The NFL has long encouraged its owners to settle their differences in house, away from the public spotlight. It appears that won’t be the case in Washington.
Three men who collectively own 40% of the Washington Football Team franchise have filed a lawsuit against majority owner Dan Snyder in a federal court in Maryland, in an attempt to sell their shares.
The existence of the lawsuit was first publicly revealed on Friday, when the Washington Post petitioned the judge to make documents from the case public. The case currently is under seal, meaning the documents that were filed are kept private.
The judge said he will rule on the Post’s request by Dec. 3.
At issue is an interpretation of NFL rules regarding team ownership and the sale of shares.
The three minority owners are Frederick Smith, founder and CEO of FedEx; Robert Rothman, a private equity investor; and Dwight Schar, chairman of NVR, Inc., a homebuilding company that includes Ryan Homes.
The three have collectively offered their stake in the team for sale through Baltimore banking firm Moag and Company.
According to the Washington Post, two billionaire investors from California — Behdad Eghbali and Jose Feliciano, who co-founded Clearlake Capital — have agreed to purchase the 40% stake for $900 million.
That amount is less than the true market value of the team but reflects that the shares don’t come with a substantial voice in the day-to-day running of the team.
Snyder is allowed a right of first refusal to buy the shares back at that price. The minority partners contend their shares must be purchased together, as they are offered for sale together.
Snyder has reportedly informed the partners that he plans to exercise his option for Smith and Rothman’s shares, but not Schar’s, cutting him out of the deal.
Schar and Snyder, longtime friends, have become bitter adversaries in the past year. Snyder has petitioned a federal court for documents he alleges will show Schar was involved in the leaking of damaging stories in the press, including a series of exposés in the Washington Post that alleged a culture of sexual misconduct among senior team officials.
The NFL, which values discretion and privacy in such matters, has an arbitration process by which grievances must be settled.
The Post reported that process is ongoing.
A fight in federal court has the potential to be extremely damaging for the league, if documents showing league finances are made public as part of the proceedings.
There is also the public relations hit that would come from a protracted fight and the potential loss in revenue if Washington fans continue to abandon the team as they have in recent years — TV ratings and attendance both have dropped steadily since Snyder purchased the team 21 years ago.
Any sale would have to be approved by three-quarters of the league’s owners, though it seems Feliciano and Eghbali would have little difficulty securing that approval.
While six NFL teams are female-owned, there are only two majority owners of color — Jaguars owner Shahid Khan, who is of Pakistani descent, and Bills owner Kim Pegula, who was born in South Korea. Feliciano is Puerto Rican, and Eghbali is Iranian.
By purchasing the minority stake they would informally be considered the favorites to purchase the team if Snyder ever decided to sell — or if the recent allegations led the NFL to force him to sell.
It is unknown how the legal process will impact the current renaming of the Washington team, previously referred to as the Redskins.
Team president Jason Wright has said he anticipates the process potentially taking through the 2021 season. He has said the current moniker of Washington Football Team is under consideration as the permanent name.