Mark Attanasio is more likely to appear in the sports pages than a business journal. Mr. Attanasio, managing partner of Los Angeles alternative credit investments firm Crescent Capital Group LP, typically shies away from the press unless it is to talk about his beloved baseball team, the Milwaukee Brewers, which he bought from Major League Baseball Commissioner Bud Selig's family in 2005 for a reported $223 million.
While he tries to stay under the business news radar, Mr. Attanasio has been busy. Crescent Capital was the leveraged finance and mezzanine investment group of TCW Group Inc. until it was spun off on Jan. 3. Last month, Crescent Capital filed to launch a business development company, Crescent Capital Finance Group Inc. However, Mr. Attanasio declined to talk about the Crescent Capital Finance before it goes public. Executives are looking to open an office in London to invest in European credit and leveraged finance; the firm already has a Paris office.
Mr. Attanasio started out as a lawyer but quickly moved to the investment banking side, working at Drexel Burnham Lambert. He ended up being part of a three-member team that led the workout of what was once the fifth-largest bank after it collapsed in 1990 as part of the junk bond scandal. The threesome — which included Crescent Capital co-founders Jean-Marc Chapus and Robert Beyer, who eventually became the CEO of TCW — took their Drexel experience and went into the investment management business under the name of Crescent Capital Corp. managing high-yield debt and lending to midmarket companies. TCW was one of their clients and in 1995, TCW bought the firm.
With the spinoff, Crescent is back to where it started but now, younger executives can share in the firm's success.
Mr. Attanasio is pretty happy with his ballclub, too. At the time of this interview — his first with a business publication since the spinoff — the Brewers were heading into the All-Star game break, tied with the St. Louis Cardinals for first place in the National League Central Division.
What is the relationship between your work as an investment manager and as chairman of the Milwaukee Brewers? I take the same discipline and focus on process that we have always used in running the investment business to overseeing the baseball team. I started by changing the attitude that Milwaukee, the smallest market in baseball, was too small to compete. I told people to stop calling it a “small market,” but to call it “middle market.”
And over the past seven seasons, we have seen that we are succeeding by many of the on- and off-the-field metrics — whether it is being on top of our division in the standings ... making the playoffs in 2008 for the first time in a generation, drawing upward of 3 million fans for four seasons, being voted among the best fan experience by such outlets as ESPN and Sports Illustrated, being among the most-visited team websites, one of the fastest-growing retailers, or having the highest TV and radio ratings as well as making a positive impact in the greater Milwaukee community. This is our business plan, and this is a direct result of being process-driven, something that I have relied on my entire business career.
Why did you spin off from TCW? We have a very consistent investment process and a lot of home-grown investment professionals who have been working together for a long time. As we looked at the optimal way to incentivize and retain people in our group, the most opportune way was to spin our business out of TCW so we could directly incentivize our investment professionals. At TCW, we had direct incentives through carried interest in our funds, but the only way to incentivize people in our business for the long term was to spin out. ...
All we have ever done is focus on credit and build the group independently. By spinning out, the partners can gain equity in Crescent. We have upwards of 40 employees who have equity in Crescent Capital. We have widely distributed equity in our firm so we could directly tie compensation to the performance of our business.
Do you plan to continue to be involved in mezzanine investing? My fellow managing partner, Jean-Marc Chapus, has been running our mezzanine business since 1991. We started with a pool of capital as a separate account and raised a series of mezzanine funds. TCW acquired Crescent ... in 1995. One of our capabilities that was attractive to TCW was our mezzanine business. ... TCW also was attracted to another of our lines of business — bank loans, which we had been managing since 1993 and TCW did not have.
What's next? We want to focus on credit. We don't want to be all things to all people. One reason we spun out was to stay focused on what we were investing in. We are looking at more credit in Europe, and we see a lot of opportunity there with banks shedding assets. The other thing we are looking at is adding an emerging markets capability, and are talking to senior professionals who would establish a group for us. However, we didn't leave TCW to become TCW.
How did you get into investment banking? As a young associate, I was working late at night proofreading documents at the printer while the investment bankers were taking the clients to dinner. I wanted to be closer to structuring the transaction and making it happen rather than documenting what the bankers were doing ... I got an offer from Drexel, and it involved moving to California to have a close nexus with Michael Milken and what he was doing in the junk bond, high-yield area. Other firms offered me a vice president position and a clear path to promotion. I felt it was a better opportunity to be at a place like Drexel early on without a clearly defined path, instead of a more established firm where it would have taken seven years to become a partner. To my parents' chagrin, I went to work in the Drexel Beverly Hills corporate finance department in 1985, and I shared a windowless office with Jon Sokoloff, now a managing partner of the private equity firm Leonard Green. ... The guy who ran M&A was Mike Brown, and his driver had an office with a window by himself.
At Drexel, when Mike had his legal issues, they moved a couple of us from corporate finance to the trading floor. One day, Fred Joseph, Drexel's CEO, came on the speaker phone and said "We have a small liquidity problem,' and everyone on the trading floor started packing up and leaving. I was so naive. I asked, “Where is everyone going?” I soon learned that there is no such thing as a small liquidity problem when you run a financial institution.
Bob Beyer, who eventually became the CEO of TCW, Jean-Marc and I stayed behind to manage the bankruptcy estate. Drexel had $2 billion of high-yield securities, and it gave us the largest distressed portfolio in the country. ...
Dealing with these assets was a lot more intellectually satisfying than being an investment banker. Based on our successful experience with the Drexel estate, we organized Crescent Capital as an asset manager in 1991 to provide capital to middle-market companies that needed it and to manage distressed portfolios ...
With the success ... I was in a financial position to think about owning a baseball team ... which has always been a dream of mine. Actually, my dream was to play center field for the New York Yankees, but I had trouble hitting a high school curveball. I honestly didn't think that the possibility of owning a MLB team would happen until I retired. As you may know, many Major League Baseball owners are in their 70s.
