MHR Broncos History Lesson -- The Pat Bowlen Saga

Welcome to another installment of Broncos History. This week we are going to tackle the headache that is Pat Bowlen's legal life over the past ten years.  I can safely say I am glad I am not a million/billionaire fighting in court against another millionaire.

Most of us can agree that Pat Bowlen has been one of the best owners in the National Football League.  We have been blessed as Bronco fans to have such an active, yet non-intrusive CEO.

However, we came real close to losing Mr. Bowlen in favor of the return of a former owner who nearly bankrupt the franchise in just two years of running the team.

To really understand what happened and why, we have to go all the way back to 1981. I was just learning to pee in the bowl at that point.  This was the year that a man named Edgar F. Kaiser, Jr. purchased the Denver Broncos for a paltry $30 million.  Amazingly, he only had to pay $8 million up front.  The rest was to be paid over time at 12% interest.  Unfortunately for Kaiser, the franchise posted a $1 million loss in his first season as an owner.  Then in 1982 came the NFL Players strike that seriously put Kaiser and the Broncos in financial peril.

Even after posting a $6 million profit in 1983 and also selling his Minority Interest in the team to Bob Adams, a long time friend of Dan Reeves, for another $10 million, the Broncos were nearing bankruptcy.  Enter Pat Bowlen, who was as desperate to own a professional franchise as Kaiser was to sell his own.  A determined Bowlen offered Kaiser an NFL record $51 million(which included assumption of $25 million in debt!) for Majority Interest in the team.  To top that off, Bob Adams then demanded to be bought out at the same share price which cost Bowlen an additional $20 million.

The amazing thing to me is that Kaiser was $25 million in debt even after posting a $6 million profit and selling $10 million for Minority Interest.  I wish I knew what the hell he was doing and how he ever became a millionaire in the first place(I checked the latter, he is a trust fund baby).

After paying the hefty sum of $71 million to become an owner in the NFL, Bowlen's family businesses began to falter somewhat in the late 80's.  This forced Bowlen to transfer ownership of the Broncos into various family owned corporations.  The list is too long to mention, but by 1998 this is how the Broncos corporate structure looked:

"(1)The Broncos franchise and assets related to the team were owned entirely by the Partnership; (2) The Majority Interest of the Partnership was owned by Texas Northern Products; (3) the Minority Interest in the Partnership, which was acquired from Bob Adams, was owned by P.D.B. Enterprises, which was owned entirely by Texas Northern; (4) Texas Northern was entirely owned by Hambledon Sports."Source

Prior to the 1998 season, Bowlen offered John Elway a deeply discounted deal to buy 20% of ownership of Texas Northern.  Elway never accepted the offer, but Edgar Kaiser filed suit over the proposed deal anyway.  The battle was on.

When Kaiser had sold the Broncos to Bowlen, he included a special clause called "right of first refusal" which gave Kaiser the right to repurchase any part of the Denver Broncos franchise that Bowlen offered to sell to a third party on the same terms.  In order to save us all from the legalise required to explain all this, it basically comes down to the fact that Kaiser wanted to purchase a Minority Interest of the Broncos for the exact price Bowlen had offered it to Elway.

It wasn't clear cut, however, as Bowlen had been transferring ownership of the Broncos between various corporations since he took over the team in 1983.  Any one of those previous moves could have been found in violation of the original special clause.

At stake in this court battle wasn't just the ownership of the Denver Broncos, but also a large percentage of the profits earned since Pat Bowlen purchased the team.  He stood to lose hundreds of millions of dollars if he lost his case against Kaiser.  How this man was able to continue running a successful franchise from 1998 to 2006 is beyond me!

Fortunately for us, the courts decided that Pat Bowlen had offered Elway shares in Texas Northern. The text of the original agreement specifically gave Kaiser a right of first refusal over only the Broncos franchise and the Majority Interest.  As stated earlier, Texas Northern owns the Minority Interest.  Bowlen won his case through(what I believe to be) blind chance.  Had he offered Elway a stake in any other portion of the team, we could very well have had a forced change in ownership.

In any event, we should count our lucky stars to still have the great owner we have.  I can't imagine having anyone else in charge of our franchise.  Especially after studying how "well" Kaiser ran this organization.   Heck, if Bowlen had lost and Kaiser took over back in 2006, we could be looking at financial insolvency right now!

This ones is for your MNBronco!