From Angels Sale Could Sprout a Sports Heaven
From the outside, putting a piece of the national pastime in the hands of two of America’s new high-tech billionaires looks like a home run.
Broadcom Corp. co-founders Henry T. Nicholas III and Henry Samueli, who lead a group thinking of buying the Anaheim Angels, could pump money, technology and a little pizazz into a sad-sack team that has never made it to the World Series.
But behind the headlines of Walt Disney Co.’s attempts to sell the Angels--and, in the same deal, the Mighty Ducks hockey team--is a series of talks, handshakes and negotiations that go well beyond two sports teams.
Ultimately, they could decide the fate of Sportstown, Anaheim’s fanciful dream of turning a parking lot into an entertainment center before an expanded Disneyland can eclipse it. At Sportstown’s heart is a separate but related deal for an artificial glacier that could melt unless the backers can sell $100 million in bonds this fall.
The latter project, pursued by a separate investment group that also includes Nicholas and Samueli, involves a first-of-its-kind indoor snowboard and surf complex known as the Gotcha Glacier.
The backers say that within two weeks, they will begin announcing the retailers, restaurateurs and entertainment specialists who have agreed to lease space in and around the four-story, 450,000-square-foot Glacier.
If the Glacier project floats, the Angels’ stadium and the Ducks’ arena would anchor what nationally renowned sports marketing consultant Dean Bonham says could become an “all-purpose sports and entertainment facility of the next millennium.”
In this vision of the billionaires and their business partner, Gotcha surf wear owner Marvin Winkler, fans would not only eat, drink and shop in the sprawling complex but also surf and snowboard, attend concerts and extreme sports festivals and watch baseball and hockey games.
That lineup may even be formidable enough to attract the National Football League, which badly wants to return a team to Southern California but has been frustrated in its attempts to strike a deal with Los Angeles interests.
But the projects are far from being completed, and any one of them could fall apart.
For starters, negotiations on the sale of the sports teams could continue well into next year. The Glacier’s projected cost has more than doubled to $105 million. And no major retail, restaurant or entertainment-related company has announced plans to occupy the space that will make up the various components of Sportstown.
Nearly everyone involved in the talks has larger motives.
Nicholas and Samueli, the current kings of the semiconductor business, hope new-format sports programs and other interactive broadcasts will drive sales of their computer chips, which make it possible to display Web sites and television simultaneously.
Winkler wants to create extreme-sports programming for TV and the Internet aimed at teenagers and young adults. He’s hoping it will help him sell more Gotcha T-shirts and board shorts.
And Anaheim hopes to finally make money from the huge parking lot surrounding Edison Field, a dream for two decades. That leaves Anaheim City Manager James D. Ruth, who promised the city would recoup its $20 million from Sportstown revenues, crossing his fingers that the billionaires and their partners buy the teams from Disney. Maybe they can be the ones who finally turn parking spaces into gold.
“We’re waiting for the Disney deal to be consummated,” Ruth said. “If you get an owner that has the wherewithal to bring more to the project . . . we would be more than willing to work with them.”
Search for Backers to Build a Mountainside
Boosters and detractors agree that the Gotcha Glacier is an extraordinary idea: a mammoth indoor play area built around extreme sports. It would house a 3 1/2-acre snow slope suitable for pro snowboarding contests; a skateboard and in-line skating park; a massive rock-climbing wall; an indoor-outdoor surf park with six wave pools; plus restaurants, shops, birthday suites, a fitness center and a nightclub.
No one has stepped forward to fully finance it or signed a lease to be a part of it. The Glacier of Anaheim group, headed by a landscape contractor and a former ski instructor, has so far announced just three tenants: shops specializing in clothes from the Gotcha International labels Gotcha, MCD and GirlStar.
Glacier Chairman Bradford Kinney said he’s near agreement with numerous prospects. “We have backup (tenants) for our backups,” said Kinney, surrounded in the office of his San Juan Capistrano landscaping firm by surf posters, architectural drawings and photos of his expensive upgrades of backyards.
He declined to name names, but people close to the project said the developers have talked with the Sport Chalet chain for a sporting goods store, and Jillian’s Entertainment Holdings, a Louisville, Ky., company that mixes restaurants, bowling alleys, nightclubs and billiard parlors under the roofs of its entertainment complexes.
To reassure bond buyers, backers including Nicholas and Samueli will make up any shortfall in rents and sponsorships, Winkler said. Attorney Thomas Walley, another Glacier partner, said last week that the guarantee means the bond payments can be met even if the Glacier runs at just 28% of its capacity.
“We feel very positive about the (bond) transaction,” said David Freedman of Morgan Stanley Dean Witter, which is marketing the bonds.
Kinney has nurtured the vision of indoor snowboarding since 1993, but things accelerated two years ago while he was building a backyard roller hockey rink for Winkler. Sensing a chance to promote his brand, Winkler got hooked on the Glacier, introduced Kinney to the Sportstown site, and began trying to line up financial backers.
