Sports Mogul McNall’s Golden Touch Loses Luster : Business: He turned L.A. on to hockey. But recent developments suggest that he may have hit his limits.

From an Arcadia high school student who made money trading Roman coins to a sports mogul whose Los Angeles Kings nearly won professional hockey’s Stanley Cup last year, Bruce P. McNall has projected an image of glittery success.

With his open checkbook McNall spent millions to lure such star athletes as Wayne Gretzky to his Kings and former Notre Dame star Raghib (Rocket) Ismail to his Canadian football team, the Toronto Argonauts. McNall brought Hollywood to hockey, schmoozing at games with the likes of actress Goldie Hawn, actor James Woods and former President Ronald Reagan. Along the way, the beefy, wisecracking, personable McNall was lauded as a wildly successful sports entrepreneur whose popularity and spending knew no bounds.

But recent developments suggest that McNall may have hit some limits. In December, he announced a deal involving new investors to whom he will sell a majority interest in his treasured Kings--a move once considered unthinkable--largely to pay off a bank loan. The exact percentage has not been disclosed publicly, but sources with knowledge of the deal told The Times that McNall is selling 65% of the franchise.

The impending sale of part of the Kings has stirred interest in McNall’s financial well-being. McNall, 43, said “there are no problems” with his finances and that he is eagerly looking forward to building an arena for the Kings that may be shared with the Lakers. He said he is the victim of negative rumors orchestrated by unidentified parties who would like to see the Kings deal fall apart “for their own benefit and profit.”

Separating the fact from rumor, it is easy to see that McNall has had a rather challenging year. For example:

* He helped engineer a deal that brought a National Hockey League team to Orange County this season. He will receive $25 million over several years for giving up exclusivity in the Los Angeles area.

* Creditors sued him after he allegedly defaulted on a bank loan and failed to pay a Hollywood studio that alleged he owed money.

* A business partner filed a lawsuit charging that McNall improperly used company money for other ventures.

* His dream of bringing championship hockey to Los Angeles was realized when the Kings played in the Stanley Cup finals.

* His rare coin business, which does well in inflationary and boom times, has fallen prey to the soft national economy.

Add to all this the money-losing Canadian football team, a steep debt level and a Forum lease that limits McNall’s ability to profit from the Kings’ popularity and you have an atmosphere worthy of closer examination.

Selling the Kings

McNall and his lawyers are working hard to close the $60-million agreement to sell the controlling interest in the Kings. The buyers are Los Angeles telecommunications entrepreneur Jeffrey Sudikoff and his associate, Joseph Cohen. McNall chose Sudikoff, chief executive of IDB Communications, over an affiliate of Sony Corp. Sony only wanted to buy a minority interest in the Kings, as well as a piece of the Lakers basketball team from owner Jerry Buss.

The tentative deal says a lot about the changing fortunes of someone who was lecturing audiences three years ago for $48 a head on “Turning Your Passions Into Profits.” He will soon be left with a much smaller piece of his most passionate investment, the Kings. As recently as last season, McNall said he would not consider selling them. Under a clause in the complex deal, sources said, McNall conceivably could buy back up to 80% of the Kings on favorable terms if an arena is ever built, although Sudikoff and his partner would own most of the arena.

There are signs that McNall may be unable to continue calling all the shots for the Kings as he does now. Both McNall and Sudikoff said McNall will continue to run the team as something of a managing partner even after the deal is completed. But Sudikoff said in an interview he won’t be a passive partner. “I’m definitely an interested investor. I’m not just a financial investor. I’m not doing this because I think it’s fun,” he said.

McNall said the partial sale is necessary to help him achieve a longtime goal of building a $150-million state-of-the-art arena in the Los Angeles area that gives the Kings more revenue opportunities than they have at the 27-year-old Forum.

The sale also would give McNall financial breathing room. The heart of the sale involves helping McNall shed his biggest creditor, Bank of America, which had agreed to extend up to $90 million in loans and credit to McNall’s operations.

Banking sources, creditors and people close to McNall confirm that McNall’s business predicaments prompted Bank of America executives recently to move his loan to an internal special assets unit, which specializes in handling loans that are of special concern to the bank. Banking sources say such a move is no small matter and indicates that B of A executives are concerned about the prospects of the loan being repaid.

