On a warm summer evening in 2004, Philip Anschutz greeted British Deputy Prime Minister John Prescott at the $150-million soccer palace Anschutz had created in Carson.
After settling into a luxury suite to watch the Los Angeles Galaxy battle the San Jose Earthquakes, Prescott asked Anschutz which side he was rooting for.
“He said it didn’t matter because he owned the two teams,” Prescott recalled in an interview in London. At the time, Anschutz controlled half of the 10 pro soccer franchises in the U.S.
The moment captured Anschutz’s trademark approach to investments, which holds that they are to be dominated, not merely owned. That philosophy has made Anschutz an economic force in Los Angeles, as important to the region’s future, some say, as the William Mulhollands and Harry Chandlers of the past.
Yet in a city known for its entertainment moguls and industrialists who seek the limelight, Anschutz is intensely private. He is a longtime Denver resident and doesn’t even maintain a Los Angeles address.
“Philip Anschutz is sort of like the Wizard of Oz,” said Los Angeles economist Jack Kyser. “He is the man behind the curtain pulling the levers. Nobody sees him, yet he has a huge impact on Los Angeles.”
In addition to the Home Depot Center in Carson, Anschutz built the $400-million Staples Center, dug a 130-mile oil pipeline from Kern County to Wilmington and is pumping $1.8 billion into a sports and entertainment district in downtown Los Angeles. He also has assembled the nation’s largest chain of movie theaters and operates a Hollywood production company that is leading a revival of family-oriented films.
“There isn’t a single person in the history of Los Angeles that has put more of his own money into this city,” said developer Steve Soboroff, a onetime advisor to former Mayor Richard Riordan. “My feeling is we should rename the Harbor Freeway the Anschutz Freeway.”
With an estimated net worth of $7.2 billion, Anschutz ranks No. 28 on Forbes’ list of the richest people in America. Over the last four decades, he has amassed a global empire of more than 100 companies, nearly all of them privately held. In addition to oil and gas, real estate, movies and sports, his enterprises are active in railroads, telecommunications, agriculture, live entertainment, art and newspapers.
Preeminent among the firms is Anschutz Entertainment Group, which began operating in Los Angeles in 1995 as Anschutz Properties Co. with the purchase of the bankrupt L.A. Kings hockey team. AEG now has 50 subsidiaries worldwide, 3,000 employees and annual revenues approaching $1 billion. It develops major sports and concert venues in the U.S. and Europe and is the nation’s second-largest promoter of live entertainment, with recent tours starring Paul McCartney, Kenny Chesney and Prince.
Acquaintances describe Anschutz, 66, as brilliant, stubborn and compassionate.
“He’s deeply religious, a man of high integrity and great character,” said Los Angeles Unified schools Supt. Roy Romer, a friend of Anschutz from his three terms as Colorado governor.
Like many aggressive businessmen, Anschutz also has acquired his share of adversaries. His litigation record reveals a sharp-elbowed tycoon willing to pay to make disputes go away and to keep his public image intact.
During the last three decades Anschutz has paid cash settlements -- all of them confidential -- to companies that claimed they were denied their fair share of profits or were done in by deceptive business practices, according to interviews and courthouse documents in California, Colorado and Wyoming.
Among the settlements was a multimillion-dollar award to Mel Gibson, who alleged that the theater chain Anschutz controls cheated the actor’s distribution company out of revenue from the hit movie “The Passion of the Christ.”
George Ablah, 77, a real estate magnate and fellow native Kansan, prevailed in a legal tussle with Anschutz over a failed oil and gas partnership.
“He is very tough,” Ablah said of Anschutz. “He thinks he is God. If you question him in any way, he will cut your legs out from under you.... He is extremely lucky with those tactics. It has worked out very, very well for him.”
Anschutz’s Denver-based spokesman, Jim Monaghan, declined to discuss the litigation, saying only that the number of suits against Anschutz and his companies is “remarkably small” for such a large organization. He also said that a settlement is not an admission of wrongdoing.
Anschutz shuns publicity and declined numerous requests to be interviewed for this article. According to Monaghan, Anschutz’s last extensive on-the-record interview took place in 1974.
Occasionally, Anschutz speaks to the media, but insists on not being quoted. He chatted with this reporter in December at a London movie premiere but insisted that the bland exchange be off the record.
Despite his wealth and ambition, Anschutz is barely visible in Southern California. He flies to Los Angeles about once a month aboard his jet, stays in a Beverly Hills hotel and spends weekends at a residence in the Palm Springs area.
With no entourage, no personal office and not even a reserved parking space in Los Angeles, he goes out of his way to remain anonymous. Friends say he enjoys jogging alone or buying a hot dog at Staples Center without being recognized.
