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Blood ties forge empire of $650 million yearly revenue

Steelers/NFL Videos

By Andrew Conte and Carl Prine ,
Sunday, July 20, 2008
 

Rooney Inc. includes the Steelers, and a whole lot more.

The five sons of the late Art Rooney Sr., often called The Chief by friends and family, oversee a sprawling empire that includes at least two dozen corporations -- in fields as diverse as dog racing, restaurants and electrical contracting -- that combine to churn more than $650 million in annual revenue. One piece, a casino and harness racing track at the northern edge of New York City, raked in more than $400 million last year.

"A fair amount of what we have done well as a family goes back to Art Rooney Sr., my grandfather," said Patrick Rooney Jr., 44, a West Palm Beach, Fla., racing executive and restaurant owner. "He knew that the Steelers couldn't support all of his sons, so he started up businesses to help them."

With so many mouths to feed, the family diversified into new industries. The family tree branched out from the five brothers -- Daniel, Arthur Jr., Timothy, Patrick and John -- to more than 30 children, the grandchildren and, now, the great-grandchildren.

"It's shocking, but it's now in the fourth generation," said Art Rooney Jr., The Chief's second-oldest son who turns 73 this year. He's a real estate executive in Mt. Lebanon who recently published a family history.

Art Rooney Sr.'s business model was to give each son a stake in every core business, divvying up responsibilities: The two oldest brothers, Daniel and Arthur Jr., stayed with the Steelers; Timothy runs the New York casino; the two youngest, Patrick and John, head the Florida dog track.

Now the brothers might break up part of their holdings as New York financier Stanley Druckenmiller plots to purchase enough shares from Dan's brothers to control the Steelers. Their father paid $2,500 for the franchise in 1933, but consultants hired by the sons have set the value at $700 million to $1.2 billion. Through a spokesman, Steelers Chairman Dan Rooney, the oldest son at 75, declined to comment on the negotiations.

Even if they go separate ways on the Steelers, the sons and grandchildren of Rooney Inc. retain a quiet pride linked to the way the family patriarch, who died in 1988, signed off on his personal letters to each of them: "Keep the Faith."

According to grandson Pat Rooney Jr., that admonition not only reminds the clan of their strong Roman Catholic upbringing, it reinforces a message about Irish blood loyalty to family and it remains the unspoken business mantra for three generations of The Chief's kin, most of whom will never live in the North Side. It underscores why the brothers remain diehard fans of the Steelers and stakeholders in each other's companies, even after moving away and starting large, extended families of their own.

It also frames heart-breaking decisions the elder Rooneys are debating about the core enterprise, the Steelers, perhaps punting the team so the youngest Rooneys can take their seats on an ever-widening bench.

"A part of who I am, my very being, is that I was born a Rooney," Patrick Rooney Jr. said. "It's more than a name. It goes to how we behave, how we conduct ourselves in public. I will always be a Steelers fan. I will always live and die, like any other fan, with the Steelers. That's the way the whole family is."

For the second generation of Rooneys -- a clan that included in Pittsburgh their first cousins, the McGinleys -- ownership didn't mean entitlement. They and the McGinleys started at the bottom. They worked.

"Everyone who has an ownership in sports worked there as a teenager," said attorney John R. McGinley Jr. "It was probably everyone's first job. I did it. I lined fields and did laundry, and picked up players and drove them to the airport and got to know them. We're all football nuts. At least in our family, football was the thread that tied everybody together. It was kind of like the Sunday family gathering. Going to games was our version of that."

Even though they're successful in other professions today, the Rooneys and the McGinleys re-enact a family ritual inside Heinz Field before each home game. They meet and greet inside a luxury box, then make their ways into the stands to be closer to the fans.

Gambling on gambling

While the Steelers remain the most secretive part of the family's major holdings, public records filed in Pennsylvania, New York and Florida show the Rooney brothers have commercial interests that go beyond the gridiron and often are tied directly to gambling.

Even as the Steelers battled Majestic Star Casino's debut on the North Shore over traffic congestion -- a key reason slots license-holder Don Barden cites for failing to get enough money for the project -- the five Rooney brothers sought to expand their own wagering interests in New York and Florida. Steelers chairman Dan Rooney was listed on Florida filings up to last year as chief financial officer of the family's greyhound racing track in West Palm Beach.

Patrick J. Rooney, CEO for the Palm Beach Kennel Club, was unavailable for comment. John Rooney's name appeared on a state filing this year with the title of chief financial officer, and all five brothers are listed on a separate filing as officers in the track's holding company.

The Rooneys' common ownership of the Steelers, a casino, harness track and dog track apparently violates the NFL's anti-gambling rules. Both the team and the league cited that common ownership as a reason for breaking up the family business.

With dogs, simulcasting of races and a high-stakes poker room, the kennel club reported total revenues of $34 million last year and claimed assets worth $18 million. It paid out nearly $6 million to shareholders in 2007, according to a filing with the Florida Department of Business and Professional Regulation.

