officer of Lovaca Gas Gathering Company which was a subsidiary of the now Coastal Corporation. And as part of the settlement of a lawsuit between natural gas customers of Coastal-Lovaca, they had reached a settlement whereby Lovaca would become an independent company; would be spun off from Coastal Corporation. San Antonio was the largest natural gas customer of Lovaca and therefore we picked San Antonio as the headquarters for the new company. We came to San Antonio, a few of us, in January of '79. In anticipation ofthe spin-off in January of 1980 we built an office building which was completed in September of '79. So we actually set up the new company in San Antonio, hired all the people, built the building, went into operation pretty much September of '79 and then we spunoff in January 1980.
H: And what was the suit all about?
G: Coastal, through subsidiaries, had entered into long-term natural gas contracts with a number of major customers, which included the City of San Antonio, Austin, LCRA, the City of Corpus Christi, CP&L, Lone Star, Texas Utilities. And in these contracts they had agreed to give them all the natural gas that they wanted, which means that it was a full-requirements contract.
H: At a set price.
G: At a set price, that escalated every five years. These contracts were essentially twenty-year contracts.
H: And they were ... what was it about ... two dollars?
G: No, it was about twenty-two ... twenty-three cents, an MCF.
H: Okay. That's per thousand cubic feet.
G: Right. And then they would normally, you know, escalate maybe a penny every five years.
H: Okay. And then those contracts were broken, by what? Inability to supply?
G: (laughter) There were actually two things that happened. Number one, new gas was not being found, so that Coastal-Lovaca could not deliver the volumes under those William E. Greehey (Tape 1 of 1)
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contracts. So that was problem number one. Problem number two was that the gas that was being found was at a higher price than the sales contract that they were selling it. Which meant that you would go broke if you had to pay more for the gas than ...
H: Old gas was twenty-three cents, what was new gas then, approximately?
G: It was kinda of interesting, if you look at the history of natural gas. Natural gas was ten to twelve cents for years and years and years, and everybody felt like there'd be plenty of natural gas in that price range.
H: Well, I remember when they used to "flare it off" as a nuisance.
G: Absolutely. Absolutely. And when those contracts were entered into, you know, I think Coastal and Lovaca certainly felt ... their management did ... and, incidentally, I was part of the Coastal organization, but I was in accounting when these contracts were signed and all these things were going on. I wasn't in Operations; I wasn't involved in negotiation of contracts. But clearly San Antonio and all the customers that had entered into these contracts with Lovaca and Coastal felt that gas would be plentiful and could be delivered at those prices or they wouldn't have entered into the contract. And Coastal and Lovaca felt the same way. William E. Greehey (Tape 1 of 1)
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H: Refresh my memory. What year was that that Coastal could not deliver?
G: You know the contracts were entered into, if I recall, like in 1963 and in 1973 Coastal filed with the Railroad Commission, I think it was May 1973. And it was the first time that San Antonio and the major customers realized that Coastal-Lovaca would not be able to deliver the gas under those contracts at those prices or be able to deliver all the gas.
H: And at that time Oscar Wyatt, who was the chairman and owner of Coastal, became the prime villain.
G: Absolutely. Absolutely. That's when the public outcry was heard throughout Texas; that's when the energy crisis really came home to Texas. I don't recall ... I think we had ... Coastal-Lovaca probably had four hundred gas customers so we were pretty much the predominant supplier in the state. And in May they were told that we didn't have the gas and we wouldn't be able to sell at those prices.
H: And that was coincidental with the Arab oil embargo; just about the same time.
G: About the same ... right at ...
H: So you had people short of natural gas and sitting in long lines to get gasoline for the cars. And I think this had results more than just the spin-off that created Valero, because City Public Service then went to other sources of William E. Greehey (Tape 1 of 1)
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energy - coal, got involved in nuclear which cost an enormous amount of ... more than ... billed - oil. So one of your prime customers, City Public Service, now has alternate sources other than the natural gas and has that effected your business?
G: Absolutely. And it's affected the total natural gas business. When those curtailments occurred in '74, they not only occurred in Texas, they occurred everywhere and all of a sudden natural gas wasn't the reliable supply it had been in the past. So all electric utilities started diversifying their source of energy. They went to coal, they went to nuclear. They went as an alternative also to fuel oil, which the burners could handle. But the big change was really to coal and nuclear. So gas lost a lot of market. And even today there is a real concern with electric utilities to build grassroot plants that only use natural gas because of their concern about the reliablity.
