Updated 2 yearss ago
[Photo: Ryan Ketterman]
In America, you are “not tied down by some status quo. It’s a meritocracy, which is wonderful, but then it’s hard getting to a certain stage and even harder staying there, which is the challenging and fun part.”
— Shahid Khan
It’s been a month since Khan bought the Jacksonville Jaguars NFL franchise from Wayne and Delores Weaver for $760 million. And many in the crowd — a who’s who of the city’s elite and a raft of economic development professionals — have met him privately.
But the February luncheon marks a formal coming-out party for the 61-year-old billionaire owner of Flex-N-Gate, an Illinois manufacturer with plants on three continents that makes original equipment parts for virtually every major automaker from Acura to Volkswagen.
Khan, called “Shad” by friends, reaches the microphone. Silverware stops clinking. Conversation dims. He begins with a story from his overseas trip, explaining that he had taken along Jacksonville Jaguars jerseys as gifts for Japanese auto executives. “Some of the CEOs, I gave it to them and they were really excited and liked everything, and we talked about the Super Bowl and every single one of them had a simple question: ‘Where is Jacksonville?’ ”
The room erupts into knowing laughter. Jacksonville’s business community is confident these days but still very aware that the city lacks the visibility and status of places like Miami, Orlando and Tampa Bay.
The business crowd expects Khan to deliver a winning football team, but they’re expecting a lot more. Khan’s international connections and personality make him a natural ambassador for a city in search of a higher profile. As the owner of a multinational company, he might move some badly needed jobs and other business investment to Jacksonville. Charities are excited about his record as a philanthropist.
There’s something else as well: In a city with little diversity in its business community and a heritage of Southern racial dynamics, Pakistan-born Khan along with the recent election of the city’s first African-American mayor instantly offers the city a more cosmopolitan profile that better serves its business aspirations.
The Jaguars, who finished last year 5-11, face the challenges typical for teams in communities with smaller economic bases. Attendance rose from 2009 to 2010 but fell slightly in 2011. Khan has pledged to keep the team in the city. [Photo: AP/Frederick Breedon]
Born in 1950, Khan grew up in Lahore, Pakistan, a city of 10 million near the border with India. His parents were considered middle class — his mother a math professor and his father a lawyer-turned-entrepreneur. He is the second-oldest, with two sisters and a brother.
Khan calls it a “great childhood.” From an early age he had an entrepreneurial bent, building transistor radios and selling them. “That was very unusual. Nobody did that,” Khan says.
Ultimately, Khan’s parents saved up to buy him a one-way ticket so he could study engineering in the U.S. Khan, accepted at the University of Illinois at Urbana-Champaign, arrived in late January 1967 at age 16, staying at a YMCA for $2. The next day he encountered two feet of snow and a blizzard that shut down the city.
“For me, it was a challenge, an adventure,” Khan says, interviewed at his wood-paneled, windowless office inside EverBank Field.
Khan landed his first job in America as a dishwasher making $1.20 an hour shortly after arriving. “In ’67, that was big money,” he says. “When you convert that to Pakistani rupees, that is more money than 99% of the people over there are making.”
At the University of Illinois, Khan set out to assimilate. He didn’t hang out with other immigrants and pledged at a fraternity, Beta Theta Pi. “He immersed himself completely in the U.S. culture,” says friend David Sholem, an attorney in Champaign. “Those were the most fun and exciting times,” he says.
> Revenue: More than $3 billion
> Employees: 12,450 worldwide
> Operations: 48 manufacturing plants in Argentina, Brazil, Canada, Mexico, Spain and the U.S.
> Customers: Every major automaker in the world, including BMW, GM, Chrysler, Acura, Toyota, Lamborghini, Volkswagen and Ford.
Khan, who became the firm’s chief engineer within five years of joining the firm, helped solve the puzzle. In 1978, at 27, he decided to start his own company focusing on a one-piece bumper. With $13,000 and a $50,000 government loan, Khan started Bumper Works. The first vehicle to wear one of his bumpers was the Chevy Luv pickup.
