Broncos’ Fumbled Handoff Reveals Perils of NFL Estate Planning

(Variety) - This story is the first in a series covering inheritance and estate planning in the National Football League. NFL owners, with an average age of 72, face tax and legal decisions familiar to any family with assets to pass to the next generation—compounded by rules and restrictions unique to a league with $17.4 billion in annual revenue and an average franchise valuation of $4.14 billion.

Pat Bowlen checked all the boxes. 

A decade before his death, the billionaire owner of the Denver Broncos consulted with attorneys about the orderly handover of the team after his death. He crafted a carefully delineated trust that his hand-picked trustees would oversee. He filed that succession plan with the NFL, per league bylaws, and heirs were notified of developments. Yet for years, both before and after Bowlen died in 2019, members of his family battled in court, and in the media, over the franchise’s fate—doing exactly what Bowlen sought to avoid.

Inheritance is a familiar topic to American families. Any child of a certain age, whose parents have acquired a middle-class economic status, can relate to the vexing family dynamics. 

What do we keep when our parents die? What do we sell? What do we do with dad’s stamp collection? What of the family home? Who gets the cabin on the lake? What are the tax implications? What does the will say? What does it actually mean? And often, the most difficult question of all: Who decides?

Now multiply all that by billions of dollars, thanks to burgeoning sports-team values, and you have a recipe for ugly, angry, lasting recriminations and fights—the kind that are almost never in the best interests of the league, especially with myriad fans and journalists eagerly following along. 

Trust and estate experts see NFL teams as especially ripe for succession problems.

“With NFL teams being worth billions of dollars,” Ray Madoff, director of the Boston College Law School Forum on Philanthropy and the Public Good, recently told Sportico, “the value alone provides plenty of reason for legal squabbles.”

Madoff emphasized that NFL teams are extra special because of scarcity, a quality that also complicates passing them on to heirs. “They are worth more than money to many of their owners,” Madoff, author of Immortality and the Law: The Rising Power of the American Dead, observed. “This means that property disputes can’t be easily resolved by selling the property and splitting the proceeds.”

These problems aren’t going away. With 11 controlling owners of NFL teams who are 75 years or older—representing more than a third of all teams—many franchises will change hands in the coming years. 

Are those teams ready? Is the NFL ready? Over the course of the next two weeks, Sportico will examine the issues that arise when these massive and rapidly growing assets are on the brink of new ownership.

When it comes to potential pitfalls surrounding NFL family estates, the most recent franchise sale is particularly instructive. In June, a group led by Rob Walton bought the Broncos for $4.65 billion. The deal marked the end of a multiyear, high-profile legal battle that awkwardly pitted Bowlen family members against each other and underscored the unpredictable nature of succession planning when dynastic hopes clash with intrafamily quarrels. Walton, a 77-year-old father of three and current steward of his family’s Walmart fortune, will look to avoid the pitfalls that have plagued the Bowlens and other NFL families.

Inheritance of assets at this scale isn’t always contentious. After all, there is plenty to go around, and the major concern is reducing tax exposure and risk. “For most ultra-high net worth families, the imperative is wealth preservation versus wealth creation,” David Koh, managing director and senior investment strategist for the chief investment office at Bank of America, said in a video interview.

And in the case of Pat Bowlen’s estate plan, “The trust should have worked,” trusts and estates attorney Carolyn Caufield said. Caufield, a partner and chair of Herrick’s private clients practice group in New York, advises high net worth individuals on multigenerational estate planning and succession planning. She says her line of work involves “intense relations” with clients, who need to tell their attorney “where every body is buried” and reveal “every illegitimate kid” who could surface seeking their share.

Bowlen, Caufield explained, followed a sensible playbook. 

As he began to suffer from Alzheimer’s disease in the late 2000s, Bowlen undertook steps to cede control of the team. In 2009, he revoked one trust to create a new one that would be overseen by three trustees, each a team executive or attorney with whom Bowlen was long acquainted. None was a family member. 

The trust was to oversee the complex structure undergirding the team’s ownership. The team was technically owned by PDB Sports, a limited partnership that was itself owned by Bowlen Sports Inc., which, in turn, was owned by Patrick Bowlen and his brother John Bowlen. The trust would operate other Bowlen-related team properties, including Stadium Management Company, which operated Mile High Stadium.

