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Seventh Inning

Cranmer’s letter almost breaks the deal

Business negotiations are like making sausage. The outcome may be palatable, but it’s an unsavory process to watch. So it was with talks about the teams’ contributions to the new stadiums.

On the plate for team shares were pledges of $35 million from the Pirates and $50 million from the Steelers, but the Plan B architects wanted more. What followed was a force play.7thhardball300x162.jpg (10829 bytes)

Bill Newlin, Mayor Murphy’s special counsel on baseball issues who had been involved with the Pirates for more than three years, handled the baseball talks.

The football end fell to Chuck Cohen, a bond attorney with the Dowtown firm of Cohen & Grigsby who had represented John Rigas during a failed bid to buy the Pirates. Cohen was brought into the talks by county Commissioner Bob Cranmer.

"Our charge is to make sure we have a professional team making the maximum contribution it can without causing it to fail, to find that line on something that is neither unfair to the public nor overly generous to the owners. That’s what negotiations are all about," Newlin said.

"The public interest is served by enabling them to be successful. It’s a little bit of a chicken and egg thing. You have to create enough revenue to give the team a chance," Newlin added.

Beginning in April 1998, Newlin sat down with Kevin McClatchy. Their meetings increased in intensity and frequency and they met at least twice a week in May.

They crafted a term sheet that eventually grew to 12 single-spaced pages. They would resolve one thing, move on, then come back later to refine it.

Talks with the Steelers followed the tenor of their player negotiations, which is to say they were tough. The Steelers argued that even at $50 million, they were committing more to their stadium than owners had to fork over in Jacksonville, Baltimore, Cincinnati and other cities.

 
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Cohen, a lawyer for 33 years who was sports editor of the student newspaper when he attended Dartmouth College, met on April 2 with Art Rooney II, grandson of the franchise’s founder and one of club president Dan Rooney’s nine children. It was an indication of the growing role in team operations being played by Art, a Steelers vice president and a partner in the law firm of Klett, Lieber, Rooney & Schorling.

After a dozen preliminary meetings, real talks began after May 8 when Cohen hand-delivered a 90-item sheet of negotiable terms, along with an eight-page chart, covering every conceivable economic and non-economic issue related to a new stadium.

"We had asked Art to put a deal on the table, to tell us what the Steelers wanted. He didn’t want to do that. He was genuinely concerned that if he did that, we would get to the 11th hour and ambush them with some other demand," Cohen said.

The biggest stumbling block was that when the Steelers’ $50 million was added to the government share of Plan B, there wasn’t enough money to build a football stadium. That gap was a deal-breaker; construction costs had to be brought down and the Steelers share had to go up.

Now entered Marc Ganis of Chicago-based Sportscorp. Ltd., a consultant, hired by the county during the Plan B talks, who had worked on lease deals in other cities.

On easel paper, Ganis listed the revenues the Steelers would generate in tickets, concessions, personal seat licenses, club seats and luxury suites in a new stadium and compared that amount to what other teams made.

"The way Ganis figured, there was going to be a sufficient amount of money to make the Steelers competitive and still have plenty left over to be applied to that gap and maybe even eliminate it," Cohen said.

"They thought he was a little aggressive, but they did not say he was dead wrong. I think it was a breakthrough. We had on the table everybody’s secrets and needs," Cohen said.

Bob Cranmer said negotiations with the Steelers were "like squeezing Silly Putty." He had some public flareups with Dan Rooney, who voiced concerns that his franchise was being pressured to pay for other Plan B projects.

Cohen described the talks this way: "The Rooneys are just highly, highly sensitive of being public whipping boys. I respect them greatly. They’re an exemplary, public-spirited family. They’re also extremely reserved. They’re very cautious to concede the validity of an argument or factual observation. They’re not tough to talk to. They’re just really cautious."

As the spring wore on, the Steelers did agree to increase their share, to $60 million, but that wasn’t enough to eliminate the gap.

In an effort to reach a final agreement, the Plan B architects set up meetings with the teams on Saturday, June 20, at the DoubleTree Hotel, the very spot where they had watched Plan A, the Regional Renaissance Initiative, go down the tubes. Art Rooney was so optimistic he telephoned his father, who was vacationing in Ireland, and told him to come home. But the deal almost blew up.

Throughout the negotiations, Cranmer had been outspoken about the need for the Steelers to increase their share. The day before the meeting, Cranmer sent a letter to the Rooneys, making it clear he felt he had done all he could to broker the deal and if it fell through, well, it wouldn’t be the politicians’ fault.

Murphy wanted nothing to do with the letter. He thought it would back the Steelers into a corner. Art Rooney interpreted Cranmer’s letter as an attempt to create political cover: if the deal fell through, the Steelers would be blamed.

The night before the big meeting, Art Rooney called Cohen at home, where he was watching a Pirates game over pasta and grilled chicken with McClatchy and some friends. The Steelers were thinking of pulling out.

"He was ticked. But at this stage of the game, he wasn’t going to be an MIA. They were risking a lot to be walking away from," Cohen said.

"I just had my game face on," Cranmer said of the letter. "I was absolutely prepared to walk away from the table. I figured we’d get a ballpark and have the Steelers still in Three Rivers. The mayor wasn’t happy. He asked me what the hell was I doing."

"I wasn’t sure there was going to be a meeting," Murphy said. "I was on the phone Friday night with Art at 10 saying this was too important to let go. He was livid. His voice was quivering. I told Art I totally disagreed with the tone of the letter, that I had no part in writing or sending it. It was a letter that presumed failure, protecting someone’s rear end."

Three rooms were set up for the DoubleTree talks: the Armstrong Room for the Pirates and the Washington Room for the Steelers, with the Plan B architects in the middle in the Lawrence Room.

The Pirates deal got done first.

McClatchy agreed to increase the Pirates’ share to $40 million, with the extra $5 million coming from the sale of stadium naming rights. The Pirates also agreed to put in more money if their revenue streams were greater than projected in the new ballpark. They also agreed to an iron-clad lease that binds them to Pittsburgh until 2031; if the team tried to move, it would cost the club $100 million.

"Both sides felt tapped out, stretched. But the conclusion was the Pirates needed to do $40 million. It’s the last pain that hurts the most. It’s usually the last pain that makes the deal happen," Newlin said.

Nobody thought the Steelers’ end would get done. Not only had the mood turned edgy, a $25 million gap still existed between the Steelers and the Plan B negotiators.

But the parties set aside their differences. And they closed the final financial gap when Murphy suggested they split the difference. The Steelers share was set at $76.5 million, and Dan Rooney came to the hotel to crunch the numbers with his son.

"It was time to make a deal. If it wasn’t made then, it probably wouldn’t have gotten done. When you make a compromise, there are things you want and things you don’t get," Art Rooney said.

The Steelers agreed to play in Pittsburgh until 2031. The bulk of their share would come from personal seat licenses, which are fees paid up front by fans for the right to buy a season ticket. Most of the remainder would come from fees paid for luxury boxes and premium seats.

"It’s user money. People who go to the games will pay," Cohen said.

"What Saturday represented was an agreement by the teams and local government on a course of action. It was a seminal event. They joined forces to try to get something done," Cohen said.

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