The Long Run
Two Romneys: Wealthy Man, Thrifty Habits
By MICHAEL BARBARO and ASHLEY PARKER
BOSTON — Soon after Mitt Romney handed out eye-popping bonuses to top performers at his private equity firm in the early 1990s, a young employee invited him to ride in his brand-new toy — a $90,000 Porsche 911 Carrera.
The Long Run
Articles in this series are exploring the lives and careers of the candidates for president in 2012.
The Long Run: After a Romney Deal, Profits and Then Layoffs (November 13, 2011)
The Long Run: For Romney, a Role of Faith and Authority (October 16, 2011)
The Long Run: Perry Survived Even as His Big Plan for Texas Failed (December 10, 2011)
The Long Run: For Bachmann, God and Justice Were Intertwined (October 14, 2011)
Building a Better Mitt Romney-Bot (December 4, 2011)
Jim Cole/Associated Press
Mr. Romney was entranced by the sleek, supercharged vehicle: at the end of a spin around downtown Boston, he turned to the employee, Marc Wolpow, and marveled, “Boy, I really wish I could have one of these things.”
Mr. Wolpow was dumbfounded. “You could have 12 of them,” he recalled thinking to himself.
But Mr. Romney had frequently driven an inexpensive, domestic stalwart that looked out of place in the company parking lot — a Chevrolet Caprice station wagon with red vinyl seats and a banged-up front end.
It was a stark sign of the tug of war, still evident in Mr. Romney’s life, between an instinctive, at times comical frugality, and an embrace of the lavish lifestyle that accompanied his swelling Wall Street fortune.
Mr. Romney, 64, has poured $52 million of his own money into campaigns for the Senate and the White House, but is obsessed with scoring cheap flights on the discount airline JetBlue.
He has acquired six-figure thoroughbred horses for his wife, Ann, yet plays golf with clubs from Kmart. And he has owned a series of multimillion-dollar homes, from a lakefront compound in New Hampshire to a beach house in California, but once rented a U-Haul to move his family’s belongings himself between two of the vacation retreats.
Friends, co-workers and relatives describe Mr. Romney, now seeking the Republican presidential nomination, as something of a paradox: a man exceedingly deft at and devoted to making money who has never become entirely comfortable with his own wealth.
In interviews, they said he was driven in his business career more by his striving and competitive nature than by the goal of accumulating riches. Still, he had to be persuaded by his wife, Ann, to walk away from his job at Bain Capital, the private equity company he helped found, at a time when it had become “extraordinarily lucrative,” he recounted in a memoir.
Mr. Romney, who has a net worth estimated at $200 million from his days buying and selling companies, rarely discusses the rewards of that career, wary that it might alienate voters worried about paying their bills. He has not disclosed his income tax records, shielding from public view details about his finances. On the campaign trail, where he wears Gap jeans and a Seiko watch, he is eager to highlight the humblest aspects of his biography, including the bankruptcies endured by his grandfather.
His complicated relationship with money was shaped by his father, George W. Romney, a self-made businessman and Michigan governor, and by a Mormon faith that counsels modesty. Tagg Romney, Mr. Romney’s eldest son, explains his father this way: “There isn’t much that bothers him more than wasting money.”
In making his case for the presidency, Mr. Romney has built his campaign around pledges to rein in government spending and reduce the federal debt. He argues that he has squeezed costs out of every organization he has led — as chief executive of Bain Capital, organizer of the Salt Lake City Winter Olympics and governor of Massachusetts — turning penny-pinching into a management style.
“He is as cheap as it comes,” said Bob White, a longtime Romney friend, business partner and confidant. “And I think that carries over into everything he does.”
A Frugal Father
The parking lot in front of Cranbrook, the boarding school outside Detroit that Mr. Romney attended as a day student in the 1960s, was crammed with flashy cars, gifts from top auto executives to their children.
There was no sparkling car for Mitt Romney, however. His parents had refused to allow their four children to own cars in high school, even though George Romney ran American Motors, the giant manufacturer.
It was an early lesson in moderation from the senior Romney, who had a poor, itinerant childhood, could not afford to finish college and paid for his honeymoon by selling aluminum paint out of the trunk of his car.
“I don’t think George ever forgot that,” said Walter DeVries, a longtime friend and colleague.
The Romneys lived in an affluent suburb, Bloomfield Hills, with a housekeeper and two refrigerators in the kitchen. But George Romney still required his children to mow the lawn, shovel snow, rake leaves, weed the garden. “I know he worried that because my brother, sisters and I had grown up in a prosperous family, we wouldn’t understand the lessons of hard work,” Mitt Romney wrote.
Friends learned to navigate Mitt Romney’s packed schedule of weekend chores and his shift as a security guard at a local Chrysler plant. “You couldn’t do anything on Saturday,” recalled a classmate, Phillip Maxwell, “because Mitt had to clean the basement.”
It was an ethos that Mr. Romney tried to imbue in his five sons, even as they grew up with the trappings of wealth, like prep school tuitions, extended vacations, Jet Skis — and, in recent years, $100 million in trust funds and a paternal investment of at least $1 million in a financial company started by Tagg Romney.
When Tagg was 16, he lost an inexpensive anchor off the coast of Cape Cod, Mass., where the family had a summer home. Finding the 18-inch-long weight at the bottom of the ocean, he told his father, was a lost cause.
Mr. Romney insisted that Tagg search for it, but after the teenager refused, Mr. Romney excused himself from the guests he had been entertaining, put on a bathing suit and a snorkel mask, and set out in a rowboat with his son.
