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Greed Head

After returning home for the Christmas holidays in 1995, Houston native Chris Burkhalter decided it was time to plan a move back to his hometown. Burkhalter had a good job as the sports information director at Northern Arizona University, but he'd been away from Houston for a number of years and missed his family. So when Houston Rockets vice president John Thomas offered him a job several weeks later as public relations director of Les Alexander's fledgling Texas Terror arena football team, Burkhalter jumped at the chance. He'd be making only $22,000, a $10,000 cut in pay, but the opportunity to reunite with his parents and brother cinched the deal -- that and the chance to work for Alexander and his two-time world champion Houston Rockets organization. "I was completely starry-eyed at the opportunity," Burkhalter recalls.

Burkhalter started work that February, spending the first few weeks in the Rockets' media services office under director Tim Frank until the Terror season got under way. From March through July, he juggled several responsibilities in addition to his media chores. Burkhalter says he "was basically doing two or three people's jobs." What little feedback he got from his immediate supervisor was positive.

The Terror had a lousy season, losing all but one of its games, but even a miserable showing on the field did not prepare Burkhalter for what came afterward. On August 6, four days after the final game, he was called into his supervisor's office. After some small talk, she told him that his services with the Terror were no longer required. "All of a sudden it hit me," he says. "Wow, I'm being fired."

Burkhalter had been given no indication that he'd be canned; in fact, he had every reason to believe his job would continue into 1997. When he took the position, he says, John Thomas promised him a full year of employment. Disturbed at this breach of trust, he outlined his story in a letter he mailed to Alexander at his home in Boca Raton, Florida. "I never heard back from him," Burkhalter laments.

Burkhalter wasn't the only casualty that day: All but one of the Terror employees were sent packing. Like Burkhalter, all had been told they had yearlong jobs. Only head coach John Paul Young had a contract.

Multimillion-dollar enterprises such as the Rockets will always have their fair share of disputes and misunderstandings. But since Les Alexander bought the NBA franchise in August 1993, his organization has left behind a lengthy trail of fired employees, stiffed vendors and angry sponsors. And their stories are remarkably consistent -- a litany of broken agreements, unpaid bills and a mean-spirited cheapness that borders on pure greed. Behind the glossy veneer of two NBA championships, there's big trouble in Clutch City.

Most of the stories have yet to be told, in part because the local media has been as enchanted by the Rockets' winning ways as the fans. The majority of those employees, vendors and sponsors have collected their due, but only after either threatening or taking legal action. And in exchange for their money, the Rockets insisted they sign gag agreements not to discuss their cases.

Despite repeated requests, neither Alexander nor John Thomas would speak to the Press for this story or respond to a long list of questions faxed to the Rockets' public relations office.

"He just doesn't want to be available for the time being," says media services director Tim Frank of Alexander. "Later on, there may be a time when we'll sit down with you and talk about these issues, but right now the issues are rather sensitive. He's trying to stay out of the spotlight."

That spotlight has been especially bright of late. Alexander is embroiled in a battle with Houston Aeros owner and Summit leaseholder Chuck Watson for control of a proposed new downtown arena that will eventually replace the Summit. Millions of dollars are at stake. Since cutting off negotiations with Watson last July, Alexander has filed suit to weasel out of his Summit lease and, having already expanded his sports empire into arena football and women's professional basketball, has applied for a Houston franchise in the National Hockey League.

Alexander's position on both the Summit lease and the NHL team appears to be shaky. If the lease proves airtight and Alexander is denied the hockey franchise, he will have two choices: He can either compromise with Watson and accept a split of the new arena, or he can pursue his goal of total control of the building and all the revenues that flow into it. If he chooses the latter avenue, he'll have only one play left, the blackmail card -- either he gets what he wants, or he'll have to move the Rockets out of town.

 

If anyone doubts that Alexander would send the beloved Rockets to New Orleans, Nashville, San Jose or some other town willing to mortgage itself and enrich him, the history of the team's business dealings since he took over says otherwise. In that context, the stories of Chris Burkhalter and dozens of others should sound a clear warning both to fans and to Houston's elected officials.

After he was dismissed, Burkhalter had to tap deeply into his savings to keep himself afloat while he looked for work. But like most of the Rockets' casualties, he's landed on his feet. After several months on the hunt, he found employment as the sports information director at Indiana State University. Still, the bitterness over his experience lingers.

"I got shit on," he says. "There's no other way to describe it."

