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SBJ/20100322/Champions of Sports Business
Published March 22, 2010
It’s a postcard perfect day in the desert when a group of golfers spot Jerry Colangelo standing on the edge of the tony Arizona Biltmore Country Club.
“Hey, isn’t that Jerry?” one of the golfers shouts from across a wide fairway. “Jerry, how have you been?”
Colangelo returns a friendly greeting. Such recognition comes easy and often for the man who was instrumental in putting professional sports on the map in Phoenix.
four decades in the valley, Colangelo has owned the
NBA’s Phoenix Suns, brought Major League Baseball to town, built two
state-of-the-art facilities, won one world championship and, through his leadership,
returned glory to the once-tarnished
Inside Colangelo’s comfortable office overlooking the golf course is evidence of his achievements: a replica of the 2001 World Series trophy and a hefty John Wooden Keys to Life trophy. Harder to display is his distinguished reputation as a hands-on operator, working many times ahead of the curve. During his 40 years with the Suns, Colangelo ran all phases of both the basketball and business sides of the franchise. He was general manager and head coach, sold tickets and sponsorships, brokered local television and radio deals, and, as Suns chairman, played a pivotal role in building the team’s arena.
He set a new example for sports executives for the future.
“He was conversant with every aspect of franchise operation, from the basketball side and crossing over into the business side,” said NBA Commissioner David Stern. “He understands every aspect of franchise operation, including the fact that for the franchise to grow, it has to be a key part of the community.”
Colangelo arrived in Arizona in 1968, at the age of 28, to become general manager of the Suns. He was the NBA’s youngest general manager at the time but heeded a key lesson that he learned while helping launch the expansion Chicago Bulls in the mid-1960s — to watch, listen and learn.
On one of his first scouting trips for the Bulls, he sat near well-respected NBA scout Marty Blake and legendary New York Knicks coach Red Holzman and barely said a word to either man. For three nights, Colangelo sat mostly silent, watching Blake and Holzman evaluate players.
At the end of the trip, Holzman turned to Colangelo and told him he just might have a future in the business.
“Early in my career, I learned to keep my mouth shut and be a sponge,” Colangelo said. “Surround yourself with people who know things.”
What Colangelo lacked in experience during those early days he made up for with vision and instinct. Consider that before accepting the job with the Suns, he insisted on an option to buy the franchise. The owners of the team scoffed at the demand, given that Colangelo arrived in Phoenix with a wife, three kids and $300 in his pocket. But Colangelo prevailed, and some 20 years later, the Suns made good on the deal by granting Colangelo the first crack at buying the team.
When he was given the chance to buy the team in the mid-1980s, Colangelo saw the upside far better than any outside investor ever could have seen. When Colangelo and his partners at the last minute found themselves some $4 million short of the $44 million price, he was able to convince his skittish investors to dig deeper in their wallets because he knew the business so well.
“People said I was crazy to pay that much, but I believed in myself and I believed in the league,” Colangelo said.
He paid $44 million for the franchise in 1987; he sold it for $401 million in 2004.
Colangelo closed the Suns deal on Friday, Oct. 16, 1987. The infamous Black Monday hit the next business day, with the stock market plummeting more than 500 points.
“If I didn’t get that deal done then, it never would have happened,” Colangelo said. “The Suns probably would have moved, and then baseball would have never happened.”
Driving the value of the team was Colangelo’s then-novel plan to build the former America West Arena (now US Airways Center) backed by future revenue from suite and club-seat sales. It was one of the first NBA arenas to use premium seating and naming rights as a source of financing, and Colangelo delivered on his promise to the banks. The arena opened for the 1992-93 season, and the Suns, playing at the time in the 17th largest market in the NBA, led the league in revenue that year with $110 million.
“That is one of the highlights of my career,” Colangelo said. “We maximized every opportunity.”
Colangelo used a similar plan to bring the MLB Diamondbacks to Phoenix. In 1995, he led an investment group to buy an expansion franchise for $130 million. The fast growth of the Sun Belt city had convinced Colangelo and his partners that Phoenix could support a baseball team.
“We were catching the region on an upswing, and though I had a full plate, I was energized to do it,” Colangelo said.
Colangelo leveraged his influence and credibility with the Suns to bring MLB to Phoenix despite controversy surrounding the use of public funds to finance the new club’s needed ballpark.
“He was having extraordinary success in the NBA and at the same time he is able to bring baseball to Phoenix and get a new stadium built, and we all know how tough that is,” said MLB Commissioner Bud Selig.
The Diamondbacks had a robust season-ticket base of 36,000 during their early seasons, and the club spent lavishly to sign high-priced free agents. The efforts culminated in 2001, with a World Series championship in only the franchise’s fourth year of existence. It was a crowning moment in Colangelo’s career.
But the glory wouldn’t last.
By 2004, season-ticket sales had plummeted, and the team found itself $150 million in debt, much of it through deferred salaries to players signed under Colangelo’s watch.
Colangelo soon was embroiled in a dispute with his partners, and he was unceremoniously forced out.
“There was a lack of support and I stepped down,” Colangelo said of his departure from the Diamondbacks ownership group. It was the low point in Colangelo’s career.
Ken Kendrick, managing general partner of the Diamondbacks and an original investor in the franchise with Colangelo, declined a request to be interviewed for this article.
“Rather than build slowly, Jerry wanted to get as good as he could as fast as he could,” said Chicago White Sox and Chicago Bulls Chairman Jerry Reinsdorf. “It led very fast to a world championship, but he incurred so much debt in doing it … it ultimately led to him leaving. But you can’t take away a world championship.”
Leaving the Diamondbacks wasn’t the only notable development for Colangelo in 2004. It was that same year that he sold the Suns to Robert Sarver. He was diagnosed with prostate cancer in 2004, as well.
“It was a watershed year for me,” said Colangelo, who is in good health today.
The team transactions meant that for the first time in nearly 40 years, Colangelo was no longer directly operating a franchise. But it wasn’t long before he would have another chance to apply his patented hands-on style in running a major sports entity.
While Colangelo was dealing with his personal and professional
Stern turned to Colangelo, a trusted friend who had served as chairman of the NBA’s board of governors, to reshape USA Basketball. Colangelo would agree only if Stern met two conditions.
“I needed full authority and no budget,” Colangelo said.
Stern agreed, and Colangelo was named managing director of USA Basketball in April 2005. He wasted little time in revamping not just the roster, but also the attitude of the players. He met personally with each of the players to gauge their commitment. Typically, Colangelo also worked to secure sponsors and boost marketing of what became known as the Redeem Team, recapturing the gold medal during the 2008 Beijing Games.
now is chairman of USA Basketball and overseeing plans for the 2012
“Jerry had a vision from the day he came in, and in addition to his ability to articulate it, he deals personally with every player and every sponsor,” said NBA Deputy Commissioner Adam Silver. “Jerry brings credibility and class, and everything he has done has been first rate.”