Stan the Man

http://www.denverpost.com/null/ci_6318716?source=infinite

This is older – 2007 – but offers a bit of insight into the man. He learned a lot of his business practices from the Waltons, of course.

His profile over at wikipedia has been vandalized a bit.

A look inside Kroenke’s empire
By Greg Griffin and Robert Sanchez
Denver Post Staff Writer
POSTED: 07/08/2007 01:00:00 AM MDTADD A COMMENT

One of E. Stanley Kroenke’s first decisions as a vintner was to pour roughly $3.3 million of fine Napa Valley cabernet sauvignon down the drain.

Kroenke and partner Charles Banks drained 550 cases of the 2004 and 2005 vintages, about 40 percent of the total, last year after buying the tiny but highly valued Screaming Eagle vineyard.

The wine’s cultlike fans would have happily bought it, but the new owners believed it was not up to their standards. Disposing of the lower-grade wine improved the quality of the final product, Banks said.

“That was a tough decision to make, but it was the right decision. Nothing is worse than not delivering on a promise,” Banks said. “Having a partner like Stan, who was willing to stand by it, you can’t find people like that.”

Kroenke’s bold start in the wine business is emblematic of how the wealthy real estate developer and owner of sports teams throws himself into his ventures, friends say. It’s also an example of how Kroenke manages to make successful investments across a broad spectrum of industries.

Kroenke is one of the wealthiest – and most guarded – businessmen in the country, parlaying his marriage to Wal-Mart heiress Ann Walton and early real estate deals into successful runs in land development, professional sports, ticket sales and the launch of the Altitude Sports & Entertainment network.

The 3-year-old Colorado-based company airs programs mostly related to Kroenke’s five Denver-based franchises – most notably the Colorado Avalanche and the Denver Nuggets.

Now worth an estimated $2.1 billion, the elusive Midwesterner is a top developer of retail strip malls – often anchored by Wal-Marts or Wal-Mart Supercenters. He has recently expanded that reach into Colorado, where he has built or is building seven shopping centers.

“Even in the early days when I was in graduate school I had hoped to have the opportunity to work in Colorado someday,” Kroenke said in an e-mail response to Denver Post questions. “It brings to mind the old line that what’s important in real estate is location, location, location. In that regard, what’s not to like about Denver?”

The most generous descriptions of the 59-year-old portray him as one of the most visionary businessmen of his era. To critics, however, credit for Kroenke’s success goes less to his business skill than to his ability to exploit his Walton family ties.

Whatever the perception, there’s no argument about Kroenke’s financial success.

Over time, associates and close friends say, Kroenke has settled into new ventures, trying his hand in everything from Canadian cattle ranching to European soccer.

Nowhere is the Wal-Mart shroud being torn away more visibly than in Commerce City, where Kroenke unveiled a $71 million soccer-specific stadium this spring that is home to his Major League Soccer team, the Colorado Rapids, which he bought from fellow billionaire Philip Anschutz in 2004.

In addition to the stadium – which will play host to the MLS All-Star game this month and will serve multiple concerts yearly – the 917-acre development near the former Rocky Mountain Arsenal has 24 youth soccer fields (the most in the nation), 1 million square feet of planned retail and commercial space and Commerce City’s $31 million civic center.

“The deciding factor for this project was the kids. Soccer is a wonderful sport and having a place where thousands of young people can play the game and work to stay fit in a great environment is fantastic,” Kroenke said.

As for how people should view his many business activities, Kroenke said: “Personal recognition isn’t something I have been concerned with or thought about much. … I think if you work hard and are honest, then good things will happen.”

But Kroenke’s demand for privacy probably will be tested in the coming years as he expands his financial reach deeper into Colorado and overseas.

A traveling man

While Kroenke is a quiet figure, he still can be seen around his homes in Columbia, Mo., in Malibu, Calif., and in Denver, where he has a penthouse suite in the Pepsi Center – which he also owns. Kroenke also spends time with friends and business associates at his four ranches in Canada, Montana and Wyoming, where he hunts, fishes and helps build hand-made fences.

