Cornering the Market
Atlanta, GA
It’s fitting this week that the Kansas City Chiefs are on center stage.
Two years ago, when this game was in Atlanta, my wife arranged for us to attend the annual Super Bowl breakfast. At it were an assortment of NFL big-wigs…players, coaches, movers, and shakers.
Afterward, we joined a more intimate reception. Bart Starr Jr, Tony Dungy, Dan Reeves, Frank Reich, and Anthony Munoz were there, and all were as nice as they could be.
Among the men who took the most time to speak with us was Clark Hunt, owner of the team that lost that year’s AFC Championship game, won last year’s Super Bowl, and is playing again in today’s extravaganza.
Hunt came by his exalted position the old fashioned way: he inherited it.
But, to his credit, he has made good with his gift, and acknowledged his blessings. Like ex-athletes or many lottery winners, there are legions of rich kids who waste wealth as soon as they receive it. By all indications, Clark Hunt has been a responsible steward of his father’s legacy, and a successful manager of his family business.
As to his father, Clark (we were quickly on a first-name basis) gave considerable credit to the man who founded the team, started its league, and prepared his son to follow in his footsteps.
Much as I’m sure he enjoyed talking to me, Clark no doubt felt he should’ve been a couple miles away that morning, with his team as they prepared to play the next day’s game. But, alas, his team wasn’t there.
Two weeks earlier, the rest of his Chiefs were on the verge of joining him in Atlanta. They held a late 4th quarter lead on the Patriots, had just intercepted Tom Brady, and were in perfect position to run out the clock.
But there was a flag on the field. A Kansas City defender had lined up off-sides, and given New England another chance. The Patriots took advantage, won the game, and consigned Clark Hunt to a consolation conversation with yours truly.
Even so, he was exceedingly gracious, particularly in response to some of my unoriginal comments.
“Mahomes is amazing”, I informed Mr Hunt, as if he were unfamiliar with his star quarterback and had never watched him play. “He’s like the Steph Curry of the NFL. He is an incredible talent, makes everyone around him better, and is a joy to watch.”
“He really is”, came the sincere yet obligatory response. “And he’s a great person too. We are fortunate to have him.”
“And he wins”, I continued. “Well, I mean except the last game. I can’t believe you lost that. And all because one guy couldn’t even line up on his side of the ball! That was brutal. It must be agonizing to think you were that close to hoisting a trophy with your own father’s name on it.”
“Excuse me. I need to get more coffee.”
OK – I didn’t really say something that classless or stupid, and Clark didn’t abruptly walk away. But I’m sure those thoughts had consumed his waking moments since his grounds crew cleaned an opposing team’s confetti from his own home field.
Clark talked to us quite a while, to David and Rita as well as to me. He talked a bit about his father, the American Football League, and how much fun it had been to revive the Kansas City Chiefs. But we didn’t venture where I really wanted to go.
A few days ago, I recalled my conversation with Clark Hunt. Not only because of the Super Bowl, but also after some interesting action in the silver market…which made me think not so much of Clark, as of his father.
Lamar Hunt was one of fifteen children…by three women…of HL Hunt, the eccentric, self-made oil tycoon who at his death was reputedly the wealthiest man in America.
But HL Hunt wasn’t all about money. He was also a big family values guy. In fact, he valued family so much that he had two of them.
Simultaneously.
Today’s Super Bowl is not the first connection the Hunt family has had to the city hosting tonight’s game, that is home to the Chiefs’ opponent, and that is the town where your author grew up.
While still married to Lamar’s mother, HL Hunt allegedly assumed a first name of “Franklin”, and exchanged vows with a young woman from Tampa. She gave her “husband” four children, and for a decade remained oblivious to his purported polygamy.
Thru a friend, she learned that Franklin was a figment…but that HL and his parallel family were very real. Later, when HL established trust funds for their kids (and, no doubt, for his “wife” as well), she agreed to attest that Hunt had never been her legal husband.
HL remained married to Clark’s grandmother until she died, almost twenty years later. He then married his secretary and adopted her four kids…which, in retrospect, made some sense. Because they were his.
My home town and his family’s association with it never came up in my amiable chat with Clark Hunt. But the achievements and adventures of his father did, even if they paled in scale, scope, and scandal to those of his grandfather.
