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Steelers Secretly Shopped to Potential Buyers (1 Viewer)

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"The storied Pittsburgh Steelers football franchise has been secretly shopped to potential buyers amid continuing divisions among the five sons of the team's founder, Art Rooney Sr. The talks affect not only one of America's iconic sports franchises, but one of its most fabled sports families. Steelers Chairman Dan Rooney, who helped build the National Football League and is the oldest of the five sons, wants to consolidate his control by acquiring most of his brothers' shares in the Steelers over 10 years, those briefed on the talks said.

In a statement Monday afternoon, Dan Rooney confirmed these efforts and said, "I have spent my entire life devoted to the Pittsburgh Steelers and the National Football League. I will do everything possible to work out a solution to ensure my father's legacy of keeping the Steelers in the Rooney family and in Pittsburgh for at least another 75 years

The statement said the company is restructuring its ownership to ensure compliance with NFL rules. Dan Rooney "wants to stay in the football business while some of his four brothers plan to get out of the NFL and focus their business efforts on their racetracks and other interests." The statement said that Dan Rooney and his son, Steelers President Art Rooney II, are arranging a financing plan to buy Dan's brothers' shares in the team in order to continue substantial ownership of the franchise by the Rooneys.

But some of the brothers and younger third-generation family members are asking whether a better deal can be put together, if there is to be an ownership change.

However its fate is decided, the Steelers franchise is a rich prize. The team has won five Super Bowl titles and been among the most dominant in the league for 30 years. They play in a new riverfront stadium that routinely sells out its 65,000 seats. And their fan base is famously loyal, reaching far beyond western Pennsylvania."

http://online.wsj.com/article/SB1215463977...p_us_whats_news

 
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Ruh roh George :goodposting:

By JOHN R. WILKE

July 8, 2008; Page A1

The Pittsburgh Steelers -- owned for 75 years by the same local family -- is secretly being shopped to potential buyers as the five sons of the football team's founder and their heirs spar over the storied franchise's future.

Associated Press

Art Rooney Sr., left, and his oldest son, Dan, in 1970

Steelers Chairman Dan Rooney, the eldest of the brothers, wants to consolidate his control through a 10-year plan to buy out most of their shares, but a well-funded prospective buyer has emerged after some of Mr. Rooney's brothers and their children raised questions about his offer.

Stanley Druckenmiller, billionaire chairman of Pittsburgh's Duquesne Capital Management, has expressed interest in acquiring the Steelers, people briefed on the negotiations said.

The closed-door talks affect not only one of America's iconic sports franchises, but one of its most fabled sports families.

In a statement Monday, the Steelers said Mr. Rooney "wants to stay in the football business while some of his four brothers plan to get out of the [National Football League] and focus their business efforts on their racetracks and other interests." The statement said that Mr. Rooney and his son, Steelers President Art Rooney II, are arranging a financing plan to buy the brothers' shares in the team in order to continue substantial ownership of the franchise by the Rooneys.

"I will do everything possible to work out a solution to ensure my father's legacy of keeping the Steelers in the Rooney family and in Pittsburgh for at least another 75 years," Dan Rooney said in the statement.

But some of his brothers and younger third-generation family members have sought an independent analysis by a top Wall Street investment bank to see whether a better deal can be put together. They worry that Dan Rooney's plan undervalues the team and takes on too much debt.

Working in tight secrecy under the code-name "Project Newcastle," Goldman Sachs & Co. late last year valued the Steelers operations at $800 million to as much as $1.2 billion, according to documents reviewed by The Wall Street Journal.

Mr. Druckenmiller, who has told Rooney family members that he hoped to retain Dan Rooney as a partner if he buys the franchise, also wouldn't comment for this story.

The Rooney family's divisions over the future of the Steelers are a classic example of the challenge facing second- and third-generation owners of a family business. Looming estate taxes and diverging interests among the children and grandchildren of the founder raise pressure for a sale, bringing emotional family issues into play.

