CINCINNATI — This is a story that explains how the family that owns the Cincinnati Bengals became billionaires. We’re telling it now because the family is negotiating for additional taxpayer funding to renovate their workplace, Paycor Stadium.
Hamilton County built the stadium, pays millions annually to maintain it and owes debt on it that won’t be repaid before 2032.
The Bengals have earned more than $1 billion in operating profits in the 24 years they’ve occupied the place as tenants, according to Forbes magazine.
The Brown family used some of those profits to increase their ownership stake from 57% to 97% since 1999. That, combined with a 13-fold increase in average NFL team valuations, increased the Brown family’s total wealth by more than $3 billion.
Hamilton County Commissioner Alicia Reece made all of this a public issue during a Jan. 21 commission meeting, when she pushed for lease concessions from the Bengals, citing Mike Brown’s first appearance in the Forbes 400 last November.
“Forbes had 400 of the richest people in the country and only one was listed from Cincinnati and Hamilton County,” Reece said. “It was the owner of the Bengals, who only has the Bengals. So, we know there’s some money in this lease.”
Watch our full story on the Brown family here:
The Bengals declined to comment for this story but defended its stadium track record in a Jan. 9 letter from Bengals Vice President Troy Blackburn to Hamilton County Administrator Jeff Aluotto.
“The plan adopted 30 years ago has worked well — better than people could have hoped,” Blackburn wrote. “The sales tax has grown and has helped to develop the riverfront into a national urban showpiece. And the Bengals have been able to compete at the highest levels in the NFL. These were the community’s goals in 1996 when over 61% of citizens voted for the project.”
Much has been written about that 1996 plan to finance new stadiums for the Cincinnati Reds and Bengals, using a half-cent sales tax to fund stadium costs and riverfront development.
But not much is known about the deal’s financial impact on the Bengals and its owners. So, the WCPO 9 I-Team set out to learn as much as possible about that, using court records and other public documents, along with financial estimates released by Forbes, Sportico and CNBC.
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.
‘Willing partner’ or ‘welfare recipient?’
What all of that means for stadium talks depends on your perspective.
“I wouldn’t say they’re $3.7 billion richer because the county paid for their stadium, but that contributed to it, without a doubt,” said Joe Cobbs, a Northern Kentucky University professor who teaches a course called Moneyball - The Economics of Sports.
Cobbs said the ownership investments paid off for the Brown family in ways that could benefit Greater Cincinnati.
“I think they are more focused (now) on producing a winning, or at least competitive club,” Cobbs said. “In those previous decades … maybe they were more concerned with, ‘How do we consolidate our ownership?’”
Cobbs pointed to Joe Burrow’s five-year, $275 million contract as one example. Another is the team’s apparent willingness to sign long-term deals with Ja’Marr Chase and Tee Higgins.
“I do think that they have shown recently, within the last few years, that they will invest in the superstars that they have on the team,” Cobbs said. “I think they’ve also invested more in marketing within the community to build their brand.”
Finally, Cobbs expects the team to pay for a higher percentage of stadium improvements than it has in the past.
“I think they are a more willing partner,” he said. “When all the dust settles, I would expect their contribution to be larger than 25%.”
Others aren’t so sure.
“The Brown family are the biggest welfare recipients in Hamilton County,” said Jeff Capell, a Blue Ash city councilman who has criticized stadium spending for much of his career. “Every time we are spending money on a taxable purchase in Hamilton County, we are transferring our wealth to make a billionaire family even wealthier.”
Capell doesn’t begrudge the Brown family for boosting its ownership stake: “Sounds like a great investment,” he said. But he does expect Hamilton County to strike a harder bargain in lease talks with the team.
“They need to make sure that the Bengals are making a significant contribution into their own home,” Capell said. “Ideally, it would be 100%. I’d love to see no funding subsidizing these private organizations that make a ton of money.”
How other owners compare
Of course, the Brown family isn’t the only Forbes 400 listmaker seeking public money for an NFL stadium these days.
Carolina Panthers owner David Tepper, who ranks 39th on the Forbes 400 list with an estimated net worth of $20.6 billion, agreed to pay $150 million toward an $800 million renovation last June. That means Charlotte is on the hook for 81% of the projected cost.