Perhaps not since Howard Hughes has a multibillionaire with such a big stake in Hollywood been so secretive.
“Anschutz is an enigma,” said Neil Westergaard, editor of the Denver Business Journal. “He is a very, very private man, which I think invites a lot of speculation about what his motives are.”
Philip Frederick Anschutz was born in 1939 in Great Bend, Kan., attended high school in Wichita and studied economics at the University of Kansas. After graduation in 1961 he went to Denver to work for his father, wildcatter Fred B. Anschutz.
In the 1974 interview with the State Historical Society of Colorado, Philip Anschutz described himself as “aggressive and hard-working.” He recalled logging 12-hour days at the office and working evenings and weekends.
“It becomes almost like alcoholism,” Anschutz said. “You can’t break the habit. You eat and drink this kind of work. I don’t think there is anything unusual about that.”
What was unusual was Anschutz’s knack for spotting bargains and business trends.
“The guy is an alchemist when it comes to money,” said Bob Scanlan, a merchant banker who has worked with Anschutz. “Phil would rank up there in my humorless Hall of Fame. He is just focused beyond belief.”
He and his wife of 38 years raised two daughters and a son in Polo Club, a prestigious neighborhood in Denver. He bought Eagles Nest Ranch, a 47,000-acre spread in eastern Colorado where he keeps 2,500 head of cattle, built a golf course and plays host to a dove-hunting retreat each year for friends, chief executives and politicians.
Since 2000, Anschutz, his wife and his companies have made more than $1 million in political donations, mostly to Republican candidates and campaigns. He has spent millions assembling one of the nation’s finest collections of western art.
Yet Anschutz shuns many of the traditional trappings of wealth. For years, he wore a Timex and drove an old Buick before buying a used Lexus sedan. He has been spotted in a tuxedo behind the wheel of a rented Ford Taurus en route to a Hollywood premiere.
Admirers call Anschutz modest and soft-spoken. He rarely cusses or consumes alcohol. His one known vice: chomping unlighted cigars.
Tim Leiweke, AEG’s chief executive and Anschutz’s point man in Los Angeles, said: “He is to a fault extremely quiet because seldom is he comfortable being in the limelight. Phil has nothing to hide. This is a guy who at the end of the day likes to be private and has no ego.”
University of Denver Chairman Dan Ritchie has been a friend for decades. He said Anschutz lives by “the code of the West”: Be tough but fair. Operate on a handshake. Talk less and say more. Never quit. Don’t promote yourself.
Anschutz’s religious beliefs have been scrutinized, especially within the movie business, because he is regarded as a moral conservative who has invested heavily in films that appeal to families and Christians.
Although Anschutz and his wife have worshiped at an Evangelical Presbyterian church in suburban Denver, they no longer do so, according to Monaghan. He said that Anschutz considers himself “spiritual” and now attends services at churches of various denominations. When in Southern California, friends say, he prefers spending occasional Sunday mornings on the golf course.
His Walden Media and Walt Disney Pictures produced “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe,” a Christian allegory about the resurrection. “Narnia” is Disney’s highest-grossing live-action film, with nearly $1 billion in box-office and DVD revenues.
Douglas Gresham, a co-producer of the film and the stepson of “Narnia” author C.S. Lewis, told The Times that he selected Walden to make the movie because of his regard for Anschutz.
“I believe he’s a man of faith, probably someone who’s had some realizations in his life and is trying to carry them out,” he said.
Anschutz has spent about $23 million over the last decade on a pair of nonprofit groups to promote positive values. His Random Acts of Kindness Foundation is dedicated to inspiring generosity, and the Foundation for a Better Life was established to “help make the world a better place for everyone.”
According to an analysis of federal tax returns, the Anschutz Foundation donated nearly $110 million from 1998 to 2004, with about 80% of the money going to nonprofit organizations in Colorado.
In Los Angeles, Anschutz has rejected requests to support museums, hospitals and universities in a meaningful way, according to civic leaders. The tax records show that his foundation has given $1.9 million -- or less than 2% of total grants -- to charities in Los Angeles County.
“He has a great vision for the future of Los Angeles,” said Eli Broad, the philanthropist who is spearheading the $1.8-billion Grand Avenue development on Bunker Hill. “I give him credit for that. I wish he would become more engaged in our various cultural institutions.”
Leiweke says such criticism is unfair.
“He is very uninvolved in L.A.,” Leiweke said. “He is a substantial giver in Denver, as he should be.”
