Dan Snyder financial allegations, explained: Commanders owner reportedly used team funds for himself

Three former Washington Commanders minority shareholders have accused team owner Dan Snyder of using the NFL franchise to improperly enrich himself, according to court filings obtained by ESPN, along with interviews conducted by the news agency.

ESPN reported Tuesday that Snyder’s alleged improprieties include securing a $55 million loan from Bank of America without team board approval; Demanded $4.5 million for the team to put its logo on its private jet; pay yourself an unauthorized annual salary of $10 million; and generally using team money to “support his lavish lifestyle”.

ESPN also reported that NFL Commissioner Roger Goodell was not only aware of the allegations against Snyder, but was at least complicit in allowing him to violate company statutes and league procedures to rack up new debt.

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Here’s what you need to know about Snyder’s alleged financial shortcomings and how the NFL reportedly ignored multiple requests from former stakeholders to hold him accountable:

Dan Snyder Financial Allegations Explained

Former minority owners Robert Rothman, Dwight Schar, and Frederick W. Smith — all billionaires themselves — first voiced their grievances to Snyder after discovering in April 2020 that Snyder had taken out a $55 million loan in December 2018 without their consent. dollars received from Bank of America. They represented half of the team’s six-member board of trustees and had to approve all major financial decisions related to the team.

ESPN reports that the owners only found out about the secret loan through the fine print of the team’s financial report. It was also the same month that Snyder was reportedly unable to pay them their quarterly share of team winnings for the first time. When they confronted him the following month about the missed payment and undisclosed loan, Snyder eventually admitted to receiving a $20 million loan — less than half the actual amount.

According to ESPN documents, Snyder replied, “What the hell do I need a board meeting for?” When Rothman complained, the board hadn’t met in several years.

Emails obtained by ESPN also show that Bank of America officials are repeatedly asking Washington executives to produce a resolution from the team’s board of trustees approving the loan before the line of credit can be completed. ESPN reports that the bank was never presented with a board resolution before the line of credit was closed. When NFL-appointed umpire Brad Karp requested a copy of the resolution from Bank of America on December 31, 2020, it had nothing.

Per ESPN, “Applicants further allege that Snyder or his agents misrepresented to the bank that appropriate board approval was obtained” and that the team “did not receive the necessary board powers of attorney,” attorneys wrote to Karp.

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Two attorneys representing Snyder eventually conceded that “there are no formal decisions dating back to 2018” regarding the Bank of America loan. The minority owners also alleged that Snyder used the $55 million loan to cover up the team’s cash flow problems, in addition to improperly using team funds to enrich himself.

Among Snyder’s alleged shortcomings:

• He leases his private jets back to the team and charges them a $4.5 million “promotional fee” to have the team logo emblazoned on them.
• He pays himself an unauthorized annual salary of $10 million.
• Scheduling more than $7 million in “unreimbursed business expenses” for fiscal years 2017-2020, not including $1 million in reimbursed vehicle expenses and “additional security required while traveling abroad (due to his high profile ownership position). “

Regarding the last point, Snyder revealed that part of the expenses included a July 2018 yacht party where he hosted NFL owners Jerry Jones (Cowboys), Robert Kraft (Patriots) and Terry Pegula (Bills).

The partners seeking NFL arbitration wrote to the league that the party included “world-class cuisine prepared by some of the finest personal chefs in the world and wine/beverages of the highest quality.”

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The NFL’s Role in Dan Snyder’s Complaints

ESPN reports that Goodell signed off on Washington’s $55 million Bank of America loan the same day it was approved, December 13, 2018. When ESPN asked for an explanation about Goodell’s approval of the loan application, the league issued a statement through spokesman Brian McCarthy claiming it was not the commissioner’s responsibility to review loan terms.

The NFL provided another statement to ESPN regarding the grievances between the minority shareholders and Snyder and the timing of their petition for NFL arbitration:

The parties had a number of disputes, which were certified to the commissioner for arbitration under league rules. The commissioner appointed a highly respected lawyer as arbitrator and neither party objected to this appointment.

After a few months, the parties were asked if they would be interested in confidential mediation with the client, which they agreed to do. Mediation lasted two days and the parties subsequently reached an agreement whereby the three limited partners sold all of their shares in the team to Mr. Snyder at an agreed price and on different terms. Each was represented by highly experienced legal and financial advisors. The agreement contained a full indemnity from any claim that was or could have been made by either party in the arbitration.

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Mediation began on Jan. 13, 2021. ESPN reports that the partners’ attorneys were willing to ask the league to investigate the secret line of credit and have raised the issue multiple times. ESPN reports that Goodell and NFL General Counsel Jeffrey Pash both refused to consider it, saying the minority owners were “angry.” Goodell prevented the arbitrator from obtaining bank records relating to the loan.

ESPN’s source said Goodell eventually told the minority owners their only option was to reach an agreement to sell their stake in the team. Requiring another loan to fund the acquisition, Snyder received the necessary approval from NFL owners — all 32 voting parties — on March 31, 2021. He took out another loan from Bank of America, this time for $450 million.

About a month after the mediation closed, Snyder paid his partners $875 million for their 40 percent stake in the team. He’s now looking to sell the team for as much as $7 billion, which would value the owners’ previous stakes at $2.8 billion. Bank of America is reportedly managing the sale of the team on behalf of Snyder.