Dan Snyder and the Washington Commanders Find Themselves on the Hot Seat Once Again

[i]

Controversy has followed the Washington Commanders and the team’s owner Dan Snyder over the past few years. In July, the Commanders received a $10 million fine and Snyder ceded control of the team’s day-to-day operations to his wife, Tanya Snyder, following the NFL’s investigation into allegations of a toxic workplace.[ii] During this ongoing investigation into the team’s toxic workplace culture, new evidence uncovered deeply concerning business practices directed by the senior leadership of the Commanders.

On Tuesday, the House Committee on Oversight and Reform, the Congressional Committee investigating the Commanders, sent a 20-page letter to the Federal Trade Commission detailing financial improprieties under Snyder’s ownership.[iii] According to the letter, Snyder and the Commanders “may have engaged in a troubling, long-running, and potentially unlawful pattern of financial conduct that may have victimized thousands of team fans and the National Football League.”[iv] Additionally, the “Commanders may have intentionally withheld millions of dollars in refundable deposits owed to fans, and concealed revenues that were owed to the NFL as part of the League’s revenue-sharing agreement.”[v]

Jason Friedman, who was with the Commanders organization for 24 years and served as a vice president of sales and customer service, provided the Committee with the evidence it passed on to the FTC.[vi] According to Friedman, the Commanders maintained “two sets of books” — an external set of books that was shared with the NFL but underreported certain ticket revenue, and an internal set of books that included the complete and accurate revenue and was “shown to Mr. Snyder.”[vii]

Friedman told the Committee that team executives routinely instructed him to withhold security deposits that should have been returned to customers who had purchased multi-year season tickets for premium seats, known as seat leases.[viii] Friedman explained that Snyder and Mitch Gershman, Washington’s current chief marketing officer and former chief operating officer, instructed him to “identify security deposits that are on dormant accounts where…the likelihood of the customer coming forward and asking for their deposit back is as close to zero as possible.”[ix] Additionally, Friedman and other Washington employees were directed by team executives to “establish roadblocks to prevent customers from obtaining the security deposits they were due—effectively allowing the team to retain that money.”[x]

The Commanders would then improperly convert these unclaimed security deposits into revenue to be used for other purposes, revenue that some team executives referred to as “juice.”[xi] According to Friedman, “the team had unreturned security deposits for ‘around 2,000 accounts’ belonging to customers and fans totaling ‘approximately $5 million.’”[xii]

Friedman also provided the Committee with documents indicating that the Commanders improperly reclassified the revenue from NFL games to such events as a Navy-Notre Dame college football game that took place at FedEx Field, as well as a Kenny Chesney concert, to divert revenue that would otherwise have been shared with the NFL.[xiii] Friedman told the Committee that “even though we sold $811,800 worth of tickets, we reported that sale to the NFL at a total of $721,600, leaving $162,360 of juice, of money that would just go right into the owner’s pocket and didn’t have to be exposed to the NFL revenue sharing program.”[xiv]

If Friedman’s allegations are proven true, then Snyder and the team could face significant punishment as they would be guilty of circumventing the NFL’s revenue-sharing agreement. Currently, each team is required to deposit 40% of ticket revenue from home games into a revenue pool that is then shared among the 32 NFL teams.[xv]

In response to a request for comment, a Commanders spokesperson referred to a statement released on March 31, which provided: “The team categorically denies any suggestion of financial impropriety of any kind at any time. We adhere to strict internal processes that are consistent with industry and accounting standards, are audited annually by a globally respected independent auditing firm, and are also subject to regular audits by the NFL. We continue to cooperate fully with the Committee’s work.”[xvi]

NFL spokesperson Brian McCarthy said the League will continue to cooperate with the Committee as well and has already provided more than 210,000 pages of documents.[xvii] Additionally, the NFL has engaged former SEC chair, Mary Jo White, to review the serious matters raised by the Committee.[xviii] White is already investigating the sexual harassment claims against Snyder and Washington.[xix]

Chairwoman of the Oversight and Reform Committee, Representative Carolyn B. Maloney, stated: “This new information on potential financial misconduct suggests that the rot under Dan Snyder’s leadership is much deeper than imagined. This new information suggests that in addition to fostering a hostile workplace culture, Mr. Snyder also may have cheated the team’s fans and the NFL. It further reinforces the concern that this organization has been allowed to operate with impunity for far too long.”[xx]

Ultimately, while the focus of the Committee remains on the investigation of the Commanders’ toxic work environment, the Committee has called upon the FTC to investigate the Commanders’ potentially unfair and deceptive business practices. The Committee provided the FTC with the information and documents necessary to determine whether the Commanders violated any provision of law enforced by FTC and whether further action is warranted. The Committed requested the FTC to take any action it deems necessary to ensure that all funds are returned to their rightful owners and that those responsible are held accountable for their conduct.[xxi]

[i] Photograph: https://www.yardbarker.com/nfl/articles/report_commanders_owner_dan_snyder_might_be_forced_to_sell_after_latest_allegations/s1_13132_37213262

[ii] https://bleacherreport.com/articles/10032434-report-commanders-accused-of-unlawful-financial-conduct-in-letter-from-congress

[iii] https://www.nbcsports.com/washington/commanders/congress-sends-details-troubling-commanders-financial-conduct-ftc

[iv] Id.

[v] Id.

[vi] Id.

[vii] Id.

[viii] https://bleacherreport.com/articles/10032434-report-commanders-accused-of-unlawful-financial-conduct-in-letter-from-congress

[ix] Id.

[x] Id.

[xi] https://www.nbcsports.com/washington/commanders/congress-sends-details-troubling-commanders-financial-conduct-ftc

[xii] https://theathletic.com/news/washington-commanders-financial-conduct-allegations/Ewvp1IK646ZK/