ESPN has the details on the investigation of Dan Snyder for financial crimes, and it’s time for him to sell the team

Sell the team Dan

Update: Attorneys for 40+ former employees of the team issued a statement.

Dan Snyder has avoided most of the legal scrutiny that would happen if even half of the allegations against him were true, and a large part of that comes from the protection afforded by the NFL “shield” and Commissioner Roger Goodell. ESPN published a bombshell article today that lays out, in impressive detail, the allegations at the heart of a federal investigation. A $55 million credit line from Bank of America sparked a war between Snyder and the three minority owners of the team that he eventually bought out.

This was another long-form article from Don Van Natta Jr., and is a must-read for any fan of the NFL. I’ll be summarizing the major points here, and waiting for what looks like the outcome that most fans of the Washington Commanders want, Dan Snyder selling the team. If the allegations of bank fraud can be proven in court, this could lead to a lot more than that, including charges, fines, or worse.

ESPN obtained documents from a court battle between Snyder and his former partners(Robert Rothman, Dwight Schar and Frederick W. Smith). They discovered a loan that was taken out from Bank of America without their knowledge or consent, and confronted Snyder about it.

“Three billionaires — not a few whistleblowers — alleged to the NFL arbitrator that their partner had possibly committed bank fraud,” the source said. “This is jail time type of fraud. The NFL owes them as much of a fair shake as it owes Snyder. And the league had no interest in finding out what happened. They buried it and didn’t investigate it and covered it up.”

The documents obtained by ESPN show that minority partners Robert Rothman, Dwight Schar and Frederick W. Smith protested the loan after they discovered it in a financial report’s fine print. They then started looking closely into the team’s finances and found Snyder was using the team as his “personal piggy bank,” including charging the team $4.5 million to put its logo on his private jet, they alleged in the arbitration petition filed with the NFL.

The loan, like any other made by NFL teams, had to be approved by Roger Goodell, and his signature provided. Snyder also needed approval from his board of directors, which included his three minority owners, and that wasn’t obtained since they didn’t even know about it until it was discovered on a financial report. They tried to get Snyder suspended or removed, and went to court to get resolution on the issue. Snyder had been blocking them from selling their minority shares, and Goodell had moved their case to mediation that he oversaw. They eventually agreed to sell their combined 40% stake in the team back to Snyder for $875 million.

John Brownlee, counsel for the Commanders, issued the following statement:

“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.”

NFL spokesman Brian McCarthy also issued a statement:

“The parties had a series of disputes, which were certified to the Commissioner for arbitration as required by league rules. 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, which they agreed to do. The mediation lasted for two days and the parties subsequently reached an agreement whereby the three limited partners sold all of their interests in the team to Mr. Snyder at an agreed-upon price and other terms. Everyone was represented by very sophisticated legal and financial advisors. The agreement included full releases of all claims that were or could have been asserted by any party in the arbitration proceeding.”

Other interesting things from ESPN’s story:

• The team’s local revenues — those derived apart from NFL media rights deals — had dropped by one-third over the previous decade, from $241 million in fiscal year 2009 to $160 million in fiscal year 2020.
• When Rothman complained that the team’s board had not met in years, Snyder responded, “What the f— do I need a board meeting for?”
• Snyder planned to expense more than $7 million in “unreimbursed business expenses” for fiscal years 2017 through 2020. Snyder also revealed that he was seeking $1 million in reimbursements for vehicle costs “and extra security required during foreign travel (due to his high-profile position as Owner).”
• The minority owners accused Snyder of using the team as his personal piggy bank
• Snyder takes a $10 million per year salary that wasn’t approved by the board of directors
• Snyder charged the team $4.5 million to paint the team’s logo on his private jet as an advertising expense. He also leases those jets back to the team.
• Snyder is accused of using the proceeds from the Credit Agreement to disguise the team’s poor operating performance and cash flow problems, and, at least in part, to enrich himself improperly at the expense of the team and other stockholders.