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|12-09-2008, 09:05 AM||#1|
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Lot of ground to cover in Steelers deal
Lot of ground to cover in Steelers deal
By Carl Prine and Scott Brown
Tuesday, December 9, 2008
Four sons of Art Rooney Sr. say they've handed the ball to their brother, Steelers Chairman Dan Rooney, in his fourth-and-one drive to restructure ownership of the fabled football franchise as time ticks away.
The main problem is whether the anticipated financing will materialize. Asked whether he could dodge getting tackled by a spreading national economic downturn, Rooney said: "That remains to be seen. There is really not a whole lot I can say about that at this time. We're working on it."
Rooney, 76, made his remarks after a board meeting Monday at Heinz Field where his brothers agreed to a deal that will make him principal owner of the Steelers.
"I think this was a step in the right direction, but by no means is it finished," Dan Rooney said.
If completed, the deal will place the value of the franchise at about $750 million, once business debt of about $50 million is subtracted. According to his brothers, Dan Rooney has placed the team as collateral for a $280 million loan orchestrated by PNC Financial Services. The rest comes from 17 partners he has recruited after winning key concessions from his brothers, they said, to make the sale go through.
The Rooney brothers hope to seal the deal and get National Football League approval by Dec. 31, a deadline set by the league.
"We've done our end of the deal. We got our term sheets in when (NFL) Commissioner (Roger) Goodell wanted them. I'm optimistic that we can get this deal done, but the ball's now with Dan. The hurdles and potholes in the way are his. He has to get the financing squared away," said Art Rooney Jr., 73, the author and scouting genius who helped sculpt the Steelers dynasty that dominated the National Football League throughout the 1970s.
The parties hope to finalize the deal in time for it to be vetted before the NFL's finance committee meets by conference call Dec. 15. The panel was slated to hear terms of the restructuring on Wednesday, but the meeting was rescheduled.
The league's 32 franchise owners meet Dec. 17, when approval of 24 owners could make the deal a reality.
"There's a lot of things we have to do. We have to do that, but we also have the league to deal with. They have to do research on the people, and things like that. That's why it's hard to say. Things come up, the league has their own ideas; things like that," said Dan Rooney.
His brothers said they met all demands the league and Dan Rooney placed before them.
"There are no bad people here. All of the brothers accepted Dan's offer and accommodated his requests as much as anyone could do," said Patrick Rooney, 70, a Florida racetrack tycoon.
"I'm satisfied with the deal. I'm sure we would've been better off if we could've waited another four or five years, once the market improved, and we would've done better," he said. "But the question was whether the NFL would've waited, and they probably wouldn't."
Patrick and brother Timothy Rooney run increasingly lucrative casino gambling operations at parimutuel racetracks in New York and Florida, enterprises that run afoul of NFL bylaws banning the practice. Their father, Hall of Famer Art Rooney Sr., is said to have founded the Steelers franchise in 1933 with $2,500 in proceeds from track bets.
To meet Goodell's demands and exit the league, Patrick and Timothy Rooney will receive their cut of the $750 million -- worth about $120 million each -- immediately.
"This is to accommodate the league. This never was a sale we necessarily wanted to make. It's not something we were thinking about. It was forced on us," said Patrick Rooney, who was represented at the meeting by his son, attorney Brian Rooney of Ann Arbor, Mich.
Art Rooney Jr. told the Trib he will take about $75 million upfront, keep about one-third of his shares for three to seven years before selling them to Dan Rooney and his partners, and put the remaining stake into a trust fund for his heirs.
A similar arrangement was worked out by John Rooney, who like Art plans to remain partners in the corporation along with Oakland's Rita McGinley, 86, sister of deceased Steelers co-owner Jack McGinley. She holds 10 percent of Steelers' stock.
Although Dan Rooney -- also a member of the Pro Football Hall of Fame -- has served as chairman of the franchise for decades, Art Rooney Sr., known affectionately as "The Chief," gave each of his sons a 16 percent stake in the club before he died in 1988.
The remaining 20 percent was carved into non-voting shares held by the McGinley clan. They were represented at yesterday's board meeting by Downtown attorney John R. McGinley Jr.
Art Rooney Jr. described the board session as "cordial," but said he has warned Dan's son, Steelers President Art Rooney II, "to watch out what you wish for, because you might really get it," including hundreds of millions of dollars of debt during a recession and a corral of new partners.
Art Jr. said he hadn't been told the names of his new partners, but he cautioned brother Dan "that no one will be as good of partners as your brothers and your cousins, the McGinleys, have been all these years."
David Tepper, an East Liberty native who runs Appaloosa Management hedge fund in New Jersey, confirmed Dan Rooney's representatives approached him to become a minority partner. "Yes," he said, about being approached. "Is it really going through?"
Tepper, 51, for whom Carnegie Mellon University's Tepper School of Business is named, declined to address rumors that he would become a key partner.
A previous deal with rival hedge fund guru Stanley F. Druckenmiller that would've sold the franchise for $840 million, minus balance sheet debt, embroiled the Rooney brothers throughout the summer before it collapsed Sept. 18.
According to Patrick Rooney, the value of the franchise would have crested at about $755 million once business debt was subtracted, and Druckenmiller would have paid cash. But the brothers hedged at the final meeting.
Art Jr. wanted to mull the weighty consequences of parting with a team the family held for much of the 20th century and into the 21st. Others believed that they might be able to chase a higher price from Druckenmiller and that there might be unresolved conditions to work out.
With markets worldwide fluctuating wildly, Druckenmiller, in no mood to negotiate any longer, yanked his bid.
"I was confused. I thought they should be chasing me, not me chasing them," Druckenmiller said.
Patrick Rooney confirmed the brothers sought to restart talks with Druckenmiller but backed off when Druckenmiller said he would pare the original price substantially. During that time, Dan Rooney was trying to line up investors and obtain bank financing, a process that appears to continue.
If the four Rooneys could have garnered the original $840 million franchise value, the brothers believed a sale would have been best for the family, the franchise, the city and even Dan Rooney, because Druckenmiller said Dan could remain at the helm as a part owner for the rest of his life -- free from concerns about team finances, debt and a threatened strike by union football players.
"There were certainly a couple of tough problems facing us," said Patrick Rooney. "The league said a Rooney had to have ownership of 30 percent of the shares, and everyone was at 16 percent each. There was the gambling thing, too.
"But there also was the fact that we were getting older. You know, the older you get the younger you think you are and the longer you think you are going to live. But if you listen to the actuaries, you know what you are facing and you want to plan your estates for the younger generation."
Part of that planning, he said, involves concerns about estate and capital gains taxes, expected to rise under President-elect Barack Obama, whom Dan Rooney supported.
|12-09-2008, 04:21 PM||#2|
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Re: Lot of ground to cover in Steelers deal
I am a bit worried about the amount of debt thery are taking on. I think Dan will get the financing eventually,because the income the Steelers generate is steady even if not substantial.
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