03.24.06

Paul Allen’s Predecessor On The Blazers’ Mess

Posted in Basketball at 6:20 pm by

On the same day the Blazers announced the suspension of Darius Miles for blowing off a shootaround, team founder and former president Harry Glickman (above) has a guest editorial in the Oregonian.

Once the Rose Garden opened, there were some pretty good years. Then I started noticing changes in the way the Blazers managed their business. These changes were not only reflected in the poor character of many of the players they brought in, but also in how management responded (or didn’t respond).

Then I began to hear comments from longtime sponsors and business leaders that the Blazers were losing their community connections, which we had spent 25 years building. They were also frustrating City Hall by not advancing the Rose Quarter development. (Paul Allen acquired the Red Lion Inn and other adjacent properties, and received exclusive development rights on all the city-owned parcels adjacent to the Rose Quarter as part of a public/private partnership with the city.)

There were many other examples. It was becoming obvious the Blazers were losing their special place in the hearts of most Oregonians.

Today, we see the inevitable result: The Blazers are near the bottom in NBA attendance. In 1995, I believe we were fourth. There is no more telling statistic than the failure of the Blazers’ most loyal fans to renew their season tickets.

Allen got into this situation because of a series of decisions he made during the past decade or so. If his current financial difficulties are the result of a burdensome loan on the Rose Garden, it must be pointed out that his advisers and attorneys negotiated that loan based on clear criteria that Allen himself set.

Specifically, his only exposure was to be the amount of equity — the $46 million he invested. No other guarantees or collateral were available to secure the loan. Nothing at all was wrong with that approach because Allen and his advisers surely were fully aware of the consequences if he ever wanted to separate the Blazers and Oregon Arena Corp.

As a result, most of the experts told us that borrowing $167 million, without security from the owner, would be extremely difficult.

In spite of the challenges, a consortium of lenders was formed. And, as predicted by the experts, the terms of the loan not only required that all revenues from the sale of suites, club seats and arena advertising must be allocated to the arena corporation, but also that the Blazers must sign a long-term lease to assure the lenders they would always play in the Rose Garden.

Now, Allen and Blazers’ management are calling this the “worst arena lease in professional sports.” But this is not an accurate characterization, because the lease was negotiated between two companies wholly owned by the same person. The allocation of revenues was only a matter of satisfying the lender’s requirements, which were dictated by Allen’s desired financing structure.

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