ST. CHARLES COUNTY — David Hoffmann acknowledges that his strategy to create a national tourist destination in Augusta, the heart of Missouri’s wine country, has not gone to plan.
Construction of a new hotel is on hold. The 12-hole golf course can’t be built where he wanted. And the company has been sued several times over money disputes.
But the 72-year-old billionaire, entrepreneur and Washington, Missouri, native said his family remains committed to its grand plans for St. Charles County.
“We would never walk away,†said Hoffmann, who lives in nearby St. Albans. “We have zero plans to exit Augusta. We have zero plans not to fulfill what we originally set out to do.â€
His eponymous firm, the Hoffmann Family of Cos., owns Midwest manufacturing businesses, Michigan marine transport, several small newspapers, a Florida sports arena and the minor league hockey team now affiliated with the ºüÀêÊÓƵ Blues.
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It manages hundreds of limited liability companies across the country tied to all of its properties — $4 billion in assets, all told. It employs 11,000 people globally, the company says.
And it’s growing. So far this year, the company has added 11 companies, including suburban Chicago ice cream brand Oberweis Dairy, plus thousands of employees and over $600 million in revenue.
Hoffmann, who now serves as chairman of the firm, said 2024 is on track to be one of its best years ever.
It all started, Hoffmann said, with the 1989 launch of his executive search firm, DHR Global, in Chicago.
His success there fueled the company’s future.
Growing Oberweis
The use of family money allowed the Hoffmanns to structure their company like a family office, a business framework that’s similar to how private equity firms operate. But there are no funds to raise and no outside investors to please.
That structure gives the Hoffmanns more freedom, said Peter Boumgarden, director of the Koch Family Center for Family Enterprise at Washington University’s Olin Business School.
“The big challenge in private equity is that you raise the money from investors, who then expect it back in seven to 10 years,†Boumgarden said. “The only way to get the money back is to sell.â€
Family offices “can be more creative in how they invest and what they invest in. They don’t have the pressure of returning capital to investors,†he continued.
The Hoffmann Family of Cos. owns commercial real estate and recreational businesses in Naples, Florida, on the Gulf of Mexico; Avon, Colorado, just west of Vail; Winnetka, Illinois, a village north of Chicago; and on Mackinac Island, a car-free locale on Lake Huron in Michigan. The company now owns most of the passenger ferries serving Mackinac Island, along with two newspapers there, after an acquisition last month.
Hoffmann was drawn to the Oberweis deal, he said, because of the brand and product, as well as a family connection. Hoffmann said his father drove a milk truck before running a small dairy of his own.
“We’ve never bought a company out of bankruptcy before,†Hoffmann said.
Hoffmann said the plan is to open one new Oberweis store each month somewhere in the U.S.; the company already signed two leases in the Chicago area.
It may even open a location on Clayton Road in a deal the company is close to closing on, he said, though he declined to share specifics.
He said they’re spending a lot of money on growing Oberweis. “It’s going from survival to growth mode,†he said.
His company is looking at other local deals as well. Hoffmann said he put an offer in to buy the Pierre Laclede Center in Clayton — two office buildings on Forsyth Boulevard that went up for sale earlier this summer.
But it has generally been a tough year for the company in Missouri.
‘We buy a company a month’
It defaulted on a $31 million loan for its office building at 8000 Maryland Avenue earlier this year, and the lender, Wells Fargo, is seeking court action to foreclose on it.
Still, said Kevin Morrison, the chief financial officer for Hoffmann private equity firm Osprey Capital, the company is nearing a deal with the loan servicer that would enable the Hoffmanns to keep the building.
A 12-hole golf course that Hoffmann planned to build at one of his Augusta wineries was nixed after contractors hit bedrock. Hoffmann said his golf course designers told him that fairway grass wouldn’t grow there, so now he’s looking at acquiring a nearby golf course instead.
The company began selling off some of its Augusta real estate, including some properties that were in worse shape than Hoffmann expected. And it’s facing several lawsuits regarding its Augusta properties and plans, including from a local grape grower and several contractors that allege they’re owed over $50,000 for work they did in sprucing up the properties.
Hoffmann said the lawsuits, some of which have already been settled, will be taken care of. More so, he added, they’re indicative of how large the undertaking has been in Augusta, with his company hiring hundreds of others to do the work.
“We’re one of the best capitalized private companies in the world. I’m a Forbes billionaire,†he said. “I don’t think we have a capital problem.â€
Hoffmann blames bad hiring in the beginning for the delays but says now he has the right people in place with the right strategy. Issues with wine production and distribution have been fixed, he said.
JoAnn Milster, president of the Greater Augusta Chamber of Commerce, said she’s been impressed by Hoffmann’s new hires, including Tom Fuchs, a wine industry veteran who was hired to manage the Hoffmann wineries earlier this year.
Milster said Fuchs and his team regularly come to board and town meetings and that they’re engaged with the community. They’ve been a great asset, she said.
She’s optimistic that Hoffmann’s vision for Augusta can still happen.
“I think they had a lot of good ideas,†Milster said. “Just because they haven’t happened by now doesn’t mean they won’t happen.â€
Hoffmann estimates his company has spent about $75 million so far in Augusta.
They’ve invested too much emotionally, he added, to quit.
“It’s been a little sidetracked, but, you know, we run a big company,†Hoffmann said. “We buy a company a month, and when things don’t go exactly as we want them to, we adjust and move forward.
“But there’s no way we’re leaving Augusta.â€