For a guy who prides himself on making smart bets, Les Alexander must wonder how he made such a bad gamble on the Summit. As part of his purchase of the Rockets from majority owner Charlie Thomas, Alexander had the right to buy a 49 percent profit stake in Arena Operating Company (AOC), the Summit leaseholder controlled by Greenway Plaza developer Kenneth Schnitzer and a pair of insurance companies, Kemper and Northwestern Mutual. Had he done so, Alexander essentially would have been his own landlord.

At first, Alexander intended to exercise his option. When former minority partners Tilman Fertitta and Gary Bradley each sued Thomas, claiming that they had a contractual right to purchase the team because Alexander's offer didn't meet an $85 million threshold, Thomas countered that the value of the deal exceeded $85 million. His evidence included the 49 percent profit stake in AOC, which was pegged in court documents at more than $4 million. Alexander himself testified that he intended to make the purchase.

He never did. According to former AOC president Mike McGee and other sources close to the deal, Alexander continually tried to low-ball Schnitzer, who wasn't selling at a discount. When a 120-day window to complete the deal expired, Alexander asked for an extension, and got one through the following August.

Even after a year, the parties couldn't reach an accord. Meanwhile, relations between Schnitzer and Alexander had deteriorated. Things became so strained between them that when they'd run into each other on the elevator at the Four Seasons Hotel, where both often stayed, neither would acknowledge the other's presence. Schnitzer would not comment for this story, but he relayed a message through his secretary: "Mr. Schnitzer said his mother always taught him that if he couldn't say something nice about someone, don't say anything at all."

The extension expired, and Schnitzer then exercised his own option under the complex agreement to take back the 49 percent stake in AOC by paying the Rockets $1.25 million. On September 12, 1994, Schnitzer regained total control of AOC.

The following Sunday, Mike McGee was having lunch with Steve Patterson, the former general manager of the Houston Rockets who had been fired by Alexander shortly after he took over the team. Patterson had since assumed the top job with the Houston Aeros under owner Chuck Watson. McGee indicated that Schnitzer and the insurance companies might be willing to sell AOC in its entirety, and threw out some figures. Intrigued, Patterson met later that afternoon with Watson, who wasted no time. "It took me about three hours to look at the deal and feel like it was a good deal," Watson says. "We said yes that day."

A month later, the deal closed. For about $6 million, Watson owned AOC outright. The Rockets were his tenant.

Had Alexander not insisted on ratcheting down the price, he'd be in line right now to control the proposed new arena. Watson would have no lease for Alexander to break, and little or no claim to a piece of the new facility. But as it turned out, AOC is making a profit and has almost recouped its investment, and Watson is also vying for an NHL franchise in Houston.

In short, Alexander blew it. McGee thinks the Rockets owner felt he could outlast Schnitzer, though the fact that Schnitzer was backed by multibillion-dollar insurance companies would seem to indicate otherwise. "I can only conclude that the advice he got was less than right on the mark," McGee says.

Another observer puts it more bluntly: "It was probably the dumbest business decision in the history of professional sports."

Had Alexander made many mistakes like that in his career, he would never have been in a position to buy the Rockets in the first place. A New Jersey native, he made his pile of money in the financial markets, specializing in buying and selling new-issue bonds. According to a financial statement obtained by the Press, he had a net worth of more than $74 million late in 1992. To be successful in the bond business, you need a combination of brains and chutzpah, and Alexander's friends credit him with both.

 

"He's extremely smart," says longtime friend Paul Montle, president and CEO of LS Capital Corporation in Houston, who claims to have sold Alexander his first bonds in 1973, an Arco issue. "He listens to and absorbs information, and doesn't forget it."

Over the years, Alexander has dabbled in various other enterprises, including horse racing, casinos, leveraged buyouts and real estate, all of which have an element of risk associated with gambling. And he likes to cultivate that high-stakes image, telling reporters of his college days spent playing poker instead of going to class, or taking the bar exam in California without ever attending class or cracking a book.

Those other ventures haven't panned out as well as his bond business. One of his horses, Jodi's Sweetie (named after his daughter), did fairly well, winning a big 1992 race for older horses in Florida, but Alexander shows no starts for any horse under his name since 1995. His involvement in efforts to bring casino gambling to Texas were thwarted by the Legislature, and another casino venture in Colorado -- owned by his friend Montle -- in which Alexander has an indirect interest, is foundering. Several companies in which he had a stake lost money or went bankrupt. And in 1993 he claimed that one of his companies would "revolutionize the way kids go to college in terms of loans"; apparently, the company has yet to overthrow the established order.

