ESPN senior writer Don Van Natta Jr. reports Washington Commanders owner Dan Snyder took out a $55 million loan, indicated by a footnote in an April 2020 financial report. The note showed the three minority owners did not know Snyder took out the $55 million credit line, and he took it out without their approval. The Washington Commanders are owned by Dan Snyder and Pro-Football, Incorporation. One owner’s actions must be approved by either a majority vote, or by the Board of Directors’ approval. Incorporation partners are not liable for another partner’s actions, compared to a partnership, in which they are liable. Here, the minority owners are not liable for Snyder’s loan if he and the Washington Commanders committed the alleged financial misconduct.
Federal prosecutors are investigating Snyder potentially committing financial misconduct. Multiple sources with firsthand knowledge of the inquiry reported these allegations. Documents related to the team’s finances show Snyder’s action of taking out the loan without the minority partners’ consent and Washington’s board of directors’ approval violated the shareholders agreement. The documents also show Bank of America officials asked team executives repeatedly for proof that the board had approved the loan. But the team executives never turned over a copy of the board approval before the loan closed, and one team lawyer later acknowledged in a letter that the board approval doesn't exist.
Snyder’s actions are potentially criminal. A source reported the partners alleged to the NFL arbitrator that their partner had possibly committed bank fraud. Snyder’s fraud is a jail time type of fraud. A criminal inquiry is being led by a team of FBI and IRS agents. A federal grand jury has issued subpoenas for a cache of documents related to the team's finances, including the loan. Prosecutors acquired the partners' NFL arbitration petition and other supporting materials, including emails and letters between team executives and bank lawyers, documents show. The minority partners pressed the NFL arbitrator to seek proof Snyder legally obtained the loan, and the NFL moved to shut down arbitration proceedings. The partners agreed to mediation, led by NFL Commissioner Roger Goodell. The mediation resulted in the partners selling their shares, and it silenced their complaints against Snyder, the sources said. The NFL never conducted the partners' requested investigation of the loan, and the league levied no sanctions against Snyder related to the allegations of financial misconduct.
The minority partners believe Goodell and NFL general counsel Jeffrey Pash sided with Snyder over them. They believe 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 minority partners listed their allegations, and it included misuse of team funds to staff his yachts and private jets to the abuse of corporate bylaws. The documents 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 partners’ dispute was fought in sealed motions filed in a federal lawsuit in Maryland before landing in confidential proceedings led by an NFL arbitrator and, eventually, the closed-door mediation overseen by Goodell and NFL lawyers. The partners asked Goodell to suspend or remove Snyder as the owner. They stated: "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" of the Washington NFL franchise, the partners wrote in the NFL arbitration petition. "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)."
During the two-day mediation, the partners' lawyers were primed to demand that the NFL investigate the secret credit line, according to a source with firsthand knowledge. Despite lawyers raising the issue several times, Goodell and Pash said they would not consider it. The source said Goodell told the partners they had only one option: Reach an agreement to sell their shares to Snyder. A source said: "Goodell and Pash were not interested in talking about those allegations or any allegations between the parties.” “The partners were furious that Goodell and Pash had blocked their request that the arbitrator seek bank records from Bank of America.”
Within a month of the session, they struck a deal: Snyder agreed to buy out his three partners' 40% share for a total of $875 million. But Snyder was cash poor. He needed the NFL's permission to finance the buyout. By a 32-0 vote on March 31, 2021, NFL owners granted Snyder a new debt-limit waiver. And Snyder borrowed an additional $450 million from Bank of America.
Snyder is moving forward with his plans to sell the Commanders, accepting sealed bids from several interested groups. Managing the sale on Snyder's behalf: Bank of America.
Alex Patterson is a Thomas M. Cooley Law School graduate and works for the City of
Springfield’s Corporate Counsel as a paralegal. He played football for seventeen years
as an offensive and defensive lineman. He graduated from Lindenwood University-
Belleville in 2018 with a Bachelor’s in Sports Management. He can be followed on