Prices Driving Family-Run Franchises Out Of NFL

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MICHELE NORRIS, host:

One of the great franchises in American Sports was in the news this week. We're talking about the Pittsburgh Steelers of the National Football League. They've been owned by the same family for 75 years, but now a family feud is raising questions about the team's future. Sports writer Stefan Fatsis joins us as he does most Fridays to talk about sports and the business of sports.

And Stefan, the Steelers have been owned, as we said, by the same family for many, many years. There aren't many sports franchises that can make that claim anymore.

Mr. STEFAN FATSIS (Staff Reporter, Wall Street Journal): No, there aren't, just a handful, and the significant ones are in the National Football League, and in this case it's the Rooney family. Art Rooney Sr. paid $2,500 to found what was originally called the Pittsburgh Pirates in 1933. He passed the franchise onto his five sons when he died in the late 1980s, and the Steelers have been run by just one of those five, Dan Rooney, and now Dan's son, Art II.

NORRIS: So what are the issues at play in this family feud?

Mr. FATSIS: Well, there are three. One is succession planning. Dan Rooney is 75 years old. His brothers are all going to be 70 by the end of the year. The family would face huge estate tax issues if they don't do some sort of ownership change to include the next generation. Because they need to do that, the league is requiring the franchise now to meet an NFL rule that 30% of a team is owned by one person. The Steelers had had a sort of informal waiver on this issue. And the third issue here is disassociating the team from its current gambling interests. The other brothers, other than Dan Rooney, run racetrack and racetrack casino businesses in New York and Florida. League rules say no casinos.

NORRIS: So what would the family have to do to make these changes happen?

Mr. FATSIS: They're going to have to hire a lot of lawyers and bankers, of course. This is where it's getting predictably ugly. Dan Rooney has made a proposal to buy out his brothers' shares over time and give his son ownership interest. Now, the story that was broken earlier this week by my former colleague, John Wilke of the Wall Street Journal, the paper says it values the team at about $700 million, Dan Rooney's proposal buzz. But the other brothers brought in Goldman Sachs, the Wall Street firm, and they're valuing the team at $800 million to $1.2 billion. Then there's a Pittsburgh billionaire, Stanley Druckenmiller of Duquesne Capital Management. He's entered the picture as an interested buyer.

NORRIS: The NFL this week said that it's working to keep ownership and operation of the Steelers within the Rooney family. Why is keeping the family in the league so important?

Mr. FATSIS: Because they've got this direct link to the history of the NFL, to the growth of the NFL. The league values the Rooneys' institutional memory and their knowledge, but it's getting harder and harder for dynastic sports families. You know, it helps to have an established fortune before you get into a league now or to have shifted gears a while ago.

The Rooneys have been defenders of the share and share-like philosophies that guided the league for decades. Times are changing, though. The era of socialism in the NFL, of sharing all revenue equally, is ending. The NFL's first goal here has to be to ensure that the Steelers' market value is honored because other franchises depend on that, and that whoever takes over the team has the financial wherewithal to compete going forward. That's why it wouldn't be surprising to see an outsider get involved.

NORRIS: it seems like team ownership would be inherent with some sort of family drama. Are there other teams that are facing planning and estate taxes issues?

Mr. FATSIS: Yeah. I mean, you look around the NFL, just kind of ownership that goes back to the 1920s and '30s, the Steelers, the Chicago Bears, the New York Giants. You've got a dozen or so principal owners who are in their 70s and 80s now. So the face of the league is going to be changing dramatically in the coming years. The other team to watch right now, the St. Louis Rams, their principal owner, Georgia Frontiere, she died in January. Her children are shopping the team now.

NORRIS: Stefan, it's always good to talk to you. Have a good weekend.

Mr. FATSIS: Thanks, Michele.

NORRIS: Stefan Fatsis joins us to talk about sports and the business of sports on Fridays. He's also the author of a new book called "A Few Seconds of Panic: A 5-Foot-8, 170-Pound, 43-Year-Old Sportswriter Plays in the NFL." It was just published this week. And congratulations, Stefan.

Mr. FATSIS: Thanks, Michele.

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