The Rooney brothers own 80% of the Steelers through Rooney Enterprises LLC; the McGinley family, their cousins, own 20%. Rooney Enterprises also owns the Yonkers Raceway just north of New York City and its profitable casino; the Palm Beach Kennel Club, a faded Florida dog track that now has a poker room; and other holdings, including a horse farm in Maryland.

The Steelers are by far the family's crown jewel. Art Rooney Sr. -- a colorful, cigar-chomping sportsman who kept the team going in its early years through his skill as a horse-race handicapper -- bought the club for $2,500 in 1933.

He was known in football circles as "The Chief" and, along with a handful of other early owners, was enormously influential in steering the NFL from a small and clubby league into the U.S.'s premier professional-sports organization. After decades of losing, the Steelers became a powerhouse in the 1970s, fielding marquee players such as quarterback Terry Bradshaw and Franco Harris. The team has won five Super Bowls and thrived despite the economic ups and downs of their home city.

Dan Rooney, 75 years old, became Steelers chairman on his father's death in 1988; his brothers, Art Jr., Tim, Pat and John, are vice presidents of the Steelers and operate the other family businesses. Dan Rooney named his son, Art II, as the team president after the 2002 season.

Dan Rooney's role in the NFL would be difficult to overstate. He has been involved in most major decisions for the past 30 years, serving on committees that have expanded the league into new markets and navigated difficult labor relations with players. He also promoted diversity in hiring, imposing a requirement that teams interview minority candidates for top coaching positions, which became known as the Rooney Rule.

The Dan Rooney family's buyout proposal was presented by Société Générale SA under the code-name "Project 33," documents show. The plan appears to value the Steelers at well below the price range envisioned by Goldman.

Under the SocGen plan, the Dan Rooney family would take on substantial debt and pay $35 million to each brother and the McGinley family for a 5% stake in the team. Dan Rooney's family then would buy more equity, at a price to be determined, over 10 years, leaving each with a 5% stake in the team.

The Goldman valuation was sought by family members who wanted an alternative to their elder brother's plan. In it, Goldman says, "the family must begin the process of planning for the future of the franchise, which will entail balancing numerous and sometimes competing interests." At some point earlier this year Mr. Druckenmiller was drawn into the mix. If his bid is successful, he has told Rooney family members, he'd like Dan Rooney to continue running the team.

Waiver From the NFL

Dan Rooney's plan would require a waiver from the NFL, because the debt would exceed league limits, SocGen's bankers said. NFL Commissioner Roger Goodell assigned Paul Tagliabue, his predecessor as the league's leader, to work with the families and investment bankers to resolve the ownership situation.

Some family members expressed concern to bankers involved in the talks that Dan Rooney could use his enormous influence with the NFL to favor his family's bid. Mr. Rooney has had a major role in selecting NFL commissioners, and the NFL would have to approve any sale.

Technically, the Steelers ownership is out of compliance with NFL guidelines already. The league requires that a single person own at least 30% of a franchise to be principal owner; in the Rooney family, each brother's share works out to 16%. And the league has limits on owning gambling operations, at a time when the Rooney family stake in casinos is increasing.

These concerns make it unlikely the current ownership structure will continue. Both the Dan Rooney bid -- if a waiver can be obtained on the debt limit -- or an outright purchase of the team by another buyer would address these issues.

In a letter that sought to summarize family views late last year, Mr. Tagliabue wrote to Mr. Goodell that "the Chief" wanted Steelers ownership "continued within the Rooney family beyond the current generation of brothers if at all possible and consistent with the economic and operating realities of the NFL."

But the Tagliabue letter also says, "Everyone endorses the concept that any sales or transfer of equity interests in the Steelers need to be based upon fair and market-based valuations."

The NFL declined to comment, and Mr. Tagliabue was on vacation, his office said, and could not be reached.

Rich Prize

However its fate is decided, the Steelers franchise is a rich prize. The team plays in a relatively new riverfront stadium that routinely sells out its 65,000 seats. And its fan base is famously loyal, reaching far beyond western Pennsylvania.

