The son almost rises
H. Ross Perot Jr. had just bought the Dallas Mavericks in May 1996 when the basketball team's top executive quit. The son of Dallas' most famous billionaire was in a bind. As he often does, Perot Jr. turned to his longtime chief lieutenant, Frank Zaccanelli, and put the fiery Italian in charge of the floundering franchise. It was a short-lived but telling choice.
As president of Perot Jr.'s real estate company, Zaccanelli had hammered out many of the company's biggest deals--including the burgeoning Alliance Airport Park, an industrial facility north of Fort Worth. Zaccanelli had also spearheaded Perot Jr.'s scheme to acquire cheap raw land in the early 1990s and transform those properties in Austin, Plano, and McKinney into lucrative housing developments with nearby golf courses.
But managing a professional basketball team? Zaccanelli had zero experience. Two decades earlier, he had played for the Division III collegiate team at Potsdam State University in upstate New York. Since then, the 41-year-old has shot plenty of hoops around town--establishing a reputation as a passionate, occasionally downright mean, man on the courts.
But Zaccanelli's zeal wasn't the cure for the beleaguered Mavericks. A sharp-tongued man with an uncanny knack of inspiring loathing, Zaccanelli needed only a few months to alienate the players, Perot Jr.'s other partners in the Mavericks, and, ultimately, the fans. Some 25 games into the season, Zaccanelli traded the Mavericks' only bona fide star, the whiner Jason Kidd, for three largely unrecognized players. By the end of the season, the Mavericks went through 27 players on their roster--breaking a National Basketball Association record that had stood since the 1940s.
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The team set another dubious NBA record on April 6, 1997, by scoring only 2 points in one quarter against the Los Angeles Lakers. By the end of the season, the Mavericks had lost two more games than the previous year, posting an abysmal record of 24-58. Attendance dropped by 1,584 fans per night. Only 15,102 fans had shown up on average to fill 18,502 seats.
Today, Zaccanelli shuns responsibility for the disastrous season. "The Mavericks didn't get broken in one year," he asserts. But before the season came to a close, Zaccanelli finally had to give up the general manager's post.
In February, Zaccanelli flew to Maui and persuaded former New York Knicks coach Don Nelson, who was enjoying semi-retirement, to accept the Mavericks job. Zaccanelli wined and dined the basketball legend, and came armed with a generous offer from Perot Jr.: a five-year, $8 million contract to serve as the Mavericks' general manager with no day-to-day coaching obligations.
Before he got on the plane for Dallas, Nelson had one more request. Though Perot Jr. was hiring him, Nelson wanted to meet Perot Sr. "But I explained to him that it was Ross [Jr.] who was running the show," Zaccanelli recounts.
The Nelson episode underscores the puzzling predicament of Ross Perot Jr. His father is one of the richest, most cantankerous, and least predictable figures in the United States--known variously as a wildly successful businessman, a failed presidential candidate, creator of an entire political movement, and a nut.
In the past few years, Perot Jr. has made no small effort to distinguish himself from his father without betraying the strong family roots from which he sprang.
While venturing into his father's territory--the world of business--Perot Jr. has stayed away from computer services, the industry that made dad rich. He has chosen a corporate moniker, Hillwood Development, with no connection to the Perot family name, and has set out to carve his own fame from the North Texas landscape.
Father and son each regularly emphasize Perot Jr.'s independence when talking to reporters. "We often find out by reading in the newspaper what each other is doing," Perot Jr. told Texas Monthly in 1994. With pride, the father frequently tells writers that his son is "Big Ross" and he is "Old Ross." (Neither Perot would speak with the Dallas Observer.)
Despite all the talk, the first child and only son approaches his fortieth birthday still unable to shake the perception that he operates only in his father's shadow. Dealmakers who sit across the table from Perot Jr. say they assume Perot Sr. controls the purse strings and makes the final calls on deals.
Dad's estimated $2.6 billion wealth, however, is only part of the equation that leads observers to conclude that dealing with Junior equals dealing with Senior. The son has also begun to acquire, in small measure, the same ruthless, my-way-or-the-highway reputation that dogs his ornery father.
Recently, it is Perot Jr.'s public squabbles that have begun to make headlines.
In the town of Westlake, about 30 miles northwest of Dallas, Perot Jr. stirred up a public relations brouhaha by persuading a compliant Board of Aldermen to disannex his 2,500-acre Circle T Ranch. Perot Jr. wanted out of the town after the mayor and residents began nitpicking his plans to build a huge development.
In Dallas, Perot Jr. has so far failed to generate much public support for his proposal to develop a $220 million project including a downtown sports arena and a complex of offices, hotels, and retail outlets. It hasn't helped that Perot Jr. wants taxpayers to pick up half the tab.
