August 23, 2009
How a powerful Nashville P.R. firm tarnished its image
By Brad Schrade
and Michael Cass
They never saw this crisis coming, this torrent of bad news that hit so close to home.
When the five partners of McNeely Pigott & Fox — Tennessee's most politically connected and outwardly confident public relations firm — went before the Metro Council last week, their own story had already spun horribly out of control.
Two weeks of bruising questions had forced the firm to resign from its lucrative contract to promote the biggest project in the city's history: the proposed
$635 million downtown convention center.
In the midst of a recession, the convention center is also shaping up to be one of the most controversial plans the city has ever considered.
And the firm hired to help temper criticism wound up fueling it with an open-ended contract that sent a whopping $458,000 bill to the city in just over a year.
It was a stunning fall that has raised questions about the entire convention center project, Mayor Karl Dean's oversight of it, and his close association with the P.R. firm that helped get him elected. It has also knocked off balance Nashville's most entrenched message shop, which has long mixed business and politics with a deft touch and a golden Rolodex that reaches across the state's political landscape.
"The fact that we are stepping aside does not mean we won't continue to be involved in important issues facing our community," founding partner Mark McNeely told the council Monday night, striking a defiant tone reminiscent of a political candidate in the heat of a campaign battle. "We are not quitters. We are fighters. We will work vigorously to defend against misleading and inaccurate statements regarding our firm and the convention center."
Metro Councilman Mike Jameson, a critic of the convention center project, called out McNeely Pigott & Fox more than two weeks ago for what he said was unregistered, orchestrated lobbying of council members funded by tax dollars. In a backhanded acknowledgement of the firm's perceived power, he said criticizing it publicly would probably end his political career.
By last week, Jameson had softened his critique and become more politic in his assessment of the firm — which threw a campaign fundraiser for him in 2003 — but he still found the whole episode troubling.
"They're a powerful, well-connected PR firm, and there's nothing wrong with that," Jameson said in an e-mail. "But when connections with government officials get a little too familiar, a little too cozy, it can lead to trouble. Of course, good connections are exactly what makes any PR firm attractive to clients, so it's a circular dilemma."
But a number of council members, including Jameson, have said the real blame lies with city officials for poor oversight. And the firm, which is clearly shaken by its first major public setback, maintains it has done nothing wrong.
"We've worked very hard and have a reputation as experienced, effective communicators on behalf of our clients," McNeely told the council. "Credibility is our watchword, and if we don't have it, we are not effective."
A napkin, some beers and a mayor's ambitions
Like any interesting political or business biography, McNeely Pigott & Fox has its own creation story, the type of tale familiar to the firm's founding partners from their days as newspaper reporters at the Tennessee Capitol.
After an undisclosed number of rounds of beer over lunch at the old Applebee's on Elliston Place in 1985, they drew up a business plan on a bar napkin. They had a hint of cockiness that carries through to today in what has become a 65-employee operation — the largest P.R. firm in the state.
The namesakes —McNeely, Mike Pigott and David Fox — lamented over that fateful lunch the sorry state of public relations in Nashville and agreed that they could write press releases better than the so-called pros faxing them into reporters during the pre-Internet days.
"We just thought that somebody that knows how to write and understands government can find a niche," McNeely said.
McNeely founded the firm on his own in 1987 with his first client, then-Sen. Al Gore, the future vice president. Pigott came on the following year, and Fox joined a couple years after that, with the Democratic-leaning firm taking shape in form and name alike.
An early client was self-made health-care millionaire Phil Bredesen, an unseasoned but aspiring politician laying the groundwork of what has become a nearly two-decade reign over the political life of Nashville. He was elected mayor in 1991, with Pigott serving as communications director.
In 1993, the firm hired two more partners, Katy Varney, a former staffer in Gov. Ned McWherter's administration, and Dave Cooley, a Bredesen political lieutenant. Cooley would be in and out of the firm for the next decade as Bredesen's political needs warranted.
Another partner, Keith Miles, a former newspaper reporter and staff member of U.S. Sen. Jim Sasser, would join the firm in 1995.
As mayor, Bredesen set out to remake Nashville and hitched his vaulting political ambitions to the city's expanding skyline. McNeely Pigott & Fox was never far behind, helping sell or promote the projects, many of them visible today from the firm's 28th-floor downtown offices above the Renaissance Nashville Hotel — next to the existing convention center.
In 1994, the firm oversaw the groundbreaking for what became Sommet Center. Three years later, it helped sell Nashville on building a stadium for the NFL's Houston Oilers to play in. In 1999, Dell hired the company to help persuade the community and the Metro Council to dole out millions to make a move here possible.
The partners last week bristled at any suggestion that they gain government work from their political connections, saying that's not how things work. They say there's a firewall between their individual political activity and the government contract procurement process. They win based on their skills and track record, they say.
During Bredesen's tenure as governor, they've avoided bidding on state work because of Varney's close ties to State Finance Commissioner Dave Goetz — her husband.
"We are not the kind of firm, coming from where we came from, that trades on friendships with the expectations of getting work," Miles said. "We've always said that if there's a procurement out there that we think we can do the work, we think our record speaks for itself. We do not ask for political favors to get work. We think we should be able to get it on our own merits."