But Alexander did score big on another gamble -- the Houston Rockets. Prior to hooking up with Charlie Thomas, Alexander had tried to buy several NBA teams, including the New Jersey Nets and the San Antonio Spurs, but had been unsuccessful. In San Antonio, a group of local investors was hastily assembled to buy the team after Alexander appeared. The locals feared Alexander would try to move the Spurs out of town -- a real possibility, given the ease of escaping from the team's porous lease in the Alamodome.

Thomas was anxious to unload the Rockets after the 1993 season and was willing to sell to Alexander. But there was a hitch: with a net worth less than the purchase price of about $85 million, Alexander didn't have the cash. So he turned to another friend, Dallas investor Bill Esping, who agreed to loan him $45 million. It was a great deal for Esping, who simply borrowed the money from a bank, turned around and loaned it back to Alexander at a higher interest rate. In addition, Esping got a small percentage of the team, which he later sold back to Alexander. "The only reason he went to Esping was [that] he had no choice," says a source familiar with the deal.

In his first season of ownership, Les Alexander hit the jackpot. The Rockets beat the Knicks for the 1993-94 NBA championship, and the value of the franchise blew through the ceiling overnight. "Obviously, it was a good investment," he gloated to Forbes as the team charged toward victory.

But cutting a bond deal and owning a pro sports team are endeavors with little in common, and Alexander's inability to grasp the difference may explain his current predicament. He did much of his trading from the comfort of his office in Boca Raton (one visitor describes the scene as "four subservient women and a computer screen"), with little human contact beyond telephone conversations with brokers. A basketball team, on the other hand, must maintain a complex network of relationships with the community. Diplomatic skills are critical.

Under Alexander, the Rockets have made well-publicized contributions to the community: His Clutch City Foundation has poured more than $1 million into various inner-city projects, and the players are always making appearances at youth functions. Since Alexander launched his legal action against Watson, it's been almost impossible to turn around in Houston without being hit by a commercial or news story on some act of largess by the Rockets.

But if Alexander had been ambassador to Bosnia, World War III might already be raging. He and his wife Nanci are noted vegetarians and animal rights supporters, and shortly after his purchase of the Rockets they exhibited an astounding insensitivity to community mores and traditions by announcing that the Livestock Show and Rodeo had to go. Although that declaration was met with eye-rolling and guffaws, some of Alexander's other moves have elicited a different reaction. After the Rockets won their first championship, Alexander jacked up ticket prices as much as 100 percent for choice seats, spawning a lawsuit from an irate fan. When a Chronicle interviewer informed Alexander that the cost of two season tickets exceeded the price of a new Cadillac, he responded, "So drive to the games in a used Yugo. I've got mine, and now I've got yours."

 

Alexander has displayed the same arrogance with his subordinates. One former employee recalls the day he encountered Alexander and asked if he knew the hour. "He said, 'I never wear a watch, because when you're so rich, you don't need to know what time it is.' "

That arrogance may come back to haunt him. Schnitzer isn't Alexander's only enemy, just the one who's cost him the most. After three and half years in Houston, Les Alexander has managed to create an army of detractors that no acts of charity or public relations effort can overcome.

"It's absolutely impossible for him to relate to human beings," says one NBA executive who has dealt with Alexander. "He relates to one thing and one thing only: money."

On July 5, 1994, less than two weeks after the Rockets beat the New York Knicks to capture the NBA championship and send the city into collective ecstasy, executive vice president John Thomas conducted what were supposed to be "evaluations" with staff members in his office. Beginning at 10:30 a.m., 23 employees took their turns. Many wondered why Thomas wouldn't look them in the eye, and why a stack of large, shrink-wrapped plastic boxes sat in a corner. It didn't take long for 13 of them to find out. "They were for us to clean out our desks," recalls one former employee.

The wholesale slaughter is remembered at Rockets headquarters as "Bloody Tuesday." It was the single most sweeping front office change during Alexander's tenure, but hardly the only one. On his first day in charge, in fact, Alexander fired three longtime workers. More than 100 employees have since been shown the door. Some positions, including the key controller's slot, have turned over five times or more.

Unlike most of the carnage, however, Bloody Tuesday triggered a public furor, primarily because one of the victims was Jerry Burrell, better known as Turbo. Angry fans deluged the Rockets with a barrage of phone calls and faxes demanding Turbo's reinstatement and questioning the integrity of those responsible for the ouster of the popular acrobatic mascot.

