Six years after swooping in to town to rescue the Nuggets and Avalanche, the unassuming Missouri billionaire has transformed Colorado’s sports scene, established a business model for the industry’s future, and become the most powerful sports figure in the state. He just won’t tell you about it.
By Stewart Schley
In real estate, three things matter, and talking isn’t one of them. Enos Stanley Kroenke of Columbia, Missouri, is many things, but foremost among them he is a real estate developer, and a very successful one, which is one explanation for the why the most influential team owner in one of the best sports markets in the country is about as notorious a figure as the 15th player on a 15-man National Basketball Association roster. In a city where previous Nuggets owners like Red McCombs and Sidney Schlenker were drawn to the spotlight, Kroenke is dry toast, black coffee, in-bed-by-10-p.m. dull by comparison. People who know him go blank trying to come up with colorful anecdotes or lively descriptions. “A perfectly pleasant person,” says Don Elliman, a former Kroenke lieutenant. “Quiet,” says Wendy Aiello, a Denver public relations consultant who has worked for Kroenke and his wife, Ann. “Very cordial,” offers Jeff Gordon, a columnist for the St. Louis Post-Dispatch newspaper.
What does matter in the business of real estate are money, location and timing. Those attributes Stan Kroenke has. The money part is well-catalogued by nearly article ever written about the 58-year-old Kroenke. Forbes estimated his personal wealth in 2005 at $1.8 billion, most of it reflecting the “location” part of the real-estate equation: Kroenke has investments in shopping centers, buildings and realty management agreements in highly trafficked retail corridors stretching from Pennsylvania to Steamboat Springs to Malibu, California. THF Realty, the privately held company Kroenke founded with a partner in 1991 (the name stands for “To Have Fun”), manages 100 or so properties encompassing 20 million square feet of space. When he’s not dispatching subordinates to hash out rights-of-way agreements and zoning deals with city councils for new Wal-Mart locations and roadside malls, Kroenke has shown a fondness for adding personal holdings like a large stake in the St. Louis Rams football team, a fly-fishing ranch in British Columbia, and most recently, an interest in Screaming Eagle Winery in California’s Napa Valley, which produces an acclaimed Cabernet Sauvignon that goes for as much as $1,000 per bottle.
On the timing side, the soft-spoken Midwesterner has exhibited an instinct for knowing when to strike, and a willingness to pounce quickly. On the July morning in 2000 when Kroenke was introduced to Denver as the new owner of the Denver Nuggets, the Colorado Avalanche and the Pepsi Center arena that both teams called home, few employees of the teams who arrived at work even knew who Kroenke was. “I was told to call a press conference in one hour,” recalls Brian Kitts, who managed media relations for the teams’ owner, Ascent Entertainment Group Inc. “I asked Don Elliman who the buyer was. I had no idea.”
Kroenke came out of nowhere to complete a deal that had soured twice, leaving the teams twisting in a sort of corporate no-man’s land where dysfunction prevailed. The company that cashed Kroenke’s $420 million check for the teams and the Pepsi Center was Liberty Media Corp., the cable TV investment firm based in Douglas County and run by cable impresario John Malone. But Liberty was only a temporary resting place for the sports teams and their lower-downtown sports palace. Liberty had inherited the Nuggets and the Avalanche as part of Liberty’s acquisition of Ascent Entertainment Group Inc., a badly conceived amalgamation of television pay-per-view operations and supposedly synergistic sports teams that had hemorrhaged money since being spun off by a Maryland satellite communications provider, Comsat Corp. Under pressure from shareholders, Ascent put the Denver teams and the arena on the market in 1999, attracting the first of two doomed offers.
At that time, the name “Kroenke” was hardly recognized in Denver or anywhere outside of Columbia, Missouri, where Stan Kroenke was busy building a real estate empire, cheering on quarterback Kurt Warner from box seats at St. Louis Rams games, and helping his son, a promising basketball player at Columbia’s Rock Bridge High School, sort through college offers. Even so, Kroenke probably wouldn’t maintain a part-time residence at the Pepsi Center today if it weren’t for the first of Ascent’s two failed attempts to sell the team.
