After Spectrum roof blew off, Snider took a big risk

This Inquirer story is reprinted from July 29, 1985.

Turn back the clock for a moment to 1968, to a cold and blustery day in February. About 11,000 people are seated in the year-old Spectrum arena in South Philadelphia. They are waiting for a matinee of the Ice Capades.

But the skaters never took the ice that afternoon. Instead, the crowd witnessed an event that nearly caused the financial ruin of the arena and its creators, a group of private investors led by Eagles owner Jerry Wolman and a 35-year-old Eagles vice president named Edward M. Snider.

While the spectators watched in amazement, high winds ripped away a 50-by-100-foot section of the Spectrum's roof and sent it crashing to the ground outside. The building's fortunes soon followed: Three years later, the arena - built for the city by Wolman's group at a cost of $12 million - was operating under the protection of federal bankruptcy court.

"The Spectrum wasn't a very valuable property back then," Snider recalled. "The roof had made it a national laughingstock."

No one is laughing now.

In one of the bigger gambles in the city's commercial history, Snider - owner of the fledgling Philadelphia Flyers - stepped forward to pull the Spectrum out of bankruptcy court in January 1972 with an offer to pay its more than $8 million in debt.

He received in return a 50-year lease to operate the city-owned arena at a minimal rent - $1,250 per month - and without the burden of real estate taxes. In addition, he was guaranteed the lion's share of profits from an adjacent city parking lot. Example: The lot generated revenues of $1.2 million last year, according to city officials, and $757,550.02 of it went to Snider.

To say that Snider won his gamble is gross understatement. In 1974, seven years after he started the team with a $2 million investment, Snider's Flyers galvanized the city with the first of their two Stanley Cups. Driven by the popularity of the Flyers, the Spectrum's turnstiles spun at a rate that made it, by most accounts, the most profitable arena in the nation for its size.

And those successes in turn begat Prism, the regional pay-television network that Snider started in 1976 in a joint venture with Twentieth Century- Fox. By 1983, when Snider sold his interest in Prism, it had become the nation's most successful regional network with 355,000 subscribers on 87 cable systems. The sale price was never revealed, but some observers placed Snider's share in the tens of millions.

Today the silver-haired Snider fairly shimmers with wealth and influence. At 52, the former accountant now presides over an $84 million-a-year sports, entertainment and marketing empire built on the twin pillars of the Flyers and the Spectrum.

That empire is called Spectacor Inc. And even with the subtraction of Prism and the Maine Mariners, which Snider founded as a Flyers farm team and later sold to the New Jersey Devils, Spectacor remains a combination of sports and business that can be matched only by the likes of Ted Turner, Los Angeles Lakers owner Jerry Buss and Gulf&Western Corp., with its Madison Square Garden/Knicks/Rangers/cable-television network.

"Ed Snider has to rank as one of the most successful and imaginative sports entrepreneurs ever," said Phillies president William Y. Giles. "With the exception of the O'Malley family and the Dodgers, I can't think of anyone else who has made a lot of money on a sports franchise. Most people make their money somewhere else, then buy a team."

Snider, by contrast, has parlayed the Flyers into an ever-expanding corporate organization. He began the company as a private firm in 1974 and remains its only shareholder. But in addition to the Flyers and the Spectrum, the Spectacor umbrella has been spread to include:

* SpectaGuard, an ushering and security-guard service. ... * Spectacor Management, an arena management and consulting firm. ... * Showcase Stores, a ticket and sports-merchandise firm. ...

* Ovations, a private dining club at the Spectrum.

Spectacor does not normally reveal its finances. But during a recent interview at the company's headquarters at 15th and Locust Streets, company chairman Fred A. Shabel said the company generated total revenues of $84 million during the fiscal year ended June 30. It was the company's highest revenue year ever.

Those revenues represented a 33 percent increase over the $63 million reported in the previous year. And they marked a continuation of a five-year trend in which total revenues have risen by 60 percent - despite the loss of the cash-generating Prism.

As chairman and president of Spectacor, Shabel has directed that revenue growth on a day-to-day basis while Snider oversees operations from his post as chairman of the executive committee. Indeed, Snider 's delegation of power is such that he is able, as he did this year, to leave Philadelphia in early July to spend the rest of the summer at his vacation home in Maine. ...

Shabel says the Spectrum continues to generate the majority of the company's revenues. A major reason for last year's revenue surge, he said, was the performance of both of its permanent tenants: the Flyers and the 76ers.

The Flyers, confounding the expectations of most hockey observers, stormed into the Stanley Cup finals before finally losing steam against the defending champion Edmonton Oilers. In addition to their home playoff games, the Flyers kept the 17,000-seat Spectrum packed for most of their 40 home games, at tickets that began at $8.50 a seat.

The Sixers did not draw as well during the regular season. But by reaching the National Basketball Association's Eastern Conference Finals, where they lost to archrival Boston, they, nonetheless, went deep enough into the playoffs to generate substantial revenues.

"In terms of profits, the teams are always a very fluid situation," Shabel said. "This was a good year for us. But there have been bad years - for example, when the Rangers knocked off the Flyers in the first round" in 1983.

No matter how the teams fare, however, the Spectrum is virtually assured of attracting 50 to 60 major concerts a year - with first-rate draws such as Madonna and Bruce Springsteen - as well as the U.S. Indoor Tennis Tournament, the Ringling Bros. and Barnum & Bailey Circus and a host of other special events. In many cases, the Spectrum also helps promote those events.