H: So, twenty years later you're still feeling the impact?
G: Absolutely.
H: So what does Valero do to make up for the absence of a large market for natural gas? Are you in refineries?
G: Well, you know, a lot has happened as a result of what happened, you know, in early '70s in Texas with Lovaca, the Railroad Commission, the customer dispute. I think it led to total deregulation to where we, as an intra-state William E. Greehey (Tape 1 of 1)
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pipeline before, could not sell gas outside of the state. If we did we'd be subjected to the federal regulations. Now that there's a completely decontrol in the natural gas market, intra-states can use inter-states to move gas, they can sell throughout the United States, so rather than just selling natural gas within the state, we're selling gas throughout the United States utilizing other pipelines. And all that is the result of deregulation. So our markets ... we're actually selling more gas today than we've ever sold, because of deregulation. But because of deregulation it's kind of like the airline industry; there's an excess of pipeline capacity, there's an excess of gas supply ...
H: Which keeps the prices down.
G: ... keeps the prices ... keeps the margins down ... what you get for moving gas through your pipeline, and reduces the margin on what you can get for gas when you sell it.
H: Okay. In '73 gas was twenty-three cents, what is in now in '95?
G: You know, it's kind of interesting what natural gas has done. When I took over in 1974, as President and CEO for Lovaca, and incidentally, when Coastal filed with the Railroad Commission in May of 1974 they asked the Railroad Commission to set-aside those prices in the contract and give them a rate which allowed them to pass on their William E. Greehey (Tape 1 of 1)
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increased cost. So it was kind of a cost-plus type of contract. The Railroad Commission got Coastal to enter into an agreed judgement, whereby the subsidiary, Lovaca, would be taken away from Coastal, from the management standpoint. Would be managed by a completely independent board of directors which would be selected by a district judge in Austin. And so in June or July of 1973, just a few months after that filing, this independent board actually took over the management and operations of Lovaca, and I went to work for them in '74. And when I went to work for them gas prices had escalated about ninety cents. So they had gone, you know, from maybe thirty cents and seventy-three to ninety cents and by the end of the year they were at a dollar-sixty. By 1975 they were up to a dollar-ninety and then they stayed at that price range for quite awhile. Then ... it was then called The Federal Power Commission, which regulated the inter-state pipelines, they allowed the inter-state pipelines to buy gas on a deregulated basis. And they could blend that gas into their existing cost of gas and sell it into their markets. Well, all of these inter-states had low-cost gas. So when they opened up the market they started bidding aggressively for natural gas and their contracts were seven and eight dollars. So prices, you know, were in the two and three dollar range and some gas that the inter-state pipelines were actually in the seven William E. Greehey (Tape 1 of 1)
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dollar range. Then all of a sudden with these high prices and the new technology and improving drilling, there became a surplus of natural gas in about 1983. And all of a sudden the curve started changing and natural gas prices started falling, and they got down to a dollar. In fact, this year, out in West Texas natural gas prices at the wellhead were below a dollar. Now today the prices are about a dollar and a half.
H: Are these take-or-pay contracts?
G: Very few contracts are take-or-pay. What most contracts say is they're subject to rateable takes allowed by the Railroad Commission. And what that does is it allows all producers to be treated equally. So a pipeline will say I'm going to sell a million cubic feet a day, and if they have supply contracts that are two million a day, they'll take rateably fifty percent of all those contracts. That's an over simplification, but that's how contracts work today. Take-or-pay on a producer contracts are a thing of the past.
H: Well, tell me, how many people you came to town with in '79.
G: We didn't come with very many. I think that we probably brought maybe a hundred people ...
H: All from Lovaca?
G: ... from Houston ... yeah ... and then we probably, you William E. Greehey (Tape 1 of 1)
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know over a period of time, we probably hired four or five hundred people.
H: And now you have two high-rise office buildings and how many people?
G: We don't have that many people in ... I would think we'd have probably seven hundred people.
H: Total?
G: Yeah.
H: It's in the field and ... ?
G: In San Antonio.
H: In San Antonio.
G: Now total employees, we've got about seventeen hundred.
H: Okay. That's out in the field and that's ...
G: Right.
H: Do you do any drilling yourself?
