The sale agreement of the Washington Commanders may need adjusting. What those adjustments are to get approval from the NFL owners depends on the reporting.
Dan Snyder agreed to sell the NFL franchise for $6.05 billion to a group led by Philadelphia 76ers and New Jersey Devils owner Josh Harris. That group includes at least 20 limited partners, including NBA legend Magic Johnson.
However, according to Mike Ozanian of Forbes, league owners are concerned about the financing as currently structured. The deal includes $1.1 billion of secured debt and another $1 billion in unsecured debt.
The deal also includes Snyder receiving a 50% incremental increase in the Commanders’ gross revenue over the next two years. Yet, Snyder believes he will split $400 million with the Harris group. The Harris group thinks the two parties are dividing $200 million.
Another issue for NFL owners is the size of the purchasing group. NFL rules limit an ownership group to 24 limited partners. According to Ozanian, the Harris group goes over 24 limited partners when the investors within the various LP groups get counted.
Without the deal being adjusted, NFL owners may not approve the sale of the team to Harris.
Forbes’s reporting is consistent with previous reports that highlighted the NFL finance committee raised concerns about the deal after its initial review.
However, the Harris group believes the deal has $1 billion in equity rather than unsecured debt. Also, Harris contests the group has 20 limited partners, which falls under the NFL’s limit of 24. If some of the $1 billion is private-equity money and that too could violate NFL rules, as the league prohibits private-equity ownership of teams.
According to A.J. Perez of Front Office Sports, the sale remains on track for approval before the 2023 NFL regular season starts despite the need for tweaks.
“Any adjustments required to the bid are modest and manageable,” one source told Front Office Sports, adding the deal was “thoughtfully structured and compliant with NFL rules.”
The snag in the sale comes down to whether the NFL owners believe there is a $1 billion unsecured debt. Also, the owners may feel cash burdens may rest with the limited partners. Nonetheless, the Harris group must figure out how to settle any concerns about the financing to buy the team.
Indianapolis Colts owner Jim Irsay confirmed at this week’s owners’ meeting in Minneapolis that the NFL has concerns about the sale.
“We’re a little ways away, but we’re working hard,” Irsay said, per Nicki Jhabvala of The Washington Post. “Everyone wants to get it done, and it’s seeing that it just complies with league policy. It’s a complicated deal so we’re trying to just work through it and we’re hopeful that we can get it done. It’s going to take probably several more weeks of discussions before we see if we can reach the goal line.”
Dallas Cowboys owner Jerry Jones echoed Irsay’s comments.
“It sounds like a long process, but this is a significant thing for everybody involved, certainly the fans of Washington,” Jones said, per Jhabvala. “So I think doing it right and having people of this caliber that are involved is worth the wait.”
The process of the sale is going as expected. But the news of the financing snag presumably puts a damper on Commanders fans’ excitement to rid itself of Snyder. Keep in mind no North American professional sports team has sold for $6 billion. Thus the perceived holdups are unusual looking from afar.
Front Office Sports says the Harris group has a combined net worth of $100 billion. Forbes’ sources say the net worth is $50 billion. Regardless, their net worth is well enough to back the $6.05 billion deal. Thus a solution may be somewhere in the middle of the hay.
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