tv Bloomberg Businessweek Debrief A Conversation With Robert Kraft Bloomberg May 21, 2017 2:30am-3:01am EDT
megan: robert kraft leads a corporate empire worth $5 billion. as the owner of the new england patriots, he has an organization that has won five championships. robert: in our organization, people are free to do with they do and are not encumbered by corporate bs. megan: kraft shares his thoughts on what makes tom brady special. robert: he is a genuine, nice, hard-working person. i do not hold grudges, but i also do not forget anything. megan: and on his close, personal bond with president donald trump. robert: i always member the people who were good to me. he was in that category. megan: a conversation with robert kraft coming up on this
week's "bloomberg businessweek debrief." ♪ robert: i love business. and growing up in brookline, massachusetts, i always dreamt about going to harvard business school. we came from a family of limited financial means, so in high school i would talk to the dean of the school and see what i had to do to get admitted right out of college. i knew that i was passionate about, so i tried to get on a path to do that. you know, any business we are in, we try to stress quality, and how we differentiate from the marketplace. to do that, you have to try to see things that other people don't see, and take risks that other people are not willing to
do. >> let's talk about one story i heard about you, that is before you bought the patriots in 1994, you had been a season ticket holder for 23 years. the first time you bought the tickets, it was $1000. and your wife, when you came home and told her you had spent $1000 on season tickets for the patriots that she was not too happy about spending that money. robert: you have done a lot of homework. [laughter] robert: we were a newlywed couple, and i was passionate about football. i loved it. we had four young sons, and it was something i loved to do with them.
megan: flash forward to 1994, and the owner at the time wanted to move the team. you already owned the rights to the stadium, and you fly to st. louis and you say before you go, you thought the team was worth $115 million. robert: i was passionate about buying the patriots. you have a greater chance of being a starting quarterback in the nfl than owning the team in your hometown. knowing that if i ever had a chance, i got an option on the land, 300 acres of land for people who did the parking. it was owned by 12 different people, and i controlled that for 10 years. in 1988, we discussed the sullivan family that owned --
sponsored the michael jackson tour, they lost a lot of money and loaded the stadium up with debt, $48 million of debt in a stadium that cost $6 million. long story short, i bought it out of bankruptcy, competing with the previous owner, the guy who owned the shaving company. he bid $18 million, i bid $25 million, and got the stadium. i got an option on the land in the stadium, so we controlled all of the revenue. he had tickets, i had everything else. they were going to move the team to st. louis, but they had to get out of my lease. and they offered us $75 million to move the team.
i said no. my sweetheart said to me, you paid $25 million for this top of the stadium, they are offering you $75 million. you take it. you will find another team. but i remember the boston braves, who was my number one team who moved from boston when i was a young cade, and i remembered how sad i was. so i said, i am going to go to st. louis and by the team. she said, what will you pay? i said, the right number is $115 million, but i will probably go to $122 million. i just want you to know. megan: does anyone know what he paid for the team? $172 million.
[laughter] robert: i agreed to pay that 15 hours after i told her i was paying $115 million to $120 million. this was 1994. she went bananas. [laughter] robert: it was the first time in our marriage that she questioned my wisdom. megan: in the years before you bought the team, the patriots won just 19 of 80 games. 19, that is it. robert: which my wife reminded me of. megan: it is why she started to go to games. and no playoff appearances. the year you bought the team, you qualified for the playoffs for the first time in eight years. since then, we all know, five
super bowl championships, 15 division championships. but when i look at that turnaround, what do you credit for such an incredible reversal of fortune so quickly in terms of attitude, in terms of achievement, in terms of how you were adopted in boston? robert: we tried to collect good people, encourage them to take risks and be bold. if they took risks and it did not work out right, but they did what was in the best interest of the company, or it have been logical, we encourage them to do that. because most people will try to play safe all the time. you need your special people who are outside the box, who do things differently. and sometimes whose personalities are quirky, but they have a special talent. the kind of business we are in is a business of egos, and a business of who gets the credit.
in any business, division from within it can become the biggest enemy. i learned that in our paper and packaging company, as we were selling products threat the world and competing against big public companies who, within their companies, one side does not want the other side to do well because they will get ahead of them in promotion. we took advantage of those inefficiencies and marketed it to our benefit. it is the same thing when you are running a football team. you have coaches, and very often the coach will say that the personnel people did not get me the right people, and the personnel people will say the coach did not play the proper people at the proper time, or they did not have the right system. it is excuses all the time. the question is how do you get people on the the same page?
and force egos that have trouble working with one another? you see that in your own businesses and with colleagues that you have in your company. if you can get people to check their ego at the door and put team first, what ever the team may be, then once you have it going, having continuity -- i find that people make changes so often because they don't like things. one of the things i have is i never make a change unless i know there is something better to put in its place. i do not make change for change's sake.
