Bruce P. McNall made his fortune in the 1970s selling pristine antique coins to collectors. He turned that wealth and status into sports, becoming the owner of the NHL’s Los Angeles Kings and the CFL’s Toronto Argonauts, and winning the most prestigious thoroughbred horse race in France. He has also produced several Hollywood films, including Weekend at Bernie’s and The Manhattan Project. And for good measure, he owned several homes and a Boeing 727.
Then, in a flash, it was all gone. Suddenly McNall had nothing left, a position he had never been in before. So what exactly happened? How did a guy who had big celebrities like Tom Hanks, Kurt Russell and Goldie Hawn on speed dial lose it all? And perhaps more impressively, how did he stay in Hollywood’s good graces?
Really, it’s thanks to his tremendous networking ability. The man is a schmoozing machine. McNall built his wealth through his charm and helped boost his work via bankers and brokers. He used the Kings as a vehicle to borrow millions of dollars, and as chairman of the league’s board of governors (the NFL’s second-highest position), he persuaded both the Walt Disney Company and Wayne Huizenga, the founder of Blockbuster, to buy NHL teams too.
McNall associated celebrities he knew with bankers’ money. It seemed like a win-win; bankers got to rub shoulders with stars, while stars received money to pursue their interests. The main problem: McNall’s businesses stopped making money in the 1990s, and in 1994 he was forced into liquidation for default $160 million in loans.
McNall, who was born on April 17, 1950, in Arcadia, California, developed an interest in trading antique coins as a child. He studied Roman history at UCLA, and by his mid-twenties he had a coin shop on Rodeo Drive. Soon he was traveling the world in search of coins with Texan financier Nelson Bunker Hunt. It was Hunt who introduced McNall to the worlds of money, sports, and horses.
Even though he was only 24 years old, McNall adhered to the adage “spend money to make money”. In 1974, he paid $420,000 – a sum four times greater than the previous record – for the decadrachm of Athena, from the 5th century BC. AD It is the rarest piece in the world. He bought the Kings for $15 million, then agreed to pay Wayne Gretzky for 10 years to bring him from the Edmonton Oilers.
Quickly befriending Gretzky, McNall entered The Great One on the Argonauts in 1991. Along with actor John Candy, the trio bought the team for $5 million and immediately signed Rocket Ismail, a catcher electrifying and a man back from Notre Dame. , to a four-year, $18.2 million contract. This decision was notable for two reasons: it was a ton of money to give a player in those days, and before signing with the Argonauts, Ismail was playing in the NFL. The fact that he retired from the more established league is further testament to McNall’s suave business acumen.
As an LA hockey team, the Kings’ home games naturally featured plenty of celebrity sightings. Perhaps fueled by fans wanting a taste of the Hollywood lifestyle, ticket and merchandise sales skyrocketed. Feeling the benefit of a rivalry in Southern California, McNall convinced Michael D. Eisner, the president of Disney, to create an expansion team in Anaheim in 1993. McNall got a $25 bribe million dollars from Disney for accepting a team in its home territory.
But despite all that spending, McNall’s Kings teams never made any money while he owned them. The main reason for this is that the team had to shell out big bucks to play their home games at the Great Western Forum, owned by then Lakers owner Jerry Buss. Anyone who’s been to a Lakers game knows they go all out on extravagance.
During this time, McNall’s coin collecting business was stimulated by creating artificially high values for the old coins he peddled. He did this by introducing his investors to a market dominated by collectors. The market plummeted in the late 1980s, so McNall turned to banks, particularly Merrill Lynch, and raised nearly $49 million in limited partnerships. Again, however, McNall was unable to get the profits he thought he could get, and the first two funds were liquidated. But even though those funds lost money, McNall still made some for himself, as companies paid him to manage and collect coins.
It turned out that the coin company was also about to run into trouble. In December 1993, Bank of America told McNall he had defaulted on a $90 million loan guaranteed by the Kings; if he didn’t sell the team by the end of the month, Bank of America would force them into bankruptcy.
McNall eventually found a business to sell: telecommunications company IDB Communications Group, which had just merged with LDDS Communications. Bank of America ultimately financed $50 million of the $60 million purchase price for a 72% stake.
Although McNall had to relinquish control of ownership of the team, he was still able to retain the remaining 28% of his stake and remained chairman and governor for a time thereafter. Court documents show the bank took the $60 million proceeds and $12.5 million different from Disney, half of its payment for its Anaheim expansion with the Mighty Ducks. Bank of America also took a 10% stake in LDDS Communications. And, in good news for McNall, the bank has released him from his remaining $30 million claim, so he can use that security to pay other creditors.
But that was the only bright spot for McNall. His film company, Gladden Entertainment, was forced into bankruptcy. Just two weeks after the Kings were sold, McNall had three separate banks filing for Chapter 11.
Mr. McNall’s empire was rapidly unraveling. The federal grand jury subpoenaed his business records and those of his associates. His movie company, Gladden Entertainment, creator of “Mr. Mom” and “The Fabulous Baker Boys,” was forced into bankruptcy in April by debt. About two weeks after the Kings’ sale, three of Mr. McNall’s banks, Credit Lyonnais, IBJ Schroder and European American Bank, filed for involuntary bankruptcy, a case that has since been escalated into a Chapter 11 reorganization.
McNall’s downfall also caused problems for Merrill Lynch. Numismatic, McNall’s coin company, resigned as general partner and, while sorting through inventory, Merrill Lynch discovered that 399 coins (worth $3.3 million) were missing from the World Coin Fund. This led to legal action by investors; a second lawsuit followed, this one accusing Merrill Lynch and McNall of illegally acquiring coins in the funds. McNall confirmed these accusations in an interview where he said he smuggled coins from foreign countries and that the bulk of coins from two Merrill Lynch funds were taken illegally. The coins were eventually recovered by their rightful owner, to whom McNall had paid $100,000 per month. He probably got at least some of that money by charging $4 million to a Merrill Lynch fund for his purchase of those coins, then wired the money to a Swiss company he owned. Very sneaky!
On December 14, 1994, Bruce McNall pleaded guilty to five counts of conspiracy and fraud and admitted to defrauding six banks out of $236 million over a 10-year period. He was sentenced to 70 months in prison, although he was released 13 months early for good behavior. His fraudulent spending also trickled down to the Kings, as the team filed for bankruptcy in 1995 and remained in dire financial straits for several years.
While in prison, McNall was visited by friends like Gretzky, Kurt Russell and Goldie Hawn, and received letters and well wishes from Eisner, Tom Hanks and television producer Barry Kemp. In 2003 McNall wrote a book titled Have Fun While It Lasts: My Rise and Fall in the Land of Fame and Fortune, and continues to work in the film industry, albeit in a much smaller production role. Today, he has a modest net worth of $3 million and runs ProCon.org, a charity that the website says is “dedicated to promoting critical thinking, education, and informed citizenship by presenting controversial issues in a straightforward, non-partisan, mostly pro-con format.”
Let’s hope McNall is a bit more level-headed this time around, but one thing is certain: if he gets into trouble, he’ll have plenty of friends he can count on to back him up.