"Firing Jerry Burrell is the most incredibly stupid business decision I have ever heard of in my life!" one area business executive and longtime fan wrote to Thomas. "Piss on you and your fellow managers for taking a big piece of fun out of the Houston Rockets. I hope you get fired, too, and soon."

"I was sorry to hear of your poor decision to remove Turbo from your organization," wrote another. "What a mistake and lack of class in handling the situation. You obviously did not learn anything from the past."

Indeed, Turbo's was not the first firing that had incensed the fans. Shortly after he assumed control of the team, Alexander summarily axed hall of famer Calvin Murphy from his community relations post. After a number of influential parties, including NBA officials, urged Alexander to reconsider, Murphy got his job back. Likewise, Turbo's flying dunks are still a highlight at Rockets home games.

It remains a mystery why Alexander made such serious PR blunders in the first place. Some of the legions of the departed suggest that he merely wanted to shave the budget by hiring lower-priced talent to serve the same functions, not realizing the esteem in which Murphy and Turbo were held. Though Thomas denied that cost was an issue, Turbo now works as an independent contractor instead of a Rockets employee -- meaning that the team doesn't have to pay his liability insurance or other benefits.

At least in Turbo's case, more than penny-pinching may have been involved. Thomas in particular seemed to resent Turbo's fame and way with the crowd, while Alexander's view of a mascot was much more cuddly (thus the bizarrely mismatched dual mascots the Rockets currently employ: Turbo and Clutch, the fuzzy bear). "They couldn't stand him," says a former worker of Alexander and Thomas's regard for Turbo. In fact, Thomas's distaste was so obvious that during staff meetings other employees would lavish praise on Turbo just to goad Thomas. "On purpose we'd say, 'Oh, Turbo was great last night,' " the worker says.

But public opinion couldn't save the other employees, even though many of them were as highly regarded in their fields as Murphy and Turbo are in theirs. Brenda Tinnen, for example, who was hired as ticket services manager to replace Bloody Tuesday victim Jeff Gaines, had a reputation as one of the most talented and friendly administrators in professional sports. Wooed by John Thomas from the Minnesota Timberwolves, where she had a similar position, Tinnen was given a raise and a three-year contract and promised the freedom to do her job without interference. Excited at the prospect, she moved her family from Minneapolis and found a place to live in Houston.

 

If anyone should have felt confident about her bargain, it was Tinnen. She knew Thomas, who had worked with her at the Timberwolves; both were part of a small circle of friends who would drink beer together after work.

But the friendship didn't last. Perhaps because her contract was too fat for Alexander's taste, Tinnen found herself on the outs with her bosses. According to her colleagues, Thomas questioned her every move, undermined her authority and generally made her life miserable. Finally, in frustration, she left -- after extracting a healthy settlement. Tinnen, who's now with the NHL's Phoenix Coyotes, signed a confidentiality agreement as part of her deal and would not discuss her Rockets tenure with the Press.

Such settlements were common among the fired employees -- so common, they jokingly became known as the "Les Alexander Scholarship Package." But not everyone got what they were owed. Mary Carol Hoesel, for example, who ran the old electronic advertising board at courtside, has been asking for the $980 she's been owed for more than two years. She has yet to collect.

Hoesel started working part-time for the Rockets in 1987, helping at the box office on game nights. In 1989 she took the electronic message board controls, for which she was paid $30 a game and $30 to program each new sign. In addition, she got a pair of tickets that she could give to friends. At the end of each month, she'd submit an invoice and get a check several weeks later.

After Alexander took over, Hoesel continued to submit her bills, but after four months the checks stopped coming. A few months later she began asking Thomas and others about the money, and though she was continually reassured that the matter would be dealt with, she never saw the cash. "It's irritating," Hoesel says. "It's not like they owe me $10,000."

As the bodies piled higher and the stories circulated, the atmosphere in the Rockets' offices grew gray with gloom. Stress levels hit the red zone. "We were all dreading every time the phone rang -- 'Uh-oh, it's my turn,' " says a former employee whose bell eventually tolled.

The mood was 180 degrees from the pre-Alexander club, when employees were encouraged to offer their opinions and suggestions. Even after Alexander arrived and fired the congenial Steve Patterson, the Rockets retained that family feel under new president Tod Leiweke, who only lasted a few months.