By all accounts, Mr. Druckenmiller is one of those loyal fans, routinely attending home games and rarely missing a playoff, associates say. And while he spends much of his time in New York these days, he lived in Pittsburgh for more than 30 years, and his firm, Duquesne Capital, has its offices there. With a net worth estimated at more than $3 billion, he is perhaps best known as the chief trader, until 2000, for hedge-fund pioneer George Soros.

The Steelers' operating income is estimated at $20 million a year, on $200 million in revenue, the investment bankers at Goldman noted. In benchmarking a possible price for the Steelers, Goldman used a multiple of about 40 times operating income, the average of recent NFL team sales, in arriving at its valuation of at least $800 million.

Others involved in these discussions, however, noted the price could be hurt because -- despite the team's fan base and strong ties to the city -- Pittsburgh is no longer a growing market and has fewer big companies that can afford lucrative box suites.

Write to John R. Wilke at john.wilke@wsj.com
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The Rooney family's divisions over the future of the Steelers are a classic example of the challenge facing second- and third-generation owners of a family business. Looming estate taxes and diverging interests among the children and grandchildren of the founder raise pressure for a sale, bringing emotional family issues into play.
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This is the issue in a nutshell. Some want out and the ones that want to stay in are scrambling to buy them out. Of course there is a dispute as to how much the team is really worth. Dan Rooney is going to try to undervalue the team while those that want out want top dollar.In cases like this there is often no bad or good guys -- it is just an unfortunate situation that many families face when there are assets which are joint-owned and some want to sell and others want to hold onto.
 
Story made page one of the Journal this morning and is now much longer and more detailed than what I copied in the 1st post. There is another bidder outside the family, investment bankers (Goldman, Soc Generale) are involved, and Goodell assigned Tagliabue to work with the family and bankers to resolve the ownership situation.

ETA- Druckenmiller, the bidder (from Duquesne Capital) said he'd still want Rooney to run the team if his bid was successful.

 
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I hope Dan Rooney is successful. It would be a shame if they lose the team because some members of their family want more money.

As a kid in the 70s, the Steelers were always my 2nd team each year (NE Pats first, so I rooted a lot for the Steelers then :useless: ). My first jersey was Mean Joe Green , which looked great on a ten year old kid who was about 4' and about 60 pounds. Now, even though they are one of our main AFC rivals, I still root for them when the Pats aren't involved.

Good luck to Dan and his son. The NFL wouldn't be the NFL without them.

 
i just edited my post to note that Rooney could still at least run the team. The current ownership structure has a couple of problmes as-is, including that a single individual is supposed to own at least 30% of an NFL team and the league has limits on owning gambling operations, at a time when the Rooney family stake in casinos is increasing.

 
Investor would leave Steelers in Rooney's control, source says

Tuesday, July 08, 2008

By Gerry Dulac, Pittsburgh Post-Gazette

Stanley Druckenmiller, the billionaire chairman of Pittsburgh's Duquesne Capital Management and a member of Oakmont Country Club, was contacted by a member or representative of the Rooney family about buying shares in the team, the Pittsburgh Post-Gazette has confirmed.

It is unclear just how much interest Druckenmiller would own in the franchise, but, according to a source who is a friend of Druckenmiller, he has been approached about possibly purchasing the shares of at least two or three of the Rooney brothers.

The source said Druckenmiller is only interested in providing investment capital to the Rooney family and would let Dan Rooney run the team "as long as he wants." He also said it has been Druckenmiller's "lifelong dream" to be one of the Steelers' owners.

Several years ago, Druckenmiller came to Oakmont's rescue when the club was involved in a power struggle with the United States Golf Association over the construction of a new pedestrian bridge.

When the USGA told Oakmont it would not bring a U.S. Open back to the club until a new bridge was built over the Pennsylvania Turnpike, Druckenmiller agreed to pay for the bridge as long as his donation remained anonymous. Druckenmiller paid between $500,000 and $800,000 for the bridge.

First published on July 8, 2008 at 10:37 am
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Frenchy Fuqua said:
Investor would leave Steelers in Rooney's control, source says

Tuesday, July 08, 2008

By Gerry Dulac, Pittsburgh Post-Gazette

Stanley Druckenmiller, the billionaire chairman of Pittsburgh's Duquesne Capital Management and a member of Oakmont Country Club, was contacted by a member or representative of the Rooney family about buying shares in the team, the Pittsburgh Post-Gazette has confirmed.