Anschutz also contributes locally through several AEG foundations, which report giving $11 million during the last decade. With the exception of a $1-million gift to Walt Disney Concert Hall, the bulk of the money went to education, public safety and community programs.
These donations are focused on assisting immigrant communities in the neighborhood surrounding Staples Center as part of a campaign to support “the have-nots,” Leiweke said.
“We understand people get mad at us because we’re not a huge giver to the opera or museums,” Leiweke said from his downtown office. “There are a lot of needs we have to try to figure out down here. We’re very prickly about people who say we don’t give to the community. We just don’t give in ways they want us to give.... Shame on them.”
Oil and Gas
On Oct. 9, 1967, Anschutz encountered the first of three business disasters that would ultimately define him as a master of opportunity.
He was awakened at 2 a.m. after a well in which he owned a one-eighth interest blew out near Gillette, Wyo. Anschutz, then 27, and his chief geologist landed in Gillette in a rented aircraft about 5 a.m.
Many details of Anschutz’s account -- taken from his taped interview with the Colorado Historical Society -- could not be independently verified. Several participants are now dead and others were unavailable.
As they got within a mile of the site, Anschutz and his geologist could see oil spewing over the drilling rig. That was a problem, but it also meant the well had hit pay dirt.
In the next several hours, Anschutz raced around town contacting landowners and acquiring options on adjoining oil leases.
“I had a lot of concern as to how I was going to pay for the leases that I’d bought since I didn’t have any money at that time,” Anschutz said.
While his crews labored through the night trying to cap the well, Anschutz flew back to Denver. Upon returning to his apartment, he watched a report on the evening news of an explosion and fire at the scene of his rig. A spark from a pump truck engine had ignited the oil.
The next morning, Anschutz talked the legendary Paul “Red” Adair of Houston into sending a crew to extinguish the blaze. He then flew to Casper, Wyo., to meet one of his oil partners.
Anschutz wanted to buy out partner Jeff Hawks. It took seven hours of haggling, lubricated with shots of whiskey, before the two men cut a deal: Anschutz would pay all costs related to the fire -- potentially millions of dollars. In return, Hawks would turn over his one-eighth interest in the well. The terms were scrawled on a white tablecloth, which for years hung on Anschutz’s office wall.
After flying out of Casper in the middle of the night, Anschutz spotted flames shooting hundreds of feet into the red Wyoming sky.
“I thought, ‘My God, this is the end. I’ll never be able to overcome all this.’ ”
While Adair’s crew fought the fire for more than a week, Anschutz recruited investors to purchase shares of the rights he had acquired from Hawks as well as the lease options. He then persuaded Universal Studios, which at the time was preparing to film “Hellfighters” with John Wayne, to pay about $100,000 for the rights to film Adair’s crew putting out the inferno.
“I subsequently made a lot of money off the oil,” Anschutz said. “There’s always a point that if you go forward you win, sometimes you win it all, and if you go back you lose everything, and that was that point for me.”
By the mid-1970s, Anschutz’s company had expanded to about 500 employees and $100 million in annual sales.
In 1979, a massive oil and gas reservoir was discovered on Anschutz Ranch East, a field straddling the Wyoming-Utah border. Three years later, shortly before the collapse of global petroleum prices, Anschutz sold a one-half interest in his mineral rights to Mobil Corp. for $500 million. The deal, combined with his existing assets, made Anschutz, at 43, the youngest billionaire on Forbes’ list.
He went on to explore oil and gas around the world. One of his oil companies also built the Pacific Pipeline after a seven-year legal battle with the Los Angeles City Council. The line, completed in 1999, carries up to 130,000 barrels of heated crude oil per day from Kern County to refineries in El Segundo and Wilmington.
Like many oilmen, Anschutz took on partners to spread the risk of developing new fields. One of them was Ablah, the Wichita real estate baron.
The Little George Oil Co. -- named for Ablah’s diminutive stature -- and the Anschutz Corp. entered into a partnership in 1985 to explore undeveloped oil and gas leases in Idaho. But after several deep holes turned up dry, the venture went bust.
Ablah had paid $14.5 million upfront. Anschutz sued him in 1989, saying Ablah owed him an additional $2 million plus $900,000 in interest.
Ablah countersued, contending in court papers that he had “relied upon the truthfulness and integrity of Philip Anschutz.” Ablah claimed that Anschutz had withheld information that the exploratory wells were extremely high-risk.
“He had suckered me,” Ablah said. “I’m a big boy. I didn’t deserve the $14 million back.” But when Anschutz demanded more, Ablah said, he lost respect for the Denver billionaire.
“He didn’t quite treat me fair, and he wasn’t quite honest,” Ablah said.
