Robert Kraft Talks Sports, Sneakers, and His Friendship With Trump – Bloomberg
Robert Kraft, chief executive officer of the Kraft Group and the owner of the New England Patriots, was interviewed on May 2 in New York City by Bloomberg Businessweek Editor Megan Murphy. Following are excerpts from their discussion, which appear in the May 15-21, 2017, edition of the magazine.
Megan Murphy: You got a scholarship to Columbia, went on to Harvard Business School, started at the paper company Rand-Whitney, and founded a sprawling empire now worth $5 billion by the latest estimates. Tell us about the struggles you went through in your early years, and the risks you took, and how the companies you started were part of a trajectory.
Robert Kraft: I love business. Growing up in Brookline, Massachusetts, I always dreamt about going to Harvard Business School. But we came from a family of limited financial means. So, starting in high school, I would go over there and talk with the dean of the school and see what I had to do to be able to get admitted right out of college. I knew what I was passionate about, and so I tried to be on a path to do that.
The first real big risk I ever took was going up to Newfoundland. We were in the corrugated box business and had one big plant and a smaller plant. I realized 60 percent of our sales cost was really raw materials going to the paper mills. I said, “You gotta try to control our raw materials supplies so you could get the margin business.” So I went up to Newfoundland, where there was a paper mill that was in tough trouble. I competed against big players in the paper industry to take over this mill. I guaranteed them a sale of 200,000 tons, and the big paper companies who wanted this same mill wouldn’t make that guarantee. Thank goodness there wasn’t an internet, because I really didn’t have the net worth to do it if they had done their proper checking. I kept my fingers crossed.
What happened next was President Richard Nixon put in price freezes in the U.S., which meant people couldn’t really export. I had the only new capacity coming out of Canada. And that allowed me to export to Korea, Europe, Iran. Remember, this was in the 1970s when you could go to Iran. I actually went seven times. It was a great country and great people. Anyhow, that allowed me to make a lot of friends throughout the world and build this company today, where we’re in 95 countries. And it’s the same thing with the Patriots.
We’ll get to that. Many may not know that the Patriots weren’t your first sports team. Tell us about the Boston Lobsters of the World Team Tennis league in the ’70s.
We love tennis. My wife and I and my kids all played tennis. We were crazy about it. And this professional tennis league started. If we’ve had success with the Patriots, it’s in part because of the lessons I learned there. There were 16 teams. Jerry Buss, who wound up buying the Lakers, owned the LA Strings. We were from New England, so we owned the Boston Lobsters.
We played in Nickerson arena, which was owned by Boston University. I would advertise and bring in people to watch our tennis team. But all the parking revenue and the concessions revenue went to the university. I’m going, “What kinda dummy am I? I’m bringin’ them in. And all we’re getting is ticket revenue.”
So I learned the importance of stars. Jerry Buss had Chris Evert out in Los Angeles. Billie Jean King and Virginia Wade played for the New York Apples. Now, Martina Navratilova had just defected to the U.S., but her rights were with a guy in Cleveland. We were struggling to make money, but I paid $50,000 in 1975 to get the rights to sign her. She came. It created quite a buzz. And we got a lot of notoriety.
So I learned two things. You have to control your venue. And you have to have a star. Anyhow, we wound up OK. But the other thing I learned if you’re in a partnership: You’re only as good as your weakest partners. Four of us in the league made money, but the other teams were not doing well. So I decided, “We’re gettin’ outta this business.” But it left me prepared for—”
First, one quick story. Before you bought the Patriots in 1994, you’d been a season ticket holder for 23 years. But the first time you went out and bought season tickets, you spent $1,000. When you came home and told your wife, Myra, she wasn’t too happy.
I have the greatest wife, bless her memory. She loved Sundays, because I’d always take my four boys to the games. And she’d go to the chick flicks and do the Sunday crossword puzzle in the Times. She loved Sundays, because there was peace.