The younger Perot's travails have become a regular fixture on the nightly news as his company squabbles with Tom Hicks, the owner of the Dallas Stars hockey team, over the arena project.
Although the Stars and Mavericks need each other to make an arena deal work, relations between the two have become so frayed that it appears neither will bend and give the other majority control of a new arena.
The most incessant bad press for Perot Jr., however, has centered on his first year of ownership of the Mavericks, a team that spirals ever further into the NBA basement.
One has to wonder why Perot Jr. is catching so much flak. The son's personality scarcely resembles that of his hard-edged father. Perot Jr. shares none of the famed piercing wit, accusatory tone, and know-it-all mannerisms. Instead, more than 25 acquaintances, employees, and business associates who were interviewed for this story say the son is a quieter, more inward-looking fellow.
"He is more of an I'll-listen-to-you kind of guy than his father," says Jim Francis, a Republican political consultant who has worked for Perot Jr. on business matters.
So where is Perot Jr.'s newly emerging reputation as a tough guy coming from? Two words--Frank Zaccanelli.
Not inclined to be a pit bull himself, Perot Jr. has turned to the Italian to be his hardball hitter. Zaccanelli has risen quickly from the ranks of Perot Jr.'s young company to become top lieutenant. Zaccanelli's office is right next to Perot Jr.'s (and down the hall from Dad's) on the seventeenth floor of a nondescript glass building in North Dallas.
A former health and beauty products salesman, Zaccanelli has earned his stripes in real estate circles, and is largely seen as the bite behind Perot Jr.
"Frank is a very competitive, hard-nosed businessman. He knows how to leverage his assets. He is not the proverbial good ol' boy. It's all business with him. He carries a big stick, and that is the Perot stick, and he keeps it in plain sight," says Bill Shaddock, a land broker in Plano, who has negotiated with Zaccanelli.
Zaccanelli's gruff manner has made him unwelcome in some quarters. Tales of his temper are legendary--and perhaps, at this point, hyperbolic.
"I never threw a clock at anybody, so you can take that one out," Zaccanelli volunteers during an interview, trying to preempt a question about one common rumor of a temper tantrum.
The clock may have stayed on the desk. But two former Hillwood employees say fireworks regularly flew in Zaccanelli's chambers. Secretaries were reduced to tears, the two recall. Subordinates were subjected to tirades in which every third word was an obscenity, they say.
If he was around, Perot Jr. usually just closed his door. "Ross doesn't like the dirty work. But he doesn't mind it happening. Zaccanelli is there to rip guys apart," says one former Hillwood employee who worked with Perot Jr. and Zaccanelli.
Whether negotiating with adversaries or dealing with friendly partners, Zaccanelli is known for confrontation. "He gets all red in the face. You can tell it's not acting. He's out of control," says a lawyer who has witnessed the episodes.
Zaccanelli shrugs off his reputation as the inevitable fallout from the role he plays as gatekeeper for a billionaire's son. "I tell my wife, sometimes you get a little disgusted being lied to 10 times a day by someone hoping to get your money. You have to siphon out what's real," he says. "Do I have a temper? Sure. Do I have a lot of passion about what I do? Yes. Have I, over the years, had some run-ins with people? Sure...That is the only way I can function...I have to have that edge.
"Ross' view is much more macro. My job is to get into the trenches and get things done."
Others come to Zaccanelli's defense. Randy Williams, an executive vice president of business development for the Dallas real estate powerhouse owned by Robert Dedman--Club Corporation of America--has participated in partnerships with Hillwood. About Zaccanelli's demeanor, Williams insists: "The stories are somewhat overrated. It hasn't at all been done by trampling over people. You know when you sit down with anyone the ilk of Perot...hey, he who has the gold gets to make the rules. If you or I had that kind of money, I don't know if we would have been any different."
Barbara Ryan, his assistant for five years at Hillwood, says characterizations of Zaccanelli as menacing are unfair.
But Zaccanelli's detractors, and they are numerous, question whether his blunt ways benefit Perot Jr. in the long run.
"Frank is bad karma," says a real estate broker who worked closely with Zaccanelli.
"If you are a hammer, the whole world looks like a nail. But every once in a while, you need a screwdriver. His is not an effective way to do business in the big leagues," says another businessman who has negotiated with Zaccanelli. "Anybody who has a chance will get away."
Several times, other businessmen have called or written Perot Jr. to warn him about his lieutenant. "I told him I thought Frank was injuring the family name," says one broker. He didn't receive a response.
One lawyer who has worked closely on a deal with Perot Jr.'s company says, "People are always asking me, 'Why does Ross Jr. put up with this guy?'"
