KUSA – Even as Pat Bowlen is dealing with the terrible effects of Alzheimer’s Disease, he has never owned a higher percentage of the Denver Broncos.
The team has reached an agreement to buy a percentage of John Bowlen’ minority ownership stake, per the statement released by the Broncos. John Bowlen is Pat’s brother and has held minority ownership in the team since the Bowlens first bought a majority stake of the Broncos in 1984.
The deal is pending final approval from the NFL, which is expected to happen soon.
“This transaction further consolidates Pat Bowlen’s majority, controlling ownership interest in the Broncos while keeping 100 percent of the team in the Bowlen family,’’ the Broncos said in their statement. “The acquisition of this share is independent of Mr. Bowlens’ succession play that is being administered by the Pat Bowlen Trust.
“John has been a great partner for many years, and we are very pleased he will remain a minority owner of the Denver Broncos.’’
The Pat Bowlen Trust’s succession plan calls for one of his seven children to assume command of the team. The Trust and the team have been careful to not say which of the children is in line to one day control the team, although it’s hardly been a secret Brittany Bowlen, 28, is a top candidate.
Brittany received her degree from Notre Dame, has worked in the NFL office and in the Broncos’ front office and is working toward her MBA at the Fuqua School of Business at Duke University.
Before this transaction, John Bowlen held about 30 percent of the team’s ownership in minority, non-voting shares. He sold a percentage of that minority shares to the Broncos, while also keeping a portion of his stake.
The deal gives John Bowlen a significant payout while still holding a minority percentage of the team. Whether Bowlen held 30 percent of the minority ownership or 5 percent, it still includes no voting rights.
Unanswered is how much of the non-voting minority percentage the Broncos bought and for how much. Forbes valued the entire franchise at $2.6 billion, of which 30 percent would compute to $780 million. However, non-voting shares as a separate entity would hold considerably less value.
How much less? Some investors would argue that without controlling interest, and without the right of first-refusal should any of the majority shares become available, the minority interest is worth little.
John Bowlen initially put the team up for sale last fall in part because his brother Pat had not been operating the team since it was announced in July 2013 he had been diagnosed with Alzheimer's, and also because he lost his Western Canada oil and gas company to bankruptcy last year.
Why not cash out, and still be part of the team, especially if the team carries the Bowlen family name?
The Pat Bowlen Trust had owned nearly 70 percent before the transaction. This deal ensures that 100 percent of the team is staying in the Bowlen family.
Pat Bowlen, his brother John and sister Marybeth first bought 60.8 percent of the Broncos in 1984 from Edgar Kaiser Jr. for $51 million. It was a lucrative deal for Kaiser at the time as just three years earlier, he bought the Broncos from Gerald and Alan Phipps for $30 million.
A year after their initial purchase from Kaiser, the Bowlens bought the remaining 39.2 percent minority interest from John Adams and his attorney Timothy Borden for $20 million.
That $71 million total investment is now worth well more than $2 billion, although, in the end, a franchise is only worth what someone will pay for it.
John Bowlen announced through his wife Kerry back in October that he was selling his minority interest. With no controlling interest, it was going to be a difficult sell. A little more than five months later, John Bowlen is instead selling a portion of his minority interest to the team.
