To call the New England Patriots owner Robert Kraft a turnaround guy is an understatement. Calling him a shrewd businessman with the gift of foresight is more appropriate. Kraft purchased a failing franchise back in 1994 and turned it into football’s greatest dynasty. That’s a big feather in his cap. Here’s how he did it.
Buying the Patriots
Back in the early 90s, Kraft was playing three-dimensional chess. He rose to prominence after buying a paper mill called “International Forest Products,” a brand he made integral to the packing industry. He decided to take that same well-developed business acumen and apply it to professional sports.
At the time, the Patriots were owned by Boston businessman Billy Sullivan who was instrumental at bringing football to Boston during the early years of the AFL. However, the Patriots were anything but a lucrative or successful organization.
The Patriots franchise was actually composed of three smaller units: the stadium, the team, and the parking lot. In order to “own the team” and make the franchise profitable, reports Inc, the prospective owner would have to buy each unit, which was an expensive, unappealing prospect. But Kraft had a vision.
He purchased the parking lot after the Sullivan family defaulted on the lease payments. Many thought that he would never see a return on his investment. But his end goal wasn’t just revenue off the parking lot; it was owning everything.
The Sullivan’s stake in the franchise limped along for another two years before they put the team and stadium up for auction. Businessman Victor Kaim bought the team with plans to move them to Jacksonville, but after a close reading of the lease agreement, Kraft preempted that plan by purchasing the stadium. It was only a matter of time until he leveraged the stadium’s long-term lease agreement to his advantage, purchasing the team in the process. All said and done, he paid $227 million for all three pieces.
How Robert Kraft pays the Patriots in 2020
Fast-forward to 2020. The New England Patriots are the face of the NFL. Kraft’s initial investment has gone from $227 million to an empire worth almost four billion dollars. And yet, with all big business, financial trouble is never far behind.
Going into the 2019-2020 offseason, reports ESPN, the franchise was struggling to stay under the salary cap. The cap ceiling this year is $210 million, according to Spotrac. At the start of the offseason, the Patriots had nearly $164 million in active contracts, with $24 million in dead cap space, and six million rolling over from last season. Over half the dead cap amount is due to Tom Brady who departed for the Tampa Bay Buccaneers.
That meant no cap space left, especially with Cam Newton incoming. A few changes due to the advent of COVID-19 forcing players to opt-out, as well as restructuring a few key contracts, has freed up valuable space, but until next season’s salary cap, the Patriots’ purse strings will be tight for the rest of the year.
Winners and losers
The big question with any turbulent offseason is who are the winners and losers? Who made out best, and who isn’t in Kraft’s good graces?
Names on the winners’ list include Stephen Gilmore with a five year, $65 million dollar contract, and Dont’a Hightower with a four year, $35 million dollar contract. Compare that to back up quarterback Brian Lewerke with his one year, $610,00 contract, or wide receivers Isaiah Zuber and Will Hastings, also with $610,000 each.
And the team as a whole? This will be their first year in almost two decades without Brady at the helm. The talk of the town is Cam Newton, but a lot remains to be seen in 2020. Robert Kraft has done it before, but does he still have what it takes to maintain his empire going forward? The way he navigated this year’s salary cap tells me yes, yes he does.