WASHINGTON — It was a headline that shocked the sports world, in particular those in the D.C. area.
In a statement, the Snyder family, along with the Washington Commanders, confirmed that the owner hired Bank of America to start the process of selling the team.
"The Snyders remain committed to the team, all of its employees and its countless fans to putting the best product on the field and continuing the work to set the gold standard for workplaces in the NFL," the statement reads.
To discuss the next steps, and the rules for who the next buyer may be, our team turned to two experts in sports law:
- Jodi Balsam, a sports legal expert from the Brooklyn Law School, who was a former NFL Counsel, offered an explanation of the rules for any new buyer.
- Lisa Delpy Neirotti, Director of the MS in Sport Management Program - The George Washington University
NEEDS LEAGUE OWNER APPROVAL:
If someone wants to be the new principal owner of the Washington Commanders, they'll need support from three-quarters of the league owners. That would mean approval from 24 of the league owners.
"All the owners vote, and they must get three-fourths approval from the NFL ownership before they can accept and move forward with that bid,” Neirotti said.
In order to ease the process, Balsam said that the seller would likely look for a noncontroversial choice, that would get speedy approval. She said it's likely that the league would do significant background checks, to ensure that the prospective owner is financially stable and has a suitable character.
"You're looking for a buyer with unquestionable capacity and a sterling reputation," Balsam said. "And somebody who will pass muster amongst the fellow owners who are responsible for conducting the vote."
Brian McCarthy, the NFL's Vice President of Communications, confirmed the process for selling a team, sending the following statement:
“Any potential transaction would have to be presented to the NFL Finance Committee for review and require an affirmative vote by three-quarters of the full membership (24 of 32 teams).”
PRINCIPAL OWNER MUST HOLD 30% STAKE IN TEAM:
Balsam said that it's part of the rules that a principal owner holds at least 30% of the team ownership. She said that often, a buyer will come in with a higher ownership level than that.
"Certainly it helps satisfy some of the financial capacity concerns if you can comfortably reach the 30% minimum investment," she said.
Balsam said that the price tag for an NFL team can reach as high as $5 billion, which means an owner would need to be prepared to spend a serious amount of cash.
"The most recent team sale - that of the Denver Broncos - was for $4.6 billion," Balsam said. "So the principal owner has to come up individually with 30% of that amount."
Neirotti said the price tag could soar even higher than that this time around.
"There are some estimates out there that say this could go for $6 to 7 billion," she said. "I mean, we don't know."
NO MORE THAN 25 BUYERS:
Teams are expensive, and a principal owner may look to other investors to aid in the financing. However Balsam said that this can not exceed 25 buyers.
"No more than 25 people including that general partner - that principal incoming owner - can be in one franchise ownership group," she said.
To accommodate the enormous price tag, some hopeful owners may turn to debt, but there are limits there as well.
"The incoming ownership group may incur no more than $1.1 billion in debt in making that purchase," Balsam said.
OWNERSHIP GROUP REGULATIONS:
The buying group can not be a non-profit, a publicly-traded company, or a private institution like a private equity group. This differs from other leagues like the NBA, which allow private equity to own teams.
"Unlike other leagues, the NFL does not allow any institutional investment," said Neirotti. "So no venture capital, no funds. It has to be - you know - private individuals."
However, there is one big exception -- the Green Bay Packers have been grandfathered into this policy, and is the sole shareholder-run NFL Team.
"The Packers organization was founded as a community shareholder organization," said Balsam. "A long time ago it was grandfathered and it continues to be publicly traded in the local community with no single principal owner.
ANOTHER TEAM OWNER?
In the past, there were restrictions on whether an owner of another sports team could purchase an NFL squad.
Balsam said that rule was repealed, opening the door for an NBA, NHL, MLB owner to jump into the contest for the Washington Commanders.
So could we see Ted Leonsis, the owner of the Washington Wizards, Capitals, and Mystics, add the Commanders to his list of squads?
"If they have $5 billion handy, they're in the running," Balsam said.
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