The Quiet Guy Who Brought Football Back To Houston
Houston billionaire Robert C. McNair doesn't spend money recklessly. He has given tens of millions of dollars to universities, medical research, and charities but keeps close tabs on his donations. And on a recent fishing trip to Alaska, the 62-year-old businessman didn't throw away a line or lure needlessly, recalls fellow angler Malcolm Gillis, president of Rice University.
So when McNair bid a record $700 million for a National Football League expansion franchise for his hometown--outmaneuvering a fractious Los Angeles--colleagues knew this was no crazy Texan on a Saturday night spending binge. A pragmatist first and sports fanatic second, McNair says of his deal: "I think it can be a successful business at this price."
Few would doubt McNair, who has spent two years chasing his dream, even when the NFL clearly favored the bigger, glitzier L.A. market. In March, the league granted a conditional franchise for its 32nd team to Los Angeles, giving bidders there time to strike a stadium deal. But squabbling among such high-powered bidders as Hollywood power broker Michael Ovitz and developer Ed Roski, plus a lack of public financing, doomed L.A.'s effort. And it didn't hurt that Houston was offering $150 million more than Los Angeles. If the lengthy competition irritated McNair, he didn't show it. "I've always felt that if you lose your temper, you lose your ability to think, so I try not to lose my temper," he says.
With his deep pockets and unassuming air, McNair was able to present a united community to the NFL--and the promise of a $310 million stadium with a retractable roof. The public will kick in $195 million toward the bill through hotel, car-rental, and other taxes, returning pro football to Houston for the first time since the Oilers left for Tennessee after the 1996 season. "Bob McNair was the guy who had the class, the clout, and the cash to put this thing together. I don't know of another human being in Houston who could have done it," says Jack M. Rains, former chairman of the Harris County-Houston Sports Authority.
The deal isn't likely to produce strong returns for McNair in the short term. But "if you assume he sells 10 or 15 years from now, NFL team values have skyrocketed, and somebody will pay a billion or a billion and a half then," predicts Marc S. Ganis of Sportscorp Ltd., a Chicago firm that values franchises. In the biggest NFL franchise sale until now, the Washington Redskins sold in May for $800 million, but that included the stadium.
Patience and a knack for spying opportunity are second nature to McNair, who grew up in North Carolina. After dabbling in insurance and advertising sales, the psychology major from the University of South Carolina was lured to Houston by a friend's promise of a $3,000 loan to start an auto-leasing business. "Houston is a can-do city. They recognize your ability rather than your pedigree," says McNair, whose father was a salesman for Sunshine Biscuit Co.
"GOOD NAME." After building up his auto-leasing business, McNair moved into equipment-leasing and trucking. By 1982, overleveraged and squeezed by competition, part of the trucking biz was in bankruptcy, with about $1 million in debt. McNair says creditors were eventually paid 100 cents on the dollar. "Because he had his good name and reputation, he came roaring back," says Rains.
Did he ever. In 1984, McNair jumped into independent power generation just as partial deregulation of the electricity market was creating a niche for smaller players. He first planned a $15 million cogeneration plant in New Jersey. "By the time I got through with it, it was $130 million," recalls McNair, who brought in such heavyweight partners as Enron Corp. and General Electric Co. "He was very committed and tenacious and just kept working at it and working at it until he got it done," says Enron CEO Kenneth L. Lay.
At the time of a planned public offering last year, McNair's Cogen Technologies Inc. was operating three plants with an estimated $450 million in gross annual revenues and $65 million in net income. But given the uncertainty of the market, McNair, who owned 82% of the company, grabbed a $1.4 billion offer from Enron to buy most of Cogen's assets.
The deal has left McNair with plenty of free time to pursue his sports interests--which include horse racing and a 1,500-acre farm in Kentucky. He owns the nation's top two-year-old filly, Chilukki, who is undefeated after six races. He vows to create a "first-class organization" in football, too.
The still-unnamed team starts playing in 2002, and McNair plans to bring in financial partners to cut his stake to 30%. "I'll leave the coaching to the coaches," he promises. But with such a hefty investment, odds are that Bob McNair won't be sitting quietly in his skybox.
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