The sale of the Washington Commanders took another big step yesterday as potential buyers Josh Harris and Mitchell Rales met with the NFL finance committee in New York. The group led by Harris signed an exclusive deal with Dan and Tonya Snyder to buy the team for $6.05 billion. Several issues were raised by the 8-owner committee including the amount and type of debt, fund sourcing, and the vetting of the reported 20+ investors.
The Harris group has been working with the finance committee to adapt the structure of the deal so that it meets the current rules of NFL ownership. This will be the highest amount paid for an NFL team, and it has tested the NFL’s approval process as the massive sale price is butting heads with the league’s $1.1 billion debt limit. There were conflicting reports last week about the nature of the Harris group’s proposed debt, and the likelihood that the deal would go through.
Some of the league owners are concerned that as the deal currently stands, Harris’ group would finance the purchase with a down payment of $5.85 billion that would include $3.75 billion of equity, $1.1 billion of secured debt and $1 billion of unsecured debt. In addition, Snyder would get 50% of the incremental increase in the Commander’s gross revenue over the subsequent two years that will be paid out of the team’s cash flow. (Snyder thinks the two parties will split $400 million while Harris believes $200 million will be split down the middle.) Add that all up, and you get the total purchase price of $6.05 billion.
It’s the $1 billion of unsecured debt that worries some members of the league’s finance committee, sources say. As one sports banker put it to Forbes, “this would be a leveraged buyout of a football team.”
Reports from yesterday’s meeting have been positive, and the sale is still expected to be finalized in the next “month to two months at the most,” per Indianapolis Colts owner Jim Irsay. “We’re not done yet, but we’re making progress. It was a good meeting.”
“It’s going well. I’m hopeful because of their inspired aspect and their enthusiasm and their track record that they’re really committing, saying, ‘Well if that doesn’t work then I’ll make it right. Either way, we’re going to make it right.’ So we’re just trying to work through those final details. And I’m hopeful that we’ll be able to. I would imagine something in mid to late July would be the earliest we’d call it league meeting.”
“They know it can’t be smoke and mirrors,” Irsay said. “They’ve committed to make it. That’s reasonable. I’m optimistic that can get done. It’s a complicated deal. I’ve just seen these things fall apart when you’re just trying to dot an I and cross a T. I mean it’s unusual, but if you stay in business long enough, unfortunately, one thing’s for sure: No deal is done until it’s done. And I think in this case, there’s every reason to believe compliance will be there because they know that’s a must. They know we would say, ‘Hey, sorry, no deal.’”
Josh Harris and associates should be in control of the Washington Commanders before the 2022-23 season starts, and the Snyders will likely be overseas counting their billions. Snyder has owned the team since 1999, and has been one of the worst owners in professional sports. The fanbase has been waiting for this moment for a long time, and it’s almost time for some hope to return