Jack Culley fell in love with sailing during the 1960s, and it changed his life. In 1970, after a 20-year career in sales and marketing for the Pillsbury Co. in Minneapolis, Culley made a dramatic shift, to selling sailboats.
It was a gutsy move that proved lucrative. Eventually.
I was a one-man company for the first three years, Culley said. Literally, there was one employee, and that was me. The only thing that was clear to me at the time was that it was an interesting opportunity that I wanted to pursue. The opportunity to start my own business was very attractive to me.
Today, Culleys company, Sailboats Inc., manages marinas in Superior, Knife River and in Manitowoc, WI; operates charter sailing fleets and charter sailing certification courses at seven locations along Lake Superior, Lake Michigan and Lake Pepin; and flies a one-plane air charter service out of Superiors Richard I. Bong Airport.
Barkers Island Marina in Superior, which Sailboats Inc. has managed since 1980, is adjacent to a housing development on Marina Drive that Culley owns with two partners. Culley, now 73, and wife Linda built the first of 28 luxury homes and condos now on the drive, and still live there 10 months of the year.
Culleys years at Pillsbury were a great education in sales and marketing, but he said hes found a greater happiness selling boating than he did selling biscuits. Its great because youre bringing an activity to people that they enjoy, he said. Its very satisfying.
That satisfaction and success didnt come overnight, however, and not without the usual hard work, risk-taking and, of course, political controversy.
The housing development on Marina Drive in Superior came to fruition against the wishes of some citizens opposed to development on the site.
A plan last year to buy more land there and build another six houses wasnt approved by the Superior City Council, and is dead, Culley said.
The plan for more housing followed turmoil in 1999 over the renewal of Sailboats Inc.s lease at Barkers Island. During the negotiations, a city council contingent challenged the administrations past enforcement of lease terms. One meeting became so heated that then-mayor Margaret Ciccone stopped the discussion and stormed out.
The highly-publicized incident led the way for a group of citizens pushing for a recall election, which resulted in Ciccone being unseated by current Mayor Sharon Kotter. By the time the recall was over, the marina lease had been extended to 2007, and few citizens could remember what the arguing was about.
Culley had hoped for a longer lease, and less rabble rousing, but ultimately was pleased to be able to continue operating Barkers Island. The marina business is what makes everything work, he said of his diverse operations.
Originally from Cheyenne, WY, Culley graduated from Bryant & Stratton Business College in Louisville, KY. After brief stints in Chattanooga, TN and Birmingham, AL, he came to the Twin Cities in 1950 to work for Pillsbury.
Culley started Sailboats Inc. in 1971, with a sales showroom in Excelsior, MN on Lake Minnetonka. Boat sales were Culleys main money-maker for two decades. By 1991, he had sold about 400 boats.
Those were halcyon days, he said, noting that Sailboats Inc. sells about six to eight new boats a year system-wide these days.
The decline in boat sales started in 1991, Culley said. The number of boat owners is still going up and marinas are doing fine, but new boat sales are down and they arent going to pick up. The economy is not supporting it.
Part of the problem, according to Culley, is that there are plenty of good used boats out there. All these 76s and 86s are still around. They just dont go away. The damn things are still doing just fine.
Culley got into the marina management and charter sailing business in 1976, when Sailboats Inc. began a two-year stint operating the Port Superior Marina in the Town of Bayfield. Sailboats Inc. went from a three-employee operation to a 60-employee operation overnight, Culley said.
Most of the companys charter business remains in Bayfield, even though it no longer operates a marina there. It docks a 20-boat charter fleet at Apostle Islands Marina.
In Superior, there are just three boats in Sailboats Inc.s charter business, which Culley said bring in about $30,000 in revenue. Boat owners who keep their boats in the fleet take 55 percent of the charter fees.
Culley said in late May his charter business was down about one-third from 2001. It could be a late-starting season, he said, but primarily its the economy.
Culley returned to the marina management business in 1979, when Sailboats Inc. won a 20-year lease at the new Barkers Island Marina in Superior. The lease payment for Sailboats Inc. was set at 60 percent of income from seasonal dock rental. The annual payment to the city grew steadily from about $100,000 in the early 1980s to about $150,000 by 1999. Total payments to the city during the original 20-year lease period exceeded $2.5 million.
