News from the Washington Commanders sales process has been at a minimum in recent weeks, a product of confidentiality agreements between the serious contenders for what will likely be the costliest franchise purchase in sports history.
Meanwhile, multiple ongoing investigations could prove troublesome for owner Dan Snyder — whether he sells the Commanders, as expected, or keeps the club.
Investigations by the U.S. Attorney’s Office — led by the FBI and IRS — along with the league’s second outside investigation have progressed in recent weeks. While all the details are shrouded in more secrecy than the bidding process, Front Office Sports was able to shed some light on both.
Mary Jo White, a former SEC chief, was tapped by the NFL more than a year ago, and two sources told FOS that White had uncovered more financial irregularities than have been reported to date.
At issue is a $55 million line of credit that Snyder took out without the knowledge of his then-co-owners. Snyder is about $1 billion in debt. A sizeable portion of that is due to his decision to buy out those three former partners, a move made possible by the NFL owners’ approval of a $450 million debt waiver in March 2021.
Loan Interests
How Snyder used some of the money he took to buy out his three former partners has come under scrutiny by White, the two sources said.
While the NFL doesn’t loan the money, it backs and can even make arrangements for the loans on an owner’s behalf. These loans are typically for constructing new stadiums or renovating existing ones, but most loans have guidelines.
White is examining whether Snyder used any of the NFL-backed loans in violation of whatever guidelines that came attached to the loan, sources told FOS.
ESPN reported last month that Snyder paid himself a salary of $10 million before the start of the pandemic. While most controlling owners can tap team revenues, sources told FOS Snyder is thought to be one of the few owners — maybe the only owner — in the league to pay himself a salary.
In the throes of COVID-19, when no fans were allowed to attend games at FedEx Field, Snyder paid himself no salary.
With the debt waiver in hand, Snyder paid nearly $900 million for the 40% of the Commanders owned by real estate mogul Dwight Schar, FedEx chief executive Fred Smith, and investor Robert Rothman in March 2021.
A ‘Substantial’ Raise
Snyder re-established his eight-figure salary and gave himself what one source described as a “substantial” raise.
The sources who spoke to FOS on condition of anonymity said White is determining whether that salary came from the NFL-approved loan, which likely had conditions attached as to how that money could be used.
That was the case when the NFL arranged up to an $85 million loan for former Baltimore Ravens owner Art Modell in 1999. Modell had defaulted on some of his debt after years of financial struggles dating back well before the NFL allowed the franchise to exit Cleveland after the 1995 season.
The major stipulation to get that loan was that Modell had to sell a minority stake in the franchise. Modell, who died at 87 in 2012, agreed to sell a controlling stake to Steve Bisciotti months after that loan was approved.
Snyder Takes Control
While FOS previously reported that the team’s local revenue streams are at or near the bottom in several categories, the Commanders — like all NFL teams, thanks to the $350 million-plus each team gets annually through broadcast and streaming deals — are profitable.
Before the three co-owners were bought out, Snyder held about 40% of the team’s shares. About half the teams in the NFL pay dividends to partners, and the Commanders were among them.
When Schar, Smith, and Rothman were still a part of the team, they split around $80 million in revenues annually before the trio and Snyder had a major falling out over Snyder’s use of team funds. Snyder’s cut amounted to more than $30 million before 2020.
Snyder currently owns more than 80% of the team, although his sister, Michele, holds the rest. His mother, Arlette, had 6.5% of the team before her death in July 2021.
How the disbursements have been handled in recent years and whether White or her investigators have examined those payments is unclear.
“The characterization of the White investigation is 100 percent false,” a Commanders spokesperson said in a statement to FOS.
The NFL declined comment for this story.
The team is Snyder’s major income stream — and he has pricey taste.
He purchased the most expensive house ever in the D.C. area ($48 million) in 2021 and recently put his old one in Maryland on the market for $49 million.
Then there’s his $180 million yacht with an IMAX theater.
