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Arizona Commerce Authority - AZ Business Magazine September/October 2011

Arizona Commerce Authority Aims To Bolster The Business Environment

The new kid on Arizona’s economic development scene is poised to shake things up. The Arizona Commerce Authority (ACA), a public/private entity, is not merely a name change, a rebranding of the Arizona Department of Commerce that over the years received its share of praise and an increasing level of criticism. And it’s not just a committee of top-shelf business leaders.

“It’s more than that,” says Don Cardon, president and CEO of the Arizona Commerce Authority. “It’s really a call to arms.”

Created by Gov. Jan Brewer through an executive order a year ago, and formally established by the Arizona Legislature early this year, the Arizona Commerce Authority is the cornerstone of the Arizona Competitiveness Package, a mix of tax benefits and incentives targeting quality job growth. The Arizona Commerce Authority’s leadership board consists of 17 of Arizona’s top CEOs who provide oversight and valuable input, with House Speaker Andy Tobin and Senate President Russell Pearce as ex officio members. Brewer chairs the Arizona Commerce Authority, and sports entrepreneur Jerry Colangelo serves as co-chairman.

The state’s university president, chair of the Rural Business Advisory Council and other committee chairs round out the balance of the 31-member ACA board.

The leadership board’s focus is on growing and diversifying Arizona’s economy and creating quality jobs throughout the state. The ACA works closely with such key partners as the Science Foundation Arizona, the three state universities, regional economic development groups and local communities.

The ACA is targeting these key base industries — aerospace and defense, renewable energy, science-technology, and small business and entrepreneurship. It is funded through existing payroll withholdings under an annual operating budget of $10 million, plus a so-called deal-closing fund of $25 million, some of which will be allocated for job training.

Michael Manson, an ACA board member and founder/executive chairman of Motor Excellence in Flagstaff, says he thinks the quasi-public agency will produce results for a number of reasons.

“By involving business leaders as we have and funding it by government we are removing some of the politics, enabling more performance and quicker response to commercial opportunities,” says Manson, who also founded PETsMART. “The pendulum swung a little far before the recession toward government regulations, but we need to get back to being more oriented toward entrepreneurial commercial opportunities.”

Mary Peters, president of Mary E. Peters Consulting Group, says the ACA draws from the successful endeavors of other states.

“We now have a mindset that Arizona is open for business,” says Peters, a former federal highway administrator with the U.S. Department of Transportation and former director of the Arizona Department of Transportation. “We’ll do what we can, especially in the aerospace and defense industries. If we’re not out there working to bring them to Arizona, other states will.”

Under the deal-closing Arizona Competes Fund, a company will need to achieve certain performance measures including average employees’ wages above the county’s average wage, health insurance coverage minimums and other requirements similar to the state’s existing job-training program. Backers say the fund will spur investment in projects in the targeted industries.

It replaced the inactive Commerce and Economic Development Council deal-closing fund, is controlled by CEO Cardon, and puts Arizona among the top one-third of states with aggressive economic development programs, supporters say.

Funds provided to growth projects must result in a net benefit to the state, consistent with the Arizona Constitution’s gift clause. In addition, an economic impact analysis by an independent third party will be conducted on all projects to determine potential return on investment benefits to the state. Furthermore, funding will be awarded with contractual provisions for performance and “claw-back” of funds for non-performing projects.

The Competitiveness Package extends the existing job-training program, a reimbursable grant program for job-specific training plans for employers creating new jobs or increasing the skill and wage levels of current employees.

Arizona’s Enterprise Zone Program is replaced with a new Quality Jobs Tax Credit for new job creation statewide. This tax credit is performance based on net new job creation and capital investment with specific eligibility qualifications for urban and rural businesses.

The tax credit for each new quality job created is $3,000 per year for three years and is limited to 400 new jobs per employer, per year. The program is capped at 10,000 new jobs per year. Experts say the program will increase Arizona’s competitiveness ranking to No. 3 from No. 9 in the Mountain West.

On the tax side of the equation, the electable sales factor for multistate corporations increases to 100 percent from 80 percent in equal increments from 2014 to 2017. A corporation that conducts business both in-state and out-of-state must apportion its income from business activity based on the ratio of property, payroll and sales in

Arizona compared to the corporation’s property, payroll and sales everywhere.

The corporate income tax rate is reduced by 30 percent to 4.9 percent from 6.97 percent in equal increments from 2014 to 2017. The change is expected to improve Arizona’s national ranking from 24th to No. 5, and from No. 6 to No. 3 in the Mountain West.

