MBA Holdings finds wheels of fortune

June 25, 2005

ATYPICAL OFFICE: MBA Holdings founder and CEO Gaylen Brotherson stands in his office in north Scottsdale.

Emily Piranio For the Tribune

A nondescript north Scottsdale office building houses the headquarters of a company at the cutting edge of the emerging motorcycle rental industry. Inside the offices of MBA Holdings and a look at its founder and CEO Gaylen Brotherson, it's obvious this is not a typical suit-and-tie business.

From behind the 20-foot-long curved desk that Brotherson built himself and surrounded by vintage bikes, odd artworks and antique toys including an old rocking horse that guards the door, Brotherson rides herd on a batch of bike-related businesses.

But his now publicly traded company had a staid start.

The MBA stands for Mechanical Breakdown Administrators, the company's original name before it started to diversify.

Brotherson was an insurance salesman specializing in auto warranties in 1989 when he formed the company. Eventually he had a couple dozen independent agents hawking his policies. They worked primarily through credit unions that financed auto loans.

But after the Sept. 11, 2001, terrorist attacks, automakers started offering their own zero financing packages, and Brotherson's credit-union business dwindled, he said.

Seeking new money-making opportunities to shore up his company, Brotherson, who did a stint as a motorcycle dealer in the 1960s, formed the National Motorcycle Dealers Association in 2003 with the intent of providing services from employee health insurance to central purchasing for the thousands of ma-and-pa bike dealers around the country.

Among his customers was Blue Sky Motorcycle Rentals owner Wayne "Lumpy" Ordakowski, who had his own shop in Denver and licensed 10 other rental operations.

Brotherson bought Ordakowski's vision of a national rental network, and in December he bought Ordakowski's company.

"Lumpy had a unique concept. I liked the layout of his program and thought if we could put our cash and stock in, we could double or triple it in 2005," Brotherson said.

He hired Ordakowski to make their shared vision a reality.

Since then, MBA Holdings has been on a buying spree. He's bought software companies and other rental operations -- mostly for their web sites or proprietary software programs. Or for their fortuitous locations.

MBA Holdings recently bought an operation near Phoenix Sky Harbor International Airport and another in Las Vegas. With the Denver Blue Sky shop, they form a triangle that Brotherson and Ordakowski believe will be launch their one-way rental business.

Like travelers who fly to Phoenix, rent a car, drive to the Grand Canyon and eventually to Las Vegas for the final leg of their vacation, bike enthusiasts would like to do the same, Brotherson said.

Eventually MBA would like to expand the network, becoming the Hertz of the rental bike business, Ordakowski said.

"The motorcycle rental industry isn't that old," he said. "It's still going through growing pains. But eventually this will become mainstream. And we plan to be there when it happens."

Having popular winter and summer locations also lets the company make the most of the inventory.

"We could rent 50 bikes out of Denver in summer, but it's a seven or eight month season. We couldn't afford to have them there in winter," Brotherson said.

MBA Holdings, which had revenue of about $5 million last year, reported a loss of about $1 million. Brotherson said that's because of expenses in building up the new areas of the business and the still sagging, but starting to recover, insurance end of the operation.

Brotherson isn't concerned even with all the purchases, he believes MBA Holdings will be profitable within a year now that he has the framework in place to grow the new rental businesses.

But MBA Holdings may never be a Scottsdale standard suit-and-tie operation, even though motorcycles are becoming big business among the suit-and-tie executives that Brotherson and Ordakowski say will fuel their company's growth.

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