Flash-forward to 1994. The owner of the Patriots at the time, James Orthwein, the Anheuser-Busch heir, wants to move the team to St. Louis. You already own the rights to the stadium. You fly to St. Louis. And you said before you went that you did your homework and thought the team was worth $115 million.
So let’s go back to the Lobsters. I was passionate about buying the Patriots and realized that I had to control the venue. You have a greater chance of being a starting quarterback in the NFL—because there are 32—than owning the team in your hometown. If I was ever going to have a chance, I had to control the venue. In 1985, I got an option on the land. It had been owned by 12 different people. In 1988 the Sullivan family, which then owned the team, sponsored the Michael Jackson tour, the Victory Tour, and lost a lot of money. They loaded the old Foxboro Stadium up with $48 million of debt—on a stadium that cost $6 million. Long story short, I bought it out of bankruptcy, competing against Victor Kiam, the guy who owned the shaving company [and who bought the Patriots from the Sullivans in 1988]. He bid $18 million. I bid $25 million and got the stadium. So I had an option on the land and the stadium. We controlled all the revenue, except for tickets. Mr. Orthwein [who bought the team from Kiam in 1992] had tickets. I had everything else. It was the reverse of the Lobsters.
James Orthwein was going to move the team to St. Louis. But it had to get out of my lease. They offered us $75 million. And I said, “No.” My sweetheart said to me, “Wait, you paid $25 million for this old dump of a stadium. They’re offering you $75 million. You take it. You know you’ll find another team.”
But I remember the Boston Braves. That was my No. 1 team and my love, and they moved from Boston when I was a young kid. I remembered how sad I was. I said, “You know, I’m gonna go out to St. Louis tomorrow. I’m gonna buy the team.” She said, “What are you gonna pay?” I said, “Well, the right number’s $115 million. But I’ll probably go to $120 million, $122 million.”
And you paid $172 million, which was the highest price at the time for any franchise.
I agreed to pay that 15 hours after I’d told her I was paying $115 million to $120 million. This is 1994. She went bananas. It’s the first time in our marriage that she questioned my wisdom. She started going to games. She said, “I’d better figure out what’s goin’ on.”
The Patriots, in the five years before you bought the team, had just 19 wins. No playoff appearances in the five years.
They were 19 and 61, which was why my wife started going to games.
The year you bought the team, you qualified for the playoffs for the first time in eight years. Since then, five Super Bowl championships, 15 division championships. What do you credit for such an incredible reversal of fortune?
The Patriots had never sold out in 34 years. And the games were always blacked out, the home games in New England, which is nuts. So my eldest son, Jonathan, and myself, we made 90 speeches in the first 70 days and asked people to buy season tickets. In the first day after we bought it, there was a snowstorm, but 6,000 people came down to Foxboro and bought tickets. The fans were great.
In the end, as anyone running businesses knows, everyone’s looking for what your culture is and what your values are—whether you are going to stand by them. With us, it’s simple. We try to collect good people, encourage them to take risks and be bold. If they’ve taken risks, and it hasn’t worked out right, but they’ve done what’s in the best interest of the company or been very logical, we encourage them to do that. Because most people are going to try to play safe all the time. You need your special people who are outside of the box, who do things differently, and, sometimes, whose personalities are quirky. But they have a special talent. We’re in a business of egos and a business of “who gets the credit.” Division from within can become the biggest enemy. I learned that in our paper and packaging companies.
Well, it’s the same thing when you’re running a football team. You have personnel people. You have coaches. Very often, the coach will say, “Well, the personnel people didn’t get me the right people.” And the personnel people will say, “Well, the coach didn’t play the proper people at the proper time,” or, “They don’t have the right system.” It’s excuses. And so the real trick is how you get everybody on the same page and force egos who sometimes have problems working with others to work with one another. Get people to check their ego at the door and put team first, whatever the team may be.
