In 1959, Sullivan, by then involved in business ventures, requested a National Football League franchise in Boston. With Boston's five previous football franchises having folded or moved, the NFL denied Sullivan's request.
AFL franchise
Having not succeeded in starting an NFL franchise, Sullivan then turned to the new American Football League the same year. For $25,000, he was awarded the league's eighth and final team for their inaugural season in 1960 as the Boston Patriots. Sullivan gave his son Patrick Sullivan the title of General Manager for the team and another son Chuck Sullivan the title of Executive Vice President. In 1964, Sullivan helped the AFL negotiate a 5-year, $30 million television agreement with broadcaster NBC.
For the 1971 season, the Patriots' second in the post-merger NFL, Sullivan changed the team's name from the Boston Patriots to the New England Patriots to correspond with the team's move into Schaefer Stadium in Foxborough, Massachusetts, and to embrace all of New England, as the New York Giants were soon to play two seasons in the Yale Bowl in New Haven, Connecticut. He was named majority owner of the team in 1975. During his 28 seasons as principal owner, the Patriots tallied 14 winning records, made six playoff appearances, played in the 1963 AFL Championship Game and represented the AFC in Super Bowl XX. Sullivan was never among the wealthier NFL owners. His undoing came with a series of bad investments in the 1980s, the biggest being The Jackson Five1984 Victory Tour, bankrolled by his son and heir apparent Chuck. By at least one estimate, the losses from the tour equaled the Sullivans' net worth. The Victory Tour debacle was magnified by the fact that the Sullivans had to pledge Sullivan Stadium as collateral. With no other way to readily obtain cash, the Sullivans quietly put both the team and the stadium on the market in 1985. The $100 million asking price seemed exorbitant at first, but made more sense when the Patriots made their deepest playoff run since their AFL days and advanced all the way to the Super Bowl. Even after making the Super Bowl, however, the revenue from the Patriots wasn't nearly enough to service the debt. By 1988, the Patriots were in such dire financial straits that they needed a $4 million advance from the league just to make payroll. In an attempt to reverse a slide toward what appeared to be certain bankruptcy, Sullivan asked Michael Jackson to bail him out, to no avail. Out of desperation, Sullivan asked the NFL if he could sell 50% of the team in a public offering. The NFL refused the request, prompting Sullivan to ask Reebok CEO Paul Fireman to purchase a stake in the team. When that went nowhere, Sullivan was all but forced to sell the team to Victor Kiam for $83 million the same year. Sullivan remained as the team's president until 1992 when he and Kiam sold the team to James Orthwein. However, the stadium lapsed into bankruptcy and was purchased by paper magnate Robert Kraft, who owned an option on adjacent land. Kraft would use the lease as leverage to buy the Patriots from Orthwein in 1994. In 1991, Sullivan filed a $116 million antitrust lawsuit against the NFL and accepted an $11.5 million settlement of the case in 1996.
After being ousted as President of the Patriots in 1974, Sullivan sought to regain control over operations. By 1975, Sullivan had repurchased 100% of the voting stock. Once in control of the corporation, Sullivan removed all directors of whom he disapproved. Notably, however, in order to pay back the loans required to purchase the voting-stock, Sullivan agreed with lenders to assign income of the corporation and assets of the corporation over to the banks. In order to do this, however, Sullivan needed to eliminate the non-voting public shareholders. Sullivan was successful in structuring a deal that provided the non-voting public shareholders $15/share; this transaction was approved by the shareholder class. A dissenting shareholder refused to tender his shares and filed suit. Eventually, the Massachusetts Supreme Judicial Court found the merger/elimination of the minority shareholders as illegal and effected for Sullivan's personal benefit. Additionally, the Court found that Sullivan's actions constituted a waste of corporate assets. It was ordered that the shareholders be paid the value of the shares, not in 1975 dollars but as the value would have stood in 1986.