Arizona Commerce Authority

Under personal property, depreciation schedules are further enhanced for prospective acquisitions of commercial personal property on or after 2012.
Colangelo, partner of JDM Partners, explains his determination in agreeing to serve as co-chairman of the Arizona Commerce Authority.

“We will eliminate all distractions in pursuit of the ultimate goal — restoring economic vitality and stability to our state,” says Colangelo, former top executive of the Phoenix Suns and Arizona Diamondbacks. “Our new structure automatically eliminates the agency’s culture of entitlement and political sloth, and we have introduced what I believe to be a ferocious approach to both retaining and attracting business for the benefit of Arizonans, their families and our children.”

For more information about the Arizona Commerce Authority visit www.azcommerce.com.

Rick Welts, president and CEO, Phoenix Suns - AZ Business Magazine July/August 2011

Rick Welts, President And CEO, Phoenix Suns

CEO Rick Welts discusses how the recession has affected the professional sports industry, the sports industry’s role in economic development, the Phoenix Coyotes, and more.

Rick Welts
Title: President and CEO
Company: Phoenix Suns


How did the recession affect the professional sports industry?

It certainly put pressure on pricing. The Suns haven’t raised prices in three years now and certainly didn’t feel like we were in a position to. The types of products that we tried to create for ticket buyers, I think, were reflective of the economy and understanding that we’re probably going to sell more partial full-season tickets than we are our traditional season ticket. … We have our own market for resale tickets for people who own tickets and want to sell them to other people, which was an opportunity for people to recoup some of the investment they’d made on season tickets. And I think we saw that across all the teams in the Valley.

Are you seeing any positive changes in the economy?

Our television ratings were up significantly this past year, and I think one of the trade-offs between people coming to the arena and the television broadcast was that we actually had more people that were part of our audience there. We’re unique among the Valley sports teams in that we produce and sell all of our own television games. … I think definitely last season we saw an upturn in ad spending, which is important to us because it’s a big part of our revenue on our television broadcast.

What role do pro-sports teams play in economic development?

I’m a huge believer that we are the greatest brand ambassadors for Phoenix that exist out there. … So, when we have games on national television coming from Phoenix, Arizona, and you have beauty shots of our incredible community, it’s really a two-and-a-half hour commercial for our region, for the city of Phoenix.

What about the rift between the Goldwater Institute and Glendale over the Phoenix Coyotes?

It’s really an important topic that cities are going to have to wrestle with, and our city is going to have to wrestle with. … The economics of our business are not such that sports teams by themselves can afford to build a multi-purpose facility … But how we pay for that, what’s the appropriate investment, what’s the right way to go about doing it is a very fair discussion to have out there between sports teams, the public and our elected officials.

Why was it important to publicly announce that you’re gay?

We really want to have an open discussion about sexual orientation within this industry, which is a very difficult topic for us to get to. For whatever reason, we’re a little out of step with where most of our society is today in having that discussion and feeling comfortable having it. The purpose was to hopefully facilitate more of that discussion, which I can promise you has been the case. What I also said is that I wanted to at least have a person out there who young people could identify with who might give them a little hope that pursuing their passion, if it’s team sports, wasn’t something that was out of reach just because of who they were. … I’m at the very beginning of what’s going to be a very interesting journey for me on this. … I’m going to let the experience guide me.

Vital Stats: Rick Welts

    • Worked for the Seattle SuperSonics from 1969 to 1979 starting as a ball boy and ending as director of public relations
    • Started his tenure in the NBA league office in 1982 as director of national promotions for NBA Properties
    • Credited with the creation of the NBA All-Star Weekend concept in 1984
    • In 1998, Brandweek magazine named him Marketer of the Year for his role in creating and launching the WNBA
    • Left the NBA office in 1999 as the league’s executive vice president, chief marketing officer and president of NBA Properties
    • Joined the Suns as president and COO in 2002
    • Named president and CEO of the Suns in 2009

Arizona Business Magazine July/August 2011

Jerry Colangelo discusses Arizona's economic future and more. - AZ Business Magazine Nov/Dec 2010

CEO Series: Jerry Colangelo

Local businessman Jerry Colangelo talks basketball, Arizona Commerce Authority, the recession and more.

Jerry Colangelo
Title: Principal Partner
Company: JDM Partners

Did you always aspire to be in business or was it circumstances that put you on this path?
I transferred universities for basketball reasons, originally. I went to (University of) Kansas for a semester to play with Wilt Chamberlain. When he transferred — when he quit school — I transferred to (University of) Illinois. I had taken business courses in Kansas and when I transferred I brought those credits with me. But then I went into education. I thought I would teach and coach. But I had some business background and I was always a little bit of an entrepreneur, in terms of trying to make a dollar as a young kid, little businesses, etc. So it all kind of came together and I ended up being in the sports business, which means that I was being prepared all along.

