Houston Arena Dispute Reveals Ethnic Divide

It was a marriage born in the concrete caverns of a modern metropolis, a match made not in heaven, but in Houston.

Three years ago, the city’s National Basketball Assn. franchise, the Rockets, needed public approval to build a glitzy, taxpayer-funded civic and sports arena. Support of ethnic minorities, the Rockets owner knew, would be critical at the ballot box. So they cut a deal.

African American and Latino leaders promised to turn out the vote. In exchange, Rockets owner Les Alexander pledged to give minorities a share of the business generated by the arena, everything from hot dog sales to pest control. The alliance was hailed as a new model of civic collaboration, a forceful reminder of Houston’s commitment to diversity.

This month, the $220-million Toyota Center opened its doors. The Rockets, its primary tenant, are preparing for their first season there and will be joined by the Comets, the city’s Women’s National Basketball Assn. team, and the Aeros, a minor league hockey team. But the trust between the white owner of the Rockets and minority communities -- forged through a simple, two-page agreement -- has eroded.

Last month, minority leaders sued the Rockets, alleging that Alexander had included minority businesses to some degree but was blocking them from signing more lucrative concession contracts. Through lawyers and aides, Alexander denied the allegations and declined an interview.

Millions of dollars are at stake. But perhaps more important than business machinations are the long-term implications for Houston, by some measures the most diverse city in America.

Houston had long fancied itself immune from racial strife that saddles many large cities. Suddenly, minority leaders have levied allegations of “plantation economics,” and the suit compares Alexander to Eugene “Bull” Connor, the Birmingham, Ala., police commissioner who turned fire hoses and dogs on civil rights demonstrators 40 years ago.

To some, the dispute has become a referendum on the power of urban African Americans and Latinos -- a test of whether the nation’s fourth-largest city can continue conducting business based on money, not skin color, while diversity grows.

“Once it was prescribed that black and brown could not vote in this country. Now we are at the pinnacle of the voting process,” said Houston attorney Benjamin Hall, a leading lawyer for minority activists. “The Rockets tried to manipulate that. And there is an uprising.”

The Rockets have filed a “general denial” of the allegations in Harris County District Court, and the two sides are scheduled to meet before a judge today in their latest attempt to resolve the dispute.

Rockets attorney Michael Goldberg said Hall’s rhetoric -- particularly his comparisons to Connor -- exaggerates the dispute and does not serve the best interest of the city.

“You try not to be naive after practicing law for so long,” Goldberg said. “But in my 20 years of practice this has been the most disgusting thing I’ve worked on. It’s playing the race card to the nth degree.”

Houston became a big city largely because of whites, who arrived in droves for the oil boom of the 1960s and 1970s. It became a mature city more recently, largely because of growth in its ethnic communities -- Asian engineers, black doctors, Latinos and Vietnamese immigrants who have found success and buying power.

“There are new city fathers and mothers here,” said Robert Stein, dean of the School of Social Science at Rice University here. “And they want a piece of the political pie.”

In 2000, Houston joined Los Angeles, New York and Chicago as metropolitan areas with a “majority minority,” where whites no longer represent more than half of the population, said Stephen Klineberg, professor of sociology at Rice. According to the U.S. Census Bureau, Houston is 37% Latino, 31% white, 25% African American and 5% Asian.

There are, of course, problems here common to every urban region, including poverty, low education levels and tension between minorities and police officers. But diversity is prized by many, enough so that a ban on affirmative action -- modeled after action taken in California -- was soundly rejected by voters in 1997. Houston later approved a measure ensuring that minorities receive a share of city contracts.

“This is the face of the American future,” Klineberg said. “What you are seeing is the complexity and difficulty of shifting from a white-dominated world to a multiethnic world.”

Studies show that Houston is the only large city in the country where the “effective electorate” -- people who show up to vote -- is also a majority minority, Stein said. (His wife is a close aide to Houston Mayor Lee P. Brown, who supported the referendum leading to the financing of the Toyota Center.) No ethnic group can claim to represent more than half of active voters, Stein said.

That parity -- and a drive for wealth here -- has made segregation in business impractical, he said.

“This is a meritocracy,” he said. “We are practical people in Houston. All people care about is this: Can you produce? Can you make money?”

A 1999 attempt to finance a new arena flopped. A year later, a second attempt sailed through. Rockets managers say the second campaign was better orchestrated and that opposition had petered out. But many civic leaders say minorities’ support assured passage of the second initiative, and call the vote an explicit exhibit of minority voters’ power.

After the second election, noting the “support and efforts” of minorities, Alexander signed a document promising “the full participation of the minority community in all phases of the development and long-term operation” of the arena.

In May, minority leaders filed their first lawsuit, alleging that Alexander was not living up to that commitment. With Hall threatening a boycott of the arena, the two sides went into mediation. The result: a settlement in which Alexander guaranteed minorities 30% of the business generated by the arena.

The second lawsuit accuses Alexander of failing to live up to that agreement too. While minority leaders concede that they were given substantial cuts of most business associated with the arena, such as design and construction, they say they have been cut out of the most lucrative contracts, those governing food and beverages.

The lawsuit accuses Rockets officials of constructing “a labyrinth of unconscionable conditions” that makes it impossible for minority businesses to receive their proper share. Alexander’s conduct, the lawsuit charges, such as hiring lawyers to stonewall negotiations, “demonstrates that he is more interested in keeping minorities as servants, entertainers and maids.”

Goldberg denied the allegations.

Meanwhile, the process of nominating minority-run businesses for a share of arena contracts has been dogged by allegations of cronyism, and some critics contend that the clearest winners in the dispute are attorneys.

Hall stands to pocket a large sum. He and the other attorneys who represented minority businesses are guaranteed 16% of their profits for the next 15 years. No one knows how much money that will be, but Hall says it’s enough that he rejected a flat-fee offer of $1 million for the case.

“This is just sad, when lawyers have perhaps their own interest at greater heart than what is good for the city and the community,” Goldberg said.

Some minority leaders have begun to distance themselves from the legal dispute.