SBJ/September 26 - October 2, 2005/Facilities

Little issues, big rift in Portland

The Portland Trail Blazers want an arbitrator to settle their fight with Rose Garden manager Global Spectrum over who decides such arena operations issues as the playing floor’s appearance, game-day security, ambulance services and broadcast rights for the public address system outside the facility.

The list of disputes, which include whether “Rose Garden” should stay on the Blazers’ home court and who should occupy a customer service booth, illustrates the tension level between a team accustomed to making its own arena decisions and a manager that it didn’t hire.

The Blazers want the Rose Garden’s name off the court, but Global Spectrum likes it there.
Global Spectrum took over management of the Rose Garden on Jan. 1 on behalf of Portland Arena Management LLC. The bondholders that own the arena formed that company after Oregon Arena Corp., Blazers owner Paul Allen’s in-house facility operations company, filed for Chapter 11 bankruptcy protection in 2004.

The Blazers contend Global Spectrum is violating the terms of the facility’s use agreement established by the federal bankruptcy court determining future arena operations. The team sent a letter to Portland Arena Management about three weeks ago stating its dissatisfaction and saying it wants to settle the matter through arbitration.

“These are all issues we feel we negotiated with the lenders after the bankruptcy, aspects we feel have been breached,” said J.E. Isaac, the Blazers’ vice president of business affairs and Allen’s former arena manager at the Rose Garden.

The letter also expressed the team’s dissatisfaction over Global Spectrum’s priorities in renovating the 10-year-old facility in the next four years, a project the bankruptcy court required to return the arena to a first-class building.

Mike Scanlon, Global Spectrum’s arena manager at the Rose Garden, said last Wednesday that Global’s response on behalf of the bondholders would be sent to the Blazers by the end of last week.

Global Spectrum will attempt to resolve its differences with the team without having an arbitrator clarify the terms of the use agreement, Scanlon said.

The Blazers say they own the rights to the logos and lettering used on the basketball court, Isaac said.

The team wants to remove the name “Rose Garden” from the court to maintain a “symmetry” in design after the Blazers removed a secondary logo from the court before the 2004-05 season, Isaac said.

The Blazers also say Global Spectrum is “charging us for things that are clearly required to be at no cost under the use agreement, such as security, police and ambulance services and connections to the mobile video studio,” Isaac said.

Four police officers and an ambulance, a cost Scanlon estimated at $1,000 a game, were provided to the arena free of charge when the Blazers controlled the building, Isaac said.

“They reimbursed themselves” under the previous lease arrangement, Scanlon said.

In addition, Global Spectrum runs announcements on upcoming events over the PA system outside the Rose Garden and the Blazers want to air music, Scanlon said.

“This is all small stuff, it’s like a fly on the elephant,” he said. “The fact remains that they filed bankruptcy. The tactics they’re using — the public and the industry are smart enough to see through this.”

Portland Arena Management is spending up to $15 million initially on Rose Garden upgrades, most of which is invested in creating new premium amenities and installing LED signs around the arena bowl.

The Blazers think Global Spectrum, in charge of the improvements, should replace the arena’s 18,000 seats and the scoreboard before improving the suites and club areas and selling advertising on the LED boards, and “enjoying the [revenue] of selling that inventory,” Isaac said.

“The fabric seats are in their 10th year, and should be re-covered or replaced,” he said. “The video screens are obsolete. The sound system is the original equipment and is obsolete.”

Global Spectrum plans to replace the seats and the scoreboard in the next two to three offseasons, Scanlon said.

“We’ve got four years of phases, and we’ve got to start somewhere,” he said.

“We took over the building on Jan. 1 and the seats didn’t magically become old and the scoreboard outdated,” Scanlon said. “We’ve put more money into the building in six months than they did in 10 years.”

Isaac countered that Oregon Arena Corp. had invested $20 million in capital improvements for the Rose Garden since it opened in 1995.

Isaac, however, couldn’t recall specific expenditures other than the acquisition of a temporary seating system that allowed the facility to convert more rapidly from basketball to hockey, a $3 million to $4 million project, and spending $500,000 to update security measures after the Sept. 11, 2001, terrorist attacks.

“The rest would’ve been a situation where we improved or repaired things over the course of the nine years we operated the arena,” Isaac said.

Scanlon can’t recall a similar dispute between a team and its landlord in his 12 years in the business, especially one involved in bankruptcy.

“This is a good lesson for any team that owns a building that is supposed to be run quasi-independently,” Scanlon said. “The teams and the buildings should protect themselves and have a clear path so it doesn’t get ugly. If it’s blended together, it’s tough to operate.”

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