It is unclear just how much interest Druckenmiller would own in the franchise, but, according to a source who is a friend of Druckenmiller, he has been approached about possibly purchasing the shares of at least two or three of the Rooney brothers.

The source said Druckenmiller is only interested in providing investment capital to the Rooney family and would let Dan Rooney run the team "as long as he wants." He also said it has been Druckenmiller's "lifelong dream" to be one of the Steelers' owners.

Several years ago, Druckenmiller came to Oakmont's rescue when the club was involved in a power struggle with the United States Golf Association over the construction of a new pedestrian bridge.

When the USGA told Oakmont it would not bring a U.S. Open back to the club until a new bridge was built over the Pennsylvania Turnpike, Druckenmiller agreed to pay for the bridge as long as his donation remained anonymous. Druckenmiller paid between $500,000 and $800,000 for the bridge.

First published on July 8, 2008 at 10:37 am
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Apparently not anonymous anymore.
 
I don't think Art Modell can afford it. Plus he's a million years old and the franchise would be facing the same kinds of succession problems in just a few years.

 
Here's today's follow up article. Not much new; it only made page two. ;)

'Hail, Mary': Steelers Fans Face Realities of a Sale

Pittsburgh Prays On Hearing News: Please Don't Move!

By KRIS MAHER July 9, 2008; Page A2

PITTSBURGH -- News that the longtime owners of the Pittsburgh Steelers could sell part or all of the football franchise is sending shockwaves through Steeler Nation.

The Rooney family has been associated with the franchise since Art Rooney Sr., one of the National Football League's legendary owners, purchased the team in 1933. His five sons now control the team. The family has sought interest from outside investors, The Wall Street Journal reported Monday.

Despondent fans: The Pittsburgh Steelers are an integral part of the city and its self-image.

Here in Pittsburgh, the possibility that the team could be sold -- or even sold and moved to another city -- is wrenching for many fans because the Steelers have become such an integral part of the city and its self-image since the steel industry imploded in the 1980s.

Stanley Druckenmiller, billionaire chairman of Duquesne Capital Management, in Pittsburgh, is a possible bidder, according to people briefed on the negotiations. Mr. Druckenmiller has told Rooney family members that he would ask the team's chairman, Dan Rooney, to continue running the team and that it would remain in Pittsburgh.

Mr. Rooney, the eldest son of the team's founder, said Monday he would do "everything possible" to ensure that the team remains based in Pittsburgh and under family control. His son, Steelers President Art Rooney II, said "there is no reason to believe" current discussions about ownership would impact fans. A team spokesman said Tuesday the Rooney family had no further comment.

But fans in Pittsburgh and those around the country who have strong ties to the team are unsettled. "I'm having a hard time breathing," posted one fan on Steelers Fever, a fan Web site, in response to the news. "This is a dark, dark day in Steelers history," another wrote.

"I, along with most of the Steeler Nation, seem to be in a state of shock," said Kyle Brown, a 20-year-old fan who lives in Garrettsville, Ohio. Mr. Brown said his parents grew up in Johnstown, Pa., and "thankfully" raised him to be a Steelers fan. "The Rooney family are people that we have come to know and love," he added.

Some fans weren't willing to admit that a change in the team's ownership structure could lead to changes for fans. The chances that the Steelers could leave Pittsburgh are "zero," said David Fair, 39 years old, a graphic designer who lives in New Kensington, a Pittsburgh suburb, who runs a fan site named Steeler Nation. "The team is everything to the city," said Mr. Fair, noting that if the team loses on a Sunday "this town is in a deep, dark depression."

Perhaps, but sports experts said the history of other football teams should give Steelers fans pause. Jim O'Brien, a Pittsburgh sports author and historian who has written 12 books on the Steelers, noted that Los Angeles, Cleveland and Baltimore -- each with a once-storied franchise -- have all lost football teams. He suggested fans would be naive to think the team couldn't be moved. "To me, it's a possibility," he said. "It's unsettling because people wouldn't want to see anyone but the Rooneys running the Steelers."

