Old Boys Network

February 25, 2013

All is quiet in Glendale as the Coyotes continue their slide through western Canada. Last year at this time, there was a potential buyer on the horizon and the Coyotes swept through the western Canadian teams like Sherman through Georgia. This year, that potential buyer has failed in his initial attempt to purchase the team and work his way through the morass that is Glendale politics and the team has thrown away two games in a row where they had a lead in hand.

Since I heard about Beacon Sports Capital Partners, LLC being involved in the request for proposals (RFP) process for the arena management process in Glendale, it’s gone really silent. Glendale mayor Weiers has publicly mentioned FOUR interested buyers, yet none have made a public appearance. Former Arizona Attorney General and participant in the Fiesta Bowl investigation Grant Woods has acknowledged his representation of an unnamed group and then gone quiet. Ice Edge guy and former Jamison group investor Anthony LeBlanc made a statement that he’d need a deal from Glendale similar to the one Hockey Partners negotiated and then dropped off the stage.

Former Coyotes suitor duo Kerry Reinsdorf and John Kaites have yet to say anything, but if Beacon is the middleman between Glendale and potential Coyotes buyers, you wouldn’t be crazy to figure their group is very much in the running for the team. Why?

Beacon and Reinsdorf in Glendale

I have mentioned the relationship between Michael Reinsdorf, his firm International Facilities Group (IFG) and Beacon before (click here) regarding their role in the Coyotes fiasco way back when the train was going off the rails and Jerry Moyes went to bankruptcy court with the team. The names of both Reinsdorf and Beacon come up with some regularity in the bankruptcy proceedings in documentation of what appears to be an orchestrated leak of proprietary information. The leak resulted in sanctions from the US Bankruptcy Court.

The IFG web site declares their participation in Glendale with the following prose:

IFG was retained to represent the City of Glendale during the negotiations, design, and construction of the arena. IFG’s role was to protect the interests of the City and ensure that Glendale’s investment was effectively managed.

It’s a bit of a stretch to characterize Glendale’s investment in the arena as “effectively managed” in anyone’s book. That said, IFG lists on their web site other Glendale projects.

Glendale Courthouse, a $42M project completed in 2010:

IFG is the Project Manager for the City of Glendale’s new Court Complex; the firm oversees the design-build design and construction process. IFG chose to utilize a “Bridging-Design” approach in order to maximize the City’s return of investment in the building while delivering the project in a compressed timeframe.

Renaissance Glendale Hotel and Conference Center:

The Renaissance Glendale Hotel & Conference Center, a joint-venture between the City of Glendale Arizona and John Q Hammons Hotels.  Located next to Jobing.com Arena and University of Phoenix Stadium, which was home to the 2008 Super Bowl. 

IFG was the City’s representative for the project with oversight responsibility over the Conference Center, Media Center, Television studios and Parking Garage.

IFG also lists the Diamondbacks and the Maricopa County Stadium District (owners of Chase Field) as clients. So, it’s apparent that IFG and Michael Reinsdorf are well connected in Arizona, it wouldn’t be much of a stretch to assume Jerry Reinsdorf and coincidentally John Kaites would enjoy the benefit of those connections as well as their own substantial connections lists. There’s nothing wrong with connections, nothing would get done without them. If the connections are used in a fashion that skirts fairness, however, then lines have been crossed.

Beacon and Reinsdorf in California

In August 2005, Beacon and Reinsdorf and IFG were named as defendants in a lawsuit (click here) brought by West Coast Arena Ventures, LLC (WCAV) for breach of a confidentiality and non-compete clause relative to a “high desert sports complex” that WCAV was trying to get off the ground. The suit was settled by November, 2006. I don’t know what the settlement was. Somebody with more time or resources could to navigate to the LA County Superior Court site, search for case “BC337982” and lay out the scratch for the documents.

The suit alleges that Beacon disclosed material, confidential facts to Reinsdorf and IFG causing the loss of a business opportunity for WCAV. The implication was that Beacon’s sharing of confidential data with Reinsdorf sunk the development of the sports complex WCAV was proposing and, I assume, rounding up funds and support to develop. I was unable to find any information of substance on the proposed sports complex, so it’s hard to guess whether it was a half baked scheme or not.

Gerald Sheehan, according to the suit, signed an agreement with the principals of WCAV (The Schwartz Group and Cambianica Associates Architects)  in January, 2004 on behalf of Beacon. That agreement was, ostensibly, to evaluate the potential of the sports complex project and assist in its development and it included a confidentiality agreement.

Beacon subsequently proposed that Reinsdorf and IFG be approached as participants and investors. Cambianica/Schwartz agreed to developing a relationship with Reinsdorf, but not without Reinsdorf signing some sort of confidentiality agreement. He did not sign such an agreement, according to the suit.

The suit continues to claim that Reinsdorf and related entities “elected to move forward and promote development concepts similar or identical to the Project” with, of course, Cambianica and Schwartz cut out of the deal. The suit states that Reinsdorf and IFG courted Palmdale to pursue the sports complex opportunity (is it the “Best of the West softball complex“?) after Beacon provided the proprietary information to them.

I don’t know whether there was a successful completion of the sports complex or not. I’m only presenting the facts of this suit in a “where there’s smoke” capacity. Also, since I don’t know the eventual resolution of the suit, it’s possible the entire suit was a sham and IFG/Reinsdorf/Beacon were entirely blameless.

Back To Glendale

Ironically, Jerry Moyes was called on the carpet four years later in August, 2009 by Judge Baum for leaking confidential documents related to the Reinsdorf bid for the Coyotes. Beacon and Michael Reinsdorf and IFG were involved in the deal from the jump.

The documents that were leaked concerned the millions of dollars of concessions that Reinsdorf was looking to get from Glendale as well as the relocation “out clause” Reinsdorf was demanding. It wouldn’t be much of a stretch to assume that Beacon provided direct advice to Reinsdorf despite being hired by the City of Glendale to determine the worth of the arena with the Coyotes as a disinterested third party. Reinsdorf was “outraged” that the details of the deal were floated for public consumption. (AZ Rep article)

By the way, it’s not likely the city would be interested in pursuing such a short term (5-7 year) “out clause”, having once negotiated a 20 year deal. More likely is a 10-12 year “out clause” that would maximize the chances for the Coyotes to rebuild their damaged fan base and start turning a profit.

Once the documents were leaked, Glendale claimed their ability to negotiate with another party, Ice Edge, was severely damaged. Glendale asked that the Moyes crew be held in contempt for providing the documents. Oddly enough, the ears of the Goldwater Institute perked up once the documents were public, beginning their harangue about use of public funds for hockey.

Today, I have no confirmation from anyone that Beacon is actually the arbiter of the arena lease deal in Glendale. Beacon’s Sheehan didn’t deny their involvement in Glendale when we spoke last week, he suggested I follow up with the city. The fact of the matter is that if Beacon is the firm pushing the RFP for the arena, it would appear that a Reinsdorf would have an unfair advantage in the bidding process. I’m not saying Jerry Reinsdorf would be a poor owner, there’s plenty of evidence to the contrary. My point is simply that at BEST, if Beacon is involved, the appearance of potential conflict of interest should eliminate them from consideration of involvement at ANY level.

True impartiality is probably impossible, but surely Glendale can do better.

Given the Arpaioan flair for the dramatic of new Glendale mayor Jerry Weiers, can we hope for some sort of public announcement during his State of the City speech this Thursday evening? Tune in to Glendale Channel 11 around 5:30 to see. I’ll be watching.