But Leiweke's replacement -- John Thomas -- was a different story. A journeyman administrator who had worked in corporate sales and broadcasting for various hockey, basketball and baseball teams in Minnesota and Seattle, Thomas was hired by Leiweke from KFAN sports radio, where he was station manager, to be the Rockets vice president of sales and marketing. Shortly thereafter, Leiweke was gone and Thomas had climbed into his position.

The styles of the two could not have been more different. "[Leiweke] at least gave you a forum to express yourself," says former sales rep Mark Calabro, now with the New Haven Ravens minor league baseball team. "But if you disagreed with Thomas, you almost felt like a little black check went against your name. He'd just look at you like, 'How dare you disagree with me.' "

Not coincidentally, those who exerted independence from Thomas didn't last too long. Calabro left before he met the fate of his peers. "I didn't like the way [the organization] was headed," he says. "I was disgusted by John Thomas."

How much Alexander knew or knows about the Rockets' internal state of affairs and Thomas's management style isn't clear. Those who complained directly to the big boss never heard back, though Alexander evidently passed the complaints along, because Thomas invariably came back to the employees grousing about insubordination. Few have much bad to say about their personal dealings with Alexander, who was generally cordial, if distant. But they still hold him responsible for the way the Rockets do business. "I never really had a problem with Les," says one of the later casualties. "I just don't like how he runs things."

Perhaps nothing symbolizes the change under Alexander as vividly as the story of Ed Penn, the former director of group ticket sales who was one of the first three victims of the new regime. Penn, an alcoholic, had nearly lost his job because of his problem, but had checked himself into the John Lucas Treatment Center and was on the rebound. "He was told to get help, and he had, and he was turning things around," says a former employee and friend who stayed in touch with Penn after the firing. "The organization had compassion, and they took care of people who had been there a long time."

 

Then Alexander took over, and 24 hours later Penn was out the door without a good-bye or a thank you. "He was never the same after that," says the friend. Penn relapsed. Nine months later, he died.

Fired employees rarely leave happy, and John Thomas has said on many occasions that the bad rap on the Rockets is merely the concoction of former workers with axes to grind. He's especially angry with the Aeros organization, which hired several ex-Rockets employees, including Steve Patterson, and which he believes is responsible for trying to sabotage the Rockets' good name. Thomas even forbade his advertising staff to fraternize with any Aeros employee, making it clear that the penalty for transgression would be severe.

But if he were willing to talk, Thomas might have a harder time explaining the comments of local retailers who will never do business with the Rockets again, or corporate sponsors whose dealings with the team likewise resulted in a permanent rift.

Gio Tomasini had sold the Rockets office equipment for years, and fully expected to continue: He'd never received any complaints, and his company, Global Services Inc., had provided excellent service. During the playoffs of the first championship season, Global had even stationed a technician on-site during the games "because they couldn't afford to have a copier broken," Tomasini says.

After the season, Global negotiated a new deal with the Rockets for copiers, fax machines and other equipment. They surveyed the entire office to get a sense of what was needed, then negotiated a price. Tomasini signed the contracts and received the pair of season tickets that were part of the bargain. The equipment was delivered. "[Thomas] was heavily involved in the whole thing," Tomasini says. "It was done."

Then Tomasini got a call from Thomas while in New York on business. Come pick up your equipment, Thomas told him. The Rockets had a better offer from another supplier, and the deal was off. "I said, 'What about our agreement?' " Tomasini recalls. "John said, 'Well, that's what Les wants to do. Nothing I can do about it, Gio.' "

Tomasini picked up the equipment, returned his tickets and sent the Rockets a $3,000 bill for delivery charges and use of the equipment while the organization had it. He also sent Thomas and Alexander letters explaining the bill, but never heard back from them. "I just blew it off," he says.

Just before the current season, Tomasini got a call from the Rockets, who complained about the service they'd received from his replacement and asked him to return to the fold. "I just told them I had no desire to do business with them," he says. "I had a contract before, and they broke it. What's to keep them from breaking it again?"

Nothing, if other similar tales are true. Tomas Romero, owner of Jalapenos Restaurant, who had catered events for the Rockets for 15 years, won't work with the team anymore after an attempted abortion of an agreement. Romero won't discuss the particulars, but the pain lingers. "It was not a pleasant experience," he says.

Apologists for John Thomas, though they won't speak on the record, say that most of his troubles with vendors stem from his first months on the job, when high turnover left the controller's office in chaos and bills didn't get paid through no fault of his own. That's why, for example, the cellular phones were disconnected for non-payment of the bill, and why Rockets staff who checked in at a certain hotel were told that they had to use their personal credit cards to secure their rooms, since the Rockets' credit was no longer good.

