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
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,"
"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