He also visits his three California vineyards, including a luxury resort for would-be vintners, and travels internationally. He recently visited China and France on wine-related trips.

Friends say Kroenke is a voracious reader – Westerns, biographies and historical novels are favorites. He sometimes reads past midnight and rises by 6 a.m. to work out before breakfast. When in Denver he enjoys private workouts with Nuggets trainer Steve Hess.

He’s fiercely dedicated to keeping healthy, forgoing breads and pasta for lean buffalo meat, fish and egg-white omelettes. One friend says Kroenke is so fit that his body-fat percentage is lower than most collegiate players who were taken in this year’s National Basketball Association draft.

In business meetings, Kroenke takes an interested but quiet role and relies on his employees to thoroughly debate subjects before bringing issues to him for approval.

During a meeting among Nuggets officials last winter, superstar guard Allen Iverson came up as a possible trade target. Kroenke had three words for his staff: “Go get him.” And they did.

A staunch Republican who gave $220,000 to the party in Missouri in 2000, Kroenke also is a major donor to the University of Missouri, where he earned graduate and undergraduate degrees in business and for a time attended law school in the early 1970s.

Even as his wealth grew, friends say he held to his small-town roots, refusing to move away permanently from the college town that he has called home for nearly four decades. His two children attended public grade schools in the city. His son Josh also played basketball for the Missouri team. His wife of 33 years (worth $2.6 billion on her own) lists herself as a “housewife” in federal election filings.

Josh, 27, is an analyst with Lehman Brothers in New York. Their daughter, Whitney, 29, is a documentary producer in California.

Enos Stanley Kroenke was named after St. Louis Cardinals greats Enos Slaughter and Stan Musial. One of four children of Alvin and Evelyn Kroenke, he swept floors and kept books at his family’s hardware store in Mora, Mo., in the 1950s and 1960s.

He attended high school in Benton County, where he excelled as both a student and an athlete. A forward on the high-school basketball team, Kroenke once scored 33 points in a game, a school record that stood for more than a decade.

“I’ve always had an affinity for sports. Early on I loved to listen on the radio to the St. Louis Cardinals with my grandfather,” he said. “As I grew up, I played baseball, basketball and ran track. I think, at their best, competitive sports teach many valuable lessons about life.”

Learning from the Waltons

Longtime friends are hard-pressed to remember a time when Kroenke dropped his guard. During jogs around Columbia in the 1990s, while friends joked and lagged behind, Kroenke would speed up and distance himself from the group.

“Some guys were real jokesters,” said Bob Stull, a former University of Missouri head football coach who ran with the group. “Stan was not one of them.”

He often went hunting with the late Bud and Sam Walton. During trips throughout the Midwest, Kroenke peppered the older Waltons about their business, about property development, sales and marketing.

“Stan was like a sponge, just trying to learn everything he could,” said David Glass, Wal-Mart’s former chief executive. “He was so interested in how businesses worked, even at a young age.”

Kroenke said the Wal-Mart founders had a strong influence on him.

“I watched how they did things and how they executed their plans. All of my mentors told me to find something I loved to do and try to be the best at it. I’ve been passionate about business, sports and real estate since a young age. … I got involved in my first sizable business venture in my late teens. It was risky but rewarding,” Kroenke said.

As an undergrad at Missouri, Kroenke worked at a student-owned clothing store in Columbia called Ladigo of London. In 1970, he borrowed a few thousand dollars from his father and became a partner with owner Bob Roper.

The shop was popular with students, and its owners earned enough to pay their school bills. Roper described Kroenke as “very reliable, hardworking and dependable.”

“He had good instincts about what it took to be successful,” Roper said.

When the partners sold the store in 1972, they made a profit on their investment.

Kroenke earned his MBA a year later and met Ann during a vacation in Aspen. By happenstance, she was a Missouri nursing student. They married in 1974.

In 1975, Kroenke took a job with Missouri retail developer Raul Walters, who had built some of Wal-Mart’s early stores. In taking the opportunity, Kroenke turned down a paid fellowship to earn a Ph.D. at Missouri.

