Pittsburgh's Rooneys
Quietly Shop the Steelers

The Pittsburgh Steelers -- owned for 75 years by the same local family -- is secretly being shopped to potential buyers as the five sons of the football team's founder and their heirs spar over the storied franchise's future.

Steelers Chairman Dan Rooney, the eldest of the brothers, wants to consolidate his control through a 10-year plan to buy out most of their shares, but a well-funded prospective buyer has emerged after some of Mr. Rooney's brothers and their children raised questions about his offer.

Stanley Druckenmiller, billionaire chairman of Pittsburgh's Duquesne Capital Management, has expressed interest in acquiring the Steelers, people briefed on the negotiations said.

The closed-door talks affect not only one of America's iconic sports franchises, but one of its most fabled sports families.

In a statement Monday, the Steelers said Mr. Rooney "wants to stay in the football business while some of his four brothers plan to get out of the [National Football League] and focus their business efforts on their racetracks and other interests." The statement said that Mr. Rooney and his son, Steelers President Art Rooney II, are arranging a financing plan to buy the brothers' shares in the team in order to continue substantial ownership of the franchise by the Rooneys.

"I will do everything possible to work out a solution to ensure my father's legacy of keeping the Steelers in the Rooney family and in Pittsburgh for at least another 75 years," Dan Rooney said in the statement.

But some of his brothers and younger third-generation family members have sought an independent analysis by a top Wall Street investment bank to see whether a better deal can be put together. They worry that Dan Rooney's plan undervalues the team and takes on too much debt.

Working in tight secrecy under the code-name "Project Newcastle," Goldman Sachs & Co. late last year valued the Steelers operations at $800 million to as much as $1.2 billion, according to documents reviewed by The Wall Street Journal.

Mr. Druckenmiller, who has told Rooney family members that he hoped to retain Dan Rooney as a partner if he buys the franchise, also wouldn't comment for this story.

The Rooney family's divisions over the future of the Steelers are a classic example of the challenge facing second- and third-generation owners of a family business. Looming estate taxes and diverging interests among the children and grandchildren of the founder raise pressure for a sale, bringing emotional family issues into play.

The Rooney brothers own 80% of the Steelers through Rooney Enterprises LLC; the McGinley family, their cousins, own 20%. Rooney Enterprises also owns the Yonkers Raceway just north of New York City and its profitable casino; the Palm Beach Kennel Club, a faded Florida dog track that now has a poker room; and other holdings, including a horse farm in Maryland.

The Steelers are by far the family's crown jewel. Art Rooney Sr. -- a colorful, cigar-chomping sportsman who kept the team going in its early years through his skill as a horse-race handicapper -- bought the club for $2,500 in 1933.

He was known in football circles as "The Chief" and, along with a handful of other early owners, was enormously influential in steering the NFL from a small and clubby league into the U.S.'s premier professional-sports organization. After decades of losing, the Steelers became a powerhouse in the 1970s, fielding marquee players such as quarterback Terry Bradshaw and Franco Harris. The team has won five Super Bowls and thrived despite the economic ups and downs of their home city.

Dan Rooney, 75 years old, became Steelers chairman on his father's death in 1988; his brothers, Art Jr., Tim, Pat and John, are vice presidents of the Steelers and operate the other family businesses. Dan Rooney named his son, Art II, as the team president after the 2002 season.

Dan Rooney's role in the NFL would be difficult to overstate. He has been involved in most major decisions for the past 30 years, serving on committees that have expanded the league into new markets and navigated difficult labor relations with players. He also promoted diversity in hiring, imposing a requirement that teams interview minority candidates for top coaching positions, which became known as the Rooney Rule.

The Dan Rooney family's buyout proposal was presented by Société Générale SA under the code-name "Project 33," documents show. The plan appears to value the Steelers at well below the price range envisioned by Goldman.

Under the SocGen plan, the Dan Rooney family would take on substantial debt and pay $35 million to each brother and the McGinley family for a 5% stake in the team. Dan Rooney's family then would buy more equity, at a price to be determined, over 10 years, leaving each with a 5% stake in the team.

The Goldman valuation was sought by family members who wanted an alternative to their elder brother's plan. In it, Goldman says, "the family must begin the process of planning for the future of the franchise, which will entail balancing numerous and sometimes competing interests." At some point earlier this year Mr. Druckenmiller was drawn into the mix. If his bid is successful, he has told Rooney family members, he'd like Dan Rooney to continue running the team.

Waiver From the NFL

Dan Rooney's plan would require a waiver from the NFL, because the debt would exceed league limits, SocGen's bankers said. NFL Commissioner Roger Goodell assigned Paul Tagliabue, his predecessor as the league's leader, to work with the families and investment bankers to resolve the ownership situation.

Some family members expressed concern to bankers involved in the talks that Dan Rooney could use his enormous influence with the NFL to favor his family's bid. Mr. Rooney has had a major role in selecting NFL commissioners, and the NFL would have to approve any sale.

Technically, the Steelers ownership is out of compliance with NFL guidelines already. The league requires that a single person own at least 30% of a franchise to be principal owner; in the Rooney family, each brother's share works out to 16%. And the league has limits on owning gambling operations, at a time when the Rooney family stake in casinos is increasing.

These concerns make it unlikely the current ownership structure will continue. Both the Dan Rooney bid -- if a waiver can be obtained on the debt limit -- or an outright purchase of the team by another buyer would address these issues.

In a letter that sought to summarize family views late last year, Mr. Tagliabue wrote to Mr. Goodell that "the Chief" wanted Steelers ownership "continued within the Rooney family beyond the current generation of brothers if at all possible and consistent with the economic and operating realities of the NFL."

But the Tagliabue letter also says, "Everyone endorses the concept that any sales or transfer of equity interests in the Steelers need to be based upon fair and market-based valuations."

The NFL declined to comment, and Mr. Tagliabue was on vacation, his office said, and could not be reached.

Rich Prize

However its fate is decided, the Steelers franchise is a rich prize. The team plays in a relatively new riverfront stadium that routinely sells out its 65,000 seats. And its fan base is famously loyal, reaching far beyond western Pennsylvania.

By all accounts, Mr. Druckenmiller is one of those loyal fans, routinely attending home games and rarely missing a playoff, associates say. And while he spends much of his time in New York these days, he lived in Pittsburgh for more than 30 years, and his firm, Duquesne Capital, has its offices there. With a net worth estimated at more than $3 billion, he is perhaps best known as the chief trader, until 2000, for hedge-fund pioneer George Soros.

The Steelers' operating income is estimated at $20 million a year, on $200 million in revenue, the investment bankers at Goldman noted. In benchmarking a possible price for the Steelers, Goldman used a multiple of about 40 times operating income, the average of recent NFL team sales, in arriving at its valuation of at least $800 million.

Others involved in these discussions, however, noted the price could be hurt because -- despite the team's fan base and strong ties to the city -- Pittsburgh is no longer a growing market and has fewer big companies that can afford lucrative box suites.