The $126 Million Fumble (How the Sullivans turned a $25k investment into a financial disaster)

[jmt57]

I just stumbled across this today. It's a lengthy read, from the perspective of when it was written in 1988 - but very well worth your time in my opinion, regardless of how long you have been a fan of the Patriots. It goes beyond the infamous Jackson tour, with nuggets of Patriots and NFL history.


The $126 Million Fumble

Chuck seemed to get carried away by power. "The team and the league had become terribly important to him," says Camille Sarrouf, a lawyer and former Patriots shareholder who successfully sued the Sullivans. "He once said to me, 'There are 100 U.S. senators but only 28 owners of an NFL team.' "

But even as Chuck ascended in the NFL hierarchy, his family's decline was beginning. The 1982 strike sapped the team owners of revenues. The Sullivans were hurting more than most because they were still paying off the debts they had assumed when they took over the Patriots. Interest rates soared in the late 1970s and early '80s, when the Sullivans had done most of their borrowing, and the Sullivans were paying several million dollars a year just to service those loans. Then Chuck came up with a plan that would not only clear the books but also give his father and his family lifelong financial security: In 1984 he decided to promote a 15-city international music tour—the famous Victory Tour—featuring Michael Jackson.

Chuck had dabbled in music promotion before, having brought Duke Ellington and the Kingston Trio to Boston College for concerts while he was attending law school there. When he was stationed in Thailand, during the Vietnam War, he worked as the Army's front man for Bob Hope's 1968 Christmas tour. In the early '80s he brought such big names as David Bowie and The Police to Sullivan Stadium.


This time, however, Chuck was in over his head.​

 

[patfanken]

Thanks for finding this JMT. I have long hated all the Sullivans. They never put anything of their own INTO the franchise, and pretty much scammed everyone who ever did business with them. The kids were entitled egotists, and the father nothing more than a professional spin doctor who either led the scam or took advantage of it. The description of the deal they extorted out of Murray was disgusting. They made sure they took care of themselves, and yet were SOOOOOO stupid they backed out of it.


Anyone who thinks that the NFL would have never come to Boston without Billy Sullivan hasn't a clue about demographics. NE has ALWAYS been a great sports market and had the TV numbers that would have made it a prime destination for a franchise. The final indignity the Sullivans left us with was selling the team to a boob almost as stupid and inept as they were (Victor Kiam), at a time when BOTH Bob Kraft and Paul Fireman were eager buyers.


History tells us that in a few short years, Kiam was forced to sell quickly to James Orthwine, whose reason to buy it was to move it to his home town of St.Louis. As it turns out Orthwine's most positive legacy was hiring Parcells, and selling to Kraft (who did some "extortion" of his own when he wouldn't take $75MM in free money for his lease, and instead overpaid (by a lot), something like $189MM, which at the time was the most money ANYONE had ever paid for a professional sports team.


Looking back on it, the Pats were the league's WORST franchise, playing in the league's WORST stadium, and made the LEAST amount of money in the league. Yet Kraft paid the MOST money ever for a franchise. Talk about having a vision. Even more than that, having the ability to make that vision come true, not only on the field but off it.

 

[n6249c]

[...] The final indignity the Sullivans left us with was selling the team to a boob almost as stupid and inept as they were (Victor Kyam), at a time when BOTH Bob Kraft and Paul Fireman were eager buyers.

History tells us that in a few short years, Kyam was forced to sell quickly to James Ortwine, whose reason to buy it was to move it to his home town of St.Louis. As it turns out Orthwine's most positive legacy was hiring Parcells, and selling to Kraft (who did some "extortion" of his own when he wouldn't take $75MM in free money for his lease, and instead overpaid (by a lot), something like $189MM, which at the time was the most money ANYONE had ever paid for a professional sports team.

Looking back on it, the Pats were the league's WORST franchise, playing in the leagues WORST stadium, and made the LEAST money in the league. Yet Kraft paid the MOST money ever for a franchise. Talk about having a vision. Even more than that, having the ability to make that vision come true, not only on the field but off it.

Don't know about Fireman, but IIRC Kraft's eagerness to buy the team was tempered by the separation of ownership between the team and the stadium. Think he wouldn't buy the team without owning the stadium, so he passed on the deal with the Sullivans and bought the stadium some time later. Then he was in a position to buy the team when the plans for moving it ran into some snags (was it the lack of a stadium in St Louis? ironic if so!).

 

[Tony2046]

What a great read. Thanks for sharing this.

 

[oldrover]

I just stumbled across this today. It's a lengthy read, from the perspective of when it was written in 1988 - but very well worth your time in my opinion, regardless of how long you have been a fan of the Patriots. It goes beyond the infamous Jackson tour, with nuggets of Patriots and NFL history.


The $126 Million Fumble

What a story... man, those Sullivans were business idiots. Reminds me of the old Steve Martin stand-up joke:

"Hey, I wrote a new book... "How To Turn $1 Million In Real Estate Into $25 In Cash"..."

 

[Rusty Coupe]

If the Sullivans' could have hung on for a few more years, they would have received their share of the new TV revenue contracts and probably would still own the team.

That would have made the AFC East the dysfunctional owners division. The Sullivans', Huizenga/Ross, an aging Ralph Wilson, and Woody. That might be the parity of the league Roger has been looking for all along, and the real reason for his crusade against the Pats.

 

[FortressX]

Did they have issues with the parking lots back then and who owned them ?

 

[patfanken]

Did they have issues with the parking lots back then and who owned them ?

Eddy Andelman, IIRC owned some land around the raceway back then. Eventually he sold it, I assume to the Krafts, and I'm sure he did very well.

 

[jmt57]

Did they have issues with the parking lots back then and who owned them ?

Yes, you are correct. I forgot about that fiasco.

From an August 6, 1979 article:

They're off and kicking

Schaefer Stadium in Foxboro, Mass., 26 miles southwest of Boston, is the home of the New England Patriots of the NFL. The Stadium, which seats 61,297, was deemed an engineering miracle in 1971 after it was completed in less than a year for only $6.7 million. But now, folks, it turns out that somebody goofed. Parts of the stadium were built on land now belonging to Foxboro Associates, owners of the adjacent New England Harness Raceway. Eddie Andelman, a Boston radio personality and a partner in the harness track, has been threatening to lop off the intrusions.​