How would describe the Valley’s business environment for entrepreneurs?
I think it is a good place, but it has evolved. I came to the Valley 40-plus years ago, when things were kind of wide open and there were many more opportunities, at least from my perspective. You had the ability to get things done because it was still a small town, to some degree. I’ve seen it quintuple in size, if you will, and we’ve had our ups and our downs in the Valley, but we’re trying to re-identify who we are and what our future holds. But there will always be room for entrepreneurs. There’s no question about that. I still believe in the Valley and the business climate, and it’s going to get better as our economy gets better, so there’s room.

How will the new Arizona Commerce Authority help the state’s economy?
I think the Commerce Authority is coming at exactly the right time. We have the opportunity to re-do how we do business in this state. It’s very important to retain the businesses that we have and it’s very competitive out there. The states are competing for big business and small business. We need to create a climate that is truly conducive for small and big business to come to Arizona. I think that with the people, the manpower that we will have on this authority, we have a chance to make that happen.

I’ve been a little outspoken about the fact that we need the Legislature to help with the funding — there’s no question about that — but at that point they need the business community to conduct the business of commerce. That’s what they know best. And if we can kind of separate that, we have a great opportunity to go out and be competitive. We’re going to need some things from the Legislature. Incentives — that seems to be a dirty word to some people, but it’s reality. That’s what’s happening in other states. That’s why they’ve had so much success. We have the models to look at.

For me, coming from the world of sports and every day you’re competing, it’s another game, it’s going for another win. This is a classic example of taking something that needed to be restructured, a little like my USA Basketball experience of late, when I took over the program and it was back on its heels. Today, we’re the defending gold medalists in every category, men’s and women’s, every age bracket. We have a chance with the Commerce Authority to basically do the same thing. We need to win a gold medal. We need to go out and compete with all the other states, because we have a lot to offer in this state. We just need some incentives. We need to look people eyeball-to-eyeball and sell them on why it’s important to come here, why they will enjoy not just the quality of life. We need to improve our education, we need to make it a better community in which it is conducive to do business here. If you get people jumping on the bandwagon, we have a chance.

How did the recession affect the sports industry in general and in the Valley in particular?

The recession has hit everyone and every segment of the marketplace. It’s interesting; when things are really bad economically, people still want to be entertained. … Vicariously, people follow sports teams because they once played, they have some affiliation, they love the association when their teams are winning. When teams are losing, that’s when they jump off the bandwagon. … We took a hit here in the Valley big time. Because we have so much emphasis on the construction industry, we were hit harder than other parts of the country — in the Southwest. No. 2, we are saturated right now with sports teams — no question about that. Everyone was affected. If we had continued with our growth, because we were on an incredible growth curve, we would have grown into maturity with all of our sports teams. What we have gone through have been some real challenges. But the good news is that the sports franchises have adjusted. They’ve had to adjust their policies, their attitudes toward discounts, etc. And that’s one of the things I’ve noticed in sports in the last two years is that they’ve made adjustments to deal with what’s taken place with the recession.

You are still involved in sports, but you’ve also moved on to real estate development. Some would say that’s a risky move. How do you respond to that?
People say when you make money in real estate is when you buy appropriately. There are a lot of deals out there to buy in — they say cash is king. Well, there are a lot of financial institutions sitting on a lot of cash, but they’re not really willing to let the consumer have that cash. So everyone is very hesitant right now. There is great opportunity in real estate. You have to be more specific about residential, commercial. My partners and I are involved in some iconic properties: the (Arizona Biltmore Golf & Country Club), the (Wigwam Golf Resort & Spa). In taking that step with distressed properties, we were able to take these properties out of bankruptcy. We believe we made a good buy at the time. We are making an investment in those properties, because we believe in the future. We believe things will get better over a period of time and that the real estate marketplace will continue to get better over a period of time. We’re sitting on 37,000 acres of property on the west side of Phoenix that have the ability and the approval to build a city of over 300,000 people. But this isn’t the time to start that project — that’s in Buckeye, Ariz. Do I think someday that will happen? Maybe in some way, shape or form; maybe not the way it was visualized five years ago, but are people going to continue to come here? I believe so. But back to the Commerce Authority; we have to bring jobs to Arizona. So by being creative and being aggressive going out to bring companies here — with high-paying jobs, not just service jobs — then we will continue with the growth pattern, because we have so many wonderful things to offer in terms of quality of life out here in the Southwest.

