Virginia lawmakers are already looking to slash $650 million from the state’s bid to build a new stadium for the Washington Commanders. With what Congress has learned about how the NFL franchise runs its business, it would be folly if we were to give them one red cent.
“This new information on potential financial misconduct suggests that the rot under Dan Snyder’s leadership is much deeper than imagined. It further reinforces the concern that this organization has been allowed to operate with impunity for far too long,” said House Committee on Oversight and Reform Chair Carolyn Maloney (D-N.Y.). “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. While the focus of our investigation remains the Commanders’ toxic work environment, I hope the FTC will review this troubling financial conduct and determine whether further action is necessary. We must have accountability.”
The committee addressed its findings in a letter to the Federal Trade Commission that indicates senior Washington Commanders’ executives, including team owner Dan Snyder, 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.
According to information obtained by the committee, including emails, documents and statements from former employees, 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.
“The fact that the Committee, while investigating evidence of sexual harassment and workplace misconduct, also uncovered evidence of what appears to be a scheme to cheat fans and the NFL tells you all you need to know about Dan Snyder and how he is running this organization,” said Rep. Raja Krishnamoorthi (D-Ill.), chair of the House Subcommittee on Economic and Consumer Policy. “The question is what other potential wrongdoings are the Commanders engaging in, and what is the extent of the dysfunction atop their leadership? The Committee will continue to push for transparency and accountability from the team and the League to protect all employees in the workplace, and I urge the FTC to investigate the evidence provided by the Committee of the Commanders’ long-running financial schemes.”
Troubling findings
The committee conducted a transcribed interview with former Commanders sales executive Jason Friedman, a 24-year veteran of the organization oversaw sales and customer experience for all seating at FedEx Field and held the position of vice president of sales and customer service at the time of his separation from the team in 2020.
During his interview, Friedman described a pattern of deeply concerning business practices that were directed by senior leadership, including Snyder. According to Friedman, in 1997, under previous ownership, the team began requiring fans to enter into multi-year leases for certain premium seating which could only be secured with a one-time refundable deposit of 25 percent of the price of the seats for one year. Friedman explained that after Snyder acquired the team, he continued this practice for all premium seating until 2000, when the policy was changed, and deposits were only required for private skyboxes.
Internal documents obtained by the committee reveal that at least some of these lease agreements required that security deposits be returned within 30 days of the agreement ending. However, Friedman said that under Snyder’s leadership, team executives instructed Friedman to withhold the security deposits from customers at the end of their lease terms and to create artificial barriers to discourage customers from requesting the return of their deposits.
According to Friedman, the franchise also improperly converted unclaimed security deposits into revenue to be used for other purposes. This revenue was referred to as “juice” by some team executives.
Friedman understood the team’s practice of converting unclaimed security deposits into “juice” would occur when team executives believed the Commanders “were a little bit behind on our sales numbers.” During his transcribed interview, Friedman explained that Snyder and Mitch Gershman, Friedman’s former supervisor and then-COO for the Commanders, would specifically instruct him to:
“Go identify security deposits that are on dormant accounts where, in my estimation, the likelihood of the customer coming forward and asking for their deposit back is as close to zero as possible, and then return the security deposit in the system and convert the credit that would then be on the customer’s account into juice.
“The money would then be allocated to a similar license fee, handling fee, interest fee. It would get converted into something where, A, we didn’t have to share it with the league, and B, there was no outstanding obligation related to it. Meaning we didn’t have to issue out a ticket to a customer related to that line item.”
Friedman provided evidence that the Commanders tracked and stored information related to customers’ security deposits in an electronic ticketing and accounting database. Based on Friedman’s interview and information that was exported from that electronic database and reviewed by the Committee, it appears that Friedman identified approximately 2,000 customers who paid refundable deposits totaling $5 million and whose money was not returned as of 2016.
Friedman also provided information and documents indicating that Commanders executives repeatedly concealed ticket sales revenue that should have been shared with the NFL by underreporting the revenue. To accomplish this, team executives falsely processed or misassigned a portion of the ticket revenue from Commanders games as fees related to special events, such as concerts or college football games, which did not have to be shared with the League.
According to Friedman, the Commanders avoided detection of these practices by failing to include in their ticket manifests the actual prices charged for tickets. The unreported revenue that was collected by the Commanders, or “juice,” would then be assigned as non-sharable revenue in its accounting systems and concealed from the NFL.
As part of this scheme, the Commanders reportedly maintained two sets of books: one that was shared with the NFL but underreported certain ticket revenue, and another internal set of books that included the complete and accurate revenue and was, according to Friedman, “shown to Mr. Snyder.”
This practice appears to be reflected in two emails between team executives and Friedman — one from April 1, 2013 and another from May 6, 2014 — that Mr. Friedman provided to the committee.
Another former team employee, Rachel Engleson, confirmed to the Committee that “it was known and/or rumored in the office that there was ‘moving around’ of money regarding tickets,” and stated that she had informed an investigator hired by the NFL about this issue during an interview in 2020.
We can’t do this
Virginia lawmakers had originally proposed to commit up to $1 billion toward a stadium project to be located at one of three proposed Northern Virginia sites. The return on investment for the Commonwealth would come from future tax revenues, which has to be at question now, based on the findings of the House committee investigation.
Seriously, can we trust an organization that reportedly scams its customers and its league partners to be on the up and up with public money?
That’s one issue. A bigger issue would be the lack of public clamor for the project, which would make the ribbon-cutting awkward, to be sure.
Pro sports franchises are worth, literally, billions of dollars. They can build their own buildings.
Story by Chris Graham
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