Tokenizing the Cincinnati Bengals: A longshot idea to keep the team in town

A local technology investor thinks he has the solution to Hamilton County's stadium dilemma. Adam Koehler wants to tokenize the Cincinnati Bengals.

CINCINNATI — A local technology investor thinks he has the solution to Hamilton County’s stadium dilemma: tokenize the Cincinnati Bengals.

That means converting the team’s shares into digital assets that can be bought, sold and traded like bitcoin. Such a deal could generate billions of dollars in cash for the family of Bengals owner Mike Brown, while keeping them in control of the franchise founded in 1967 by NFL Legend Paul Brown.

“It would allow the residents of Cincinnati, instead of going broke spending money on the sales tax, (to) put their money into something that’s practically guaranteed to make money,” said Adam Koehler, founder of Reversed Out, LLC, a digital advertising agency in Covington. “Five years ago, this team was probably worth $2.5 billion. Now it’s worth $5 billion. It’s like, how many billion dollars do you need on paper? At some point, you probably want to get liquid.”

The Bengals did not respond to an email seeking comment for this story. But there is reason to believe the team would not be interested in Koehler’s idea.

“They’re not necessarily early adopters,” said Joe Cobbs, a professor who runs the Sports Business and Event Management program at Northern Kentucky University. “They’ve shown themselves to be pretty conservative in their approaches, and it’s worked for them.”

The Bengals were the only NFL team to vote against a rule change last November that allows private equity firms to purchase ownership stakes of up to 10 percent in an NFL team.

But Koehler figures cash would come in handy for the Brown family, which made the Forbes 400 last year with an estimated net worth of $3.9 billion.

“One of the big problems for these billionaires like Mike Brown, who’s a billionaire on paper, is ‘Does Mike Brown have that liquid money? Does he have that cash sitting there?’ The answer is no,” Koehler said. “That’s a big problem for us as fans because he can’t pay players. You saw Jessie Bates walk. You saw D.J. Reader walk. Hopefully they can work out a deal with Ja’Marr Chase, who’s the best receiver in the league. But they have to guarantee so much money.”

NFL rules require teams to place money in escrow for long-term contract guarantees. The Bengals are known for avoiding guarantees beyond a contract’s first year. Koehler said the team could also use an influx of cash for stadium expenses or estate taxes.

“We don’t know what their financial situation is, personally. But I would guess that, if all their wealth is tied up into that asset, they probably want to get liquid at some point,” Koehler said.

'It's crazy in the sense that it's new'

The idea of tokenizing the Bengals has been percolating in Cincinnati’s startup community for years. Koehler was one of those stirring the pot, as he looked for new opportunities following the 2015 sale of Dotloop. It was one of Cincinnati’s biggest startup success stories, when it sold for $108 million to Zillow. Koehler was among its founders.

A few years after the sale, Koehler “started getting into crypto. I own a digital agency. I had to understand how blockchain worked.”

Blockchain is a digital ledger that allows a series of transactions to be recorded, time-stamped and shared in a way that’s intended to promote transparency and prevent fraud. It’s used by cryptocurrency investors to buy and sell digital currencies like bitcoin and ethereum, but it can also track digital tokens that use a unique number to represent ownership of a specific asset.

Koehler helped organize a 2017 conference in Northern Kentucky called “A Day for Crypto.” It explained the industry to about 200 local attorneys and investors. He formed a startup called C-Prop, which uses blockchain technology to document real estate transactions.

“Then, we started going down this whole path of what can be tokenized,” Koehler said.

In the process, he met Mike Hiles, founder of 10XTS, a consulting firm that helps investors tokenize what the industry calls RWAs, or real-world assets.

“Imagine a world where you could own a piece of your favorite painting, a slice of a skyscraper or a fraction of a gold bar,” says the company’s promotional video. “That’s the power of tokenization.”

It makes perfect sense to Hiles that the Cincinnati Bengals could be tokenized.

“I mean, it’s crazy in the sense that it’s new,” he said. “But it’s also based on legacy financial structures.”

Hiles said the concept is catching on quickly in the financial industry, where tokens are being used to represent bond transactions, loans and mutual fund trades. Adoption has