Winkler said Nicholas, Samueli and the Texas energy company Enron are among investors that have committed more than $30 million to the project.
If the Glacier is able to attract tenants and corporate sponsors--”We’re talking to the Pepsis and Chevrolets of the world,” Kinney said--the company hopes to raise about $100 million from the sale of corporate bonds.
A team stands at the ready: Kajima Corp., which built the world’s first indoor ski area in Tokyo, will supervise construction and guarantee that the project is done on time and on budget; Turner Construction Co., which remodeled Edison Field, is the general contractor; Ogden Co., which runs Arrowhead Pond, will manage the Glacier; and Mammoth Mountain crews will operate the snowboard and ski runs.
Plans call for the Glacier to be wired for the staging and filming of sports events over television and the Internet.
Not all events would take place inside the Glacier, however. Marketing chief Mike Gerard said he has talked with MTV and several concert promoters about sports and music festivals. Those could be held in the parking lot or the baseball stadium, as could adventure sports championships, with the potential to draw thousands of fans.
Flanking the Glacier outside would be a giant sporting-goods store with a scuba-diving tank, bowling lanes, a skydiving chamber, sports bars and similarly themed businesses. Although his agreement with the city doesn’t require it, Kinney said he’s hopeful about finding tenants for all of the Sportstown entertainment zones.
The big financial companies that would be the likely buyers of the corporate bonds must decide if extreme sports are a trend or just a fad. Old favorites like swimming, bowling and fishing remain more popular, but in-line skating and snowboarding are the fastest-growing U.S. sports, according to the Sporting Goods Manufacturers Assn.
“When you’re building a building as big as they’re talking about, with waves and mountains and all, that’s a big investment that’s got to be recovered over the long term,” said one East Coast investment banker familiar with the project. “If those items are not long-term [in popularity], you’ve got a problem. You can’t just pull out a big rock-climbing wall real easily.”
The Glacier “may be more financially successful than buying the (money-losing) teams,” said Marc Ganis, president of Sportscorp Ltd., a Chicago sports investment banking firm. “But, because it’s the first, that makes it a more speculative investment.”
Indeed, for the Glacier investors to make maximum profit from these outdoor events, the Nicholas group must buy the Angels.
Purchasers Could Bring Down Barriers
The Edison Field lease agreement allows the Angels to manage the stadium and parking lot, book virtually all events there and keep all revenue from admissions, concessions and parking. The lease also allows the Angels to limit outdoor advertisements within Sportstown, retain revenue generated by those ads, and even prohibit fast-food restaurants--favorites with the young men who would likely frequent the Glacier--from operating within 250 feet of Edison Field.
If the Nicholas group buys the Angels, those restrictions could easily be removed or revised.
The bond sale is scheduled for November, said David Freedman of Morgan Stanley Dean Witter, the investment banker for the deal. If the funds are raised, construction officials say, the project could break ground in January and open in spring 2001, just after Disney’s new California Adventure theme park opens across from Disneyland and down the street from the Glacier.
If the business visionaries succeed, the NFL could jump at the chance to place a team within this 21st-century sports village.
“A real good football stadium in that setting might be attractive,” said NFL spokesman Greg Aiello.
Right now, the NFL is dangling one expansion franchise, with Houston and Los Angeles competing. Only Houston has a stadium-financing plan satisfactory to the NFL, but billionaire Marvin Davis is considering an 11th-hour bid to build a stadium at Hollywood Park. The league does not envision future expansion.
“We’re going to continue to look for a way to restore an NFL team to the Los Angeles area, one way or the other,” Aiello said.
Sportstown could become a haven for a team eager to relocate. Anaheim officials have targeted a parcel next to the Arrowhead Pond--and near Sportstown--as a potential site for a football stadium.
The NFL is extremely interested in proposals that expand development beyond a stadium. The 49ers hope to build a mall alongside a new stadium in San Francisco.
In such developments, owners can earn money--and cities can earn sales tax revenue--from properties on a daily basis, not just on a handful of game days each fall. The new wave of baseball stadiums features such year-round attractions as a hotel perched above the outfield in Toronto’s Skydome, a brew pub and retail store next to Bank One Ballpark in Phoenix and a four-story office building beyond the bleachers at The Ballpark in Arlington, Texas.
“The trend in sports facility development is to include commercial retail and entertainment development as part of the stadium and arena plans,” Ganis of Sportscorp Ltd. said.
The league envisions replicating the “NFL Experience,” its traveling interactive theme park of football-related games and exhibits, as an attraction within new stadium developments. That would fit perfectly within Sportstown and its high-octane mix of sports-related stores, restaurants and activities.
