Washington Commanders News & Rumors

ESPN’s Seth Wickersham and John Keim recently reported on a prospectus drafted by Harris Blitzer Sports & Entertainment and its advisers. The “Harris” of that group is in reference to 76ers co-owner and potential buyer of the Commanders, Josh Harris. Harris and company drafted the 43-page document, titled “Commanders Investment Opportunity” and marked as “Privileged & Confidential,” to help pitch potential limited partners to buy into the deal with Harris.

The reason this seems unfamiliar is because, in the past, buyers of franchises have historically been able to afford the purchase without the help of limited partners. As franchise prices continue to skyrocket, though, it should be expected that what has become known as an unnecessarily complicated financial agreement will be become the new norm.

In the document, Harris paints the picture of a future for the Commanders that includes boosted attendance, increased ticket sales and sponsorship revenue, and even a new stadium. There are almost certainly specific plans to address these assignments, but the report focuses on Harris’s assertion that the mere removal of current ownership should greatly assist in propelling the franchise towards those end goals.

Harris argues that the recent spiraling in attendance, ticket sales, and sponsorship revenue are all direct consequences of “allegations against current ownership.” He points out that the franchise has, historically, ranked among the best in the league for local revenue metrics and attendance, and that, with new ownership, opportunities will arise to help restimulate and drive local revenue. Harris predicts that the potential new ownership will more than double this year’s local revenue ($173MM) by the 2031-32 season, quoting estimates of $380MM or $466MM if the team were to build a new stadium.

On that front, Harris offers both the idea of auctioning off naming writes as an instant opportunity for cash as well as hope that FedEx Field may soon be vacant. Soon is a relative term, as the prospectus offers 2031 as a moving date, much later than recent executive rumors of 2027-28, when the team’s current contract expires. It mentions that the new stadium could be built on its current site or at the site of Robert F. Kennedy Memorial Stadium near the Capitol but proposes that Virginia may offer the best incentives. A stadium bill had been passed in the Virginia House and Senate before the infamous allegations killed the bill before it could get to the governor.

The prospectus did its job of helping Harris to pool together multiple limited partners and make his bid, but the complications of the situation do not stop there:

• It’s been reported plenty that the NFL finance committee has several points of contention with the current Harris-Commanders deal. One of the reported issues, according to Mark Maske and Nicki Jhabvala of The Washington Post, is a reported “earnout” incentive in the deal. The “earnout” is reportedly a structure that would provide the seller, Dan Snyder, with “a deferred payment of an amount contingent on the franchise reaching specified financial benchmarks.” Its inclusion has been tabbed as one of many markers of an unusually complex agreement.
• The Commanders face further turbulence as the sale continues to stall. Jhabvala and Maske report that the team has been fined $425K by the District of Columbia and required to “refund more than $200K in deposits to D.C. ticket holders.” This punishment is reportedly part of a settlement reached with the office of D.C. Attorney General Brian L. Schwalb. Schwalb told The Post that the team “improperly held on to security deposits that it was required to return…misused those moneys…knowingly used the security deposit for purposes it wasn’t supposed to use the money for…(and) knowingly made it unnecessarily difficult for fans to get their money back.” Despite agreeing to the settlement, the team denies all the allegations listed above by Schwalb, according to Tom Pelissero of NFL Network.
• Lastly, in a bit of an older report from Maske and Jhabvala, legal representatives of more than 40 former Washington employees have urged for an added stipulation to the sale. The attorneys have asked NFL commissioner Roger Goodell and the league’s team owners to prohibit Snyder “from suing his accusers who participated in the investigations as a provision of the sale of the franchise.” In a letter sent to Goodell, the attorneys requested that Goodell and company include “a contractual provision that forbids Mr. Snyder from initiating litigation against any of the individuals who participated in the various investigations into the team, including but not limited to” the 40-plus clients they represent. Due to Snyder’s “well-earned reputation for being vindictive and litigious,” the group fears retaliation for their clients’ participation.

The next major step toward a formal sale of the Commanders took place recently, with Dan Snyder and Josh Harris announcing that a sale agreement is in place. The deal may not become official in time for the next owners’ meetings, however.