Apparently because when Perot Jr. needs a pit bull, Zaccanelli is ready for the job.
Ross Perot Jr. was born November 7, 1958, a year after his father started a now-famous stint at IBM. It was the job that convinced Perot Sr. to quit several years later and start his own company, Electronic Data Systems, and go head-to-head with Big Blue. EDS, of course, became the font of the Perot riches. Perot Jr. may have been born the son of an IBM salesman, but he grew up to become the scion of a billionaire.
In the looks department, Perot Jr. lucked out. He didn't inherit his father's short frame, goofy grin, and much-lampooned jug ears. Instead, Junior most resembles his sweet-faced mother, Margot Perot. His grimace, occasionally captured in photographs, hints of dad. But Junior is tall, blond, and built like an athlete.
In the numerous volumes written about Perot Sr., the childhoods of Perot Jr. and his four sisters are always pegged as surprisingly idyllic. Margot Perot gets credit for keeping her children on a steady course despite the family's wealth.
Close family ties still mark Perot Jr.'s life. He, his wife, Sarah Fullinwider, and their three children live in a $2.8 million Highland Park home, right next to his mother-in-law's $1.3 million house. On the street in front of Perot Jr.'s 9,800-square-foot abode (it has six baths and seven fireplaces), neighbors have seen Perot Sr. pass a hockey puck with a grandson, an armed security guard standing sentry nearby.
Security concerns run deep in the billionaire's family. Well reported was the 1987 incident when Dallas police pulled over Sarah Fullinwider Perot for speeding and found a handgun on the seat beside her. Perot Sr. called the cops, who hadn't filed any gun violation law charges, and chewed them out for the way they treated his daughter-in-law. In 1993, Perot Jr. went through an airport security checkpoint in Seattle, Washington, with a loaded gun in a black nylon bag. He told the court that acquitted him later that he had forgotten about the weapon, which he had planned to take home from his office.
Perot Jr.'s own childhood also reflected the trappings of wealth and connections.
When Perot Jr. was 10, according to biographer Gerald Posner's recent book on Perot Sr., the EDS founder used his ties with former President Richard Nixon to try to get his son into a moon launch at Cape Kennedy, even though the rules barred anyone under 16 from attending. In a letter to Nixon aide John Ehrlichman, Perot Sr. complained that Senator Ted Kennedy had gotten his underage son in.
While Perot Jr. attended St. Mark's School of Texas, he won a national riding championship aboard a top-caliber Tennessee walking horse his dad bought for him.
When Perot Jr. graduated from Vanderbilt University, according to Posner, his father sent him a paper titled "All I Know About Business." The 28 pages included such advice as: "It [business] should be pursued with the same positive spirit one brings to an athletic contest" and "Never let money become your goal." His dad warned Perot Jr. to stay away from the MBA types. "Their loyalty is to themselves," he wrote.
But as a new college grad, Perot Jr. had in mind pursuits more immediate and romantic than starting a business career. His father, at that point, was about to become a national hero, courtesy of author Ken Follett's fawning book On the Wings of Eagles. The book glamorized Perot Sr.'s efforts to rescue EDS workers from an Iranian prison in 1978 after they were arrested amid the country's revolutionary fervor.
In 1983, Perot Jr. made his own grab for the spotlight, undertaking a record-setting flight around the world by helicopter. Flying with him was his dad's employee, EDS executive Jay Coburn, who had played a central role in the Iran rescue. Later that year, Perot Jr. entered the Air Force. He became a fighter pilot, and moved from base to base around the country for the next two and a half years.
While Perot Jr. was off flying fighter jets, the already enviable financial circumstances of the Perot family soared to unscaled heights. EDS, in which Perot held some 46 percent of the stock, merged with General Motors in the summer of 1984. The deal put roughly $930 million in cash in the Perot family coffers.
Perot Jr. left the military the next year. He later told a reporter he thought about making a career of the Air Force, but instead he traded his flight suit for the dark suits and white shirts his dad favors and began reporting to Perot Sr.'s office. The son was going to be a businessman.
Given the family fortune, of course, Perot Jr. didn't have to start small. Few know precisely how much money Perot Jr.'s father gave him to start out, and those who know won't say.
But when Perot Jr. decided to venture into real estate, Perot Sr. already owned about 20,000 acres of raw land in booming North Dallas. At the time, anyone with wads of cash was tempted to buy up fields in the path of growing suburbs, hold them for a few years, and then resell at a handsome profit. By the time his son entered the land business, in fact, Perot Sr. had already bought much of the land that would later become Alliance Airport.
But just as Perot Jr. jumped into real estate, the North Texas market cratered, and the savings and loan crisis ensued. There was no longer easy money to be made sitting on empty land and waiting for prices to rise. As the one responsible for making his dad's real estate investments work, Perot Jr. realized he was going to have to become a developer. And he was going to need some help.