The biggest growth at Barkers Island came in the late 1980s. Culley said the marina was a losing proposition for Sailboats Inc. at that time, but boat sales were still strong. During the 80s, boat sales offset the losses of operating the marina, he said. By the 90s, it was the opposite.
Despite the struggle at Barkers Island in the early days, it still managed to make a measurable dent in the industry.
Joel Johnson, chief executive at the Johnson family-owned Lakehead Boat Basin in the Duluth Harbor said his company lost 50 percent of its clientele when Barkers Island opened. He said his marina has never reached full capacity again, but small spurts of growth have returned to bring Lakehead to about 80 percent occupancy.
A competitor with Culley 23 years ago for the Barkers Island lease, and a competitor now for marina clients, Johnson continues to insist like some past Superior city councilors that Sailboats Inc.s deal on Barkers island is a gift from the city.
They dont pay their fair share, Johnson said. If you look at the size of that marina . . . to amortize that marina would cost $300-some-thousand a year. Hes getting it at a bargain rate.
Johnson doesnt hold that against Culley. We get along fine, he said. Business is business. He got a good deal from the government and took advantage of it, thats all.
Such criticism isnt new to Culley, who in February dropped a $150,000 claim against a Superior city councilor he said made slanderous remarks about his business.
Councilor Ed Erickson suggested in a September 2001 finance committee meeting that Sailboats Inc. was treating some of the boats in Barkers Island Marina as transient dock customers that were actually seasonal dockage customers, essentially cheating the city out of about $150,000 a year.
Erickson later read a statement of clarification to the council, where he said he was inquiring about rumors of improper bookkeeping, and not making any accusations.
Johnson, however, is not afraid to make accusations. (Culleys) in the charter business. So, lets say you owned a sailboat and he said hed put it in the charter fleet and give you free dockage if he could take your first three charters, which would equal the same as your dockage.
Well, where did that money go? Did it go to the charter income side or the dock? If it doesnt go under the dock, then the city doesnt get a piece of it . . . . The city was supposed to, in the original contract, walk down there and physically count the number of boats there, multiply them by the rates that are appropriate for their size, and take 60 percent of that.
Johnson said the citys finance department has never verified the actual number of boats docked at the marina, and accuses former finance director Tim Nelson of dereliction of duty. He didnt do his job, Johnson said.
Nelson, 58, retired early this year in a battle with cancer, and died June 18.
Finance director Jean Anderson, Nelsons successor, said Sailboats Inc.s marina revenues are confirmed independently by outside auditors in reviews of the companys annual financial statements.
We havent changed anything as far as anybody going down there and doing counts of anything, she said.
Culley defends those reported revenues as legitimate, adding theres never been language in his city lease requiring boat counts. He said the city of Superior receives a greater share of the revenues from its marina than do other Wisconsin cities with similar marina operations.
This year well pay about $250,000, he said. Not only are they getting their fair share, theyre getting more.
Sailboats Inc.s Barkers Island lease agreement did change in 1999, putting a bit more of a pinch on the business. The city now collects 65 percent of seasonal dock revenues, up from 60 percent in the original lease.
Culleys neither a stranger to controversy nor politics, although his political activity and influence in Republican circles and that of his wife Lynda ripples far from Superiors waterfront.
They are longtime supporters of former Wisconsin Gov. Tommy Thompson and his successor, Gov. Scott McCallum. Culley said he met Thompson in 1987, and the two remained fairly close after that, with Culley providing financial support for Thompsons campaigns.
Thompson appointed Culley to the states Tourism Council on which he served for nine years. Culley also has served on the Wisconsin Coastal Management Council for 10 years.
Lynda Culley, a retired senior report analyst for Minnesota Power, served on Gov. Thompsons judicial review board and the State Public Defenders advisory committee. She also was a member of McCallums transition team advisory committee as he was stepping up to replace Thompson early in 2001. Thompson was tapped by President Bush as U.S. Health and Human Services secretary.
Superior attorney Toby Marcovich, a Democrat and a member of the University of Wisconsin Board of Regents, describes his longtime friend Jack as a major figure in Republican politics. Marcovich said he was named to the universitys governing board, in part, because Culley went to bat for him.
