More details have emerged in the Washington Commanders owner Dan Snyder’s buyout of three limited partners last year. After a year-long dispute, Dan Snyder bought out FedEx founder Fred Smith, capital funder Robert Rothman and NVR Inc chairman Dwight Schar for $875 million to gain their 40% stake in the NFL franchise.
The dispute between Snyder and the three Commanders’ minority owners is the primary focus of federal investigators in Virginia, looking into the financial improprieties of the Commanders, according to ESPN’s Don Van Natta Jr.
A federal grand jury issued subpoenas for documents related to a $55 million loan Snyder took out before the 2020 pandemic without the approval of the Commanders board of directors, that at the time included the three minority owners.
According to ESPN’s report, Snyder obtained the credit line from the Bank of America. Email exchanges show that the bank representatives repeatedly asked for proof of the team’s board’s approval. The loan allegedly got closed despite no proof provided.
An ESPN classified that the three partners alleged Snyder committed “bank fraud… jail time type of fraud” yet the league “buried” the matter.
The three partners’ discovery of the loan and other financial inquiries sparked the year-long dispute with Snyder. Their dispute led to a federal lawsuit in Maryland before landing in confidential proceedings with an NFL arbitrator. The partners pressed the NFL arbitrator to seek proof that the loan was legally obtained. However, the league shut down arbitration proceedings, and NFL commissioner Roger Goodell pushed for mediation between Snyder and the three partners, resulting in a buyout.
The three partners alleged that once they approached Snyder about the credit loan, Snyder withheld their dividend payments starting in April 2020. When the partners inquired about not having board meetings, the three got removed from the board in June 2020.
Dan Snyder also blocked Smith from selling interest in the team in 2018. Snyder cited that the proposed buyer would not be acceptable to the NFL. That interested buyer was Alan Kestenbaum, who later bought a minority stake in the Atlanta Falcons and was approved by the NFL owners.
The partners alleged in the arbitration petition that Snyder blocked the sale to prevent the due diligence required by a new limited partner that would have revealed the team’s financial misconduct.
The partners also alleged Snyder used team cash to “support his lavish lifestyle.” Among the allegations, Snyder leased his personal jets with team cash, Paid himself a salary of $10 million a year, and charged the team $4.5 million for placing the team’s logo on his jet.
Eventually, Snyder agreed to buy the 40% stake the three minority owners had for $875 million. However, Snyder was cash poor and got an approved loan from the NFL for $450 million to facilitate the sale.
The probe by the FBI and IRS comes on the heels of the Commanders’ ongoing sale. Snyder is exploring options to sell the team after immense pressure from NFL owners following several investigations into the Commanders owner and the team. Snyder has been the subject of probes by the NFL, Congress, and federal authorities. Those investigations stem from various allegations, including sexual harassment, workplace misconduct, and financial improprieties.
On Monday, the Washington Post reported Dan Snyder demanded, among other matters, indemnification from the league for future legal liability to go ahead with the Commanders’ sale. Snyder has threatened to sue if the NFL fails to meet his demands. That’s angered some other NFL owners and provoked them to seek a vote to remove Snyder from membership of the league.
The Commanders have refuted the Washington Post report.
Two NBA owners, Josh Harris of the Philadelphia 76ers and Tilman Fertitta, have emerged as suitors. Meanwhile, Amazon founder and Washington Post owner Jeff Bezos has been barred from placing a bid on the Commanders due to Snyder’s detest for the Post.
The Post ran several reports in the past three years that led to multiple investigations into Snyder.