The would-be buyers in the summer of 1999 were Missouri billionaires Bill and Nancy Laurie, who offered Comsat’s CEO Charlie Lyons roughly $400 million in cash for a chance to own two professional sports franchises in a city that displayed unusual fervor for its teams. Lyons, feeling pressure to make a deal, accepted. Within days, shareholders were in full revolt, claiming the $400 million price deeply undervalued the teams and Ascent’s $170 million Pepsi Center. Comsat’s board of directors took the unusual step of unraveling an agreement that had been blessed by the company’s top executive. Comsat’s board fired Lyons, the Lauries refused to increase their bid, and Ascent was left with two professional sports franchises it badly wanted to sell.
There was no way for outsiders to know it at the time, but despite the deal’s failure, the Denver-to-Missouri connection hadn’t been severed altogether. A relative and neighbor of the Lauries, Kroenke had followed the failed transaction with interest from the very start. Kroenke’s wife, the former Ann Walton, is Nancy Laurie’s sister. The two women are heirs to a colossal fortune handed down by their father James “Bud,” Walton, the brother of Wal-Mart Stores Inc. founder Sam Walton and a co-founder of the retail goliath.
The brother-in-law of the man who had come close to buying the Denver Nuggets and the Colorado Avalanche knew a few things himself about valuing assets, particularly when they included a real-estate component in a fast-growing part of a city. A former high-school hoops player, the father of a college prospect and the co-owner of a professional football team, Stan Kroenke also knew something about sports. His brother-in-law may have walked away from a chance to buy into Denver’s professional sports market, but Kroenke’s interest had been piqued at just about the time that Ascent was preparing again to try again to sell its sports interests. The presumed buyer this time, Denver banking executive Donald Sturm, came armed with a superior bid – roughly $460 million – and seemed destined to get a deal done. (Ascent, having agreed in principle to Sturm’s offer, even allowed him to approve a contract extension for Nuggets coach Dan Issel.) But Sturm’s refusal to agree to a city demand for a guarantee to keep the teams in Denver for at least 25 years negated an agreement for the second time. Finally, in February 2000, Liberty agreed to buy all of Ascent’s assets for around $750 million, even though Liberty had little interest in owning two cash-engulfing sports teams. (Instead, Liberty liked Comsat mainly for its promising hotel pay-per-view operation known as OnCommand Corp.) Back in Missouri, Kroenke was now running the numbers seriously on the idea of acquiring and expanding a professional sports company in Denver. Just five months after buying up Ascent Entertainment, Liberty Media had wrapped up negotiations with the reserved but determined investor from Columbia. Stan Kroenke had to outmaneuver a rival bidding group backed by investor George Gillett and legendary ex-Bronco John Elway, but on July 6, 2000, he had his teams, his arena and his name on a new company, Kroenke Sports Enterprises.
The name Enos Stanley Kroenke was inspired by two stars of the St. Louis Cardinals baseball team of the 1940s, Enos Slaughter and Stanley Musial, both known as scrappy, hard-charging ballplayers. The name seems to have been prescient. The son of a second-generation immigrant from Germany who lived in a tiny hamlet in Benton County, Missouri, Stan Kroenke was scratching out monthly profit-and-loss statements for his father’s lumber business before he was 10, according to published articles. He made his first real estate investment in the 1970s, launching a clothing store in Columbia not far from the campus of the University of Missouri, where Kroenke had attended school on an academic scholarship, earned a Master of Business Administration degree, and met the woman he would marry. Extremely guarded with the media about his family and his personal life, Kroenke is especially resentful of the suggestion, frequently cropping up in press reports, that his business success is partly attributable to his marriage to a wealthy heiress. In one of the few revealing comments about his personal life that he has made to a reporter, Kroenke reminded the basketball writer Dan Wetzel in 2003 that when he met his wife, neither of their families had amassed the sort of wealth they possess today, and both clung fast to the sort of small-town values that had been part of their upbringing. “Some people don’t understand that,” Kroenke said.
At the same time, there are certainly close ties between the Walton and Kroenke families that have been helpful to Kroenke’s real estate business. Many of Kroenke’s retail-business developments, such as a planned retail complex now under way in Columbia, include or are anchored by Wal-Mart stores. The combined wealth possessed by Stan and Ann Walton Kroenke – amounting to more than $4 billion, according to Forbes – also played at least a minor role in sealing Kroenke’s original deal to buy the sports teams from Liberty Media. When Kroenke purchased the Denver sports properties in 2000, Ann Walton Kroenke was listed as a guarantor in agreements with the city of Denver spelling out financial qualifications the city required to approve the sale of the teams.
