Broncos projected for record-breaking sale despite playoff drought
MSU Denver faculty members explain the rising value of NFL franchises.
One of Colorado’s most historically successful sports teams, the Denver Broncos, announced at the end of January that it would begin to seek a buyer. Since former owner Pat Bowlen’s death in 2019, the team has been under the control of his family members, who have been unable to agree on which of them should run the team.
Bowlen purchased the team in 1984 for $78 million, and the turnaround sale could bring over $4 billion, which would set a record for the most ever paid for a U.S. sports franchise.
The Broncos’ recent performance, a six-season playoff drought, likely won’t have much of an impact on the team’s projected value. Nor will the three Super Bowl wins during the Bowlen reign.
The potential record-breaking purchase has little to do with the increase of brand value and more to do with supply and demand, said Darrin Duber-Smith, a senior Sports Marketing lecturer at Metropolitan State University of Denver’s College of Business.
“There are just so few desirable sport properties available,” Duber-Smith said.
Since 2000, only 10 franchises have been purchased among the NFL’s 32 teams. Most recently, David Tepper purchased the Carolina Panthers in 2018 for $2.275 billion. The next NFL team sale after the Broncos will likely have an even higher price tag than Denver’s team.
“The value of sports franchises across the board globally has gone up over the last 40 years,” Duber-Smith said. “It’s not inflation; it’s the fact that the sport is bringing in so much more money than it used to.”
For team owners, the main return on investment comes from creating partnerships with other businesses, said Assistant Professor of Sport Management Kelly Evans, Ph.D. Sports teams often break even on their operations, and it can be rare to turn a profit. The prestige of owning a sports team can be one driving factor for potential buyers.
“It’s a little bit of profit and a little bit of ego,” Evans said.
Arthur Fleisher, Economics chair and professor at MSU Denver, said the sale itself will have virtually no economic impact on Denver. However, with a new owner, Duber-Smith says the brand value could attract a better quarterback, which in turn could attract more fans and increase the brand equity through revenue and media ratings.
Media mogul Byron Allen has openly discussed his plans to bid on the team. If the purchase goes through, it would make him the first Black owner in the NFL. However, Allen’s net worth of roughly $450 million is only about 10% of the anticipated sale price of the Broncos. The NFL requires any buyer to put up at least 30% of the purchase price.
“I think that would definitely be a step in the right direction,” Evans said, adding that the Broncos’ being the first NFL franchise with a Black owner would be historically significant.