The case went to trial July 24, 1990, in Denver District Court. On the first day, Anschutz testified that he had warned Ablah many times that the project was “a 1,000-to-1 shot.”
The next morning, the Denver Post carried a front-page photo of the rarely seen Anschutz rushing from the courtroom.
Before taking the stand that day, Anschutz made Ablah a surprise settlement offer, and the case was dismissed. The terms were confidential, but a copy of the settlement obtained by The Times shows that Anschutz dropped his demands and paid Ablah $750,000 for his drilling rights.
“Who was right and who was wrong meant less to him than his loss of privacy,” spokesman Monaghan said. He added that several factors led Anschutz to settle, including disruption to his business, the cost of litigation and unwanted media attention.
The Ablah lawsuit was not the first or last time Anschutz paid off claims brought by oil partners.
In 1975, a Denver-based petroleum firm that lent Anschutz $540,000 as part of an exploration deal in Pakistan claimed that he failed to repay the money. The company sued and, in a settlement, recovered most of the funds.
In other cases, Anschutz was ordered to pay back a $20-million loan to a pipeline company and $33.5 million in royalties to Amoco Oil and other owners in 1994 as part of the Anschutz Ranch East discovery.
Anschutz also tangled with Amoco over whether his firm owed $625,695 to settle claims from a 1989 explosion and fire at a gas processing plant that killed a contractor and injured 11 workers. Anschutz eventually paid, say sources familiar with the outcome, but not before Amoco characterized their dealings in a court complaint.
“Over the past eight years, Anschutz has employed a myriad of stall tactics to delay certain substantial payments in other settings,” wrote Amoco attorney Timothy Beyer in June 1993. “Its position has been to baldly refuse to pay its obligations.... “
Anschutz amassed one of the largest fortunes in the modern history of the railroad business.
He saw an opening when the U.S. government deregulated the railroads in the 1980s. Anschutz believed that a consolidation of transcontinental lines was inevitable, and he wanted a piece of the action.
In 1984, he bought Rio Grande Industries, parent of the ailing Denver & Rio Grande Western Railroad, for $500 million. Anschutz paid $90 million in cash and borrowed the rest. Four years later, he merged it with San Francisco-based Southern Pacific Transportation Co. for about $1 billion, most of it borrowed. He also assumed $780 million in Southern Pacific debt.
Southern Pacific was nicknamed the “Sluggish Pacific” because it was hemorrhaging cash and saddled with aging locomotives. Shortly after the merger, the railroad giant was losing $400,000 a day.
It marked the second crisis in Anschutz’s business career.
“Everyone thought he would eventually bleed to death,” Leiweke said. “He bled a lot ... but he turned it into something.”
To stave off bankruptcy, Anschutz sold a slice of the merged railroad to a Japanese shipping line, invested in new equipment and generated $2.2 billion by selling hundreds of parcels of surplus real estate.
The properties included downtown L.A.'s Union Station and 177 miles of rail lines that now carry commuter trains to Los Angeles from Orange County, San Bernardino, Simi Valley and Santa Clarita.
One of the most sought-after assets was the Southern Pacific line along Alameda Street. The cities of Long Beach and Los Angeles needed the right-of-way to build the Alameda Corridor, a high-speed 20-mile cargo expressway connecting their ports to downtown rail yards.
Steve Dillenbeck, then the director of the Port of Long Beach, recalled the first time that local officials met Anschutz over lunch near Pershing Square. After everyone was seated, Anschutz walked in sporting a large silver belt buckle.
“He didn’t say a heck of a lot,” Dillenbeck said. “It was staged very much to show that he is a little extraordinary.”
The officials at the table nearly choked on Anschutz’s initial demand: $500 million.
“It is incomprehensible that he would even think we would pay that amount,” Dillenbeck said. “For $500 million, we could have bought the whole railroad.”
The price tag eventually was whittled to $240 million. The final cost of the Alameda Corridor was $2.4 billion, making it the county’s most expensive public works project.
In 1996, Anschutz negotiated a $5.4-billion merger with Union Pacific that made him the largest shareholder of the nation’s biggest railroad. Anschutz had parlayed an initial $90-million investment in the Rio Grande into a $1.2-billion stake in the Union Pacific.
Before the merger, Anschutz took control of an obscure Southern Pacific subsidiary that he thought had great potential. Along with billions in new wealth, it would create a third business crisis: one of the biggest corporate accounting scandals in recent years.
The subsidiary was Southern Pacific Telecom, which provided high-speed data transmission through a network of fiber-optic cable lines installed alongside railroad tracks. He assumed 100% ownership of the company, relocated it to Denver and changed its name to Qwest.
