Selling an NFL team involves a series of complex transactions and judgment calls. Bids, loans, lines of credit, scrutiny of financial records, personal disclosures and various approvals are all part of the mix. Not just any billionaire can join the exclusive club.
The pending sale of the Washington Commanders features all of that plus a federal criminal investigation, an unusual fight over indemnification and unanswered questions about a “secret” infusion of $55 million that might implicate NFL commissioner Roger Goodell and other league executives.
As strange as it sounds, it might prove easier for the league to have the much-maligned Daniel Snyder remain the Commanders’ owner rather than confront the fallout of what could prove to be a long, litigious and public departure.
Reporting by The Washington Post and ESPN over the last two days illuminates how problematic it will be for the NFL to cut ties with Snyder without placing the relationship between the commissioner’s office and owners—long shielded from public and legal scrutiny—under an intense spotlight.
According to the Post, Snyder will only sell the Commanders if the league and other ownership groups indemnify him against possible liability stemming from his ownership, and only if the league’s investigation into his conduct be kept confidential. The league and some other owners, the Post reports, are flatly opposed to Snyder’s demand. They are contemplating the possibility of forcing Snyder’s removal, which would likely be followed by Snyder suing the league and other owners.
Snyder’s reported demand for indemnification stems from assorted civil litigation facing him and the team. Former employees accuse him of sexual harassment and other workplace-related offenses. The team is being sued by the District of Columbia for alleged harm to consumers. In theory, an indemnity clause would ensure that Snyder isn’t on the hook to pay settlement or civil judgments. Indemnity clauses, however, are often not all-encompassing. They usually pertain to specific matters or categories.
Meanwhile, ESPN reports that Snyder obtained a “secret” $55 million loan from Bank of America to facilitate his buyout of three Commanders’ limited partners (Robert Rothman, Dwight Schar and Frederick Smith) in 2021. It appears the loan violated the team’s shareholder agreement since the board of directors never voted on it. Snyder also allegedly used the Commanders’ finances as his “personal piggy bank,” including charging the team (that he owns) $4.5 million to place its logo on his private jet, a jet that ordinarily is not publicly viewed.
Snyder’s dispute with the limited partners—who sued him until a federal court ruled that the dispute must go to an arbitration process overseen by Goodell—was resolved when Snyder bought them out. However, they reportedly were frustrated that Goodell and league officials did not clarify how Snyder obtained the $55 million without the board’s involvement.
The answer might come from federal prosecutors in Virginia who are probing whether the team and its officials, including Snyder, engaged in criminal wrongdoing in regard to how fully the team reported revenue to the league. NFL teams are obligated to share various forms of revenue, and shared revenue impacts the salary cap and other financial calculations for players. There are also claims the team tricked fans into believing general admissions tickets were sold out, only giving them the option to pay for higher priced seats.
The criminal investigation might uncover no criminal conduct. As of now, there is no indication that prosecutors plan to seek charges or that a grand jury has been impaneled. The team also insists the allegations are categorically false and that it has fully complied with the investigation.
But in a worst-case scenario for Snyder and other Commanders executives, the investigation could lead to prosecutors seeking charges for a range of crimes, including bank fraud (deception in securing a loan from Bank of America); tax fraud (using doctored records to downplay revenue); wire fraud (using technology to dupe fans into paying for higher priced seats); racketeering (team officials running an illegal enterprise that is portrayed to the public as legitimate and law-abiding); and conspiracy (a group of individuals conspiring to carry out illegal goals). These are felony offenses, carrying potential prison time.
Even if the Commanders’ sale goes forward, Snyder would be attached to the NFL long after he leaves if criminal charges surface. At a minimum, Snyder, league officials and other owners would be relevant witnesses and subject to subpoenas and demands for sworn testimony. Though the league tries to resolve disputes with owners and teams through confidential arbitration and mediation, the NFL wouldn’t be in control of a criminal proceeding—a judge would be calling the shots. The proceeding would also make public various court filings that contain copies of transcripts, emails, texts and financial records that the league and owners regard as private. This is why Snyder’s exit might increase risks for the league.
In this possible situation, Snyder might be more inclined to direct blame onto the league or to other owners, and be willing to share materials that reflect poorly on others. Snyder, who has been an NFL owner since 1999, likely has personal knowledge of topics that would be of interest to fans and media and could become revealed through litigation. Keep in mind, even if Snyder—a billionaire who reportedly has already received a $5.5 billion bid from Houston Rockets owner Tillman Fertitta—agreed to strict confidentiality as part of a sale, a contractual pledge to confidentiality would not extinguish his legal responsibility to comply with a subpoena.
Two years ago, Los Angeles Rams owner Stan Kroenke sought indemnification from the league over a lawsuit brought against him and the league for how the NFL approved the Rams’ move from St. Louis. The case ultimately settled for $790 million, of which Kroenke agreed to pay $571 million.
Kroenke’s interest in an indemnification clause was rational in that he (accurately) calculated a resolution of the lawsuit would prove costly. Snyder’s reported request for indemnification suggests he may view his potential liability as considerable. That alone should give the league pause. The league could also worry about a precedent being set; should Snyder gain indemnity in exchange for the sale of his team, other owners would use that as a precedent should they sell their teams.
Alternatively, the NFL could try to remove Snyder as owner without his consent. This is an operation the league has never taken in its 103-year history.
As explained more fully in this Sportico legal story, the removal process would entail the NFL charging Snyder with an offense that, in the league’s view, warrants his removal. Snyder would then have 15 days to respond, followed by a quasi-trial or arbitration overseen by Goodell or a designee. League attorneys would function as prosecutors and the de facto jury would consist of other NFL owners.
At least 24 owners (a three-quarters super majority) would need to vote to sustain the charge. In that scenario, Snyder would have 120 days to sell the team, or the league could rely on arbitration to set a price for a sale.
This scenario risks collateral damage for the league and other owners. Although the outcome would be “final, conclusive and unappealable” under the league’s constitution, Snyder would almost certainly sue and seek a restraining order to block any sale. He could insist that the league and owners conspired to force a sale and in doing so, violated antitrust law, which prevents competing businesses (including NFL teams) from harming competition more than helping it.
Snyder might also contend the process was rigged. He could point out leaks to national media that paint him—he would say wrongly—in a guilty light and prejudiced other owners against him. Snyder could also portray the NFL as hypocritical by revealing other owners’ misdeeds or alleged misdeeds that didn’t warrant their removal. Owners could worry about these disclosures and the prospect of a new precedent being set: Once an owner is removed for misconduct, what’s to say when it wouldn’t happen again?
Although the NFL would contend the litigation is frivolous given that Snyder (like every owner) contractually agreed to accept outcomes under the constitution, the league might not be able to extinguish the case quickly. Years ago, the NFL thought Al Davis’ antitrust litigation over relocating the Raiders was frivolous, yet it lasted years with Davis effectively winning. Snyder could use litigation to compel sworn testimony and document disclosures from the league and other owners.
All things being equal, the NFL would prefer that Snyder sell the Commanders. He has generated unwanted controversies and played a role in Congress investigating the team. Goodell even had to testify before Congress on account of Snyder. A sale would also set a new, high price for a franchise that could be a valuable benchmark when other owners eventually sell their teams.
But all things aren’t equal. Snyder might be just one owner, and he might be widely unpopular, but he has significant leverage in this situation and the financial wherewithal to cause chaos for the league and owners.