It was right before the real estate slump--in 1986--when Frank Zaccanelli entered the employ of Ross Perot Jr. Zaccanelli was one of about a half-dozen real estate professionals in the office, a novice Perot Jr. hired as he began to feel his way into the industry. Zaccanelli, though, would quickly rise from the ranks and become second only to Perot Jr. himself.
Zaccanelli has the proverbial good looks that mothers are supposed to warn their innocent daughters about: tall and swarthy, with a wide mouth, piercing eyes, and a fit build. His is a commanding presence. He can be as genial as any good salesman, dropping his guest's name frequently, asking about hometowns, and eagerly engaging in small talk about the bad habits of drinking coffee. "My parents drank it all the time," he says.
The son of a tool grinder, Zaccanelli grew up in much more modest circumstances than his future boss. Born and raised in Syracuse, New York, he was the only child of first-generation Americans. His grandparents on both sides had immigrated from Italy.
When Perot Jr. was still finishing up at privileged St. Mark's in North Dallas, Zaccanelli was fleeing the dirty, industrialized East Coast of his birth. He decided to try his lot in Houston, moving there in the late '70s and landing a job selling health and beauty products. Zaccanelli survived, but didn't thrive. In 1980, when his employer transferred him to Dallas, Zaccanelli began eyeing greener pastures in real estate. It was the industry to enter in Dallas if one was financially ambitious. Going to school at night, Zaccanelli earned his real estate brokerage license in 1982, and set out to make contact with the high rollers.
It was expensive--more than he could afford, really--but Zaccanelli kept a membership at The Cooper Aerobics Center. There, he could run into North Dallas powerbrokers on the basketball court, shooting hoops and making connections. The investment paid off.
At that gym, Zaccanelli began playing ball with Roger Staubach, the former Dallas Cowboys quarterback turned real estate mogul. Staubach took a shine to Zaccanelli, who established a reputation as an intense, if argumentative, player who sometimes got in trouble with referees for overreacting to foul calls. Staubach hired Zaccanelli as a real estate broker.
Zaccanelli was working for Staubach on a transaction when he ran across Perot Jr. As a sort of test, Zaccanelli confirms, Perot Jr. agreed to invest in a real estate deal Zaccanelli had found in Atlanta, Georgia. But Perot Jr. wanted Zaccanelli to keep his broker's fee invested in the property. Zaccanelli not only complied, he moved his family to Atlanta for a summer so he could personally oversee the property's management. "Ross saw that and admired his drive," recalls another real estate broker who has worked with both men. Perot Jr. hired Zaccanelli.
Initially, Zaccanelli was just one of five or six real estate aces in the office who had all been in the business longer than their boss. There was no top dog, a former Hillwood employee says, but a pack competing for Perot Jr.'s attention. "Frank used to say whoever leaves Ross' office last will prevail," the former employee recalls.
Ever looming over the office was the specter--if not the presence--of Perot Sr. A former Hillwood executive remembers the old man trying to give his son independence. "His dad was pretty good. Once in a while, there would be a meeting without his son, but usually he said, 'It was Ross Jr.'s decision,'" recalls the former employee.
Zaccanelli, apparently, was able to ingratiate himself early on with Perot Sr. These days, Zaccanelli says he only greets Perot Sr. in the elevator, engaging in all substantive business discussions with the son. But in those early days, one former Hillwood employee says, Perot Sr. used to meet as often as twice a month with Zaccanelli and other Hillwood employees. Indeed, two former Hillwood employees speculate that, in some ways, the father took comfort in having a scrapper like Zaccanelli near his understated son. Perot Sr. could take care of himself, they say, but wanted Zaccanelli to guard his son--and his assets.
If at first Frank Zaccanelli was just a member of Perot Jr.'s pack, that changed with the Alliance Airport development. "After Alliance, he was the man," recalls one former Hillwood employee.
The 418-acre industrial airport north of Fort Worth that opened in 1989 ranks as Perot Jr.'s chief accomplishment to date. It also serves as a model for the "public-private" developments that Perot Jr. likes to trumpet.
The concept for Alliance was novel, and Perot Jr. usually gets credit for the innovation. (Two former Hillwood executives, though, say Perot Sr. had just as much to do with it as his son.) The notion was to build an airport specifically for industrial users--manufacturers and companies who needed easy access to planes shuttling in parts and supplies.
When the Perots began exploring the idea, the Federal Aviation Administration had already authorized a second airport for Fort Worth. Close to Dallas-Fort Worth International Airport, major highways, and rail lines, the facility would create a transportation hub for companies that ship products nationwide.
