Colangelo's Not the Real Local Hero
"I just wish that sometimes your paper could say 'Thank you' rather than taking shots!" Jerry Colangelo bellowed over the phone in October, the last time I was able to reach him for comment on his business endeavors.
The Godfather of Phoenix sports was angry because I had dared to put him in the same cover story with a hippie artist who has actually used her own money to redevelop parts of downtown Phoenix.
Colangelo was insulted to be in the same story with Beatrice Moore -- a flower-power peacenik who has dedicated much of her life to revitalizing a stretch of Grand Avenue in downtown Phoenix by giving the oddballs and creative types a place to do their thing.
She's bought warehouses nobody wanted. Used her own sweat to refurbish them, creating spaces where artists can live and work. As the bohemians moved in, the crack dealers and lowlifes were pushed out.
A community was reborn -- with virtually no help from the city of Phoenix.
I wouldn't call that bad company to be associated with in an article on the future of downtown Phoenix. But Jerry saw it otherwise.
"To be used as a counter to Beatrice Moore was just demeaning," Colangelo whined.
What's the problem, Jerry?
Is it her peasant dress you don't like?
Or the fact that, unlike you, she's made her business plan succeed without the benefit of hundreds of millions of dollars in taxpayer money -- cash that you have masterfully leveraged into a tidy family fortune?
Demeaning? I'll tell you what's demeaning, Jerry.
In fact, I'll give you 400 million examples of demeaning.
On April 16, you sat inside your palace called America West Arena and announced the sale of the Phoenix Suns for $400 million.
And you never even thanked us -- the men and women whose money has been used to help you build a financial empire and secure your hallowed spot in the Basketball Hall of Fame.
It's not surprising that Jerry's got it backward about who should be thanking whom.
After all, at the conclusion of the news conference announcing the sale of the Suns, most of the fawning Phoenix press corps gave the Colangelo family's financial windfall a standing ovation.
What in God's name were these geeks jumping to their feet over?
Jerry Colangelo's a wealthy man because the citizens of this city are dumping millions of dollars a year into his play pen. He should be walking around downtown Phoenix shaking every hand he can shake, saying: "Thank you, thank you, thank you!"
But of course he doesn't have time for such displays of gratitude. He's too busy worrying about his legacy.
At the big press conference, Colangelo did recognize (kind of) that he's had a little help along the way.
"There are a lot of people that need to be talked about here," he said. "Our organization, our players, the management team, the city of Phoenix, who has been a great partner of ours in building this arena. And serving as a terrific partner: our sponsors, our advertisers."
Not a word of thanks to the taxpayers who have provided and will continue to fork over huge sums of money that allow Jerry Colangelo and his partners to laugh all the way to the bank.
"Yes, this is the highest price ever paid for an NBA franchise. It's $400 million," Colangelo said proudly.
Of this, $200 million will be cash paid by the new owners, led by Richard Sarver, a San Diego banker and real estate developer who hails from Tucson. Sarver's group will also assume $200 million of Suns debt.
When you take into account that the team was purchased in 1987 for $44.5 million, it's clear that the pockets of Jerry and his partners are stuffed with cold cash.
Colangelo has a 20 percent stake in the team -- meaning he could clear about $40 million in cash, before taxes.
What accounts for this significant run-up in the value of the Suns to set the record price for the sale of an NBA franchise?
It's not like Colangelo's team dominated the league. The team likes to brag that the Suns have the fifth-best overall record in the NBA. So what?
During the 16 years Colangelo owned the team, the Suns made it to the NBA Finals only once, losing to Michael Jordan's Chicago Bulls in six games in 1993.
While they were in the playoffs almost every year and generally fielded competitive squads, the Suns were a clear notch below the dominant teams of this period: the Bulls, the Detroit Pistons, the Houston Rockets, the Los Angeles Lakers and the San Antonio Spurs -- all of which won at least two titles.
Jerry's Phoenix Suns have always been also-rans.
Nevertheless, pro basketball experts believe the Suns, under Colangelo, have been a well-run organization, which contributed somewhat to the hefty sales price.
The fact that the Phoenix area is continuing to grow at an astounding rate is another important factor in the willingness of Sarver and his partners to pay $400 million for a team that Forbes magazine said was worth $282 million earlier this year.
But the real juice behind this deal is the sweetheart lease agreement that Jerry cut with the city of Phoenix for America West Arena, which opened in 1992.
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.
"Look," Colangelo told me last fall, "I've spent a lot of time and money. I have sacrificed a lot."
Exactly one week after Colangelo announced the sale of the Suns and basked in the wealth that we bestowed upon him, we learned the true meaning of sacrifice when Arizona lost a real local hero in the mountains of Afghanistan.
I didn't personally know Pat Tillman.
But I feel like I did.
By now, you've heard all the stories about the man who bucked the system. The man who turned everything upside down to do what he thought was right.
Tillman decided to forgo fanfare and acclaim to serve his community and his nation. Money meant little to him. Following his heart meant everything.
That's how I remember him playing football, which is the only way I knew him.
His hair flying from underneath his Sun Devil helmet as he selflessly charged across the field, he would make tackle after bone-jarring tackle in those special seasons when Arizona State football reached its zenith on the national stage.
Asked by radio personality Jim Rome in 1996 what was the highlight of the Sun Devils' remarkable season, Tillman glossed over the stunning 19-0 shutout of Nebraska and thrilling wins over USC and UCLA.
Like the dedicated Sun Devil he was, Tillman pointed to the November 23 game in Tucson.
I'll never forget that night. It was my 11th wedding anniversary to my now ex-wife. It was a night that every Sun Devil in the country will long savor. It was a night that capped a perfect regular season and guaranteed a trip to the Rose Bowl with a 56-14 mauling of the hated Arizona Wildcats.
"The Arizona game was a nice, swift ass kicking, so it was cool," Tillman told Rome in an interview days before the 1997 Rose Bowl, where dreams of a Sun Devil national championship slipped away in the Pasadena mist.
It's sobering how quickly life can change.
A few minutes after my family and I had cheered as Sun Devil fans tore down the goal posts in Tucson, I got word that my only brother was near death in a Flagstaff hospital.
I drove up the mountain that night, my head almost exploding with emotion and memories. It seemed like it took forever. I arrived a few minutes too late to hold Don's hand as he passed into the beyond. He was only 33.
I feel like I've lost another brother now.
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