Bowlen’s plan encountered problems, as his many family members—seven children from two marriages along with three siblings, who were co-owners at different points and who had their own children—disagreed about the future of the team and the competency and objectivity of the trustees. 

The conflicting voices reflected how the team was a family-owned business. Bowlen—the scion of a wealthy Canadian oil man—along with brothers John and William and sister Mary Elizabeth Jagger, purchased most of the Broncos in 1984 and the remainder two years later. Each of the siblings, court records obtained by Sportico indicate, owned about 25% of the team in 1986. 

The siblings discovered that arrangement wasn’t sustainable, because NFL ownership rules require that each team identify a controlling owner. Pat Bowlen gradually purchased equity from his siblings and gained franchise control. Before he passed away, court records estimated he effectively owned 76% of the team while John Bowlen owned the other 24%.

In a 2018 petition that advocated the removal of the three trustees and appointment of an independent party to serve as the estate’s conservator, William Bowlen insisted that his brother was incapacitated when he crafted a new trust in 2009. He also maintained the trustees had willfully denied his brother’s intentions about the team’s future. 

“Prior to [Pat’s] incapacity,” an attorney for William wrote, Pat “expressed to [William], numerous other family members, and his closest advisors that he eventually wanted a member of his family to be the sole owner of the team.” William went on to say that his brother desired that one of his children would own the team and that “he wanted the Bowlens to be ‘an old family of the NFL,’ just like the Rooney family with the Pittsburgh Steelers.” Selling the team wasn’t part of this alleged plan.

Complicating the fact pattern, Pat’s wishes, as described by William, were apparently not mentioned in writing in the trust or accompanying documents. Still, William argued, the trustees declined a succession plan submitted by Pat’s two daughters from his first marriage, Amie Klemmer and Beth Bowlen Wallace, that a healthy Pat would have supported. As William told it, his brother “expressed a longstanding desire for Beth to serve in a management level role” with the team and mentored his daughter on the possibility of becoming controlling owner. 

But, William asserted, Annabel Bowlen—Pat’s second wife—“became very upset” when she learned that Beth had attended an owners’ meeting in 2012. Annabel, one court filing claimed, wanted one of her own children to take over. She allegedly threatened a trustee with firing if Beth progressed toward ascension as the controlling owner.

Beth, whose position with the team was eliminated in 2015, and Amie also sued the trustees, who allegedly preferred that a younger half-sister, Brittaney Bowlen, take charge. Beth and Amie sued despite the risk of triggering a “no-contest” clause in Bowlen’s trust documents that suggested any family member who challenged those documents could be disinherited. In addition, Beth Bowlen hired a public relations firm to advocate for her position, which prompted the trustees to claim she was not qualified. 

Meanwhile, the NFL, at the urging of the trustees, provided arbitration services to confirm the trust’s valid ownership and operation of the team. The lawsuits were resolved out of court by 2021, with the trust intact. That, along with the trustees defeating a lawsuit brought by the estate of team’s prior owner, Edgar Kaiser, over a right of first refusal, helped to pave the way for the sale. But for the Bowlen family, the path was tortured and treacherous.

“Family litigation is the most painful kind,” Caufield said. “It’s never about the money, it’s about love and who loves me more . . . It’s almost impossible to get out of quickly.”

The Broncos weren’t alone in experiencing familial wrangling over control of an NFL franchise. The New Orleans Saints and the Los Angeles Chargers have endured similar controversies, each with a unique set of facts reflecting how every family is different.

Five years ago, New Orleans Saints owner Tom Benson settled a long legal battle with his daughter, Renee Benson, and her children over Benson’s plans to remove their equity interests from trusts that controlled the team and his other businesses. The children and grandchildren believed their ouster was urged by Benson’s third wife, Gayle Benson, whom he married in 2004.

They also maintained in court filings that Benson, who was 87 at the time he shifted inheritance plans, was “heavily medicated” and had been “having difficulty thinking and suffering from apparent memory lapses.” Benson, it was alleged, thought Ronald Reagan was still president, and upon being told he wasn’t, guessed it was Harry Truman.

The daughter and grandchildren placed much of the blame on Gayle, who they claimed had “removed Tom Benson’s photographs of his family that were once prominently displayed,” dismissed his longtime staff and “screened almost all, if not all, of Tom Benson’s phone calls, emails and regular mail.”

