There’s a special clause in the Commanders sale that could defer as much as $200 million in payments to outgoing owner Dan Snyder.
The Washington Post reported this week that Snyder accepted the $6.05 billion offer with an earnout clause from the Josh Harris group. The earnout could provide Snyder with a deferred payment contingent on the Commanders reaching financial benchmarks.
The Post said that the earnout might’ve been used during negotiations to push the price higher than Harris and his group of investors initially wanted to pay Snyder. A source told the Post that the payout to Snyder from this clause could be up to $200 million. However, the Harris group could end up paying far less. Plus, the Post reported that the financial benchmarks that trigger the deferred payments aren’t clear. It also suggests that the $6.05 billion price for the team might not be a fixed amount.
The Post said an earnout is deferred consideration that can be used to reconcile a difference of opinion between the buyer and seller. The Post said that earnouts can be common in regular business deals. But you usually don’t see them in regards to the sale of sports teams.
It is a complex deal. And it’s why NFL owners won’t be voting on the Commanders sale next week when the league begins meetings in Minneapolis.
NFL confirmed there will be no vote to approve Commanders sale next week
NFL executive vice president of communications Jeff Miller briefed reporters during a Thursday conference call. Owners, he said, will provide an update on the Commanders sale next week. But Miller said there “are not going to be any votes at this time.”
By league rules, 24 of the 32 NFL owners must approve the sale before it is approved. The owners could convene a special meeting to approve the sale later this summer. They did something similar last August. That’s when owners said yes to the sale of the Broncos to Rob Walton and Greg Penner. Walton is the heir to the Walmart fortune and Penner is married to his sister. The ownership group paid $4.65 billion for the Broncos. At the time, it was the most ever paid for a North American sports franchise. The Commanders price tops that.
Josh Harris grew up in Chevy Chase, a Washington, D.C. suburb, so he knows the city and its fans. Harris already is the majority owner of two sports franchises — the Philadelphia 76ers in the NBA and the NHL’s New Jersey Devils. He also owned a minority share of the Pittsburgh Steelers. But he would need to sell his $140 million share before taking over the Commanders. He also placed a bid for the Broncos last year. The NFL financial committee is familiar with his businesses.
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