A report from ESPN’s Don Van Natta Jr. has revealed that Washington Commanders owner Dan Snyder is the subject of a federal investigation, with federal prosecutors conducting a probe into alleged financial misconduct.
Snyder is likely to part ways with the team at some point this year but wants assurances that the NFL will free him of any liability once a sale goes through, something reported to have left other team owners irate.
According to the report from ESPN, Snyder took a $55 million loan unbeknownst to his other three partners – Dwight Schar, Robert Rothman, and Frederick W. Smith – who held a 40 percent stake in the team. The credit line is believed to be the main focus of federal prosecutors in Virginia and directly contravenes the team’s shareholder agreement as all loans must be approved by the Commanders’ board.
Documents obtained by ESPN show that officials from Bank of America repeatedly requested proof that the board had approved the loan yet team executives never handed it over. A team lawyer later noted in a letter that the approval does not exist.
While Snyder’s partners were unaware, NFL commissioner Roger Goodell is said to have known about the loan and signed off on it as the league is required to guarantee all debt taken on by its teams.
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The partners also found out Snyder had leased his personal jets back to the team and, besides paying himself a yearly salary of $10 million, arranged for the Commanders to pay him $4.5 million for having the team logo on his personal jet. Snyder referred to the latter as “an advertising fee.
The partners insisted that the jet “provides little or no advertising value,” while they never approved the millions Snyder paid himself.
They also claimed that the credit line from Bank of America was potentially secured fraudulently as Snyder or his agents made it appear that the loan was approved by the board.
A petition to the NFL from the partners to have Snyder removed as the owner reads:
Snyder used 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.
Snyder’s wrongful conduct, self-dealing, mismanagement and brazen disregard of his duties also manifest more generally his lack of fitness to continue serving as the principal stockholder and CEO.
His conduct has harmed not only Claimants and [the team], but also the Washington … franchise as a whole (and thus both Washington … fans and supporters, and the NFL itself).
Snyder eventually reached a settlement with the three partners, paying them $875 million for their 40 percent stake. He is now seeking $7 billion from the sale of the team, which would put the value of their stake at $2.8 billion.
