By Jon Morgan
December 20, 1999
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.
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.
"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.
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