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Sid Bass: Why the Fort Worth billionaire saved Blue Bell

Blue Bell ice cream will return to grocery store shelves on Monday, Nov. 2, after a recall in April. The Brenham-based creamery was rescued from the brink of bankruptcy by Fort Worth billionaire Sid Bass, who invested $125 million to keep the company afloat.
Blue Bell ice cream will return to grocery store shelves on Monday, Nov. 2, after a recall in April. The Brenham-based creamery was rescued from the brink of bankruptcy by Fort Worth billionaire Sid Bass, who invested $125 million to keep the company afloat. AP

When Blue Bell ice cream makes its triumphant return to Fort Worth on Monday morning, signature flavors like Cookies ’n Cream, Homemade Vanilla and Dutch Chocolate will taste extra-sweet and satisfying.

Not just because Blue Bell’s many fans, some of whom are expected to line up at 5:30 a.m. at area grocery stores, have been deprived of the beloved Texas treat for nearly seven months.

It’s also because one of Fort Worth’s own, reclusive billionaire Sid Bass, rescued the 108-year-old company from the brink of meltdown.

In April, the Brenham-based creamery was in the throes of the worst scandal in its history: Desserts made at Blue Bell’s Brenham and Oklahoma plants had been linked to a listeria outbreak that caused 10 illnesses and three deaths, in Arizona, Oklahoma, Kansas, and Texas. The severity of the health scare eventually forced Blue Bell – the country’s third-largest ice cream seller — to stop all production and recall its products.

As the weeks passed, Blue Bell would lay off 1,450 workers and furlough 1,400 others (from a total workforce of 3,900). According to both the Houston Press and The Wall Street Journal, the crisis sent Blue Bell’s annual revenue plummeting from $680 million in 2014 to a projected $500 million this year – or a loss of $180 million.

Beset by negative publicity and delays in isolating the source of the bacteria, a cash-strapped Blue Bell struggled to jump-start its operations. The brand was teetering on the edge of extinction.

And then Bass opened his wallet.

In mid-July, the eldest Bass brother, who Forbes estimates is worth $1.66 billion, shelled out up to $125 million in what many financial observers label a straightforward loan. The infusion of money helped Blue Bell get back in the game, and by early September it began selling its first half-gallons in the Houston and Austin areas, as well as parts of Alabama. Now comes the second wave: Dallas, Fort Worth, Waco, Tulsa and Oklahoma City get their first Blue Bell deliveries as early as 3:30 a.m. Monday.

Why would one of Texas’ wealthiest men take an investment plunge into the uncharted waters of a food company when his previous investment experience had been in oil and gas, high tech and notably Walt Disney Co. stock? And why would arguably the most private of the four Bass brothers (Ed, Robert, and Lee all joined Sid on this year’s Forbes billionaires list), emerge from his carefully formed cocoon of seclusion to make national headlines with an investment in Blue Bell?

Only the 73-year-old, silver-haired Bass knows for sure. He politely declined a request from the Star-Telegram last week for a one-on-one interview, saying in an email, “I try to live a quiet life.”

But a closer look at the deal reveals layers of sweetness and Bass’ signature business savvy. According to The Wall Street Journal, Bass’ investment in a “distressed” Blue Bell comes with warrants that could give him a one-third ownership stake in the company. One analyst estimated he could easily double his investment in two years. Another said that Bass, in fact, has had his eye on Blue Bell since the 1980s.

For now, though, Blue Bell’s savior is just happy the ice cream brand is getting back on shelves in North Texas.

“I’m excited for the employees of Blue Bell and its loyal customers,” said Bass, who did respond to a follow-up email on the eve of Blue Bell’s return. “A lot of hard work has made many people happy. That is a nice outcome.”

Private man makes a public deal

To understand the splash that Bass’ recent re-emergence has made on the local business scene, it is necessary to recall how meticulously he has curated his privacy, ever since he married the Iranian-born New York socialite Mercedes Tavacoli Kellogg in 1988 — after a whirlwind romance that allegedly first began when she playfully flung a dinner roll at him during a Hamptons party.

Their marriage, and the preceding headline-grabbing divorce from Bass’ first wife of more than 20 years, Anne Hendricks Bass — to whom he reportedly paid a settlement estimated at $200 million to $300 million — thrust Bass into the paparazzi-lit, caffeinated swirl of New York high society.

