Football's true PatriotNovember 3, 2010: 3:00 AM ET
Robert Kraft has turned New England into a football juggernaut. Now all he has to do is save the NFL.
By William D. Cohan, contributor
Neither fate nor the collective bargaining gods could have timed it better. Three days before the start of the NFL season this year, on a sunny Thursday morning at 6:34, Patriots star quarterback Tom Brady was cruising in his black Audi down Gloucester Avenue in Boston's Back Bay when he slammed into a minivan that had run a red light coming down Commonwealth Avenue.
Brady tried to swerve, but the front end of the Audi smashed into the side of the minivan. "I was scared out of my mind," Brady later said. Glass shattered everywhere, a woman walking her dog nearby fell over backward, and the passenger of the minivan was seriously injured; the police had to use the Jaws of Life to extract him. Brady walked away unscathed -- he practiced with the team later that day -- but not before giving the Patriots' owner, Robert Kraft, the scare of his life. "We have a lot to be thankful for," Kraft told ESPN after the accident. "It was really a miracle."
The very next day, miracle in hand, Brady went to Kraft's office and signed a new, four-year, $72 million contract that would keep him with the Patriots until 2014 and would make him the highest-paid player in NFL history. The contract extension had been the subject of intense public scrutiny for months, with Brady heading into the final season of his six-year deal unsigned. While they had been working toward a deal, the accident, both parties say, was the tipping point that forced action. "It put in perspective everything we're doing," Kraft said. "We're very, very lucky." (As he later told Fortune, "We have a special relationship. He's like a real son.")
It was a particularly tricky situation for Kraft, the billionaire owner of the Boston-based, privately held Kraft Group, a conglomerate with paper-packaging, real estate development, commodities trading, and private equity investments. As one of the highest-profile owners in the league, he has a key role in the NFL's tense standoff with the players' union over compensation, which could force a lockout of next year's season if a deal isn't reached. "Brady is a unique asset," Kraft said a few weeks after the momentous day. "I think we did it in a responsible way. What we did was right for the team and right for the league."
Robert Kraft certainly knows what's right for the Patriots. In the 16 years since he has owned the team, he has taken one of the sorriest franchises in the NFL and transformed it into one of the most feared, admired, and profitable. Although he paid a record $172 million in 1994 for the team, most estimates of the Pats' value these days are around $1.4 billion. Along the way, he and the Patriots, under head coach Bill Belichick, have won three Super Bowls and more games in the past 10 years -- 126 -- than any other NFL team in any decade. The Patriots also won 21 games in a row in 2003 and 2004, the longest consecutive winning streak in NFL history, inclusive of playoff games. (To be sure, the Pats haven't exactly been shy about any of this, proclaiming the 2000s the team's "Decade of Dominance.")
Kraft's remarkable successes with both the Patriots and with his industrial businesses have given him tremendous sway both with other NFL owners and with league executives. In just the past few years his profile in the league has risen markedly. He serves on the NFL owners' executive committee and four other committees, more than any other owner. As co-chair of the league's powerful broadcasting committee, he takes an active role in negotiating the lucrative contracts that allow CBS, Fox, Comcast, ABC, and ESPN to televise NFL games. In 2006, Kraft's support for Roger Goodell was influential in getting the new commissioner selected. "I view Bob like I do Lamar Hunt, one of the founders of the league," says Jerry Jones, owner of the Dallas Cowboys. "I don't know that we have anybody that today has made that kind of contribution to the NFL franchise." In other words, in a league known for its swagger, no one has more clout these days than Bob Kraft.
Now, with the labor standoff, Kraft's role is heightened anew. At issue is how much of the league's revenue -- currently around 60% -- the players will get in the future. The debate is complex, tense, and raw, with years of history on both sides -- and given Kraft's stature in the league, no deal is going to get done without his blessing.
Kraft feels certain the league and the union will sign an agreement in time to prevent a lockout. "We're going to get a deal," he told Fortune during a recent conversation in his spacious office in Gillette Stadium, where he sits surrounded by Patriots memorabilia. "I think a number of us will want to do whatever we've got to do to do it." Kraft's words have considerable weight. When he publicly expressed optimism after the league's recent owners' meeting in Chicago and said he thought a deal would be likely, it made headlines.
He also predicts the NFL season will be extended to 18 games a year, rather than the 16 currently played. While that will increase the already extreme wear and tear on the players -- an issue now in the spotlight after a series of injuries and vicious hits in recent weeks -- more games played means more revenue for the teams that can then be shared with the players. "That's the key to the deal," Kraft says. "If you don't grow the pie, you can't pay your bills." But in Chicago, Kraft also struck a somewhat ominous tone and urged the players union to agree to a deal sooner rather than later. "It'll be less of a deal the more time that goes by," he said. "If we go down the road of a lockout and losing games, we all lose." Jerry Jones agrees, marking a united front between the league's two most powerful owners. "We all want to get a deal done before the start of the next year," Jones told Fortune. "That is the will of all of the owners." (Neither the Players' Association nor its attorneys responded to requests for a comment about Kraft or the labor negotiations.)