But there is no doubt that Stan Kroenke is the mastermind behind the transformation of Kroenke Sports Enterprises into what some regard as a model for the modern-day spectator sports industry. Although he gives wide latitude to senior executives to run day-to-day affairs, Kroenke has set out the strategy for developing a far-reaching regional sports and entertainment company, and he keeps close tabs on his growing sports industry investment. (Paul Andrews, the top-ranking executive at Kroenke Sports, says he talks or communicates by e-mail with Kroenke several times a day.) Since acquiring the Nuggets, Avalanche and the Pepsi Center in 2000, Kroenke has done what real estate developers tend to do: He has built out. In July 2002, he purchased a money-losing National Lacrosse League team from Washington D.C. and transformed it into the league’s top-drawing team, the Colorado Mammoth. In September 2004, Kroenke bought from fellow Colorado sports industrialist Philip Anschutz the Colorado Rapids of the fast-growing Major League Soccer organization, and is now sharing with Commerce City the costs of building a new soccer-only stadium and surrounding retail complex. With Broncos owner Pat Bowlen and Elway, Kroenke owns a minority share of an arena football team, The Colorado Crush, that plays at Kroenke’s Pepsi Center. He has added well-liked live entertainment facilities in the form of Denver’s Paramount Theatre and, in a joint venture with concert promoter Clear Channel Entertainment, the outdoor City Lights Pavilion amphitheater, where this summer, performers like Fiona Apple and The Fray will take the stage. Including live sports games, concerts and events like “Monster Jam,” the Pepsi Center hosts close to 270 events per year, says Kitts, Kroenke Sports’ director of marketing and public relations. Much more so than Pat Bowlen, whose beloved Broncos perform just 10 times at Invesco Field each season, Stan Kroenke is the city’s most prolific provider of live sports and entertainment.
Some associates and sports industry figures believe Kroenke’s boldest move, however, was the decision in the February 2004 to launch a regional TV network that features Avalanche, Mammoth and Nuggets games as its programming cornerstones. The idea itself isn’t novel – team owners in several markets have launched similar networks – but it’s expensive and filled with risk. It could cost well over $50 million to develop the network before KSE begins to generate an operating profit, according to Dean Bonham, a well-known sports industry marketing advisor based in Greenwood Village. With the TV network, Kroenke is entering a world that has little resemblance to the business of developing real estate or running sports teams, and hasn’t always been kind to owners. The owner of the Carolina Bobcats NBA expansion team, Bob Johnson, shut down a struggling regional TV network last summer after less than a year on the air – an event that was doubly surprising given Johnson’s history as a successful cable TV entrepreneur who founded the cable network BET. In choosing to launch his network, Altitude TV, Kroenke turned down a rich TV rights premium offered by Fox Sports Net Rocky Mountain, which had aired Avalanche and Nuggets games in the past and was anxious to preserve a key part of its program lineup. If there was a signature moment in Stan Kroenke’s six-year tenure as a team owner in Denver, turning down a sure source of profit for a possible bigger upside down the road was it.
Elliman, the former publisher of Sports Illustrated magazine and the president of Kroenke Sports Enterprises until he retired in 2004, says the Altitude decision underscored two Stan Kroenke business principles. The first is to invest for the long term. “If he’d had a shorter horizon than 10 years I’d have voted to do the Fox deal,” Elliman says. “But because he doesn’t have that, he opted to go a route that has a greater upside and will create better equity for the franchise.” The second principle is to negotiate from a position of strength. In the talks leading up to Altitude’s launch, Kroenke made it clear to Fox officials he was serious about launching a network. Kroenke’s approach, says Elliman, was “never to bluff. Don’t ever point a gun unless you’re prepared to pull the trigger.”
Kroenke may have pulled the trigger that created Altitude from his outpost in Columbia, but in keeping with a hands-off management approach, he left the wheeling and dealing to his Denver staff. Jim Martin, a TV industry veteran who is Altitude TV’s president, handled the Fox negotiations personally. Kroenke wasn’t present at any of the meetings to discuss Fox’s rights bids, according to Tim Griggs, the affable vice president and general manager of Fox Sports Net Rocky Mountain.
