[ Available in Word format at: 05%20-%20Deal.doc ]
“Well, that was a waste of time. I wonder why Cheryl had me show up in the first place. I can’t surf those waves.”
“Sure you can, haole girl. Tow-in easy, no problem.”
“No problem until you fall, Sonny-boy,” said Heath Larson.
The elevator door opened and they walked across the lobby past several Wavelife employees who were surprised to see the two Wavelife heroes in person on a normal business day. As for Aleja Gracellen, nobody quite knew who she was, but she must have been somebody if she was with Larson and Noaloa.
“Have you ever done any tow-in surfing?” said Larson as he held the door open for her.
“No, and I don’t plan to, although I must admit the footage I’ve seen of you makes it look like fun.”
“I surf da place no problem, dey gimme mo money.”
“You already make more money than you know what to do with, Sonny-boy,” said Gracellen, never one to mince words with surf stars. She noticed the cold, damp wind had picked up a bit.
“Heath, there’s no way the surf’s any good.”
“Yeah, but getting some exercise beats sitting in a conference room. And fifty bucks says the world champ is too hung over to run to the pier and back.”
“You’re on, brah!”
The Hawaiian took off across the parking lot, last night’s party hound turned into a competitor who hated to lose.
Larson looked at Gracellen. She shrugged.
“Sure, why not?”
They caught up to Noaloa half way across the lot. When they got to the street, the men turned left but Gracellen cut to the right.
“Sonny-boy, wait a sec! Hey Aleja, where are you going?”
Gracellen turned and ran backward as she yelled, “The Newport Pier is right down the street. Anybody can do that. Let’s see you guys run to the Huntington Pier!”
Noaloa and Larson looked at each other, but Gracellen did not wait for them to decide.
“And if I beat you both, you guys each owe me a hundred bucks!”
* * *
“We'll give you a hundred grand worth of shares and you can use Wavelife surfers in your ads free of charge. And we’ll throw a five-star contest at any Geosurf resort you want. Plus a t-shirt,” said Roberto Mercante.
“Your stock’s headed south, I don’t need surf star endorsements, and contests are more trouble than they’re worth. But we can start negotiating on the shirt. Just what are they worth these days?” said Clark, knowing that Sonny-boy Noaloa liked wearing t-shirts with his fat paychecks silk-screened on them to intimidate his competitors.
“About 37 cents net, but for you we’ll make up a special one with a check for a million dollars on it,” Mercante said.
“A million dollars? You know it’s a sign of the times when seven figures sounds like chump change,” said Ian Clark, feigning a yawn. Then he leaned forward, clasped his hands on the table in front of him and zeroed in on Mercante.
“How much do you think it will cost you to exploit that place?”
He glanced at Cheryl Corlund, who appeared to be paying attention. But just to make sure, he began firing off costs one after another.
“You’ve got to bring it all to the customer, no? Design new lines around the conquest of the reef! Production costs! Point-of-sale displays! Sales team training! Travel costs! New trade show booths! Buyer parties!” Clark winked at Mercante, knowing his wife was obviously not amused.
“Need I go any further? Oh, wait a sec, what about the upside? The stock goes up, the points you pay the banks go down, the factors are your pals again, and you’re flush! So, a million bucks? Try again, but first take a look at this.”
Clark pulled another disk from his shirt pocket and sailed it across the room. Mercante caught it with one hand.
“It’s a copy, yours to keep, deal or no deal. Why don’t you take another look to remind yourselves of exactly what’s on the table.”
Once again, the Geosurf logo dissolved into a menu of the best waves in the world. Only this time, the last item said “The Wavelife Ring of Power”, with a glowing blue circle surrounded by perfect waves.
Ian Clark noticed Mercante’s eager body language and was reminded of an old movie about a mysterious map and a remarkable discovery.
“You could call it surfing’s ‘Eighth Wonder of the World’! It could be your King Kong, Roberto,” he said, making no attempt to hide the snide tone to his remark, “And Aleja could be the beauty who tamed the beast! With Heath to save her in the nick of time!”
Cheryl Corlund knew the comment was right on target, but she said nothing and let Clark dig himself in a little deeper.
They watched the simulation again. Clearly, it was the heaviest surfing environment imaginable: the biggest, most remote, and most perfect set-up in the world.
When the clip ended, Mercante turned back to Clark and laughed.