The Perots already owned most of the land needed for the project, but building it would require a hefty contribution from taxpayers. Federal and state agencies--and the city of Fort Worth--had to pitch in. In addition to the actual airport, infrastructure like roads and sewers needed to be built. Ultimately, government kicked about $194 million of taxpayer money into the deal. Fort Worth's share was about $68 million. Zaccanelli and other Hillwood executives decline to say how much their company invested.
Convincing various public entities to spend that kind of money took some coaxing. After all, the deal allowed the Perots to turn 20,000 acres of empty land into a gold mine for themselves.
As the effort progressed, Perot Jr. increasingly tapped Zaccanelli to keep it on track. Zaccanelli made his usual strong impression. "He is very aggressive," recalls Bob Bolen, who was the mayor of Fort Worth at the time. Bolen says he had to insist that Zaccanelli leave his office on several occasions. "I would tell him to go out and come back in later...that the way things were going, we couldn't do any more on that day."
In most quarters, Alliance is billed these days as a success story. In its marketing material on Alliance, Hillwood claims the project has created 10,900 permanent jobs. Intel Corporation recently announced plans to build a $1.3 billion plant at the airport, where it will join AMR Corp., the parent of American Airlines, CompUSA, Inc., and Federal Express. (It didn't hurt that Perot lobbyists in Austin helped ease through legislation allowing Intel, the semiconductor giant, not to pay school taxes. Junior has followed his father's tradition of helping out public office holders with money. In 1995 and 1996, the Federal Elections Commission shows that Perot Jr. and his wife gave $14,000 to national candidates.)
As a moneymaker for Hillwood Development, the airport park has yet to prove itself. Perot Jr. undoubtedly lost money during all the years the vacant land sat undeveloped, and it is unclear how much profit the privately held Hillwood has realized since the airport opened.
But in other real estate ventures, there's no question that Perot Jr. is making money. In the early 1990s, his company bought up roughly $100 million in properties at fire-sale prices from the Resolution Trust Corporation.
Even his detractors give Zaccanelli the lion's share of credit for bringing together the RTC transactions. "Nobody else could have convinced Ross Jr. to pull the trigger on those deals other than Frank," says one former Hillwood employee.
Driving through the northern suburbs of Dallas, the pricey subdivisions built on Hillwood's bargain properties stand out. They are the ones with multi-million-dollar homes built on relatively small lots, always with a golf course nearby.
Hillwood's theory in developing the land has been to pack in the newly rich by giving them a lot of bathrooms, gables, cornices, and fancy moldings, as well as 18 holes within view. It has worked. One of Hillwood's newest subdivisions, Stonebriar in Frisco, has 605 lots sold, and only four acres left unsold.
Two former Hillwood employees say the RTC deals were particularly sweet for Perot Jr., and by extension solidified his support for Zaccanelli. The son had used his own money, not Dad's, to purchase much of the property, the former Hillwood employees say. So the profits are rightfully the son's.
The deals also made Zaccanelli a rich man, helping pay for his own monstrosity of a home in Willow Bend, a subdivision in Plano that Hillwood developed.
Financial success has not yet visited Ross Perot Jr. on his Circle T Ranch property in Westlake, Texas. Instead, his efforts to develop the property have spawned a nasty political fight. Perot Jr. and his company stand accused of bulldozing local residents and politicians who have dared to oppose the project.
Since Perot Jr. bought the famed 2,500-acre ranch in 1993 from bankrupt Bunker Hunt--an oil man and heir to legendary fortune himself--the ranch has produced mostly headaches, litigation, and bad press.
Back when he was rich, Hunt used the ranch to raise thoroughbred horses. The property remains lovely, unspoiled Texas countryside with a horse track, a ranch house, a farm house, boat quarters, a sizable lake, and two ponds. Perot Jr. has transformed the ranch house into a marketing tool, using it to entertain clients. Several tenants lease the farm house.
Perot Jr. wants to keep the ranch intact, but use the bulk of the empty property to build a historical Texas town as a tourist attraction, as well as single-family homes, corporate headquarters, and a regional shopping center.
(Rick Patterson, the president of Alliance Development Corp. and Perot Jr.'s point man on Circle T, says he doesn't like to use the word "mall" to describe the development plans because it carries negative connotations.)
Perot Jr.'s plans should not have surprised anyone. The land was zoned for commercial use before he bought it. It's a 10-minute drive from his Alliance Airport park and sits on state Highway 114, which leads to nearly 9,000 other acres of raw land the Perots own in the area.
But Perot Jr.'s plans for Circle T have met tremendous and highly sophisticated resistance from the townspeople, particularly Westlake Mayor Scott Bradley, a corporate lawyer and real estate investor himself.