Labor deals aside, no other owner extends himself on behalf of the league more than Kraft. During the recent renegotiation of the NFL's lucrative TV contracts, Kraft flew the NFL's top executives -- Goodell, CFO Anthony Noto, and Steve Bornstein, CEO of cable's NFL Network -- back and forth across the country on his Gulfstream IV so they could attend the meetings together and talk strategy on the way. "Robert was side by side with Roger, myself, and Steve and the media team in strategically thinking about these deals," says Noto, who recently left the NFL to return to Goldman Sachs (GS). "It's a lot of work and effort for him, a huge investment of his personal and professional currency in traveling across the country and personally calling on the Les Moonveses, the Rupert Murdochs, the Mel Karmazins of the world." In 2008, Kraft -- along with Jerry Jones -- went with NFL executives to Philadelphia to try to resolve an ongoing dispute with Comcast (CMCSA) about how many of the cable company's subscribers should have access to the NFL Network.
"Why does Robert Kraft get on the Acela train, go down to Philadelphia, and personally invest the time to solve complex differences of opinion?" Noto asks. "Because he cares about the league first and last. He does not get any more than any other club for the investment of his time. He gets 1/32 of that deal" -- referring to the league's model in which the 32 owners split revenue equally -- "not 2/32 or 16/32. It's 1/32." Kraft is modest when it comes to this kind of praise. "We're all fractious," he says of his fellow owners. "But we're only as good as our weakest partners. That's not a trite saying. I want everyone to do well. If the NFL does well, the New England Patriots are going to do well."
Others outside of football lavish similar praise on Kraft. Brian Moynihan, CEO of Bank of America (BAC), has known him for many years. (Kraft Group is a client of the bank.) "He understands the power of brand and the power of bringing good business discipline to everything he's done," Moynihan says.
Not that Kraft ignores his team's own interests. In 2002, at a cost of $325 million, he opened CMGI Field, which soon became Gillette Stadium and ushered in the NFL's era of grand sports palaces (prior to Gillette, the Pats played in Foxboro Stadium, infamous for its lack of proper food joints and seats that froze in winter). In 2007, Kraft opened Patriot Place, a $350 million shopping and entertainment complex adjacent to Gillette Stadium with 1.3 million square feet of retail space. Later he added a movie theater and a luxury hotel; this month country singer Toby Keith will open a restaurant there. In 2008, CBS (CBS) and the Kraft Group opened CBS Scene at Patriot Place, a unique, three-story sports bar and lounge with broadcast facilities. "It seemed like a great idea to extend our brand," Moonves says.
Two things stand out about Robert Kraft: He does not come by his passion for football naturally, and he is a preternaturally gifted risk taker. Although he was a sports enthusiast and a fair athlete growing up in suburban Boston, he wasn't allowed to participate in organized sports. The games were played on Saturday, when the orthodox Krafts were at synagogue, and the practices were during the week, when Kraft was at Hebrew school. His father, a dressmaker, wanted Kraft to be a rabbi.
Kraft went to Columbia on a scholarship and finally played on the lightweight football team. (In 2007 the Krafts gave $5 million to Columbia to support intramural athletics; the university named its football field after him. There are also the Kraft Family Stadium and a number of other parks in Jerusalem.) He went on to Harvard Business School, and, after he married his wife, Myra, her father, Jacob Hiatt, gave Kraft his start in business. Hiatt, a successful entrepreneur in Worcester, Mass., was the principal owner of what became Rand-Whitney, which made paper packaging for food, toys, and cosmetics. Kraft joined the business and, using borrowed money, ultimately bought out Hiatt's stake.
A passionate Boston sports fan, in the late '70s Kraft launched what would become a decades-long, highly unorthodox pursuit of the ownership of the Patriots. In 1985 he bought an option on 300 acres of land surrounding Sullivan Stadium by paying a group of Boston businessmen $1 million a year for 10 years for the right to buy the acreage for $18 million. That gave him a decade to figure out how to get both the stadium and the team. In 1986 the Sullivans put the Patriots up for sale but without the stadium, so Kraft passed on the deal. The Pats went instead to the late Remington razors owner Victor Kiam for $87 million. But when the Sullivans ran into further financial difficulties two years later, Kraft and a partner beat the Kiams' bid and bought the stadium out of bankruptcy for $25 million in a deal that required the Patriots to stay there until 2001. In the meantime, with an option on the land and the stadium, Kraft was getting $2 million a year in revenue from parking and concessions.
