entered its final years, as the Ravens team owner has agreed to relinquish his
franchise to a new investor as soon as 2004.
The venerable sportsman, once a confidant of commissioners and presidents,
struck a tentative agreement Friday to sell 49 percent of the Ravens to Anne
Arundel County businessman Stephen J. Bisciotti. The $275 million price
includes an option enabling Bisciotti to buy the rest of the team’s shares in
four years for an additional $325 million, according to sources familiar with
the deal who spoke on the condition of anonymity.
That gives the team a value of about $600 million.
Bisciotti, who declined to reveal details of the transaction, said
yesterday he intends to invoke his option to become the team’s sole owner. The
deal, which still must pass muster with the National Football League, gives
Bisciotti the right to purchase the other 51 percent of the team anytime
between 2004 and 2006, one source said.
If he doesn’t exercise the option, he would remain a minority investor and
the Modells would remain in control — an unlikely outcome given the price
Bisciotti has paid.
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Modell declined to comment yesterday, but issued a written statement
saying: “My family could not be happier with this turn of events. Steve has
built an incredibly successful business from the ground up. I am impressed
with his acumen and energy, and I believe he can help the Ravens achieve a
championship level both on and off the field.”
In an interview yesterday with The Sun, Bisciotti, 39, said he had never
before bid on a sports franchise but was moved to act when the Ravens became
available. A childhood Colts fan, he came of age in the era of Bert Jones and
the resurgent Colts. Bisciotti said he viewed the purchase as an “average
financial deal” but an irresistible opportunity to help his adopted home
state.
He began contacting intermediaries, including former Maryland Stadium
Authority head John Moag, about three weeks ago. He visited the team’s Owings
Mills complex 10 days ago and met with Modell and his son, team president
David Modell. Bisciotti said he “clicked” from the start with the elder
Modell, whom he grew up following on the sports pages but had never met.
“When I was a kid, there were two team owners who were held in esteem:
Wellington Mara and Art Modell, the old guard,” Bisciotti said.
Mara is part-owner of the New York Giants. Modell, part of late NFL
commissioner Pete Rozelle’s inner circle, chaired the league’s influential
television committee when football became the networks’ most valuable
commodity and the sport surpassed baseball as America’s most popular.
Although separated by a generation, Bisciotti and Modell share some
characteristics: Both are self-made multimillionaires from middle-class
backgrounds. And both procured their franchises at young ages. Modell paid
$3.93 million for the team, then known as the Cleveland Browns, in 1961, when
he was 35.
Bisciotti could be as young as 43 when he assumes control, making him the
second-youngest of the league’s current owners. The Washington Redskins’
Daniel Snyder is the youngest, at 35.
For the next four years, Bisciotti will have a say over only the biggest
franchise decisions — leaving day-to-day control in the hands of the Modells.
Bisciotti said he would use this time to learn about the sport and team.
One source said a clause in the contract provides for payments to David
Modell if he is discharged within the first two years of Bisciotti’s majority
ownership.
“Art deserves a championship team, and if this allows him to leave the NFL
with the dignity he deserves for all he has done for the NFL I would love
nothing more than for Art Modell to have a Super Bowl trophy before he
retires,” Bisciotti said.
A shocking move
It was the desire to win the NFL’s championship, as well as to pass the
team on to his two sons, that prompted Modell to agree in 1995 to move the
team to Baltimore. The shocking decision brought a firestorm of protest upon
Modell, who was burned in effigy in Cleveland and vilified nationwide. Before
the move, he had been a candidate for the Pro Football Hall of Fame but has
not been since.
He blamed Cleveland leaders for failing to provide him a stadium on a par
with that the city built for the American League Indians and National
Basketball Association Cavaliers. And Modell, 74, said he wanted to follow in
the footsteps of his late friend, Pittsburgh Steelers owner Art Rooney, who
left his franchise to his son, Dan.
The transaction brings to an end a tumultuous period for the franchise.