Although it is a small town, Westlake is not home to your typical small-town Texas folk. With such well-known residents as former Pittsburgh Steelers quarterback Terry Bradshaw, Westlake is an enclave for 250 mostly wealthy residents who want an unmarred rural vista out their windows, but a short drive back into Dallas and Fort Worth. The town also is home to Solana, a huge, sleek office complex with such well-known corporate residents as IBM.
Mayor Bradley, Perot Jr.'s camp believes, is the sticking point in any efforts to further develop Westlake. "Scott communicates with the press a lot, and he is real litigious," says Patterson.
These days, Patterson contends that Bradley isn't even the town's legal mayor, having been kicked out by the board of aldermen. But Bradley's backers believe they have legally reelected him to office. The dispute, like almost everything else in the small town, is the subject of litigation. There are no fewer than 13 pending lawsuits in various courts statewide related to the Circle T fight.
A former partner at the big Dallas law firm of Jenkens & Gilchrist, Bradley admits he has become single-minded about Perot. "I'm stubborn as hell if I think I am right," he says. His ranch house--sitting on property abutting the Circle T--was built in the 1930s and designed by idiosyncratic but respected Dallas architect Charles Dilbeck. Bradley and his wife have painstakingly restored it inside and out. The Bradleys' dining room table, however, resembles the war room in a modern-day political campaign, covered with paperwork and newspaper clippings about the Circle T battle.
Last summer, Perot Jr. began inviting key Westlake residents to the Circle T ranch to see marketing presentations of his vision for the property. Perot Jr. needed local support, because his plans require zoning changes that will allow more retail space on the property.
In an echo of Alliance Airport, Perot Jr. was also hoping to fashion another "public-private" arrangement where taxpayers would pick up the tab for things like sewers and roads.
In addition to the usual--money and influence--Perot Jr. had another source of leverage in Westlake. When he bought the ranch from the Hunts, it was already home to three municipal utility districts.
MUDs, as they are known, are special taxing districts allowed under state law so citizens in rural areas can band together and issue bonds to pay for needed improvements. The residents inside a MUD are supposed to vote before any debt is taken on. But Circle T's MUDs are contained within Perot Jr.'s 2,500 acres. Bradley's camp believes that Perot Jr. can effectively dictate any public financing programs by the Circle T MUDs by leasing land to agreeable tenants.
In February, the two sides began negotiating over a tentative deal under which Perot Jr. would dissolve the MUDs if Westlake leaders would give in to certain zoning changes and tax arrangements.
The talks broke down in April, however, when Bradley leaked a proposed draft of the agreement to the press--or so the Perot camp says--and put a negative spin on it. Townspeople didn't like the smell of the deal. They showed up at a public hearing en masse--some 350 strong--to make it clear that public sentiment was against Perot Jr. Even former quarterback Bradshaw, who reportedly has gone fishing at Perot's ranch, spoke out against the proposed development.
On April 29, days before the next scheduled municipal election, the board of aldermen held a special meeting and threw Bradley out of office. The aldermen, who had been intensely courted by the Perot camp, then set about on May 2 dismantling the town. The board disannexed Circle T from Westlake, and seceded their own properties. Altogether, the aldermen favoring Perot Jr. wiped out 70 percent of the land that had been in Westlake, and 95 percent of the city's tax base.
Waiting to welcome Perot Jr. and Circle T with open arms was the city of Fort Worth, which already had graced Perot Jr. with $60 million for Alliance Airport. At a specially called Saturday meeting, the Fort Worth city council made the Circle T part of its "extraterritorial jurisdiction," basically claiming the land for possible future annexation and protecting it from would-be interlopers.
Perot Jr. may have bolstered his development scheme, but he unleashed a public relations nightmare. The specter of a rich developer literally destroying a town--and defying its voters--to build a shopping mall did not sit well. In the city elections one day after the annexation vote, the aldermen who had helped Perot Jr. were ousted. The newly elected aldermen reinstalled Bradley.
The Perot camp claims that election wasn't truly representative of the town's interest. Some 60 voters came from a neighborhood that has never been properly annexed into the town of Westlake, claim Patterson and a Perot lawyer who is suing over the voting irregularities. The case is still pending.
And where was Frank Zaccanelli--Perot Jr.'s right-hand henchman--during the Westlake flap? Zaccanelli did help negotiate the purchase of Circle T, and talks to Patterson regularly about the development plan. But he has not been anywhere near the public relations effort Perot Jr. has launched to salvage his reputation. Perot Jr. hired former Republican congressman Pete Geren to handle the publicity angle of Westlake.
Because while the Circle T battle unfolded, Zaccanelli has had his hands full with another debacle--the Dallas Mavericks.