The city's affection for the Steelers founder will be on display in "The Chief," a one-man play about Art Rooney Sr.'s life scheduled for its sixth run at the Pittsburgh Public Theatre in September. Fans typically show up at performances wearing team jerseys and team-color black-and-gold paraphernalia.

Rob Zellers, who co-wrote the play and is education director at the theater, said he was "blown away" by the thought that the Rooney family could sell. "They have grace, and they care about the community," he said. "There's just some things that you can never imagine."

The Steelers' notoriously far-flung fans are watching the news closely. Dan Caldwell, 53, an attorney in Atlanta, said, "For people who've left the city, the part that they've kept with them is the Steelers." He said he has been a fan of the team since the 1960s and continued to be one when he moved away from the city in 1980. But he said he couldn't see the team leaving Pittsburgh. "That would be like the Yankees not being in New York," he said.

Write to Kris Maher at kris.maher@wsj.com

 
roadkill1292 said:
I don't think Art Modell can afford it. Plus he's a million years old and the franchise would be facing the same kinds of succession problems in just a few years.
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He's also not independently wealthy. Modell's wealth was always from the ownership of his team, and not from some other venture. He doesn't have the juice to be anything other than a minority owner in some group, which wouldn't happen anyway.
 
cj* said:
Rumor around here is that Art Modell is making a push.
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Modell still owns a 1% share in the Ravens, as part of a legal manuver so as to not pay a finders fee to the Andrew's Trust, as pat of the original sale of the Browns to Modell in '63According to Wikiopedia, to divest the 1% would cost modell $30M, leaving him as an unlikely player in this

I know it's hard to believe ##### like this can come down, but it is part of the current NFL landscape...the good news for Steeler fans is the venture capitalist involved seems to want to leave control to the Rooney family, and the sale of 30% to him would help get the situation "right" w/the NFL

Hard for Goodell to run around and preach "moral", "character" and the like for the players, but allow a controlling interest of one of the NFL franchises to a family involved in racing and casinos...

alittle like :confused:

letting Drunkenmiller in @30% would solve a whole lot of problems @the commisioners office, which is why I would think Tags is involved running point on what was covert operation "Project Newcastle"

 
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This is news, but I don't think it's a big deal. Druckenmiller is a Pittsburgh guy and a huge Steeler fan. Might even be good for the franchise.

 
Steelers looking for more investors

Dan Rooney, son lining up 'names you will recognize' for partnership

Thursday, July 10, 2008

By Gerry Dulac and Dan Fitzpatrick, Pittsburgh Post-Gazette

On a day when the four Rooney brothers officially announced Wall Street investment bank Goldman Sachs & Co. as the financial adviser for the possible sale of their ownership stake in the Steelers, Dan Rooney and his son, Art II, began lining up "names you will recognize" to be part of a financial partnership that they hope will help them gain majority control of the National Football League franchise.

And here's a twist: One of the persons with whom they have had discussions is none other than billionaire investor Stanley Druckenmiller -- the same person who is seeking to buy the shares of the other four Rooney brothers and become majority owner of the Steelers.

According to a source who has intimate knowledge of the situation, the Steelers are working with two investment banks -- Morgan Stanley in New York and PNC Bank, Downtown -- and are compiling a team of investors to buy all, or even a portion, of the shares owned by the other four Rooney brothers -- Art Jr., Tim, Pat and John.

The investors, who were not identified, are people from the Pittsburgh area and other parts of the country, some of whom are "names you will recognize," according to the source.

They would help Dan Rooney, chairman of the Steelers, and Art Rooney II, the team's president, come up with a financial package that would allow them to purchase enough shares and assume majority control of the Steelers without violating the NFL's limit on debt assumption, the source said. The NFL has what is known as a "debt ceiling" of $150 million per franchise, though the league has been known to grant waivers to some teams.

It would also allow the Steelers to comply with an NFL policy that requires a team owner to have at least 30 percent controlling interest in the franchise. Right now, the Rooney family owns 80 percent of the team, with the five brothers each owning an equal share, or 16 percent.