"Ok, Clark. You can have the keys to the front door. You can have anything you want. I want to surf that place!”
Clark laughed, too.
“That's big of you, Roberto. Your whole company for the best wave in history - now that IS being authentic. Thanks, but no thanks - the rag trade would be bad for my health,” he said with a knowing laugh.
He turned to Cheryl Corlund because it was time to get serious.
“Ok, Madam CEO, what’s your offer?”
Cheryl Corlund had barely glanced at the screen and had paid scant attention to the antics of Clark and her husband. They were like two monkeys scurrying around for peanuts compared to what was on her mind.
When Wavelife’s troubles began to mount, she had called in some old Harvard MBA chums to tackle the problem, and a number of scenarios were fleshed out after weeks of work with division heads and marketing experts. However, when Wilson and Massara reviewed the various alternatives, they sliced the proposals to pieces. At the end of the day, nothing penciled out for the company in its existing incarnation.
Then Wilson and Massara had come up with an idea. The way out was to pull off something rarely done on Wall Street anymore: a leveraged buyout. If she could execute an LBO, and then sell the company, her seasickness in the surf industry would be over. It would be like stepping onto dry land after a season in hell trying to sail a drunken boat across a stormy ocean. However, to get investment bankers interested in underwriting the buyout, she would have to show them something to pique their curiosity, if not their greedy instincts, and after seeing Larson’s reaction to Clark’s reef, she had exactly what she needed. And, as it turned out, she could treat the reef as if it was a lease on some wilderness acreage where there “might be” oil and gas reserves.
There are no guarantees the reef could ever become a fixed asset. Its value is unknown, and that would be the key to skirting around the insider trading laws. And it may never be worth a dime to anyone until Heath and Sonny-boy ride the place. After the LBO is executed.
And the beauty and the beast angle with Aleja? I hate to admit it, she thought, but the idea had merit.
She looked back at Clark and responded in a soft, friendly voice.
“We'll joint venture a surf camp on the nearest island under Wavelife’s name, pay for all the infrastructure, pay you to run expeditions to the reef, give you 10% of the net profits from sales of site-related garments, and cross-promo with Geosurf for three product cycles.”
Cheryl Corlund low-balled with the best of them, but that was exactly what she wanted Clark to be thinking, and his response was pretty much what she knew it would be.
“You pay for everything, provide an unsecured loan of fifteen million to Geosurf, give me twenty-five percent of the gross on everything coming out of, what did I call it, the Wavelife Ring of Power? And I run the show, period, on-site.”
“What about contests?” interrupted Mercante without having to look at his wife to know his part in her strategy.
“Not yours. All mine, and your employees have to surf in 'em. With you as sole sponsor, of course. One-point-five mill would buy you signage above the title.”
“Then what's in it for us?”
“The honor of doing something for the sacred soul of surfing,” said Clark, with just a hint of a tent-show preacher in his tone.
Cheryl Corlund’s voice cut between the two men.
“I'm here to do business, Mr. Clark. Apparently, you are not. Why don't you just go peddle your ego someplace else?”
Her husband caught his cue and quickly added, “But when can I go surf that place, bro?”
Ian Clark laughed loudly.
"Good cop - bad cop! You two are really something. Biggest company in the surf industry, and I hear your parties are pretty wild, too. Oh, by the way, how are the kids these days? Did they graduate yet?”
Clark was really pushing it. He knew that he was up against a powerful tag team in Cheryl Corlund and Roberto Mercante, so it was no holds barred. The two Mercante teenagers were infamous in Orange County for their parties and had been already been kicked out of two private high schools. It was below the belt, but to Ian Clark it was fair. This was not about making nice.
“Okay, let’s cut the crap. What’s your best offer?”
“Why don't we just buy Geosurf and you can work for us?” Roberto liked the idea of owning access to the best waves in the world, and Geosurf had every license worth having.
The CEO glanced at her husband. It was time for him to butt out.
Her eyes locked with Clark’s.
“I don't want anything more to do with you than I have to. Here are my terms,” she said, having already considered her SEC filing dates, next year’s trade shows, production lead times, sales teams orientations, LBO due diligence issues, her current cash-on-hand, and the fact that next year’s selling season coincided with the Southern Hemisphere’s winter surf.
“Heath Larson, and/or possibly other surfers to be named later, in the water riding the place exactly as you showed it to us between June 21 and August 17, or you sign Geosurf over to us lock, stock and barrel,” she began.