The bank is expected to receive most, if not all, of the $60 million that Sudikoff is paying and possibly a part ownership in the new arena, if it is built. A McNall lawyer said that when the Kings’ deal is completed, McNall will be free of the Bank of America loan. McNall and his aides said they have an “excellent relationship” with the bank.

A McNall spokesman said that McNall officials have received no notice “of any change in the status of our account” and “want to make it clear that we are not in default.” A Bank of America spokesman declined to comment, citing company policy about discussing specific customers.

The Lawsuits

McNall has a variety of other business and creditor problems, including these recent predicaments detailed in public records:

* McNall, who in the past has represented his net worth at as much as $200 million, was sued last October by Torrance-based Republic Bank for defaulting on a loan requiring him to pay $1.875 million last May. In a sworn statement, Republic Vice President Lee Marzahl refers to McNall’s “apparent illiquidity,” or the inability to convert assets quickly into cash.

McNall said he was not aware of the Republic loan default until The Times asked him about it. He sees it as a minor amount of money for him--roughly the same as recently reacquired Kings’ defenseman Marty McSorley makes in a season--and denies that he is experiencing liquidity problems. A settlement is pending.

* Hollywood studio 20th Century Fox has obtained a court order attaching a lien on McNall’s assets, alleging that McNall is 17 months late in paying $4.5 million the studio said he owes. The money in question stems from the failure of “Mannequin II,” a movie that Fox released for Gladden Entertainment, a production company McNall owns with former Columbia Pictures studio chief David Begelman that has produced such films as “The Fabulous Baker Boys” and “WarGames.”

Suzan A. Waks, McNall’s vice chairman and chief financial officer, said McNall is suing Fox as well for allegedly mishandling the film’s release. She called Fox’s court order “a negotiating ploy with Bruce” and said that McNall “has a very good relationship with the people at Fox despite the fact they’ve been arguing back and forth.”

* A coin partnership organized through Merrill Lynch by McNall called Athena II is also faltering. Securities and Exchange Commission filings show that the fund lost $9.2 million in the first nine months of last year as the value of the fund’s coins plunged. SEC documents list the equity of limited partners in the venture as tumbling from $17.5 million at the start of last year to $8.5 million Sept. 30, a drop of more than 50%.

McNall acknowledges that the coin market has been slow, but said it is improving. He said Athena made money for investors early on, adding that he chose to liquidate it so investors’ money would not be eaten away by overhead costs to run the fund.

* McNall was named in a lawsuit filed last month by his partners at Superior Stamp & Coin in Beverly Hills, one of the nation’s top auction houses and traders in rare coins, stamps, antiques and memorabilia. Co-Presidents Ira and Lawrence Goldberg alleged in a recently settled lawsuit that McNall used $4.6 million from a bank credit line because he “desperately needed funds to maintain his other ventures and his extraordinary life style.”

Ira Goldberg alleged in a sworn statement that McNall “falsified Superior’s 1993 year-end inventory statement with the intent to mislead Superior’s auditors and the Bank of California” by listing as Superior inventory--and therefore as collateral--coins that Goldberg said belonged to a McNall-organized coin fund. It was also alleged in the lawsuit that McNall overvalued a personal stamp collection that served as collateral for a bank loan.

Neither McNall nor the Goldbergs are allowed to discuss the terms of their settlement, although it is believed that McNall and the Goldbergs are severing their business ties.

Before the lawsuit was settled, McNall called it “a desperate move on their part to save a failing business” the Goldbergs were running, further alleging that they resisted such moves as cutting their salaries. As to Ira Goldberg’s accusations, McNall lawyer Kenneth N. Klee said that the Goldbergs’ lawsuit was filled with “inflammatory statements capable of being misconstrued.”

Last week, the Goldbergs sent a letter to The Times saying that their allegations “should not be regarded as proven facts.” They added that they “have both personal affection and great respect” for McNall and do not want to see him harmed by the allegations they have made.

