Elsewhere: Sprint Leaves Kansas City

Under its $35 billion merger agreement with wireless giant Nextel Communications Inc., Sprint plans to switch its executive headquarters to Reston, Va., where Nextel is based. Sprint employs 17,000 people in the greater Kansas City area. Its headquarters in nearby Overland Park, Kan., has roughly four million square feet of space, one of the largest corporate campuses in the world. Sprint's move is compounded by the fact that Midwestern metropolises struggle to attract cutting-edge technology jobs.

Company officials won't say how many jobs will leave the area, but they have made it clear that job cuts will follow the merger. The company's operating headquarters and fixed-line phone business will remain in the Kansas City area. (Sprint is spinning off its fixed-line business into a new publicly traded company.)

The defection will certainly smart here in the nation's 27th-largest city. Sprint is the only major corporation based in Kansas, making it a rare marquee company in the state. The greater Kansas City region, which straddles Missouri and Kansas, has already lost the National Collegiate Athletic Association's main office while another local company, baking industry icon Interstate Bakeries Corp., filed for Chapter 11 bankruptcy protection this fall.

"When UPS moved from Connecticut, I bet those people don't even remember it," says Ernie Goss, a professor of economics at Creighton University in Omaha who studies the economies of Midwestern towns. "The Midwest is a little more sensitive."

In Johnson County, Kan., where Overland Park is located, every job at Sprint's main campus creates an additional 2.2 jobs, including everything from retail sales positions to construction jobs, according to a 1999 study by the County Economic Research Institute in Overland Park. The research was released after Sprint built its new campus. At the time, the institute predicted Sprint's annual industry output -- a figure that's similar to gross domestic product -- would be $6 billion a year in Johnson County.

Area residents also are worried that Sprint's generous charitable and other giving may slip. Sprint has agreed to give $20 million to the Kansas City area during the three years ending in 2006, representing about 75% of Sprint's donations. That money funds everything from teacher-training programs to the local ballet. The company also agreed this summer to pay $2.5 million annually for 25 years to put its name on a downtown entertainment complex that's a key part of a city revitalization project. Sprint Chief Executive Gary Forsee told a local paper that that commitment to the entertainment center won't change.

"We'll be looking at the news every morning to see what's going on," says Robert Maile, superintendent of the Kansas School for the Deaf in nearby Olathe, Kan. The phone giant provided several hundred volunteers and funds to build the school a new playground this fall.

Sprint's roots in Kansas date back to 1899, when Cleyson L. Brown started Brown Telephone Co. in Abeline, Kan. It's undergone a litany of changes -- it once encompassed an oil company, grocery stores and a shoe operation -- but has remained based in Kansas the whole time.

Residents have long been concerned about losing Sprint's corporate office. The company has been in serious merger talks at least twice during the past decade. Talks with Texas-based Electronic Data Systems Corp. broke down in 1994 and its deal with MCI WorldCom (now MCI) fell apart in 2000. Some locals are waiting for final approval of the Nextel deal before they get nervous this time around.

But local businesses say they've already felt the impact of Sprint's downsizings. The company's cut thousands of jobs during the past few years as the telecommunications sector struggled. Arcadian, a caterer in Overland Park, produced lavish spreads of pecan-crusted salmon and chocolate torte for Sprint during the boom times of the late 1990s. But during the past few years, "the amount of events that we've been doing with them and the budgets that we've had for them ... just continually drop," says owner Diane Crouse.

The news comes at a bad time for the local real-estate market. The office vacancy rate in southern Johnson County, the location of the Sprint campus, is about 17%, up from 9% a few years ago. Sprint's old executive office remains unsold after a year on the market. The asking price for the 250,000-square-foot building is $22 million, says Joyce Murray, vice president, sales and leasing at Zimmer Real Estate Services, who is handling the sale.

Other Midwestern towns have spent years getting over the loss of major corporations. Prof. Goss points out that Omaha residents still lament losing Enron Corp., better known there as the parent of Northern Natural Gas Co., to Houston in 1986. "Even after this length of time, there's still this thing about Northern Natural Gas," Prof. Goss says, noting that residents still speak nostalgically about the company's buildings.

Still, civic leaders are trying to remain positive about the Nextel deal. Many point out that a stronger Sprint is better for Kansas City, even if it means fewer jobs. Some are hoping that with both the company's landline business and the operating headquarters still in the area, Sprint will eventually create more jobs than it has there today.

"We would not have scripted it exactly this way, but far more compelling is the recognition that we are much more likely to have a long-term success with this merger than if Sprint should continue to be a standalone company," says Bob Marcusse, president and chief executive of the Kansas City Area Development Council.

Other local officials point to a burgeoning biotechnology sector and a diversified base of manufacturing jobs as proof that Kansas City will weather the loss of Sprint's headquarters. But even Sprint's own officials have acknowledged that Kansas City is heavily dependent on the telecommunications giant. "Our success and the region's success are inextricably tied," Mr. Forsee, Sprint's CEO, said in a speech in March.