John Textor’s Hollywood special effects studio specialized in making big-screen fantasy appear real.
Taking a page from his company’s script, the relentless salesman created a vision so compelling that public officials suspended their disbelief.
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The story of how it unraveled and why, in next Sunday’s Palm Beach Post.
Textor’s dot-com gamble turned bond analyst into player
West Palm Beach native John Textor scored big during the dot-com boom, making millions on a software company. It was a win that set the stage for his attempt to turn Digital Domain into a player on Wall Street and in Hollywood.
After going to Wesleyan University in Connecticut, Textor pursued a Wall Street career. He worked as a bond analyst at Paine Webber, then in mergers and acquisitions at Shearson Lehman. He returned to South Florida in the 1990s and worked for a time for Michael Swerdlow, a commercial real estate developer in Broward County.
But working for others didn’t fit Textor’s temperament. In 1997, he launched Wyndcrest Ventures, a West Palm Beach company to invest in other companies. Textor wouldn’t have to wait long for Wyndcrest’s biggest win.
In late 1997 or early 1998, Wyndcrest Partners paid $1.62 a share for 324,000 preferred shares of Art Technology Group, a privately held software company based in Boston, according to regulatory filings.
Textor’s timing couldn’t have been better. Art Technology Group went public in 1999 at $10 a share. With the company’s revenue soaring in 2000, shares exploded, reaching $126 during the frothy market of 2000.
Textor has said that, after splitting the proceeds with his partners, he made $20 million by selling Wyndcrest’s stake during the bubble. The blockbuster trade established Textor as a player in the world of tech dealmaking.
After his big win, Textor suffered losses. Jester, a tech start-up based on Clematis Street in West Palm Beach, flopped. Two Silicon Valley companies rejected Textor’s repeated buyout offers in 2002.
In another money-maker, Textor helped launch VirtualBank of Palm Beach Gardens. He sold out at a profit long before the institution, renamed Lydian Private Bank, was taken over by federal regulators in 2011.
The wins meant Textor had arrived. He lived in a $4 million house on Jupiter Island and owned a couple of yachts.
And he set his sights on Hollywood, teaming with college buddy Michael Bay to buy Digital Domain in 2006. He would try to build the animation company into something it was not and six years later, despite $135 million in subsidies from Florida governments, it would go into bankruptcy and become his biggest flop.
John Textor: The West Palm Beach native and Digital Domain chairman played a starring role, negotiating for government money to create Hollywood East, an ill-fated idea.
Michael Bay: Hollywood hitmaker, partnered with Textor to buy Digital Domain in 2006
James Cameron: Titanic director, founded the company Textor bought
Dan Marino: Miami Dolphins great, investor in Digital Domain
Dr. Dre: Rap mogul hired Digital Domain to create a virtual version of Tupac Shakur
John Sculley: Former Apple CEO, on Digital Domain board
Carl Stork: Microsoft millionaire, served as CEO
Frank Patterson: FSU film school dean; a tireless supporter; Digital Domain paid him consulting fees, covered part of his FSU salary
Kevin Ambler: Former state legislator, pushed key $20 million grant; later named to Digital Domain board, given stock options
Kimberly Mitchell: West Palm Beach city commissioner championed Digital Domain’s film school
Charlie Crist: As governor, he signed off on a $20 million state grant to Digital Domain approved by the Legislature
Dale Brill: Crist’s head of economic development, he now says he would have lost his job if he had opposed state money for Digital Domain
Enterprise Florida: The public-private partnership spent months scrutinizing Digital Domain, decided not to recommend a state grant
Digital Domain milestones
May 2006: John Textor, Michael Bay and Carl Stork buy Digital Domain Productions, a Hollywood animation studio
April 2008: Digital Domain files for an initial public stock offering but later drops the plan
June 2008: Textor begins negotiating with state officials for incentives
June 2009: Then-Gov. Charlie Crist signs off on state budget providing a $20 million incentive for Digital Domain
July 2009: Digital Domain announces incentive package with Port St. Lucie
August 2010: Digital Domain announces incentive package from West Palm Beach
November 2011: Digital Domain goes public on the New York Stock Exchange
April 2012: A virtual version of late rapper Tupac Shakur performs at a concert in California
May 2012: Driven by Tupac hype, Digital Domain shares hit an all-time high of $9.20; Digital Domain announces $35 million loan from Tenor Capital of New York
Sept. 4: Digital Domain announces default of Tenor Capital loan
Sept. 7: Digital Domain closes Port St. Lucie studio; Textor resigns
Sept. 11: Digital Domain files for Chapter 11 bankruptcy protection
How we got the story
As Digital Domain Media Group began to implode last year, Palm Beach Post staff writer Jeff Ostrowski dug into the company’s story. Over the past year, Ostrowski read thousands of pages of court documents and emails and listened to John Textor’s speeches and presentations. He interviewed Textor before and after the company failed and saw firsthand how the businessman used both bluster and charm to get what he wanted.
Digital Domain’s $135 million subsidy
Delivered to Digital Domain
State: $20 million in cash incentives
Port St. Lucie: $40 million bond to build and equip headquarters, land worth $10 million and $7.75 million in cash. City took back land and building.
West Palm Beach: $10 million in downtown land and $2 million in cash. City won land back in bankruptcy court.
Total delivered: $89.75 million
Promised but not delivered
State: $20 million in film tax credits
Port St. Lucie: $2.25 million in cash
West Palm Beach: $8 million in cash, $15 million in bonds
Total not delivered: $45.25 million