By Bob Smizik
Pittsburgh Post-Gazette
http://www.post-gazette.com
Wednesday, July 09, 2008
Associated PressArt Rooney Sr., left, with his sons Art Rooney Jr., center, and Dan Rooney after the team brought home its third Super Bowl trophy in 1979.
Throughout his long and distinguished career in pro football, as an executive with the Steelers and a power broker within the NFL, Dan Rooney has been a problem-solver extraordinaire.
Need a consensus to select a commissioner? See Rooney. Need a cool head and an honorable man to forge a deal with the union? See Rooney. Need a diversity program that works? See Rooney. Need a coach that will bring the Steelers into the 20th century? See Rooney.
Ever since he came to power as the Steelers chief executive without title in the 1960s and signaled his astuteness by hiring Chuck Noll, Rooney has been the man people come to see when they have problems, be it resurrecting a franchise or heading off a strike. He quietly has worked behind the scenes to solve some of the most difficult problems that have faced the NFL in the past 40 years.
Now he faces a predicament of another kind that could be beyond even his abilities.
There is turmoil in the Steelers organization revolving around the five Rooney brothers, some of whom reportedly want out of their joint ownership. It is not the kind of turmoil that will affect the team in the short term. Nor should it in any way result in talk about relocating the team because that's not going to happen. But in the long term this is a problem that possibly could bring an end to the Rooney dynasty.
What The Chief, Art Rooney Sr., built, and what his oldest son has overseen so superbly for about four decades, could come tumbling down in the years ahead.
The Rooney family is in violation of at least two NFL rules:
• The league stipulates one person must own 30 percent of the team's stock.
The Rooney family owns about 80 percent of the team but it is evenly divided among the brothers.
• The league does not permit ownership to be involved in gambling operations, whether government sanctioned or not.
The Rooney family has controlling interest in Yonkers Raceway in New York state and the Palm Beach Kennel Club in Florida. Both operations have gambling, poker and/or slot machines, on their premises.
Art Rooney left his oldest son in charge of the Steelers and gave him the title in the mid-1970s. His second oldest, Art Jr. worked for the Steelers until the mid-1980s as the team's scouting director. He was responsible for building the great Super Bowl teams of the 1970s. He was fired by Dan in 1985. Tim, the middle brother, runs the Yonkers operations. The youngest brothers, twins John and Pat, are involved with the Florida operation. Pat is the CEO. John also is involved in family real estate.
All the brothers are in their late 60s to mid-70s. All are at a time in their life when they're thinking of their children and the grandchildren. Since none of the brothers, except Dan, is involved in the football team, it doesn't seem out of the question that they would want their share at this time in their lives. At the least, it would make estate planning simple.
And although the legacy of their father is much in their thoughts, they have their own families to think about.
The problem is that each share is worth so much there is almost no way Dan Rooney can buy out his brothers. The team is valued at between $800 million and $1 billion. The brothers each own 16 percent, with the other 20 percent owned by the McGinley family, to whom the Rooneys are related through marriage. Sixteen percent of $800 million is about $130 million. To pay off all four brothers would require $520 million.
Dan Rooney is a wealthy man, but he is not fabulously wealthy like other NFL owners. He doesn't have the kind of wealth to pay off one brother, let alone four. Obviously, he's a man who has the collateral to borrow a lot of money. But the NFL has a ceiling on how much a franchise can borrow.
Dan Rooney has some options. The most obvious would be for the brothers to sell their properties. But that doesn't seem to be on the table.
He can insist on a tradeoff. If his brothers want to sell the Steelers, he can ask for his share of their operations. That would reduce his payment to them, but it would still be a staggering fee.
Another option, and one Dan Rooney probably would not prefer, would be to take on a partner. Stanley Druckenmiller, ranked 91st among Forbes Magazines 400 richest Americans in 2007, reportedly has been approached by a member or representative of the Rooney family. Forbes estimated the wealth of Druckenmiller, chairman of Pittsburgh-based Duquesne Capital Management, at $3.5 billion.
Druckenmiller, a long-time Steelers fan, appears to have the purest of intentions. He only wants to help. But what Rooney has to take into consideration is this: Will his heirs only want to help? Rooney will resist taking on a partner, although in the end he might not have an option.
It's an ugly scenario with no easy solution. But with the four brothers looking at about $100 million after taxes as their share of the team, it's easy to see why this problem won't go away.
Bob Smizik can be reached at bsmizik@post-gazette.com.
First published on July 9, 2008 at 12:00 am
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