It takes money to make money, but Denver billionaire Philip Anschutz has gotten so good at pulling money out of unlikely situations, he's starting to look like the King Midas of 17th Street. When he's not out raising funds for Bob Dole's campaign or talking to the president of Mexico about buying that country's railroads, Anschutz is negotiating deals so sweet he may add another billion dollars to his net worth by this time next year.
The latest example of Anschutz's talent for making money when least expected involves the 49 acres of tumbleweeds Anschutz owns bordered by the Auraria Parkway, Speer Boulevard and the new Elitch Gardens. This dusty spread will be home to the Pepsi Center, a planned $150 million arena that is supposed to host the Denver Nuggets and the Colorado Avalanche by 1998. Just a few months ago, Anschutz and Ascent Entertainment Group, which owns the two teams, were involved in a nasty blowup over a botched deal to build the Pepsi Center on Anschutz's property and, in return, give the billionaire 50 percent ownership of the hockey team. After Ascent pulled a fast one and paid $75 million to have the former Quebec Nordiques all to itself, threats of lawsuits hung in the air and the jilted Anschutz announced that he was "devastated."
To make himself feel better, Anschutz entered into a partnership soon afterward with California businessman Edward Roski Jr. and bought the Los Angeles Kings hockey team for about $100 million. But a deal announced last week for the Pepsi Center site shows once again how the stars always seem to align themselves in Anschutz's favor: Ascent agreed to pay Anschutz a total of $35.7 million to acquire the site and bring their relationship to an end. The agreement includes $20 million for the land; $6.6 million to repay Anschutz for his share of the arena's development costs; a $5 million reimbursement after the Pepsi Center opens; and a lifetime luxury suite in the new sports palace. Ascent will also buy out Anschutz's 13 percent share of Elitch Gardens for $4.1 million.
"The rich keep getting richer," says one longtime Denver business executive who's been a keen Anschutz watcher for years. She speculates that Anschutz and Ascent have been negotiating ever since the original deal fell apart, even as Ascent leaked stories to the Denver daily newspapers claiming it was going to build the Pepsi Center on land behind Union Station that is owned by the Trillium Corporation. "I think this was in the cards all along," she says. "That's the way Phil works."
Not a bad settlement for a marriage that was never really consummated, especially since as recently as December, Ascent was offering Anschutz a mere $1 million to settle their differences. But the reclusive billionaire, who seldom appears in public and rarely grants interviews (he didn't respond to phone calls for this story), has a remarkable ability to get the best side of a deal. When Anschutz engineered a $1.8 billion buyout of Southern Pacific in 1988, the move was widely derided by those who thought the tired old railroad had already seen its best days. By simultaneously slashing the workforce and boosting rail traffic, Anschutz made Southern Pacific attractive to investors, and he reaped his reward last summer with the announcement that Union Pacific wants to buy out Southern Pacific for $5.4 billion and form the nation's largest railroad. Press reports speculated that Anschutz could make as much as $1 billion off the deal.
"There were years a lot of people wondered if that railroad was ever going to work," says one prominent Denver developer. "The guy has a Midas touch."
The sale of Southern Pacific is still awaiting government approval, but Anschutz has plenty to occupy himself while he waits for that to go through.
Anschutz first made a name for himself in the 1970s, when he discovered a huge oil and gas field--known as the Overthrust--on his family's sprawling ranch in Wyoming. He sold 50 percent of the ranch in 1982 for $500 million and used the money to invest in real estate and other business ventures. His holdings today cover a good chunk of downtown Denver, including the Tabor Center and the Anaconda Tower.
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He picked up the Pepsi Center property, an old railyard, when he bought Southern Pacific. Ascent paid about $10 a square foot for the land, a price that's now the going rate in the valley. But just two years ago Elitch Gardens paid less than half that price for its site, an indication of how property values have risen as the valley has become a hot spot for development.
Although Anschutz has contributed money to conservative religious causes, including a last-minute $10,000 to the group that pushed the anti-gay rights Amendment 2 in 1992, and has raised funds for Republican presidential candidate Dole, he's been criticized for his lack of involvement in Denver charities. While other local tycoons have made huge donations to the planned public aquarium along the South Platte River or to the University of Denver, Anschutz has little presence in the community. "You don't see a Phil Anschutz building or his name on anything around Denver," notes one observer.
The Anschutz family's two charitable foundations have total assets of just under $7 million, according to the 1994-95 Colorado Foundation Directory, and have handed out less than $1 million. Both figures rank the Anschutzes far down the list of Colorado foundations.
Moreover, recipients of the family's largess are just as likely to be political action groups as they are social-service organizations. In a recent year, according to the directory's listing of "typical" grants, the Anschutzes gave $10,000 to the Heritage Foundation, a conservative think tank in D.C., while giving $5,000 to the Food Bank of the Rockies.