McNall believes that talk about possible business difficulties may have been sparked by a decision to hire Klee, one of the nation’s top bankruptcy lawyers at Stutman, Treister & Glatt in Los Angeles. McNall and Klee said there are no plans in the works calling for McNall to seek protection in bankruptcy court. McNall added that he hired Klee not for his bankruptcy expertise, but because “he’s the best negotiator I know.”

Klee clearly strengthens McNall’s hand at the bargaining table, according to people who have been dealing with him. Klee has played important roles in some of the nation’s biggest bankruptcy cases, such as Texaco.

Klee’s mere presence implies that McNall has the ability to file for bankruptcy court protection. Court records in the Superior Stamp & Coin case show that an order was entered barring McNall from forcing Superior into bankruptcy.

The Image

McNall has clearly revived the Kings, which he bought into in 1986 and took control of two years later from former owner Buss. Before the Kings, McNall was a little-known Beverly Hills coin collector and racehorse owner, where he enjoyed some success in the 1980s.

Largely through the 1988 acquisition of superstar Gretzky, McNall turned an indifferent Los Angeles on to the sport. McNall built the Kings from a team losing an estimated $5 million annually before he bought it to one that last year netted an estimated $2 million, aided by playoff revenue. Once lucky to sell out the Forum, the Kings this season are selling about 95% of the seats at home games, more often than not selling all 16,005 seats even with their playoff hopes fading.

As the Kings’ popularity increased, the gregarious McNall has become something of a celebrity, in contrast to other Los Angeles sports team owners who often shun the limelight.

In near 90-degree heat last summer, McNall, dressed as usual in a dark suit, appeared at Magic Mountain in Valencia at an event honoring the Kings. He stood for the brief presentation and signed autographs for the better part of half an hour in the sweltering sun.

McNall also marketed the team in a way that substantially boosted sales of such items as Kings shirts and caps, changing the colors from a garish purple and gold to a trendier silver and black. All told, the team, which McNall spent about $20 million to acquire, would have an indicated value of about $100 million based on the pending transaction.

McNall also climbed meteorically within hockey circles, and was elected in 1992 to the powerful post of chairman of the National Hockey League’s board of governors. In that post, he helped the NHL shed its blue-collar image by wooing to the league such prominent executives as Walt Disney Co. Chairman Michael D. Eisner of Anaheim’s Mighty Ducks and Blockbuster Video tycoon H. Wayne Huizenga of the Florida Panthers.

McNall also became popular with the press, which enjoyed his playfulness, quips and spontaneity.

After buying the Kings, McNall suggested that someone shoot him if he ever started acting like notoriously autocratic New York Yankees owner George Steinbrenner. After a Kings’ victory in the playoffs last spring, McNall grabbed a reporter’s note pad and pen and yelled from the back of the room at head coach Barry Melrose: “Coach! You earned your salary tonight, right?”

Even while feeling the pressure of business difficulties, he has maintained a sense of humor. Last month, McNall abruptly began walking up and down the aisle, soliciting dollar bills from reporters in the middle of a news conference marking McSorley’s return, joking that he needed the money.

As the Kings prospered, however, McNall has grown more restless. He is locked into a long-term lease with the Forum and Lakers owner Buss that gives Buss a lucrative chunk of concession sales, parking fees and “Senate” seat packages often bought by businesses. McNall’s limited potential to make money off the Kings is driving his desire for a new arena. Sources familiar with the Kings estimate that McNall spends about $100,000 a game paying Buss a percentage of ticket sales, rent and other costs.

McNall believed that he could turn around the Toronto Argonauts in the Canadian Football League in much the same way he did the Kings. He and his partners--Gretzky and actor John Candy--have sunk about $22.5 million into the Toronto team since 1991. McNall, in a four-year, $18.2-million personal services contract, signed Ismail, who now plays for the Los Angeles Raiders. Such moves generated plenty of publicity, but no profit.

The Argonauts, through the fall and most of the winter, were in default for rent to the Toronto SkyDome, where it plays. The team made good last month on about $300,000 in back rent. SkyDome President Richard Peddie said the payments came only after considerable pressure was applied. One player, who was eventually paid as promised the $25,000 he was owed, was so concerned about the rumors of team problems said that he camped out for a week in January in the Argonauts’ lobby, serving doughnuts to the team staff while waiting for his check.

