Interested bidders for the Denver Broncos have a clear mandate. Come to the table with all your money in order.
Daniel Kaplan of TheAthletic.com recently reported that all proposals made to buy the team must be fully capitalized when made. The goal is to prevent a situation in which the lead investors would still be working post-bid to get the rest of the money in place, in the form of limited partners who would own various pieces of the team.
As Kaplan explained it, that happened with the sale of the Panthers. It helped David Tepper, who bought the full team himself, emerge as the winning bidder even though other groups theoretically offered more money to team founder Jerry Richardson. Since they didn’t have their ducats in a row, Tepper got the franchise.
This will make it harder for a consortium of owners to get the deal done in Denver, and in turn easier for one really rich person to purchase the full amount of the equity.
League rules allow up to $1 billion in debt to be assumed, and they require that at least one person or family own 30 percent of the team personally. If the Broncos sell for $4 billion, the controlling owner would contribute at least $2.2 billion ($1.2 billion cash and $1 billion debt) with the balance coming from investors.
But, again, if there are to be investors, the investors must be ready to go from the get-go.
This requirement, a new tweak from the league, possibly is aimed at accounting for the fact that, because the team currently is owned by a trust, the trustees have a fiduciary duty to get the most money it can for the team. Thus, if one person is ready to go with $4 billion and a coalition eventually could pull together $4.5 billion, the group in theory would win. This new requirement mandates that the group be ready to proceed when its bid is made.
In theory, the league could still increase the debt limit and/or decrease the minimum ownership percentage in order to facilitate majority ownership by a minority. Regardless, the full capitalization would have to be in place when the initial bid is submitted.
Looking at the situation more broadly, the requirement obviously makes it easier for one really rich person to buy the whole thing with the stroke of a pen. This would underscore the simple, and sad, reality that the only real qualification for becoming the steward of an NFL team is having either enough money to buy it or the right DNA to inherit it. For all the rules about money, there’s no requirement that the buyer know anything about the sport or the industry, that the person will act in the best interests of the fan base, or that the person will preside over a non-dysfunctional operation.
Instead, all that matters is can they write the check? Some owners actually don’t mind the idea of an ultra-rich incompetent joining the club. It makes it easier to win football games played against that person’s new team.
Broncos fans need to hope that whoever comes up with the most money to buy the team will also have a plan for doing something other than seeing an eventual return on the investment. Because even the worst teams in the NFL still make a profit.