The firm's ownership has been changing in recent years. Two of the firm's namesake partners have sold their shares or started selling them. Pigott, who still works with the firm, has sold his equity in the company to the other owners, and McNeely is now selling his stake.
McNeely, 60, said the partners wanted to "have a succession plan in place … so the company lasts longer than the namesakes." But he said he remains the managing partner and has "no plans to do anything else for a long time."
Building storm
"Do Great Work. Have Fun. Make Money."
It's the guiding motto of a firm that has built on its string of public victories and high-profile connections, along with a self-described "bootstrapping" approach to the work that has built a client list of 80 to 105 accounts.
Clients are mostly private entities, including the Tennessee Titans, AT&T, CSX Transportation, Nashville Area Chamber of Commerce, Tennessee Bankers Association, Harpeth Hall School and Hyde Family Foundations, according to the firm's Web site. The firm also makes up to $500,000 a year working for Nashville Electric Service and has worked for years for Tennessee State University. The firm worked with The Tennes sean in 2007.
Earlier this year, the firm helped lead communications in the effort to defeat a proposal that would have required the city to do business in English only. It was paid $20,000 for that work, McNeely said.
It also likes to tout its recognition as one of the top P.R. firms in the country to work for, according to national surveys, and its extensive pro bono work for clients such as Reviving Baseball in Inner Cities, the Nashville Public Library, the American Diabetes Association and the International Puppet Festival.
In 2007, the firm earned $7.9 million in fees and $16 million in gross revenues, according to bid documents filed with the Metro Nashville Airport Authority.
The federal government is one of its largest clients. Contracts with the U.S. Labor Department to market, communicate and oversee national ad campaigns for the Job Corps program total about $1.7 million in fees annually, or about 20 percent of the firm's business. The program helps train economically disadvantaged young people across the country.
"They've got a blue-collar work ethic," Cooley said of his former firm, which he left earlier this year to strike out on his own. "They've been good at keeping their feet on the ground and understanding how the average person understands issues and how to communicate on those issues."
Their work — and the prices they charge for it — has never been under such a glaring light since a story NewsChannel 5 first reported earlier this month started to raise questions about the firm's convention center contract. That has turned into a full-throttle inquiry by media outlets across town, raising questions about other contracts and the firm's ties to the Dean administration.
The airport authority contract awarded last year is worth $360,000 a year, or $30,000 a month. That is substantially higher than the amount paid to the previous firm, Dye, Van Mol & Lawrence, which had held the airport contract since 2001. But McNeely says his firm has put twice as many hours into the communications effort.
Dean said he had no involvement in either the convention center contract or the airport authority's. Dean appoints members to the boards that awarded each of the contracts.
The mayor said his administration is not too cozy with McNeely Pigott & Fox.
"The fact of the matter is, that firm has done more work for the city before I was mayor than it's done since I became mayor," Dean said. "I probably know somebody in every P.R. firm in the city. That's just the nature of the city."
Friends, political allies
The firm's ties to Dean started with personal friendships but accelerated when he decided to run for mayor.
Its partners and other employees contributed $6,050 to Dean's 2007 campaign. Miles said that stems from their obligation to be politically active and informed citizens.
"That's what we believe in," he said.
A relative political novice and a low-key law director for then-Mayor Bill Purcell, Dean surprised Nashville's power structure when he set out to succeed his boss.
Dean's prior political experience included three terms in the tame electoral arena of the public defender's office. He did not have a natural circle of political confidants, and some of the partners in McNeely Pigott & Fox were among the
many who helped fill the vacuum.
Three of the firm's partners played unpaid roles in the mayor's campaign. Dean said Fox advised him on communications and "messaging," and Varney helped with debate preparations. Pigott was Dean's senior communications adviser during the runoff campaign against former U.S. Rep. Bob Clement.
McNeely Pigott & Fox also helped organize Dean's inauguration. A photograph of the event is on the firm's Web site.
Dean said he socializes occasionally with Fox and Varney, and his wife and Fox's wife are friends. He said he consults them for advice, though "not all that frequently."
One key decision that Fox assisted on was helping guide Dean toward his eventual deputy mayor, Greg Hinote. Fox, who has known Hinote for years, said he was one of the people who recommended him to Dean after the election.
But Hinote, who had been happily serving as U.S. Rep. Jim Cooper's chief of staff, said he didn't seek Fox's help, and Dean said he ultimately made the hiring call on his own. He "can't quantify" the impact of Fox's counsel.
The firm has worn different hats during the Dean administration. In regular meetings with the mayor's office to discuss the convention center, the firm had been billing up to $285 an hour, while other work on various subjects is done informally for no pay.
Dean's mayoral staff has turned to partners Pigott and Fox for help editing speeches and talking points about the convention center project and other matters. Hinote and Janel Lacy, the press secretary and chief speechwriter, said they wanted to make sure the mayor could provide the most recent information about the project.
"You go to the people who know the most about an issue," Lacy said.
Lacy said she couldn't remember specific other issues she sought advice on, but "I'm sure I've done that."
Hinote said he and others in the mayor's office had learned some important lessons from the convention center contract blowup. But he expects to remain on good terms with a group of people he's known for years.
"We've all known them for a long time, and the relationship started before any of us were here," he said. "In some cases, they're friendships. You separate the friendship from the business part."