But Consolidated Printing might have another view. The Arkansas company printed the Rockets' tickets this season, but delays held up delivery until it was too late to get them distributed to season ticket holders in time for the first preseason game. Just who was at fault for the delay depends on whether you're the Rockets or Consolidated, though a source close to the ticket company says the team missed its deadlines.

The Rockets sent a letter to season ticket holders apologizing for the delay, and placing blame squarely on Consolidated's shoulders. "The Rockets, as well as the San Antonio Spurs, New York Knicks, Golden State Warriors and Phoenix Suns, were all affected by similar delays," the letter read. "Discussions have already begun to award our ticket printing to another company in the future."

 

There was one problem with the letter -- it wasn't true. The Golden State Warriors didn't use Consolidated this season. And the other teams invoked by the Rockets denied the claim. "It was not accurate," says Suns director of ticket operations Mike McLaughlin. "We did not experience a delay in the delivery of our tickets."

"I have a great working relationship with Consolidated," echoed Larry Chu, the Spurs' director of ticket operations. "[The Rockets] did not ask my permission or let me know that our name was going to be included in their letter. We're not very happy that it was."

The Rockets haven't yet paid their bill. Though no one with Consolidated would comment, the dispute will likely end up in court.

Similar disputes over debts have arisen with corporate sponsors. Mike McGee knows about one of those sponsors, the Whataburger hamburger chain. McGee, the former president of Arena Operating Company who now runs the Summit as chairman of Leisure Management International, has been intimately involved with the Summit since 1979. It was McGee who developed the two-phase plan to expand the Summit and construct the food court, and he also was responsible for finding the vendors to fill it.

Initially, McGee figured he would cut a deal for the hamburger concession with McDonald's, which had a long-standing relationship with the Rockets that preceded Alexander's purchase of the team. But the new management wanted the concession to go to Whataburger, and McGee wanted to be an accommodating landlord, even though he was not obligated to do as his tenant asked. So he entered into negotiations with the Corpus Christi-based chain as the first championship season progressed. By the playoffs, an agreement was close. "We had a deal in spirit," says McGee. "We'd traded drafts of our contracts and everything."

Simultaneously, the Rockets were negotiating with Whataburger for a sponsorship package, and the corporate sales office had reached a handshake agreement for the following season.

Then the Rockets won Game 7 against the Knicks, and all bets were off. Thomas insisted that the Whataburger package should essentially double in price, undermining the deal, and the burger chain backed out. A few days later, Thomas called McGee at a conference in Minnesota and asked him to bag Whataburger -- in favor of McDonald's. "I said, 'Well, this is really gonna make me look [like I'm] dealing in bad faith with Whataburger,' " McGee told the Press.

No matter, Thomas told him, because McDonald's had agreed to the same terms for the food court hamburger concession that McGee had negotiated with Whataburger. McGee checked with McDonald's. "They said, 'Well, no, we're not gonna do that deal,' " McGee says. "We stayed with Whataburger."

Handshake agreements aren't the only kind the Rockets have tried to break. After purchasing the team, Alexander called Continental Airlines, which had an existing three-year sponsorship deal with the Rockets, and insisted that the carrier give him free plane tickets on demand. Though he backed off when Continental refused, the episode was the beginning of a deterioration in the relationship. Continental agreed to sever ties with the Rockets before its contract expired.

The Rockets even tried to chisel Coca-Cola by renegotiating its sponsorship agreement with the soft drink manufacturer in the middle of their contract. Coke took legal action, which was recently settled in mediation. Coca-Cola spokesman Ben Deutsch says a confidentiality agreement prohibits him from publicly commenting on the dispute.

As with the personnel fiascoes, the question of whether Alexander knows about the many conflicts with vendors and sponsors remains a mystery. But again, that he's aware of some of them is undeniable. Mike McGee, for one, expressed his concern about his experience with Whataburger and other incidents directly to Alexander. "In spite of all the shortcomings and frustrations, I tried to be a professional in my approach with that organization, and tried to let him know that we didn't summarily just take the Rockets and their playing in our facility for granted," McGee says.

He heard nothing from the owner -- but he did get a scathing letter two days later from John Thomas, who criticized McGee for going behind his back to Alexander.

It all leaves McGee lamenting the old days, two world championships notwithstanding. "We didn't see eye-to-eye on every issue," he says of the previous ownership and management. "But at least we were professional and gentlemanly about it."

