Update: Subpoenas have started being issued
Update: The NFL defers to Mary Jo White's sexual harassment investigation into Dan Snyder
NFL spokesperson Brian McCarthy: "We continue to cooperate with the Oversight Committee and have provided more than 210,000 pages of documents. The NFL has engaged former SEC chair Mary Jo White to review the serious matters raised by the committee."— A.J. Perez (@byajperez) April 12, 2022
The Congressional Committee on Oversight and Reform has sent a letter to the FTC (available for download here via the Washington Post) which details the allegations of financial improprieties committed by Dan Snyder and the Washington Redskins organization. These allegations come from former Washington VP Jason Friedman, who worked for the organization for 24 years, and was involved in ticket sales and customer service.
Little teasers of his testimony have been leaking out from the Committee that included Washington keeping two sets of books, and also withholding ticket sales payments that should have gone into a pool that is split with other NFL teams. This letter, and the Washington Post article that was just published, give details on how Washington allegedly bilked their own fans and other franchises out of money through multiple deceptive practices.
Friedman alleges that he and others were instructed to avoid discussing refundable security deposits with customers. Fans were required to put a 25% deposit on seats, but could get it back after their contract was fulfilled. Barriers were intentionally put in place to discourage fans from getting this money back, and the money was then turned into "juice". One of those accounts belonged to NFL Commissioner Roger Goodell.
Some team executives used the term “juice” to refer to revenue that was intentionally misallocated in the franchise’s accounting system and attributed to unrelated events, the letter says Friedman told the committee. According to the letter, Friedman testified that Snyder and Mitch Gershman, then the team’s chief operating officer, would instruct him to “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.”
Such allocations would be made in part to avoid contributions to the pool of local revenue that NFL teams must share with the league and other franchises, Friedman told the committee. Friedman told the committee that the practice “occurred over the course of several years” and “was done at the direction and for the benefit of Mr. Snyder,” the letter says. It ended around 2017, Friedman told the committee, after Snyder ordered it to stop through Stephen Choi, the team’s former chief financial officer.
Exclusive from me and @NickiJhabvala: The House Oversight Committee tells the Federal Trade Commission that the Commanders and Daniel Snyder “may have engaged in a troubling, long-running, and potentially unlawful pattern of financial conduct."... https://t.co/0VYSDbL83k— MarkMaske (@MarkMaske) April 12, 2022
The letter also describes how revenues from ticket sales were underreported to lower the amount owed to other teams. Friedman alleges that the organization started this underreporting scheme after a 15-year waiver by the NFL capping the amount that the team had to share from its club-seating revenue expired in 2012.
“The executives apparently accomplished this by falsely processing or misassigning a portion of ticket revenue from Commanders games as fees related to special events, such as concerts or college football games, which were not subject to revenue sharing with the NFL,” the committee’s letter says.
Friedman told the committee that he “falsely processed” $162,360 of revenue from Commanders game tickets as being derived from a Navy-Notre Dame game at FedEx Field, based on guidance from Choi in a May 6, 2014 email. “The juice goes to Navy vs ND game,” Choi wrote, according to the committee’s letter.
Friedman told the committee the Commanders avoided detection in such a case by charging $55 for a ticket listed in their manifest as costing $44.
There is also testimony about Washington scamming fans into buying higher prices ticket packages by lying about the availability of cheaper seats, the fabled 160k+ season ticket waiting list, and also suing season ticket holders who couldn’t make payments on those plans. But the information about scamming other owners, if it can be proven, remains the biggest problem for Snyder and his continued membership in the NFL owners’ club.
Congress is now getting the Federal Trade Commission involved which is not something the NFL is likely to welcome. Washington has denied the accusations coming from Jason Friedman as they have been released, and will likely continue denying them until more evidence and lawsuits come out. Expect dueling statements as the day progresses, and then we wait for the next bombshell report to come out...