Buffalo Bills owner Terry Pegula, 154th on the Forbes’ list at $7.7 billion, was promised $850 million in state and county contributions in a new-stadium deal struck two years ago. But Pegula has promised to cover all costs above $1.54 billion, and the price tag has risen to more than $2.1 billion. That means the public contribution in Buffalo is 41% and shrinking.
The Bengals have offered to cover up to 20% of a $600 million stadium renovation, but it revoked that offer last summer while accusing the county of defaulting on its Paycor Stadium lease, according to emails released by the county in response to public record requests.
READ MORE | EMAILS: Bengals, county accuse each other of violating stadium lease, raising questions about team's future
“The team has indicated that it favors a smaller, incremental approach to stadium improvements and a short-term lease extension,” Hamilton County Administrator Jeff Aluotto wrote to Bengals Vice President Troy Blackburn in July. “The team has made it clear that it does not foresee itself investing any more than the $50-60 million it recently committed — combined with a similar amount from the league.”
The Bengals and the county are continuing negotiations. The team is in control. It has the option to renew its Paycor Stadium lease under its existing terms for five two-year periods beyond its June 30, 2026 expiration date. That means it could continue to play rent-free at Paycor, while enforcing lease terms that require the county to cover all operating expenses and capital improvements there.
For the Brown family, it’s always been about control.
“Because of his experiences in Cleveland, Paul Brown did not want to return to professional football unless he was the control person,” wrote U.S. Tax Court Judge John Colvin in a 1997 memorandum that rejected IRS complaints about the transfer of shares from Paul Brown to his sons.
‘Not just a coach’
The Cleveland Browns were named for their legendary coach, who changed the game with a series of innovations — and three NFL championships — in the 1950s. But he butted heads with owner Art Modell and was fired in 1963.
“Paul Brown wanted to be an owner of a team, not just a coach,” Colvin wrote. “Paul Brown was vice president, general manager and chief operating officer of the Bengals from 1967 until he died in 1991.”
Mike Brown, who assembled the ownership group and chose Cincinnati as the home for his father’s team, ensured control with a voting trust agreement, signed by founding shareholders.
As voting trustee, Paul Brown “had the right to exercise all shareholders’ rights and powers, including the right to vote the stock and take part in or consent to any corporate or shareholders’ action,” Colvin wrote.
But it didn’t give Brown complete control.
“The voting trustee had no authority to change the terms of his employment contract … or take any action to dissolve, consolidate, merge, reorganize or recapitalize” the company, Colvin wrote.
When the Bengals debuted in 1967, Paul Brown was its fourth-largest owner, with a 10% stake. Ahead of him were two investors who would play major roles in the Brown family’s ongoing quest for control: John Sawyer and Dutch Knowlton.
Sawyer was the son of a U.S. Commerce Secretary who made the Ohio Agricultural Hall of Fame a pioneer in the use of pesticides. He also served as the Bengals' president or vice president from 1968 until he died in 2015.
Knowlton, born in Athens, Ohio, made his fortune in construction — building, designing and financing more than 160 structures on Ohio college campuses while diversifying into sports investments, raising show horses and selling Beechcraft airplanes.
Sawyer was a longtime ally of the Brown family, while Knowlton was a thorn in the Bengals’ paw, based on disclosures in the IRS tax case and a Hamilton County probate case in which two of Knowlton’s children tried to invalidate his 1996 will.
The records show Sawyer made a number of deals with the Brown family to help them boost their ownership and stay in control. Knowlton, on the other hand, boosted his ownership stake to more than 42% by 1980, and used those shares to force changes in the team’s management in the 1990s.
‘An opportunity to control the Bengals’
Sawyer’s role as a Brown family friend first came to light when the IRS filed a $30 million tax lien against the team, claiming a 1983 option agreement was a way for the Browns to avoid estate taxes. Judge Colvin rejected the IRS claim while explaining how Sawyer helped the Brown family become majority owners.
Between 1973 and 1980, Sawyer was the team’s president while a series of transactions boosted his ownership stake to 36.5%. Paul Brown doubled his stake to 20% while giving sons Mike and Pete one share each. Knowlton also increased his ownership to 42.5% during this period. In 1980, Sawyer struck a side deal with the Brown family.
