Does Limbaugh’s loss equal a win?

I wrote last week that in normal economic times, Rush Limbaugh’s pursuit of an NFL franchise would be a non-starter. Now it appears to have actually failed to start, with news that Dave Checketts would look to replace the talk show host as part of his potential ownership group. In 2008, when I advised a group looking to bid on an NFL team, Checketts was reported to be a bidder for the Rams, and even then Limbaugh was considered a possible investor. At that time, there was doubt over whether 24 NFL owners, the number required to admit a bidder or group, would approve someone as controversial as Limbaugh. The fact that he had been in pursuit of the team for at least a year now calls into question whether the public saga of Rush announcing his bid for the Rams last week (and the subsequent cries of opposition) was more of a publicity stunt than a trial balloon.

APIt looks like Rush Limbaugh will be spending plenty of time in his studio and not much time at the Edward Jones Dome.

It’s about the money

What I mean by this is that Limbaugh may have already been told that his bid would not be approved by the other owners. Frankly, finances may have played as big a role in this as did Limbaugh’s status as a radio host or his ability to charge people’s emotions. Dave Checketts as a managing partner doesn’t have the kind of cash the league is seeking, and he locked the team in St. Louis. Limbaugh, while he earns money fast, may not have enough accumulated wealth to comfort NFL owners. Assuming Limbaugh has earned the $100 million he is reported to have earned, after agents fees and taxes, he has $50 million left over to save and live off. So if Rush put $25 million away every year and hasn’t had a big investment loss, that would put his liquid wealth at around $100 million, far short of the total value of the team he was seeking to buy, which is around $700 million.

It is precisely that 1:1 equity-to-value ratio the league is looking for in a potential majority owner. If you are trying to buy a $700-million team, they want people who have a $700-million net worth to be the principal owners. This way, they’re assured that someone will always be financially responsible for the franchise and to the other owners. While rules permit small ownership groups to be formed (Green Bay being the grandfathered exception), the owners still want one super-wealthy individual on the hook and won’t allow four people with individual net worths in the $200-million range to aggregate their holdings to meet that threshold. The league currently demands one individual with enough money to essentially own the team outright even if they aren’t required to actually do that. Rules also limit borrowing against the team. Clearly, the last year has hit the wealth of Americans hard, and those billionaires are tougher to find, but Limbaugh and Checketts may always have been long shots.

Publicity money can’t buy

APDid Limbaugh manage to gain sympathy from his attempted bid?

But while the plug has been pulled on Rush’s bid, he won the news cycle handily -- and that may have been what he wanted all along, particularly if he knew his bid was dead. Everyone is talking about this. Limbaugh has been attacked by everyone from Jim Irsay to Al Sharpton. He has also been defended by Keith Olbermann and was interviewed exclusively by NBC, which put his whole life’s story out there. Limbaugh may ultimately be the winner, and he may have done something nearly impossible for him to do -- gain some mainstream sympathy. There are people who don’t agree with him who actually feel like he got jobbed.

Does he have any recourse? The NFL is a private group, and like Augusta National, it can admit or not admit whom it likes, with the caveat that perhaps they can’t discriminate against someone who’s a member of a federally protected group. So Limbaugh likely can’t sue under an anti-discrimination statute; there would be some real irony if he could. He could conceivably sue under antitrust, alleging some conspiracy to create a group boycott against him. Jim Balsillie may have such a suit against the NHL, but whether Limbaugh could prove that the owners conspired to keep him out is unlikely. Since Rush has received publicity, attention and a standing that he couldn’t hope to get any other way, he appears to have won by losing.

Another possible winner

There may be one other roundabout winner in all this and that’s Commissioner Roger Goodell and the owners as they move into discussions about a Collective Bargaining Agreement. Depressed or suppressed franchise values aren’t generally desirable, but they sure come in handy during collective bargaining. They can point to Limbaugh and say, “Look, we had a prospective buyer for a franchise and the players and the public killed the deal. The only kinds of buyers we are currently generating are flawed ones, so our financial picture isn’t as rosy as you guys think over at the NFL Players Association.”

Make no mistake, everything the league does this year will be about collective bargaining. Even if the failure of Limbaugh’s bid had little or nothing to do with the current state of labor negotiations, the league and the owners will use it to their advantage.

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