The four Rooney brothers, Art Jr., Tim, Patrick, and John have agreed in principle to sell their shares of the Pittsburgh Steelers to their older brother Dan Rooney and his son Art Rooney II.
Thus it appears that a process which as been underway for some years, but only became public back in mid-July, will apparently close before year’s end.
All sides involved in the deal have repeatedly expressed a desire to complete the final terms of the transaction before any change of administration in Washington might lead to unfavorable changes in tax law.
Beyond that, the need to restructure the Steelers ownership arose from twin sources: The youngest of the Rooney brothers is 69 and all must plan for their estates, and the fact that the race tracks owned by the Rooney family in New York and Florida have video slots, which runs afoul of NFL anti-gambling rules.
Dan Rooney to Pay 480 Million to Brothers
To complete the deal Dan Rooney has assessed the total value of the Steelers at 800 million dollars, and based his offer for his brothers 64% on that figure. However, Dan’s offer discounts business debts, which brings the total value of the franchise to 750 million. According to Steel Curtain Rising’s calculations, That would mean that Dan would pay out need to shell out 480 million to buyout his brothers.
Earlier this year the four Rooney brother rejected an offer by Wall Street Financier Stanley Druckenmiller. According to the Post-Gazette, Druckenmiller’s offer was based on a 840 million dollar value for the team; the Tribune-Review reports that Druckenmiller valued the Steelers at 820 million.
How Dan and Art II Are to Finance the Deal is Still a Little Nebulous
Carl Prine of the Tribune Review is reporting that “280 million of the deal will come from loans arranged by PNC Bank, and Dan Rooney will need to bring in a number of equity partners he has yet to name.”
If Dan is paying out 750 million and is borrowing 280 million, that leaves a difference of 200 million. No one has reported on how Dan is to bridge that gap. Equity investors might play a part of, and if that is the case then we still do not know how much of the Steelers Dan and Art II will end up owning.
It’s also conceivable that Dan and Art II are paying a part of that 200 million in cash. Dan owns 20% of the family race tracks, and has divested or will divest (press reports conflict) that 20%. The race tracks are more valuable and more profitable than the Steelers, so it is more than conceivable that Dan’s share of the tracks could come to 200 million dollars.
With Continuity Comes Change
Even with Dan and Art II getting controlling interest of the team, things will change. This deal is going to require Dan and Art II to take on a tremendous amount of debt, and its also reported that the four Rooney brothers will receive payments over a number of years. This could easily mean that the Steelers will have less money to spend on player salaries.
Likewise, outside investors are going to have to be given a role in running the team. Art Rooney brought in minority investors from time-to-time, but the NFL is a far different place now than it was in the 30’s and 40’s.
Technically Dan has answered to the Board of Directors, comprised of himself, his four brothers, and the McGinnely family. Now the composition of the group figures to change greatly.
As Art Rooney Jr. himself said to the blog Behind the Steel Curtain:
It may be awkward for him down the road. Right now we let him do whatever
he wants. He doesn’t have to answer to anyone. When he gets outside partners that will all change. Those partners won’t be happy about giving a guy a hundred million and then watching him get killed. He’ll need to answer to his partners, even if he is primary owner.
Dan Rooney is known for his ability to build consensus and find compromise in even the most difficult situations, so the fact that he’ll have to deal with outside investors is not worrisome, but there will most likely be changes to the way the Steelers operate, even if the differences are not visible to the eyes of the average Steelers fan.
Other Art Jr. and/or John Rooney Maintain a Stake?
It is also possible that some of the brothers would retain a small number of shares in the Steelers. Art Jr. has openly discussed this possibility, and the other likely candidate is John Rooney. It was John Rooney has been pushing for his brothers to accept Dan’s offer, and he, unlike his brother’s Tim and Pat, did not resign from the Steelers Board of Directors in August.
John, however, remains heavily involved in the family’s racetrack business, and it is unknown if the NFL would allow him to continue to play a roll in the Steelers ownership.
Dotting the i’s and Crossing the t’s
By all accounts this deal is likely to finalized before the NFL finance committee meets on December 17th in Dallas, but the perspective on those final steps differs slightly, depending on which brother you talk to.
Art Rooney Jr. characterized it this way in the Tribune-Review:
We have a board meeting in December, but we hope that’s just a formality and everything is out of the way by then.
His brother Tim was also positive, but there was a hint of caution in his words as reported by the Post-Gazette:
There are more than a few loose ends to be solved but are or should be doable. It is very important to solve the problem before the end of the year because of taxes.
Tim Rooney, the middle child, is seen as being the one brother most open to selling to outside investors, so perhaps he is not 100% happy at accepting less money. Nonetheless, it would appear that Tim is on board with the sale.
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