Bank on it
The 25-year-old, dyed-in-the-wool Pittsburgh Steelers fan couldn’t believe his eyes. Bill Cowher angrily stormed toward him, approaching on the grounds of the old Municipal Stadium in Cleveland, his trademark spittle flying.
Don Cornwell, a young staffer at the NFL in 1994, had gotten the short end of the stick one fall weekend to fly in from New York to enforce league uniform rules before that day’s Browns-Steelers dustup. He had just informed Steelers staff that Greg Lloyd, a recidivist fashion rule breaker, had his socks too high. That meant Lloyd returning to the locker room to change, which could have caused the linebacker to miss the start of the game. Cowher would have none of it.
Cornwell, who remained such a big fan of the Steelers that several years ago he went to their fantasy camp, moved on from his sock inspection days (he was an analyst with the league for two years). He is now a managing director at Morgan Stanley where he is one of the top dealmakers in sports, overseeing the sales of IMG (pending) and Maple Leaf Sport & Entertainment, and yes, the restructuring of the Steelers.
He is rare in sports, a top acquisitions adviser at a major investment bank. Unlike traditional commercial sectors, in sports, boutique agencies play an outsized role in mergers and acquisitions, or M&A. The sale of the Sacramento Kings, the biggest team sale last year, for example, engaged three boutiques: Game Plan advising the buyer, GSP the seller, and Tipping Point Sports the spurned Seattle group.
Part of the reason for the lower profile of big investment banks is the unique and heavily nuanced aspects of the sports industry, and in particular the leagues’ heavily regulated approach to their business. It’s also the slower deal flow, and for Wall Street, the often small numbers.
Of course, with the $2.15 billion sale of the Los Angeles Dodgers, soaring regional sports network valuations, and ancillary value outside of teams, like in IMG, Cornwell is relishing the opportunity.
“What has happened over the past four or five years with the increase in media revenues and stabilization of cost structures with the new CBAs is that the profitability of these franchises has gone up,” he said. “With cash flows up, you see nontraditional sports buyers like private equity funds looking at them. Historically, they would never. I am not seeing a lot of traditional PE firms buying teams outright, but they are looking at ways of getting into the sports ecosystem.”
Following the footsteps
Cornwell was born into a banking family, named after his father who worked in investment banking and then
|Cornwell’s current portfolio includes overseeing the pending sale of IMG.
In Cornwell’s early days at Morgan Stanley, which he joined in 1998 out of Stanford Business School, many people did a double take when he walked into meetings, expecting an older version to walk through the doors. It’s one of the reasons Cornwell adopted using K, his middle initial, ahead of his first name upon introduction and on business cards, to ensure those who heard his name for the first time distinguished him from his father.
Cornwell majored in government at Harvard, his father’s alma mater. And fresh out of school, he joined McKinsey, the consulting firm, before joining the NFL and later going to graduate school.
Eric Baker, the CEO of European ticketing firm Viagogo, is a Cornwell friend dating to their days at the consulting firm and Stanford.
“He is on the short list of guys I call to get perspective on sports deals,” said Baker, who boasts a summer home in the Hamptons close to Cornwell’s. “He always has his pulse on what is going on in sports.”
“I remember [Commissioner Paul] Tagliabue came by and just introduced himself, and one of the first things he said was, ‘You know I held the record for rebounding at Georgetown before Patrick Ewing,’” Cornwell recounted.
He worked there with future Commissioner Roger Goodell, Joe Siclare, now the chief financial officer, and Joe Ellis, today the Denver Broncos president. Tom Spock, then the head of NFL Enterprises, wrote a letter of recommendation for Cornwell to Stanford.
“Don has a great personality,” said Spock, who is a media consultant now. “He lives in a larger world than just the world of his office.”
Perhaps it is coincidental that for his first major sports transaction Cornwell advised Dan and Art Rooney on the restructure of the Steelers after the league ruled that family members’ ownership of horse tracks violated league anti-gambling rules.
The deal involved debt, equity, reshuffling and selling partnership interests, all on the heels of the 2008 financial crash.
“It wasn’t an easy time,” said Art Rooney, the Steelers’ owner now. Cornwell could get excited at times trying to get certain deal points together, Rooney said.
“I am happy he was our financial adviser,” Rooney said.
Not all of Cornwell’s work is as high profile. He advises the NBA on the valuation of team media contracts, which is a controversial area when a team that owns its rights can value them less than market rate for the purposes of limiting their payments into revenue sharing.
“Teams have their views on media valuations so we rely on experts,” said Bill Koenig, the NBA’s president of global media distribution.
Cornwell will say little about his most high-profile assignment, co-advising on the sale of IMG to William Morris Endeavor, even long after the sides announced the transaction.
That transaction tested him, with frequent erroneous media reports, the high-profile nature of IMG, and the lengths he had to go through to keep the process quiet, underscored by his continued reticence.
Clearly though he values IMG’s media assets, believing that there is nowhere to go but up.
“Today we get the question, ‘Is there a bubble in the value of sports rights?’ ” Cornwell said. “My own personal view is there is not.”
Cornwell, as the son of African-American bankers, said he feels a strong need to give back to his community.
“Both my parents were African-Americans on Wall Street in the ’70s and ’80s, so I had a first-row seat for what they went through,” he said. “Frankly [there are] not a lot of African-Americans on Wall Street today, so it always amazes me what they went through.”
He chose education as his focus, sitting on the board of directors for a charter school in Brooklyn, and the East Harlem Tutorial Program, a 56-year mainstay in the underprivileged neighborhood.
“He is incredibly committed, he is co-chair of [the] fundraising and communications committees, which means he attends eight board meetings a year and even hosts an annual event,” said Jeff Ginsburg, who runs the charity. “When you go to that event, you see that Don has a lot of friends.”