These crypto enthusiasts are trying to raise $4 billion to buy the Denver Broncos
DENVER — The Denver Broncos are up for sale, and a group of crypto enthusiasts is aiming to raise more than $4 billion using a decentralized autonomous organization, or DAO, to make it their own.
You can think of a DAO like a group of individuals acting in concert with no single leader. Unlike a normal pool of investors, DAOs rely on cryptocurrency technology to track and validate participation in the group, as well as to facilitate the inner-workings of how to raise and distribute large amounts of cash. This group includes an eclectic mix of attorneys, accountants, software developers, pro athletes, and at least one mathematician.
One of the people spearheading the cause is Sean O’Brien, who spent over a decade in Cisco‘s legal department, before leaving the corporate world to run a few small businesses with his wife.
“We know it sounds a bit crazy, but it’s also a bit badass,” said O’Brien. “The purpose essentially is to establish an infrastructure so that fans from all walks of life can be owners of the Denver Broncos.”
The pro football team is valued at just under $4 billion, and it is expected to garner the biggest price tag in North American sports history, according to ESPN.
Trustees of the team said in a statement that the goal is to sell the team by the start of the 2022 NFL season. O’Brien tells CNBC that while the smart contracts and crypto wallets are set up, their DAO doesn’t officially go live until the first week of March, so the “BuyTheBroncos” cause will need to cover a lot of ground fast to have a chance.
But the crypto collective has a secret weapon in Colorado Gov. Jared Polis, who recently announced plans to accept cryptocurrencies for state tax payments by this summer. On Friday, the pro-crypto lawmaker told CNBC on the sidelines of ETHDenver — a major conference dedicated to dissecting the present use cases and future of ethereum — that he would be “thrilled” if their effort comes to fruition.
“I would be excited to be part of it myself,” said Gov. Polis.
“The challenge will be it’ll take a lot of money…but you know what, if your imagination is big enough, then it can happen. And anything I can do to make it happen, I’d be happy to,” continued the governor.
They say this DAO is different
DAOs take coordination of resources on the internet to a new level, according to Auston Bunsen, co-founder of QuikNode, which provides blockchain infrastructure to developers and companies.
“They represent a new kind of organization moving at hyper speed,” said Bunsen.
Investor Cooper Turley, who has helped build several popular DAOs, says they’re like an “internet community with a shared bank account.”
“Basically, a small group of people come together to form a chat group, and then they decide to pull capital together, [typically] using an Ethereum wallet,” Turley previously told CNBC.
The BuyTheBroncos contingent joins a long list of DAOs pooling funds to buy real-world assets. In July 2021, PleasrDAO bought a copy of the Wu-Tang Clan album once owned by Martin Shkreli for $4 million, and in Nov. 2021, a consortium of crypto investors formed ConstitutionDAO, pulling together $47 million worth of ether in a week to try and buy a rare, first-edition copy of the U.S. Constitution at a Sotheby’s auction. Although the group didn’t place the winning bid, the movement captured the world’s attention and helped to mainstream the concept of crypto crowdfunding.
ConstitutionDAO’s rallying call was “WAGBI” or “we’re all gonna buy it.” But in fact, the thousands of investors who comprised that DAO would not have received fractional ownership of the document. Instead, they would have become holders of a crypto token known as “People” that would have granted them certain voting rights over the future of the document.
“ConstitutionDAO was essentially a fundraiser,” said Derek Sorensen, a mathematician and computer science PhD student at the University of Cambridge in the U.K., who’s advising BuyTheBroncos on how to structure the DAO.
“It was kind of like, we’ll raise money, we’ll buy this Constitution, you don’t own any of the Constitution, or actually have any legal rights to anything about it. You can vote on where we put it, but there’s no legal guarantee,” continued Sorensen.
Sorensen says the BuyTheBroncosDAO will adopt an entirely different governance structure. Though the group will still fundraise in cryptocurrency, the idea is to give people partial ownership, in which they will participate in deciding how the team is run. They also plan to form the group as a cooperative, similar to outdoor sports retailer REI, rather than a LLC, which they believe will exempt the owners from certain SEC regulations governing investing in securities.
Buying the Denver Broncos
$4 billion seems like a huge amount of money, though organizations like BitDAO, which currently has more than $2.3 billion worth of crypto tokens on its balance sheet, show that the effort is not entirely impossible.
“It’s definitely possible in the world of crypto. That sum of money is not unheard of,” said Sorensen. “I’m very, very confident that this sum of money is absolutely doable in web3,” though Sorensen gave the disclaimer that he is an academic mathematician, and thus, probably not the best person to assess the future success of business.
So far, the BuyTheBroncos cause doesn’t have much traction. Its Twitter account had fewer than 50 followers as of the time of publication, and O’Brien’s last two attempts to buy professional sports teams with a DAO were unsuccessful. But the origin story of ConstitutionDAO has a similar tenor.
19-year-old ConstitutionDAO member Miguel Piedrafita told CNBC that ConstitutionDAO was started mostly as a joke. He says that he and his friends saw an article about the Constitution going up on the auction bloc, and they started making memes about buying it. From there, the effort snowballed.
“We made a Twitter, went to bed, and the next day, we had a bunch of followers. So we started working with legal teams, museums, and Sotheby’s to try to put it all into motion, and it ended up kind of working,” Piedrafita said.
The takeaway? Do not underestimate the underdog in the land of crypto.
The BuyTheBroncos group also has a pretty solid plan B. Organizers tell CNBC the more realistic goal is to raise around 25% of the money needed to place the winning bid, and from there, join forces with a consortium of more traditional buyers to make up the difference.
Even if the BuyTheBroncosDAO fails, O’Brien is optimistic that the effort will spread awareness regardless.
“While having a fan-owned Denver Broncos in a DAO-based system would be amazing, that isn’t our final goal,” said O’Brien.
“We want this effort to essentially open up peoples’ eyes to what a DAO can do in the real world and make a tangible connection between this web3 life and the real world. Our thought is that it accelerates DAO adoption for solving real-world problems such as food scarcity or unhoused peoples.”
But as Gov. Polis points out, it sure would be good if these crypto enthusiasts could seal the deal.
“I can’t play favorites. Obviously, whoever buys the team, we’re totally, as a state, we want to have a good owner, but this would be really noteworthy for Colorado if they could pull this off,” said Polis.