“Sawyer and Paul Brown entered into the 1980 option agreement to give each of them a chance to obtain a majority interest in the Bengals if the other died,” Colvin wrote. “Neither wanted any other Bengals shareholder to gain control.”
That deal was followed by a more complicated option agreement in 1983 that would eventually make the Brown family majority owners of the team.
Sawyer agreed to purchase all but one of Paul Brown’s 118 shares in exchange for a promissory note worth $6.7 million over 10 years.
He also granted an option to let Mike and Pete Brown purchase all but one of his 213 shares in 1993 plus the 117 he bought from Paul Brown. The purchase price was $25,000 per share, or $8.2 million.
That deal enabled Sawyer to collect $13.3 million in profit distributions from Paul Brown’s shares over 10 years, plus an additional $1.5 million in 1993 — when he would be able to use payments from Mike Brown’s sons to pay off his 10-year loan.
Before Paul Brown died in 1991, he assigned Sawyer’s note and option to a family partnership that was also established in 1983. That allowed shares to be distributed to not only Mike and Pete Brown, but Mike’s wife, Nancy, and children, Katie Blackburn and Paul H. Brown.
The IRS argued the deal was a “sham” transaction, designed to avoid estate tax. But Colvin ruled it was an arms-length deal in which both sides got something of value.
“Sawyer wanted to receive income from his investment in the Bengals,” Colvin wrote. “Paul Brown wanted to give his sons an opportunity to control the Bengals.”
‘It got my attention’
The Brown family became the team’s largest shareholder in 1993, but it would take eight more years to wrestle control from Dutch Knowlton.
“The dealings I had with him from the beginning were — I felt that I was in there with a heavyweight,” Mike Brown testified about his former business partner in a 2007 trial. “And he always had my respect.”
The trial, in Hamilton County Probate Court, wasn’t about the Bengals.
It was mostly about Knowlton’s lawyer, Charles Lindberg, a Bengals owner who was managing partner of the Bengals’ law firm, Taft Stettinius & Hollister, from 1985 to 1996.
Knowlton’s children alleged Lindberg exercised undue influence on their father, whose 1996 will called for his foundation — not his children — to receive the proceeds of his Bengals shares. A jury ruled Knowlton’s will was valid and there was no undue influence.
But the trial provided lots of insight into the relationship between Knowlton and the Brown family.
“Bill Hackett sold his shares to Dutch Knowlton, I think it was 1978,” Mike Brown testified, while explaining why he thought Knowlton was “a very shrewd negotiator and a capable man.”
Hackett was an 8% owner of the Bengals. He played for Paul Brown at Ohio State and connected Brown to Sawyer when the team’s original ownership group was forming. The Bengals were stunned by the sale.
“Dutch changed the arrangements of how our shares were held internally without even saying anything to me,” Mike Brown testified. “He just made the transaction with Hackett and presented it as a fait accompli. I thought that was a pretty strong performance. It got my attention.”
Hackett’s shares helped Knowlton reach his biggest ownership stake in the Bengals, at 42.5%. That was enough to claim three seats on the board and the title of chairman. But it wasn’t enough to gain control over the Brown family.
“Mr. Knowlton never had any influence, that I could see,” Lindberg testified. “Even though he had 42% of the stock, he was outvoted by the Browns and Mr. Sawyer at every turn.”
Things got worse in the 1990s. After the Brown family bought Sawyer’s stake in 1993, Knowlton threatened to sue. The Browns threatened to change the team’s corporate structure to eliminate income distributions to shareholders.
Lindberg testified the disputes were settled in 1994 by a compromise negotiated directly between Mike Brown and Dutch Knowlton. To keep profit distributions flowing, Knowlton granted an option to let the Browns acquire 60 of his shares for $100,000 each.
“That was the first time that I was aware that there was a major attempt by them to reduce Mr. Knowlton’s ownership,” Lindberg testified.
‘Windfall for the Brown family’
The 1994 agreement led to seven years of income distributions totaling $34.5 million for Knowlton, according to a 2005 court ruling by Hamilton County Magistrate Rogena Stargel.
