ENGLEWOOD, Colo. — Weeks before the Denver Broncos got their grove back by trading for quarterback Russell Wilson, the team received notice of more legal issues ahead of an impending sale.
In January, a Denver District Court judge ruled that the right of first refusal agreement between owner Pat Bowlen and former owner Edgar Kaiser was "no longer valid or enforceable in any respect." Kaiser's heirs appealed that ruling to the Colorado Court of Appeals on Feb. 25.
The trust that now runs the Broncos challenged the contention by Kaiser's heirs that the right of first refusal in the original agreement between Kaiser in Bowlen in 1984 was still valid. There was a one week trial in September, ahead of the January ruling that sided with the Broncos trust.
The appeals process will take time and could overlap, if not delay the sale of the Broncos.
"It's clear that the Kaiser heirs want a piece of the action," said 9NEWS legal analyst Scott Robinson. "And we're talking about, literally, millions and millions of dollars at stake, so you can see why an appeal was filed."
The Kaiser heirs are asking the Colorado Court of Appeals to rule that the right of first refusal did not end with Kaiser's death, but was intended to extend to the heirs.
On Feb. 1, Broncos Chief Executive Office Joe Ellis, who is also one of the three trustees to the Patrick D. Bowlen Trust, announced the team would be sold.
"Any prospective buyer would, at least, have to know about this litigation and take that into account," said Robison. "You'd hate to raise millions, if not billions of dollars, to buy the Broncos, and then find out that your bid is worthless because there's a right of first refusal to someone else who then exercises that right."
A source close to the Broncos told Broncos Insider Mike Klis that the appeal by the Kaiser estate was not unexpected and the team’s sale process would continue. Dozens of prospective bidders have expressed interest in buying the Broncos. The sale price is expected to come in around $4 billion.
The Kaiser appeal is not expected to hinder the sale, the source told Klis, with the Broncos expected to have a new owner by late summer.
"We may not know the final answer to the question of whether the Kaiser heirs have the right of first refusal, or not, for several more years," said Robinson. "This is not a tempest in a teapot or much ado about nothing. If the appeal is successful, then the Kaiser heirs will have a right of first refusal. They will have a right to buy the Broncos."
The Broncos’ confidence to proceed with their sale could come from the convincing manner in which Judge Shelley Gilman sided with the trust following the initial September trial. Judge Gilman’s findings included:
- The right of first refusal in the March 16, 1984, sales agreement between Kaiser and Bowlen “has terminated in its entirety” and “is no longer valid or enforceable in any respect.”
- None of Kaiser’s heirs “have any rights under the right of first refusal” – meaning they are not entitled to any notice of the intended sale of the franchise.
- The Broncos have no obligations “to provide notice of any intended sale.”
In their notice of appeal, Kaiser estate lawyers listed issues it would raise including whether the court erred in finding the right of first refusal terminated; if the court erred in finding the sales agreement and amendment ambiguous; if the court erred in considering improper expert testimony; and if the court erred in considering the parties intent, including testimony from Bowlen’s testimony and from testimony of Kaiser and Bowlen themselves in two prior cases.
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