Two years later, Khan bought Flex-N-Gate for $1 million. Today, the company posts revenue of more than $3 billion a year.
Learning American culture included mastering the art of winning people over. “I had a very active social life,” Khan says with a laugh. “I look back fondly on those years to this day.” He met his wife, Ann, at a college bar. They have been married for 31 years and have two adult children. He also had his first encounter with American football, attending games with his fraternity brothers, some of whom played for the Fighting Illini.
Khan graduated with a degree in mechanical engineering in 1970, with the U.S. in the middle of an economic recession. Looking for work meant encountering a lot of doors shut in his face. “Obviously, rejection is a part of life, whether you are asking somebody out or asking for a job,” Khan says. His job-seeking strategy: Rather than just mailing out resumes, he angled to get past a secretary and talk to a manager directly. “Then you would try to sell them — ‘I can do this for you,’ ” Khan says.
The shoe-leather approach paid off, and a small auto parts manufacturer in Urbana named Flex-N-Gate hired him to help engineer custom bumpers. After becoming the company’s chief engineer within five years, he left to start his own business. In 1980, he purchased Flex-N-Gate for $1 million — and has spent 30 years building it into one of the largest auto parts manufacturers in the world.
In addition to Flex-N-Gate, Khan also owns two other companies, Bio-Alternatives, a biodiesel fuel company that his son, Tony Khan, helps manage, and Smart Structures, which monitors the structural health of bridges.
As Khan’s business grew, he and Ann continued to live and raise their children in central Illinois. They were generous donors in the community, giving $1 million to a local YMCA. Khan also bought an aviation service company and bought and renovated the Urbana Golf and Country Club. He’s also donated more than $18,000 to Illinois-based candidates for Congress — from both parties — and was an early backer of Republican presidential candidate Mitt Romney.
The Khans have given generously to the University of Illinois, donating to the school’s library and a performing arts center. Last September, they gave $10 million to build an annex to the building that houses the College of Applied Health Sciences and have also funded endowed professorships. “He picks his interests pretty carefully,” says Peter Fox, a Champaign-Urbana area real estate developer.
The school’s athletics program has benefited as well. In addition to buying a suite at the football stadium, Khan funded an outdoor tennis facility that bears his name and gave money toward a stadium renovation. “They are very, very generous,” says Ron Guenther, a former athletics director at the school.
Jaguar fans gave Khan a warm reception. Some wore paper versions of his signature handlebar mustache. [Photo:AP/John Raoux]
In 2005, Guenther connected Khan with Jerry Colangelo, former owner of the Phoenix Suns and the Arizona Diamondbacks, to give Khan guidance on buying a team. In 2010, Khan tried to buy the St. Louis Rams after owner Georgia Frontiere died. Chip Rosenbloom, her son, told the Florida Times-Union that Khan was “respectful” and quickly earned his trust. But the deal fell through when minority owner Stan Kroenke exercised his right to buy the team.
Undeterred, Khan continued building a rapport with other NFL owners. His relationship with previous Jaguars owner Wayne Weaver began the same way he went about getting his first job after college — with a cold call. “It was part of just going around introducing myself to people,” Khan says. Unknown to fans, Khan attended the Jaguars season opener in September 2010 with family and friends, the Times-Union reported.
By late November, Khan and Weaver had hashed out an agreement at a hotel bar to sell the team for $760 million. Forbes reported that Khan borrowed $350 million of the total. Khan and Weaver kept the deal a secret from everyone but close friends and family until Nov. 29. Hardly anyone in Jacksonville had heard of Khan — Jacksonville Mayor Alvin Brown says he didn’t learn of the deal until just before it was announced.
Massive media coverage followed, with stories in the New York Times, Wall Street Journal, Forbes magazine and on cable networks. All the attention was a big change for Khan. Flex-N-Gate was so low profile it didn’t even have a media liaison on staff. He adapted quickly. “It’s been fabulous. It’s a parallel world I didn’t know existed. It’s been part of the package and it’s wonderful.”
