Consider, for example, the corporate heaving that occurred during the first four years the Bowlens were working the franchise into their portfolio, like an anaconda digesting a monkey. In 1984, Bowlen bought Kaiser's 60 percent interest and subsequently transferred it to Texas Northern Productions Inc., a Texas corporation, later known as Bowlen Sports, Inc. In 1985, PDB Enterprises bought the minority partners' interest; PDB Enterprises, as noted earlier, was owned by PDB Sports Holdings, which was controlled equally by Bowlen and his three siblings, with the Arvella Regis Bowlen Trust No. 2 also holding an interest.
In 1986, PDB Sports Holdings was folded into Hambledon Sports, Inc., an Alberta corporation. Hambledon Sports also assumed $3.75 million in debt the Bowlen family owed to another family corporation, Hambledon Estates, Ltd.
Still following the bouncing ball? In 1987 the Bowlens traded a small piece of their stock in HEL to Hambledon Sports in exchange for stock in the latter company. HEL also sold certain assets to Hambledon Sports for a $7.9 million promissory note -- including all the shares in Bowlen Sports, Inc., owner of 60 percent of the Denver Broncos. After some further exchanges of stock and a mutual canceling of promissory notes, Hambledon Sports ended up owning, through its subsidiaries, all of the Broncos.
And who owned Hambledon Sports? At that point, Pat Bowlen controlled about 30 percent of the voting stock, with his three siblings each assigned 23.3 percent of the preferred shares. But it appears that Arvella Bowlen's trusts actually had the largest equity position in the company, by virtue of their control of non-voting stock in Hambledon Sports and their ownership of HEL, a family company that loaned money to Pat Bowlen and made other loans assumed by Hambledon Sports.
Other corporate mergers followed. But Pat Bowlen thought the 1987 reorganization was significant enough that he notified the NFL of the new corporate structure. NFL rules state that any change of ownership in a team must be approved by the league, while "gifts" of shares among family members do not require such approval. According to a report in the Boston Globe, a league executive deposed in the Kaiser lawsuit testified that the Bowlen family transfers were approved by the league as changes in ownership, not gifts.
Among the documents Kaiser has submitted to the court is a proposed draft of the 1985 extension agreement, in which Bowlen's side sought to add language excluding the family transfers from Kaiser's right of first refusal. "Kaiser specifically rejected Bowlen's attempt to rewrite the ROFR," Kaiser's attorneys note, claiming that this attempt shows that Bowlen knew from the outset that the ROFR applied to transactions among family members.
Judge Matsch may yet decide that Bowlen's efforts to parcel out the team among his family don't amount to fraud or even a breach of contract. Whatever the corporate hocus-pocus might say about Bowlen's cash crunch in the late 1980s and his reliance on family money to pay the bills, it doesn't suggest that he was trying to dump his shares with the aim of depriving Kaiser of the chance to get back in the game again.
The Elway offer is another matter, though. Pat's proposal to his quarterback reads like a sweetheart deal between Daddy Warbucks and his favorite ward. The deal is pure Bowlen: impetuous, grandiose, hush-hush, and loaded with hidden agendas and risks. Elway chose not to pursue it, but it may end up costing Bowlen plenty.
The document is dated September 23, 1998, early in Elway's final season and six weeks before the vote on the new stadium. It states that if the stadium is approved, Elway will be granted an option to purchase 10 percent of Bowlen Sports, Inc., the general partnership that owns the franchise, and invited to join the Broncos' front office following his retirement. Eventually, he'd have the chance to purchase another 10 percent of BSI and be named chief operating officer of the organization.
The agreement estimates that the team's total value with a new stadium will be around $400 million; BSI's equity, minus $100 million in debt, works out to $300 million. To exercise his option to buy in, Elway would have to come up with "10% of the equity minus 1/3 of that value minus $5 million." In other words, the quarterback would have to put up only $15 million ($30 million, minus a third, minus another $5 million) to buy a 10 percent interest that's worth twice that much. And most, if not all, of that $15 million payment would come from money BSI already owed Elway in deferred salary, or would owe him by the time he retired.