“June 21 is the first day of summer, but what’s August 17 about?”
“Don’t interrupt me again, Mr. Clark,” said Corlund, knowing this all had to happen according to schedule and that the reef could not come with any strings attached.
“All rights to the reef will belong to Wavelife and all permits will be in our name. If we decide we want to do anything out there we own all on-site events and you will not be involved in any way, shape or form other than consulting at our discretion.”
Clark wasn’t about to say a word. He knew there was more to come.
“I will hand you a check for two million dollars as soon as the first wave is ridden by Heath Larson within the given performance period. We will subsequently pay you twenty-five percent of net profit from site-related apparel up to another two million. If you cannot get Heath on these waves,” she pointed to the screen, “between the specified dates, you give us the keys to Geosurf Expeditions.”
“Well, uh, I don’t know, uh, but what - - -”
Clark knew the term “net profit” didn’t mean a thing, and he knew Corlund understood that as well. He detected an urgency in her voice, despite the clipped tones she used to intimidate him, and so he countered without ever forgetting for a second that he needed cash, and fast, or remembering what would happen if he didn’t deliver.
"Two now, two when Larson takes off. No back end.”
“One point five now, one point five on his first wave, paid end of August, no back end.”
“If he surfs the place on June 21, I don’t want to wait.”
“There will be a check waiting for you at the reception desk on your way out.” She pushed her chair back, went around the conference table and picked up the disk before walking over to Clark and extending her hand. “It’s a handshake for now. Tell your lawyer to clear his calendar for next Tuesday at 10 am. We’ll all meet right back here to sign papers. Now if you don’t mind, I’ve got a corporation to run.”
Just before she walked out the door, Cheryl Corlund paused and turned around. “I want a game plan from you guys before you leave the premises,” she noticed her husband was staring at the screen, “So listen carefully,” Mercante heard her words and immediately turned around. “I don’t care what it costs as long as it comes out of your surf team budget, Roberto. I’ll need forty-eight hours notice before Heath hits the water, and none of this ‘Well, we thought a swell was coming’ bullshit. Is that understood?”
Corlund’s husband took a deep breath. He owed Wavelife’s success to his wife, and he knew she expected results.
“Loud and clear,” replied Mercante.
“What about you, Mr. Clark? Can you do it?”
“Well, - - -”
“Well what? We’ve got a deal, or don’t handshakes mean much to you?”
“I can do it,” he said, though he knew he would have said anything just so he could walk out the door with cash-in-hand.
“I’m sure the two of you will be a great team together,” she said without looking back as the door closed behind her.
The two men sat for almost a minute looking at the image on the screen. Neither wanted to say the first word, but Clark was prepared with an icebreaker.
“You know, it must be hard to stay in touch with reality in a place like this,” said Clark, leaning back in his chair and sweeping his arm around the conference room, “so I thought I'd bring along a little air freshener.”
He pulled out a small joint of Durban Poison, the near-psychedelic weed grown in South Africa. He lit it up and offered it across the table.
“Fucking Clark, what the hell are you doing?” said Mercante, holding up his hand in refusal.
As the fabled smoke from the African Horn expanded in his lungs, Clark started to get up to exhale out a window. Then he realized that they don’t open in skyscrapers, so he simply exhaled over the table.
“Sorry to smell up your inner sanctum, but I forgot there's no way to get fresh air into these corporate monuments,” said Clark, “and I just thought we could get on the same wavelength, Roberto.”
But within seconds he was rambling on about how Wavelife’s surfers should not use special boards or technology, the publicity angles they could push, t-shirt designs, floating houseboats filled with spectators, and worse.
As Clark spewed, Roberto thought about what his wife wanted from him. The company’s future depended on his creating a new surfing sensation, something he’d done many times at trade shows, contests, and parties. But this time there would be no fall-back position if he failed. This had to be the genuine article, and there was no room for Clark’s stoned nonsense.
“Shut up, Clark. Maybe you didn’t hear some of the terms, but as I recall you are now a paid consultant. Heath Larson would never go for what you are talking about.”
“But he has to have some sense of real adventure - real risk - survival on pure instinct –“
“Clark, we’re going to minimize every risk. Jet skis, personal GPS locators, oxygen bottles, – that stuff is standard these days, although maybe not for guys at San Onofre. Next thing I know you'll be telling me no lifeguards!”
