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The Gambling Kingpin Who's Hawking Vatican Giftware


People: ENTREPRENEURS

THE GAMBLING KINGPIN WHO'S HAWKING VATICAN GIFTWARE

John Connelly's deal gives him rights to goods now only in Vatican shops

It was a quiet lunch last spring in the Vatican apartment of Cardinal Rosalio Jose Castillo Lara, right next to St. Peter's. The cardinal was eating with his good friend John E. Connelly, a riverboat-gambling entrepreneur from Pittsburgh. Lara was talking about the Vatican's priceless art collection, the masterpieces housed in 13 museums and the Sistine Chapel. Then, as Connelly recalls, the cardinal popped a surprising question. "How would you like to market it?"

Connelly gives lavishly and is accustomed to receiving favors. He pours money into the Democratic Party and has bunked down at the White House. He gives to colleges, and honorary doctorates rain down upon him. But his favorite charity is the Church. He donates millions to Catholic schools. And just down the street from Cardinal Lara's apartment, Connelly is donating $13 million toward a hotel to house important visitors to the Vatican. So it's little surprise that when the Catholic Church decided to market its art, the Vatican's favorite gambler got first dibs.

SALESKIDS. Now, the 71-year-old Connelly has his hands on one heck of a deal. His contract with the Vatican gives him the rights to sell gifts and art reproductions that until now have been available only at Vatican shops. His license covers the Americas, as well as Spain and Austria, says Connelly. Georgina Burnett, executive assistant at the Vatican museum shops, says the Connelly venture is part of a broad Vatican effort to market its treasures to benefit charities. The hope is that Connelly, who made his first fortune 40 years ago by devising consumer promotions for banks, will turn Vatican gifts into a megabusiness whose millions will help fund Catholic education.

While America's appetite for religious artifacts is largely untested, Connelly can bank on a vast and vigorous distribution network for the new company, Treasures Inc. Beginning this fall in Pittsburgh and Detroit, parochial schoolkids who traditionally knock on doors selling cookies and magazines will be offering different wares: angel ashtrays, Ferragamo Vatican art neckties--even plaster knockoffs of God's finger touching Adam's, from the Sistine Chapel. Prices range from $4.50 to $40.

Connelly, who plans to give Catholic schools 40% of the gross proceeds (with 5% for himself and 5% for the Vatican), predicts the sales will double or triple fund-raising for Catholic schools. Father Kris Stubna, secretary for education in the Pittsburgh diocese, estimates Vatican gifts will boost fundraising from $3.5 million now to $6 million in the first year, 10% of the diocese's annual budget. "Angels are the No.1 hot-selling item everywhere," says Stubna. And the choice of a gambling entrepreneur to market the holy art? Local Catholic leaders stress Connelly's decades of good works in the Church and his success as a marketer.

As truckloads of reproductions pile into his Pittsburgh warehouse, Connelly sketches out his global designs. First Pittsburgh and Detroit, then the rest of the country, Mexico, and beyond. When the business spreads, he plans to diversify beyond what the Vatican gift shops now offer. He already has come up with "Carry the Cross" Cross pens and paint-your-own Raphael watercolor sets. He envisions advertising on Catholic cable-TV shows and maybe on Home Shopping Network. He's thinking about Vatican specialty shops, with soft light and celestial music. Who knows? He says Treasures could turn into a billion-dollar business. Then Connelly cuts short the reverie. "Hey," he says, "if I can conquer the U.S. in a year, I'll be a miracle man."

Of course, Connelly believes in miracles. As he sees it, he has lived a few. With both parents dead by the time he was 16, Connelly, the oldest of five children, dropped out of school to support his siblings. He mined coal, and then he boxed. As a lightweight known as "Twinkletoes," he won 12 of 13 fights, losing the last after a late night of carousing.

He turned fancy footwork into real money in the 1950s when he created promotional programs for banks. He encouraged them to reward depositors with watches and toasters, which he sold to the banks by the millions. He's still promoting, selling supermarkets a million giveaway watches a year. With his Apples For Students program, he sells cut-rate Macintosh computers to supermarkets, which give them to schools designated by parents who save up and turn in their grocery receipts.

BAD BET. Connelly made a bigger name for himself in the early 1960s. After serving on the municipal board that helped to clean up Pittsburgh's three rivers, Connelly bought some riverboats and launched a dinner-cruise line. His business spread to St. Louis, and in the early 1980s he bought a New York operation and turned it into World Yacht. He sold the New York dinner-cruise line to Circle Line in 1988. "I walked away with $40 million net," he says.

From riverboats to riverboat gambling was a natural jump. But it led to Connelly's biggest tumble. Amid great hopes, he launched President Casinos Inc. in Davenport, Iowa, later expanding the casino's operations to St. Louis and Biloxi, Miss. At the same time, he bought riverfront acreage in Pittsburgh and Philadelphia, anticipating pro-gambling legislation in Pennsylvania. After he took President public in 1992, at $18 a share, the stock climbed to $32, lifting Connelly's stake above $300 million.

But the gambling bill fell flat in Pennsylvania, and elsewhere President ran into bruising competition. Last year, it lost $58 million on sales of $192 million, and the stock now is wallowing around $1.25. A former partner in the Davenport casino, Richard L. Whalen, calls his involvement with Connelly "the single worst business mistake I've made."

President's stumble has reduced the value of Connelly's stake to $12 million. He's still rolling in money by most people's standards, with assets topping $100 million. But to pump up the fortune again, he's pressing hard on the Vatican deal. And for all his important friends in high places, Connelly knows that his most valuable allies in this latest campaign are the millions of diminutive sales agents, Vatican catalogs in hand.By Stephen Baker in Pittsburgh, with John Rossant in Rome


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