It was June 1995 when Ross Perot Jr. first began seriously pursuing a sports franchise. For three months, he negotiated intensely with Norm Green about buying the Dallas Stars hockey team, and the two sides even roughed out a contract.
The deal was almost finalized, and Perot Jr. brought in public relations consultants to help prepare for the announcement of the ownership switch. But at the eleventh hour, it fell apart.
Frank Zaccanelli, front and center in the negotiations, says it was Perot Jr. who pulled out of the deal, ultimately realizing that it wasn't a moneymaker. "These numbers just don't work," Zaccanelli says he and Perot concluded. The Stars were too deeply in debt.
But a former Hillwood employee who was still with the company at the time remembers another scenario generally discussed around the office. This former employee says it was assumed Perot Jr. was getting the money for the Stars purchase from his dad. (Perot Sr. would later help arrange $60 million in cash so his son could buy the Mavericks.) The same employee says office workers speculated that it was Perot Sr. who balked at the last minute and scotched the Stars purchase. A lawyer who has worked closely with the Perot family for almost two decades says Perot Sr. has never liked the idea of owning a sports team, or any seasonal business for that matter. "He says he likes his people to work year-round," the lawyer recalls.
Two former Hillwood employees and a former friend of Zaccanelli's say Perot Jr.'s top lieutenant was despondent when the Stars deal fell apart. Without explanation, Zaccanelli took almost two weeks off from the office and implied that he was thinking about quitting, one former employee says.
Zaccanelli and two others who still work for him at Hillwood flatly deny that he reacted in such a fashion. Zaccanelli concedes he and several other Hillwood executives may have taken a few days off after the deal collapsed to recover from three months of intense negotiations.
The aborted Stars purchase, Zaccanelli says, ultimately led to the Mavericks. After tying up Green's assets, Zaccanelli says, Perot Jr. felt obligated to help the Stars owner find another buyer.
Perot Jr. offered to serve as an intermediary between Green and Don Carter, then the Mavericks' majority owner. Perot Jr., who is friends with Carter's son, Ron, called the Mavericks owner to see if he wanted to buy the Stars in late 1995, Zaccanelli says. Carter declined the invitation.
But Carter did call Perot Jr. back and ask if he might want to buy the Mavericks, Zaccanelli says. Carter was tired of running the hapless basketball team, which seems to get worse no matter how hard it tries. Carter had paid $14 million for the then-new NBA franchise in 1979. By 1996, the team was worth about $125 million, and Carter decided to cash in.
The way Zaccanelli tells it now reduces the role of automobile dealer David McDavid, whom late-night television viewers know all too well from his mind-numbing commercials.
But McDavid's role didn't seem that diminutive at the press conference when the Mavericks sale was announced. McDavid and Perot Jr. stood side by side to announce the sale, and explained that they were partners in the deal.
McDavid's brother-in-law, Steve Dieb, a land broker and friend of Zaccanelli's, claims the McDavid group was actually the catalyst for the purchase. Dieb says he got McDavid to talk to Carter, and then brought the idea to Perot Jr. McDavid met with Perot Jr. shortly before Christmas 1996. "We were feeling each other out," Dieb says. McDavid and Perot Jr. met again at the Circle T ranch in February.
At the time, one participant in the meeting says, Perot Jr. seemed lukewarm about a Mavericks deal. When Zaccanelli joked that he and Dieb would run the team, the participant recalls, Perot Jr. cracked: "That's what I'm worried about."
But, the same participant recalls, Zaccanelli expressed confidence. "I'll get him to buy the team," he recalls Zaccanelli telling the McDavid camp. Ultimately, former Hillwood executives and members of the McDavid camp say, Zaccanelli did persuade Perot Jr. to buy the Mavericks by arguing that purchasing the team created an entree to the biggest Dallas real estate transaction of the decade: a new downtown arena.
The down-and-dirty negotiations for the Mavericks went surprisingly fast. Zaccanelli had already schooled himself on sports-team finance when he worked through the aborted Stars purchase, he says, so the Mavericks' numbers were a breeze.
But there were some tense moments in negotiations. Zaccanelli did his own share of ruffling feathers. At one point, one participant says, Ron Carter made a mistake calculating some numbers, and the result could have cost the Carters millions of dollars. Rather than simply allow Carter to fix an honest screw-up, Zaccanelli wanted to make Carter eat the mistake. Zaccanelli says the incident is something he "would rather not comment on."
Then Carter, peeved about the incident with his son, began barring Zaccanelli from his office, the same participant recalls. (Neither Carter, his son, nor McDavid returned calls from the Observer.) Zaccanelli raged that McDavid "had thrown him in the grease and that Carter would not let him participate," the participant recalls. "Frank was pissed. He thought McDavid and Carter were good ol' boys."
