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Denver Broncos sale: Time To Pony Up

The team sells for a record price, and the process suggests the NFL’s ownership changes worked

By Chris Smith and Ben Fischer
The $4.65 billion price tag for the Denver Broncos is the highest ever paid for a professional sports team.getty images

In 2018, David Tepper bought the Carolina Panthers for $2.275 billion. It was a new NFL record for a team sale, but was widely seen as a disappointment, falling far short of the $3 billion some insiders expected. It also raised a critical question inside the league: Were the rapidly rising club valuations and the league’s conservative ownership rules working to limit the market of possible bidders?

Owners and the league considered revolutionary changes for new buyers — like increasing the number of allowable limited partners and letting controlling owners hold less equity personally. In the end, though, they settled for evolutionary changes, like raising the debt limit and relaxing cross-ownership rules while continuing to prohibit institutional investments.

When the Denver Broncos became the next NFL team on the market, Rob Walton’s extraordinary wealth ended up being the deciding factor in a $4.65 billion purchase. Unlike with Tepper, however, Walton had several viable competitors who could credibly keep his price high. His was one of four bids over $4 billion submitted on June 6, sources said.

Walmart heir Rob Walton has an estimated net worth north of $60 billion. getty images

The price paid by Walton, the Walmart heir with an estimated net worth north of $60 billion, not only doubles the previous NFL record, it is also more than $2 billion higher than the previous record for a U.S. team (Steve Cohen’s $2.4 billion purchase of the New York Mets in 2020) and in fact is the highest ever for a sports team anywhere in the world.

“This deal validates that the NFL’s approach has been correct, and can continue into the future without any mitigation of team values or strong potential owners,” said longtime sports consultant Marc Ganis, a confidante to Commissioner Roger Goodell and several key owners. “Not just because it was sold to the Waltons, but because there were [other] highly qualified groups — bidders within the NFL rules and processes — that could have purchased the team at a record-breaking number.”

In fact, the value may have climbed even higher if not for Walton’s immense wealth, which likely scared off some potential bidders and prevented a more prolonged auction. Two runner-up bids for the Broncos came in above $4.25 billion, said one source familiar with the bidding. There was speculation that some runners-up were prepared to bid much higher, but they ultimately calculated that Walton would go higher still, in the process setting an elevated price floor for the next NFL team to hit the block — which those bidders might be interested in. 

Sale timeline

July 2014:
Longtime owner Pat Bowlen transfers control of the Denver Broncos to a trust as he battles Alzheimer’s. Joe Ellis, the team’s president and CEO, is among the three people controlling the team.

June 13, 2019:
Pat Bowlen dies. Disputes among the seven Bowlen children in the five years since their father stepped away complicate succession planning.

December 2019:
Ellis says that without unanimous agreement by the siblings on the path forward, the team will be sold. Brittany Bowlen, the choice of the trustees, is fiercely opposed by Pat Bowlen’s two eldest children, Amie Klemmer and Beth Bowlen Wallace.

July 2021:
On the cusp of a trial, Klemmer and Bowlen Wallace drop a lawsuit challenging Pat Bowlen’s will.

February 2022:
The team is formally put up for sale.

June 7, 2022:
A group led by Walmart heir Rob Walton buys the team for a record $4.65 billion. — B.F.

A lone transaction for a team in an appealing market is, for now, but a single data point, but the strong number and quality of bids is evidence that the NFL’s minor adjustments have thus far been sufficient to allow for continued growth.  

The first of those critical rule tweaks came in October 2018, when NFL owners voted to eliminate a restriction that prohibited them from owning teams from other sports in NFL markets, under a belief that it could cause competition with fellow owners. That restriction had created complications for Los Angeles Rams owner Stan Kroenke, who also owns the Denver Nuggets and Colorado Avalanche, and was seen as a limiting factor during the sale of the Panthers several months earlier. In that auction, there were two higher bidders than Tepper but those groups had liquidity problems. The ultimate sale price may have been higher had members of the NBA ownership ranks been able to bid. 

If not for the cross-ownership rule change, Josh Harris, who owns the Philadelphia 76ers and New Jersey Devils, would have been precluded from joining the Broncos auction. 

Another reason the NFL hasn’t had to make more radical changes — yet — is the infrequency of trades of controlling shares, giving executives and owners time to cultivate, educate and encourage potential bidders. One way to maintain that is to make it easier for legacy families to hold onto their clubs amid estate planning and succession issues. Now, the control owner of veteran families can own as little as 1% of the team, lowering estate tax liabilities and making it easier to keep them off the open market.

Four takeaways

Why was the price so high?
In addition to only coming on the market every few years, NFL teams benefit from soaring media rights revenue and cost certainty in the form of a long-term salary cap that virtually guarantees eight-figure (at least) annual profits. Denver was particularly desirable because of its strong national fan base and central geography. One sports banker said this supports the notion that sports are “recession-proof.”
What does this mean for the sale price of future NFL teams?
Before Tuesday, the Broncos were listed by Forbes as the NFL’s 10th most valuable franchise. The majority of teams, then, wouldn’t likely match or exceed the $4.65 billion price. But the Rob Walton group, and the runners-up, all priced the team at a far higher multiple of revenue than prior NFL buyers, suggesting the market sees a rosy future around the league.
What, if anything, can we expect from Rob Walton?
Walton has not spoken about his plans, and the NFL’s hard salary cap makes an owner’s personal wealth more difficult to leverage than in other sports. But expenses not controlled by the cap in Denver now look very different with his $60 billion-plus largesse, potentially including a new stadium, related real estate developments, practice facilities, coach salaries and business side payroll positions.
Will anyone else join the ownership group?
Insiders say former Broncos quarterback Peyton Manning could join. He would be a popular, dynamic face of the group, but it could also hamstring his growing media business. 
— C.S. and B.F.

Finally, the league has raised its debt limits, providing liquidity relief to prospective team buyers required to come up with a mountain of cash (in the NFL, control buyers must own at least 30% of team equity). Last summer, the NFL doubled the maximum debt in team acquisitions from $500 million to $1 billion, but that leverage cap is still extremely conservative given the NFL’s strong cash flow and ‘A’ credit rating last December from Fitch, which also gave the league a stable rating outlook.

NFL team ownership remains a hot commodity because teams can count on huge cash flow thanks to the league’s national media deals — the NFL last year secured a suite of rights agreements worth $10 billion annually — and enterprise values that have far outpaced almost any other asset class. Several bankers also indicated that, despite the high values, there remain enough mega-wealthy individuals to support a competitive auction every few years.

“The number of teams is fixed, and the number of transactions aren’t that many. It’s not like one of these things is coming on the market every six months,” said Galatioto Sports Partners President Sal Galatioto. “When you have one for sale, and you have four or five bidders, you have three or four losers. Those losers are natural buyers for you when the next team comes on the market.” 

That theory could be put to the test relatively soon in Seattle, where the estate of former owner Paul Allen, who died in 2018, is widely expected to eventually sell the Seahawks. Harris, who bid on the Broncos, is reportedly interested in getting into that mix, and rumors abound in league circles that Amazon founder Jeff Bezos is keeping a close eye on the team in his corporate home town.

Allen & Co. and Proskauer represented the Broncos. The buyers did not use a bank, but Hogan Lovells handled the legal aspects of the deal.

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