SBJ/September 28 - October 4, 1998/No Topic Name

Redskins' value is soaring

With the going rate these days for an NFL franchise pegged at $530 million, will Washington Redskins President John Kent Cooke be able to buy the very team he and his late father made so valuable?

That's the economic conundrum confronting Cooke as he abides by his late father's will to sell one of the NFL's storied franchises and put the proceeds into a foundation. Cooke is a minority shareholder and president of Jack Kent Cooke Inc., which owns the Redskins. The estate put the team on the block just after Alfred Lerner successfully bid $530 million for the Cleveland Browns franchise. That price includes $53 million earmarked for the Browns' new stadium.

But experts say there will be a feeding frenzy surrounding the Redskins sale, driving up the price and putting more financial pressure on Cooke.

"There will be more than a dozen bidders, and there will be a quiet auction that will drive the price up," said Marc Ganis, president of Sportscorp Ltd., a Chicago-based sports consultant company. "For Cooke, it's a Catch-22 situation. The team is as valuable as they are today because of John and Jack Kent Cooke's efforts. But because they enhanced the value so much, it will make it that much more difficult to buy. [Cooke] has the fiduciary responsibility to get the highest price from the team, so it's a difficult situation."

Redskins officials said Cooke would not comment on his bid, but in a statement Cooke said he hired NationsBanc Montgomery Securities as his financial adviser.

"This final step is as complicated as it will be expensive," Cooke said. "My father's estate must receive a fair price, partners must be chosen and the NFL must have ultimate approval. I hope ownership of the team is resolved in the near future and that it continues to be in my family."

So just what are Redskins worth? That depends apparently on how much someone is willing to pay for the history and prestige that surround the Redskins.

"The value of the franchise will come in at $397 million, which is 75 percent of the Browns; then I'm adding debt of $160 million, so the price will be around $557 million," said Dean Bonham, president of The Bonham Group Inc., a Denver-based sports marketing consultant. "I don't know if the team is worth more than the Cleveland Browns, but a franchise in Washington carries the name and tradition that goes beyond other franchises, and that plays into the purchase price."

The recently christened Jack Kent Cooke Stadium, the team's 80,116-seat stadium that opened last year outside Washington, could also boost the bidding price. The privately funded stadium cost $250 million to build, and Ganis said it generates $30 million a year in operational cash flow.

Then there are the NFL ownership rules, which could also make it more difficult for Cooke to buy the team. League rules prohibit corporate ownership, and the team's majority owner must own at least 30 percent of the team.

If the team sells for $550 million, that means Cooke would have to come up with $180 million for his controlling interest. That's a far cry from 1984 when Jack Kent Cooke bought out Washington attorney Edward Bennett Williams' 15 percent share of the team for $10 million in a deal that made Cooke the sole owner of the Redskins.

"Cooke will need to bring in a substantial partnership and be very creative with his debt structure," Ganis said. "But I think he will find a way to accomplish it if for no other reason than that he wants it more than anyone else."

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