Business Connection; 0122

Business connection is made by MDC to serve all of our diverse communities and is made possible by the generous support of our members. Thank you. Business connection starts now. Hello and welcome to business connection I'm Jeff Salk and we are on location for the first part of tonight's program. From the Baltimore Ravens training complex here in Owings Mills here not to talk about sports per se but about the leadership and management aspects of sports. We sat down with Ravens head coach Brian Billick. Coach thank you for making time for us with great joy. You give a lot of leadership talks management talks I understand you gave your first commencement address recently I'm curious what that was like was it different in any way. Very much so it was a real challenge because I had agreed to do it when I had a chance to sit and

visit with Dr. Ramsay president of UN B. And and his PR staff. When they told me I had like 12 minutes. I thought gosh you don't know me very well I've noticed to talk just for 12 minutes of my life. But it was interesting because you have such a short period of time. You recognize it's not about you. All right. This is an incredible day for these young people. Incredible accomplishment becoming doctors lawyers. And so you're trying to in a very concise period of time leave them with some type of measured message some type of challenge that will resonate with them as they go forward and you do in a very short period of time so it would be different than what you normally would go in and if I do a corporate speech it will be anywhere from 45 minutes to an hour in exchange afterword Sometimes I'll do a half day seminar which I really enjoy so to condense it all into 12 minutes was a challenge. So if you have the challenge of leaving the graduates with really only one thought maybe that they're going to remember.

What's the message. Well I went through a number of different things in my mind as to what I wanted to leave with them. But ultimately it was a challenge. It was a challenge to say look this is this diploma that you're going to pick up is not the end it's a beginning. And that that's a contract that's a contract with regards to the obligation that you now have given the resources the support that that we all receive when you accomplish something of that nature. Whether it be family friends teachers mentors that you have an obligation to pay them back in the only way you can and that's to do do that for someone else that they've done for you. So that means an obligation the University of Maryland Baltimore means an obligation to the city of Baltimore the state of Maryland Maryland this country to utilize the assets that you've been given now and going forward and giving back to your community and living up to your potential. And basically that's what that day was about. Take that diploma in hand take that contract in hand understand that obligation take that challenge and go forward. Let's talk about your job tomorrow. I'm running a football team coaching the football team.

What did you learn about management and leadership doing your job that an executive an of another kind of organization might not learned. Well I don't know if it's anything that another executive doesn't learn one of the reasons I like doing the corporate seminars and speeches that I do because it allows me to get out and about and interact with corporate America and find out what's important to them. One of their bullet points what are they trying to do in terms of bringing together different divisions or we're building a team environment in a very volatile business environment where there's consolidations cutbacks and downsizing. What I do is very high profile and I think that's why people covet having someone like myself come in and talk to the organization. I learned a long time ago I can't come in and begin to think that I could tell them about their business I don't have that expertise I don't have that experience. What I found is that much of what I do. Let them connect the dots talk about what I have to deal with in terms of the constantly changing profile of my

team because of the cap because of the changeover in the transitory nature of my industry right now. The volatility in the environment that I live just like in corporate America I mean I'm starting my seventh year and I'm fourth among Jedi. There's been 47 coaching changes head coaching changes in the short years I've been the head coach of the Baltimore Ravens So it's a very volatile environment. Obviously corporate America lives in that same volatility what it's like to deal with a varying degree of talent in your organization. I have just like in business you have the high selling superstar and the role player the person that you need to be successful but maybe isn't as high profile. And how do you mix that together how do you bring that team together when you have all those very experiences and demands obviously in my industry it's all about how do you allocate your resources the cap. You know I have 89 million dollars to put pay in my 53 players you would think that would be enough. But but the market says that some players are worth X amount of dollars and other players

aren't and so to begin with that and yet still build that team chemistry that team environment is a challenge. I ask about your writing you come back to some themes about passion and accountability. We understand the sports importance of passion what's the business importance of that. Oh you're going to be challenged at every turn. And have. A. Difficulty after difficulty test after test individually and as an organization. If you don't have passion for what you do. It's going to wear you out and your energy level is going to weigh. Your desire to do the job. Every year our fans this organization have expectations and if you don't take on each year with a huge amount of passion if you ever start to sit back and go and you know we're doing OK or I've been down this road before or you give in to the wear and tear that an industry like this can have on you and you don't start with that passion every day you're not going to last.