What advice do you have for entrepreneurs who are ready to take their companies to the next level?
Don’t be afraid to fail. … You have to take calculated risks. You have to be willing to step out on that board knowing you might get pushed, fall off. The worst thing that could happen is you do — you get up and you start over again. One of the things that has probably marked my career is that I started with nothing and I was never afraid to go back to nothing, but I was going to enjoy the ride. And so as it relates to my mix of experiences. Being competitive as an athlete prepared me for the business world, which was another competition. No one has batted 1,000 percent. Hall of Famers hit .300 — that’s only three out of 10. So why is it any different in business? You’re going to make mistakes, you’re going to learn from your mistakes. You can’t be afraid to fail, you have to be willing to take that kind of calculated risk. I’ve seen so many people, again in my lifetime, who have complained and whined about never getting an opportunity. And I would say to them, “Opportunity walked by you three or four times, but you never recognized it, because you’re so busy whining.” Get out there, don’t be afraid to compete and believe in yourself.

    Vital Stats




  • Became general manager of the new NBA franchise Phoenix Suns in 1968
  • Coached the Suns in the 1969-1970 and 1972-1973 seasons
  • Purchased the Suns for $44.5 million in 1987
  • Founder and owner of the Arena Football League’s Arizona Rattlers from 1992-2005
  • Played a key part in moving the NHL’s Winnipeg Jets to Arizona in 1996
  • Launched the WNBA’s Phoenix Mercury in 1997
  • Launched the MLB Arizona Diamondbacks in 1998
  • Served as chairman and CEO of the 2001 World Champion Diamondbacks
  • Chairman of the NBA’s Board of Governors from 2001-2005
  • Sold the Suns, Mercury and Rattlers to an investment group headed by Robert Sarver in 2004
  • Sold his controlling interest in the Diamondbacks to a group of investors in 2004
  • Elected to the Basketball Hall of Fame in 2004
  • March 26, 2004 proclaimed Jerry Colangelo Day in Phoenix
  • Named director of USA Basketball in 2005
  • Received the Spirit of Caring award in 2005 from the Valley of the Sun United Way
  • Inducted into the Suns’ Ring of Honor in 2007

Arizona Business Magazine Nov/Dec 2010

Cohesive Workplace

Cohesive Sustainable Workplace Environment

The summer of fun in Arizona has arrived. What are some of the exciting topics around the water cooler this season? Consider these: A splendid May that has seen unseasonably cool temperatures; our Phoenix Suns vying for a championship; environmental disaster in the Gulf of Mexico; this little thing called Senate Bill 1070.

Did you just feel the air go out of the break room? Regardless of personal and political ideology, the recent piece of state legislation (with national implications) brings to light a workplace issue that should be at the forefront of managers minds: How do we build a cohesive and sustainable workplace?

Cohesion in the workplace drives company loyalty, reduces employee churn, increases efficiency and productivity, and creates an environment where people desire to work. What does this mean from a business sustainability standpoint? Better people, better work, and better potential profit. A workplace environment in which employees dread coming to work, do not feel engaged, and are not valued does not equate to a prudent business model. An organization that embodies employee respect and engagement has a framework for success and sustainability.

In the midst of our state’s economic and social uncertainty, here are some ideas to help foster a more cohesive environment in your workplace:

Stakeholder Engagement:
You will be amazed at the innovative ideas and solutions that your employees possess. Provide your employees, at all levels, with the opportunity to “co-create” their future and the future of the organization in concert with you, the manager.  Buy-in, especially by those most closely tied to the organization, is always in style.

Employees as Assets:
Don’t marginalize or alienate the greatest asset in your workplace; employees. Make a concerted effort to develop and advance your employees professional and personal life. You will be amazed how a little development will produce a lifelong raving fan that works harder and better for the organization.

Create a nurturing environment:
Workplace stress can have deleterious effects on employee behavior, health, and family life. Combat this by making the workplace one in which people have fun, interact, and look forward to coming to each day.

Arizona is a beautiful state that is home to a diverse and pluralistic community of individuals that provide us with a rich culture. Naturally, this permeates into our collective workforce. While businesses should always act in a manner that complies with the current legal framework, they should also make a concerted effort to establish a more cohesive environment for its diverse workforce and act in a more sustainable manner.

What are your success stories in creating cohesive and sustainable business environments?

hr_team

2009 HR Team Of The Year Honoree


Phoenix Suns LogoCompany: Phoenix Suns
Web: www.suns.com

Company Established: 1968
Employees in AZ: 200
Employees in HR department: 6

The Phoenix Suns human resources department is known not only as the “go-to” place for a wealth of information, but also as a warm and welcoming office for all employees who walk through the door.