In 1960, Lamar Hunt established the American Football League, and founded a charter franchise known as the Dallas Texans. Two years later, the team relocated to Kansas City…and became the Chiefs. When the AFL and NFL merged, Lamar provided the moniker by which we now know today’s annual smorgasbord of overbearing commercials, exorbitant halftime shows, insufficient chicken wings, and intermittent football.
Or, perhaps his son named the game. In passing, Clark mentioned to me that, as young kids, he and his siblings suggested to their father that the event be called the “Super Bowl” (after a “Super Ball” toy they’d been playing with) and the name eventually stuck. As, it seems, has his team’s propensity to appear in it.
For the second consecutive year, Clark Hunt is unable to attend the Super Bowl breakfast. Partly because…as part of the theatrics of viral aversion…there isn’t one. But also because his team is once again playing in the game he ostensibly named.
This week, as noted earlier, that is appropriate. And not only because the Chiefs won the AFC. But because, when the commodity markets opened last Monday, their founder came immediately to mind.
A few days ago, we reflected on short-selling, and the GameStop frenzy. After Redditors drained the juice from that lemon, they were set to squeeze one of the most manipulated markets in the world: silver.
The object of their ire was the big banks, who depress the price of the metal thru short positions and paper derivatives. Either because…or in anticipation…of a reprise of the GameStop mania, the silver price rose 10% on Monday morning.
The next day, margin requirements were lifted, and the prior session’s gains were promptly erased. Exciting stuff. But it was a soothing sonata compared to the raucous symphony that played out forty years ago. And Lamar Hunt was in the orchestra pit.
In the 1970s, Lamar and his two older brothers began acquiring silver. The dollar had recently been detached from gold, and was drifting to oblivion. To immunize themselves from the infection of inflation, the Hunts injected their portfolio with physical assets.
Slowly at first, and then steadily at last, they kept buying silver futures. But instead of settling in cash, as most investors do, they took possession of actual metal. They packed it on planes, and flew with it to store their stash in Swiss vaults.
On one flight, a circus elephant was with them, and almost crashed the plane when it wrapped its trunk around wires that controlled the flaps. Lamar rushed toward the precocious pachyderm, and tossed a rubber tire in his cage so he’d have something less lethal to play with.
By the end of the decade, the Hunts had acquired almost two-thirds of the world’s investable silver…and were on the verge of cornering the market. Within months, the price had risen five-fold.
An ornery public…already riled by stagflation, hostage crises, and misery indices…was livid. Discount retailer Tiffany took out ads calling the Hunts accumulation of silver “unconscionable”, and chastising them for “artificially” driving up the price of one of their main costs of goods.
Tiffany Outraged Over High Prices
Much as brokers did this week to deflate GameStop vigilantes, the powers-that-be sprung into action to squash the Hunts. In January 1980, they changed the rules in the middle of the game. They would, for an indefinite period, allow only liquidation orders in silver.
Investors couldn’t open new contracts; they could only close out old ones. In effect, the restrictions ensured that the price of silver could only go down. So it did.
At the same time, as they did this week, the exchanges pushed margin requirements up. This forced the Hunts to front additional collateral to cover their loans. They couldn’t do it, so we’re forced to sell. The price fell further. As quickly as it reached its summit, the price of silver had returned to base camp.
Lamar Hunt held a smaller position than his brothers, and was cleared of the racketeering and anti-trust charges of which they were found guilty. Several years later, after silver fell and oil crashed, the family filed for bankruptcy.
Lamar paid his portion of a $130M fine, but kept his team. Had he not, I never would’ve met his son, nor be kicking myself now for not asking him more about the time his father and his uncles almost cornered the silver market.
Since we spoke, Clark picked up his own piece of silver, a Super Bowl trophy he added last year to the one his father won half a century earlier. Tonight, he will try to grab another, and corner his own silver market. On the other side of the trade, across the line of scrimmage, will be a quarterback who has already done so.
Kansas City is a great town. The Chiefs are a fun team. But I grew up in Tampa. My parents live within several miles of the stadium, and my brother lives a few miles from them.
I like Clark Hunt, admire his organization, and wish him well.
But not today.
JD
