The Billionaire Bengals: How the Brown Family Got Rich

[LostInDaJungle]

https://www.wcpo.com/news/local-news/i-team/the-billionaire-bengals-how-the-brown-family-got-rich

 

 

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Here’s a summary of what we learned:

• The Cincinnati Bengals generated total operating income of more than $1 billion since 2000, based on estimates released annually by Forbes. Operating income is the money left over when a company pays for salary and other business expenses. It’s the rough equivalent of pre-tax profits. Forbes estimated the Bengals’ operating income averaged $3 million annually in the three years before it moved to Paul Brown Stadium in 2000. That jumped to $26 million in the first 10 years as a county tenant and $51 million in the second decade. After losing money in the Covid year of 2020, the team’s operating income bounced back to an average of $98 million since 2021.
• The Cincinnati Bengals are worth between $4.1 billion and $5.25 billion, depending on whether you believe Forbes with the lower estimate, or CNBC with the highest. A third estimate by Sportico values the Bengals at $4.71 billion. The difference between these estimates is that Forbes doesn’t count the value of team-owned real estate or stadium events, like the Taylor Swift concerts that filled Paycor Stadium on two nights in 2023. All three publications ranked the Bengals last in the NFL, based on 2023 operating results.
• The Brown family achieved a $3.7 billion increase in their total net worth after spending more than $170 million to buy out the team’s largest minority shareholder, Austin “Dutch” Knowlton. That boosted the family’s ownership stake from 57% in 1999 to 97% in 2011, based on disclosures in a 1990s court case over Brown family taxes and a 2007 probate case involving Knowlton’s will. Applying those percentages to Forbes valuations, the Brown family’s stake in the Bengals grew in value from $239 million in 1999 to nearly $4 billion in 2023 – a difference of $3.7 billion.

 

 

[LostInDaJungle]

Having read the whole thing, I don't really see where the Brown family has gotten huge windfalls of cash... At least not relative to the cash reserves needed to be an NFL owner. It sounds like they managed to get $20-60M for a decade, and the last few years are finally getting into the $100M range. When you're paying out $275M contracts and rising, that's still not a lot of nest egg money.

 

They own 97% of a $5B asset, but unless they want to sell a part of it, it doesn't put money in their pockets. They could borrow against it... But that's just selling it with extra paperwork. (Although I'm sure they do and have... But it's also smart of them to keep that to a minimum.)

 

I knew the history of them buying the team, but it also sounds like Mike is very wary of having partners because he had a bad one. Maybe Katie will eventually be more interested in fancy trips to Europe, and will be willing to sell a part of the team to investors. It will increase the Bengals cash reserves, and give Katie an actual board to be accountable to.

 

Doesn't change my long held opinion that they run the team like a Mom and Pop shop in a league full of Wal-Marts and Krogers.

[I_C_Deadpeople]

Well, if their total revenue is say $400M annual (mostly from the league) then making $100M per year is a 25% Operasting number which is HIGH for any business. The NFL is a licence to print money. Period. 

 

A good private business usually targets 15% operating income off sales and that is a good company. 

 

There is a lot of money being made annually PLUS the value of the franchise keeps rising as well. 

 

 

[LostInDaJungle]

2 minutes ago, I_C_Deadpeople said:

Well, if their total revenue is say $400M annual (mostly from the league) then making $100M per year is a 25% Operasting number which is HIGH for any business. The NFL is a licence to print money. Period. 

 

A good private business usually targets 15% operating income off sales and that is a good company. 

 

There is a lot of money being made annually PLUS the value of the franchise keeps rising as well. 

 

 

No doubt. I wish I was so lucky.

Some quick "back of the napkin" says they have maybe $500M on hand? Guessing that they probably neither spend nor invest extravagantly. Yeah, it's a half a billion dollars, but they're about to write that much in contracts next week. It's whole different story in 5 years... 

I have said this before... The business person in me respects the hell out of Katie and Mike for being frugal and sensible while executing on a long term plan. At the same time, I bemoan the myopic focus for leaving the Bengals the least valuable franchise in the NFL. Just like I admire that Mom and Pop shop for being in business for 72 years, but I still see they're struggling next to the big box stores and the new 7-11 that just opened up. They're not even doing half as well as their neighbors who rebranded into a bougie health food shop 10 years ago when the neighborhood gentrified.

[WRAPradio]

Don't they get a portion the the TV money as well?

[I_C_Deadpeople]

The league provides a load of money each year well above the salary cap. We could find out that number from the Packers public info. On top of that, they have whatever local/stadium revenue that does not go into the league pool. 

 

I have zero respect for the Browns from a business perspective because they have always been focused on annual income instead of franchise value. If they focused more (with more investment) on the franchise value that in itself would then generate more annual income. 

[I_C_Deadpeople]

https://www.sportico.com/leagues/football/2024/green-bay-packers-2023-revenue-financial-results-1234789647/

 

Here is the 2023 financial info for the Packers. League provided $400M of revenue and they added $250M of local revenue. 

 

I would expect the Bengals to have lower local revenue but also lower expenses (less staff etc). 

 

The reason Private Equity is interested in owning parts of teams is because these teams are cash cows. PE usually looks for annual returns of 20% minimum and in this case that would include the increase in the franchise value. 

[sparky151]

Statista published gross revenue numbers for all 32 NFL teams recently. Bengals were the lowest and about half of the Cowboys. But it was still 549 million annually. They have a salary cap of 279 million and other expenses as well. But the family could easily be collecting 150 mil per year. As a % of a $4 billion asset, it's not that high. But the asset keeps increasing in value annually. Their lease with the county featured rents that decline over time. 

 

The last time I checked the sharecount was something like 586 in total with the Brown family owning all but 1 share, held by Lindberg. He got it from Knowlton. 

[T-Dub]

2 hours ago, LostInDaJungle said:

I have said this before... The business person in me respects the hell out of Katie and Mike for being frugal and sensible while executing on a long term plan. At the same time, I bemoan the myopic focus for leaving the Bengals the least valuable franchise in the NFL. Just like I admire that Mom and Pop shop for being in business for 72 years, but I still see they're struggling next to the big box stores and the new 7-11 that just opened up. They're not even doing half as well as their neighbors who rebranded into a bougie health food shop 10 years ago when the neighborhood gentrified.

 

The ma & pa xhili stand has a niche. They're in business for themselves. All they have to do is serve good food at a reasonable price. They don't have to out compete Skyline and Gold Star. They have their clientele and can be happy with that.

 

The Bengals, on the other hand, have one goal. Their purpose (ostensibly) is to line up against any other team and win. They're closer to a Skyline franchise, in that all the teams are getting paid so the product meets a certain standard and everyone is able to conpete.

 

The Brown family, however, appear to be happy in that Ma & Pa niche. Do enough to keep the lights on & don't worry about the new place across the street.