Richard Rumer, vice president of finance and administration for the Spectrum, said the arena's share of such performances can vary widely. But as a general rule, the Spectrum gets its choice of a flat $10,000 fee or 20 percent of net revenues, he said.

Some users of the Spectrum have complained about its rates, but Rumer said the Spectrum's prices were in line with comparable arenas across the country. Yet observers agree that the Spectrum's profit margins are probably considerably higher than other arenas' because of the low monthly fees dictated by the 50-year lease with the city.

And in the meantime, revenues continue to rise at the other Spectacor companies. Shabel said that SpectaGuard, already generates $7 million in annual revenues and lists such clients as the University of Pennsylvania, the Eagles and McNeil Consumer Products Co., the Fort Washington maker of Tylenol products. The company is now aggressively marketing its services.

Spectacor Management, Shabel continued, has completed a study that calls for a $14 million Civic Center complex in Reading. And Showcase Stores is planning to triple its number of stores by the end of 1986.

But despite Spectacor's successes, Shabel says the company is not as profitable as many observers believe.

One of those observers, Thacher Longstreth, a city councilman and former president of the Greater Philadelphia Chamber of Commerce, estimates Snider may have amassed a personal fortune of between $50 million and $70 million from his South Philadelphia empire.

"Anything he decides to get into seems to immediately become well-run and very profitable," Longstreth observed.

"Ed Snider's a creative genius," counters Shabel. "But all this talk about us being so profitable is really exaggerated. For one thing, as a hockey team we don't get the big TV-revenue packages that some sports get. We certainly don't have a cash cow here."

The suspicion to the contrary remains, though. Especially at some levels of city government.

Most informed officials concede that Snider's 50-year lease terms are reasonable when put into perspective. That is, they agree that he deserved financial incentives in return for taking responsibility for a bankrupt and ridiculed property. But at the same time, those terms - agreed to by Mayor James H.J. Tate - appear to stick in the craw of many officials when measured against current standards.

A look at the lease shows that Snider is obligated to pay the city $15,000 a year in rent, or $1,250 a month. Moreover, he must pay the city a percentage of the annual revenues generated by the adjacent city parking lot. At present, that portion is 25 percent, and it amounted to about $252,500 last year, city records show.

But Snider pays no real estate taxes on the Spectrum. In 1971, U.S. District Judge A. Leon Higginbotham granted the Spectrum an exemption from property taxes on the ground that it was public property used for public purposes.

According to the city Board of Revision of Taxes, the assessed valuation of the Spectrum is $5.8 million. Its annual property tax bill would be slightly more than $431,000.

Phillies president Giles, for one, believes that those enviable lease terms were the engines of Snider's early success. Giles said the Phillies gain no parking revenues from city lots and pay 18 percent of their ticket revenues to the city.

"The lease made a big difference because he [Snider] could show a greater net profit," Giles said. ...

But few would argue that Snider, his Flyers and the Spectrum have been anything but a positive force for the region's image and its economy. The Flyers won the Stanley Cup at a time when Philadelphia was widely known as the "City of Losers," and their success is seen by many observers as the starting point for the subsequent revival of the city's image.

And, if the Flyers' victories were the catalyst for Philadelphia's new formula for success, the head chemist was clearly Edward Malcolm Snider.

"Jerry Wolman put the whole Spectrum deal together," Longstreth recalled. "He was great at creating things, but he didn't run it well. Snider took it over and proved to be one of those extraordinary entrepreneurs who has the ability to inundate whatever he does with money."

According to Longstreth and others who have been associated with Snider over the years, his personality has remained consistent. To those he perceives as competent and loyal, he can be fiercely devoted.

For instance, when former Flyers star Bernie Parent was inducted into the Hockey Hall of Fame in September 1984, Snider wept openly at the ceremonies in Toronto. And when Bobby Clarke decided to retire as a player, Snider was quick to assure Clarke's future with an immediate offer of the Flyer's general managership.

At the same time, Snider can be a ruthless businessman, and he has little patience with people whose competence he doubts, associates say. He replaced Flyers president Bob Butera in 1983 when it may have been more expedient to keep him, associates say. Butera, a former state representative, was politically well-connected.

"Ed Snider's parted ways with a lot of people over the years," one former associate said.

At present, Snider appears to be devoting more of his time to interests other than Spectacor. He is an avid disciple of Ayn Rand, a writer who espoused a doctrine of unbridled individualism, and is backing the creation of an institute in Los Angeles for the study of her work. ...

In a telephone interview from his Maine summer home, Snider reminisced about his success.

"I had decided to bring a National Hockey League franchise into Philadelphia. And to do that, the Spectrum had to be built," he said. "We would build the arena with private funds, and the city would get extra revenue without spending a dime. Everyone thought it was a fabulous deal at the time.

"So we started the construction, and Wolman and I ended our partnership. I got the Flyers, he got the Spectrum. When the Spectrum went bankrupt, I stepped in and paid off the debts, 100 cents to the dollar.

"I guess the Flyers were the key, since they generated the funds that allowed us to get the Spectrum. And later on, we were able to start Prism."

But Snider exhibited his characteristic confidence when asked if he considered the revival of the Spectrum a gamble at the time.

"Everyone seemed to feel that I was taking a terrific gamble on a property that was a real turkey," he said. "But I felt confident that it would succeed. In fact, it would have succeeded from day one, if it had been run right."