"I've got to tell you," he continues, "it's very difficult sometimes to take the high road and maintain a positive and proper attitude, when all these unprofessional activities are going on."

 

About a month after the 1994 championship series, Fred Cuellar got a call from John Thomas. Would Cuellar, the owner of Diamond Cutters International, a diamond and precious stone cutting house, be interested in bidding on the Rockets' championship rings? His firm didn't design or make finished jewelry, but Cuellar, a Rockets fanatic, jumped at the chance. "I said it would be an honor," he recalls.

Cuellar called the NBA to find out how much the rings should cost, and was told that the league provided about $55,000 to the team for the first 20 rings (for the players, coaches and a few others), with the owner traditionally picking up the tab for additional rings (league spokesman Brian McIntyre confirmed that this is standard NBA procedure). Figuring $2,750 per ring, Cuellar designed an upscale specimen that was a little pricey at almost $5,000. He presented his proposal to the Rockets anyway. "They said, 'We'll get back to you on it,' " he said.

The Rockets never called back, and Cuellar figured he'd priced himself out of the competition. Eventually he heard that a Canadian company, Intergold, had won the contract. End of story.

That is, until a couple of the Rockets players came to him and complained that they were getting second-rate rings. Cuellar did some checking and learned that Intergold's bid was only $600 for each piece, less than a quarter of what the NBA had allotted. Apparently, Alexander's plan was to produce all the championship rings (more than 40), plus a lesser replica version and a cheap souvenir model, with the NBA's money. His tab: zero.

Cuellar couldn't believe it. "I know what a good ring is," he says. "I know what a bad ring is. The players weren't getting good rings. I got really pissed off about it."

Believing that champions deserve the best, Cuellar decided to spend his own money to create the rings he had designed and give them away to the players. To spread the word, he placed a large ad in the papers. "Champions shouldn't wear rings from Cracker Jack boxes," the ad said. "This is not a time to worry about saving money, it's a time to honor the glory you gave the city. For that reason, Diamond Cutters International will offer the $23,500 [retail value] Championship ring, that Les Alexander doesn't believe you deserve, at no cost for any player of the team that would like it."

There was no shortage of takers. Cuellar threw a ring giveaway party at Maxim's, complete with original music commissioned for the occasion and "The Fantastic Championship Ring" T-shirts. Though John Thomas asked the players not to attend, all of them did -- except for Hakeem Olajuwon, whose brother was associated with Intergold. Cuellar figures he spent more than $250,000 on the entire affair.

Ironically, Cuellar's generous deed has ultimately benefited him. The dazzling rings drew such attention that other leagues contacted him about doing their championship rings, and today he's built a profitable sideline designing them. The Super Bowl champion Cowboys, the last two NHL Stanley Cup winners and the Canadian Football League champs all sport Cuellar's rings. "I created a whole new company because of Les Alexander and his tight budget," he says. "I should thank the man."

Others, especially the Rockets employees who were touched daily by Alexander's nickel-and-diming, aren't as thankful. Fired salesman John Kopack, for example, had to take legal action to collect the months of overtime he'd accrued after John Thomas instituted a "boot camp" that forced the sales staff to work six or seven days a week, up to 13 hours a day. The Rockets' rationale, as outlined in court documents, was that the team was an entertainment business and therefore should be exempt from the federal Fair Labor Standards Act requiring overtime pay and the minimum wage for employees.

That argument infuriated Kopack's lawyer, L.G. Clinton Jr. "For a person making the millions of dollars that he is, to take the position that the people are not entitled to receive the minimum wage is ridiculous," Clinton says. "It's kind of chintzy, to say the least."

Clinton told Alexander's lawyer that he was going to ask for all of the organization's financial records, which apparently scared the team off. "They settled pretty promptly after that," he says.

Despite getting his client's due, the experience left a bad taste in Clinton's mouth. Prior to taking the case, he'd been an avid Rockets fan and season ticket holder. Not afterward. "I canceled my subscription," he says. "That's the regard I have for Mr. Alexander. He's not getting any of my money."

While the Rockets' attempts to save money by stiffing employees had a nasty, personal edge, other cost-cutting measures seemed merely petty and cheap. Early on, Alexander tried to eliminate the small group of statisticians who compile various official figures for the NBA and media during the games -- to save the $10 per game they were paid -- and replace them with college kids who would work for free. The league convinced him to keep the regulars.

