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Samueli May Take Over Management of the Pond

Broadcom chairman's bid to run arena fuels speculation he wants to bring NBA to Anaheim.

November 01, 2003|Kimi Yoshino | Times Staff Writer

Anaheim wants to turn over management of the Arrowhead Pond to a company created by Henry Samueli, the high-tech billionaire who once tried to buy the Angels and the Mighty Ducks, city officials announced Friday.

If approved by the City Council on Tuesday, the deal with Samueli's newly formed Anaheim Arena Management would keep the city-owned arena's existing staff and create no extra risk for the city, officials said. Some wonder if it could even lead to something the city has long wanted: an NBA franchise.

"This is someone with demonstrated interest in franchise ownership getting into the venue management business," said David Carter, a principal of the Los Angeles-based Sports Business Group. "Does that potentially make them interested in the Ducks? Does it put them in play for an NBA team? Is this just the first domino for him and his partners to knock over in Orange County?"

Michael Schulman, managing director of H&S Ventures, the company that coordinates the Samueli family's charitable work and private investments, said the firm has no interest in buying the Ducks, an NHL franchise for sale by its founding owner, the Walt Disney Co.

Basketball, however, remains a top goal, though no one would say if Friday's announcement was a preliminary step in that direction.

"I think everybody believes the NBA belongs in this building," Anaheim City Manager Dave Morgan said. The Pond's general manager, Tim Ryan, agreed: "We're going to continually pursue every lead."

The city has also been focused on developing an 807-acre area around Arrowhead Pond and Edison Field that the city has dubbed the "Platinum Triangle." They envision shops, offices and luxury apartments similar to the area surrounding San Francisco's Pacific Bell Park.

Finding a new management company and ensuring financial stability has been part of that plan since the current manager, Covanta Energy, declared bankruptcy last year. The company, formerly called Ogden Entertainment, has lost money on the Pond for years.

"We want to be in a position to build toward the future," Mayor Curt Pringle said. "There's so many opportunities for what can take place here."

To make that happen, the city needs a "quality partner," he said.

But for now, city officials, Pond management and Samueli's representatives said their focus is completing the deal, which would transfer the contract from Covanta to Anaheim Arena Management. After the City Council vote, a Bankruptcy Court also must approve it.

Samueli's company would assume all operating costs and $40 million in debt. The city negotiated with Covanta and bankers to determine how much debt the new management company will take on.

Although the city owns the arena, Covanta paid for the building in 1993 and still owed $120 million for construction. The company also recorded $30 million in losses since that year because of a complex management fee arrangement. Under the new terms, there will be no management fee and the city is also no longer responsible for taxes that average about $230,000 a year.

"One of the beauties of the investment world is that what is a bad investment for some people can turn out to be a good investment for others," Schulman said. "We see it as a good opportunity."

Because of the restructured deal -- reduced debt and no management fee -- city officials said Anaheim Arena Management is likely to realize a profit soon. The city will receive a percentage of any profit Anaheim Arena Management earns.

"This a great deal for the city and the taxpayers of the city," Pringle said. "It maintains the good team and also ensures that oversight is with a local Orange County entity that really cares about the success of the county as a whole."

Samueli, chairman of Irvine-based chipmaker Broadcom Corp., is ranked No. 386 on Forbes magazine's list of the world's richest people, with an estimated net worth of $1.1 billion.

Samueli will continue to focus his time and energy on Broadcom and will not be involved in the Pond's day-to-day operations or management decisions, though he will have a role in deciding the arena's long-term uses, Schulman said.

The Samueli family has a history of philanthropy in Orange County. Henry and Susan Samueli, who live in Corona del Mar, have donated $20 million to a new Jewish community center in Newport Beach and a combined $50 million to the engineering schools at UC Irvine and UCLA, both of which bear his name. He has also donated more than $10 million toward the construction of a new concert hall and theater next to the Orange County Performing Arts Center.

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