Allegheny County Controller Mark Patrick Flaherty yesterday warned the Rooney family that any change in the Steelers ownership would mean the state and county could seek reimbursement of their $281 million share of the construction costs of Heinz Field.
"As the financial watchdog for the County, I will not permit a material change in ownership of this regional asset to occur without an equitable repayment of the funds contributed by the taxpayers or [will] require a new agreement with the new owners group that the team must remain in Pittsburgh for the next 75 years," Mr. Flaherty wrote in a letter delivered to members of the Rooney and McGinley families.
The controller cited Article 6.4 of the lease agreement between the team and the Sports & Exhibition Authority, which he said requires repayment of a proportionate share of the $281 million of state and county money used to build Heinz Field should the team be sold outside the families.
Some members of the Rooney family are in talks with New York investor Stanley Druckenmiller for the sale of a majority of shares of the team.
"The taxpayers of Allegheny County and the State of Pennsylvania provided the funds dedicated to the construction of the Stadium based on the agreement that the Steelers remain in Pittsburgh with the Steelers Family," Mr. Flaherty wrote. "The new stadium and the generous lease provisions contributed significantly to increases in the value of the Steelers Franchise."
The letter says Forbes magazine estimated the team's value at $300 million in 1998 and at $929 million last year.
"The public should share in the increased value that the stadium has contributed to the franchise," Mr. Flaherty wrote.
Mr. Flaherty said he was acting in his role as county controller and the sale of capital stock in the team outside a "permitted transfer" to another Rooney or McGinley family member would violate terms of the lease agreement reached between the Sports & Exhibition Authority and PSSI Corp., which represented the Steelers in the stadium deal.
To construct the stadium, the state and county put up $281 million while, according to Mr. Flaherty's calculations, the Steelers provided $76.5 million.
"[B]y entertaining such discussions concerning a change in ownership outside the Steelers Family, such shareholders may have violated the lease provisions between the Steelers Franchise and the Sports & Exhibition Authority. A material change in ownership would violate the taxpayers' trust, the same taxpayers who agreed to an expenditure for the Stadium based upon trust and reliance that the team would remain in Pittsburgh with the Steelers Family," Mr. Flaherty wrote.
Jack McGinley, a cousin of the Rooneys and a shareholder in the team, last night said he had received a copy of the letter and criticized Mr. Flaherty, calling the correspondence "really offensive."
"I find it offensive he could write a letter to me with these assertions without calling me to ask about it," Mr. McGinley said. "I am very surprised at it. I have known him a long time. I thought it was a very, very amateurish approach to a serious matter. I am extremely disappointed in Mark Flaherty.
"We have nothing but concern for the propriety of the process."
Mr. Flaherty could not be reached last night for comment and County Chief Executive Dan Onorato did not respond to requests for comment.
Someone with knowledge of the Heinz Field lease with the Sports & Exhibition Authority -- a telephone book-sized agreement signed between the Steelers and the city-county agency eight years ago -- said the lease "gives them [the Rooneys] the right to sell the team, but the franchise is bound to staying in Pittsburgh."
Also, the "permitted transfer" language Mr. Flaherty cited is common in lease agreements of all kinds -- usually they are used by tenants, in this case the Steelers, to keep landlords from interfering in business decisions.
The language prohibiting the team from leaving Pittsburgh is solid. The team's lease was for 29.5 years -- long-term Pennsylvania leases are commonly less than 30 years, due to tax issues. And the state, under a separate agreement with the Steelers regarding Pennsylvania's $75 million contribution to the stadium, has third-party beneficiary rights letting it sue the team to keep it from leaving.