“In the immediate aftermath of all that, Sid just went radio silent,” said Katie Sherrod, a resident of Fort Worth since 1969 and a longtime observer and chronicler of the Basses and Fort Worth society.

The eldest of the four Bass brothers, who have led philanthropic and civic affairs in Fort Worth for several decades, Sid was instrumental in launching the rebuilding of downtown Fort Worth, with the Worthington Hotel and City Center towers, and eventually with his family, the Bass Performance Hall.

But from 1988 until 2011, his life pivoted more toward his newly adopted home of New York, where Sid and Mercedes Bass became fixtures on the boldface-name circuit. Bass joined his new wife for many glossy soirees and would play a vital role in financially backing her cultural philanthropic passions, such as a $25 million gift in 2006 to the Metropolitan Opera. She also fulfilled her many duties as board chairwoman of the Fort Worth Symphony Orchestra.

But beginning around 2010, there were whispers that Sid Bass was chafing at his wife’s constant flitting from one gala to another. Meanwhile, he was retreating into his late-in-life avocation: painting.

And once his divorce from Mercedes Bass after 23 years of marriage was finalized in 2011 and was fully dissected in a 2011 article in The New York Times, Bass started spending more time in Fort Worth – allegedly vowing he would never again put on a tuxedo.

In their 2011 divorce, Mercedes Bass got not only a grand Fort Worth estate, but also an 18-room Manhattan co-op and a ski chalet in Aspen, Colo. Sid Bass returned to Fort Worth and took up residence in three apartments, valued at more than $1 million total, in the Montgomery Plaza condominium building. The loftlike spaces are where Bass presumably does most of his painting.

“That would make sense that Sid would want to live near downtown, in a sleek, cool, and modern space as he has just come back from New York,” Sherrod said. “That urban vibe would be attractive to Sid.”

Since resettling in Fort Worth, Bass has flown mostly under the media radar. He has periodically emerged, as when it was reported he donated $100,000 to Planned Parenthood to compensate the organization when the Susan G. Komen Breast Cancer Foundation wanted to defund Planned Parenthood’s local branches.

In October, Bass eulogized Dee Kelly, longtime Bass family attorney and the founder of Fort Worth’s largest law practice.

In a Star-Telegram account of the funeral, Bass praised Kelly, saying: “If a problem looked hopeless, Dee was a master. He would pry with leverage, he would cajole with honey. … When ingenuity didn’t work, tenacity did. He was the most tenacious person you’ll ever know. … Dee defined loyalty.”

Since his return to Fort Worth, Bass has reportedly made one other high-profile real estate purchase. According to reports in Variety and RealtyToday.com, the actor Patrick Dempsey (Grey’s Anatomy) and his “estranged” wife, Jillian Fink, sold their 5,547-square foot, three-bedroom, 3.23-acre, Frank Gehry-designed Malibu foothills mansion – complete with outdoor pizza oven, equestrian facilities and a chicken coop —for $15 million to Bass. Variety reported that the “buyer” so desired the property that he outbid others by $500,000 to snare it.

As for Bass’ pursuit of painting, arguably his most famous commission, according to The New York Times, was his portrait of TV news superstar Barbara Walters.

Reached during her regular exercise routine in New York, Walters confirmed the anecdote.

“I went to see him in his studio as I knew he had been painting,” she recalled. “I saw some of the portraits he had done, and I told him, ‘I would love it if you would paint me.’ Sid replied that he would, but he first needed me to tell him who were some of the most important people in my life. And then he incorporated them into this wonderful painting.”

Walters thinks so highly of Bass’ work that she hung it in her entrance hall. She described Bass’ painting style as near-photographic “with certain abstract elements in it seen the further you stand from it. He added the names of the people in my life that I’m very close to, like my daughter. I think my portrait is simply wonderful and most people admire it from the moment they see it.

“He’s just a wonderful man.”

Scooping for investment details

Citing its privately held, family-run status, Blue Bell has declined to comment on any aspect of Bass’ financial involvement in the company. Its president and CEO, Paul Kruse, did issue a boilerplate statement at the time of Bass’ highly publicized stake: “We are pleased Sid Bass has made a significant investment with our company. The additional capital will ensure the successful return of our ice cream to the market and our loyal customers.”