With the TV network, Kroenke has assembled a sports-industry trifecta: He owns competitive teams, buildings they play in, and their main media conduit to fans. Controlling multiple assets that employ a shared corporate infrastructure handling ticket sales, sponsor recruitment and building operations gives Kroenke unusual economic leverage the sports industry historically has lacked. Sports industry experts regard Kroenke Sports as a model for a new type of sports investment approach that’s more business-minded and less of a hobby for rich people. “It’s much more sophisticated today,” says Bonham, whose firm does consulting work for Kroenke Sports. “Somebody like a Stan Kroenke will buy an NBA franchise or will be a substantial owner of an NFL franchise. He’ll enjoy those sports, but at the same time he’s sophisticated enough and his people are sophisticated enough to know two things: One, you can lose a heck of a lot more money today than if you were to have done it 20 years ago. And conversely, today you also can make a lot more money that you could 20 years ago.”
The multiple-asset, shared-infrastructure formula has helped Kroenke Sports Enterprises weather some of the unpredictable elements of sports ownership, like the National Hockey League player lockout that kept the Pepsi Center dark and empty during nights when the Colorado Avalanche would have been playing in the 2004-2005 season. Unlike the owners of the Vancouver Canucks, Phoenix Coyotes and other NHL teams that announced staff layoffs because of the lost season, Kroenke Sports, which has close to 400 Denver-area employees, was able to reassign employees to other positions during the lockout, says Paul Andrews, the executive vice president and chief marketing officer of Kroenke Sports Enterprises.
With the company’s owner rarely seen in public, the 41-year-old Andrews, a former Aurora High School student who started his sports-industry career selling Nuggets tickets over the telephone, has emerged as the face of Kroenke Sports in Denver. Andrews is responsible for bringing in revenue to Kroenke Sports Enterprises by overseeing ticket sales and courting corporate sponsors like Coca-Cola, which signed in April as the first announced sponsor for the new Rapids stadium in Commerce City (a deal that makes Invesco Field the only major-league sports facility in the metro area not named after a beverage). In addition to serving as Kroenke Sports’ top executive – Kroenke hasn’t named a new president since Elliman’s departure – he is a proud caretaker of the Pepsi Center, which has been named the most “fan-friendly” sports arena in the country two years running in a USA Today poll. “I want you from the second you park that car to the second you leave to have a pleasant experience,” says Andrews.
Executives say the same corporate mission will influence the way things work at the soccer complex Kroenke Sports is building as a focal point of Commerce City’s Prairie Gateway development. Renderings of the approximately 20,000-seat stadium, which opens next year, display a dramatic succession of angled steel panels jutting above seating areas on each side of the stadium to resemble the pitch of a mountain peak. Flanking the stadium are 24 playing fields for youth soccer and lacrosse teams that could accommodate as many as 500,000 kids annually. The plan represents a typical Kroenke development strategy: surround an anchor tenant with supporting resources that draw crowds and feed into the larger whole. And nestle the whole thing in a ready-to-explode suburban setting adjacent to easy highway access. The idea behind the dedicated soccer stadium is to create a wholly different experience than what Rapids fans are accustomed to at Invesco Field, where even a healthy crowd of 20,000 seems sparse within the 70,000-seat facility. “Twenty-thousand people at Invesco feels absolutely empty,” says Jeff Plush, a former sports talent agent who helped Kroenke Sports launch a marketing strategy for the Mammoth and has been named vice president and managing director for the Rapids. At the new soccer complex, where the pitched roof is designed in part to produce a resonant echo, Plush says the crowd will be louder and the energy level elevated. All of which should feed back into a mantra that’s recited often at Kroenke Sports: “Sports teams win championships in full buildings,” says Andrews.
That’s been proven twice in the case of Kroenke’s Avalanche, which owns not just two Stanley Cups (one was earned under Kroenke’s ownership, in 2001) but the league record for consecutive sellouts. A championship is lacking for the Nuggets, a team that plays a game close to Kroenke’s heart. An affinity for basketball has led Kroenke to take a much more active role in the Nuggets than the Avalanche, which is helmed by arguably the NHL’s most gifted general manager in Pierre LaCroix. Kroenke orchestrated in 2005 the mid-season hiring of Nuggets coach George Karl, who has an investment with Kroenke in three Midwestern athletic clubs. And after refusing to extend the contract of Nuggets general manager Kiki Vandeweghe during the latest NBA season, Kroenke dumped Vandeweghe days after the team was ousted from the first round of the league’s playoffs.