G: No. We're not in exploration at all. We're in three businesses. One is natural gas, pipeline, we buy, sell, transport natural gas. The second business we're in is natural gas liquids. As the gas moves through our pipeline we put processing plants that extract the natural gas liquids from that natural gas stream and the natual gas liquids I'm talking about - ethane, propane, butane, natural gasoline. And then the third business that we're in is the refining business; we have a refinery in Corpus Christi.
H: What about CNG?William E. Greehey (Tape 1 of 1)
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G: We're not in any of the alternate fuels like that.
H: Do you see much prospect for those replacing gasoline?
G: No. No. It's too expensive. And in automobiles we used compressed natural gas in a lot of our field vehicles, but it takes away all of your storage in your trunk because of the tanks. You don't have much of a range in ... and our average field guy probably drives a hundred and fifty - two hundred miles a day. (laughter) And those things don't have a range.
H: And filling stations aren't that handy.
G: And they are not that handy. We have them at our field locations, which makes it convenient, but I think that's something that is not really going to be that meaningful. I think what's going to happen is you're going to get cleaner burning gasolines like reformulated gasolines that are oxygen rich, that burn cleaner and I think people will be going in that direction, as opposed to compressed natural gas.
H: Well, tell me about some of the changes you've seen in San Antonio in the last sixteen years, economic, culturally, anything particularly that has struck you or affected you, the positives and the negatives.
G: It's kind of interesting. When we came to San Antonio there was a group that represented the North Side and they put a big push on us to put our office building on the NorthWilliam E. Greehey (Tape 1 of 1)
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Side of town. Then there was a downtown group that put the big push on us to build downtown and then when we decided on this location we didn't please anybody. Because downtown didn't feel this was downtown.
H: It's almost downtown.
G: Well at that time they really didn't think it was downtown. You know everything has kind of moved over here but we were the only building, they didn't have the bank buildings or any of the others. But what I saw was, I saw a business community that was really divided. You had a strong North Side, which was primarily the developers; and then you had a strong downtown group. The other thing that I saw was a community that I felt really wasn't working together. You had the COPS group and they were always at odds with the business community, it seemed, on issues. You had a city council that was divisive, I thought. You know when you have Bernie Eureste tell me that we can take our company and move it out of San Antonio and you can take the Spurs and leave, you don't have a good council.
H: Right.
G: And what I've seen over the years, I've seen a community that has really come together. Business leaders, the community leaders, the elected officials, COPS, everyone seems to be working together for the common good of San Antonio. William E. Greehey (Tape 1 of 1)
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H: How would you account for that? You think everybody realized that ... Hey, we're all in it together? Or did the light dawn or ... ?
G: You know, I don't know what caused that. I think there's been a lot of new businesses in San Antonio, and there's been a lot of new leadership and I think that's helped. I think Valero was a big plus coming to San Antonio. You know, up until Southwest Bell we were the largest public company. And then Diamond-Shamrock becoming a public company and its spin-off; I think they've played a key role, and Roger's certainly been a leader in ...
H: Roger Hemminghaus.
G: ... been a leader in the community. So you see new leadership getting involved in the community.
H: Well, Valero, you and your employees, have been active in the community and non-profit organizations, community service, business organizations and such. And you regard that as a good investment, of your time and your people's time?
G: I think it pays big, big dividends. You know, first of all I think you do those things because you feel good about it, but when we started hiring people for our company we knew what kind of company we wanted to be. And one of our missions was to be involved in the community and be community leaders, giving both financially and giving of William E. Greehey (Tape 1 of 1)
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your time. And I feel very strongly that when you have employees that care about the community, really care, that they're going to care about the people they work with and they're going to care about the company and they're going to be a lot more productive, with the right attitudes. And I think that's certainly been true in our company. The morale in our company has always been very good. We have not had any turnover; turnover costs you money. Employees have great pride in the company for our community involvment and things that we do. And everything that we've done, we've done it consistently. And we've had good years where we do more for the community, but we've had some bad years, but we've always done for the community. I mean that is in something we've said we're not going to make any money this year so we're not going to do anything for the community.
H: Well, how do you decide what group or organization gets funding from Valero? I mean you've long been on the list of usual suspects people come to for financial help.
G: Sure.
H: Some of them you obviously have to say no to.
