´ Steel Curtain Rising: Steelers for Sale? Ownership in “Transition” - Analysis

Which were the most important reasons the Steelers lost to the Ravens (pick all that apply)

Tuesday, July 8, 2008

Steelers for Sale? Ownership in “Transition” - Analysis

While the news that the Steelers ownership is in transition might have caught Steelers Nation off guard, it shouldn’t have. Dan Rooney is 75, and while he’s in good health and his father lived to be 87 securing the Steelers future has to have been on his mind.

To my knowledge, this issue has been publicly discussed twice. Once in a book by Ed Bouchette and another time in a book by Jim O’Brien.

In his book The Dawn of a New Steel Age, Ed Bouchette reported that the Rooney’s were aware a situation like this would arise. Bouchette focused on the fact that if each brother passed ownership along to his children, the Steelers management structure would become unwieldy. Offering little in the way of detail, Bouchette suggested that Dan Rooney would attempt to buy out his brothers. It would seem that he is attempting this is now.

However, The Dawn of a New Steel Age was written in 1993, before NFL franchises held the astronomical value that they hold today. The reports by ESPN and MVN.com that the other Rooney brothers are interested in discovering what they can get on the open market are a potentially ominous sign.

ESPN has reported that Forbes Magazine has assessed the Steelers potential value at 717 million dollars. An earlier report by Biz Journals estimated the team’s value at 820 million dollars.

One must assume that each Rooney boy owns an equal share of all assets in the family’s portfolio. But given that racetracks are in decline while the NFL is still appreciating, these negotiations cannot be easy.

It figures that any deal will involve Rooney exchanging his shares in the family’s other holdings plus a large amount of cash for his brother’s collective interests in the Steelers. Given the NFL’s restrictions on gambling, its almost certain that the other Rooney boys must fully divest, that it won’t be enough for Dan and Art to put together the money to acquire 51%.

In other words, if Dan and Art II want to keep the team, they’re going to need to fork over a lot of cash if they are to keep the team.

Reports indicate that Dan and Art II. are assembling to do just that, but a push by the other Rooney boys to shop the team could spell trouble.

The Steelers are one of the NFL’s marquee franchises, and it is easy to imagine an auction quickly spinning out of control. Dan and Art will certainly secure a substantial credit line, but with the Steelers reporting an estimated $36.5 million operating profit, one must question their ability to sustain themselves in a bidding war.

Blood Runs Thicker than Water, but Neither is Green

The Rooney’s have been held up as an NFL equivalent of a mom and pop store. The bonds that tie the brothers by all accounts are quite strong.

But money’s power to corrupt can be horrendous, and more than one close-knit family has been broken apart by bitter disputes over what to do with the family business.

The Rooney brother’s have already shown a willingness to sacrifice self interest for the good of the family – Art Rooney Jr. quietly accept being fired by Dan in the mid-80’s.

While that’s a solid precedent, past performance is no guarantee of future results, especially when hundreds of billions are potentially at stake….

The only other piece of published evidence we have on this matter comes from Jim O’Brien’s 2001 book The Chief, where he described about how the Rooney’s have been selling off assets as they aged. He speculated that that the Rooney’s might sell the Steelers one day too, cautioning that it would be “for the right reason.”

Between the Lines

Both Dan and Art II issued the following statements:

  • Steelers Chairman Dan Rooney stated, “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.”
  • Steelers President Art Rooney II stated, “There is no reason to believe that the current internal discussions will have any impact on our fans or on our team this season or in the seasons to come.”

Reading between the lines, Dan’s statement is far less positive than Art’s. “I will do everything possible to work out a solution…” sounds like a man facing an uphill battle.

Art’s is much more categorical, and much more positive, simply stating that the fans or the team will not see any impact.

What to make of these differences? Absent inside information, its all in the eye of the beholder.

League Involvement

The fact that the NFL has appointed Paul Tagliabue to “represent” the league’s interests, shows that the league see this as a serious matter, when was the last time when was the last time the league got involved in an internal ownership issue? With that said, Dan Rooney is close to both Roger Goodell and Paul Tagliabue, so their involvement is likely a good sign.

Watch Tower

It is interesting to note that neither of the Pittsburgh publications cited the desire of the other Rooney brothers to shop the team around, while national outlets did report this fact?

Did the Pittsburgh press leave this out because their reporting discounted that as a rumor, or did the national press scoop the local media? It is impossible to tell, as no report is citing sources as of yet. (The national press got it wrong on Bill Cowher’s successor.) It’s also possible that interested buyers have leaked word to the national press in an attempt to rouse interest from within the family – but that is purely speculation.

Likewise, there is little indication as to who, how or why the story broke today. The Steelers issued a press release, but it is impossible to tell if they did this on their own, if they did so because they got wind the story was going to break, or if this was in reaction to published press reports.

Hottest story

Twenty three days before training camp, this is clearly become the hottest story of the Steelers’s 2008 off season. Steel Curtain Rising asked Ed Bouchette a number of times to update what he’d written in 1993 to no avail. It seems that he’ll have no choice but to address the issue now.

No comments: