SBJ/20090126/Opinion

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  • Family drama has happy ending for NFL and Steelers

    In this time of financial upheaval, one of the nation’s historic treasures, the Pittsburgh Steelers, has been sold to its existing principal owner. 

    It is a story out of Hollywood, full of quarreling family members, a rebuffed billionaire suitor and gambling interests, all under the watchful eyes of the NFL.

    With time running out in 2008, Dan Rooney and his son Art II stepped up with a proposal that made sense for the Rooneys and gained league approval on Dec. 17. As it lurches towards its final chapter, it is a story worth telling.

    The background

    Founded in 1933, the Steelers are the fifth-oldest franchise in the NFL, after the Chicago (now Arizona) Cardinals, Green Bay Packers, Chicago Bears and New York Giants.

    The Rooney family members have been majority owners of the Steelers since the team’s inception, with the five Rooney brothers, including Dan, each owning 16 percent and the family of John McGinley owning the other 20 percent.

    The 2008 season represented Dan Rooney’s 54th year with the Steelers, a family name and franchise inextricably linked.

    The actors

    Stanley Druckenmiller was the 106th-richest American in the Forbes 400 in 2008, with an estimated net worth of $3.5 billion. Having had his long-standing purchase offer — which would have included a significant up-front cash payment and retention of Dan Rooney as principal owner — rejected, Druckenmiller pulled out.

    Art Rooney II will
    have a 10 percent
    stake in the
    Steelers.

    My suspicion at the time was that he would be back. A buyer like this from Pittsburgh would find it hard to go cold turkey on this deal. And in this time of financial crisis, the Rooneys would be hard-pressed to find a similar suitor. My suspicions were wrong, however, as Druckenmiller stayed away.

    Dan and son Art II had long expressed their desire to buy out the shares of Dan’s four brothers. Both divested their interest in the family racetracks that came under the harsh gaze of the NFL.

    The four brothers initially believed Dan and Art’s offer to be undervalued, but became sold with the upgraded offer.

    Art Rooney Jr., who had a falling out with brother Dan in the late 1980s, lives in Pittsburgh and has worked for the Steelers. He had said earlier this year that there was a “good chance, a real good chance” that the Rooneys will no longer own the Steelers.

    Tim, John and Patrick Rooney Sr. are heavily involved in racing interests and have resigned from the Steelers’ board. 

    The brothers initially hired Goldman Sachs to conduct a valuation analysis of the team, which was estimated to be worth between $800 million and $1.2 billion.

    The reasons for selling

    Patrick Sr. had stated that the gambling interests of the family were more profitable than the Steelers, referencing the huge disparity of revenues in the NFL and the problems small-market franchises face competing with the large-market teams. He has further referenced the brothers’ interest in avoiding inheritance taxes.

    The brothers’ involvement in racetracks was contrary to NFL policy prohibiting NFL team ownership association with gambling interests. The NFL has required that the new ownership be divested of all interests in the racetracks, which Dan and Art II have done.

    The brothers also believed there would be tax consequences retroactive to the beginning of 2009 by the new Obama presidential administration, an administration that Dan actively supports.

    The approved deal

    NFL owners on Dec. 17 approved Rooney’s plan for restructuring Steelers ownership by a vote of 31-0. They allowed two of their long-standing tenets (requiring that one person own at least 30 percent interest of a team and a $150 million debt limit) to be skirted in apparent deference to Dan Rooney and the importance of continuity in ownership.

    Keeping Dan Rooney at the Steelers’ helm
    involved a waiver of debt rules and
    the commissioner’s blessing.

    While John and Art Rooney Jr. will remain minority partners of the team, Dan Rooney will hold 20 percent, and Art II 10 percent. The NFL will allow Dan and Art II to be treated as one person owning 30 percent of the team.

    Dan and Art II will also incur $250 million in debt, and their shares in the Steelers will be used as collateral for their loan.

    Finally, the NFL owners voted to approve three minority investors in the team that were secured by Goldman Sachs.

    The NFL owners’ affinity for Rooney continuing his ownership was evident in comments by fellow owners.

    “We’ve looked at it very positively and hope they can get everything worked out,” said Houston Texans owner Bob McNair.

    I know from experience at league meetings how respected Dan Rooney is and how much tradition and history weigh on the minds of the ownership among all the NFL teams. Like the Green Bay Packers, the Chicago Bears and a few others, the Pittsburgh Steelers are a franchise that resonates history, tradition and success in the NFL.

    With the continued presence of Dan Rooney — albeit with allowances made by the league — all seems right with the Steelers.

    Andrew Brandt (andrew.brandt@nationalfootballpost.com) is president of The National Football Post and teaches sports business and sports law at the University of Pennsylvania’s Wharton School of Business and Georgetown University Law Center, respectively.

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  • Guide nation, not sports

    It was fun to hear candidate Barack Obama joke during the campaign that, if elected president, he would “throw his weight around” in an effort to turn the Bowl Championship Series into a true playoff system. And it is gratifying to have another chief executive who takes both his sports and his fitness seriously.

    But we were pleased, nonetheless, to hear no mention of sports in President Obama’s inaugural speech. It was a serious message, appropriate for serious times, and it dealt with issues that have much more significance than which teams get to play in which college football games.

    We’d like to offer two other things that we think the president and Congress should steer well clear of: the search for a new head of the NFL Players Association, and the question of whether cable and satellite operators should be forced to carry channels that they don’t want. There are systems in place to take care of those issues. NFL players are perfectly capable of deciding who they want to lead their union, while free market give and take can handle the question of which operators carry which networks.

    Obama’s potential as a game-changer for sports will rest in his ability to guide the nation through the harsh economic climate. The  sports industry will look to Washington to pursue policies that keep fans spending and credit flowing.

    Here’s hoping that our government keeps its eye on the ball, and its hands off sports.

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  • Guide nation, not sports

    It was fun to hear candidate Barack Obama joke during the campaign that, if elected president, he would “throw his weight around” in an effort to turn the Bowl Championship Series into a true playoff system. And it is gratifying to have another chief executive who takes both his sports and his fitness seriously.

    But we were pleased, nonetheless, to hear no mention of sports in President Obama’s inaugural speech. It was a serious message, appropriate for serious times, and it dealt with issues that have much more significance than which teams get to play in which college football games.

    We’d like to offer two other things that we think the president and Congress should steer well clear of: the search for a new head of the NFL Players Association, and the question of whether cable and satellite operators should be forced to carry channels that they don’t want. There are systems in place to take care of those issues. NFL players are perfectly capable of deciding who they want to lead their union, while free market give and take can handle the question of which operators carry which networks.

    Obama’s potential as a game-changer for sports will rest in his ability to guide the nation through the harsh economic climate. The  sports industry will look to Washington to pursue policies that keep fans spending and credit flowing.

    Here’s hoping that our government keeps its eye on the ball, and its hands off sports.

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  • Partnership with sports could be newspapers’ saving grace

    Newspapers are going the way of analog television. While antiquated TVs get replaced with high def, newspapers don’t have anything to keep the wired generation coming back for more.

    The advertiser-supported financial model isn’t working. Most American newspapers were having a tough time before the bottom fell out of the economy last quarter. Ultimately, newspapers are putting up “going out of business” signs because there are fewer people reading print editions. And newspapers failed to quickly adapt to the Internet. Sites like Craigslist, eBay and Monster revolutionized classifieds by offering free listings and free access to consumers, further siphoning off advertisers and readers.

    For those papers fortunate to stay in business, they have responded by reducing pages, reducing coverage and laying off writers, which in turn is leading to a vicious cycle of additional subscriber cancellations.

    At the current failure rate, there won’t be any more dailies to read in a few years. We need a radical solution. Enter the always mavericky Mark Cuban. He suggests that sports teams and leagues work together and hire a few pool beat writers in each major league city. The journalists would write for the local papers but be paid by the teams. The papers would have complete editorial control over the writers, but would guarantee at least one full page of in-depth coverage of each pro sport during its season. This concept seems like a win-win for all the parties. The papers would each get a few top journalists’ salaries funded, fans would get the in-depth and local information they crave, and the teams and leagues would get the local publicity and coverage they need, as well as daily access to middle- and upper-income fans.

    Like Cuban, I still love getting my news from papers. Even though I have 24/7 access to the Internet, I actually prefer holding a paper, bringing it to the gym and reading in-depth analysis and columns.

    But staying informed through dailies is impossible. There just isn’t much coverage any more. When I moved to Los Angeles, the Los Angeles Times had beat writers covering and traveling with every Southern California team, in-depth coverage of many national games and hundreds of features. Today, most sports sections have been gutted and wire reports are increasingly replacing real writers.

    Which is why Cuban’s proposal deserves serious consideration. He understands the role of the media in sports. We wouldn’t have a multibillion-dollar sports industry today if not for the sports media. A century ago there was little, if any, sports coverage, and the revenue reflected the dearth of information. Over 60 years ago, Connie Mack, longtime manager of the Philadelphia A’s (1901-50), told the press, “When I entered the game, (sports) received only a few lines as news. These few lines extended into columns and pages. In ratio the crowds in our ballparks grew and grew. News, like advertising, is a powerful momentum … The professional sporting world was created and is being kept alive by the services extended by the press.”

    Today, sports consumers expect huge amounts of media coverage of professional sports. If we let a major facet of the press die out, the teams, leagues and even players will suffer. There are numerous other components of sports media thriving today, from sports talk radio to television to the Internet. But people still like following their teams in their local newspapers. And most online writers and sportscasters learned their trade in the newspaper beat-writing trenches. All of which is why we should be coming up with unique solutions that challenge our long-held beliefs about the newspaper industry.

    This brings me back to Cuban’s proposal. Why shouldn’t teams help fund their coverage and publicity? They did from the early days of sports journalism through the 1980s. While teams didn’t pay for salaries, they significantly underwrote the coverage. Local reporters used to travel with the teams, stay in team hotels and were fed on the teams’ tab.

    Few, if any, screamed bias during those seven decades. Just this past fall the Chicago Bulls hired former Chicago Tribune basketball beat writer Sam Smith as their Bulls.com full-time reporter and blogger. No one would ever describe Smith as a “homer.” His famous book, “The Jordan Rules,” published after the Bulls first championship in 1991, aired some dirty laundry. But it also captivated.

    So long as papers have editorial control, why does it matter if the money for salaries comes from Taco Bell, which sponsors the Lakers, or the Lakers? The sponsors and advertisers don’t demand certain coverage or viewpoints from reporters. If team owners and executives actually give journalists the freedom to honestly cover games, ask the tough questions and don’t interfere with the content, Cuban’s radical proposal could work.

    If newspapers are not willing to embrace this drastic model to help preserve their futures, maybe they should consider banding together to fund a sportswriting cooperative similar to Pro Publica’s (www.propublica.org) investigative reporting cooperative, which provides exclusives to certain media outlets after it breaks a story. It would be more challenging, since teams need to be covered locally, not nationally. But a solution is needed to continue in-depth beat reporting, features and coverage of the business of sports.

    Cuban’s team-funded sportswriter pool or a sportswriting cooperative may not be the answer, but they are definitely innovative ways to address the problem. And at least they get the conversation started. But we need to brainstorm, quickly, before sports journalists go the way of analog TVs.

    Debbie Spander (debbie.spander@comedycentral.com) is a sports and entertainment attorney, a director of the Sports Lawyers Association, and the daughter of award-winning sports columnist Art Spander.

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