He is consulted, frequently I believe, in matters of importance by the Republican administration, Marcovich said. Hes probably one of the best things to happen to Superior. Hes an energetic supporter of the city. I suppose there are other people that could have made Barkers Island Marina a successful business, but I doubt if theres anyone that could have made it more successful than Jack.
Management arrangements for publicly-owned marinas are complex and vary widely, which makes it hard to compare Culleys Barkers Island deal with others.
The city of Sheboygan, WI, for example, has a 280-slip marina that is managed by Skipper Buds, a company the manages several U.S. marinas. The city pays Skipper Buds an annual operating fee and keeps all revenuesessentially the opposite of the Barkers Island deal. Every city has a different arrangement, so it becomes difficult to compare, said Jean Dernehl of Skipper Buds.
The city of Manitowoc has a large marina it has leased to Sailboats Inc. since 1984. That deal is more complex than a simple percentage, but Culley said its a better deal for his company than the Barkers Island lease in Superior.
From time to time, the city of Superior has considered selling Barkers Island Marina, but determined the asking price would be steep, said Anderson, the citys finance director. Comparing the amount of money that the city currently takes inwhich is generally $180,000 to $200,000 a year, that goes directly to the cityif we wanted to receive that same amount in the form of a tax payment, that marina would have to be sold for something like $20 million, she said.
Marinas in the region are seeing steady growth these days, mostly due to an influx of Twin Cities-area people choosing Lake Superior over closer-to-home venues like Lake Minnetonka.
When the Johnson family took over Lakehead Boat Basin in Duluth about 43 years ago, most of the marina customers were local people. In the past 20 to 25 years its been more Twin Cities people coming up, Johnson said.
The demand for slips in our area is going up tremendously, said Michelle Shrider, general manager at privately-owned Port Superior Marina near Bayfield. A lot of our boaters come from the Greater Midwest.
They are leaving places like the St. Croix (River) and Lake Minnetonka area and coming here for more open water, more available boating, plus the pristine Apostle Islands environment. Were also getting people from Door County and the southern shores of Lake Michigan, she said.
Cully said about 80 percent of Barkers Island Marina customers are from Minnesota, about half from the Duluth area and half from the Twin Cities.
Cully also operates a smaller enterprise, Sailboats Inc. Air Charter. Hes chief pilot for the charter service, which has flown about three or four times per week over the past 10 years to cities throughout the Midwest, with Cleveland the most far flung on the regular schedule.
Culley bought the twin engine, Beechcraft Baron as Sailboats Incs corporate plane, but decided to charter it to turn it into a profit center rather than a loss center. He said the air charter business is down 40 percent this year.
Business travel is way down, he said. In a soft economy, and fearful of post-Sept. 11 terrorist attacks, companies have curtailed air travel, and are relying more on alternatives such as teleconferencing.
One of Sailboats Inc.s best profit centers, and clearly a pride and joy for Culley, is its certified charter sailing courses. The program was developed in 1980 when Culley discovered the charter business wasnt growing because people didnt know how to sail.
The beauty of the sailing lessons business is the only thing they can do is come back and charter after learning, he said. We teach them to do business with us.
Changing leisure patterns also have made sailing instruction more marketable.
When my kids were little in the 50s and 60s, everyone I knew took one or two-week vacations, he said.
With the advent of two-income households over the past 10 years, people dont take long vacations; they take mini-vacations. That fits the charter course three-day weekend perfectly, he said.
Culley said people who go through the course usually charter two-to-three times in the first year after being certified, and continue that pace for up to four years. More 10,000 customers have learned to sail from the Sailboats Inc. program. Culley said the instruction business, howeverlike the charter businessis down about one-third from last year.
Overall fundamentals in the boating business remain strong, although the near-term outlook for sales is flat.
Culley has been easing his workload in recent years, relying on a host of long-time employees he loves to brag about. Each year I do less and less, he said.
Though the Culleys have a condo in St. Petersburg, FL where they spend March and April, they continue to do most of their sailing on Lakes Superior and Michigan.
Its the most beautiful sailing environment in the whole world no question, Culley said.