By now most or all of you have read about Stanley Druckenmiller, a 55-year old hedge fund manager, who is strongly rumored to soon own at least a small piece of the Pittsburgh Steelers, if not a whole lot more. Id like to summarize what has been floating around the last few days, in print and in talk, about Druckenmiller and his potential involvement with the Steelers.
Druckenmiller was a college whiz kid at small and prestigious Bowdoin College in Maine after moving several times as a child. Shortly into his doctorate aspirations at the University of Michigan, Druckenmiller left that behind to make some money, some real serious money. He moved to Pittsburgh to work for PNC and then started a company called Duquesne Capital Management at the tender age of 28, which still has an office in Upper St. Clair. Along the way he teamed with George Soros, a widely-known international investment guru and the two of them struck gold together. In just one day in 1992, betting that the British pound would drop, Druckenmiller and Soros made a billion dollars.
The Druckenmiller Science Center at Bowdoin College
Druckenmiller now lives in New York and spends a great deal of time as CEO of Harlem Children's Zone, which helps thousands of poor families in an area that needs it most. But his heart never left Pittsburgh. Make no mistake, Druckenmiller is a Pittsburgh guy. Having moved around a lot as a kid he never established any roots or any great rooting interest for a particular football team. Pittsburgh has changed all that. Druckenmiller is a season-ticket holder and flies into Pittsburgh for all the home games. He still golfs regularly at Oakmont. This billionaire worth 3.5 billion, ranked 91 among Forbes Top 400 Americans, paints his face black and gold, wears a Troy Polamalu jersey and tailgates in the parking lot. How do you top that passion?
The Harlem Children's Zone is one of many charitable causes
Druckenmiller is involved in
Since his move to Pittsburgh, Druckenmiller has had a dream about owning the Steelers, at least in part, but has also been loyal to the franchise enough to know that the Rooneys are the Steelers and his respect has caused him to never cross that line. It was the Rooneys who approached Druckenmiller, not the other way around, regarding the recent discussions about him becoming part of ownership.
Luxurious yet tasteful. And more importantly, in Pittsburgh, where
a potential owner of the Steelers should be.
You probably have heard that a driving force in all this is that three of the Rooney brothers, Tim, Pat and John, are owners of racetracks in New York, Florida and Maryland that now include casino gambling. This is in direct violation with NFL policy and that is the reason for an alteration of Steelers ownership. Each of the five Rooney brothers (Dan and Art Jr. being the other two) own 16 percent of the Steelers (The McGinley family, having married into the Rooneys two generations ago, owns the other 20 percent). Figuring the Steelers are worth about $930 million, each brother owns about $150 million of the club.
True, the gambling issue is real and former NFL Commissioner Paul Tagliabue is even involved now in trying to broker all of this. Dan Rooney has publicly talked about the gambling issue and NFL compliance. Casino-type gambling is unacceptable to the league (though dog and horse racing seems to be acceptable). There are also other NFL matters to be considered. The first is that the league wants at least a 30 percent majority owner. The Rooney brothers each own only 16 percent, but have been grandfathered in to this point. The second is that no franchise can go into debt more than $150 million. Dan has that hanging over his head also.
However, restructured ownership would still be an issue very soon even without the gambling factor. Dan and his son Art II are the operators of the team, but as long as this continues that means that the other four brothers have no impact on the team and also cannot reach any of their $150 million share of the franchise. This is OK for the moment, but the Rooney brothers are getting up in age and this would be impossible to continue into the next generation. You can't blame the four brothers for wanting to liquidate. You also can't blame them for the timing. Word on the streets is that if Obama gets elected in November the Capital Gains Tax is going to skyrocket. The Rooney brothers want to have the next generation established before the election.
Dan cannot buy out his brothers since he doesn't have a spare $780 million laying around. Dan is rich in the sense that he owns $150 million of an NFL franchise, but he is not cash-rich other than what he pays himself from the team. Outside money needs to be infused. There's really no other way to appease the four brothers of Dan.
Enter Stanley Druckenmiller. Pittsburgh Steelers fans are very lucky to have among them a fan genius who attends all the home games. By the way, Druckenmiller doesn't sit up in a cushy loge box. He is among the crowd and the elements and high fives anyone around him when the Steelers make a good play.
Drukenmiller, pictured on the far left, has returned to Pennsylvania from New York, where his legendary stature as a Titan of Wall Street forced him to participate in the high-profile social life of New York City. Something tells me he's more comfortable around close friends in more private settings, like say, a Steelers game.
There are basically two ways in which Druckenmiller can become part owner of the Steelers. The first way would sit much more comfortably with most of us Steelers fans, and that is, Druckenmiller (or someone else) would buy out the three brothers owning race tracks and own 48 percent of the team. Dan and son Art II would find a way to buy out Brother Art and also the McGinley family and own the remaining 52 percent (or perhaps create a "Rooney Group" to accomplish the same thing). This way Dan would pass the team on to his son and the foreseeable future would have a Rooney owning (most of) and running the team. Druckenmiller would simply be a major investor.
The second scenario is more drastic and could occur if Dan cannot muster the finances to appease his brothers. In this case Druckenmiller could buy more than 48 percent, making him the head honcho. He has said that he really wants the Rooneys to continue to run the Steelers, but if he owns more than 50 percent it would be awfully awkward for Dan Rooney to essentially have a boss. Steelers fans can hardly comprehend this scenario.
We Steelers fans have an unconditional loyalty and commitment to the Rooney family. It just seems like the stars would be out of line with the universe if somehow anyone other than a Rooney was behind the curtain pulling all the levers, or at least approving what is being pulled. But keep in mind several thoughts to help you sleep.
First, this change, at least to some degree, is inevitable. Any Rooney not named Dan is not going to allow all his money to be tied up with an expensive toy from which his children gain no benefit.
Second, if anyone does need to come in, who better than a multi-billionaire who paints his face black and gold and is a current season ticket holder. To boot, the guy is just 55 years old and in the prime of his mental capacities. We could do a whole lot worse than Stanley Druckenmiller and really, not a whole lot better.
Third, while we love even the name Rooney, let's not forget that while Art Sr. was as lovable and loyal as could possibly be, the Steelers really weren't a successful operation until Dan took over in the late 1960s. Art seemed more interested in going to the races, schmoozing with local politicians, baseball and hiring old cronies as coaches. His son Art Jr. was run out by brother Dan in 1985 and we really don't know anything about Art II's instincts in running an NFL franchise. All we really know is Dan, and he is 76-years old.
Fourth, It is quite possible that having at least part ownership in the team, Druckenmiller might be willing to part with a few extra bucks each year and engage in the "cash-over-cap" escapades that Jerry Jones and Dan Snyder make an annual ritual. Druckenmiller's heart gets broken whenever the Steelers lose. That could bode well.
It must be emphasized that Druckenmiller is certainly not the only viable outside candidate to buy into ownership. In fact, the Rooney brothers (except Dan) have contracted Goldman Sachs to help identify the franchise's worth and also identify potential buyers. It may well come down to some type of bidding war. However, at the moment, the horse that is out of the barn right now is Stanley Druckenmiller, so we may as well feature him.
So, while we sit and wait, let's try to think of the big picture here and not panic. Not that we have any power to do anything about it anyway, but the bottom line is that the Steelers are going to remain in Pittsburgh for as long as the eye can see, and the franchise will be well run as always.