Anschutz took the company public in 1997, and it became one of the nation’s largest telecommunications firms. At the height of the telecom boom in March 2000, Qwest shares traded at $64.80, and Anschutz’s net worth rose to $18 billion -- vaulting him to sixth on Forbes’ list of richest Americans.
Qwest shares plunged to $1.11 in August 2002 amid an industrywide collapse caused by excess broadband capacity and reports that company executives had engaged in a massive accounting fraud.
Four former Qwest executives have pleaded guilty to federal charges, including wire fraud, falsifying documents and insider trading. Anschutz’s hand-picked chief executive, Joseph Nacchio, was indicted in December on 42 counts of insider trading after selling $101 million in stock. Nacchio, who is awaiting trial, has insisted he did nothing wrong.
Qwest lost an estimated $94 billion in shareholder value and slashed more than 23,000 jobs after its merger with telephone giant US West.
Last year, Qwest agreed to pay $250 million to settle Securities and Exchange Commission charges of booking $2.5 billion in phony revenues. It also agreed to pay $400 million to resolve a shareholders’ lawsuit, leaving investors to recover only a fraction of their losses.
Anschutz attracted special scrutiny from government prosecutors and plaintiffs’ lawyers because of his role as Qwest’s founder, largest shareholder and “non-executive” chairman of the board.
According to SEC filings, Anschutz sold about $2 billion in shares from 1998 to May 2001, a month before Morgan Stanley analysts questioned Qwest’s accounting methods. But, by holding on to 301 million shares -- or 80% of his stock -- Anschutz’s portfolio lost an estimated $10 billion in market value.
The California State Teachers’ Retirement System, the third-largest pension fund in the nation, lost $150 million investing in Qwest. The group alleges in a lawsuit that Anschutz, Nacchio and others “engaged in a scheme to falsely inflate Qwest’s revenues and decrease its expenses so that Qwest would appear more profitable than it actually was.” The case is expected to go to trial early next year in San Francisco.
Anschutz has maintained that he was unaware of any improprieties.
Nacchio testified under oath before Congress in 2002 that Anschutz was “very involved” in Qwest’s activities.
“Phil Anschutz and I were close friends for 5 1/2 years,” Nacchio said. “I spoke to Phil two to three times a week. Every major decision I made at this firm I sought his counsel.”
But separate inquiries by the U.S. Department of Justice, the SEC and Congress found no evidence that Anschutz exercised day-to-day management authority or had insider stock information. Attorneys representing Qwest shareholders examined nearly 9 million pages of documents without finding anything implicating Anschutz.
“We looked at him very hard because he sold billions of dollars’ worth of stock,” said Patrick Coughlin, a partner in the San Diego law firm that brought the major shareholders’ suit. “His initials aren’t on anything. His signatures aren’t on anything.”
According to court records in San Mateo County, Anschutz does not have an office computer or e-mail account and routinely destroys his appointment calendars. In addition, all e-mail messages sent through Anschutz’s secretary and all electronic calendar entries are permanently destroyed.
His spokesman said Anschutz is not secretive but simply old-school: He dictates memos to his secretary and does not carry a cellphone.
Anschutz reached a settlement in May 2003 with New York state Atty. Gen. Eliot Spitzer on charges that he had improperly received “nearly risk-free” initial public offering shares in exchange for steering investment banking business to Salomon Smith Barney. Anschutz made $4.8 million from the IPOs.
Spitzer also sought to recover $1.4 billion in Anschutz profits from the sale of Qwest shares that allegedly were inflated by overly optimistic research reports. Anschutz settled the case for $4.4 million in contributions to New York law schools and nonprofit groups.
Anschutz’s company issued a statement saying the settlement “very clearly reflects” no wrongdoing.
But Spitzer’s office holds a different view.
“If Mr. Anschutz was as innocent in his business dealings as he claims to be, then a trial would have been the perfect venue to prove that,” said spokesman Marc Violette. “The fact that he settled this case for $4.4 million speaks volumes.”
Since last fall, Qwest stock has rebounded to $7.85 a share, increasing the value of Anschutz’s investment to $2.3 billion. In recent weeks, Anschutz and his family trust have entered into several complex stock trades that netted about $380 million from Qwest shares.
Such transactions continue to gall former employees who lost their pensions and retirement savings.
Paula Smith, 56, a Denver mother of two teenagers, said she faces the prospect of working “until the day I die” after losing nearly $240,000 in retirement savings and $220,000 in the value of her Qwest stock.
Smith was hired as a technical writer for Mountain Bell in 1980 and took a buy-out in June 2001 -- exactly one year after Qwest acquired the company.