Modell said he had to move the team to preserve its economic viability, but
the relocation brought on additional costs, and debt, when he had to buy out
minority investors and settle lawsuits brought by Ohio officials.
A 1997 restructuring consolidated the team’s borrowings under a $185
million package of loans, an NFL record at the time that had to be approved by
a vote of other owners. To work around the league’s borrowing limits, Modell
spun off the majority share of the team to his wife, Patricia, but remains its
general partner.
Earlier this year, the team, although paying its loans on time, lapsed into
technical default when it failed to maintain a ratio of debt to operating
profit mandated by lenders.
Modell returned to his fellow team owners in July, and they agreed to back
a loan to the franchise as it sought a minority investor. Although the loan
carried a one-year term, the league asked him to line up the buyer in half
that time so the NFL would have time to find a buyer for the entire franchise
if need be.
Over the past few weeks, it became obvious that Modell would be unable to
meet his stated objective of raising $150 million through the sale of a
minority sale of the franchise and remain in control, sources said.
Bisciotti, represented in part by Moag, who negotiated the team’s move to
Baltimore and who heads Legg Mason’s sports practice, contacted the team and
said he wanted to strike a deal quickly, eliminating other suitors.
Up for vote
The deal now moves to the NFL, first to the finance committee and then to a
vote of the full ownership. Three-quarters of the owners of the league’s
franchises must approve the transaction.
Sources familiar with the arrangement predicted relatively smooth sailing
for Bisciotti, who has already passed security clearances for the work he does
on behalf of government clients of his employment services firm and whose net
worth one source said exceeds $1 billion.
Financing the purchase will be no small matter, and Bisciotti is working
with Bank of America, formerly NationsBank, a lender active in the NFL. If
need be, he will be able to borrow the $275 million first payment for the team
because minority owners in the NFL face no borrowing limits. When he exercises
the other option, he comes under a cap that now limits majority owners to
using no more than $100 million of a franchise’s value as collateral for
loans.
Bisciotti and David Modell said the sale should bring new financial
viability to the franchise, freeing it from stiff loan payments, perhaps in
time to permit the club to take full advantage of the two first-round draft
picks it will have in April’s player draft.
“It would give them the opportunity to get out from the debt and
concentrate on football,” Bisciotti said.
David Modell said he doesn’t intend for the once-free-spending franchise to
discard the financial discipline it has demonstrated in recent years. “The
organizational philosophy is not going to change. We still have to be smart,”
he said.
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“We are extremely thrilled, the entire Modell family. It gives us the
opportunity to move forward and get all the extraneous stuff aside and focus
on football,” he said.
First-year coach Brian Billick sounded enthusiastic about the change. “What
it does do is give us some latitude. By bringing us to zero debt, it allows
you to do something prudently, but maybe a little more aggressively in regards
to contracts and being able to keep some people and lure some players.”
It could also allow the team to build a new practice complex and
consolidate its offices, now split between Owings Mills and downtown.
“In combination with the fan support and sellouts, the progress on the
field, this financial structure can take us to another level. This is a real
positive day for us,” Billick said.
The transaction could prove highly lucrative for Bisciotti as well. NFL
franchises are the most valuable in sports, and their values have been
climbing rapidly. The Redskins were sold this year for $800 million, a price
that includes a privately owned stadium in Landover, and the Houston expansion
franchise carried a $700 million fee. It is not hard to imagine the value of
the Ravens exceeding $600 million in four years.
Stadium authority executive director Bruce Hoffman said no sale of the team
would affect its legal responsibility to Maryland. A 30-year lease remains in
effect, no matter who owns the team, backed by language that gives the state
extraordinary authority to block a relocation in court.
NFL spokesman Greg Aiello said the league will begin its customary
background checks as soon as the deal is presented. Typically, the approval
process takes six to eight weeks, he said.
“It could be longer or shorter depending on the issues,” Aiello said.
Sun staff writers Jay Apperson and Mike Preston contributed to this
article.