G: Yeah. You know I guess the first priority that we have is the United Way. We've always been the leader in the United Way. And that's the largest corporate gift. And we've always had a policy that whatever the employees give then we would match fifty cents on the dollar. Now there's William E. Greehey (Tape 1 of 1)
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a lot of companies that will say, well, we'll match dollar for dollar. Well they're companies that don't have a successful campaign and they may have eighty dollars per employee. We're probably up to eight hundred dollars per employee. So when you're matching fifty percent it's a pretty significant amount, so United Way priority comes first. We have a committee that reviews all of the requests, and what we do is we determine, in our budgeting process, and it's really based upon the amount of money we've made the past three years, how much money we're going to allocate to the communities. Now, over and above that there's always things that come up: You'll have money for bond issues, you'll have the Alamo Bowl, you'll have water issues, all of that, you know, is extra, is not budgeted. But education is a high priority for the company.
H: Well, Luis de la Garza seems to me to be your lead, good deeds man, and I assume he has some authority on how this money is spent.
G: That's right.
H: He can decide without going to the committee or to you.
G: Absolutely. Absolutely. And you know from a practical standpoint, any major gift that is going to be over a period of time, two to three to four to five years, he generally will talk to ... I have a Chairman's Committee which is made up of the top four people in the company; myself, and legal William E. Greehey (Tape 1 of 1)
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council, general council, president of the pipeline, their chief financial officer. And we will look at all the major things, but you know from a practical standpoint Luis and his people do the research, they're the ones that control the budget, we're pretty much going to act upon their recommendations. Now a lot of people feel like they have to talk to us, but Luis is really the key.
H: Yeah. So they come to you and you refer them to Luis.
G: Yeah. And you know a lot of people feel like when they're asking for money, they feel bad about it. But we have a pot of money and we really want to give it away to the community; we just want to make sure it goes to the right places. So we welcome people coming in and making a request.
H: Well, there's another side to that coin too. I have served with Luis on several boards. He also raises money for the organizations.
G: Absolutely.
H: From other people. Up to the point he once told me people weren't returning his phone calls and they were crossing the street to avoid him ... (laughter) ... and I've been through some of that myself when you try to raise money for good causes.
G: Luis also does our political contributions. We have, probably, one of the larger energy PACS and we have a William E. Greehey (Tape 1 of 1)
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government relations person in Washington, D.C. So we're very active on the political scene at the state level, at the national level, within the community.
H: Well, what are your criteria to backing a political candidate? You get involved in everything from City Council to Congress.
G: Yeah. You know, I think there's several. Obviously, there are positions as it relates to the business that we're in, is really important. From a practical standpoint, most of them really don't have that strong of a position on energy. So we look at a person's qualifications, and, you know, what their agenda is. And we're really not - I'm strictly an independent, I'm not a Democrat, I'm not a Republican. I've had fund raisers for Democrats. I've had fund raisers for Republicans. I look at who the best person is for the job and that's what our PAC does. But it really is to encourage good people to run, and get the best representation you can.
H: Well, do you or some of your folks meet with these candidates and find out what their views are, or what their agendas ...?
G: Absolutely. Luis has a committee that meets on PAC contributions, and I meet with a lot of people. You know, they'll come by for breakfast, or Luis will bring them by to visit with them. But Luis spends a lot of time. Stan William E. Greehey (Tape 1 of 1)
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McClellan is involved more on a national level; he's our general council and Luis reports to him and he spends a lot of time. And then we support one another. I mean, Kathy Obrioti Green with Zachry, we work very closely with her and others that are supporting good people.
H: So you exchange information?
G: Absolutely.
H: Okay. Back to the changes in San Antonio. Have you noticed - you talk about working together, have you also seen a better relationship between different ethnic citizens of the city?
G: Oh, yeah. And I think it's COPS ...
H: Communities Organized ...
G: ... and Metro Alliance. I mean, they seem to be always a division, and to be honest with you, I never saw that. When we came to San Antonio, Metro Alliance and the COPS organization, they meet with me once a year. And they review their agenda with me and I kind of talk about, you know, what we're doing in the company. So we've had a real good relationship with them. And I've been involved, you know, in two real controversial issues. One was the Alamodome, and one was the Water Now Campaign. And I found them, you know, easy to work with. And I think when you really sit down and people talk, everybody wants the same thing. But I think the community is just working great William E. Greehey (Tape 1 of 1)
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together. I've never seen anything as positive. The Dome, I know that was controversial, there's a lot of negative thoughts on that, but you talk to Bob Lanier, who's the mayor of Houston, and he would give anything to have a domed stadium like ours in downtown Houston. And I talked to Dallas people; they would give anything to have a dome stadium like ours. But San Antonio is one that wherever you go people say ... San Antonio seems to have its act together, and you're getting things done.