McNall said he would entertain offers for the football team, but denies that the team has been on the market and insists that he wants to retain a piece of the team no matter what happens. Sources close to his other partners, however, say the entire team has been openly shopped around for as much as $8 million. Whatever the sale price, McNall and his partners still must settle up with the team’s previous owner, Hollywood Park Vice Chairman Harry Ornest, who holds a note of about $2.5 million stemming from the 1991 transaction.

Slowness in payments is not necessarily a sign of trouble for a company. Even some robust business owners are slow in paying bills as part of a hardball strategy in managing cash.

McNall has seemingly tested the patience of some creditors, the SkyDome being one. The Kings have even been late in paying one of its hockey stick suppliers, the Canadian manufacturer Sherwood, which is known to have twice put a hold on shipments to the Kings before Sherwood was paid about $30,000. Asked about Sherwood, McNall said that there is “nothing that is extraordinarily late” in terms of unpaid bills for the Kings.

McNall’s problems might reflect a typical high-flying 1980s entrepreneur encountering tougher times in the 1990s, if it were not for a carefully cultivated image that has portrayed him as an overachieving Midas. The son of a USC biochemistry professor and a laboratory technician, McNall grew up in Arcadia, later saying he developed a fascination with rare coins in grade school. The 1966 Arcadia High School yearbook pictures him as president of the school’s coin club.

It is after high school that McNall’s story gets cloudy, and records suggest that McNall and his staff are guilty of a good amount of hyperbole over the years. His official Kings biography said that he zoomed through UCLA in three years starting at 16, graduating with his bachelor’s degree at a remarkably early age of 19.

A UCLA spokesman said school records list him as graduating in 1972 at age 22. Asked about the discrepancy between his UCLA claims and school records, McNall said: “I went through UCLA quickly. I ended up being a (teaching assistant) prior to graduating and got a Regents Fellowship and the next step was going on to a doctorate. I honestly can’t remember the precise date of all that.”

He added: “I don’t sit there and look at the Kings’ bio records. I probably should, frankly.”

McNall called this and other past challenges to his biography technical differences misinterpreted by reporters. Other challenges have came from Forbes magazine, which in 1991 disputed McNall’s Oxford studies claim as well as some other key business boasts. “These legends just get greater and greater. They’re just not correct,” Forbes quoted McNall as saying when asked about the claims.

McNall’s net worth also has been a source of considerable controversy. McNall has said he is worth “$150 million to $200 million,” as he was quoted by The Times in 1989, to “hundreds of millions” of dollars, as he was quoted as saying to Business Week in 1991.

The Superior Stamp & Coin lawsuit alleges that in 1989 McNall stated his assets at a considerably lower amount when he bought a 51% stake in the business. The papers said McNall said his assets “exceeded $40 million and that his current assets exceeded current liabilities by $20 million.” Forbes once concluded that McNall was worth only a fraction of what he claimed.

McNall said he still is worth a substantial amount of money, but will not say how much. Explaining why his net worth was always reported high, McNall said: “Probably what happened was that the reporter said to me, ‘All right, is it true you are worth $100 or $150 or $200 million?’ I’ve always said I have no idea.”

McNall also acknowledged that he is very much a salesman and sometimes gets carried away in telling stories. Besides, he said, it is not so bad in the collectibles and horse racing business if people think you have more money than you really do because people offer you more deals.

McNall and his advisers admit that he is a soft touch. McNall has one business tendency his advisers are trying to cure him of him, that of routinely guaranteeing loans and payments personally when it may not be necessary. That puts McNall on the hook personally if the person or company cannot pay it back. McNall calls it “a character flaw.” Vice Chairman Waks said she “took his pen away.”

McNall said: “I’ve had various partners and I’ve put a lot of faith in them. When they ask me to do something, all too often I guess I’ve said yes. My advisers over the many years said, ‘You shouldn’t be doing that.’ ”

McNall traces some of his current problems to an image that he said was too inflated to begin with.

“The world always builds you up and then it’s more fun to try to tear it down,” McNall said. “In a way, in my eyes, I was never as successful as the public made me to be. And certainly today, not nearly in the position as possibly others made me to be. It’s the nature of the beast, in a way.”