National Football Cartel

How the Arizona Cardinals and their NFL brethren exert monopoly power to extract billions of dollars from American taxpayers

Other board members say the cost is in the $360 million range.

The TSA has yet to sign a contract with Hunt Construction Company to build the stadium. According to law, the contract is to include a "guaranteed maximum price" provision that is supposed to protect the public from paying more for the stadium.

However, under an interim contract that TSA signed with Hunt in June 2000, there are provisions for TSA board-approved "change orders" that could increase the cost of the stadium to the public. TSA officials say there is enough money from planned bond sales to cover the cost of a $500 million stadium.

With Cardinals/NFL contribution locked at $85 million, any unforeseen cost overruns will be fought out between Hunt Construction Company and the TSA.

Economists and attorneys familiar with stadium construction projects say an experienced contractor like Hunt -- which has built more than 70 stadiums and arenas worldwide -- will have the upper hand in shifting costs.

"In a cost overrun dispute, bet on Hunt," says a Phoenix attorney who worked on Bank One Ballpark, a stadium that also was built by Hunt.

Bank One Ballpark was projected to cost about $273 million. It came in at about $370 million. The cost overruns were absorbed by the owners of the Arizona Diamondbacks.


The Cardinals are not the only entity benefiting from the stadium project.

A host of insider companies that have worked with the team since the inception of the Proposition 302 campaign are receiving hefty, no-bid contracts from TSA.

TSA employees also have landed lucrative employment contracts. Both issues are attracting considerable attention from state legislators and Maricopa County officials.

The Maricopa County Attorney's Office hired a private attorney to review the TSA contracts and provide a report to the county Board of Supervisors, according to a copy of the confidential memorandum obtained by New Times.

The December 21 report states that contracts awarded by TSA to Banc One Capital Markets ($25,000, flat fee), Wells Fargo Bank, Bank One, Dain Rausher ($225/hour), Western Financial Group ($175/hour), Ernst & Young ($25,000, flat fee), Smith & Harroff ($5,000/month), Zurich North America Services Corporation ($115/hour) and International Facilities Inc. ($35,000/month) were all awarded without competitive bidding.

The County Attorney's Office declined to comment on the report. Members of the Board of Supervisors and County Manager David Smith did not return calls seeking comment. The author of the memorandum, Phoenix attorney Bill Sims, declined to comment.

None of the agreements, according to the report, contain provisions normally included in state contracts related to conflicts of interest.

Several of the companies receiving TSA contracts worked on the task force that developed Proposition 302. Others stand to profit by providing financial advice to the TSA and then participating in the actual underwriting and sale of approximately $250 million in bonds to be sold to pay for stadium construction.

Dain Rausher, for example, serves as the TSA's bond underwriting consultant. Dain Rausher is also expected to participate in the sale of those bonds.

Banc One Capital Markets appears to have the opportunity to not only provide consulting services to the TSA, but also to participate in stadium financing, according to the confidential county memo.

Sims, who has reviewed several other stadium projects, stated in his report to Maricopa County that "typically . . . the government bars the consultant from participating in the transaction that the feasibility consultant is analyzing."

Ferris says the TSA contracts with Banc One Capital Markets and Dain Rausher "are entirely legal" and were issued following the advice of TSA's attorneys, the Phoenix law firm Fennemore Craig.

Furthermore, Ferris says, TSA is exempt from state procurement laws and is not subject to competitive bidding requirements.

"There are situations where you can single source a contract if it is based upon being in the state's best interest," Ferris says.

TSA is negotiating contracts with companies that are already familiar with the stadium issue because they have proven expertise, Ferris says.

Contracting with these companies, Ferris says, is also "easier" and saves TSA time.

"You can choose to look at it this (nefariously) as being we are doing business with those we had a prior relationship," Ferris says. "I view that as a strength and something that is helpful."

Another apparent conflict of interest involves Smith & Harroff, an Alexandria, Virginia, political consulting firm with close ties to former governor J. Fife Symington III and current Governor Jane Hull.

Smith & Harroff was paid about $269,000 by the Cardinals to help design its Proposition 302 campaign, county campaign finance reports show.

Immediately after Proposition 302 was passed, TSA hired Smith & Harroff on a $5,000-a-month retainer to handle TSA's communications.

Smith & Harroff, however, continued to work for the Cardinals while being paid by TSA. County campaign finance reports show that the Cardinals still owed Smith & Harroff $56,000 as of December 2000, the last time finance reports have been filed.

Smith & Harroff owner Jay Smith did not return a call seeking comment.

Ferris says he sees no conflict of interest because of Smith's dual role of working for TSA and the Cardinals at the same time.

"Jay did a great job for us over the past year," Ferris says. "He was somebody that knew intimately what the purposes of the TSA are, and that's important."

« Previous Page
 |
 
1
 
2
 
3
 
4
 
5
 
6
 
7
 
All
 
Next Page »
 
My Voice Nation Help
0 comments
 
Loading...