Kroenke became Walters’ full partner in 1979, and the two developed more than 20 retail malls, many anchored by Wal-Marts, across the Midwest.

Though Kroenke learned valuable real estate skills that would help him later in his career, the men parted ways in 1985 and fought bitterly during the next decade over how to split their holdings. They settled their claims in 1994.

When Kroenke ventured out on his own in 1985, his dealings with Wal-Mart flourished. From 1990 to 2000, he collected $154 million in rents and fees from Wal-Mart, according to company filings.

Wal-Mart placed Kroenke on its board of directors in 1995, and he stayed there until 2000. His close ties with the company have sometimes drawn criticism from Wal-Mart adversaries such as the AFL-CIO.

Kroenke and Wal-Mart also have drawn fire for receiving hundreds of millions of dollars in public subsidies for their projects.

THF Realty, a St. Louis-based shopping-center developer in which Kroenke is a part-owner, received $117 million in tax breaks from local governments on 10 shopping-center developments from 1994 to 2006, according to Good Jobs First, a Washington-based group that tracks subsidies paid to Wal-Mart. Of that, $54 million went toward Wal-Mart stores.

The money, often in the form of bonds paid by future sales taxes, typically is spent on road and infrastructure improvements.

“Tax-increment financing is a mechanism that allows public and private interests to work together for the betterment of both sectors. The tax does not exist without the creation of the project,” Kroenke said.

THF, an acronym for “To Have Fun,” has grown rapidly since Kroenke started it as a roughly 50-50 partnership in 1990 with St. Louis developer and friend Michael Staenberg. Its revenues were $300 million in 2006, and it employs 100 people.

About 50 percent to 60 percent of THF projects have Wal-Mart or related tenants, Staenberg said.

“We always give them the opportunity to be part of our projects, but there are no special deals,” he said of Wal-Mart. “The reason we get deals is that if we tell people we’re going to do something, it gets done. … (Kroenke) wishes that people would recognize that he’s a successful businessman on his own.”

Kroenke once told developer Jim Gordon, with whom he has built apartments and retail centers, that “deals are like driving fence posts – you have to hit the post over and over. … The key is to just stay with it every day.”

Kroenke appears to be having more fun, however, with his more recent ventures. He and Banks are preparing to release their first wines from their Jonata vineyard in Santa Barbara, Calif., in September.

They also have acquired, with another partner, the Meadowood vineyard resort in St. Helena, Calif. For $175,000, members learn winemaking between golf and croquet games.

Kroenke and Banks also own a resort hotel and spa in Hawaii and are developing a hotel in San Miguel, Mexico. They have several other hotel projects underway in the U.S. and Mexico, Banks said.

“Stan is one of most intellectually curious people you’ll come across. He’s interested in a lot of things,” Banks said. “He throws himself into it, and he fully understands every aspect of it. It’s not micromanaging; it’s microcomprehension.”

Persuaded Rams to move

Kroenke’s true passion is sports. In 1994, a year after he tried and failed to bring an expansion football team to St. Louis, he persuaded the floundering Los Angeles Rams organization to relocate to the Gateway City and bought a minority stake in the team.

Six years later, as his development firm began to take off, Kroenke bought hockey’s Colorado Avalanche, basketball’s Nuggets and the Pepsi Center (an original offer from his brother-in-law and neighbor, Bill Lauire, fell through) from Liberty Media in a deal valued at roughly $450 million.

Since the purchase, the Avalanche won a Stanley Cup, but its performance at the box office and in the standings has declined. The Nuggets, however, have climbed in popularity, most notably in 2003 with the drafting and signing of forward Carmelo Anthony, then last season with Iverson’s arrival.

But even with small-time players, Kroenke has his say.

“We’ll want to get a guy in for a 10-day contract, and Stan will want to know who he is, where he’s from, what’s his style of play and how we think the player will fit with the team,” said Mark Warkentien, the Nuggets’ vice president of basketball operations.

