As more in the media seem to be realizing that the Broncos will indeed go for at least $5 billion, the question becomes how high above $5 billion will it be?
The next rounds of bids are due next week. Four groups, as recently identified by Mike Klis of 9News.com, are expected to submit proposals. Ben Fischer of Sports Business Journal reports that bids are expected in the range of $4.5 billion or more.
Eventually, the key word will be “more.”
A league source with knowledge of the dynamics tells PFT that the franchise is WalMart heir Rob Walton’s to lose. But that he could. As the source put it, there are other credible bidders at the table. They have the ability to pay more than $5 billion — if they choose to. The real question is whether Walton will have competition that will inevitably force him to go above $5 billion, and whether that competition will finally drive up the price to the point where Walton bows out.
It’s an auction, plain and simple. The dynamics are the same as they’d be in any other auction. The asset being auctioned isn’t worth whatever the highest bidder is willing to pay, but whatever the highest bidder has to pay.
With the Broncos not having the option to walk away from the table and keep the team, the Pat Bowlen trust has to hope that at least one of the other groups bidding for the Broncos will push Walton to and above $5 billion. That’s why it’s important for the Broncos to have the numbers move gradually, with no one being scared away from the process. If, for example, the three other groups decide right now that they’re not going to pay more than $5 billion under any circumstances, Walton ends up getting it for a lot less.
One group to watch closely will be the faction led by Jose Feliciano. Todd Boehly, who just purchased the Chelsea soccer club for $4.5 billion is part of that effort. Earlier this year, Boehly and Mark Walter bought 27 percent of the L.A. Lakers from Phil Anschutz at an estimated amount of $1.24 billion. That puts the full value of the Lakers at just under $4.6 billion. If, as the source noted, Boehly was willing to acquire a non-controlling stake in the Lakers based on a franchise valuation of $4.6 billion, his group would surely go to $5 billion or more to get full control of the Broncos.
However it plays out, it’s going to be resolved in the coming weeks. And even if the eventual price hits $5.5 billion, the value of the Broncos (an every NFL franchise) will undoubtedly keep going up and up and up in the coming years.