Bass issued a pro forma, upbeat statement: “We are excited to be a part of the Blue Bell brand and family. Blue Bell is the quality leader in the ice cream industry. We believe quality is the principal attribute that ensures the success, growth and longevity of a business.”

Since Bass has chosen not to elaborate on his business motives for rescuing Blue Bell, the void of analysis has been filled by various financial mavens in Texas and beyond.

Michael Sherrod, in his fifth year as William M. Dickey Entrepreneur-in-residence at TCU’s Neeley School of Business, said Bass had his eye on Blue Bell as early as the 1980s.

“Sid Bass has always been interested in the Blue Bell brand because it’s such an iconic one,” Sherrod said. “Secondly, I believe that Bass believes it is still a great investment, now, for his children and grandchildren. It’s a brand that he’s always believed is valuable to Texas and valuable to keep in Texas, as an independent company. All of those things came together in a perfect storm, and Sid Bass wasn’t about to let that opportunity go by.”

After the crisis occurred, and though Blue Bell was engaged in extensive damage control, its ultimate goal was to remain a privately held company.

“Honestly, they were very fortunate that an investor like Sid Bass came along with his long-term interest in their company,” Sherrod said. “He happily played the role of white knight in helping Blue Bell stay private and not be sold to some private equity firm, or a large conglomerate like Nestle [the world’s biggest ice cream maker].”

Robert Passikoff, president and founder of Brand Keys, a New York-based brand loyalty consulting firm, said that despite all the damage the recall did to Blue Bell’s reputation, the company has a solid chance of recovering.

“We know that loyal customers to a brand beset by uncertain circumstances are six times more likely to give the brand the benefit of the doubt,” said Passikoff. “What Blue Bell went through qualifies for that. Clearly, Mr. Bass has an innate sense that loyal customers to Blue Bell will give the brand a break.”

Diane Fannon of the Dallas-based branding agency The Richards Group agrees. “In everything I’ve read, heard and viewed, I haven’t seen a single soul say, ‘I’m over Blue Bell. I’ve moved on,’ ” she wrote in a Sept. 1 blog post.

Sam Hamadeh is CEO of PrivCo, a research provider on privately held companies. Hamadeh has analyzed Sid Bass’ investment in Blue Bell and confirms that it was $125 million structured as convertible debt, meaning that a loan of $125 million could be shifted into owning a third of Blue Bell – at a discounted price.

Hamadeh estimates Blue Bell’s overall value, based on last year’s sales figures, at around $900 million – but Bass could buy it fully for half that.

“Blue Bell had to be priced that way because at the time of Bass’ loan, the company had few options,” Hamadeh said. “It was already laying off staff, cutting its marketing expenses, so it needed someone to make a distressed investment. And as a billionaire, Mr. Bass could simply write a check, while banks could not act that quickly. As a result, Bass got a really good deal.”

Hamadeh estimates that based on other product recalls, within two to three years, as customer memories are short, the company could be worth $1 billion. At that point, Bass might convert his loan into owning a piece of the company’s profit and he could double his investment.

But Hamadeh says some local sentimentality probably went into Bass’ decision.

“Even the shrewdest investor has some kind of sweet spot,” Hamadeh said. “It’s similar to those investors who purchase their local baseball team while getting nothing but a 2 percent return. But despite that sentimentality, I think Mr. Bass saw a good investment in a storied brand.”

Renfro Foods is a private Fort Worth company producing 500 brands of salsa. Company President Doug Renfro understands the mindset of a company that needs help quickly.

“Bass got them the money fast so that they would get back to doing what they know how to do,” Renfro said. “The Basses have a tremendous amount of wisdom and they don’t go in and start trying to tell people what to do who have been doing it for decades. He is just there to make sure they have the tools.”

Renfro sees another possible scenario for Bass to make a considerable amount of money on his investment. The Blue Bell ownership could eventually fracture, or become less involved in the company, leading owners to sell it to a massive ice cream conglomerate, for, say, $1 billion. Then, in theory, a third of that final sale price would go to Sid Bass because of his $125 million – or roughly one-third -- cash infusion into the company. So that means Bass might earn a third of $1 billion – or $333 million.

“Now that would be the fantasy ending to this investment for Bass,” Renfro says. “For Bass, who will always be the shrewd businessman, it must still be cool to be considered the white knight, the hero riding in to save a Texan icon.”