Bill Belichick has been the Patriots’ coach for 18 years. He’s a combination, in many respects, of your two previous coaches, Bill Parcells and Pete Carroll. He has the toughness and the loyalty. What do you think has made it work?
When I hired him—and people told me I shouldn’t—I had to build a stadium. We needed goodwill from the public. We needed people who interviewed well and were gracious. And people sent me tapes of him from Cleveland. In his five years in Cleveland, he had a losing record four of the five years. In life, whether you’re picking your life partner or your key managers in your company, you can look at the curriculum vitae. You can do all these things, but you need the simpatico of connection.
We’re very lucky with intellect and knowledge and also, by the way, with picking up a quarterback with the 199th pick. For those of you who are football fans, you see how people traded so much value just to get up and get a quarterback. And here was a guy who’s the last pick in the sixth round. In the end, when you’re running your businesses, you need to look at the people that have heart and qualities you can relate to that come together. How everybody missed him—it’s really amazing.
Of course, we’re talking about Tom Brady, the 199th and last pick in the sixth round. You recently told Andrea Kremer on HBO that when you picked him, he told you, “Thank you so much for picking me. I’m the best investment this franchise has ever made.” And that’s proven to be true.
He had been drafted. He was coming down the steps of the old Foxboro Stadium. He was a real beanpole, skinny. He’s carrying a pizza box under his arm. He came over and said, “Mr. Kraft, I’m your sixth-round draft—” And I said, “I know who you are.” He looked me in the eye, and he said, “I’m the best decision your organization has ever made.” But the way he said it, I called my eldest son. I said, “You won’t believe it.” We had just given Drew Bledsoe a $100 million contract for seven years. Tom Brady was the fourth quarterback on our depth chart. That was the year 2000. He didn’t play that year. Then he came in in the third game of the 2001 season.
What makes him, as your sons have described him, your fifth son?
New York fans or NFL fans can hate him, which I understand. But as a human being, he is nicer than anyone. He’s the most genuine, hardworking person. When you get in the huddle, and you’ve got to lead guys from all different socio-economic backgrounds and have their respect, you can’t be a pretty boy married to Gisele. That’s a negative, if anything. But he commands the respect, because he works so hard. Last year the rookies who came into the locker room would have been 7 or 8 or 6 years old when he started playing. They come into the locker room. They see Tom Brady. And he knows how to connect with them and make them feel comfortable. And it’s what he shows them: He’s in there before they’re there. And he leaves later. He works harder. He does the extra things.
Is there any ill will in terms of how Tom was treated with Deflategate? Have you forgiven the league for what happened?
I don’t hold grudges. But I also don’t forget anything. Envy and jealousy are incurable diseases.
If I had never won a Super Bowl … I’m passionate about having the privilege of owning a football team in my hometown. If I hadn’t won, I would be so angry at our folks. I understand how our competitors brought pressure on the league office to be very strong and not compromise on an issue that was nonsense and foolishness.
But what was really cool is, he didn’t play the first four games, which is 25 percent of the season, and so he took no wear and tear on his body. And the good news, we were privileged to win three and one. Then to come back in the Super Bowl, with three minutes to go in the third quarter. We had a 0.4 percent chance to win, 99.6 percent chance to lose. To come back after everything that had happened. It’s a great lesson for the millennials: how important hard work is, perseverance, never giving up, and hanging in there, to keep coming back. That was the story of this Super Bowl. We all stay together in tough times.
You’ve known Donald Trump for years. Tell us how that friendship has developed.
I’ve known the president for over 25 years. I never did any business with him. It was just a social relationship. One of the things there’s less of in the business world today is building relationships. Especially with iPhones and texting. It’s impacted Washington, because there’s not the discussion and the empathy and understanding of points of view different than yours. The only way you change things is to convince people to do what you think is right. But you can’t do that if it’s only one way.
Anyhow, I’ve known Donald for that period of time. I had the privilege of going to his wedding with Melania. Bill and Hillary Clinton were sitting at the table next to me, for the record.
