When Jerry Colangelo decided to buy the Suns in 1987, he borrowed the great majority of the money from the Arizona Bank. But he also needed to line up partners who could provide ready cash. Under the complicated setup that emerged, the team is run by Colangelo but actually owned by ten different partnerships.
The general partner--the one that calls the shots--is JDM Sports, Inc., an offshoot of Colangelo's real estate firm JDM Properties. JDM Sports, which lists total capital of about $2.7 million, technically consists of president-treasurer Colangelo and his corporate officers David Eaton and Mel Schultz, Valley real estate developers who are also his partners in JDM (Jerry-David-Mel) Properties. Other owners of JDM not listed on the firm's annual report include Valley real estate mogul Eddie Lynch, the sports booster extraordinaire who made his fortune on Metrocenter and other shopping-center developments, and Mesa developer Ross N. Farnsworth.
The team's limited partners--who put up money and are guaranteed against losses by the general partners but don't have a say in how the company is run--read like a who's who of the Valley's upper crust. The major investors in the team are Greyhound Corporation, which kicked in about $6 million, and the El Dorado Investment Company (a subsidiary of Arizona Public Service's huge holding company, Pinnacle West), which chipped in around $4 million. Both Greyhound boss Armen Ervanian and Pinnacle West vice president Henry Sargent are personal friends of Colangelo's.
Lynch and Farnsworth also invested around $2 million apiece as limited partners--Colangelo also is listed as a limited partner, although the amount of his contribution is uncertain. Even the Suns' former owners--Arizona regent Donald Pitt, New Mexico investor Richard L. Bloch, and Tucson attorney Don Diamond--rebated $3 million from the purchase price in order to retain a stake in the team.
A series of other partnerships have a smaller piece of the action, and have generally been shielded from public view. The Phoenix General Basketball Partnership, a fourteen-person money pool headed by veteran Suns team physician Paul Steingard and Suns vice president-color commentator Dick Van Arsdale, has an estimated $500,000 stake in the team. Its other members are osteopathic doctors Richard Emerson, Edward P. McDermott, William L. Smith, David Berg, Donald W. Stamper, Larry Plosker, Larry Finkel, David Plone, and Thomas P. Kalos, osteopathic surgeon John N. Stathakis, podiatrist Michael Kates, and businessman Morris Cornfield, owner of Typetronics Business Systems. Another name the Suns prefer to keep quiet is that of Charles M. Brewer, father-in-law of Channel 10 anchor Deborah Pyburn-Brewer and one of the most feared liability lawyers in the state. Also rarely mentioned is Hall Sports, a partnership consisting of Paradise Valley real estate developer David E. Hall and his father Lee G. Hall of Portland, Indiana. Finally, as it was gearing up for the arena push last June, the team added as a limited partner Leo Eisenberg, a Kansas City developer now living in Phoenix. Eisenberg, it seems, was born to be a Phoenician; he made his mark as the largest developer of strip shopping centers in the country.
The partnership system turned out to be a saving grace for Colangelo, but it worries some observers. Most NBA teams, they note, are owned by one or two wealthy people and are often operated largely as civic status symbols. But the Suns must run a bottom-line operation or risk offending their investors.
According to one Suns partner, Colangelo has promised the owners they'll receive an 8 percent annual return once the new partnership is on its feet. "The franchise is profitable," says the partner, "but it all goes back into the team. My guess is they'll pay our percentage if they have a giant surplus, but I don't think it's realistic to think in terms of a giant surplus if we're trying to build a building." The various owners, he insists, didn't buy into the Suns to get rich quick--"it was primarily to keep the club in Phoenix, and, number two, to help Jerry." They expect to make most of their money through "asset appreciation," he notes--in other words, a big payoff if and when the Suns are sold again.
Suns publicist Tom Ambrose denies that the arena proposal is a fancy way to get taxpayers to guarantee dividend checks for the team's fat cat owners. Thanks partly to the team's massive debt and partly to the phenomenal growth of the NBA, he says, the Suns risk falling to pro basketball's lower rungs. "We're not trying to put up a moneymaking machine by any stretch of the imagination," says Ambrose. "As far as profitability goes, we'll operate on a very thin margin.