 

After the first championship, electronic message board operator Mary Carol Hoesel had a chat with John Thomas about her overdue $980 bill. Thomas indicated he'd ante up and said he'd be interested in having her continue to work the signs the following season, but under new terms. "He said, 'We're not gonna pay anybody to do it,' " Hoesel remembers. Nor would she be entitled to the pair of tickets that had been part of the arrangement in the past. Hoesel declined.

Other former and current employees tell of hassles over per diem payments and interrogations about routine minor expenses such as gas bills and office supplies. During the first championship run, the team refused to fly the staff to New York for the finals, while the Knicks treated their entire front office to the trip to Houston. According to several sources close to the team, Alexander even approved the sale of tickets for the 1995 championship series against Orlando to at least one local ticket broker -- for more than their face value.

Alexander claims he doesn't have much to do with the day-to-day running of the business. Yet at least until recently he insisted on signing every check above $250, making even the simplest transactions a pain; piles of checks had to constantly be sent by overnight courier to Florida and back to pay the bills. Other sports executives laugh at the notion of an owner having to sign any checks; one noted that his threshold for merely asking approval was closer to $250,000.

Meanwhile, Alexander has bragged that the Rockets are netting him more than $20 million annually, making it by far the most lucrative sports franchise in the city.

Fred Cuellar sums up the view that many who have had dealings with Alexander and the Rockets share. "Money is a nice thing, but there's got to be a time in your life when it's not about money," Cuellar says. "It's about people, and dedication, and honor, and loyalty, and he doesn't have those things. It's not about a buck all the time."

In the first week of February, the city joined Chuck Watson in the legal battle over the Summit's contract with the Rockets. The Lanier administration is concerned, naturally, that if Les Alexander is able to wriggle out of his lease, he'll be free to relocate the team to another city willing to meet his terms. This is not an idle fear: Alexander has stated for more than three years that he plans to make Houston his home, but has never moved to sell his $2 million Boca Raton estate and has developed few personal ties to the community. He's never been shy about stating that the Rockets simply can't survive at the Summit, even though he also claims to be netting millions in annual profits. And he's leaked the names of potential destinations for the Rockets: New Orleans, Nashville and San Jose.

While the city's courtroom maneuver is more a formality than a declaration of war between Mayor Bob Lanier and Alexander, the odds of a compromise diminish with each claim and counterclaim. Alexander has been intractable since last July, refusing to negotiate with Watson while orchestrating an ill-conceived public plea by Gallery Furniture's Jim McIngvale to "let our Rockets go" from the Summit.

Instead of negotiating, what Alexander has done is enrage the very people with whom he should be bargaining. He filed his suit to escape the lease only two weeks after a previous suit claiming he'd been cheated out of Summit revenues was settled. Recently, his mother-in-law sued Arena Operating Company for a cut she received during a Rockets game, even though the Rockets themselves appear to be at fault, and even though by contract the Rockets appear to be responsible for the injury.

And Alexander's attempt to snatch the NHL franchise from Watson has more to do with controlling the arena and keeping it away from the competition than any personal interest in hockey -- prior to suddenly announcing that he'd applied for the expansion team, Alexander had often expounded during interviews on his love of basketball, football and baseball, but never once mentioned hockey.

As he did with Kenneth Schnitzer, Alexander has pushed those on the other side of the table to the breaking point -- and beyond.

 

"I have little to no incentive or desire at this point to be a partner with Les Alexander," says Chuck Watson. "I've lost confidence we can put anything together.

"I really don't have any interest in sitting down with him any more," Watson adds with finality.

Watson sees only two options at this point: either a third party, such as a sports authority, would own and operate the arena, "or we will build the arena, and he will be a lessee."

The odds of Alexander's agreeing to mere renter status in a new arena seem long, at best. His NHL bid has little substance, at least without a partner -- he still owes on his loan to purchase the Rockets, and the asking price of a new hockey franchise would likely exceed his ability to pay without unloading the basketball team. Even if the NHL decides to go elsewhere and Alexander succeeds in thwarting Watson's bid, he will still face the prospect of sharing the new arena unless he can somehow leverage his way out of a compromise.

That leaves only the threat of departure. The fans may not want to believe that Alexander could move the Rockets out of town, but more than 100 ex-employees, dozens of area businessmen, sports executives across the country and even some of his friends have no such doubts. With Alexander, it would be just another deal to close. "The basketball team and hockey team are strictly business to him," says Tilman Fertitta, a former minority owner and now an "advisor" to Alexander. "If he can have it all, why not have it all?

"He's just doing what's best for Les.


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