When the Brown family exercised the option in 2002, their ownership stake grew to 67%, a “supermajority” that enabled them to eliminate Knowlton’s seats on the Bengals’ board. The 2002 sale also became a focal point in a seven-year court fight over Knowlton’s estate.
“The result of the sale was a windfall for the Brown family, giving them total control of the Cincinnati Bengals Inc. and an additional 60 shares of stock for a bargain basement price,” attorney Stan Chesley argued in a 2004 motion to remove Lindberg as co-executor of Knowlton’s estate.
Chesley argued Lindberg had a conflict of interest in his dual roles as Knowlton’s attorney and managing partner of the Taft law firm, where attorneys worked for Knowlton, the Bengals and the Brown family. The Taft firm also represented Sawyer and former Bengals shareholder Louis Nippert. Katie and Troy Blackburn both worked for the firm in the early 1990s.
Chesley argued the shares Knowlton sold in 2002 were worth at least 10 times what he received, while the 176 shares that remained at his death were worth up to $400 million.
“The estate deserves a sale at the highest and best price,” Chesley wrote in another filing. “The Brown family may have a different agenda. They may want to avoid a sale to a new savvy purchaser. They may desire a sale price that is artificially low … Whose interests will Mr. Lindberg and the Taft firm serve?”
In her 2005 ruling, Magistrate Stargel decided the Taft firm avoided conflicts of interest by establishing a “Chinese firewall” to keep client files and secrets confidential. She also ruled there was “no substantive basis to remove Mr. Lindberg from his fiduciary position.”
Finally, she ruled the 2002 sale “caused minimal harm to Mr. Knowlton as a Bengals shareholder” because it gave him cash in the final months of his life, when his health was failing and his debts were rising.
After multiple appeals, the court case ended in 2011 with an order allowing the Knowlton estate to sell its 176 Bengals shares. When the Bengals announced the Brown family’s purchase, it said the estate “previously reached terms to sell its shares to investors in New York,” but the team exercised its “right to match such terms.”
Forbes reported the purchase price at $200 million in 2011. But a “final and distributive” account statement filed with the court in 2013 shows the price was likely closer to $173 million. The Bengals made two cash payments totaling $121.4 million for the 176 shares and signed a $27.7 million promissory note with an 11-year term and interest rate of 13%. Those terms would lead to interest payments of $24.5 million, according to a loan calculator at Bankrate.com.
"We are proud to be the owners of the NFL's Cincinnati franchise," Mike Brown said in a press release on the 2011 purchase. "We are committed to steps that will continue the Bengals as an asset for Greater Cincinnati."
‘It was money worth spending’
The 2011 purchase came in the same year that the NFL announced a nine-year rights agreement with the major networks worth an average of $3 billion per year. Those annual fees have more than tripled since 2011 and now bring every NFL team roughly $400 million in national media and sponsorship revenue each year.
That, in turn, has driven up the value of every NFL franchise, the Bengals included.
The Brown family should be praised, not criticized, for boosting its ownership stake in the Bengals, said Jimmy Gould, a Cincinnati-based private equity investor and sports agent who has known Mike Brown for decades.
“Why would they make a bad business decision? If Mike Brown spent his money to increase his hold on the team, it was money worth spending,” Gould said. “At some point in time, we’ve got to recognize that the team’s going to pass on (to future generations) and there’s going be a huge tax hit. What I don’t want to see happen is the family loses control of the team.”
Gould has represented more than 100 professional athletes, including former Bengals Andre Smith, Peter Warrick, Frostee Rucker and Dan ‘Big Daddy’ Wilkinson. He also worked with Mike Brown to establish new NFL safety protocols, following the 2001 death of his client, Korey Stringer.
Whatever the Brown family gained by investing stadium profits in their ownership stake, they could have made more by moving to Baltimore in the mid-1990s, Gould argues.
“They care about their community,” said Gould. “And, if people want to take shots at Mike Brown, they don’t know their ass from apple butter. He is a man of his word. And I have dealt with all 32 teams. I’ve been an agent for 30 years. And I can promise you, there are very few people who can measure up to him.”