It infuriates her that Anschutz has moved on to make spiritual films laced with moral messages.
“The thing I resent most about Anschutz is that he never steps up to the plate and holds himself accountable,” Smith said. “Funding ‘The Chronicles of Narnia’ is not going to exonerate him in the eyes of the Lord.”
Anschutz began building a Southern California business empire by acquiring a bankrupt hockey franchise.
He viewed the cash-strapped L.A. Kings as the key to unlocking a bigger prize, namely the building of a sports arena that would anchor a sprawling downtown redevelopment plan. And he already had a blueprint in hand -- one, ironically, that had been rejected in his hometown.
In 1987, Anschutz proposed a stylish convention center on about 35 acres of railroad property he owned near downtown Denver, but lost out to a competing bid.
In 1995, Anschutz and Los Angeles real estate investor Ed Roski Jr. paid $113 million for the Kings. The purchase revived Anschutz’s dream of rejuvenating a major downtown, only this time in Los Angeles.
Two years later, Los Angeles city officials approved locating Staples Center at 11th and Figueroa streets. By then, Anschutz and Roski had become minority owners in the Lakers basketball team, which made the new arena home when it opened in 1999.
As part of the agreement with the city, Anschutz took control of 30 nearby acres. He paid more than $18 million for the land and obtained $58 million from city bonds -- to be repaid with interest -- and $12 million in redevelopment grants.
L.A. Live, Anschutz’s sports-entertainment complex, is now under construction across from Staples Center. The first phase will open next year. Last month, AEG unveiled plans for a 1,000-room hotel complex that includes a five-star Ritz-Carlton and a four-star Marriott Marquis topped by 216 luxury condos.
The $750-million project, rising 54 stories above downtown, attracted controversy last year when the Los Angeles City Council approved up to $290 million in rebates of hotel taxes during the next 25 years.
Although the Kings have lost more than $125 million under Anschutz, his Los Angeles-based sports and entertainment juggernaut keeps rolling in profits.
Staples Center is widely regarded as the most successful arena anywhere. Home to five professional sports franchises -- basketball’s Lakers, Clippers and Sparks; hockey’s Kings; and arena football’s Avengers -- Staples books an average of 240 events annually, sometimes two a day. About 4.5 million people pass through its turnstiles every year. Anschutz aims to triple the number of visitors to his downtown complex by 2010.
Anschutz owns a total of 14 sports franchises in the U.S. and Europe. His company is pouring $1 billion into an ambitious entertainment district on the banks of the Thames River in London.
The development, which includes a 23,000-seat concert arena, is similar to Anschutz’s L.A. Live, with one notable exception: Lacking a premier anchor tenant, the project is relying on a proposed casino resort.
Competition for the one available mega-casino license in Britain has ensnared Anschutz in a political controversy. The British media reported this month that Anschutz had met Prescott, the deputy prime minister, on at least seven occasions since August 2002, including the soccer match at Home Depot Center.
An inquiry by a parliamentary committee concluded Friday that Prescott violated ethics rules by not disclosing a two-night stay last July at Anschutz’s ranch until after it was revealed by British newspapers nearly a year later. The committee said no action should be taken against Prescott, who has denied that Anschutz sought to influence him on the casino license.
Five of Anschutz’s sports franchises are soccer teams. He became attracted to the game in 1994 while watching a World Cup match at the Rose Bowl. Two years later, he launched the Colorado Rapids as part of the inaugural Major League Soccer season.
Ignoring the sport’s many skeptics, Anschutz believed that pro soccer could become a viable business in the U.S. By 2002, Anschutz controlled six of the league’s 10 teams, with franchises in Los Angeles, Chicago, Denver, New York, San Jose and Washington, D.C.
Part of his strategy to make the league profitable is building soccer-specific stadiums. Home Depot Center, which opened in 2003, is the home of two MLS teams -- the Galaxy and Chivas USA -- and is an official U.S. Olympic training site for cycling, soccer and track and field. Last month, AEG opened Toyota Park in Bridgeview, Ill., for the Chicago Fire.
Last year, the Galaxy became the league’s first team to turn a profit. Anschutz recently sold his share of the New York franchise to the Red Bull energy drink company for a record $100 million. He is looking to sell his D.C. United team.
In August, Anschutz will receive the National Soccer Medal of Honor, the sport’s highest award in this country, along with a spot in the National Soccer Hall of Fame for creating a foothold for the sport in the U.S.
“Two decades ago, people said this could never be done,” said Don Garber, commissioner of Major League Soccer. “Two decades from now, people will ask how it was done, and the answer will be Phil Anschutz.”