And on the subject of accountability. That's probably the most important thing in a team structure I think is the accountability. What is your accountability you have to identify almost on a daily basis. People I find generally want to do the right thing. And but many times they need to know what the mission statement is. They need to understand what their obligation is you need to understand that if the mission statement says one thing that maybe their job is inhabited by that prop what I call the Prime Directive and you have to recognize that as the head of that organization. So it's a daily thing where you have to make sure that your workforce understands their accountability to you your accountability to them. In our situation our accountability each other what our countability is to our fans to the city of Baltimore and it's a very high accountability sort of a communication a little bit I was surprised to read that before you gave this commencement address at the University of Maryland Baltimore that you got a tape of Tim Russert giving the commencement address last year.

That's a tough act to follow this is ait's and I admire Giuliani in the morning at the university Oh I didn't know they were going to stack me anyway but here's the question. You give a lot of speeches you're on TV all the time you're addressing groups of people all the time. Why go to the extra step of researching and watching somebody else's speech what did you learn for love love listening to and watching other people present themselves. I mean any time you are have any substance about you and you have to stand in front of a group and articulate what you're about or on a particular subject. You just can't stand up and wing it there has to be some forethought into it. I was very interested and I'm a big fan of Tim Russert I enjoy his work. I was interested in obviously could could have sat up there for an hour or hours and talked on a multiple of subjects I was interested in how he was going to take any number of things he could have talked about and condense it down into a 12 or 13 minute segment I was interested now he was going to do. One of the things I have to do in football is manage people who are

just might help out. Tracy the coaching field has gotten people who are making even more money ridiculous amounts of money and may not be motivated in the same way that people in an office environment are. The extra few dollars of a bonus payment might not be that great a motivating factor but the idea that there's a high paid performer in an organization making more than the boss is probably a common theme. Is that an issue for some of these executives that you talk with. It can be to a certain degree because obviously it's about leverage it's about that accountability. If you have someone that represents a certain dollar figure to that organization and as inflated as it may be particularly in our industry dealing with that person their level of importance and their accountability is a vital part of putting an organization together but. You know there's been it's been well documented study after study that says monetary return very rarely is a prime motivator for

people and you can't discount it. The end of the day it's going to be about the money. But popular saying I've always lived by and learned a long time ago is there's a time for pay and there's a time for play. We're in the offseason right now so it tends to be very focused about the time for pay. We're involved on a daily basis with lawyers agents putting together the contracts of what this team now and going forward will be. But at some point when we step on that that field for the first time in training camp it's my job from that point going forward to get these players to understand. All right now it's time for play. Whether you like your contract don't like your contract with you think it's fair or not fair however we got there this is how we're going forward. And now it's time to suspend all that vested self interest about what you make and what and about you in general and bring it together in a team environment and you do that by basically trying to get them to understand that whatever it is they want. It is apt to be better served by the good of the whole rather than than the individual. You've also had some experience probably more experience than you would like in dealing with individuals

employees with personal difficulties of various times various kinds. You've made a very high profile show of support for for a number of individuals I'm curious about that and anything else you've learned about helping people who are working for you when they have difficulties while you have that obligation we deal particular with a very young group of individuals that are not very high profile industry make a great deal of money that automatically puts them in a very predatory environment. So you've got to school these young people to a certain degree to understand the environment that they're now in. And many of them will come from circumstances that they don't have a lot to draw on by way of mentoring or people they grew up with that can explain to them more thoroughly understand the environment that they're in now and so we try to help them all that we can when we support people like a Ray Lewis Jamal Lewis Terell Suggs Corey for. We don't do on a whim. We don't just hey we're going to support this guy regardless. We do a great deal of soul searching. We