An honorable tradition

While Bass’ investment in Blue Bell might have surprised some experts on the national scene, a few of his close friends and former colleagues say it fits perfectly with his family’s business tradition.

“The Basses are very well known to be full of integrity and highly honorable gentlemen. So when opportunities like this occur, their reputation helps them and precedes them,” said Herbert Hughes, who worked closely with Sid Bass while head of derivatives of Bass Brothers Trading from 1995 to 2004. He was in an extraordinarily privileged position to observe and understand Bass’ investment style.

“I would say that Sid Bass saw in Blue Bell, a renowned name that got into trouble,” said Hughes, now co-owner of Buttons Restaurant in Fort Worth. “And so it didn’t surprise me one bit that the Basses as a whole, and Sid Bass individually, would help this company, this iconic regional brand, when it ran into its storm.

“And I have no doubts [he] will help right the ship over time and it will turn out to be an excellent investment for both parties, in the long run.”

Ann Hudson of Fort Worth, a longtime friend of Bass’, said she isn’t much of an ice cream eater, but she was “thrilled” when she heard that he had stepped in to rescue Blue Bell.

“Knowing Sid, this will be a brilliant investment,” Hudson said. "It’s such a win-win for everyone and I don’t even eat a whole lot of ice cream. But for those loyal customers, who have been all but desperate for it to be back on shelves, well, again, it’s a win-win.”

Blue Bell’s back in town

On Monday, Blue Bell will be reintroduced into North Texas nearly seven months after its products were pulled from stores and restaurants. It will also return to Waco, Tulsa and Oklahoma City.

Where do I get it? According to a Blue Bell rep, 2,750 accounts — mainly supermarkets, drugstores and convenience stores in Dallas-Fort Worth — will begin receiving ice cream as early as 3:30 a.m. A few restaurants are expected to have Blue Bell by Monday afternoon. They include Spring Creek BBQ (multiple locations), which has been serving Blue Bell since 1980, and the Big State Fountain Grill in Irving, an old-fashioned diner. It will offer free Blue Bell ice cream cones between 1 and 3 p.m. at 100 E. Irving Blvd.

What flavors? In stores, Blue Bell will initially offer five flavors in the half-gallon and pint sizes: Buttered Pecan, Cookies ’n Cream, Dutch Chocolate, Homemade Vanilla and The Great Divide. More flavors will be added. Twelve-pack Homemade Vanilla Cups and 12-pack Homemade Vanilla and Dutch Chocolate Cups will also be available in this first wave.

Where is it being made? Blue Bell is a Texas favorite, but this new batch was made at its plants in Sylacauga, Ala., and Broken Arrow, Okla. The Brenham plant is larger and is still undergoing improvements to the production process, Blue Bell says. It has not resumed operations.

Delivery: You can also order Blue Bell: $129 for four half-gallons. Most of the cost is due to shipping. Details at bluebell.com

The Sid Bass file

Name: Sid Richardson Bass

Born: Fort Worth. April 9, 1942

Age: 73

Parents: Perry Richardson Bass, Nancy Lee Bass

Family: Sid is the eldest of four brothers — also including Edward, Robert and Lee — who inherited a small fortune from their father and their oil wildcatter great-uncle, Sid Richardson of Athens. Led by Sid, the four Bass brothers built their wealth into the billions through Bass Brothers Enterprises. The Bass family ranks No. 29 on the 2015 Forbes list of richest American families with an estimated fortune of $8.2 billion.

Education: Sid Bass and his brothers graduated from Yale. He earned his master’s in business at Stanford University, where he was a classmate of Richard Rainwater, whom he later hired to manage his family’s wealth. Rainwater died in September.

Investments: In addition to oil and gas and technology holdings, Bass amassed a large portion of Disney stock in 1984 when the company was under siege from corporate raiders. He was reportedly instrumental in installing Michael Eisner as CEO. He and his brother Lee Bass sold most of their Disney stock in 2001 after the stock market fell dramatically following 9-11. The Basses had to pay off margin loans.

Fort Worth ties: The Bass family developed Sundance Square, and Sid Bass was instrumental in the revitalization of downtown. The Bass family also led the development of Bass Performance Hall, which opened in 1998.

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