When Anschutz started making films in 2000, he joined a long line of tycoons turned movie moguls -- William Randolph Hearst, Howard Hughes, Marvin Davis, Ted Turner and Richard Branson, to name a few. By doing so, he ignored the old saw that the fastest way for a billionaire to become a millionaire is to invest in the film business.
“Phil is different,” said Ritchie, his friend. “He is concerned the country is losing its compass. He wants to express traditional American values in an appealing way for young people.”
According to an early mission statement drafted by Anschutz, the focus of his Hollywood operation is on historical, sports and adventure films for general audiences. “We believe that gratuitous violence, use of drugs and smoking, sex and profanity will obscure the positive message we wish to impart and compromise the entertainment and commercial value of our projects.”
In a rare speech to a leadership seminar in February 2004, Anschutz said he expects his films “to be life-affirming and to carry moral messages.” He also conceded that “no one with any sense” would invest in movies.
“My friends think I’m a candidate for a lobotomy, and my competitors think I’m naive or stupid or both. But you know what? I don’t care. If we can make some movies that have a positive effect on people’s lives and on our culture, that’s enough for me.”
Still, Anschutz’s movie company doesn’t approve a project “unless we believe it will be profitable,” said David Weil, chief executive of Anschutz Film Group. Riding the success of “The Chronicles of Narnia,” Anschutz’s film operation turned a profit last year, Weil said.
Anschutz “does get very excited about what we do on occasion because it is exhilarating to reach people in a very positive way that is much more direct than operating an oil well or a railroad,” Weil said.
In addition to his production company, Anschutz controls 81.5% of the voting shares of the nation’s largest chain of movie theaters. He created Regal Entertainment Group in 2002 by merging Edwards Theaters, Regal Cinemas and United Artists Theaters.
Anschutz and a Los Angeles investment firm, Oaktree Capital Management, paid about $500 million to cover the loans of the three bankrupt theater companies. Today, Regal operates nearly 6,400 screens in 40 states. The company issued extraordinary dividends to shareholders in 2003 and 2004 that netted Anschutz a combined $741 million.
In 2003, Anschutz was sought out by Mel Gibson, who was looking for an exhibitor for his controversial “The Passion of the Christ.” At Gibson’s invitation, Anschutz saw an advance private screening of the film in Santa Monica. He was so moved by the drama depicting the Crucifixion that he took the unusual step of urging Regal’s chief executive to see the film, according to court records.
“The Passion of the Christ” became the top-grossing R-rated film. Strong first-quarter profits in 2004, aided by the success of “The Passion of the Christ,” enabled Regal to issue the second extraordinary dividend.
But Regal allegedly reneged on a commitment to pay Gibson’s Icon Distribution Inc. “studio terms,” or 55% of box-office revenues, according to a lawsuit filed by Gibson’s company to recover more than $40 million.
“It was outrageous,” said George Hedges, a Los Angeles lawyer who represents Gibson. “These guys paid themselves an extraordinary dividend, but they were unwilling to pay Mel what he was owed.”
In court papers, Regal argued that it had agreed to pay Gibson’s firm 34% of proceeds.
Testimony in the case disclosed that Anschutz’s theater group charged church groups a $500 “worship price” on top of the normal admission to attend special screenings of “The Passion of the Christ.” Regal routinely levies an administration fee to cover marketing and overhead costs for private screenings.
Gibson became so upset that he ordered his company to issue more than $500,000 in refunds to churches and Christian groups.
“Icon was shocked and disappointed that this additional fee (which was never reported to us) was being charged to faith-based organizations,” Icon wrote in a letter accompanying the refunds.
Anschutz was unaware that Regal tacked on a “worship price,” said Mike Campbell, the company’s chief executive. He added that Anschutz played no role in negotiating the deal to exhibit the film.
Regal and Icon reached a confidential settlement in March of last year. Regal reported in an SEC filing that the settlement “will reduce previously reported net income by $8.3 million.” That amount is far less than what Regal actually paid, according to knowledgeable sources.
On April 4, Anschutz and Florence Fang were honored by UC Berkeley Chancellor Robert Birgeneau and other top university officials for donating the San Francisco Examiner’s archives to the school’s Bancroft Library.
During the ceremony, speakers took turns praising Anschutz, the new owner of the Examiner, for his generosity. But no mention was made that the gift’s origin stemmed from a bitter lawsuit between Anschutz and the Fang family.