As recently as 2014, the NFL, court documents stated, reaffirmed the Saints succession plan that contemplated Renee and her children as Benson’s successors. Specifically, the team would “pass to the Renee Benson Trust.” Benson’s granddaughter, team executive Rita LeBlanc, would serve “as the owner representative to represent the ownership at NFL meetings.” That all changed the following year when Renee and her children said they were targeted in a “coup attempt” that entailed Benson trying to exchange hundreds of millions of dollars in assets in trusts designated to benefit them “for only unsecured promissory notes that have little to chance of being honored.”

Benson’s daughter and grandchildren didn’t leave the public guessing as to how they regarded their stepmother. In a 2015 court filing, they described Gayle as opportunistic and ill-equipped to run an NFL team. “After high school, [Gayle] worked as a receptionist in a dental office, then transitioned into a home-sales jewelry business, and then finally tried to find work as an interior designer,” the filing said. “She and her businesses have been sued multiple times.”

They also claimed that “prior to meeting Tom Benson, Gayle was in significant debt and had limited credit.”

Succession problems with NFL teams, Madoff noted, often “involve a new spouse who is not the parent of the children.” Such a scenario, she said, “is ripe for conflict.” Madoff added that many traditional estate planning tools—like QTIP Trusts in which the spouse is given a lifetime interest and the children are given the remainder interest after the death of the spouse—can exacerbate the opportunities for conflict.

The case settled right before a trial. Benson died in 2019 at the age of 90. Gayle “essentially won,” Caufield noted, since Benson is running the Saints as well as the New Orleans Pelicans, which her late husband also owned. 

Caufield explained that had Benson used an “independent” or “agnostic” trustee arrangement, it “would probably have avoided this [turmoil] entirely,” since the independent party “would not have let him make a decision like that.” Benson instead maintained control and, at least some in his family believed, was manipulated into decisions he might not have made when in better health.

The Chargers family saga is a live controversy. The four children of the late Alex and Faye Spanos are embroiled in litigation over control of a family trust that owns 36% of the team. Dea Spanos Berberian and her brother, Chargers chairman Dean Spanos, are co-trustees, and Dea contends that Dean and their brother, Michael Spanos, have unlawfully conspired to exclude her from decision-making. None of the children owns a majority of the team, but Dean has taken on the functions of controlling owner and is recognized as such by the NFL. The dispute is now headed for arbitration.

Intrafamily franchise battles aren’t unique to the NFL. In Major League Baseball, Louis Angelos is suing his brother, Baltimore Orioles CEO John Angelos, and their mother, Georgia Angelos, over a revocable trust established by his father, 93-year-old Orioles owner Peter Angelos. Louis insists that his father, who is incapacitated, sought to have his two sons and wife run the team, but that John has disregarded those wishes and has usurped control. It’s not every day a son sues his mother, and it might even seem like a plot out of a soap opera. But for Orioles fans, who Louis believes could see their team move to Tennessee under John’s control, which child and which parent “wins” could mean all the difference.

Still, the NFL, with the most valuable teams, has the biggest stakes in these high-profile feuds. With controlling owners’ average age of 72, and with third and fourth generations and multiple heirs waiting in the wings, the chances of future disruptions are high. Consider the Chicago Bears, which are owned by 99-year-old Virginia Halas McCaskey. She has nine children (her sons Tim and Michael passed away in 2011 and 2020, respectively) and more than 40 grandchildren and great-grandchildren. Will McCaskey’s eventual passing be met with smooth transition or dissension?

Meanwhile, the NFL is highly centralized and strives to be intensely private in its business dealings. This is the same league, after all, that argued to the U.S. Supreme Court that it was a single entity, meaning one business with different branches. Ownership lawsuits defy NFL attempts to unify the 32 teams in business operations and, as discussed above, can lead to embarrassing and sensitive disclosures in court filings. These battles may be unavoidable in a league that has long lived on legacy and strives to “keep it in the family.” 

To that point, Caufield acknowledged that “you can put many safety measures in place,” but sometimes the best laid plans won’t work. Still, she emphasized, “the best thing you can do to ensure a smooth transition to have education for the children.” She further stressed that communication is crucial to building trust between family members, who are more likely to go along with a succession plan if they hear it from the top.

That’s likely sound advice for anyone, but especially for NFL owners, given the financial stakes and public curiosity surrounding America’s most popular sport.

Read more about the business of sports on our sister site, Sportico.

By Michael McCann
September 10, 2022


More Articles