BOWLEN FOR DOLLARS
Pat Bowlen has a problem. The multi-millionaire owner of the Denver Broncos says his team needs more revenue. And the Broncos' public relations machine is already shifting into gear, preparing a campaign to convince taxpayers they should open their wallets and chip in $180 million to build the men in orange a cash machine in the shape of a new stadium.
But there are a few items not likely to be highlighted in the coming media blitz: the lease with the city that legally binds the Broncos to Mile High Stadium through the year 2018; questionable business moves by Bowlen that themselves have dammed the team's revenue stream; and growing criticism within the engineering community that a consultant's report used by the Broncos greatly exaggerates the cost of keeping the team at Mile High Stadium.
Bowlen insists that Mile High is falling apart so fast that it may be condemned within a few years, leaving Denver's beloved Broncos no place to play but the parking lot. To back up his claims, he has relied almost exclusively on a 1994 consultant's report that claims it would cost just as much to maintain Mile High over the next thirty years as it would to build a whole new facility. However, engineers familiar with Mile High say that study, commissioned by the city, drastically overstates the extent of structural damage at the National Football League's longtime Denver home.
Bowlen wants voters in the six-county metro area to okay an extension of the .01 percent sales tax that paid for Coors Field so he can break his lease at Mile High and move into a modernistic stadium to be built on the same site. Behind the arguments and posturing is an implied threat: Keep us happy or we may find a way out of here.
But while Bowlen blames his need for increased revenue on rapidly escalating player salaries, his own poor business decisions--including building highly profitable luxury boxes at Mile High and then selling the rights to another company--may have contributed to the team's call for a taxpayer bailout. A new, publicly funded stadium would get Bowlen off the hook for his sky-box blunder, allowing him to start all over with a clean slate--and to keep the millions in annual revenue from the stadium's high-roller suites all to himself.
Behind the scenes, the Broncos have gone into overtime lobbying politicians, and the effort is paying off. Despite Mayor Wellington Webb's early dismissal of a new stadium as a flight of fancy, the city and the team are now expected to announce their joint support for such a taxpayer-funded facility. The city may even be prepared to let the Broncos manage Mile High--and keep much of the revenue--while another stadium is under construction.
For Denver taxpayers the proposed deal looks more like a transfer tax--from their pockets into well-padded Broncos bank accounts. If voters agree to spring for up to $180 million, Denver would get a stadium that seats almost the same number of people as Mile High. The Broncos say they would pay $70 million of the estimated $250 million cost; the team would likely have to arrange financing for its share. What the Broncos would get in return, in addition to dozens of luxury boxes under the control of the team, is thousands of lucrative club seats, a steady stream of money from parking and expanded concessions, and millions in windfall profits.
With football superstars pulling down up to $3 million a year, it's a challenge for Bowlen to pay those kinds of salaries and still maintain a sizable profit margin. Not to mention a $1.6 million mansion on Cherry Hills Drive, another $913,000 house in Englewood, a $415,000 condominium in a Cheesman Park high-rise, a BMW sedan and a Mercedes-Benz coupe.
But Bowlen, the heir to a Canadian oil fortune, insists he needs the additional revenue from a new stadium not to enrich himself, but to keep the Broncos competitive.
"Why should the voters care if Pat Bowlen makes more money?" he asks. "The majority of the money goes to the players. There's a big gap between what some teams make and others. If you wind up in the lower tier, you can't be competitive."
The connection between stadium revenues and success on the playing field may be more tenuous than Bowlen wants to admit. The Washington Redskins, Arizona Cardinals and Seattle Seahawks each spent more than $40 million on player salaries last year--tops in the league--and all three teams had miserable seasons. Sports Illustrated magazine recently reported that general managers around the NFL will actually be less likely to offer $3 million-plus salaries next season.
What's really driving the cries for additional revenue coming from NFL cities across the country may be a desire to keep up with the Joneses. Team owners like Bowlen have been startled by the success of Dallas Cowboys' owner Jerry Jones in finding new sources of profit. The Cowboys have become a virtual money machine, scooping up revenue on everything from club seating to parking at Texas Stadium. Football-mad Texans have helped the team score lucrative promotional deals with Nike and American Express, and the Cowboys are now pulling in more than $30 million a year from these efforts. Jones has become known for defying the NFL hierarchy over whether the Cowboys have a right to keep those earnings to themselves instead of sharing them the way league teams share television revenues. The Cowboys have used their windfall to lure athletes like Deion Sanders, who got a five-year, $25 million contract. Dallas outbid the Broncos for Sanders, something that still rankles Bowlen.
