EAGAN, Minn. — By 11:38 a.m. Monday, the door to the Hammond conference room was open.
Indianapolis Colts owner Jim Irsay had already vacated the room that hosted the NFL finance committee’s roughly 90-minute gathering. New England Patriots owner Robert Kraft was now emerging after a doorway conversation with Philadelphia Eagles owner Jeffrey Lurie. Commissioner Roger Goodell strolled out not far behind them.
This was the committee’s first in-person meeting since the Washington Commanders reached a purchase and sale agreement with a partnership group led by Josh Harris.
And with financial documents filed to the league in the days that followed, the deal looms closer to ratification yet still far from the financial standards league bylaws require.
Complications surrounding debt acquisition total, the limited partner count and preferred stock versus equity swirl among what Irsay calls the “complexities” slowing this deal from completion.
Sentiment at the league meeting was optimistic the deal will eventually get done but also cautious not to underestimate the work that lies ahead. Can the Harris group clean up some of its financing structure to comply with the strict-among-sports-leagues standards the NFL requires?
“They know what the rules are and I know they really want to get a deal done and we do — so you hope that carries the day,” Irsay said Monday after the committee meeting. “But at this point, I can’t say [it will]. You hope that it gets done. I think there's more work to be done at this point.”
Why the Commanders transaction is taking so long
The fourth paragraph in Harris’ May 12 statement highlighted the challenges ahead.
Harris had already noted his union with businessman Mitch Rales; David Blitzer, who co-owns the Philadelphia 76ers and New Jersey Devils with Harris; and NBA Hall of Famer Earvin “Magic” Johnson.
Then, Harris wrote:
“In addition to Mitch, David and Magic, our extraordinary ownership group includes — local business leader Mark Win, Lee Ainslie, Eric Holman, Michael Li, owner of Range Group, the Morgan family, owners of Morgan Properties, the Santo Domingo family, Michael Sapir, Co-founder and CEO of ProShares, Eric Schmidt, former Google CEO and Executive Chair and Andy Snyder amongst others.
“Together these individuals and families have the collective resources and shared commitment to support our vision for the Commanders.”
That’s 12 limited partners joining Harris for those counting at home. There could be more who were not listed or subsequently added.
NFL bylaws permit up to 24 limited partners (25 total partners) while requiring that a general partner own at least 30% equity interest. The general partner is granted full voting control, no others eligible.
So while 12 or so limited partners would not in itself violate league rules, financing approval and allocation becomes increasingly complicated with each additional party involved.
Team owners are strict on the deal structure to combat the financial risk if an unstable ownership group were to default.
After finance committee meeting, Jim Irsay says Commanders deal needs work.
“There’s certain criteria that has to be met. That’s just the way it is. And it’s not there yet. But that doesn’t mean it can’t get…(to) a deal that complies within league rules. We’re trying to do… pic.twitter.com/QabvdcJzQp
— Jori Epstein (@JoriEpstein) May 22, 2023
The financing on this deal is more complex and creative than the league’s past two franchise transactions, when David Tepper bought the Carolina Panthers in 2018 and when the Penner-Walton group bought the Denver Broncos in 2022.
Is the league loosening its standards to expedite the removal of current Commanders team owner Dan Snyder, who is being investigated by government and league entities for alleged sexual harassment, workplace misconduct and financial impropriety? Sentiment varied among attendees at this week’s league meeting.
“If it wasn’t Snyder, this deal doesn’t happen,” one high-ranking team executive told Yahoo Sports on condition of anonymity. “The league is bending over backward because they want to get rid of this guy.”
Another team’s high-ranking executive, speaking on condition of anonymity, told Yahoo Sports they believe “in reality, this is what the future of NFL ownership is going to look like.”
With valuations sky-high — the Broncos sold for $4.65 billion, the Commanders now on schedule to rake in $6.05 billion — even the country’s wealthiest struggle to produce sufficient funding.
Owners like Harris, with capital tied up in other teams, are further pressed to produce sufficient liquidity. One team executive estimated the funding needed is closer to $8 billion or $9 billion when factoring in debt, immediately necessary facility renovations and the lurking cost of a new stadium.
The Harris group includes corporate and political leaders across Washington D.C., Maryland and Virginia. The hope is they will help generate capital in what would likely be a public-private partnership to fund the stadium.
Irsay said he could imagine a time when the league loosens its restriction on private equity funding in team transactions, though no rules will change for the Commanders sale.
Jerry Jones, whose Dallas Cowboys rank No. 1 among Forbes’ global sports valuations at $8 billion, said the financial rules are important to protect league operations.
Jim Irsay emphasized challenges, work that remains on Commanders deal. But Jerry Jones expects Harris purchase will get done.
“These are outstandingly qualified owners,” Jerry told us. “That always rules the day on getting it cleared with the NFL.” pic.twitter.com/gOrp93kndX
— Jori Epstein (@JoriEpstein) May 22, 2023
“I think the fundamental principles and guidelines of the financial strength behind the franchise [are] more important today than ever before,” the Cowboys owner and general manager said Tuesday. “I think the basic tenets of the things, the detail of how they want it structured, are important. They’ve served us owners and they’ll serve these owners too.”
Jones expressed more confidence in an imminent and inevitable sale than Irsay, who emphasized the work that lies ahead. Jones called Harris and his partners “outstandingly qualified,” adding that he would be proud to welcome them into the league’s exclusive club.
“This thing’s on a good course to happen,” Jones said. “Likely to happen.”
When might the Commanders sale finally go through?
Two main steps lie between the Harris group’s agreement with Dan and Tanya Snyder, and their entrance to NFL ownership.
The first: the owners’ finance committee, in conjunction with finance staffers in the league office, will wade through technicalities of the financial structure and send the deal back to the Harris group until its funding sources and structure fully comply with league policy.
Only afterward, once the deal has been vetted, would the finance committee make its official recommendation to club owners.
And then, club owners would vote whether to ratify the sale. A franchise transaction requires approval from at least 24 of 32 team owners, per league bylaws.
The finance committee hopes such a vote could happen this summer, Irsay said. He estimated a mid-July special meeting could allow for resolution of the current financial violations while still setting up a completed transaction in time for the Harris group to take over before the 2023 season.
“I think that would be great to have an ownership group in before the season opens — that would be a goal,” Irsay said. “This is something that would be positive for everyone to get this deal done.”
“Everyone” includes the Harris group, the Snyders and the NFL.
The league stands to benefit financially, some team brass admitting behind closed doors that the Commanders underperforming in revenue constitutes Snyder’s biggest failure in the eyes of his fellow team owners.
The league also stands to benefit legally from a Snyder split, both team executives who spoke with Yahoo Sports agreeing the NFL is waiting until Snyder no longer owns the team to release the findings of its investigation into sexual harassment and workplace misconduct allegations.
Fifteen months into that investigation, the clock is ticking.
Irsay had said publicly in October that he believed there was “merit” to removing Snyder from ownership.
Jones, meanwhile, took issue when asked this week if he was relieved no forced removal would be necessary.
“That is a speculative thing which really is inappropriate in my mind,” Jones said. “You have a very qualified buyer here. And you have, by his own admission, Dan and his family wanting to sell. So you don't need to give what-ifs beyond that. There’s enough qualifying aspects to this thing that this thing can get done.”
On that last point — that somehow, some way, at some time, the deal would get done — all at the league meetings in the Minneapolis area agreed.
“I think we’ll get it to a place,” Goodell confirmed, “where it’ll be approved.”