♪ megan: head coach bill belichick and order back tom brady have led the new england patriots to five super bowl championships. i asked robert kraft about the decisions that put them on board, starting with belichick. robert: when i hired him, people told me i should not. we had to build a stadium, we needed goodwill from the public. we needed people who interviewed well and were gracious. [laughter] robert: people sent me tapes of him from cleveland, and in his
five years in cleveland, he had a losing record four out of the five years. he was a man where whether you are picking your life partner or key managers in your company, you can look at the curriculum vitae and look at all these things, but the simpatico of all of these things -- what is right for me may not be right for you. and i believed that we had a system and our companies where people are free to do what they do, and not be encumbered by corporate bs. if they are really good and have substance, they can flourish if they are good at what they do. and also picking up a quarterback with the 199th pick. think about the draft that just occurred and what went on in the first rounds come up for those of you who are football fans, you see how people are trading
so much value just to get a quarterback. this guy was the last pick in the six rounds. all of these gurus, we spent millions of dollars in scouting, but when you are running your businesses, you need to look at the people who have heart and qualities that you can relate to that come together. how everyone missed him is amazing. megan: of course, we are talking about tom brady. 199th pick. you recently told andrea kramer that when you picked him, he told you, thank you so much for picking me.
and i am the best investment this franchise has ever made. that has proven to be pretty true. robert: the exact quote was, he had been drafted and was coming down the steps of the old foxboro stadium, and he was a real bean pole. megan: pre-giselle. robert: he is carrying a pizza box under his arm, and he said i am your sixth round draft. i said, i know who you are. he looked me in the eye and said, i am the best decision for organization has ever made. that was the year 2000. he did not play that year, and then came in the third game of the 2001 season.
the way he said it, i called my eldest son and said, you won't believe it. we just gave drew bledsoe a contract. he was the fourth quarterback. megan: what makes him -- your sons have described him as your fifth son. what makes him so special, not just as a player, but as a man? robert: he is one of the special human beings -- new york fans or nfl fans can hate him, which i understand. but as a human being, he is nicer than anyone. he is the most genuine, nice, hard-working person -- when you get in the huddle and you have to lead guys from all different socioeconomic backgrounds, and have their respect, you cannot be a pretty boy married to giselle.
that is a negative, if anything. megan: when you guys won this year, you said the fourth had been sweet, but the fifth was sweeter. robert: unequivocally the sweetest. megan: tell me why, and is there any -- a little bit of ill will in terms of how tom was treated with deflategate? have you forgiven the league? robert: well, i do not hold grudges, but i also do not forget anything. [laughter] robert: envy and jealousy are incurable diseases. if i have never won a super bowl -- i am passionate about owning
a football team. if i had not one, i would be so angry at our folks, and thinking about what we can do to do it. our competitors, i understand how they brought pressure on the league to be very strong and not compromise. it was an issue that was nonsense and foolishness. but it -- what was really cool was, he did not play the first four games, which is 25% of the season. the good news is, he took no wear and tear on his body. we were privileged to win 3-1. how many people here actually saw the super bowl? the young lady -- i was with someone a couple hours ago.
i understand their disappointment. but the young lady who was here, where is she? you were saying how you felt at halftime. with three minutes to go -- whatever team you are for, there are many anti-patriot fans. with three minutes to go in the third quarter, we had a 0.4% chance of winning. 99.6% chance to lose. and to come back after everything that had happened -- it is a great lesson for the millennials. i don't know how many we have in this room, but how important hard work, perseverance, never giving up, and hanging in there and keep coming back, that was the story of this super bowl. we stayed together in tough times. that was really tough.
♪ megan: let's talk about another friend who is in the news quite a lot, the president donald trump. you have known him for a long time. tell us how that friendship has developed over the years. robert: i have known the president for over 25 years. i never did any business, it was a social relationship. the only bad deal i have had my whole life is when my wife, bless her memory, died. he flew up to the funeral with melania. he called me once a week for a year and invited me to things. that was the darkest period of my life. my kids thought i would die. there were five or six people who were great to me, and he was one of them. loyalty and friendship, trumps politics for me. if i have had any success, it is because i have had good relationships and people trusted me.
i always remember the people who were good to me and my most vulnerable time, and he was in that category. i know he does things or says things that sometimes -- he doesn't mean everything he says, but i am privileged to know that. but people who do not know him maybe do not see the better side. but i will tell you one thing, he is very hard-working and i really believe that he wants to make this country better. he has grown in the job. i have seen it, too. for me, it is like having a high school buddy or fraternity brother become president of the united states. it is weird in a way. [laughter] robert: but it is cool, and i want to do anything i can to
help this country. i do not believe that he is portrayed properly, and some of it is self-inflicted with the style he uses. but i really hope that things will be much better in three to six months. megan: you are in many ways the embodiment of the american dream. what do you say to the people out there who feel so cut off from that, disenfranchised, left behind? how do we begin healing that divide? robert: it is like building a team or building a business. you get people together of different backgrounds and ways of thinking. i am disheartened by seeing the
partisanship. it doesn't open a door to put america first rather than our parochial -- we are competing against the rest of the world. america is a team competing globally, and we cannot have that division from within. and we have it, and never in my lifetime has i seen the divide as great as it is now. i think all of us in this room and those of us who were privileged to be in a position of influence have to do the best we can to build bridges. sports teams and music are the two things that create a sense of community in today's world more than anything. after we were privileged to win the super bowl, boston is a city of 600,000 people. 36 hours after we won, in the rain and drizzle and snow, we had a million and a half people come to the streets of boston in this world of openness with bad people running around, they all
♪ jason: it's a $2.5 trillion industry populated by some of the biggest and most influential investors in the world. i am jason kelly and i am here in berlin at this international conference, the biggest during a private equity investors -- gathering of private equity investors of its kind. over the past few days, we talked to some of those investors about what's on their minds during the trump presidency. it is a world awash with money, that may make deal more difficult going forward. our first conversation is with david rubenstein, the co-ceo and founder of tar