As the Broncos move toward a possible sale of the team in 2022, a twist has emerged.
Via Andrew Beaton of the Wall Street Journal, a Canadian holding company claims that it owns a right of first refusal as to any purchase of the club.
That claim has sparked a lawsuit from the Broncos, filed in an effort to get a ruling from the courts as to the rights of the parties. It’s Pat Bowlen’s estate on one side, and Edgar Kaiser’s estate on the other. Kaiser’s estate is joined by Scott Schirmer, an Arizona businessman who along with Kaiser’s estate owns ROFR Holdings, Ltd. Given the initials selected by the company, it appears that it was created solely for the purposes of exercising the supposed right to match any offer made to and accepted by Bowlen’s estate for the team.
Kaiser held a right of first refusal as part of the sale of the franchise to Bowlen in 1984. Kaiser and Bowlen previously squabbled over an offer from Bowlen to sell 10 percent of the team to John Elway, with an option to double his position. Kaiser claimed that his right of first refusal would have applied to any such transaction. Bowlen eventually won the fight in court.
To finance the litigation, Kaiser borrowed money from Schirmer, who now owns a piece of the holding company that allegedly holds the right of first refusal.
Although Beaton writes that a resolution of the action is expected shortly after the commencement of 2022, appeal rights would tie the case up deep into the new year. The more important question becomes whether the situation will chill efforts to purchase the team.
On the surface, it could be argued that it will be harder to solicit offers if prospective buyers know that, ultimately, they may be negotiating a deal that someone else will swoop in and match. At a deeper level, it could help drive the price to a point that will make it harder for anyone to match the eventual price.
Then there’s the question of league approval. The traditional sales process entails securing sufficient “yes” votes from the other members of Club Oligarch. If they approve a new Broncos owner and then the right of first refusal is exercised, what happens?
It’s also possible that Kaiser’s estate and Schirmer want to flip the asset for a profit, finding someone who would offer more money when the club is essentially auctioned without the encumbrance of a potential right of first refusal.
The fact that this question even exists so many years after Bowlen purchased the team serves as a reminder to the NFL that its inclination to micromanage these transactions should extend to any and all back-end deals that could blow up future efforts to sell all or part of a franchise. Regardless of how the situation plays out, it’s a complication that potentially keeps the NFL from getting what it wants -- an ownership situation in Denver that consists of one person, appropriately approved by the membership, who is in full and complete control of the franchise.