On the business side, even with a tightly woven array of assets and an efficient approach to sharing underlying resources, running sports teams generally doesn’t generate lofty profit margins. Most of the economic upside comes instead from steadily increasing asset values. (The sports investor Red McCombs, for instance, acquired the Nuggets in 1982 for $4 million and sold the team four years later for more than $20 million.)
Sports industry analysts believe the value of Kroenke’s mainstay teams, the Nuggets and Avalanche, have risen nicely since Kroenke plunked down roughly $420 million for the franchises plus the Pepsi Center in 2000. Forbes thinks the Nuggets franchise was worth about $283 million last year, and the Avalanche was valued at $246 million even before a new NHL collective bargaining agreement made owning a hockey team a more stable business proposition. The combined value of Kroenke’s investments in an expanded portfolio of teams, plus the TV network, plus the Pepsi Center, could approach $1.5 billion within five years. Not that Kroenke seems eager to cash out anytime soon. “Stan is a buyer and holder, not a trader,” says Elliman. “He expects to be the owner of these franchises for many years to come.”
Whether Stan Kroenke makes another fortune in the sports business isn’t terribly important to the loyal fans who buy the jerseys, pack the house and scream at opponents, or to the newspaper columnists who have branded Kroenke “Silent Stanley” for his relative inaccessibility. To the sports fan, Kroenke is reviled or praised based on any hundreds of considerations the owner can’t pretend to control. To the pundit, he’s measured on the basis of how effectively his personnel decisions and purse string generosity translate to on-the-court (or on-the-ice) success. Kroenke has been harshly criticized by Rocky Mountain News columnist Dave Krieger for withholding a contract extension from Nuggets general manager Kiki Vandeweghe throughout the most recent NBA season, but roundly praised elsewhere for supporting competitive teams and helping to bring the NBA All-Star game to Denver in 2004. It’s doubtful he cares much either way. As a developer, Kroenke learned long ago he’d have to contend enemies and doubters. Even in his hometown of Columbia, some citizens opposed to a new Wal-Mart planned by THF Realty have been highly critical of Kroenke: “Kroenke’s greed endangers Columbia schoolchildren,” ranted the headline on one letter to the editor in the Columbia Daily Tribune.
The one thing that can’t be argued is that the unassuming Missourian has brought to Colorado’s sports scene a stability it had lacked. Colorado sports fans with long memories will recall that before the troubled Ascent Entertainment, the Nuggets were owned by the duo of Peter Bynoe and Bertram Lee, partners who were badly under-capitalized throughout their tenure. They sold the team to Ascent, which then conducted the comically misguided auction process that, after two false starts, finally landed Kroenke and his crisply regimented, suit-and-necktie management team at the Pepsi Center. Since then, most of the news about the Nuggets and the Avalanche has either been about the teams’ performance, not the owner’s travails. These days, about the only time Kroenke Sports Enterprises makes the news is for wholly laudable reasons: The 400-employee company and its teams quietly have become large community contributors, donating more than $33 million since 2000 to organizations like the Boys & Girls Clubs of Metro Denver and The Childrens Hospital Foundation. In April, a Kroenke community outreach initiative tied to the Avalanche donated $1 million to 10 community organizations in one day.
“One of the things I like the most about Stan is that he brings the most credible, balanced ownership to the Nuggets that they’ve seen in a long time,” says Dan Price, a former Nuggets marketing employee who is the founder of local sports marketing agency Adrenalin Marketing. (Price’s firm provides graphic design services for Kroenke Sports.) There’s no better proof of that than in Kroenke’s own tightly knit family circle. Bill Laurie, spurned by Ascent Entertainment, instead ended up buying the St. Louis Blues of the NHL, lost millions of dollars, gutted the team’s roster, infuriated fans, and sold the franchise early in 2006 to Utah sports investor David Checketts. “Just tell people in Denver to be thankful they didn’t get Laurie,” says the St. Louis newspaper columnist Gordon. “Stan Kroenke is one of the more sane guys in the league.”
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