The only bad deal I’ve had in my whole life is when my wife, bless her memory, died of ovarian cancer. He flew up to the funeral with Melania. They came to my home. And he called me once a week for a year and invited me to things. That was the darkest period of my life. And I’m a pretty strong person. But my kids thought I was going to die. There were five or six people who were great to me. He was one of them.
Loyalty and friendship and relationships trump politics for me. If I’ve had any modicum of success, it’s because I’ve had good relationships, and people trusted me. And so I always remember the people who were good to me in my most vulnerable time. He was in that category.
I know he does things or says things that … You know, he doesn’t mean everything he says. I’m privileged to know that. People who don’t know him don’t see the better side. But I’ll tell you one thing: He’s very hardworking. I really believe that he wants to make this country better. And he’s grown in the job. I’ve seen it, too. For me, it’s like having a high school buddy or a fraternity brother become president. It’s weird in a way, but it’s cool. I want to do anything I can to help him help this country.
I don’t believe that he is portrayed properly. A lot of people don’t see him the right way. Part of it is self-inflicted, with some of the style he uses. I really hope that things will be much better three to six months from now.
You’re in many ways the very embodiment of the American dream. What do you say to the people who feel cut off, disenfranchised, left out, left behind? How do we begin healing that divide? How can Trump help do it?
It’s like building a team or building a business. You get people together of different backgrounds and ways of thinking and mold them with their strengths. I’m disheartened seeing the partisanship that doesn’t open a door to put America first. America’s a team competing globally. We can’t have that division from within. But we have it. Never in my lifetime have I seen the divide as great as it is now. All of us, and those of us who are privileged to be in a position of influence, have to do the best we can to build bridges.
I tell my sons, “You can’t have enough friends in this world.” You’ve got to try to relate to people of all backgrounds. The people who clean the office, we talk to them the same way we talk to the bank president. That’s very important. It just doesn’t go on in the political community. Actually, it comes back to sports teams: Sports teams and music are the things that create a sense of community in today’s world more than anything.
Boston’s a city of 600,000 people—and 36 hours after we won the Super Bowl, in the rain, drizzle, and then partial 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 came to celebrate our team. And what I neglected to tell you is, that’s the thing that brought my wife around. She saw the power of sport doing that. We somehow have to do that with Washington.
You’re wearing sneakers. You’re a kind of a sneaker—
Tell me about sneakers and bringing people together.
It helped me get street cred in the locker room. I actually have an old football injury. I have a bone spur. It’s really uncomfortable wearing shoes. So I started wearing sneakers. I love Air Force 1s. I got Mark Parker, who’s the CEO of Nike, to come and speak at an event in Boston. And he was amazed to see me wearing them. I had a suit on, and I was wearing Air Force 1s.
He said, “Why don’t we make your own line?” I said, “OK.” And all the revenue from it goes to the Boys and Girls Club of Boston. I’m comfortable, get a little street cred, and get some money for a great charity.
If there was one piece of advice you could give to CEOs who want to take that next step, who are facing challenges, who are grappling with a rapidly shifting economic and political environment, what would you say was key to your success both as a businessman and as a man?
First of all, to be open to all people, from the Dalai Lama to people from Pakistan, to people from Saudi Arabia, to people from South America, Asia—be open to everyone. We’ve become too closed as a society. We get set in our ways. Don’t be afraid of what’s coming. Be open to it.
The most important thing I say to our key managers or coaches or anyone is, “Don’t be afraid to fail.” Live your big dream, whatever it is. And as long as you’re blessed with health, and you can do the things you love, go for it. Don’t play between the 40-yard lines. That’s gonna get boring.
Most people talk a good game. But life is about execution. It probably means you have to fail along the way. But you keep coming back. And sooner or later, it’ll come out.
You’ve got to really be driven to do that, and be open-minded to all people and go after what you really want. I try to have my big dreams and just keep going for it. That’s been the story.