look at ourselves and the individual is this person worth supporting because you just can't arbitrarily do that simply because maybe they have a value to the organization. It is about them as a person. And those people and in particular when Jamal Lewis or Ray Lewis now currently have these are good people of high character. Yeah they've maybe made some stakes along the way but these are good people that we feel like we have an obligation to get them through whatever Dick's difficulties they have because they are good people and they're worthy of that support. In addition to helping out people who are having some difficulties you have an opportunity to work with a lot of young people and curious if there's any advice you find yourself giving over and over or maybe something that that echoes advice that you got at one point in your career you know there's a lot of things that you want to impart on young people I remember people trying to counsel me that way and now you know the tables are turned and you begin to sound like your father or your grandfather. But the number one thing I rule that I give to my players it's real simple. Don't do

anything detrimental to yourself. Now that seems awful simplistic but when you think about it in the way you conduct yourself on a daily basis if you will keep in mind that you don't want to put yourself in a situation where you leave yourself at risk. And if you have to think for a second is this right or wrong it's probably wrong. And you need to rely on those instincts. Coach Lastly let me ask you. With everything that you've written and accomplished in business I'm wondering and you also talked about the turnover in coaching I wonder if there are any career opportunities any challenges that you see out there that some day. I don't know how far in the future you would like to take a stab at. I just turned 51. And and so for a long time I was like any young whippersnapper that I was going to this forever. But now that I'm 51 I recognize that there is apt to be a life for me after football. They they say you can only do this job for so long because the pressures. I enjoy what I doing I love the people I work with I work in a great environment.

When I get to the point where we talk about passion and accountability that the wear and tear on this job puts me in a position where I don't have that passion for not red to step up that accountability. There will be time for me to move on something else. I enjoy interacting in a corporate environment. I enjoy my writing. It will I don't want to stay here just because I don't see any other challenge for me someplace else that wouldn't be fair to this organization. But if something were to captivate me in that way and I found that my passion for what I do here begins to wane as it does just like all the players and at some point you can't do this job anymore as a player the physical skills have diminished to the point where you just can't do it. If I find I get to that point hopefully I'll be able to find a challenge in one of these other areas that will preoccupy my time. Doesn't look like that's any time soon. I hope now they keep trying. I get asked that question I keep thinking people are trying to push me out of his job a little prematurely hopefully I'll be away for a long time.

Coach thank you for making time for some great right here. Thank you. And now let's turn to Heather Harlan with the business headlines. Thank you Jeff Baltimore Councilman Kiefer Mitchell plans to introduce legislation next week letting voters decide whether their tax dollars should be used to pay for a convention headquarters hotel. In an exclusive interview with the Baltimore Business Journal Mitchell says he's working on an amendment to the controversial hotel bill calling for a voter referendum. The councilman believes the voters should have the final say when it comes to spending almost 300 million dollars on a convention hotel. Mitchell is against the idea of 100 percent publicly funded hotel but the city's economic development agency says that's the only way to get the hotel built. And the developers of the planned four seasons luxury hotel and condo complex could be forced to include affordable housing as part of the waterfront project in downtown Baltimore. The mixed income housing bill requires large residential developments to have an affordable housing component. If they're built on certain city land or they have city assistance. The bill has surfaced as housing prices in Charm City have

skyrocketed. Home prices in the Baltimore area and the state room rose almost 21 percent for the first three months of 2005. That's compared to the first quarter of last year. Another business news college graduates shouldn't have a problem landing a job according to the National Association of Colleges and Employers and more than 60 percent of employers expect to hire more college grads this year than last year. Annual salaries are also on the rise with the biggest increases in economics and finance majors. Their average starting pay almost forty three thousand dollars. Even liberal arts grads are making more money these days. About $30000 on average. And finally even though Baltimore Washington International Airport has been making headlines with its newly opened Terminal A big development recently flew under the radar. The first British Airways plane featuring sleeper seats that's fully recline. Business class seats landed at BWI last week for business connection I'm Heather Harlan with the Baltimore and Washington Business Journal.