END OF TAPE 1, SIDE 1, ABOUT .. MINUTES.
SIDE 2.
H: ... getting things done but water is one thing that hasn't been done. San Antonio still does not have a supplementary water supply. There were some very bitter, divisive fights over the Applewhite Reservoir and not once, but twice. I was in San Angelo last year and that little West Texas city has five reservoirs, but they remember trucking in water during the drought. What is it about water? And you were involved in both of those, the latest water plan and first Applewhite fight.
G: I think that the opposition, first of all, convinced everybody that the Edwards Aquifer was, you know, just an endless amount of water. You just did not have to worry about it, there was always going to be water. And then the second issue was the quality of the water. Everybody likes William E. Greehey (Tape 1 of 1)
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the Edwards Aquifer water and the idea of drinking treated water in San Antonio was just repulsive to people. And we never could ... I think that, you know, the first Water Now Campaign which Henry was involved in, in which I was the chairman of ...
H: Henry Cisneros.
G: Yeah. I think if the ballot wouldn't have been worded backwards, we would have won. I mean we clearly was ahead in all the surveys that we were taking. The problem that we ran into on election was that people did not know how to vote. You had to vote no for yes. And so in the last weeks of the campaign we just concentrated our whole effort on trying to get people to vote the right way. And I know Henry did a lot of streetwalking, getting people to vote and he'd get someone to go in and he'd say, "Now, you did vote no?" And their guy'd say, "Oh, no, I voted yes!" You see you had to vote no for yes.
H: Well, who was responsible for that ballot wording?
G: Well, that was, you know, the group that put together the referendum to try to vote the thing down. They got the word, the referendum, and they worded it in such a way. I mean they were smart on how they did it because it worked. But again, I think ... and the other thing is there's such a distrust of the business leaders that someway you're going to benefit as a result of your involvement. There's going William E. Greehey (Tape 1 of 1)
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to be an economic benefit. And there was a lot of suspicion on Applewhite that somehow all these people were going to have these big gains.
H: Not only the business community but of the political leadership.
G: Right.
H: The first thing Nelson Wolff, who was mayor then, last year on the second vote, said they found, was the lack of trust.
G: Right.
H: And they were never able to overcome that.
G: And you know we talked about a lot of things that were going to happen that people just never believed would happen. We talked about the lawsuits which had not even been filed, on the first Water Now. But we pointed out the Endangered Species Act and how critical it was that those springs flow and if not there could be lawsuits. It could come under federal controls. There could be allocations. No one belived that!
H: But it has all come down the road.
G: That's right. And everybody thought it was a scare tactic.
H: You know, the most cynical thing that I have found in the Sierra Club water suit over endangered species; the bottom line, as far as I can determine, was for the William E. Greehey (Tape 1 of 1)
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Guadalupe -Blanco River Authority to sell water to San Antonio. Those two, Sierra Club and GBRA management were very intertwined. I may be wrong on that but ...
G: I don't know.
H: ... it kept turning up ...
G: Yeah.
H: ... that that was the real object, to make San Antonio build a long pipeline, water treatment, and buy water from Guadalupe-Blanco.
G: You know, my point in the whole campaign, and the reason I got involved in it was it was the cheapest insurance that San Antonio could buy. The reservoir was not the big dollar amount; the big dollar amount was the treating plant. Whatever you do in the future, whether you buy water from Canyon or from anyone else, you're going to have to treat it, so that investment's needed. If you could avoid all these things from happening by having that, it was worth the investment. But obviously we couldn't sell anybody.
H: Well, do you feel that San Antonio has been singled out, out of the three major interests groups, on the aquifer? You have the farmers to the west, you have the recreational springs and the endangered species to the east, but everyone keeps pointing to San Antonio. The state government says San Antonio can't get its act together on William E. Greehey (Tape 1 of 1)
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water. But the farmers have been able to pump as much water as they want out of the aquifer ...
G: Oh, I agree.
H: ... but the city residents are limited during periods of ... during dry spells, such as we're in now.
G: I know one business, you know, for example, one business leader, and he had his kids involved, that was really against Applewhite, they have a ranch. And they have a tremendous lake that's all Edwards Aquifer pumped into it. Which, you know, that's the kind of misuses you have for water. And again, they look at San Antonio as not doing something because I think it's just easier to single out San Antonio than it is the ranchers. I mean the ranchers just feel like water is their rights! Whatever is beneath there it's theirs!