The Broncos, meanwhile, have seen Denver's once insatiable demand for season tickets drop off since the debut of the Colorado Rockies. While games at Mile High still sell out, Bowlen believes the sumptuous facilities at Coors Field make Mile High seem impoverished by comparison.
"Coors Field is a beautiful place to see a game," he says. "Football needs those kinds of venues to stay competitive. I have to have a stadium that's as attractive as baseball."
For Bowlen and the owners of Denver's other professional sports teams, the beauty of $215 million Coors Field has less to do with a field of dreams than with a river of green. The Colorado Rockies managed to score one of the most lucrative leases in the country, earning millions from concessions, parking, naming rights, luxury boxes and club seating. The Broncos can be forgiven for developing a case of Rockies envy.
But while the Rockies have expertly cultivated both public and private sources to fatten up their cash cow, Bowlen's business savvy has failed him at crucial times--which may be part of the reason he's turning to Denver taxpayers for help. He made a big mistake in 1987 when, after spending $12 million to build sixty sky boxes at Mile High, he turned around and sold control of the boxes to Connecticut-based Penthouse Suites Ltd., turning a quick profit but depriving the Broncos of more than $3 million a year in revenues. Those luxury boxes rent for as much as $60,000 per season and have become highly profitable for teams around the country. Bowlen used the $18 million he reportedly received for the boxes to buy out two minority owners of the Broncos, giving the former Calgary resident complete control of the team.
Bowlen also missed the boat when he negotiated his 1987 lease with Denver, failing completely to foresee the impact stadium concessions would soon have on the financial mechanics of the professional game. Unfortunately for the Broncos, Denver negotiated one of the best deals in the country for taxpayers at Mile High. The city keeps all the concession and parking revenues and also controls scoreboard advertising, collecting more than $3 million per year from those sources.
"Five years ago the fact I didn't get any revenues from concessions was no big deal," Bowlen says. "Now football needs those kinds of revenues to stay competitive."
But while Bowlen's back-office dealings have at times been less than shrewd, he's been willing to spend big money on player salaries, including the famous $21 million he gave quarterback John Elway for a four-year contract in 1993. Last summer the Broncos spent millions luring several free agents, including $3 million up front and $1.4 million a year for Michael Dean Perry (recently named to Sports Illustrated's "All-Underachiever Team") and $1.2 million to sign and a $1 million annual salary for James Jones. Linebacker Britt Hager received a four-year, $3.8 million deal, while Dante Jones got $1.2 million for two years.
The Broncos owner makes it clear he expects to pay even higher salaries if he hopes to put together a team that could actually win the Super Bowl. "Do I expect the salary trend to reverse itself? Hell, no," he says. "That's the price of entertainment."
A city task force appointed by Mayor Webb has been negotiating with the Broncos for months now and has already agreed to hand off the ball by recommending that, rather than hold the Broncos to the terms of their lease, the city should back a plan to let metro voters decide the fate of Mile High.
And Bowlen doesn't have much patience with locals who just don't care if the team has a hard time recruiting gridiron superstars--or who might complain about extending the sales tax.
Most of the cost estimates in the debate over whether to sack Mile High are derived from a study done last year by the Denver-based engineering firm LONCO, Inc. The city now spends just over $3 million per year on upkeep at the stadium. But the LONCO report estimated it will cost $264 million over the next thirty years--or about triple the present rate--just to maintain Mile High. Not surprisingly, the Broncos have used the study as ammunition in their quest for a replacement football palace.
"To keep the stadium open in its present condition would take $130 million more than the city anticipated spending for operations and maintenance," says Porter Wharton III, a local public relations consultant who is acting as the Broncos' lead negotiator in discussions with the city. "The report confirmed what we've been saying--that Mile High is a deteriorating facility."
The study arrived at its estimates by assuming that the city would perform hundreds of expensive improvements, including replacing steel frames, laying down new concrete and renovating restrooms. But some of the engineers who have worked at Mile High over the years believe the stadium can be maintained for far less than LONCO estimates.
"I think the stadium is in excellent condition for its age," says Don Pyle, a structural engineer who was the city's chief consultant on maintenance at Mile High from 1987 until last year. "There's always a lot of interest in having brand-new toys, but there's nothing wrong with Mile High."
Pyle is the Denver branch manager for Wiss Janney Elstner Associates Inc., a company with offices in ten cities around the country that specializes in maintenance and repair of structures like Mile High. Pyle, whose company LONCO beat out for the job of studying the future of Mile High, says he believes the costs of repairing the stadium have been wildly overestimated.
