Santa Monica developers kick off sports megaplex: Scottsdale, Ariz. mall to undergo major transformation.

With little action on Southland real estate playing fields, two Santa Monica developers plan to break ground in the next few weeks on what they hope will be a high-scoring sports retail project in Arizona.

The Gordon Co. principals, Sheldon Gordon and Randy Brant, operating under the name BG Development, bought a dying three-year-old upscale shopping mall in the heart of downtown Scottsdale, Ariz. for less than 5 percent of the marble-laden mall's original $150 million cost.

Now Gordon and Brant are transforming the mall into a sprawling sports/entertainment/retail complex, being billed as the first of its kind.

The yet-unnamed project was originally inspired by Nike Inc.'s hugely successful Nike Town concept, said Brant.

But the Scottsdale project has been designed to take the Nike Town customer-participation concept to new heights -- and depths. The Scottsdale center is being designed to allow sports enthusiasts to ski on mock slopes, scuba dive in a huge fish-filled water tank and try out the latest golf club on an artificial-turf fairway.

Gordon, probably best known as developer of the Beverly Center mall and Ma Maison Sofitel hotel in Los Angeles, and Brant hope to entice the National Basketball Association, Major League Baseball and big-name sports manufacturers to lease space in the complex.

"We are creating a new concept, based on information that says that manufacturers of sporting goods are frustrated because they don't have a quality place to show their merchandise or a place with trained personnel," Brant said. The Scottsdale center is to be the prototype for eight to 10 similar centers nationwide, including one in Los Angeles, said Brant.

Gordon and Brant hired Venice-based architectural firm Jerde Partnership Inc., master planner of MCA Inc.'s Universal City, including the recently opened CityWalk retail street, to turn the 639,000-square-foot upscale shopping mall known as the Scottsdale Galleria into a sports "environment."

The four-level center will be divided into sport-specific zones featuring golf, tennis, cycling, skiing, skating, hunting and fishing, team sports and outdoor recreation. A rock climbing wall is planned to encase the existing glass elevator. From a section of that wall, cliff divers would plunge several levels into the water tank. Customers would also be able to fish from the tank. The center is also expected to feature the latest in interactive and CD-ROM technology -- allowing consumers to see, touch and experience the sporting activities in which they are interested, said Stan Hathaway, a senior associate at Jerde Partnership.

"It will have all the visual aspects of the sports," said Hathaway. "There will be video walls, big scoreboards, all kinds of electronic wizardry."

Also being designed into the project is a 3,000-seat arena where tennis, basketball and skating exhibitions can take place. Sporting goods shops, restaurants and sports bars would surround the arena.

All the center's various components are being built around the main atrium, allowing shoppers and diners to watch sporting events from any level of the mall, he said.

"There will be so many choices and things to do, you won't be able to do it all in one day," Hathaway gushed. "You'll have to keep coming back again and again." Most importantly, the sports complex would be a place for manufacturers to show their entire lines of goods. Most retailers typically carry about 10 to 20 percent of any given manufacturer's full product line, which may include equipment, clothing and accessories.

"The idea is, if you're a sporting enthusiast and you're a great skier, you'll be able to see every ski available by that manufacturer," Hathaway said.

And customers would be able to actually try out the product before buying, he added.

For instance, in the ski zone, customers would see gondolas with mannequins going up a ski lift against a painted background of a snow-covered slope and ski village. They'll be able to ski down a two-story mock slope, with simulator technology allowing them to see other skiers beside them. They'll also be able to zoom down a simulated bobsled run.

Gordon and Brant have no committed tenants yet, although they are negotiating leases with several companies and plan to break ground before the end of the first quarter. The completion date for the sports complex has been set for January 1995.

"Reebok's retail division has been involved since conception, although we have not sat down and cut a deal," conceded Brant, adding that the owner of Dallas-based America's Original Sports Bar is a good friend and "extremely interested" in opening a bar/entertainment concept in the center.

Brant said he'll wait until he has "leases in hand" before he hits private sources and banks up for the $50 million BG Development needs to finance the venture.

For now, Gordon and Brant can afford to be overly-confident.

The two partners bought the structure from Mitsubishi Bank Ltd. of Japan, the original lender on the project, for about $6 million. The partners then resold it to San Diego-based Excel Realty Trust Inc., a real estate investment trust, for about $6 million. Excel also agreed to assume about $2 million in back taxes as part of that deal. BG then leased back the property from Excel for 75 years. Other terms of that lease were not disclosed.

