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The Washington Commanders bidding process has been impacted by something outside of owner Dan Snyder’s control: the Federal Reserve.
The cost of borrowing has gone up as the Fed has attempted to tamp inflation with rate hikes. The increased cost of borrowing has become an added barrier for those interested in the Commanders, two sources told Front Office Sports.
“It’s a very big deal,” one banker familiar with the process told FOS. “A lot of rich people are saying, ‘I don’t have that kind of cash, and I don’t want to move my assets out of where I have it.’ It’s not like billionaires keep piles of cash around.”
The prime rate is currently at 8%, the highest since 2007. That rate impacts not only the would-be controlling owner of an NFL franchise.
The NFL requires that at least 30% of a team purchase be liquid (cash) held by one person who’d become the controlling owner. The rest can be raised through limited partners (co-owners) and financing if borrowing complies with the NFL’s debt restrictions.
Typically, those in an ownership group would borrow against their assets — at least in the short term — to amass the funds needed to purchase a team.
So far, only the group led by Philadelphia 76ers and New Jersey Devils owner Josh Harris has successfully managed the economic landscape. Harris’ bid is nearly $6 billion, and FOS previously reported that it’s the lone credible bid for the Commanders.
And there’s one interested party who doesn’t have to worry about interest rates: Amazon founder Jeff Bezos. Reps for the third-richest person in the world have continued to monitor the process, although Bezos has yet to submit a bid.
The prime rate was 3.25% when Snyder secured league approval to take on debt as part of a buyout of three co-owners in March 2021. Snyder financed half of the $900 million to secure the 40% of the Commanders he did not own.
Beyond interest rates, fears over a banking crisis have reportedly impacted the bidding process of Manchester United.
The Guardian reported earlier this month that uneasiness with the stability of the banking system and the cost of new debt has limited what was expected to be a major bidding war for the club.
Manchester United, owned by the Glazer family, who also control the Tampa Bay Buccaneers, began exploring a Premier League club sale in November, days after Snyder announced he’d do the same with the Commanders.