The real estate market shows no signs of slowing down this summer while buyers have more choices than ever for mortgages. In the studio now Cheryl Hi stead the executive director of the Maryland Consumer Rights Coalition. And they will swear in the president of alley back mortgage services and the past president of the Maryland Association of Mortgage Brokers Neil and Cheryl thanks to both of you for being with us. Neil I understand there is a big move towards interest only mortgages we've seen numbers that it's about a third of all mortgages in Maryland and more than half in D.C. based on your business do those numbers surprise you at all. Not really it's been becoming increasingly popular over the last six months to a year. Popularity is based soley on the fact that you can have a lower payment and still get the property. Right. On average the interest only option saves you about $100 per per $100000 borrowed. So how does it actually work is this a fixed rate or an adjustable rate loan.

Both are offered but more common is the adjustable rate option. And what would a typical payment be on a typical house. A typical payment What's a typical house. But it makes a significant interest only a similar house a $300000 loan interest only versus fully amortized will save you about $300 a month. Cheryl how does your group feel about the move towards these loans which I understand were even just a tiny percentage. If you go back five or more years we have some concerns about them they may be appropriate for some people but we do think you have to be a bit of a gambler in order to take these interest only loans and we do think that some people might not really fully understand the ramifications. I think the three main concerns we have is if you're using an interest only loan to get a house that's worth more than what you can really afford you're going to end up maybe in five years when you have to start paying the principal payments not being able to afford your monthly payments which could

be in mean you have to sell your house which could be people in a difficult situation. Let me stop you on that one for a second. There's an interest only loan automatically have a balloon payment like that in the future. Well what happens is usually if it's for five years interest only and then after five years you have to start paying the principal. I said the terms vary it could be 10 years but the typical ones that we've heard about are five years so for five years you only pay the interest and then after five years have to start paying the principal so your payments are going to go up fairly dramatically after the five year point Neal is that something customers seem concerned about or duck. It depends really the customers we have they're taking the interest only option or taking it for a reason. Most of them are not taking it because they wouldn't otherwise be able to afford the house most of them are taking it because they have a unique situation where they really want to try to keep their payment as low as possible in the near future not as concerned as what's going to happen down the road. For instance professionals just coming out of school they know that their

income will go up dramatically as the years go on. A two or three hundred dollar savings today is much more valuable to them than paying four five hundred more. Somewhere down the road Cheryl I had her up to your other concerns. One of the other concerns I think a lot of people are hoping that housing prices will increase so that way they'll build equity in their home even if they're only paying interest and that's a bit of a risk because no one really knows how the economy's going to go and whether housing values are going to continue to increase or whether this is a bubble and they may actually decrease or they could stay the same. So like I said it's a bit of a risk and a bit of a gamble to do that to think well maybe I'll only be in the house for four years so I can do that interest only for five you know for the first five year interest only and then hopefully I can sell the house and still make a profit. You know on the other hand if people look back and wonder what if I had chosen a mortgage like this five years ago four years ago they probably would have been big winners. So that makes it difficult to argue the cautionary

side. I think that's true I mean but like I said I think a lot of people are predicting that probably either the housing market has leveled off or may actually even be in correction at some point soon. But people predicted that three years ago too so you know no one really knows for sure but I think if you're financially able to deal with those kind of issues that we can't predict then I think you might be OK to go with an interest only loan but if you're an average consumer low to moderate income you don't have a lot of play with your finances then you're taking a risk to get into this loan not knowing if the House will appreciate or not. This is also the time when fixed rate loans have gotten really cheap again. Right. So how big and how big a difference is there in terms of interest rates going adjustable versus fixed. The gap is closed significantly years ago we were doing a five year adjustable rate loans in the 4s. Now they're mostly in the fives mid fives were fixed rates have come down into the mid 5s now so a lot of times we see a large swing now back

toward fixed rates. But again it's in all individual. I mean it's based on what for us what our customers are looking for what they're trying to accomplish over what period of time. What about loan to value ratios especially if you're looking at interest only. Mortgage what. What's a common loan to value how much of it can you finance. You can finance up to 100 percent. Would that cause a Morningside for you. Well again you're you're not going to have any equity in your house so if you finance 100 percent and then you need to sell the house in a year to you may in the Boeing money especially if it's an interest only loan in that housing values have gone up. Again it is a lot of it depends on how the housing market performs over the next year or so. We also see in addition to prices going up the number of transactions going up as well. What does that indicate to me or these people. Are we seeing more investors coming into the market.

