Simon, Melvin

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Simon, Melvin

(1926-)
Melvin Simon and Associates
and the Indiana Pacers

Overview

The son of a New York tailor, Melvin Simon became one of the preeminent commercial real estate developers in the Midwest. Together with his brother Herbert, the "Marx Brothers of malls" made their fortune covering America's heartland with unpretentious shopping centers. Melvin Simon expanded his portfolio to include movie production and ownership of the Indiana Pacers professional basketball team.

Personal Life

Melvin Simon was born in Brooklyn, New York, on October 21, 1926. He was raised in another New York City borough, the Bronx, just a mile from Yankee Stadium. His father, Max Simon, worked as a tailor. He earned his bachelor of science in accounting from City College in New York and entered military service during the Korean War. Stationed at Fort Benjamin Harrison in Indianapolis, Indiana, Simon remained in that city after the war ended. It was from Indianapolis that he oversaw the development of his real estate empire. Simon divorced his first wife and married Bren Burns in 1972. He is the father of five children: Deborah, Cynthia, Tamme, David, and Max.

In 1983, long after he became a successful developer, he was awarded a master's degree in business from City College. Simon has also been granted honorary doctorates from Butler University and Indiana University. He sits on advisory boards at the Wharton School of Business in Pennsylvania and Indiana University. He is a member of the board of directors of the Muscular Dystrophy Association, United Cerebral Palsy, and the Jewish Welfare Foundation of Indianapolis. Simon serves as a trustee for the Urban Land Institute and the International Council of Shopping Centers.

Simon is famous for his colorful clothes and brash, exuberant personality. Known as "Meshuggener Mel" after the Yiddish word for "crazy," Simon has practiced a very profitable form of insanity. In 1996, his worth was estimated at $620 million. He downplays the success he and his brother have enjoyed, agreeing with his brother Herb's assessment that they are "just a couple of naïve guys from the Bronx."

Career Details

While still in the military, Simon got his first job selling encyclopedias door to door. Upon leaving the service in 1955, he became a leasing agent for the Albert Frankel Company. Simon later declared the $100-per-week job "easy money." His responsibilities included leasing out space in an Indianapolis shopping center. "I enjoyed it, but in a couple of years I decided I wanted to be the person to make the decisions," he later told Indiana Business magazine.

In 1959 Melvin Simon summoned his brother Herb Simon to join him in Indianapolis. The next year, they formed Melvin Simon and Associates (MSA), a real estate development corporation. Melvin Simon served as board chairman and owned a two-thirds stake in the new company.

MSA started out by developing "strip malls"—typically a row of small businesses in a long, one-story building anchored by supermarkets or drugstores. One of their first projects was the Southgate Plaza in Bloomington, Indiana. Eventually, they moved on to develop enclosed malls. They raised money for these new ventures by selling off many of their previous holdings. By the end of the 1960s, MSA had expanded outside Indiana and was developing shopping centers across the country.

During the 1970s, Simon tried his hand at producing movies. "I thought I could make more money," he crowed of his decision to become a Hollywood mogul. But most of the projects he purchased were unpopular, and he lost millions of dollars. His most successful film, Porky's, earned $105 million, but the raunchy film was considered by some a low point in U.S. cinematic history. Other films Simon produced included the vampire comedy Love at First Bite, the romance My Bodyguard, and the farce Scavenger Hunt.

Simon gave up on the movie business in 1982, later calling his work in Hollywood "a big mistake." Meanwhile, the Simon real estate empire continued to grow. During the boom years of the 1980s MSA expanded its holdings to include "mixed use" projects that linked many different types of businesses into downtown complexes. But developing community centers remained a prime source of profits. By the mid-1980s, MSA was building about eight small shopping centers a year.

All this rapid growth came at a stiff price, however. When the real estate market took a downturn toward the end of the 1980s, Simon was forced to lay off hundreds of employees. As the recession deepened, credit became increasingly tight, and Simon and his brother found it difficult to scare up the money to complete its ambitious projects. The "golden age" of commercial development was coming to an end, a fact which may have influenced the Simon brothers decision to sell the majority of their company to the public in 1993.

There were still mountains left to climb, however. The urban mall became something of a pet project for Simon, beginning in the 1980s. It posed a challenge for the developer, who was used to having large tracts of suburban land at his disposal for construction purposes. In the congested city, space was harder to come by. There were also the problems posed by existing buildings and historic sites that exist in downtown metropolitan areas. Nevertheless, Simon rose to meet this challenge. His urban projects included the Circle Centre in downtown Indianapolis, the St. Louis Centre, and an innovative "vertical mall" in midtown Manhattan.

Chronology: Melvin Simon

1926: Born.

1955: Became leasing agent for the Albert Frankel Company.

1960: Herb Simon and Melvin formed Melvin Simon and Associates (MSA).

1982: Produced Porky's.

1982: Named one of Forbes 400 richest people in America.

1983: Purchased Indiana Pacers basketball franchise.

1993: Sold majority of his real estate holdings to public.

1995: Indiana Pacers reached NBA conference finals.

1996: Reached net worth of $620 million.

Not all of these urban projects were successful. By 1996, more than half the St. Louis Centre mall was vacant, and the shopping center had yet to turn a profit. The Circle Centre in Indianapolis fell short of Simon's promise to revitalize the downtown area. And there were other setbacks. In 1993, a Florida jury ordered Simon to pay $5.5 million to Chase Federal Bank to reimburse the bank for monetary promises made on real estate projects. Despite these reversals of fortune, the Simon brothers were still able to raise about $820 million by taking their holdings public in 1993.

Social and Economic Impact

Melvin Simon and his brother Herb preside over one of America's largest commercial real estate companies. By 1996, their empire comprised 111 regional shopping centers and 66 strip malls. They also owned a 22.5 percent stake in the Mall of America, the world's largest shopping mall, located in Minneapolis, Minnesota. The 4.2 million-square-foot shopper's paradise includes a seven-acre amusement park.

But Melvin Simon's influence goes far beyond his real estate holdings. In 1983, he had a chance to make a positive impact on the Indianapolis community as well. Together with Herb, he purchased the Indiana Pacers National Basketball Association (NBA) team, staving off potential relocation of the franchise to another city. The team, Indiana's only professional franchise, is a source of great civic pride throughout the state. A basketball fan, Simon often showed up at games to cheer his players. The Pacers under Simon's stewardship advanced to the NBA Eastern Conference finals in 1995 and 1998. A new arena, the Fieldhouse, was scheduled to open in the year 2000.

In December 1993, the Simon brothers sold more than half of their mall holdings to the public via stock offering. The 32.8 million shares of stock were sold at roughly $25 a share in what was then a record-breaking initial public offering (IPO). The proceeds from the stock sale catapulted the "Marx Brothers of malls" into the upper stratosphere of the world's wealthiest men. With a combined net worth well over $1 billion, the two "naïve guys from the Bronx" both rank among Forbes magazine's 400 richest people in America.

Sources of Information

Contact at: Melvin Simon and Associates and the Indiana
Pacers
300 E. Market St.
Indianapolis, IN 46204
Business Phone: (317)263-2100
URL: http://www.nba.com/pacers