However, the Steelers are one of several teams that have been "grandfathered" before the policy took effect because of the Rooney family's 75-year involvement with ownership.

The source also said that one of the four Rooney brothers is considering selling his entire share in the team, while the other three could sell just a portion of their share -- making it even more financially palatable for Dan Rooney to gain control of the franchise.

Speaking on a radio show that was taped Tuesday but aired last night on KQV Radio, Dan Rooney said, "What we're trying to do is get in compliance with NFL rules, that's the No. 1 thing. That includes the gambling [policy] and the 30 percent requirement. I'm doing everything I can to get us into compliance."

One of those things, ironically, is seeking the financial help of Mr. Druckenmiller, 55, chairman of Pittsburgh-based Duquesne Capital Management, which has an estimated worth of $3.5 billion. It is not known what level of involvement Mr. Druckenmiller would have with Dan Rooney, especially because he was the only investor contacted by the other four Rooney brothers in their evaluation of alternatives for their ownership shares.

But, according to the source, Dan Rooney and his son have talked to Mr. Druckenmiller, an Oakmont Country Club member, and "it's possible" he could be a part of their financing team.

Yesterday, the four Rooney brothers -- not including Dan -- confirmed they have retained Wall Street investment bank Goldman, Sachs & Co. as their financial adviser and jointly issued the following statement:

"The Rooney family name has been synonymous with Pittsburgh Steelers football for over 75 years. We hold in the highest regard the legacy of our father, Art Rooney, the founding owner of the Pittsburgh Steelers, and share enormous pride in the success of the Pittsburgh Steelers and the NFL.

"Our brother Dan has continued this legacy, and, as majority [co-] owners of the Steelers franchise, our goal is to ensure the continued success of the franchise in Pittsburgh. We echo the sentiments expressed publicly by the Steelers president that these family discussions will not have any impact on the team this season or in seasons to come and we look forward to the Rooney family's continued involvement in the franchise."

The involvement of Goldman, Sachs to "evaluate alternatives for their ownership stake" is an indication family members are open to the highest and best offers.

"Yes, [the team] is in play," said Greg Melvin, chief investment officer for Downtown money manager C.S. McKee and president of Dartmouth Capital in Wexford. "If Goldman Sachs is involved, it is in play." There is a "90 percent chance," he added, that the shares will go to the "highest bidder."

And Goldman "would call anybody they thought was interested."

Who else besides billionaire hedge fund manager Stanley Druckenmiller would want to buy a portion of the Steelers? One candidate that comes to mind is billionaire Mark Cuban, a former Pittsburgher who owns the Dallas Mavericks.

But Mr. Cuban wrote in an e-mail to the Post-Gazette yesterday that he "would not be interested."

"I think the current cap structure of the NFL, as I understand it, puts small markets at a competitive disadvantage. With the price it would sell at, I don't see that as a viable combination."

Mr. Cuban also noted that he has "not talked to anyone" regarding a possible Steelers bid.

If Mr. Druckenmiller does emerge as the buyer of certain Rooney shares, he would join a growing number of well-heeled investment managers and hedge fund operators with interests in sports franchises. One local example is billionaire Ron Burkle, part owner of the Pittsburgh Penguins and a man worth $3.5 billion, according to Forbes magazine.

Mr. Druckenmiller's net worth is currently $3.5 billion, according to Forbes, and his hedge fund manages assets valued at $4.5 billion as of March 31, 2008, according to a recent regulatory filing.

As a generator of revenue, the Steelers provide a new owner with few opportunities for growth, Mr. Melvin of C.S. McKee said. H.J. Heinz already has the naming rights to the stadium, and there is no room for more new luxury boxes, he added.

What's more, "I don't think the next TV contracts will be a whole lot better. Not a whole lot of synergies there."

Gerry Dulac can be reached at gdulac@post-gazette.com. Dan Fitzpatrick can be reached at dfitzpatrick@post-gazette.com or 412-263-1752. Bill Toland contributed to this story.

First published on July 10, 2008 at 12:00 am
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