If any business proposition ever looked like a sure thing, betting on aging Americans, rising home values and the advantages of tax-exempt companies might have been it.
For a quarter-century it paid off for John C. Erickson, who built the retirement-home chain bearing his name into a billion-dollar operation that spread from Massachusetts to Texas.
Along the way he acquired a yacht and multimillion-dollar homes and started a charitable foundation that had $139 million in assets in 2007, the most recent year information is available.
But Catonsville-based Erickson Retirement Communities got slammed by the same extraordinary forces that hit companies as diverse as Wall Street's Citigroup and Baltimore's Constellation Energy and 1st Mariner Bank. Erickson's travails again illustrate the magnitude of the financial collapse and raise questions about the future of what Fortune magazine named one of America's best 100 companies to work for.
"John has always been very aggressive," says Brian P. Froelich, a former Erickson president who left in the 1990s after a falling-out with the founder. But the company strategy, he added, "is very sustainable over time if done properly and conservatively."
Evidently it wasn't conservative enough. Erickson's stock in trade may be geriatric care and clean, airy communities for seniors. But like other companies, its dependence on credit markets and home values brought it to a low point.
On Monday the company announced it would enter bankruptcy proceedings and sell itself for an undisclosed price to Jim Davis, who with Steve Bisciotti founded Hanover-based Allegis Group in the early 1980s.
While Bisciotti went on to buy the Baltimore Ravens football team, Davis seems likely to end up taking over another Maryland institution: Erickson, its development company and contracts to run its 19 communities.
The deal must be approved by the bankruptcy court. But in any event it looks as though John Erickson, 66, will lose control of the company he founded in the early 1980s when he turned an abandoned seminary in Catonsville into Charlestown retirement village.
The company developed a unique business, creating not-for-profit corporations to issue tax-free bonds and buy management services and eventually real estate from Erickson's for-profit outfit. The system generated huge profits and, by many accounts, well-run communities.