"Mile High could last indefinitely if it were properly maintained," he says. "There's nothing structurally wrong with Mile High. It's typical of a stadium its age. It has a little rust here and there and paint peeling, but a new stadium will eventually have the same problems."
In making its estimates, LONCO emphasized the rusting of steel supports at Mile High. Pyle says it's a problem that has been exaggerated. "A steel structure exposed to the weather will rust," he says. "It's been repaired over the years and it's nothing serious. It will need to be dealt with in any stadium. Even a new stadium will need the same kind of maintenance."
Pyle also calls LONCO the least qualified of the five firms that applied for the Mile High consulting job and says he thinks political pressure may have influenced LONCO's report. "I think their goal was to prove Denver needs a new stadium," he says.
Others are also critical of LONCO's estimate of Mile High's maintenance needs. "The report trumped up the deterioration," says one former Denver public works official who asked not to be identified. "The information in their report is a distortion of fact. It's weighed to Pat Bowlen's side."
LONCO attributes such criticism to sour grapes from a rival firm and stands by its study. "We had to give our background and expertise to get this job," says Bill Hamouz, president of the company. "We've worked on similar projects before." Hamouz denies that politics influenced his company's report, for which the city paid $156,000. Even though the city paid for the report, LONCO was selected by a panel that included representatives of both the city's public works department and the Broncos.
Mike Flaherty, the city's facilities director at Mile High, says LONCO is well-qualified. But he adds that the firm may have overestimated the cost of repairs to Mile High.
"Engineers want to make sure they don't generate estimates that are lower than expenses," he says. "I don't think [the study] is gold-plated, but engineering companies protect themselves by coming in with high estimates."
Flaherty describes Mile High as a "mixed bag," a functional stadium that's been modified over the years but lacks the club seating, brewpubs, and fast-food courts of snazzy venues like Coors Field. "Mile High will never generate as much revenue as a new stadium," he says. Adds Flaherty, "What Mile High doesn't have is a revenue stream that benefits the Denver Broncos."
Until just a few months ago, city officials publicly scoffed at the Broncos' claim that they needed a new stadium.
"Structurally the stadium is sound," Webb told the press last year. "Any homeowner would think it's cheaper to paint a house and make it look like new, as opposed to saying it's cheaper to go out and buy a brand-new house."
But recently some city hall bureaucrats have been sounding more like Broncos cheerleaders. "The need for massive capital improvements at Mile High makes it appropriate for us to consider whether there's a better way to provide a football venue for the Broncos," City Attorney Dan Muse recently told the city council.
The Broncos have spent much of the past year stoking the Denver political machine. The team hired the well-connected Denver legal firm of Brownstein Hyatt Farber & Strickland to lobby city officials. (Firm partner Steve Farber also represents the Denver Nuggets in their ongoing negotiations with the city over the proposed Pepsi Center; last year, he sat on the city's side of the table when Denver renegotiated an agency agreement with the Winter Park Recreational Association.) The Broncos also donated more than $2,000 to Mayor Wellington Webb's re-election campaign, guaranteeing an open door at city hall. A once-hostile relationship suddenly has the makings of a love affair.
"Now they're saying `Oh, we need a new stadium,'" observes Bowlen. "I think we're working hand in hand now."
The mayor's sports facilities task force has already decided that metro voters should decide whether to replace Mile High, using the .01 percent sales tax that funded Coors Field. The state legislature will have to agree to refer the question to the electorate. As part of the deal, Denver would agree to let the team out of its lease at Mile High.
"We're right on the same page," says the Broncos' Wharton. "We're in almost complete agreement on most of the key elements. When we go to the voters, the Broncos and the city will be standing side by side. A couple of years ago, the Broncos and the city were antagonistic on this. But right now our relationship is extremely positive. We look upon this as something we'll work on together."
A final agreement is being held back by last spring's Colorado Supreme Court decision requiring private firms that lease public facilities to pay property taxes. That ruling took the fizz out of efforts by Denver Nuggets owner Comsat to tear down McNichols Arena and build an opulent (and tax-free) "Pepsi Center" in the Central Platte Valley. And it has also temporarily stalled the Broncos' push for a pleasure palace.
Erick Stowe, a Denver attorney and Webb supporter who serves on the mayor's sports facilities task force, says a proposal probably won't be finalized until later this spring, after the state legislature enacts new rules governing property taxes. Only after that legislation is crafted will the Broncos, who today pay no property tax at Mile High, be able to estimate their tax burden at a new stadium. "We've put the whole process in abeyance until the legislature convenes," says Stowe, adding that the task force has already agreed the stadium issue should go to the voters.