Clark didn’t miss the dig in the reference to the surf spot known for its gentle waves, so he came right back at Mercante.
“How'd you guess?”
“Fuck you, Clark. You must have spent too much time with Merrill or something. Oh, and by the way, what’s he going to think about your deal with my wife?”
“He’s got nothing to do with this,” said Clark, and he felt himself lose some ground.
“Oh yeah? What, some seagull just plopped that disk down on your desk? Well, that’s neither here nor there. What concerns me is that you’re sitting here stoned trying to think straight about survival surfing.”
Clark may have been floating on a cloud, but he was ready with a lightning bolt.
“And your polluted version of life has you thinking any straighter? Just what kind of place you got here, Roberto? A monument to man's best instincts for making a buck? What's it all worth when it is nothing but marketing? Here's a chance to stand for something - or can't you get to your feet anymore when its time to go for it on the wave of the day?”
That one stung as Clark could see from the reddening of Mercante’s face. But though the mogul was ten pounds heavier after years of trade shows and hospitality tents, he was still a Brazilian surfer with a lot of pride.
“Well, at least I’m not afraid of drowning every time I get caught inside.”
That one stopped Clark in his tracks, until he remembered Mercante had spent a week with Merrill on a trip to a stretch of Moroccan coast leased by Geosurf to control access to a series of excellent point breaks. They must have talked some story about Geosurf’s owner.
“Fuck you, too, Mercante. You and your surf stars! How about just a compass?
Turn ‘em into real sea-faring ocean adventurers! You could have square-riggers as a backdrop at the trade shows! And just think! Wavelife would finally be totally core authentic! You know, kinda like climbing Everest without oxygen!”
“Clark, I’m not getting through to you! Without lifeguards and a personal locator system we'd never get the insurance. And you can’t catch those waves without jetskis.”
Clark lit the joint and took a hit.
“Oh, come on, Roberto, you’re Wavelife International! Think big!”
He handed the joint to Mercante, who took it and then surprised Clark by snuffing it out and flipping it back at him.
“Locators, jetskis and lifeguards or I won't be able to get insurance. And Response/Rescue will be a Stateside operation and not the local boys you have working for you at your island resorts. This thing has to work for my wife, Clark. Real money doesn't believe in Polynesian traditions, or haven't you learned that yet?”
Clark was too stoned to parry the thrust. His conscience was sliced open and a cascade of memories drowned his thinking.
He remembered all the promises to the locals he’d made while thinking he could do it with someone else’s money. He remembered the investment bankers on their yachts in Newport Beach glazing over when he tried to talk about indigenous franchises needing seed capital to create self-sustaining communities at surf sites around the world. Then the money market numbers started flashing through his brain and the meeting with his lawyers and his accountant about the registered letter from the IRS. The thought of handcuffs brought him back to reality in a millisecond. A big check was waiting downstairs. All he had to do was shut his mouth and go get it.
“All right, Roberto. Anything you say. What's next?"
“I’ve got to see this place for real, Ian, and as soon as possible.”
“I’ll book us first class roundtrips to Tahiti. I’ve got to do some business down there, so I'll meet you at Papeete harbor next Friday and we'll go have a looksee, just me and you. Oh, one thing, now that I think of it. I’ll need a non-disclosure from you.”
“And I’ll need an invoice for the tickets. We’ll square it up when we sign the contracts on Tuesday, okay?”
He stood up and extended his hand to Clark, who also got out of his chair. The two men shook hands, first as businessmen, then with locked thumbs in the classic “brother” grip.
“Ok, Ian. We’ve got some mutual interests, don’t we, bro? Speaking of which, where’s that DP?”
They sat back in their chairs and Clark lit the last of the joint and passed it across the table.
Now that the deal was done, Mercante saw no harm in getting high. He sucked a hit deeply into his lungs, and then tried to hand the glowing joint back to Clark.
"No thanks, I've had enough. See you in Tahiti.”
Clark stood up and walked towards the door as Mercante coughed a cloud of purple smoke into the room.
Clark looked back at him. Mercante was trying to say something, but nothing came out.
“Don’t forget, Roberto, its better to be straight wishing you were high than high wishing you weren't,” said Clark as he opened the door and walked out without closing it.
Behind him, a disoriented millionaire surfer was fumbling with the remote control. He couldn’t figure out which button would make the perfect waves start rolling again.