Zaccanelli says he thought he was "always on the same page" with Carter and McDavid.
Zaccanelli also played a key role in an eleventh-hour blowup involving McDavid's brother-in-law. Dieb believed that he was to be given a central role in managing the Mavericks. He says Zaccanelli led him to that belief.
But on the eve of the sale announcement, Dieb says, Zaccanelli met with him, McDavid, and his sister and told them that Perot Jr. had ruled out any role for Dieb in Mavericks management. Perot Jr.'s concern, Dieb says, was nepotism. Dieb says it was a bitter blow, and ironic that Perot Jr.--a guy who was set up in business by his father--had a problem with nepotism. Zaccanelli told him, Dieb says, that he would do everything he could to get him a job.
Zaccanelli denies promising Dieb a job. He confirms that "a really hard and fast rule" about nepotism with Perot Jr. ruled out the prospects for Dieb.
"Dieb is a friend," Zaccanelli says. "But his involvement is overemphasized."
On May 1, 1996, after plenty of leaks to the press, Perot Jr. and McDavid appeared together at the press conference announcing their purchase of the Mavericks. Perot Jr. said he would hold majority interest in the team, but McDavid would run the day-to-day operations of the franchise. McDavid told reporters he would look for "basketball people to run the team."
Zaccanelli has since revised that characterization. He says the plan was for McDavid to be "the up-and-front guy" dealing with the press, but claims "a management team was in place."
The distinction became significant. Within a few weeks of that press conference--on May 16--top Mavericks executive Norm Sonju quit. It was Zaccanelli--not McDavid--who went down to the Mavericks' office to take over the helm.
Sonju's departure came just days after the Mavericks skated perilously close to violating an NBA rule that forbids teams from trying to surreptitiously negotiate with talent from other teams. According to Zaccanelli, Sonju had been instructed to contact the Indiana Pacers to see if the team would allow the Mavericks to talk to the agent of that team's coach, Larry Brown. While Sonju handled the formalities, Brown's agent, Joe Glass, and Zaccanelli began talking about a deal. Zaccanelli insists that he didn't call Glass. And, for his part, Glass insisted the two men's conversation did not violate any NBA rules. But McDavid's brother-in-law Dieb says he was in the room with Zaccanelli when Zaccanelli talked with Brown's agent. Dieb says he heard Zaccanelli talk about Brown possibly coming to the Mavericks.
The potential NBA violation came because Sonju had not yet explicitly asked the Pacers for permission to negotiate with Brown, Dieb says. When word leaked to the Pacers that Brown was getting calls from the Mavericks, the Dallas executives had more than a little explaining to do. The NBA has a $5 million fine in place for teams that are caught tampering with coaches.
Days after the whole messy affair took place, Sonju decided to quit the Mavericks. Zaccanelli says Sonju's departure changed everything. As majority owner, Perot Jr. could no longer leave the team's management up to McDavid. "He had to make a tough decision," Zaccanelli says. "He told me, 'You've got to go down there for 90 days.'"
The 90 days came and went. Zaccanelli did promote Keith Grant to vice president of basketball, ostensibly to handle the business load that Sonju had carried. But by the end of October, Grant also quit. (Grant has since returned to the team.) Zaccanelli stayed at the helm throughout. The press reported that Zaccanelli liked his new job, and made no mention of it being temporary. Running the Mavericks apparently was fun for a basketball fanatic like Zaccanelli. He would sometimes hang around watching team practices, and shot hoops afterwards, he concedes. In a November article in D magazine, sports writer Skip Bayless wrote that "Zaccanelli will attempt to fill the Jerry Jones role for the Mavs."
Zaccanelli adamantly denies he ever envisioned such a possibility. Running the team was always just a temporary gig, he insists. "I never wanted to make a career change," he says.
Indeed, as mistakes and losses started adding up, the pressure on Zaccanelli to find a seasoned general manager grew. On February 8, he announced the hiring of Don "Nellie" Nelson. Fans greeted the news with relief. But they were upset that Nelson wasn't coaching. The same day he was hired, Nelson made it clear that he, not Zaccanelli, was now in charge. He traded a record six players.
By April, Perot Jr. had his story about the Mavericks debacle down pat. If Perot Jr. had been willing to let his chief lieutenant dabble with running a basketball team, the moment was over. In written responses to questions from The Dallas Morning News, Perot Jr. said, "Basically, Frank did his job. He did a great job managing the situation and did a super job recruiting Nellie. Frank is an owner with me in the club...he'll work...through the transition program. Then, Frank and I have other things we need to do in real estate. Frank will go back into the real estate acquisition business, which is what he did before."
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.
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