Six people comprise the Suns’ human resources team. Peter Wong is vice president of human resources and Karen Rausch is human resources director. Wong is an adjunct faculty member at Scottsdale Community College and a member of the Corporate Leadership Council and the Sports Network. He is also a board member of the Sports & Entertainment Human Resource Forum and sits on the diversity committee of the Women’s Sports Foundation. Rausch is a member of the Valley of the Sun Human Resource Association and chairs the National Basketball Association’s compensation committee.

The Suns human resources team works in a male-dominated industry, yet its own ranks are half women. It sets an example for the company’s commitment to diversity in another way — half its employees are minorities. In fact, companywide, 38 percent of the people who work for the Suns are women and 37 percent are minorities. Human resources strives for a diverse mix of job candidates by developing outreach programs with Goodwill, Job Corps and the Arizona State University career center.

The Suns’ human resources team has made its mark in a number of ways. It established a leadership group for women in management positions. This year, the leadership group hosted a reception with “Good Morning America” anchor Robin Roberts, who shared professional and personal experiences as a working woman. Katie Pushor, former president and CEO of the Greater Phoenix Chamber of Commerce, recently spoke to the group about leading employee teams.

The human resources team also sponsors a leadership committee, a monthly discussion group that includes the CEO, executive management, managers and supervisors throughout the Suns organization. Coordination of the agenda is rotated among members. Each member has an opportunity to prepare presentations and arrange speakers from the Phoenix business community. Suns players and coaches also speak to the group. The leadership committee provides managers with information about the company and discusses trends and opportunities within the sports industry.

Employee recognition involves a number of programs organized by human resources. The department conducts all-employee meetings in which Suns owners and executives provide business updates and presentations are given by players, industry specialists and sports personalities. There also are service awards and a program for employee of the month.

Rick Welts, President and Chief Operating Officer of the Phoenix Suns

Rick Welts, President Of Phoenix Suns, Discusses His First Job

Rick Welts
President and Chief Operating Officer, Phoenix Suns

Describe your very first job and what lessons you learned from it.
My very first job was in the exact same industry that I am in now, and the exact same league. I was a ball boy for the Seattle SuperSonics, which I started doing in 1969. I was a team attendant, just like you see ball boys and ball kids running around today doing it, just doing what needed to be done around the locker room and during the games.

I go back to that a lot when I talk to people about what I do, because it’s very rare that anybody gets the opportunity to be in the environment of a professional sports team locker room, and there are dynamics that go on there that actually help me very much in my current job in terms of the relationships between players, the coaching staff, the training staff, the media, and where that interaction happens.

Describe your first job in your industry and what you learned from it.
It was called then the public relations director — it’s now usually called media relations director — of that same team, the Seattle SuperSonics, which I started doing in 1977. That was very valuable to me in that we ended up, the Sonics, in the two years that I had that position going to the NBA finals both years and winning a championship the second year, which was 1979. … It was really a fast education in my first two years in that position to really be the focal point of our league in the championship series both times and to win a championship.

What were your salaries at both of these jobs?
I think with the ball boy job I got $10 a game and two tickets with which my parents became regular attendees of Sonics’ games. My starting salary as public relations director, which started in 1977, was $15,000.

Who is your biggest mentor and what role did they play?
One that everybody knows would be the current commissioner of the NBA, David Stern. … I ended up spending 17 years working directly for him, the first couple in his role as executive vice president and the last 15 as commissioner of the NBA. He truly would be my most important mentor in learning. …

My two others would be my second boss at the Sonics, a guy by the name of Dave Watkins, who was head marketing and public relations person for the Sonics at the time. I really learned the value of how much creativity you could bring to a job and how important communications skills are in business. … (Then) I went into business with a guy who had been our assistant general manager with the Sonics. His name was Bob Walsh. Bob had left the Sonics to start a sports marketing firm in Seattle, and from Bob I learned to value the role personal relationships play in being successful in business …

What advice would you give to a person entering your industry?
In addition to looking for the right organization and the right opportunity, if you can pick a good boss, you’re probably going to learn more and probably advance your career better than you could if that wasn’t the case.

If you weren’t doing this, what would you be doing instead?
I actually wanted to be a journalist or at least be in the journalism industry. When I was in college I was actually in communications school. I was going during the time of Watergate when journalists really were heroes. … I still have great admiration for people who have that as their lives’ work.