The Supreme Court ruling also calls into question another key aspect of the Broncos' deal: a likely move by the city to turn management of Mile High over to the Broncos, whether or not taxpayers spring for another stadium. Denver officials have been remarkably blase about the potential arrangement, saying simply that the Broncos might be able to manage Mile High more efficiently than the city. But experiences in other cities where elected officials have handed over the keys to public facilities should raise a warning flag.
After being given control of Comiskey Park in the 1980s, the Chicago White Sox deliberately failed to maintain the historic ballpark--and then used its deteriorated state as a bargaining chip in their successful campaign for a new stadium. In Cleveland, an agreement that turned maintenance of Cleveland Stadium over to Cleveland Browns owner Art Modell apparently played a role in his recent decision to move the venerable NFL team to Baltimore. Modell signed a 25-year lease in 1974 to operate the stadium, willingly assuming the maintenance expenses. Eager to keep stadium revenues to himself, Modell created his own company to manage the stadium, separate from the team. Over the years Modell went heavily in debt to maintain the deteriorating stadium--and later blamed those debts for his highly controversial decision to move the team.
If the Broncos do take over management at Mile High, the team would in effect become a year-round tenant--an arrangement that under the Supreme Court decision would likely force it to begin paying property tax. In an effort to keep its tax bills as low as possible, the team will send Farber and others to lobby at the statehouse when the legislature convenes next month. Meanwhile, however, the Broncos' support at city hall may not be as firm as the team thinks.
Mayor Webb is seeking to position himself above the fray on the Mile High issue, aware that the proposed tax extension will be controversial and apparently not eager to be identified with it. Webb spokesman Andrew Hudson says the mayor "wouldn't actively support" the proposed stadium tax. "His feeling is that the city has a twenty-year lease and the kind of threats in Cleveland and Houston would most likely not affect the Broncos," Hudson says. "We're in a good situation that way."
Some city council members remain skeptical of any deal. "I'm not sure I've joined hands with them," says Councilman Dennis Gallagher, who serves on Webb's stadium task force. "I'm concerned about the location. What Mile High does to the eastern Sloans Lake neighborhood is a disaster. With all those new luxury boxes, I want to know how many seats will be made available to kids from the neighborhood."
Gallagher says he isn't surprised that the Broncos are so confident about their political situation. "They've hired Brownstein Hyatt Farber & Strickland," he says. "No wonder they think they have it in hand."
And in what may be an indication of the siren call professional sports teams can exert on a community, the Broncos have already drawn support from some surprising places. KOA radio host Mike Rosen, an outspoken conservative who opposes funding everything from public schools to Medicare, has endorsed a taxpayer-supported stadium. So has state representative Tony Grampsas, an Evergreen Republican who regularly castigates the University of Colorado for wasting public funds.
Convincing voters to fund a new stadium, however, promises to be a tough sell. The Broncos have reportedly already spoken with political consultant Rick Reiter, who helped promote the initial Coors Field tax, about election strategies. But since the facility would be funded with a sales tax, the shopping habits of Pat Bowlen's wife, Annabel, could become an embarrassing sidelight to any publicity effort. She was one of the patrons of a swank jeweler, Hyde Park, whose owners pleaded guilty earlier this year to charges of selling jewelry to some of Denver's most prominent citizens without collecting sales tax.
Early polls indicate a high level of skepticism, with large majorities saying they'd oppose the tax levy. And so far the Broncos have stumbled through their fledgling PR campaign, making missteps that may end up being used against them in an election.
The team, for instance, floated the idea of charging a "personal seat license" to season-ticket holders, a one-time fee of several thousand dollars that would have served as an additional tax to fund what the Broncos described as the team's share of a new stadium. After a public outcry, the proposal was withdrawn, though the Broncos have since gotten more bad press by pushing through a plan to limit transfer rights to season tickets.
An intangible factor the Broncos will have to tackle in any campaign is the sentimental hold Mile High still has on local fans, many of whom consider the turf where Elway has led the team to so many fourth-quarter comebacks the closest thing the city has to hallowed ground.
"Their only justification [for a new stadium] is that they need more revenue," says city councilman Ted Hackworth. "They should use Mile High until the end of their lease in 2018. There's a tendency to say Mile High has no value, but I don't think that's accurate."
Hackworth says the city may be able to squeeze more revenue out of Mile High by hiking parking fees and adding more advertising, potentially giving the Broncos a couple of extra million dollars per year. But the Broncos say that won't keep them happy. According to the team, there's no way Mile High can meet their needs.
Says Bowlen, "If the city offered to sell me Mile High for a buck, I wouldn't take it."