Anschutz bought the Examiner from the Fangs in 2004, launching him into the newspaper business. He has since begun new papers in Washington, D.C., and Baltimore, where he competes with the Sun, a paper owned by the Tribune Co., parent of the Los Angeles Times. Further expansion appears in the works: Anschutz owns rights to the Examiner name in more than 65 cities, including Los Angeles, and has registered the domain name losangelesexaminer.com.
His advisors say the small chain represents the kind of underappreciated asset that fits Anschutz’s portfolio. His strategy is to grow circulation and attract advertisers by concentrating on local news and providing free home delivery to upper-income households.
The Fangs’ lawsuit claimed that Anschutz and his advisors conspired with an Examiner executive to acquire the paper at a depressed price. The suit sought to overturn the sale, along with $11 million in damages.
Once again, he found a way to turn a potential liability into a financial gain.
Court records show that Anschutz hired former Denver Post Publisher Ryan McKibben as a consultant in 2003 to help acquire the Examiner. His brother, P. Scott McKibben, was then the Examiner publisher and had been asked by the Fangs to find a buyer for the money-losing newspaper.
The Fangs alleged in court papers that the McKibben brothers tilted the sale in favor of Anschutz. They contended that Scott McKibben leaked confidential information to the Anschutz organization and failed to market the newspaper to other potential buyers.
According to internal memos, Anschutz played an active role in the transaction.
In one memo, two senior Anschutz executives were assigned “to handle primary negotiations” with Scott McKibben “based on PFA direction.” Anschutz’s initials are PFA.
PFA also was listed as receiving “regular updates” from the two executives. A “timetable” memo lists a meeting between Anschutz and Scott McKibben six weeks before the sale.
Two days before the deal closed, Anschutz’s executives demanded the family include the paper’s archives at no additional cost, said E. Robert Wallach, the Fangs’ attorney.
After the sale, Anschutz retained Scott McKibben as publisher of the Examiner, paying him a $420,000 salary with a $180,000 bonus and a country club membership, court records show. He also named Ryan McKibben chief executive of Clarity Media Group, his newspaper holding company.
Both McKibbens said in separate interviews that the Fangs’ allegations were unfounded. Monaghan suggested that the litigation stemmed from “a bad case of seller’s remorse.”
News organizations reported that Anschutz paid $20 million. But a copy of the sale agreement obtained by The Times shows that Anschutz paid $10.7 million for the Examiner, the Independent newspapers, a printing business and other assets.
Wallach said that, during a break in a sworn deposition in August, he appealed to Anschutz to settle the case. The lawyer said he told Anschutz that taking the archives was “just not right” and that he risked losing a big jury verdict.
Anschutz agreed that day to a confidential settlement, which included a provision to destroy his deposition testimony. According to sources familiar with the deal, Anschutz consented to several demands made by the Fang family, including donating the archives in the name of Florence Fang to UC Berkeley.
“If Anschutz had not been a man of integrity and a good businessman, it would not have happened,” Wallach said.
Still, Anschutz figures to cash in. By donating the archives, his company is eligible for a substantial tax deduction. The precise amount could not be confirmed, but a copy of an independent appraisal obtained by the Examiner in November 2004 offers a clue.
The archives were assessed at $18.4 million -- more than what Anschutz paid for the entire newspaper.
Researcher Maloy Moore contributed to this report.
Bunting can be reached at firstname.lastname@example.org or (213) 237-2290.
Denver billionaire Philip Anschutz has become a major economic force in Southern California. He owns sports teams and arenas, promotes concerts and art exhibits, operates a Hollywood film company and is building a sprawling sports and entertainment district in downtown Los Angeles. An overview of his local business interests:
STAPLES CENTER: The arena, which Anschutz built in 1999, is home to five professional sports teams, including the Lakers and Clippers of the National Basketball Assn. About 4.5 million people pass through its turnstiles every year. Anschutz envisioned the $400-million arena as the centerpiece of a revitalized downtown.
In 2002, Anschutz created Regal Entertainment Group by merging three bankrupt theater chains. Today, Regal is the nation’s largest chain, with nearly 6,400 screens in 40 states.
The sports-entertainment district is under construction across from Staples Center. A live theater will open next year, and restaurants and nightclubs in 2008.
*TOUR OF CALIFORNIA
In February, Anschutz Entertainment Group inaugurated an eight-day, 600-mile professional cycling race from San Francisco to Redondo Beach.
*HOME DEPOT CENTER
The complex, which opened in 2003, is home to two pro soccer teams, the Galaxy and Chivas USA. It is also a U.S. Olympic training site for cycling, soccer as well as track and field.
His film group’s family-friendly movies include “The Chronicles of Narnia: The Lion, the Witch and the Wardrobe” (2005). The Christian allegory was Anschutz’s first blockbuster hit.