A report from the Washington Post’s Mark Maske and Nicki Jhavbala notes that the agreement in place “probably would not be approved without some revisions” under normal circumstances. Momentum for Harris taking over the embattled franchise, they add, stems primarily from the “strong desire” to see Snyder displaced as owner, rather than the offer being clear of issues.

The latter point has been mentioned as a potential hurdle to a quick approval of the deal. Finances are at the heart of concerns the NFL’s finance committee may have, though clarity has recently emerged regarding the various investors involved in the Harris bid. NBA icon Magic Johnson and billionaire Mitchell Rales are among those contributing to the record-breaking $6.05 billion sales price, though several other individuals are on board as well.

The next league meeting will take place May 22-23, which will be after the recommendation from the finance committee regarding approval of the sale is made. As the Post report notes, it is now “increasingly unlikely” that ratification will take place at that time. Instead, the league’s owners (at least 24 of whom will need to vote in favor of the deal to make it official) might only be updated on the status of the Harris bid, with a formal vote taking place “in the coming months.”

That would follow a similar timeline to last year’s Broncos sale, in which Harris was the runner-up. The vetting process on the Philadelphia 76ers and New Jersey Devils owner already took place then, which should help the Commanders sale move along at a steady pace in the coming weeks. Barring any further complications regarding Snyder and the ongoing investigations into sexual misconduct and financial improprieties, this saga could still reach an end during the 2023 offseason.

The situation surrounding Dan Snyder‘s potential sale of the Commanders seemed nearly over as reports appeared to be pointing towards a sale to the Josh Harris-led group last month. As a result of the NFL finance committee’s review of the potential sale, questions have been raised about the integrity of the deal, according to Daniel Kaplan of The Athletic. The main concerns lie on two fronts: 1) the number of limited investors involved in the deal and 2) the amount and source of the debt involved in the deal.

The NFL currently has a set cap for how many limited partners may be involved in an ownership group, currently set at 25. The Harris group contains approximately 17 limited partners. While that group is under the league’s cap, each investor requires extensive vetting and, with some investors located internationally, the vetting process becomes that much more cumbersome.

As for the debt involved, “buyers of teams can borrow up to $1.1 billion secured against the franchise,” something Harris proposes he will do. The problem stems from the fact that he also intends to borrow more with debts secured against the other sports teams in which he holds stake, the Philadelphia 76ers, New Jersey Devils, and Crystal Palace FC of the English Premier League.

Similar deals have been made in the NFL with limited partners. Snyder’s original purchase of the team included this method of sourcing debt. The issue lies in the fact that it is the controlling partner, Harris, who is borrowing against his own businesses. If a limited partner defaults on his loans, it wouldn’t affect the controlling party, but the committee has concerns about the possibility of Harris defaulting on his debts as the controlling partner.

It’s not the opinion of the public that the deal will be rejected over these issues, according to Mark Maske and Nicki Jhabvala of The Washington Post, but the additional hurdles may push the timeline of the deal, making it “increasingly unlikely the owners can vote to approve the transaction, even on a conditional basis, during their May 22-23 meeting in Minneapolis.” Some solutions that have been proposed are the result of the deal’s extenuating circumstances. For instance, a suggestion that Snyder himself may extend a loan to the Harris group in hopes of getting the deal over the finish line. The loan would be approximately $200MM.

Another thought was that the league may conditionally approve a rise in the allowance of debt. Due to the recent skyrocket of franchise prices (Panthers for $2.28 billion in 2018, Broncos for $4.65 billion in 2022), the NFL figured that it would become increasingly difficult for buyers to acquire teams under the current debt rules. There are still some potential bidders who may be able to go through with the purchase under the current rules, but with rising prices, that only makes an already extremely selective process that much more difficult.

There’s still optimism the deal with get approval, in due time. A source close to Harris aptly said, “It’s dragging through the NFL because they’ve never had to evaluate this type of bid. The NFL’s choice is getting Dan out (by) working through Josh’s complexity. I think they’ll find a way, but no guarantees.”