‘Gangster’ conduct, extortion allegations and a messy ownership dispute in Washington
As the Washington Football Team clawed its way to an NFC East title this season, its owners have been engaged in a fight of their own in federal court in Maryland – an increasingly messy dispute that has spilled into public view.
The lawsuit filed against Washington owner Daniel Snyder by three of his minority partners in November centered around the minority owners' desire to jointly sell their stake in the team. But it has also featured claims by Snyder of extortion and a smear campaign. Mentions of a sexual misconduct accusation and tactics "more reflective of a gangster than an NFL owner." Media leaks. Burner phones. A threatening text message.
And that's just in the unredacted and unsealed portions of court documents.
In a ruling last week, U.S. District Court judge Peter Messitte referred the crux of the dispute back to NFL arbitration – a win for both Snyder and the league, which had intervened in the case. But that hardly marks the end of the saga.
Daniel Snyder has been owner of the Washington Football Team since 1999. (Photo: Brad Mills, USA TODAY Sports)
At a virtual hearing Thursday, Messitte is due to question the parties, under penalty of perjury, about information in the case that has been leaked to media outlets. Snyder and the three minority owners – Robert Rothman, Dwight Schar and Frederick Smith – have accused one other of leaking confidential and negative information to reporters, in violation of a nondisparagement agreement.
John Moag, an investment banker who represents the minority owners, will also testify.
"I think that maybe some public airing of this matter … will bring a little sobriety to the parties, which I'm not entirely sure I see in this case right now," Messitte said during a hearing on Dec. 22.
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Attorneys for the Moag, Snyder and the three minority owners did not immediately reply to requests for comment from USA TODAY Sports on the ongoing litigation. NFL spokesperson Brian McCarthy declined comment.
While it has since become a forum for eye-catching accusations, the lawsuit filed by Rothman, Smith and Schar started with a relatively straightforward goal: To push forward a sale of their stake in the Washington Football Team.
The three minority partners – who together own 40.499% of the club, according to court filings – are seeking to jointly sell their stake to a group of outside buyers, whom The Washington Post identified as California billionaires Behdad Eghbali and José Feliciano, as well as Feliciano's wife, Kwanza Jones. The reported price is $900 million.
Snyder, however, has a right of first refusal on any potential deal – a contractural opportunity to purchase the minority owners' shares at the same price. And, according to multiple reports, he is attempting to exercise that right on only two of the minority owners' shares – the roughly 25% held by Rothman and Smith, but not the 15% held by Schar.
NFL rules stipulate that disputes between owners, such as this one, be handled in arbitration – a process that is generally preferred by sports entities due to the privacy it provides. And that's where the feud between Snyder and his minority owners first began in June.
"Sports doesn't like to air their dirty laundry in public," said Ellen Zavian, a professor of sports law at George Washington University. "They don't like to share financials. They don't want to have their fans engaged in sort of the back end of the product. They want to keep the product clean."
However, when the minority owners started to feel that Snyder's actions were disrupting a "time-sensitive opportunity" to sell their shares, they moved the dispute to federal court – and, subsequently, into public view.
Though the case was initially filed under seal, some of the documents and portions of documents were made public last month, offering details on the team's ownership arrangement and a window into the feud.
In one filing, for instance, Snyder accuses the minority owners of "orchestrating and fueling a vicious misinformation campaign" against him. He alleges that Schar asked a former team employee to leak allegations of sexual assault to The Washington Post, which reported on such allegations over the summer. The Post's reporting led Washington to hire a law firm to review the matter, and the ongoing investigation has since been taken over by the NFL.
Snyder also alleged that Moag, the banker representing the minority owners, sent him a threatening text message, with allusions not to "the media (expletive)" but "the more serious (expletive)."
"If you want to get to a clean conclusion, let me know," Moag allegedly wrote in the message. "If you want a (expletive) show, we are on for that too."
The acrimony between Moag and Snyder also stretches to separate litigation. Snyder has sought electronic records from Moag in connection with negative articles published this summer by an India-based media company, which Snyder is now suing for defamation.
In addition to denying any involvement in the publication of the articles, Moag responded in an affidavit by accusing Snyder of sending two "intruders" to his home in August. He also claimed that his clients, the Washington minority owners, had found "serious corporate irregularities" in the team's financial statements.
As the legal proceedings continue, the door remains ajar for all parties to continue to drop such accusations, with the understanding that the public will see them. Zavian said that while the case between Snyder and his minority owners might ultimately be decided in arbitration, the courtroom serves as "the theater."
"When you work in sports (law) … you realize that there's always a third party in the room. Whether you like it or not, the third party is the media," Zavian said. "You don't get to choose what the media writes about. But you know that they're present in the room."
Contact Tom Schad at [email protected] or on Twitter @Tom_Schad
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