All over the country, professional sports teams are demanding--and often getting--taxpayer-financed support. Teachers may be losing their jobs and the homeless sleeping on sidewalks, but cities have managed to fund subsidies of football teams that run in the hundreds of millions of dollars.
The recent defections of the Los Angeles Rams to St. Louis and the Cleveland Browns to Baltimore have frightened mayors across the country, who don't want to be blamed for losing popular teams. The latest football team to begin packing its bags is the Houston Oilers, whose owners have been offered a $292 million stadium and a $28 million relocation subsidy by the city of Nashville.
Owners--Bowlen included--are increasingly candid about what's driving their call for more revenue: the multimillion-dollar player contracts that have become commonplace in the NFL, which spent nearly $1.1 billion on employee salaries last year. But the brassy suggestion that it makes more sense for taxpayers to line the pockets of wealthy athletes than it does for team owners to summon the self-discipline required to keep salaries in line may be pushing some civic leaders over the edge.
Recently, for instance, Houston mayor Bob Lanier spurned the Oilers' demand for a $235 million domed stadium. "For Houston, putting money into police and fire departments, sidewalks and sewers, has higher priority than building stadiums," he told the press. "Can you ask the average guy to build luxury suites for rich people, so they can support rich owners, so they can pay rich players?"
Voters in Seattle recently opted against taxing themselves to build a replacement for the Kingdome (the city council later approved a compromise deal to build a new ballpark). And in Cleveland, Modell's big-money move to Maryland, which included a $50 million cash payment to the team owner from the city of Baltimore, also may backfire. Cleveland has taken the Browns to court, maintaining that the city's contract with the team required the Browns to stay until 1998, and a local judge recently ruled in the city's favor.
The Broncos make it clear they don't want to leave Denver. But that doesn't stop Wharton from bringing up the teams that have left their hometowns for the right price. In his view, professional football, with its rabid fan base and wide television exposure, has become an indispensable urban amenity.
"It's part of the quality of life and the city's image," says Wharton. "It makes the city a major-league city. All you've got to do is look at the cities that have tried hardest to get a franchise. Baltimore and Oakland went to incredible lengths over ten years to get teams. St. Louis just gave a phenomenal offer to the Rams. Why are these cities doing that? It's the intangibles a major-league team brings."
Many economists dispute the economic value of professional sports teams, saying they simply divert entertainment dollars from one place to another. "If you spend more time and money on professional sports, you have less time and money for other activities," says professor Robert Baade of Lake Forest College in Lake Forest, Illinois. Baade has been studying the economic impact of sports teams on cities around the country and says he's found that professional sports have a negligible effect on local economies.
"The reason that professional sports doesn't add much is that professional sports is a small industry," Baade says. "Sears Roebuck generates thirty times the revenue of all of professional baseball."
Baade also notes that many players don't live in the cities they play in, taking their hefty salaries with them. He thinks the demand for new stadiums and threats to leave cities will hurt professional football in the long term.
"There won't be the fan identity with teams there used to be," he says. "There has to be an impact when you play these franchise musical chairs. It has to come back to haunt the league."
Whatever the future of pro football, there's no question it's been lucrative for Bowlen. He purchased a majority stake in the team for $70 million in 1984, and the most recent estimates peg the value of the Broncos at $147 million. Bowlen's personal net worth is estimated at $50 million by Sports Illustrated, which actually makes him one of the NFL's poorest owners.
For the kind of money required to build a stadium, some have wondered if Denver should demand an ownership share of the Broncos as part of any stadium deal. That would tie the team to Denver permanently and prevent any possibility of the Broncos trying to break their lease. However, NFL rules now forbid municipal ownership. (The league wanted to prevent another city like Green Bay, Wisconsin, from seizing control of its local team. The Packers are the only publicly owned team in the NFL.)
Bowlen dismisses the idea of municipal ownership out of hand. He insists Denver already derives a tremendous benefit simply by having its name on the football team. In fact, he suggests the people of Denver should be thankful that he has given them free advertising by keeping the word "Denver" in its official name.
"If they can get $30 million to name Coors Field, the naming rights to a team are worth a lot of money," Bowlen says. "Why shouldn't I do a deal with Ford or General Motors and say I'll call my team the Ford Broncos? The city has a big stake in this."
Bowlen notes that the team draws a huge Denver television audience on Sunday afternoons and that watching a Broncos game remains a local tradition. Denver is still a Broncos town, he says. But he doesn't hesitate to remind residents that even the best-loved teams can pack their bags and take the next flight out of town.
"I've got a lot of work to do here in Denver," Bowlen says. "The landscape is littered with cities that have lost teams. Cities like Baltimore and St. Louis. It's absurd what's happening.
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