Khan’s 223-foot yacht, docked on the St. Johns River, is for sale. Asking price: $112 million. [Photo: AP/Bruce Lipsky]
Khan’s rise has generated relatively few controversies. One wrinkle: A dispute with the Internal Revenue Service over the validity of tax shelters that reduced Khan’s taxes by $85 million. The New York Times reported Khan and the IRS reached a settlement. The dispute apparently didn’t bother the other NFL owners, who approved the sale two weeks after it was first announced.
Khan also has faced criticism from some workers and residents who live near a now-closed Flex-N-Gate bumper plant in Michigan about the company’s use of the carcinogenic chemical chromium-6, which they claim is causing a rise in cancer in nearby neighborhoods. Michigan is conducting soil samples to determine if the site is contaminated. Meanwhile, civic and labor groups say they want the NFL to investigate Khan.
Khan met his wife, Ann, at a college bar. They have been married for 31 years and have two children. [Photo: Getty Images/Scott Cunningham]
Amid a media barrage, Khan got a warm reception from Jaguars fans and civic leaders. At a game after the sale was announced, fans wore paper versions of Khan’s signature handlebar mustache.
The honeymoon has largely continued since then, the only grumbles coming after some fans felt Khan didn’t move aggressively enough to acquire former Denver Bronco quarterback and former Jacksonville resident Tim Tebow, who — at Tebow’s preference — was traded to the New York Jets. A University of North Florida poll in early April found that registered voters in Duval County gave Khan a 78% positive approval rating.
Plenty of challenges remain.
The Jaguars will continue to face the challenges of teams in cities with smaller economic and corporate infrastructures.
Along with hiring Mularkey, Khan has hired a new president, Mark Lamping, formerly CEO of MetLife Stadium in New Jersey, and launched a program to sell discounted tickets for kids. “We are a young team, 18 years old. We don’t have the multigenerational effect,” Khan says. “We are doing everything to connect the next generations.”
On the field, the Jaguars are sticking with last year’s draft pick, former University of Missouri quarterback Blaine Gabbert, who struggled in his rookie NFL season. With Khan’s endorsement, the Jaguars are also taking an unorthodox approach to recruiting players, specifically looking for happily married players under the theory it would make them better performers. Newly signed running back Laurent Robinson and backup quarterback Chad Henne both signed multimillion-dollar contracts after bringing their wives to the interview. The team also earned generally favorable reviews for its draft picks, trading up two spots in its first selection to nab sought-after Oklahoma State wide receiver Justin Blackmon.
Lamping tries to temper some of the enthusiasm about the new owner’s influence over the team. “You can’t expect overnight to have your brand increase its profile, no matter what type of business you’re in,” Lamping says. “This is a long-term process,” he says.
So far, Khan continues to hit all the right notes. At the JaxUSA luncheon speech, Khan follows his “where-is-Jacksonville?” story by saying he’s is “in training to become Jacksonville’s No. 1 salesperson.” He assures the crowd he wants to “win on and off the field,” that the success of the team and Jacksonville are intertwined. “Jacksonville has to be thriving or the Jaguars are not thriving,” Khan says.
The luncheon crowd treated him like a rock star — a woman even appears to hand him a bouquet of red roses. “There was a little fear at first just because no one knew Shad,” says Jerry Mallot, president of the JaxUSA economic development agency that hosted the luncheon — all anyone knew was that a guy from Pakistan with a big handlebar moustache was buying the Jaguars. For Mallot, Khan’s speech is a signal he’s accepting the role the city’s leaders have in mind. “Our hopes and expectations have been realized,” says Mallot.
Khan says those expectations need to come with some patience. Will he bring Flex-N-Gate jobs to Jacksonville? The company, which had to lay off some workers during the peak of the recession, is now “quite stable,” he says, but any decision to move jobs “will have to make business sense. What drives these decisions is to be able to make a profit.”
Khan says he understands the impulse to see him as a champion for the city, but he doesn’t want to overpromise and underdeliver. “Certainly the Jaguars or myself are not the one-man solution to every issue,” he says. “But we want to do our part and help.”