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The $126 Million Fumble
John Steinbreder
March 14, 1988
How Billy Sullivan and his son Chuck turned a $25,000 investment in the Patriots into a financial disaster
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March 14, 1988

The $126 Million Fumble

How Billy Sullivan and his son Chuck turned a $25,000 investment in the Patriots into a financial disaster

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Billy Sullivan didn't make it to Super Bowl XXII in San Diego. Instead, Sullivan, the 72-year-old owner of the New England Patriots, was holed up in his condominium just south of Palm Beach, Fla. His absence was, to say the least, surprising. As founder of one of the AFL's original teams, Sullivan ranks among pro football's patriarchs, and he usually revels in the end-of-the-season socializing that is as much a part of the Super Bowl as the game itself.

But neither the game nor the parties mattered much to Sullivan this year. While the celebrants in San Diego ate, drank and danced their way into a super frenzy, Sullivan was watching all that he had worked for crumble around him. What started as a $25,000 investment in 1959 has mushroomed into nearly $126 million of debt for the Patriots, family-owned Sullivan Stadium and members of the Sullivan family. Moreover, sources close to the family say that Sullivan and his eldest son, Chuck, 45, who's executive vice-president of the Patriots, are teetering on the brink of personal bankruptcy. Chuck denied it last week, and Billy wasn't talking. (Another son, Patrick, 35, who is general manager and treasurer of the Patriots, has no equity in the team or the stadium, but has signed loans with his father and brother.)

Imagine the 28 NFL franchises as a group of nation-states. The Patriots are the league's Brazil. One set of documents obtained by SI shows that the team lost $11.9 million in fiscal 1987. Another set indicates that as of Feb. 15 of this year, the Patriots' debt had reached $49 million; that the Chuck Sullivan-owned Stadium Management Corporation, the company that runs Sullivan Stadium, where the Patriots play, had debts of $52.6 million; that Chuck had debts totaling $22.1 million; and that Billy had debts of $2.1 million. A whole platoon of creditors, from major banks to longtime friends, are badgering the Sullivans for repayment of loans and payment of bills as well as for answers to questions about how an NFL franchise could lose so much money.

In early January the Sullivans discovered they couldn't meet their monthly payroll for the Patriot players. So they pleaded with the NFL to release nearly $4 million in contingency funds, which were held in escrow. This unusual request was granted because the league worried that New England's players could declare free agency if they weren't paid on time.

The NFL could do nothing, however, about the $9 million the Sullivans owed Connecticut Bank and Trust, or the fact that they hadn't made a payment on that loan for nearly two years. The bank got tired of waiting for the money and threatened to foreclose on the collateral, which happens to be Sullivan Stadium. The bank moved to auction the stadium Feb. 23, but the Sullivans halted the sale by putting the Stadium Management Corp. into protection from creditors under Chapter 11 of the Federal Bankruptcy Code.

The stadium is only one of the Sullivans' problems. Francis Murray and John Charlton, two businessmen, have paid $22.6 million for an option to buy the Patriots. Every time Murray and Charlton have moved to exercise their option, the Sullivans have balked. Frustrated, Murray and Charlton sued the Sullivans three days before this year's Super Bowl, charging them with extortion, mail fraud, breach of contract and conspiracy. Murray, a Philadelphian, says the extortion charge stems, in part, from a threat by Chuck to sabotage the franchise by not paying the players and by allowing them to become free agents. The Sullivans dispute Murray's and Charlton's charges, and claim that they have consistently broken provisions of their agreement to buy the club.

Several third parties have attempted to provide a solution. For instance, on Feb. 16, Murray and the Sullivans announced that real estate mogul Donald Trump wanted to buy the team in an arrangement that would have given the Sullivans millions of dollars and allowed Murray to retain a stake in the Patriots. Trump met several times with the two sides to discuss a deal. However, on Feb. 29, Trump said he was no longer interested in acquiring the Patriots or in helping the Sullivans find a buyer. Chuck says Trump's fear was that the NFL would try to block his efforts to buy the team. "He said he had no problems with the numbers," says Chuck, "but was more concerned about having the league shun him."

Indeed, sources close to the negotiations say that NFL commissioner Pete Rozelle was opposed to the proposed Trump deal. According to the sources, Rozelle didn't want Trump in the league because of his casino holdings in Atlantic City and because of his role in the antitrust suit the USFL filed two years ago against the NFL. Trump, who then owned the USFL's New Jersey Generals, clashed repeatedly with Rozelle in court. (The NFL was declared a monopoly in the case but was forced to pay only $3 in damages. The case is under appeal.)

To be sure, some NFL owners had seemed to welcome the idea of Trump's buying the Patriots, and when Trump backed off from the deal on Feb. 29, he had this interpretation of events: "I feel the enthusiasm for selling the New England Patriots to me is an attempt by the NFL to co-opt me and get rid of Donald Trump as a problem...."

Over the past few weeks, other well-financed businessmen have indicated an interest in the Patriots. One is Marvin Davis, a Denver oilman who is a former owner of Twentieth Century Fox. Another is Preston Robert (Bob) Tisch, who stepped down as U.S. postmaster general on March 1. Tisch, the younger brother of CBS chief executive Larry, is a close friend of Rozelle's, and he has enough money and support among the owners to buy the team. As SI went to press, the Sullivans claimed to have lined up yet another source of financing: an unnamed group of investors who supposedly would keep the family involved in the Patriots.

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