H: But they don't have a meter; they don't pay a monthly rate. And in San Antonio the more you use the higher the rate goes.
G: You know what's interesting - is the catfish farmer was ... we were involved in the Water Now campaign and a guy that works for me in New Braunfels found out about this catfish farm. And so I started checking into the catfish farmer and I was the one that brought it to the newspaper's attention. That thing would have never even probably gotten caught! And here he was just using the hell out of this William E. Greehey (Tape 1 of 1)
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water.
H: He was using ... what? ... at least a third of what the city uses every day!
G: (laughter) That's right. That's right.
H: Plus he had some polluted runoff ...
G: That's right.
H: ... from his fish. Well, what other aspect of San Antonio you've seen change since '79 has impressed you? What about the bio-sciences? ... the Medical School and the Research Park? You've been involved in that to a degree.
G: Not to a real extensive degree. I mean obviously that's been a big plus and I think we were probably hoping for more than we've actually gotten, to date, on Texas Research Park. But obviously it is a big plus.
H: Well, the Southwest Foundation is moving out there; that should perk things up.
G: Absolutely. And you know that is a real asset to our community, as is the Health Science Center. You know, the Health Science Center, John Howe, doing what he's done and ...
H: I interviewed John just a couple of weeks ago.
G: Did you? I mean he's amazing.
H: And, people thinking about the Research Park wanting rather immediate results should realize that it took many years for Health Science Center ...William E. Greehey (Tape 1 of 1)
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G: Yeah.
H: ... which now ... all the ancillary hospitals, clinics, etc., twenty-two thousand people go to work there every day to well-paying jobs.
G: That's right.
H: And create traffic jams!
G: But you know, these are the kinds of things that have been happening. Like John Howe came to San Antonio, and what he's been able to do out there has been unbelieveable.
H: That's part of the new leadership.
G: It's the new leadership. I mean, Ron Calgaard came at the same time that our company moved here, and look what has happened at Trinity University. I mean wherever you go in the United States, everybody knows about Trinity University. I mean it's a ... it is a well, well, respected liberal arts school. I can't remember which, I think it was Merrill-Lynch, their CEO, he was talking about San Antonio and his daughter was going to Trinity. But they had looked all over.
H: Yeah, they have some really quality people. .......
G: Yeah. And you know the other thing that has happened, I mean, just something that people really don't focus on much, but is ... the Sports Foundation has done a great job in attracting sporting events to San Antonio. I mean, if you look at other cities, San Antonio is really, probably William E. Greehey (Tape 1 of 1)
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the amateur sports capital of the United States. I mean of all the things that we've had.
H: Well, San Antonio may have had the last successful pre-Olympics contest was the International Sports Festival. Because it kind of fell apart in Colorado this year and I think there's some doubt about the future of the events.
G: And see we had record turnouts, and the financial thing was a great success. But everything we've done here has done well. I think the tourism in events like this are so important. I've been involved in the Alamo Bowl. And what's so important about the Alamo Bowl is that when you bring people to San Antonio for a few days, they're going to fall in love with San Antonio, they're going to come back to San Antonio to visit. A lot of people are going to come back here to live or retire, and a lot of people are going to be looking at San Antonio in doing business. I mean there's ... San Antonio is just a great place to live, you just need to bring them in.
H: Right. I remember how impressed the Iowans were.
G: Oh! They come back ... you know they came back to the Bowl this year even though Iowa wasn't in it? A lot of them said, "We love San Antonio, we're going to come back every year." And you saw a lot of Iowa cars this year and there were a lot of editorials in the Iowa newspapers on how great San Antonio is. And it was one in the Des Moines Register. William E. Greehey (Tape 1 of 1)
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But those are the kind of things that do get national attention. You know, I was involved in the Spurs, trying to keep them in San Antonio and kind of headed up the first effort that failed, because we lacked some equity. Well, the difference between the first deal and the second deal was Southwest Bell coming in and Ed Whitacre just saying, "Whatever you need, I'm in." That's what made the second deal go - was Whitacre coming to San Antonio and agreeing to fill in that part that we couldn't get to.
H: Okay, but that kept the Spurs. But now there's talk about the Spurs wanting to get a new arena of their own, and now the Alamodome and maybe they'll go to Nashville with the Oilers or whatever. What credence do you put in that?