In 1992, he had yet another chance to buy the team when Kiam ran into financial trouble. But Kraft passed again, and the fate of the team ended up being controlled by one of Kiam's creditors, James Busch Orthwein, an advertising executive and the great-grandson of the founder of Anheuser-Busch (BUD); Orthwein said he would either sell the team or move it to St. Louis.
But to do so, Orthwein had to deal with Kraft. To get out of the stadium lease in Foxborough, Orthwein offered Kraft $75 million, but Kraft turned him down -- and offered to buy the Patriots for $172 million. Before sealing the deal, he called Massachusetts Gov. William Weld and won his promise to help Kraft build a new stadium. "We could not compete and win in that old stadium," Kraft says. "Guys used to go in the ladies' room and urinate in the sink while women were there. It was not a family atmosphere."
It would be another eight years before Kraft would get the stadium he wanted, and many eggs -- and promises -- were broken along the way. In 1999 he backed out of a plan to move the Patriots to Hartford at the 11th hour, turning down more than $1.2 billion in state funding and guaranteed cash flows in the process. But he used the threat of moving the team to get the Massachusetts legislature to provide $75 million in infrastructure money (which he is paying back) -- and to get the NFL to make $150 million in low-interest loans available to him to build Gillette Stadium. (Kraft and the NFL paid $2.4 million to the state of Connecticut to cover costs and bruised egos.) In the end, Kraft likes to point out, the Kraft Group oversaw the construction of the stadium and financed it privately. "This is the only stadium in America that is 100% private," he says.
Successful moguls often leave a trail of wounded combatants in their wake, and Kraft has his own lengthy list beyond just the spurned citizens of Connecticut. There's Stephen Karp, the Boston real estate developer who reportedly remains bitter toward Kraft after selling Kraft his portion of Sullivan Stadium six years after they bought it together. There's Boston restaurateur Charles Sarkis, who lost a lawsuit with Kraft over his failure to pay Kraft rent on the land next to Foxboro Stadium where Sarkis had a racetrack. Boston investor David Mugar is still peeved at Kraft for exercising his option in 1991, as a minority investor, to sell his stake in a Boston TV station that Mugar controlled. Kraft made a bundle, but Mugar lost control of the station. In Montville, Conn., the people don't care for him because after Kraft bought the Robertson Paper Box Co. in the mid-1980s, he made promises about creating jobs that won him concessions from the town to help him build a new plant -- then sold two older plants and caused job losses anyway.
But everyone makes enemies in business. In fact there are probably more people upset by Kraft's personnel moves on the football field. The list of Patriots players aggrieved by Kraft's perceived slights has been amply documented by the sports media and includes Mike Vrabel, Lawyer Malloy, Ty Law, Asante Samuel, Richard Seymour, and many others. But to Kraft, swapping football players is no different from intelligently pruning a portfolio of stocks. "When we started to cook is when I understood that this team should be run like we run our other businesses, with the same core values," Kraft says. "You have to make tough decisions. But managing personnel in this business is like having a portfolio of 53 stocks." Earlier this summer, after the Patriots and its Pro Bowl guard Logan Mankins could not reach an agreement on terms of a new contract, things turned acrimonious when, after Mankins made a comment questioning Kraft's integrity, he apologized privately to Kraft but refused to apologize publicly.
And then there is the unsentimental trade last month of wide receiver Randy Moss back to the Minnesota Vikings. Shortly after Moss was recruited, Kraft gave him a stern lecture in his office about not misbehaving in any way that would embarrass the Kraft family. If Moss did, Kraft told him, he would be released immediately. Moss came around to Kraft's side of the desk and hugged him. "Mr. Kraft, I want to be part of your family," Moss said. But in the few weeks before the trade, Moss had started complaining publicly about not getting the football enough, about wanting more money, and about wanting to be traded. And then he was gone.
Kraft made two brilliant personnel decisions in 2000: hiring Belichick as the Patriots' head coach and de facto general manager and drafting Brady in the sixth round that year. Nobody else in the league wanted either. "Anyone could have hired him," Kraft says of Belichick. The same could be said for Brady. Why, after Belichick's struggles in Cleveland and being so closely associated with the difficult Bill Parcells, did Kraft pick him up? "My gut," Kraft says without pause. "That's how the best things in my life have happened."
No doubt he will rely on his gut again to help him finesse the labor negotiations, the most difficult impasse the NFL has faced in recent history. No owner has more at stake in the talks than Kraft. The last decade has increased the Patriots' value exponentially, along with Kraft's net worth. And if pro football games aren't being played in Foxborough, the big parking lot outside Kraft's office will be empty, and fewer people will be shopping at Patriot Place.
Kraft has a Zen approach to it all, befitting the rabbi his father wanted him to be. "I've got no complaints," he says. "I'm not holier than thou. I've got plenty of faults. But building bridges and doing the right thing is what I try to do. I have to pinch myself every day when I drive here." Spoken like a true Patriot.
--Daniel Roberts contributed to this article.