Connecting The Dots…

Where there is a lack of clarity, people tend to interpolate or extrapolate to fill in the gaps; in common parlance, this practice is referred to as “connecting the dots.”  According to reports yesterday, the NFL has allowed Danny Boy Snyder to borrow $450M to buy out the three minority partners who were suing him.  That confrontation had gotten well into the realm of churlishness with one side accusing the other of “extortion” and the other side responding with allegations of “financial shenanigans.”  Lacking clarity in the matter, I am perfectly willing to believe both sides there.

However, the action of the NFL yesterday to render all that acrimony moot causes me to wonder why the league chose to do what it did and how did the timing come to be.  Lacking clarity in that arena, I need to do a bit of interpolating and extrapolating – – sometimes meaning that I put two-and- two together and come up with five.

There is a second shabby set of circumstances ongoing now regarding Danny Boy Snyder.  It was about 8 months ago that the Washington Post published a report by Washington cheerleaders about sexual harassment and a “toxic culture” in the team Front Office.  Two individuals were fired; the “Communications Guru” chose to retire; more women came forward with additional charges; first the team hired a law firm to “investigate” and then the NFL took over that “investigation”.  That was eight months ago; the report of the investigation is still not “available”.

There has been plenty of speculation about the contents of that investigative report to the point that some have wondered if the findings were so sordid that it would cause the league to force Danny Boy Snyder to sell the team.  As  long-term resident of the DC suburbs, I can assure anyone who is reading this that fanboys around here would prefer Hannibal Lecter to own the team if that could be arranged.  The NFL’s action yesterday not only signals that Danny Boy Snyder will continue to own the team, but that he will own about 81% of the team along with the minority shares belonging to his mother and his sister.

Now on to some “dot connecting”.  I cannot believe that the NFL would have cleared the way for that situation to obtain if there was even a 1% chance that the findings of that investigative report suggested that Danny Boy Snyder be forced to sell the team.  The NFL can be ham-handed and stubborn, but the NFL is not stupid.  As I understand the NFL Bylaws, the league can force an owner to sell his franchise if that owner engages in “conduct detrimental to the league.”  Here is the important aspect of that provision to force a sale:

  • The way the determination is made regarding “conduct detrimental to the league” is to have 75% of the owners vote to force a sale on that basis.

So, my first extrapolation here is that the investigative report which has not been available to the public is known to the higher-ups in the NFL if not in full at least to the point that the major findings have been summarized there.  The league mavens have counted heads and are certain that there are not nearly the required 24 votes to force a sale of the Washington Football Team.

That first extrapolation leads to another question that lacks clarity at the moment.

  • What circumstances have led the owners’ votes to fall out the way that is indicated here?

I can think of 3 possibilities; I am certain there are others:

  1. The findings of the report indicate to a sufficient degree of certainty that Danny Boy Snyder is not guilty of anything more than mismanagement of his “Front Office toxic culture” and that the allegations made can be resolved.
  2. The other owners are looking at the newly negotiated broadcast rights deals and cannot see how the 8 months of bad publicity surrounding this situation has done any degree of “detriment to the league”.
  3. The other owners would not want themselves to be under microscopic scrutiny with regard to the behaviors of male team employees regarding female team employees over the past several decades.  And if there were such scrutiny applied, the other owners would not like to have a “forced franchise sale” on the books as a precedent.

All three of these conclusions require “dot connecting” meaning there is uncertainty in all of them.  The first one can be confirmed or denied with the release of the investigative report with only minimal redactions.  I will be surprised if the NFL does that.  I suspect that the NFL would not want to take the chance that there is a demonstrable error of fact in that report which would cast doubt on its findings and reopen this issue(s).  The NFL is not in the business of risk taking and that course of action carries a risk with it.

The second possibility above is very real.  Broadcast rights have – according to reports – just about doubled for the next 10 years or so.  When the last team sold, the reported price was approximately 50% higher than the value of the franchise as estimated by Forbes.  The owners can easily convince themselves and their minority partners – if there are any – that things are looking up.

Regarding that third possibility, my gut tells me that some other owners saw the allegations made against the Front Office of the WTFs and thought to themselves:

  • There but for the Grace of God, goes our organization.

Just about the only aspect of this situation that does not require any extrapolation or interpolation is the fact that the allegations made by women to the Washington Post were published a little more than 8 months ago – – and the clock continues to run…

Finally, regarding the issue of sexual harassment – – allegations of which set in motion much of what I have discussed today – – here is an interesting assessment from Senator Amy Klobuchar (D- MN):

“I have a dream that, one day, maybe we’ll have more women in the Senate than there are victims of Harvey Weinstein’s harassment.”

But don’t get me wrong, I love sports………



2 thoughts on “Connecting The Dots…”

  1. Curm – topic that has been brought up around these parts… Danny Boy is getting about 40% for about $875M … while that is a nice chunk of change, that should put the evaluation at roughly 2.2B … isn’t that down about a third from last year’s Forbes estimate of 3.5B?

    1. Ed:

      Minority shares in teams sell at a significant discount because they have no say in any of the team matters. They are only along for the financial ride. The partners wanted out because they – and their corporations – decided they did not want to ba associated with Snyder any more.

      Price is expected to be $900M for 40% of the team. Forbes values the team at $3.4B; the value expressed here is about $2.6B so the discount is a bit under 25%.

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