San Diego Padres Deal Catches Anaheim’s Eye
San Diego Padres President Larry Lucchino said Anaheim officials recently inquired about his team’s imaginative $411-million joint venture with the city. In addition to building a new downtown ballpark, scheduled to open in 2002, the Padres are developing an adjacent commercial district that includes three hotels, 12 restaurants, high-tech offices, shops and homes.
The Sportstown plan, while similar in scope, lacks funding. Even if Sportstown becomes a reality, the NFL will not allow a team to consider moving there without a plan for stadium financing and construction.
“I think it would be a good fit, but it depends on how much the NFL wants,” said Ruth, Anaheim’s city manager. “I don’t see the taxpayers of Orange County subsidizing the NFL.”
The NFL recently confirmed that John Moores, who made a fortune in computer software and is now chairman of the Padres, had explored opportunities in Anaheim with the league. Moores did not deny his long-held interest in owning an NFL franchise but dismissed the idea of paying for a stadium.
“I have never contemplated, nor would I ever, the private financing of a football stadium in Anaheim,” Moores said. “That suggestion is ludicrous.”
The Sportstown idea dates to 1996 and the concept of developing the area surrounding the baseball stadium even further.
To help lure the Los Angeles Rams in 1980, Anaheim granted the football team the right to erect office buildings in the stadium parking lot. The Angels sued, arguing that the development would violate the team’s lease by reducing the amount of parking for baseball games. By the time the marathon suit was settled in 1995, the Rams had departed for St. Louis.
The settlement cost the city $13 million but preserved its rights to develop the parking lot. In 1996, city officials unveiled their initial dream for Sportstown, combining traditional elements such as hotels, shops and offices with quirky features such as orchards, a produce market, youth sports fields, a Western village with a rodeo arena, and a monorail extension from Disneyland. But the plan was only a dream, as the city had not lined up a developer or financing for the project.
Disney rejected the city’s invitation to take over Sportstown, citing conflicts for retail tenants as the company developed its Downtown Disney shopping and entertainment area as part of Disneyland’s expansion. Disney also declined to sign its Edison Field lease with the city until Anaheim reduced the size of Sportstown from 159 acres to 40, so Disney could secure enough parking spaces for Angels games and preserve views of the ballpark from the freeway.
“Sportstown was just a pipe dream that the city had,” said a financial expert who worked for Disney. “It was not well-thought-through, it had no tenants, and no money behind it. It just made no sense.”
Anaheim retained Forest City Enterprises of Cleveland, a nationally prominent retail developer, but the company abandoned the project last year after struggling to find tenants. One problem was lining up restaurants capable of competing with Downtown Disney, which is expected to skim the cream of the crop, said Victor Grgas, Forest City’s planning director.
Besides the Glacier, the city has approved a developer’s plans to build a six-story office tower at Sportstown, although no tenants have yet signed leases. Two hotels also are planned, although no companies have committed and none likely will until developers can gauge the demand generated by the expansion of Disneyland.
Anaheim City Manager Ruth and Mayor Tom Daly remain convinced that Sportstown will blossom.
“The Block at Orange gobbled up some of the restaurants and stores who might have come to Sportstown. It’s always a question of timing,” Daly said. “But there is no question the Sportstown property will very soon be generating substantial revenue to the city treasury.”
Former Anaheim Councilman Bob Zemel, one of two dissenting votes when the City Council approved the deal to help Disney pay for the stadium renovation, remains skeptical about the city’s ability to develop Sportstown. As part of the Disney deal, the city gave the company the right to run the stadium and sharply cut the Sportstown area.
“This was supposed to be the icing on the cake,” Zemel said. “But we gave away the cake. Now we’ve got this icing that’s melting in the parking lot.”
* Times staff writer Phil Willon contributed to this report.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
WHO’S WHO IN THE GLACIER GROUP
THE IDEA MEN
Bradford D. Kinney and Stephen McCorkle
(Chief executive officer; senior vice president of Glacier of Anaheim LLC) The two commercial landscape contractors came up with the idea for a huge urban “snowboard tube” after listening to a snowboarder buddy complain about how he had to drive all the way to Big Bear just to go snowboarding.
THE GEN-X TAILOR
Marvin Winkler
(Co-chairman; is Chairman and CEO of Gotcha International) Winkler found out about Kinney and McCorkle’s “urban tube” idea when the contractors were installing a skateboard park in Winkler’s back yard for his kids.
THE MONEY MEN
Henry T. Nicholas III and Henry Samueli
(Co-founders of Broadcom Corp.) Brought into the Glacier circle by Winkler, with whom they socialize. They are providing monetary backing for the project. Nicholas is an extreme-sports enthusiast.
THE BROKERAGE
Morgan Stanley Dean Witter
Is getting ready to try to sell $100 million in bonds to complete the financing.
Reporting by E. SCOTT RECKARD / Los Angeles Times
