An ESPN report Tuesday examining arbitration documents between Dan Snyder and three former co-owners of the Washington Commanders suggests that a previous loan to the team may not have been legal.
An April 2020 financial report revealed that the team had taken a $55 million loan in December 2018, without the knowledge and approval of three co-owners, Dwight Schar, Robert Rothman and Frederick Smith, who collectively controlled 40% of the Commanders at the time.
That $55 million loan is now the subject of investigation from federal prosecutors in the Eastern District of Virginia and a criminal inquiry led by IRS and FBI agents.
A federal grand jury has issued subpoenas for the Commanders’ finances, including the loan and arbitration paperwork between Snyder and the former co-owners. Getting a loan or line of credit without the approval of the team’s board of directors violates the shareholder agreement.
“The team has been fully cooperating with the Eastern District of Virginia since it received a request for records last year. The requested records only relate to customer security deposits and the team’s ticket sales and revenue. The team will continue to cooperate with this investigation,” John Brownlee, counsel for the Commanders, said in a statement.
The Bank of America, which extended the loan and which is handling Snyder’s current exploration of a sale of the Commanders, asked the team for proof of the board’s approval repeatedly. Proof of approval was not handed over before the loan’s closure, and the documents apparently show a team lawyer admitting the board approval did not exist.
Schar, Rothman and Smith had demanded the NFL investigate the loan itself during the arbitration with Snyder, but neither Commissioner Roger Goodell, who signed off on the loan, nor the arbitrator investigated the possible criminal wrongdoing.
Of the arbitration process, NFL spokesperson Brian McCarthy said in a statement that “The commissioner appointed a highly-respected attorney as the arbitrator and none of the parties objected to that appointment. After several months, the parties were asked if they would be interested in participating in a confidential mediation with the commissioner … the three limited partners sold all of their interests in the team to Mr. Snyder at an agreed-upon price [$875 million] and other terms. … The agreement included full releases of all claims that were or could have been asserted by any party in the arbitration proceeding.”
The trio’s initial disquiet and protest at discovering the loan led them to further investigate team finances, leading to further accusations of malfeasance on the part of Snyder.
Snyder is accused of acting to cover up the misconduct; when Smith mulled selling his 10% stake in the Commanders in 2018, Snyder informed him that the proposed buyer would not fly with the other NFL owners. That buyer bought a stake in the Atlanta Falcons in 2019.
Smith’s sale, the trio of co-owners said, was blocked because the due diligence involved with bringing in a new co-owner would have revealed the purported misconduct.
In their arbitration petition to the league, the co-owners also accused Snyder of milking the team for money. Business expenses Snyder sought to expense to the team included a 2018 yacht party in France with other NFL owners, as well as vehicle and security costs. Snyder also paid himself a $10 million salary paid by the team.
Snyder’s private jets were leased to the team, and Snyder charged the team $4.5 million to emblazon them with the team’s logo as an “advertising fee,” the co-owners wrote in the petition.
Snyder’s lifestyle, including multiple residences, personal staff, yachts, vehicles, and entertainment, was also subsidized by team money, the co-owners said.
Ultimately, NFL arbitrator Brad Karp would move the process on toward Goodell’s mediation, just days after the co-owners requested he acquire board approval documents from Bank of America.
The co-owners would then agree to sell, albeit with reluctance. Smith in particular was concerned that holding out would harm his son Arthur Smith’s job prospects. The younger Smith, then the offensive coordinator for the Tennessee Titans, was hired as the coach of the Atlanta Falcons on Jan. 15, 2021, just after the end of the league’s mediation.
Snyder would buy out the 40% of the team owned by Schar, Rothman, and Smith — but only after a unanimous vote in March 2021 by the league’s owners to allow him to finance the buyout with another Bank of America loan, this one for $450 million.
Now, Snyder is looking to sell, and once again wants help from fellow owners.
A Washington Post report Monday said that Snyder has asked that the league and its owners indemnify him against future legal liability and costs in the event that the team is sold.
Snyder also wants the second investigation into the team’s workplace culture, this one conducted by attorney Mary Jo White, to be kept confidential; the NFL has previously said it will be publicly released.
Snyder’s demands also included a threat to sue the league if they are not met. These asks have supposedly angered fellow owners, with NFL kingmaker and Dallas Cowboys owner Jerry Jones attempting to broker an agreement for Snyder to sell the Commanders and leave without further rancor.
The Commanders denied the veracity of The Post’s story, saying in a statement that “The story posted [Monday] by the Washington Post regarding the transaction process involving the Washington Commanders is simply untrue.”
Snyder has, in the interim, solicited buyers for the Commanders, including Tilman Fertitta, owner of the NBA’s Houston Rockets and Josh Harris, owner of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils.
Washington Post owner and Amazon mogul Jeff Bezos has also expressed interest, although Snyder has thus far denied him a chance to bid on the team, a report from The Athletic said.
Reaction from sports punditry and fans to the latest developments has been harsh.
“Last Thursday there was so much excitement about the hiring of Eric Bieniemy. Now it’s only Tuesday and that’s all gone. They always do this, erase the good with some smut,” former Washington Redskin and NBC Sports Washington personality Brian Mitchell said.
Megan Imbert, a former Washington employee who has been an outspoken critic of the team’s workplace culture based on her experience working for the team, called for Goodell to step down.
“It has been past due time Goodell steps down. The secret agreements … lack of accountability, covering up misconduct — step down,” Imbert tweeted.
Sports business analyst Andrew Brandt asked rhetorically, “The hits keep coming for Commander Dan. Continues the decades-long question: why has the NFL protected him so much?”
Washington sports fan Navdeep Singh, meanwhile, was almost impressed at Snyder’s chutzpah in asking for indemnity.
“Hats off, you gotta commend Snyder. This is a whole different level of petty like sometimes you just gotta tip your cap,” Singh tweeted.
• Brad Matthews can be reached at bmatthews@washingtontimes.com.
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