DENVER — The $4.65 billion dollar sale of the Denver Broncos has resulted in a $41 million refund to cities and counties in the metro area.
A provision of the lease and management agreement between PDB Sports, LTD and the stadium district called for owner Pat Bowlen to share some of the profit should the franchise be sold.
The contract called for 2% of the net profit to be shared with the district. That total amount is $41,037,951.
Mile High Stadium (Empower Field) is owned by the Metropolitan Football Stadium District. That district is made up of seven metro area counties: Adams, Arapahoe, Broomfield, Boulder, Denver, Douglas and Jefferson.
Taxpayers in those counties, as well as cities and municipalities in those counties, funded 75% of the stadium cost ($270 million) through a one-tenth of one-percent sales tax. That tax of one penny on every $10 went away at the end of 2011.
As part of the sale, the stadium district will receive $41 million that will be disbursed proportionally to the municipalities, cities and counties that paid into the stadium district tax.
"That money would come to the district to be distributed back proportionally to the counties and municipalities that paid into the initial tax," said Metropolitan Football Stadium District Spokesman Matt Sugar.
What is propotionally?
"Proportional would be if the City and County of Denver contributed 26% of the sales tax, they get 26% of the proceeds," said Metropolitan Football Stadium District Board President Ray Baker.
The stadium district will get an accounting of the stadium district tax from the Colorado Department of Revenue.
The amount each municipality, city and county will receive will be based on the breakdown of how much of the district tax was collected from each locale.
The lease agreement, and state law, called for the money to be spent on "youth activity programs."
"I probably wish it was a little bit more detailed as far as the language," said Baker. "It doesn't say youth sports, just youth in general, which kind of leads me to believe many municipalities may be thinking of parks and recreation."
When the district gives the money to the local governments, it will be up to those governments how to spend the money and what "youth activity programs" mean to them.
"I think the interpretation is the benefit to youth, and so I would trust the municipalities and cities will see the value of that," said Baker.
Besides the seven counties, 40 towns and cities within those counties will receive money:
- Bow Mar
- Castle Rock
- Cherry Hills Village
- Columbine Valley
- Commerce City
- Deer Trail
- Federal Heights
- Greenwood Village
- Lone Tree
- Wheat Ridge
IF THE BRONCOS SOLD FOR $4.65 BILLION, WHY IS 2% OF THE NET PROFIT $41 MILLION?
The Broncos sold for $4.65 billion.
Based on the lease and management agreement, the "sharing amount" with the stadium district equals "2% of the net profit realized by PDB… Net profit means the gross proceeds of the sale less capital contributions to the franchise (or capital contributions of the person's selling interests, plus six percent imputed annual return on such capital contributions and less franchise debt if such debt is not assumed or paid by the purchasing entity."
Here is the breakdown provided by the Metropolitan Football Stadium District Board:
Sales Price (gross proceeds from sale): $4,650,000,000
Franchise Debt: -$247,076,305
Capital Contributions (with 6% imputed annual return): -$2,351,026,144
Net Profit: $2,051,897,551
Sharing Rate: 2%
Sharing Amount: $41,037,951
"Subtracting capital contributions over the life of the franchise. You got to go way back to 1984. So obviously, there was a lot of math equation that needs to be verified," said Baker.
"We had our accountant and the Broncos work together to look at those numbers and verify those numbers and come up with a number," said Sugar.
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