Tuesday, July 8, 2008
Questions, answers regarding Steelers' ownership situation
By John Clayton
News that the Rooney family must restructure its ownership of the Pittsburgh Steelers caught sports fans off guard. Dan Rooney and his son, Art, run what is considered the most stable and one of the most well-operated franchises in the NFL. A family-run business since the late Art Rooney Sr. purchased the team in 1933, the Steelers went public with the news after two years of stalled negotiations. Here are answers to five primary questions about the ownership reorganization.
Q: Why do the Rooneys have to restructure?
A: In many ways, this reorganization was inevitable. Art Rooney Sr.'s legacy was the Steelers and racing. In the early 1970s, Art purchased a dog track in West Palm Beach, Fla., a harness horse racing track in Yonkers, N.Y., and other racing investments. His five sons -- Dan, Art Jr., Timothy, Patrick and John -- own the majority of the Steelers' stock, divided in five equal shares. Dan ran the Steelers. Most of the other brothers handled the racing interests. In 2006, video slots were added to Yonkers Raceway, but NFL ownership rules prohibit gambling interests as investments for team owners. To comply with league rules, the Rooneys either had to divest their ownership shares in the Steelers or eliminate the slots. The decision of some of the brothers was to keep the slots and enter into buyout negotiations with Dan and Art II. Two years of talks have not produced a deal.
Q: Is there any fear the Steelers might leave Pittsburgh?
A: None. Because of the loyalty of Steelers fans and the success of Heinz Field, the Steelers are a successful business. The team generates $200 million in revenue and profits are reportedly at $20 million a year. The franchise is worth between $800 million and $1.2 billion. To move a franchise, a team must post financial losses for a few years. That's not happening in Pittsburgh. The Steelers are a winner on and off the field. The Steelers brand is one of the best in sports. The plan is for Dan and Art II to buy out some of Dan's four brothers, which will have an impact on operating expenses in years to come because they will have to borrow money to buy out their family members.
Q: Will the Steelers stay under the direction of Dan and Art II?
A: Most likely, but major changes in ownership must occur. According to one plan, Dan offered $35 million to each brother and the McGinley family, which owns 20 percent of the team, for a 5 percent stake in the Steelers. The brothers believe the price of the shares should be higher, so talks continue. To fund these transactions, Dan and Art II probably need to come up with a new partner, and the name being mentioned is Pittsburgh billionaire Stanley Druckenmiller, the chairman of Duquesne Capital Management. Druckenmiller, who's worth $3 billion, once lived in Pittsburgh, and was a loyal fan. He lives in New York now, but still has a company office in Pittsburgh.
Q: How is the league office handling the situation?
A: The league is sensitive to the Rooney ownership issues and isn't putting any pressure on the family. The league has imposed no deadline for resolution, and former commissioner Paul Tagliabue has offered his services as a consultant to mediate the situation. The league wants Dan and Art II to continue to run the Steelers, and it wants to make sure the team doesn't incur more debt than is manageable. That support has bought the organization two years to solve this problem. Even though the league has been working with the Steelers for those two years, it never leaked any of the details to the media. Years of being a model franchise earned the Steelers that perk.
Q: What will be the final resolution?
A: Ultimately, Dan and Art II should end up continuing to run the Steelers. Once the brothers who want to sell settle on the value of those shares, deals will be worked out. It probably means that a noncontrolling new partner such as Druckenmiller will be brought in as an investor. Budgets might be a little tighter because of a new debt load, but the Steelers should still be the Steelers in the end.
John Clayton, a member of the Pro Football Hall of Fame writers' wing, is a senior writer for ESPN.com.