Josh Harris-led Commanders bid has holes, but will NFL bend for Snyders ouster?

October 12, 2024

EAGAN, Minn. — The NFL owners’ meeting this week was dominated by questions of whether the Josh Harris-led group’s agreement to buy the Washington Commanders for $6.05 billion would win league approval, despite the many issues in the bid. But is the league so desperate to move on from Daniel Snyder that it will accept a deal it otherwise wouldn’t?

“What precedent will this set?” asked a worried senior official of an NFL team. And if Harris is patching together the deal, it raises concern about the ability to build a new stadium, fund the team and create a world-class organization, this official said.

But the prospect of saying no means the league would be left with Snyder, something Harris surely knows as he is asked to modify the transaction.

“It takes time. A lot of people have a lot of things to do,” Cowboys owner Jerry Jones said. “I know we’re all anxious, especially the fans, but we’re on a good course. … likely to happen.”

Asked if he is confident it will get done, he replied, “I am.”

Cowboys owner Jerry Jones, seen here in 2019 talking to Commanders owner Dan Snyder, expressed optimism Tuesday about a sale of the Washington franchise getting done. (Tim Heitman / USA Today)

An example of this evolving bid includes the framing of some limited partners. The NFL caps the number of LPs at 25, a threshold to which no team is remotely close. The Harris-led group claims it is in compliance with a number around 17. In at least two cases, the LP was listed as family. This was the case with the Morgan family, the entity behind Morgan Properties. And the Santo Domingo family from Colombia. Now that family designation is for press releases only, according to a person familiar with the Harris bid with Mitchell Morgan and Alejandro Santo Domingo joining as individual LPs.

An official from a team and an industry expert who are both familiar with the deal said listing several family members as LPs, and structuring it so they have preferred equity, is not allowed by the NFL. Preferred equity has features of both equity and debt. The Harris position is that a family counts as one LP.

“Clark Hunt, our chairman, and a few other people that have been at the table with them told them it’s not just the acquisition debt total,” said Indianapolis Colts owner Jim Irsay, referring to the finance committee, of which he is a member. “It’s other league rules, like the 25 partners and preferred stock versus equity and that sort of thing. So, you know, they’re aware of it. We just have to make sure we can get there and finish it off.”

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Then there is the challenge of vetting international LPs. Michael Li, listed as an LP in the Harris announcement of signing the deal with Snyder, is a Chinese-American born in New Jersey and based in New York, according to a person familiar with Harris. Li’s parents are from China. It is unclear if Li has dual citizenship. If so, he would become the first native of that country to own part of an NFL team.

His lawyers at Wilson Sonsini put out a release saying Li is “a major investor in the buyer group for this transaction. The Wilson Sonsini team was led by partners Weiheng Chen, Jie Zhu, and Gary Greenstein and included Xuchao Dong and Athena Yu.” All but Greenstein are based in China. None replied for comment.

An official close to Harris declined to describe what Li’s business is. In the release, it is called Range Group. Another official close to Harris called it a family office, which is a description of an investment firm that invests solely on behalf of a wealthy family. Public information about the firm could not be located.

Vetting includes criminal and financial background checks, all of which are tougher to do in countries like China, especially now with heightened distrust geopolitically between the country and the U.S., which could impede NFL efforts to get a full picture of Li should the bulk of his assets exist in China.

The NFL also has worries about the amount of debt in the agreement. There is the $1.1 billion of borrowings against the team that the league allows. But there is also approximately $1 billion more in other borrowings not secured by the team. Harris owns the Philadelphia 76ers and New Jersey Devils and is planning to borrow against those teams.

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At one point, the Harris group even considered a lease back on the team’s Ashburn, Va., practice facility — meaning it would sell the property, use the proceeds for the team purchase and lease the space — but it is not believed to be in the current proposal.

One finance committee member said, “I think it’s going to take a while. … They have to comply with the rules.”

The league has long had conservative ownership rules surrounding debt and investors, a dynamic that has not proven problematic until this deal. With valuations soaring, the NFL could consider changing some of these rules, such as allowing more debt or lifting the prohibition against private equity.

“I think we should have institutional and private equity money,” said Panthers owner David Tepper, who made his money in the hedge fund world.

But his view, for now, appears to be a minority one in the NFL. Harris explored ways to use private equity early on in the process but was rebuffed by the league.

Asked about changing the rules, NFL commissioner Roger Goodell said, “That’s something we continually review and look to see if there are modifications that we would make. I think it’s important for membership to be engaged. But it’s … not how we create greater value but how do we create stability in our league, amongst the 32 teams. That’s the most important aspect of our ownership policies.”

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Overall, no owner or team official expressed doubt the sale would occur but did not address what would happen if Harris, a seasoned dealmaker, does not move off his structure. It could come down to just how much the league is willing to massage its rules to get Snyder out.

Irsay said, “Everyone knew the rules upfront. … We wouldn’t change the rules now. We’ve thought long and hard about where the rules are at this point, and they’re there for a reason.”

But Jones took a far more sunny position, saying, “As I mentioned yesterday, these are highly qualified people. They’ll get the nuances of it worked out. … These are outstanding people. There’s a number of them, so it takes a lot of work. It takes time. A lot of people have a lot of things to do.”

No contact is permitted between Harris and the team’s employees, including Commanders president Jason Wright, until there’s a complete sale. There is no waiting for a resolution on the football side. The Commanders opened their first OTA session Tuesday.

we are back 😎 pic.twitter.com/xyZLqUgi1O

— Washington Commanders (@Commanders) May 23, 2023

Owners Dan and Tanya Snyder, neither of whom attended the meeting, appear to be involved with the team’s daily activity only from a distance. The owners recently shifted their home base to London.

Wright, one of Washington’s representatives at the league meetings, did not speak with reporters in Minnesota. Norm Chirite, an adviser to Dan Snyder and former counsel of the Commanders, cast votes at the meeting on the team’s behalf and was the organization’s sole representative at the owners-only meeting, according to a league source who was not authorized to speak publicly.

Snyder reportedly sought more protection from the league via expanded indemnification over potential sanctions stemming from the Mary Jo White investigation or other pending or future matters. Jones offered no concerns. “Not from me. Not from me,” he said.

Goodell reiterated that the league intends to release White’s complete report, which remains outstanding despite starting in February 2022.

Wright did speak Saturday at a community event hosted at the Commanders’ facility.

“We continue to operate as much as we can, business as usual. I think (if) there are major line items that come above a certain level, some major things that need to be done, we’ll talk to Dan and Tanya about it,” Wright said. “They can broker a conversation potentially on our behalf. But in the meantime, we’re just going to keep on operating and hopefully, it doesn’t take long at all.”

(Top photo: Scott Taetsch / Getty Images)

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