Potential suitor emerges as some Rooneys try to sell shares
July 8, 2008 8:00 AM
Steelers' late founder Art Rooney Sr.
By Gerry Dulac Pittsburgh Post-Gazette
The Rooney family is working to restructure the ownership of the Steelers to comply with National Football League guidelines that prohibit association with racetrack and gambling interests, a process that is forcing several brothers of team chairman Dan Rooney to seek to sell their shares in the franchise, according to a source familiar with the situation.
The move in all likelihood will not affect the current management structure of the Steelers. But, according to the source, it is possible that two or three of the five Rooney brothers, could sell their equal share in the team to Dan Rooney and his son, Art II, the team's president, or to outside investors -- a possibility that has created discord in the family ownership structure.
Amid suggestions that there are intergenerational tensions among the family members, another source close to the team said that the family remains close but that future issues such as inheritance taxes caused concern for some.
The Post-Gazette has confirmed that Stanley Druckenmiller, a billionaire and chairman of Pittsburgh's Duquesne Capital Management, has emerged as a potential buyer. That interest came after Dan Rooney presented a buyout proposal that some family members thought undervalued the team; they sought another analysis from Wall Street investment bank Goldman Sachs & Co. that valued the team at $800 million to $1.2 billion, the Wall Street Journal reported, citing documents reviewed by the paper for what it called a secret project code-named "Project Newcastle."
Members of the Rooney family could not be reached for comment on the newspaper's report.
In a statement released earlier yesterday by the team, the Steelers said Dan Rooney, along with his son, are trying to arrange financing to buy his brothers' shares in the team in an attempt to gain majority ownership of the franchise. According to the source, several of the brothers are seeking to sell their shares of the team -- either to Dan Rooney or outside investors -- and will no longer be involved in ownership of the Steelers.
According to the source, the brothers in question are Timothy, Patrick and John Rooney, who are involved with the operation of Empire City at Yonkers Raceway, a harness racing track in Yonkers, N.Y., and the Palm Beach Kennel Club in West Palm Beach, Fla.
The five Rooney brothers -- Dan, Art Jr., Timothy, Patrick and John, all sons of the late founder Art Rooney Sr. -- combine to own 80 percent of the team, with each owning an equal share, or 16 percent. The family of John McGinley Sr., who died in October 2006, and his sister, Rita, own the other 20 percent.
Since the Yonkers track added video slot machines in 2006, the Steelers have been attempting to restructure their ownership in order to comply with NFL policy that prohibits involvement with racetrack and gambling interests. As part of that arrangement, the Steelers have been working with former NFL commissioner Paul Tagliabue, an attorney, to remedy the situation.
However, according to the source, the league has not pressured the Rooney family to restructure their ownership and has not given them a timetable in which to divest their gaming interest.
Dan Rooney, the oldest son of the team founder, said in a statement he will "do everything possible to work out a solution to ensure my father's legacy of keeping the Steelers in the Rooney family and in Pittsburgh for at least another 75 years."
Rooney said he wants to stay in the football business while some of his brothers plan to focus on the racetracks in New York and Florida and other interests.
The family that has long been associated with the gambling industry, starting with Art Rooney Sr.'s purchase of the team in 1933 with the winnings from a successful weekend of betting on horse racing, now finds itself at a crossroads over the same issue.
Patrick Rooney runs the Palm Beach Kennel Club and Timothy is president of the Empire City at Yonkers Raceway.
Art Rooney Sr., who loved gambling, purchased the Steelers for $2,500 in 1933. In 1936, he gained national fame after winning what was variously reported as between $108,000 and $256,000 at two New York ractetracks. He purchased the Florida dog track in 1970 and the Yonkers horse track in 1971.
Both Dan and Patrick Rooney told the Post-Gazette in 2002 that the racing interests had been more profitable than the team for several years.
The other 20 percent of the team has been owned since the 1940s by the McGinley family of Pittsburgh. Their share was acquired from the late Bert Bell, who briefly controlled ownership of the team. When Mr. Bell became the NFL commissioner, he sold the majority interest back to Art Rooney Sr. and 42 percent to Barney McGinley.
Barney McGinley's four children each inherited about 10 percent of the team. When two of the siblings died, the Rooneys bought their shares and the others passed to Jack McGinley and his sister Rita. Jack, who died in 2006, was married to the sister of Art Rooney Sr.