In 2002, Kroenke bought the Colorado Mammoth indoor lacrosse team. Two years later, he bought a stake in the Colorado Crush indoor football team – co-owned by football Hall-of-Famer John Elway and Denver Broncos owner Pat Bowlen.

“When I bought the Avalanche, Nuggets and Pepsi Center, we had imagined ways to more fully utilize this unique and wonderful building. The acquisitions of the Rapids and Mammoth, and the Crush partnership just seemed to make sense and came along at the right time,” Kroenke said.

Building a home for Rapids

Kroenke bought the Rapids, a virtual unknown in the soccer world, in 2004. Until this season, the team played at Invesco Field at Mile High, where crowds barely filled a quarter of the 76,000 seats.

At once, Kroenke began plans for a new stadium, settling on Commerce City in part because of its location near Denver International Airport and, possibly most important, the city’s willingness to support tax- increment financing.

Commerce City voters approved a $64 million bond sale to cover part of the $93 million being spent on infrastructure improvements in and around the development.

Advisers to Kroenke say his play for the Rapids and the new stadium were inspired by his travel overseas – particularly Europe – where he witnessed fervor over the sport.

Kroenke was so enamored with the intimacy of some stadiums that he became personally involved in the design of Dick’s Sporting Goods Park, telling architects to change the stadium’s flat roof to one that more resembled metallic mountains rising from Commerce City’s arid fields. Fans, called “supporters,” are encouraged to wear face paint, bang drums and blow horns at games, as is customary during European matches.

And Kroenke took his soccer expansion a step further. After announcing this year a training partnership with the storied north London team Arsenal, Kroenke became the fifth American to buy into an English Premiere League team, purchasing a 12.2 percent stake in the club and holding an option to buy 50 percent of Arsenal Broadband Ltd., which charges fans to watch games or extended interviews.

The purchase has stirred fear over whether Kroenke would attempt to buy out other minority owners in an effort to take over the team. One team official who supported Kroenke resigned his post in part because of what he saw as the club’s unwillingness to support the new owner.

“It’s the hottest issue on the table today as it relates to business for the football industry here in Europe and the U.K.,” said Denver sports- marketing expert Dean Bonham from his London office.

But perhaps Kroenke’s boldest moves so far have come off the field.

In 2004, Kroenke dropped the Fox Sports Network, which had delivered games of his teams to more than 2 million households across the mountain West, and created his own network called Altitude Sports & Entertainment.

And this year, he unveiled TicketHorse, a one-stop ticket service that serves all events at Kroenke’s soccer stadium and at the Paramount Theatre, which he also owns. While small compared with TicketMaster, TicketHorse charges roughly $3 less for handling fees and could expand to serve Avalanche and Nuggets games when those teams’ TicketMaster contracts expire in 2009.

New ventures costly, risky

Kroenke Sports Enterprises officials say Kroenke’s plan is to control the door-to-door experiences that fans have with his franchises.

“Ultimately, we want the success or failure of that fan’s experience to begin and end with us,” said Kroenke Sports executive vice president Paul Andrews. “We can get you that ticket to the Rapids game; we can get you inside a great stadium; we can get you out of the parking lot quickly after the game; and when you get home, you can watch the highlights on TV.”

The new ventures are costly, as well as risky. It could take 10 years and more than $100 million for the Altitude network to become profitable, Bonham said. Other team owners have had mixed results with their own networks.

Altitude is operationally profitable and meeting or exceeding its early revenue and cost targets, network chief executive Jim Martin said. Ultimately, the goal is to grow and cultivate a devoted fan base that will spend more on live games and merchandise, he said.

Kroenke brushes aside a suggestion that Altitude is his riskiest venture.

“All business deals have an element of risk. We just felt a few years ago was the right time to start our own television network,” he said. “We are pleased with the results to date. This was a major investment for the company, but our fans and affiliates seem pleased. We are excited about the potential for growth and reaching even more people in the region.”

Staff writer Greg Griffin can be reached at 303-954-1241 or ggriffin@denverpost.com.