Snyder docked it off the coast of France while he spent time in a resort town as NFL Commissioner Roger Goodell was the lone witness in a House Oversight Committee hearing in June.
Congressional Fallout
Snyder’s culpability in his team’s toxic workplace culture and his efforts to hinder an outside NFL investigation into it was the focus of that hearing. The Oversight Committee concluded its probe in December.
But the final report lacked any new information on the alleged financial improprieties and was mentioned only twice in the 79-page final report. The committee had effectively shifted the focus back toward Snyder’s “shadow investigation” aimed at hindering the first outside NFL investigation led by former assistant U.S. Attorney Beth Wilkinson, who summarized her findings in July 2021.
“The owner of the Commanders interfered with the Wilkinson Investigation by launching a shadow investigation into suspected sources of the Washington Post exposés, attempting to block Ms. Wilkinson’s access to information, and trying to silence employees who could implicate him in misconduct,” the final report stated.
According to Congress, that was done by sending “private investigators to the homes of former employees” in an effort to “surveil and intimidate individuals who spoke out against him.”
The lack of anything new related to allegations of financial misconduct in the final report didn’t surprise insiders for a straightforward reason: Snyder and the Commanders had been the subject of a federal probe for months.
Days after two FOS stories delved into allegations the team’s used “two books” of financial information and held back ticket revenue from the league, the House Oversight Committee sent a letter to the Federal Trade Commission in April that alleged “troubling, long-running, and potentially unlawful pattern of financial conduct” by the Commanders.
The Commanders called the allegations “uncorroborated and implausible” in a statement at the time.
Feds Enter Field of Play
The letter — also sent to the attorneys general in Maryland, Virginia, and D.C. — was the jumping-off point for a current investigation led by the U.S. Attorney’s Office for the Eastern District of Virginia with the assistance of the FBI and IRS. Virginia is still investigating as well.
The only known subpoena was aimed at the Commanders, and team counsel John Brownlee said in a statement to FOS last month that the club was “fully cooperating.”
But the scope of the investigation has already gone beyond the evidence scooped up by Congress that was made public nearly a year ago. That includes issues over the $55 million line of credit taken out without the approval of the three former co-owners, as ESPN first reported.
Some of that could be linked to evidence that Congress did not release last year, including the use of attorneys and investigators acting as impostors to — potentially illegally — gather info from multiple people.
Another potential target of the feds is what Snyder told a judge during a hearing as part of a lawsuit filed by the three former co-owners against Snyder. Lawyers for Schar, Smith, and Rothman alleged in a December 2020 filing that “Snyder or his agents have disclosed to The New York Times confidential information about discussions” in violation of the judge’s order that it remain under seal.
“No, your honor,” Snyder told the judge multiple times under oath when the Maryland federal judge asked if either he, his family, or anybody he’s associated with was the source of the story.
Judge Peter J. Messitte threatened sanctions to whoever violated his confidentiality order.
“I need to caution you about that because my ruling as to confidentiality applies across the board,” Messitte said per the transcript of the hearing obtained by FOS. “Wherever you are, whatever court you’re in — Mr. Snyder, this goes for you and plaintiffs, this goes for you. You’re subject to this court order.”
In a statement, a Commanders spokesperson said “the team has been fully cooperating” federal investigation” 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,” the Commanders said.
A spokesperson for the U.S. Attorney’s Office for the Eastern District of Virginia did not provide a comment, which is the policy for all arms of the Department of Justice when it comes to active investigations.
But complicated financial probes often span several months and, in some cases, years to conclude.
“They can take longer because [they’re] unlike sort of violent crimes, for example, where nobody is arguing over whether or not there was a crime,” said Alexander T.H. Nguyen, a former assistant U.S. Attorney. “Financial crimes investigations really hinge on whether there was an intent to defraud. It’s not as clear cut. So much more [of the investigation relies on] circumstantial evidence.”
Meanwhile, the Commanders remain headed for a potential sale — a process that remains shrouded in nearly as much secrecy and has taken months.
