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NFL finance committee has concerns about Josh Harris’s Commanders deal

NFL finance committee has concerns about Josh Harris’s Commanders deal

NEW YORK — Members of the NFL’s finance committee raised concerns Wednesday about Josh Harris’s tentative $6.05 billion deal to purchase the Washington Commanders from Daniel Snyder, slowing momentum for the approval of the potential sale and dimming the prospects of a ratification vote by the league’s team owners later this month, three people familiar with the NFL’s inner workings and the owners’ views said.

The reservations expressed during a meeting of the eight-owner finance committee do not mean Harris’s deal will be rejected, those people said. They said the committee must spend more time examining the financial aspects, and one of them said it seems increasingly unlikely the owners can vote to approve the transaction, even on a conditional basis, during their May 22-23 meeting in Minneapolis.

“Everyone wants it to get done,” one of those people said. “I’m not saying it can’t get done. I don’t know. We’ll have to see.”

According to that person, questions were raised during the meeting about some aspects of the deal. That person said the agreement is complex and the financing includes an unusually large number of limited partners. Another person said the finance committee emerged from Wednesday’s meeting with less clarity and certainty about the deal than it had beforehand.

If no ratification vote is taken this month, the NFL could schedule a special meeting for the owners to take an approval vote over the summer. The owners’ next scheduled meeting is in October.

The Harris group, the Commanders and the NFL declined to comment.

Roger Goodell says ‘progress’ is being made toward a Commanders sale

Others connected to the process said they remained confident the deal will go through eventually while conceding the timing of approval by the league and the owners is more uncertain now. The major obstacles to completion of the deal, in their view, remain the NFL’s dealings with Snyder, not with Harris. It remains unclear when the agreement between Harris’s group and Snyder might be finalized; it also is uncertain whether the NFL might announce sometime before a ratification vote by the owners that the deal complies with league standards.

The finance committee members met for about 2½ hours Wednesday afternoon as part of two days of regularly scheduled committee meetings at the NFL’s offices in Manhattan. Kansas City Chiefs owner Clark Hunt, the chairman of the finance committee, declined to comment afterward. Before the meeting, Hunt said he would leave it to NFL Commissioner Roger Goodell to characterize the status of the league’s consideration of the sale.

Before Wednesday’s meeting, there had been cautious optimism the sale could move forward in the coming weeks, perhaps with a vote in Minneapolis to ratify the deal on a conditional basis.

“That’s the hope,” one person familiar with the owners’ views said Tuesday before adding, “I still think it’s headed in that direction.”

Another person familiar with the owners’ views and the NFL’s inner workings said earlier Wednesday that the vetting process could not be completed in time for the Minneapolis meeting under the league’s standard procedures but that it might be possible for the owners to approve Harris’s deal on a conditional basis. Such a vote would move the owners a step closer toward parting ways with Snyder with as little further rancor as possible.

That person cautioned, however, that the next steps would remain precarious even in that scenario because of ongoing uncertainty among the owners about Snyder’s approach to issues such as indemnification and the NFL investigation being conducted by attorney Mary Jo White.

But the issues raised during the finance committee meeting Wednesday seemed to put the brakes on that timetable.

Under NFL rules, any franchise sale must be ratified by at least 24 of the 32 owners. The finance committee generally vets any proposed deal and makes a recommendation to the owners, who usually follow the committee’s recommendation.

But this sale has veered from the traditional process, in large part because of issues unique to Snyder and the Commanders. Snyder and the team are under investigation by the league and by federal authorities in the Eastern District of Virginia. They previously were investigated by the House Committee on Oversight and Accountability (previously called the House Committee on Oversight and Reform) and reached settlements with the attorneys general of D.C. and Maryland related to allegations of withholding deposits from ticket holders.

Harris’s tentative agreement to buy the team from Snyder is not signed and is nonexclusive, leaving the process open to other bidders. At least one other bidder, Canadian business executive Steve Apostolopoulos, has remained active in the process in recent weeks after submitting a $6 billion bid. Even so, Harris’s bid was submitted to the NFL for an informal review.

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That review initially had generated optimism within the league about Harris’s ability to complete the deal to the satisfaction of the finance committee and the other owners. But Wednesday’s meeting provided the first opportunity for finance committee members to study the details.

Harris, the owner of the NBA’s Philadelphia 76ers and the NHL’s New Jersey Devils, is a private equity investor with an estimated net worth of $6 billion, according to Forbes. More of his limited partners were identified publicly last week, including Eric Schmidt, the former chief executive officer of Google; Alejandro Santo Domingo, the billionaire heir to a family beer fortune; and Mitchell Morgan, the founder and CEO of Pennsylvania-based Morgan Properties.

They joined previously known investors Mitchell Rales, the co-founder of the Danaher Corporation, and Basketball Hall of Famer Magic Johnson.

Under NFL team ownership rules, the lead investor must have at least a 30 percent equity stake in the purchase. No ownership group can exceed 25 people, including the lead investor. The group cannot borrow more than $1.1 billion to purchase the team. No private equity firms, public corporations or sovereign wealth funds can own any shares.

It is not known to what extent the Harris group might indemnify Snyder against legal liability and costs as part of the tentative sale agreement. Since February, multiple people with direct knowledge of the league’s inner workings have said that Snyder was seeking such indemnification from a buyer or from the league and the other team owners. The Commanders said then that such depictions were inaccurate.

The NFL’s current investigation of Snyder and the Commanders is being conducted by White. Snyder declined to be interviewed by White for the investigation, three people with direct knowledge of the league’s inner workings said in March. White was expected to make at least one more attempt before completing her investigation, according to one of those people. Goodell has said the league will release White’s findings publicly, even if Snyder sells the team.

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