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Disney Deal So Sweet the Ducks May Have Arena to Themselves


ANAHEIM — When the Walt Disney Co. agreed to bring a hockey team called the Mighty Ducks to the Anaheim Arena, the move was viewed by some as almost an act of charity by a duty-bound neighbor.

After all, here was a major corporation sparing the city from the embarrassment of seeing its new $103-million sports emporium going empty. In the process, Disney's move saved the city $1 million of the $2.5 million a year that it was obligated to pay Anaheim Arena's manager if no major sports teams were landed.

But careful scrutiny of the contract between Disney and Ogden Entertainment Co., which manages the 17,350-seat arena, shows that Disney drove the hardest of bargains. Sports business specialists say that Disney appears to have one of the nation's most lucrative arena contracts.

It gives the entertainment conglomerate not only a superior share of all Ducks revenues, but a healthy cut of the cash generated by any other teams that eventually call the arena home.

"They have negotiated the best deal I have ever seen for professional sports," said Ron Weinstein, commissioner of the fledgling, 11-team Continental Indoor Soccer League. "They basically own that arena without ever putting up a dollar to help build it."

The deal is so good, in fact, that it might deter a National Basketball Assn. franchise from taking up residence in Anaheim. That's because of an unusual provision that gives Disney significant control over sales of premium season tickets and most advertising for any other teams that take up permanent residence in Anaheim.

Disney receives 100% of the hockey-related advertising revenue, half the revenue from other advertising posted inside the arena and gets to sell the advertising for other teams. As the sole ad sales force for the center, it also controls sales of premium seats--the luxury boxes and club seating--for all events. Disney gets to keep 10% of all the advertising it sells as a commission.

But with Disney allowed to nose in on another teams' control over advertising and luxury seating, experts say that NBA team owners will be likely to look elsewhere for a more equitable deal.

"In our building, we would never give up those rights," said Mark Scoggins, executive vice president of the Forum in Inglewood, home to hockey's Kings and basketball's Lakers.

Rick Benner, president of the NBA's Sacramento Kings, said a basketball franchise needs as many revenue sources as possible to succeed. Having much of the revenue raked off by another tenant could mean the difference between profit and loss.

"Come five years from now," Benner said, as "this agreement continues there might be some people who would issue some second thoughts about it. If the hockey team is successful but such a sweet lease deal can't attract other teams, at some point there would be some second guessing going on."

Anaheim City Manager James D. Ruth says, however, that there is nothing in the contract to preclude the city from securing an NBA franchise.

"There is room in there for an NBA franchise," he said, predicting that it will "happen down the road." He acknowledged, however, that "Disney has an advantage if they want to bring one" to Anaheim. The city is required to pay Ogden $1.5 million a year, with a maximum exposure of $7.5 million, until an NBA team moves into the arena.

Anaheim Arena officials have attempted to woo NBA teams, but with no luck so far. A spokeswoman for the Seattle SuperSonics, which reportedly was one target, said that the team expects to receive the arena improvements it needs and is committed to staying in the Northwest.

Besides the NBA, other team sports have slipped away. The Continental Indoor Soccer League nixed a deal to put a team in Anaheim Arena and will relocate it to Atlanta. The Los Angeles-based league, which is scheduled to begin play June 17, said the arena managers made a deal so generous to Disney that it made soccer unfeasible.

"They rolled over for Disney," said Stuart Lichter, a real estate developer who headed the group of Anaheim investors who wanted the Orange County franchise. "Ogden and the city made a deal that will make it very hard for any other sports-oriented event to succeed in this arena."

Specifically, he said his proposed lease was changed so that his group would receive less of the revenue from 2,731 premium seats, those with some of the best views in the house that are sold on a seasonal basis for hockey and basketball. The proposed lease was also amended so that Disney controlled advertising read over the public address system and flashed on the scoreboard. In addition, no advertising would be sold to any company that is a competitor of one of the Mighty Ducks' suppliers, advertisers or sponsors without the team's consent.

Advertising had been expected to generate 35% of the proposed budget--the second-largest source of revenue after ticket sales. "How do I build team value with all these hammers over the second-largest source of revenue?" Lichter asked.

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