“We rowed back and forth for about 25 minutes,” Tagg, now 41, said in an interview. “Then I remember him jumping out of the boat. He had spotted it, and he went down and pulled out the anchor.”
Thrift was a family virtue. Ann Romney used to cut her sons’ hair in the backyard. Her husband would tackle home renovations himself. Once, he enlisted everyone — for six weekends straight — in building a fence around their large home in Massachusetts. A Mitt mantra, recalled Spencer Zwick, a family friend, was, “Just because you can afford something doesn’t mean you should buy it.”
An Eye on the Bottom Line
At Bain Capital, Mr. Romney scolded colleagues for flying first class. He batted away requests for high-end office decorations (preferring faux-wooden desks). To set an example, he ate bag lunches in front of his computer.
Executives at the firm found it amusing: the business was awash in profits, but the boss still sweated the smallest possible expenses.
Geoffrey S. Rehnert, a managing director, recalled arriving at the office one day in 1986 brandishing a cellphone, an expensive new technology at the time. Mr. Romney lit into him, demanding to know why a pay phone on the road would not suffice. He eventually relented, but, Mr. Rehnert said, “You could tell it was painful for him.”
Mr. Romney brought the same austerity to the companies in which Bain invested, like Staples, the office supply retailer. As a Staples board member, he successfully negotiated with the chief executive to reduce his base salary by $100,000, arguing that the money was better invested in the company and the chief executive would be rewarded with a higher stock price.
“He always had a thoughtful reason for why it was in your interest to share in his frugality,” said Tom Stemberg, the chief executive.
Several of Mr. Romney’s colleagues saw a measure of delusion in his thrift, especially after his self-financed 1994 campaign against Senator Edward M. Kennedy of Massachusetts. Mr. Wolpow recalled Mr. Romney’s response after learning that a few Bain Capital executives had invested their own money in a jet-sharing program to make travel easier.
“I don’t see how anyone could spend $2 million on the share of a private jet,” Mr. Romney told him.
Mr. Wolpow replied playfully: “Mitt, I don’t see how anyone could spend $4 million trying to beat Ted Kennedy.”
A Family Environment
In 2004, a real estate broker sent an overnight letter to the Romneys’ house in Belmont, a Boston suburb, assuming that Mr. Romney, then the governor, would be too busy to respond himself. A nearly $90,000 parcel of land next to the Romneys’ sprawling weekend home in Wolfeboro, N.H., was now on the market, the letter said. Was Mr. Romney interested?
At his office the next day, the broker, Bob Hughes, found three frantic phone messages from Mr. Romney. When Mr. Hughes reached him, he could hear that the governor had interrupted a meeting to say, yes, he absolutely wanted to buy the property.
Even those who regard Mr. Romney as tight-fisted acknowledge his weakness for real estate; the big spending could make his gestures at frugality seem less authentic. Starting in the 1980s, as Bain partners became millionaires, Ann and Mitt Romney undertook a series of increasingly expensive home purchases and renovations.
Friends and family members said the lavish expenditures must be put into context: as young parents, the Romneys wanted to create a meeting place for their children and their friends, hosting movie nights and sleepovers. Later, when the family expanded with spouses and 16 grandchildren, these houses became a treasured retreat for the clan.
“Their thinking has evolved to, where can we create an environment where the family will want to gather together?” said Grant Bennett, a friend from Belmont.
In 1986, they spent $65,000 enlarging a Victorian in Belmont. Three years later, they moved up the street to a bigger, stately Colonial, at a cost of $1.3 million. A neighbor, David Tripple, said the home was the envy of the neighborhood: “Everyone wanted it.”
The Romneys upgraded the property by building a $30,000 tennis court, a $40,000 pool and a new wing for $200,000, documents show. A few years later, they bought the almost 6,000-square-foot home in Wolfeboro and several surrounding lots on Lake Winnipesaukee, featuring basketball, tennis and volleyball courts, a boathouse and a private beach.
The purchase price, $2.5 million in 1997, was noticed in the quiet town, two hours north of Boston. “It was more than anyone had paid for a house here,” said Mr. Hughes, the broker.
Construction of a 9,500-square-foot home in Park City, Utah, soon followed, once Mr. Romney was named to run the Salt Lake City Games. In 2008, the Romneys bought a three-bedroom Spanish-style beachfront home in La Jolla, Calif. — where Mrs. Romney rides horses as therapy for her multiple sclerosis — for $12 million. They have since filed plans to almost quadruple the size of the house — to 11,000 square feet from 3,000 — prompting barbs from political rivals and complaints from angry neighbors.
Those close to Mr. Romney say he typically defers to his wife on large purchases — especially homes, most of which are in her name.
“Mitt is the cheapest guy in the world, except when it comes to Ann, because he loves his wife more than anything,” said Mr. Stemberg, the Staples founder, who recalled Mr. Romney darting into a store during a business trip to buy his wife “an extremely expensive coat.”
The retreat in New Hampshire, which is now valued at $4 million and where Mrs. Romney loves to spend summer days playing games with her grandchildren, sometimes serves another purpose, one in keeping with her husband’s flinty spirit. When Romney campaign aides now swing through New Hampshire, the campaign encourages them to bunk at the cheapest room in the state: the waterfront guest house.
Copyright 2011 The New York Times Company. Reprinted from The New York Times, Politics, of Sunday, December 11, 2011.