By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
It's a lease that reamed Phoenix taxpayers and guaranteed Colangelo and his buddies a pot of gold.
"That [lease] was important," Sarver told me after the sale was announced. "You have to have an arena arrangement that is somewhat favorable compared to arena arrangements in general."
I asked the 42-year-old Sarver, who has made a fortune buying and selling banks and real estate: Just how favorable is the Suns' lease compared to those in the rest of the NBA?
"It's in the upper half," he said.
Sarver's understating things.
Jerry's shameless promoters in the mainstream media won't tell you how vitally important the arena lease has been to the Godfather's bulging checkbook, but I will.
Follow the numbers here; they tell the story of how Jerry Colangelo became a wealthy man on your back.
We taxpayers so far have paid out $61 million in principal and interest for the city's share in the construction of America West Arena. By 2019, that will rise to $127 million when the debt on the project is finally paid off.
In return, Colangelo's Suns have paid the city a meager $9 million in rent and profit sharing for using the facility from 1992 through June 30, 2003.
That means we foolish taxpayers are out $52 million so far on the arena deal.
By 2019, the direct taxpayer subsidy to build and finance the arena, a facility controlled by the Suns, will increase to about $100 million.
At the same time we taxpayers have forked over millions of dollars a year to subsidize the arena, the Suns have raked in about $15 million from arena operations in just the last four years, according to arena financial documents I pried from the city with a flurry of public records requests.
Get it? We pay. Jerry collects.
This gross financial imbalance in favor of the Suns is one major reason Sarver and his group were willing to pay $400 million for a team that's never won an NBA title.
Believe me, if taxpayers weren't footing such a huge part of the bill for the arena while collecting chump change on the lease, the selling price of the Suns wouldn't be nearly so high.
Remember, Jerry's gotten rich on your back.
But this is only one part of the gravy train Colangelo and his clever attorneys cut with the city on the arena.
The team is quietly stashing away millions of dollars a year in deferred revenue generated by the arena that will provide a huge payday to the Suns in the future.
Here's how this nifty deal works.
The arena is operated by Phoenix Arena Development Limited Partnership, which is 99 percent owned by the Suns.
The arena partnership's required to pay the Suns 60 percent of all suite and advertising revenue generated by the arena each year. The balance of this revenue goes to help pay for arena operations.
So far, there hasn't been enough money generated by the arena to pay the team its 60 percent cut of suite and advertising funds -- worth about $8 million a year.
That's because the arena partnership's paying off about $100 million in debt it has accumulated to pay for part of the original construction of the arena and subsequent improvements -- debt payments close to $9 million a year.
But don't think that Jerry isn't keeping track of the suite and advertising bucks.
The arena partnership's obligated to begin paying the Suns the advertising and suite money once its construction debt is paid off in 2022. The partnership already owes the team a hefty chunk of change.
As of June 30, 2003, the partnership is already obligated to pay the Suns about $53 million for its share of deferred suite and advertising revenue, plus 4 percent interest.
At the current rate of deferrals of advertising and suite revenue ($8 million a year for another 18 years), this obligation to the Suns will increase to nearly $200 million by 2022.
"The Suns are carrying a significant receivable from the arena, and hopefully, when the cash flow gets better, the arena will start paying down their debt to the Suns," Paige Peterson, the arena's general manager, tells me.
Once the construction loans are paid down, the deferred advertising and suite revenue will generate at least $10 million a year to the Suns -- and probably far more.
Notice that all of this deferred suite and advertising gravy will go to the Suns. None of it to the city, which owns the building and whose taxpayers will be out $100 million by 2018 for building and financing Jerry's money machine.
Pretty slick, huh?
Not only did Colangelo stick it to taxpayers to a tune of at least $100 million to build the arena, he then made sure that only the Suns had the key to a $200 million treasure chest that will be cracked open once the mortgage is paid.
Not only that, but in 2022 the Suns will no longer have to pay the city an annual fee worth more than $1 million to use the arena.
No wonder Sarver was quick to pull out his checkbook.
Talk about a sweetheart deal!
So pardon me if I find it a little disgusting that Jerry Colangelo's musing publicly about this legacy, pointing out all he has done for this city.