By Stephen Young
By Stephen Young
By Stephen Young
By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
Since leaving the Mavericks, Frank Zaccanelli has indeed renewed his zealous pursuit of real estate deals for Ross Perot Jr. The focus now--tapping into the public's wallet yet again with another "public-private" partnership--is building a new arena for the Mavericks and Stars.
To make it happen, Perot Jr. must cut deals with the City of Dallas and Tom Hicks, the man who finally did buy the Stars. For owners of both teams, a new arena only makes economic sense if it can be used for hockey and basketball. Otherwise, there won't be enough events to keep the arena full of ticket-buying fans.
A tall native Texan, Hicks made his money helping managers buy out the assets of their companies by leveraging them. It has been reported that he paid $84 million for the Dallas Stars. Perhaps more than any other opposition Perot Jr. has encountered lately, Hicks has deep pockets and a lifetime of business savvy. Since his initial leveraged buyout of Dr Pepper and Seven-Up in the mid-'80s, Hicks has earned a reputation among well-heeled institutional investors as a guy who can make heaps of money.
A professional in the Hicks camp says Hicks was initially happy about working with the Perots on an arena deal. Unlike the Carters, who are devout Baptists, Hicks figured the Perots wouldn't have a problem selling alcoholic beverages at the new arena. Ross Perot Jr. was "more commercially motivated," the same professional says. The ties were so congenial in the beginning, the two sides helped each other perform financial research when each purchased his respective team.
But relations soured quickly.
As the two sides tried to forge an arena proposal that they could present to the city together, Zaccanelli unexpectedly instructed his lawyers attending one meeting to ask about the specific terms of the leases each team had with the city. The questions indicated that Perot Jr. was going to play hardball. The Stars had never signed a lease with the city. Therefore, the Mavericks--and Perot Jr.--had an upper hand in negotiating for the new arena. Hicks had not worried about the omission, the professional who works for him says, because he didn't expect Perot Jr. to exploit it.
Matters went from bad to worse. In mid-January of this year, the two sides locked horns publicly. Hicks told The Dallas Morning News he intended to cut his own deal with the city, without the Mavericks. Each team sent letters to city council members and Mayor Ron Kirk. Perot Jr. complained that the other side was misrepresenting his proposal
By the spring of this year, Hicks and Perot had each come forward with dueling arena proposals. Hicks' was the more modest plan, and he wanted to get it done in a hurry. He envisioned a $180 million arena with pricey luxury boxes that could be finished in two years. Hicks wanted a $70 million interest-free loan from the city for the project, which could be built on one of several sites, including adjacent to Reunion Arena.
In March, Perot unveiled a $220 million proposal that would take longer to finish and cost taxpayers more money. The City of Dallas would pay for half of Perot Jr.'s plan.
Under the deal, Perot Jr.'s company would buy 50 acres of downtown land at an undetermined location, and set aside 10 acres for a new arena. The rest of the land would be Perot Jr.'s to develop into offices, stores, and other entertainment spots.
The two sides began negotiating again, and by early this summer had worked out many of their differences. According to David Deniger, a minority owner in the Stars, who is a partner with Hicks' organization and runs an investment firm for him, the two sides have come to a basic agreement. A holding company would manage the arena, and the Mavericks and Stars would each sign leases with the holding company.
There remains one major stumbling block: Who will control the holding company, which will have control over third-party events at the arena? Perot Jr. wants to control the majority of the holding company's board, but Hicks is demanding 50-50 control.
Meanwhile, arrangements for public financing of an arena have been moving forward--with the help of Perot's lobbyists in Austin. On May 20, legislation passed allowing the city to levy a half-cent sales tax and small fees on car rentals, parking, and even players to pay for the city's share of the arena cost. The law gives the city 18 months to work out a deal before Dallas suburbs--most notably Arlington--can jump into the bidding war for the new arena.
Zaccanelli the pit bull remains hopeful. "Things between the Stars and the Mavericks are going to work out," he says.
Maybe. But not if Tom Hicks gets hit by Zaccanelli's hammer.