There's a lot more investors coming into the market I think the stock market hasn't performed as well as some had hoped and a lot of them are seeing their friends and associates making money buying real estate. And they see it as a good investment it's unlikely the House will ever go to zero where maybe some of their stocks have. Right. And I think that you know we've seen that in Baltimore City that there was a lot of investing going on and the whole property flipping scheme five years ago or so and what we saw actually was some real small time investors who got burned people who really weren't the sophisticated people with extra money but people who thought hey I can make money on the real estate market so people just have to be cautious. Now what they're getting themselves into and not get in over their heads in case you know the housing market does cool off. Let's close with your best words of advice from from both of you. I think people need to really understand what they're getting themselves into really understand the terms know what the interest rates are and how long they're going to have to just pay the interest so that they don't end up losing their house at the end of the day.

They all your buddies agree. It's all about education an educated consumer makes the right decisions and knowing the options and knowing the pitfalls to any program is very important and you'll swear in and share a high said Thanks to both of you for being with us we appreciate it. Well that new alpaca sweater that you just bought with the wall that you thought was from Peru could very well have come from Maryland. Lou Davis has our story. Just know we are not in the end these mountains of Peru. But yes these are alpacas. They are thousands of miles from their native home being raised on this country retreat in Allegheny County. These are Packers are a transplant from South America. Barbara Buell is a transplant from Washington D.C. She moved here to old town not far from Cumberland after she tired of the hectic pace inside the Beltway. I first saw them when I was driving through Iowa. I had no idea what they were when I stopped and they explained how they could not only be a pleasure to have

around but also good business. And I realized it was something that I could handle. They're small enough that I can handle. Plus it can be very profitable. Today is the alpaca equivalent of payday. This is the day only once a year when the animals are sheared the valuable fleece is clipped off to be bagged and sent for processing. Eventually the hair will be made into a sweater or perhaps a blanket. Barbara Buell has friends and neighbors and other alpaca breeders over to help the animals are a bit reluctant. They're not very interested in getting their haircuts makes them a lot more comfortable. As temperatures rise in the summer. There are about half a dozen other alpaca owners in Allegheny County and Terry Phillips has her own thriving alpaca business in Virginia. I generally don't have but 10 or 12 female alpacas a year and maybe half of those might be for sale every year. But there have been a couple of years that I've sold over $100000 worth of alpacas and I'm a small budget. Tippett

Really a small breeder but I'm deriving that sort of income. Barbara Biel started out with four animals about a decade ago. The average price for a female she says is about thirty three thousand dollars. Males have been known to sell for more than five hundred thousand dollars. They come in 22 colors some colors more valuable than others. Top Grade wool from a baby alpaca can sell for as much as $4 and 50 cents an ounce. The actual value of the fiber depends on the quality and the actual market for it. But there are some animals that can produce as much as eight pounds in one cheeriness. And it sells by the ounce. So you easily can have maybe five six hundred dollars worth of fiber in one sharing for sure. Here they are gentle animals like their camel cousins. They will spit if they become irritated if they're really unhappy. They just sit down on the ground and brood. Until they get over it.

This is a growing business in the United. Their teen years ago there were 400 breeders in the United States. Now there are more than 2000. For a business connection. I'm Lou Davis. And we understand Lou did make it out alive. That is our program for this week you could reach us anytime with your comments and questions online at NPT dot org. Join us tomorrow at this time for State circle we will debate this week's Supreme Court medical marijuana ruling. What is the impact on the medical marijuana rules that were passed by the Maryland General Assembly. And as always you can catch up on our programs by visiting our website and now for all of us here thanks for watching business connection and have a good. Business

and the. Business community. Thank you.