G: I think that first of all I think the Spurs handled that thing very, very poorly. There isn't any question that the Spurs, financially, are going to have a very, very difficult time unless something changes. The Alamodome is not good for basketball, especially the suites.
H: They're too far away from the court.
G: Too far away. And you know, people aren't going to spend a lot of money not to be able to sit and enjoy a ball game.
H: You shouldn't have to take binoculars to a basketball game.
G: Yeah. But it's kind of interesting that, when you take William E. Greehey (Tape 1 of 1)
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a look at what's happening with teams, you had two teams move out of Los Angeles, one moved to Oakland ...
H: And the other to St. Louis.
G: And the packages that they offered was unbelieveable. And now you've got the same thing happening to the Oilers, and if the Oilers move and Houston wants to attract a team, then they're going to have to do a lot of the things that Bud Adams is asking for now. And what I'm concerned about is, in San Antonio, that everybody gets their mind made up that they don't need a new facility and if the team starts losing money. I mean we put in a lot of money for our company, and I did it because I want them in San Antonio, but if the Spurs are going to start losing money, and I'm having to write a couple hundred thousand dollar check every year for the Spurs, that's not right.
H: To subsidize.
G: That's not right.
H: Yeah.
G: I mean we can't continue to do that. We've done our part by getting them here, staying here, and now the community needs to support it. I think if the Spurs, we would have presented a good case and done it in the right way and said, "We're not going to be able to make it unless we have a facility and we have these boxes and we have these other things." And then did it on a partnership. I mean I William E. Greehey (Tape 1 of 1)
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don't think you should expect the city to pay for everything, but I think the city should help. Because I think it's important to the city. You know, I think if the Spurs leave, if you're ever going to get another team in then you're going to have to do that.
H: Right.
G: If you want one. And you know, is it worth it or not?
H: Well, how much is it - as a part-owner, how much input do you have into the operation?
G: Not any. Not any. And that was really, you know, when they set up their board, I didn't have any interest in serving on the board. Our interest was only five percent. There were others that had large interest that wanted to be involved in it.
H: Well, you probably would have been against it ... that public opinion poll that said in effect, "Do you want to pay another half-cent or shall we leave town?"
G: Yeah, I would have been against a lot of things. I mean the reason that we bought the Spurs was so that we would have stability, credibility, in the Spurs. That this was their home. And when we bought the Spurs it wasn't from the standpoint that the owners were wanting to make a lot of money. It was a community thing and so we looked at the team in a different way. I mean, we wanted them to be part of the community and get involved in the community and we William E. Greehey (Tape 1 of 1)
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wanted the community to support the Spurs. I was not in favor of all the problems that we had at the end of the first year. You know, with everybody leaving. I mean we lost Bob Coleman as the president; we lost Lucas as a coach, ...
H: Bob Bass.
G: ... Bob Bass. All these people were good people; they were all active in the community. The Spurs had a good, good image in San Antonio and to me those things were important. And, you know, we had a good year from the owners standpoint. And I said this at an owners meeting, I said, "If I was CEO of the Spurs, and it was Valero, and I presented my results at the year end to my board that number one we won more games than we've ever won before, we had the highest attendance we ever had, we beat budget in every single category, and then everybody got rid of." I mean I would have gotten a bonus. That's the difference. So ... but I think the Spurs are important to San Antonio. And I think an arena is important. It hasn't been presented right; it hasn't been done in the right way. And I think the city needs to do its part to make sure that the Spurs are financially viable, because the owners aren't going to continue to fund losses. I'm not going to.
H: Well, how can the economics work when you have - when you're paying players up seven million dollars a season? William E. Greehey (Tape 1 of 1)
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G: (laughter) I agree.
H: I mean, how long can you cover that kind of overhead in this market?
G: I agree.
H: No matter which arena you're in.
G: I agree.
H: With the escalating salaries. Which this new contract, if approved, will continue?
G: I agree. And the problem is you're pricing tickets so high that the people that you want to enjoy going to the ballgames can't afford to go. I mean, I went to a game in Houston and bought four tickets and you know, they were seventy-five dollars apiece. I mean that's three hundred dollars for four people to watch a ballgame. That's a lot of money.
H: That's not as much as a thousand dollars for one seat, courtside, at the Knicks.
G: I agree.
H: You've got the Spike Lees and those who can afford them, Bill Cosby, maybe, but it's a ... I just don't know how long ...