Still, the Rooneys have hoped to make the track more profitable.

The family has been trying -- unsuccessfully, so far -- to convince state lawmakers to legalize slot machines at the track. The track's parent company, the Investment Corporation of Palm Beach, reported $723,076 in political contributions and lobbying fees for last year.

A Rooney subsidiary, Doghouse One, maintains a condominium 417 miles away in Tallahassee, where many of those political contributions ended up.

The Rooneys are known for their tenaciousness. It took three tries to get their poker room licensed in Florida, but they did it and now it drives revenue. If they get slots, the Rooneys plan to expand the track with shops and restaurants, a hotel and a jai-alai fronton -- creating an entertainment zone they would link by monorail to nearby Palm Beach International Airport, where they own a pub.

Without slots, the Rooneys have mulled scaling back, perhaps reserving space for rental car companies or a flea market -- like the one operated for 20 years by Timothy at the Yonkers, N.Y., harness racing track before it became a victim to casino expansion.

A gold mine?

Even though they couldn't convince the Florida Legislature to approve their slots bid, the dog track came in handy when the brothers won a casino license at their New York track. The Florida company put up $38 million in letters of credit to guarantee the completion of the Yonkers' expansion. Although the money was never drawn down, the dog track is due $328,961 for providing the service.

In New York, the introduction of 5,339 slot machines -- called "video lottery terminals" by state regulators -- returned the sleepy venue nestled amid 13 million people to a big-time wagering destination. Renamed Empire City at Yonkers Raceway, the casino lured $5 billion in wagers in its first 12 months of operations last year. By comparison, the harness operation netted $73 million in bets.

The Rooneys bought the raceway in 1972 for $52 million. It was then the nation's largest private racetrack purchase. Each of The Chief's sons retains a 20 percent stake, but those set aside for Daniel and Timothy are held in trusts, according to the New York State Racing and Wagering Board.

The new venture is "doing very well and growing," raceway President Timothy Rooney said in an e-mail. His son, Timothy Rooney Jr., is Empire City's vice president, while his son-in-law, Bob Galterio, serves as the general manager.

"We have been transferring stock in Yonkers to the next generation, but this will take some time to accomplish," Timothy Rooney Sr. said.

Despite the casino's gaudy $5 billion till, experts are mixed on how much profit the casino and track will give that next generation of Rooneys. State taxes and fees took more than 70 percent of the casino's $431.7 million in revenues last year, but a change in state law reduced the public's take to 66 percent since April.

If the government's piece of the pie was 50 percent, Yonkers Raceway would "be the busiest casino in the world," said Steven M. Gallaway, a founding partner at Gaming Market Advisors, an industry consulting firm in Las Vegas and Denver. The high tax rate and looming competition at Aqueduct, a thoroughbred racing track in the New York borough of Queens, drive down the overall value of the casino.

"If you go under the assumption New York may lower the tax rate, now it becomes a home run," Gallaway said. "The upside is huge."

With the modest tax changes this spring, Yonkers Raceway should be profitable, although not hugely so, said Jeffrey Gural, a real estate executive who owns two smaller racetrack casinos -- Vernon Downs and Tioga Downs -- in upstate New York.

The casino at Yonkers Raceway is "not a super-duper gold mine but business has improved dramatically," Gural said. "If there's value, it's not huge. ... The high tax is killer."

New challenges

While the Trib identified 24 different companies chartered to the Rooney brothers and their offspring in Pennsylvania, Maryland, New York and Florida, not all appear to be gold mines.

There's the family horse farm west of Baltimore, where Timothy Rooney serves as business manager. He owns an electrical contracting company in New York that does $2 million a year in business, according to credit filings, as well as other firms tied to the track such as the printer of racing forms.

In Florida, the brothers own several ventures connected to the dog racing track, including one named for ancient Irish king Brian Boru. The younger generations are following the lead, with the children of Patrick Rooney Sr. opening a chain of Rooney's Public House restaurants. Their parent company -- General Braddock Brewing Co. -- is an homage to a 1930s Braddock brewery owned by the McGinley family. After Prohibition, it made Rooney Pilsner, and today the family is pouring another Rooney beer made exclusively for their bars.

"One rule is that the family always grows faster than the business," said Ann Dugan, founder of the Family Enterprise Center at the University of Pittsburgh. "How do you do that -- provide for spouses, children and grandchildren -- unless you have a plan for growth?"

It's a concept the Rooneys have been rehearsing for three decades as they adapted to changes and expanded the empire started by Art Rooney Sr.

"He had a hand in all these businesses," Patrick Rooney Jr. said. "Now, the businesses might not have been very big, and he wasn't around to tell us how to change to take on new business challenges, but that's a trait he passed on to us, too."

 

 
 


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