The modest price paid by BG Development, and then Excel, represents only a fraction of the $150 million the center's original developer, Galleria Limited Partnership, spent to build the mall.

The project site is in a prime location -- smack in the middle of the downtown shopping district of Scottsdale, a resort town near Phoenix.

Despite its prime location, the marble-floored Galleria, which promised Rodeo Drive-style shopping and one-of-a-kind stores, never caught on after it opened in price-conscious 1991. Not only did customers shun the mall, but its high-end tenants began filing lawsuits against management to get out of their leases. Last spring, Mitsubishi Bank, original lender on the project, filed a notice of default on the property when Galleria Limited Partnership defaulted on $94.2 million in loans and failed to pay about $2.1 million in interest payments. Brant, who said he could not comment on the specifics of the sale because of a confidentiality agreement, said only, "We feel we made a very good real estate deal."

Graham Bullick, a spokesman for Excel Realty Trust, added, "It's a once in a lifetime opportunity that has a wonderful upside; it doesn't have a down side. We (at Excel) are traditionally bargain hunters, but we haven't found anything this good in our past (17 years in business)."

The shopping mall already had many of the expensive amenities in place, such as a nine-level parking garage valued at $9 million and eight pairs of escalators with a combined worth of $2 million.

"We don't like to be involved in failures," said Hathaway of Jerde Partnership. "With this sort of sporting concept, there are a lot of people trying to put it together. The advantage here is that we have a building that we paid very little for -- someone else trying to do this would have to build a new building -- and a city very willing to try it."

For the City of Scottsdale, the purchase is the end of a losing streak in its plans for downtown redevelopment.

"(The sports complex) is going to bring new life and new attraction to downtown," said Scottsdale Councilman Greg Bielli, who said watching the Galleria's struggles over the past two years has been "very difficult."

But the project almost happened in Los Angeles, not Scottsdale.

Gordon and Brant had wanted to build their first sporting megaplex at the site of a retail project in an undisclosed location in Los Angeles.

"We pursued it diligently with the owners," said Brant. "It's a project that's not working as a retail project, and a major anchor tenant is about to move out. We would still like to do it at that L.A. location at a later date."

Meanwhile, the Scottsdale site was too good to pass up, Brant said.

"There's 8 million tourists there, someone said," Brant recalled. "And what other market can you show me that had 300,000 people waiting at the airport for a losing basketball team (the Phoenix Suns after their NBA Finals loss to the Chicago Bulls)."

Last November, Gordon and Brant called together Scottsdale city officials and sports and entertainment contacts, including representatives from the Walt Disney Co., Sports Illustrated magazine, Major League Baseball and the NBA, and sports marketing specialists. In a one-day meeting at the Marriott Suites in Scottsdale, the group critiqued the sports center concept.

"Everyone loved it," said Brant. "Everyone thought it was a timely concept...and they just thought it was going to be fun. A lot of us don't get the opportunity to develop projects that we would enjoy, but this is one that I'd personally like to have in my neighborhood."

Gordon and Brant collectively have developed more than 25 million square feet of retail space.

Gordon, a former partner in the Phillip Lyon Gordon Co., which developed the Beverly Center in Los Angeles, formed The Gordon Co. in 1983. Its projects include the San Francisco Centre in San Francisco, Ma Maison Hotel in Los Angeles and the Forum Shops in Las Vegas.

It was while co-developing the Forum Shops, a 240,000-square-foot Roman-themed shopping street next to Caesar's Palace, that Gordon met Brant. At that time, Brant had been vice president of leasing for Indianapolis-based Melvin Simon & Associates, which was co-developing the Forum Shops with Gordon. Melvin Simon was also a partner in the ailing Scottsdale Galleria mall.

Brant broke from Simon about a year ago to become a principal in the Gordon Co. and to form the Arizona partnership, BG Development, with Gordon.

BG Development picked Jerde Partnership to design its sports megaplex because "they're considered the most innovative architects in the country," said Brant. Combining entertainment and retail is nothing new for Jerde, which was architectural designer of the Mall of America in Bloomington, Minn., which combines 2.6 million square feet of retail with a seven-acre theme park, 30 restaurants and 14 cinemas to create the largest enclosed mall in the U.S.

Jerde also was the coordinating architect for the 1984 Los Angeles Summer Olympics, as well as architect of the Westside Pavilion in West Los Angeles, Horton Plaza in San Diego and the redesign of Fashion Island in Newport Beach.