G: I mean I think all that's wrong.
H: ... I don't know how long this can continue to work ...
G: I agree.
H: ... and get people into it.William E. Greehey (Tape 1 of 1)
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G: I agree. But this year we just barely limped along and we had a great season. (laughter) When you get into playoffs and you get the extra revenue.
H: That's all real money.
G: Yep.
H: Okay, let's see, anything else you want to talk about, that we haven't touched on? You obviously prefer San Antonio to Houston.
G: Oh, absolutely. And you know, there's such a difference. There's a difference in work ethics. I mean people in San Antonio, and again I think a lot of it is the Mexican culture and heritage; people have tremendous loyalties to a company. And the work productivity is a lot more than it is in Houston and, you know, the United Way is kind of a barometer, I think, of how well a community works together. And San Antonio, on the basis of the ability to give, we give more than any other city. And we went through one year where we had a problem with all the adverse publicity; but other than that we've had increases every year.
H: And the adverse publicity was at the national level, rather than here.
G: At the national level and we ... really it happened just right during the campaign. But other than that - and our relationship with the military in San Antonio is just William E. Greehey (Tape 1 of 1)
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unequaled. I mean, the federal campaign, and the community-at-large campaign are under the same umbrella. We work together, and it's unbelieveable the relationships. And the military is so good to San Antonio.
H: Speaking of the military, Kelly Air Force Base is going to go away, as we know it. How do you think the business community's rallied around Kelly? Another big effort to keep it off the list, keep it from being closed, but now it's back. What is the business community's role going to be in maintaining some form, some jobs out there, or either privatization or a trade, world-trade airfield, or what? Have you been involved with that?
G: I've been involved. You know I'm chairman of the EDF, and so we've been very active in calling on companies that would have an interest in Kelly. And what we're doing is inventorying what facilities are available, what skills are, and trying to match those up. I think Kelly is one that San Antonio showed its finest hour. I mean I don't think you could have asked for more support, from everybody, in trying to save Kelly. I think everybody gave it its best shot and I think that the business community is going to do everything they can to create new jobs out there, plus working hard to bringing new jobs into San Antonio with other companies.
H: There's one thing about privatization that I'm not William E. Greehey (Tape 1 of 1)
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clear on - privatization for Kelly. The Air Force says, and the Base Closing Committee agreed, there's not enough work to go around at these Air Logistic Centers. So Kelly closes, but they talk about privatization. I have to assume it'll be some other aircraft related work that is not Air Force, 'cause there's not enough work to keep Kelly open, there's not enough work to farm it out to Lockheed or something.
G: I think that's got a long ways to go and how all that's going to happen, I agree with you.
H: I mean, if the work's not there, it's not there. Private or government.
G: That's right.
H: And I assume some of it apparently will move to Oklahoma. But it should be an object lesson on how this all works out ... on ... probably the military is going to continue to shrink, and San Antonio, of course, is a military town.
G: I wish we had better flights out of San Antonio. We lost one public company in ... we really made an effort on this. I took a group to New York and met with the company and Nelson went. We had a bunch of business leaders, Roger Hemminghaus went, Mike Burke from Tesoro, Ed Kelly, I mean, we had a good representation. We put together a good special package on how we could help them and they went to William E. Greehey (Tape 1 of 1)
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Dallas. And it was all done on the basis of flights in and out of San Antonio.
H: This has come up more than once over the years ...
G: But, that was the only reason we lost.
H: Yeah, the lack of direct flights.
G: We had won on every other ....
H: Well, would it make sense to go to say, either United or American or Delta and say, "We will subsidize direct flights to LA, Chicago and New York?"
G: I think ...
H: Would there be a return on that?
G: I think that's needed. I think once you subsidize it, and once you get it started, then you're going to see there's a lot more business than people think. Because it is really hard to get anywhere.
H: Has there been any discussion among the EDF or the Chamber of Commerce?
G: You know there hasn't on EDF, and it actually should be a Chamber function. And I really don't know whether there has or has not; I know it's been suggested a lot.
H: Uh-huh, but nothing has ever come close to happening.
Bill, I appreciate your time, and all the information ...
G: Well, I think this is a neat project you're doing. When are you shooting to have all this done?
H: I'm ... hope to have it wrapped up, either by the end William E. Greehey (Tape 1 of 1)
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of this year or early next year.
G: Good.
END OF TAPE 1, SIDE 2, ABOUT .. MINUTES.