The Nook isn’t the only thing dragging down Barnes & Noble. So are its ties to founder Leonard Riggio

It pays to be Barnes & Noble’s founder.
It pays to be Barnes & Noble’s founder.
Image: AP Photo/Jae C. Hong
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Ailing book seller Barnes & Noble filed its proxy statement today detailing issues for its annual shareholder meeting in September. As part of that filing, the company listed various business relationships it has with other firms that have a connection to Barnes & Noble.

Interestingly, the list was chock-full of ties to companies that are at least partly owned by founder Leonard Riggio or his family, for which Barnes & Noble paid more than $160 million in the 2012 fiscal year. Earlier this year, Riggio offered to take the retail store portion of the company private.

Barnes & Noble has been hurting, partly because its Nook e-reader and tablet sales have fallen off. Investments in that business have been a big capital drain. But so have its payments to companies related to Riggio. Below are the highlights from the company’s filing.

• B&N College, which was owned by Leonard Riggio and his wife and sold to Barnes & Noble in 2009, has a long-term supply agreement with MBS Textboook. MBS, which is a new and used textbook wholesaler, is majority owned by Leonard Riggio and other family members. B&N College purchased products worth $93.5 million in 2013 and $102 million in 2012.

• Barnes & Noble also has an agreement with a subsidiary of MBS, TXTB.com, which sells MBS products online on its web site, textbooks.com. Total commissions paid to TXTB were $302,000 in 2013 and $559,000 in 2012.

• In 2010, the retailer signed an aircraft time sharing agreement with LR Enterprises Management, which is owned by Leonard Riggio and his wife. The contract allowed Barnes & Noble to use aircraft owned by LR Enterprises on a time sharing basis. Reimbursements for operating costs totaled $159,000 in 2013 and more than $1 million in 2012.

• Barnes & Nobles has leases for two office locations in which Leonard Riggio has a majority interest in one and a minority interest in the other. The total rent for the spaces, including taxes, was $5.1 million in 2013 and $4.8 million in 2012. The retailer also leases one of its B&N College stores from a partnership owned by Leonard and Stephen Riggio. That carries an annual rent of $862,000. The company also leases an office/warehouse from a partnership in which Leonard Riggio has a 50% interest, and it has an annual rent of $707,000 in 2013.

• Barnes & Noble gets freight distribution from trucking services company Argix Direct, in which a brother of Leonard Riggio has a 20% interest. The company paid Argix $54.8 million in 2013, and $49.4 million in 2012. More than 70% of those payments went to Argix subcontractors, who are not related to Barnes & Noble.

• The company used Digital on Demand, in which Leonard Riggio has a minority interest, as its provider of music and video database equipment and services. That contract was terminated in 2011, and Barnes & Noble paid Digital on Demand nearly $2 million in that year for its services.