Congress: Commanders might have broken laws - 9 minutes read
The Washington Commanders failed to refund security deposits, concealed revenue and kept two sets of financial books, the U.S. House Oversight and Reform Committee alleged in a letter it sent to the Federal Trade Commission.
The 20-page letter detailed what the committee said was a multiyear process of altering records to hide revenue that led to more profits for the organization. The allegation of financial improprieties were made by former longtime employee Jason Friedman who, on March 14, met with members of the committee as part of its investigation into the team's workplace culture.
According to emails and an Excel sheet he provided to the committee, Friedman alleged the team might have retained as much as $5 million in deposits from approximately 2,000 customers.
"Quite frankly, as you go through the allegations it reads like a description of some organization out of 'The Godfather' and not an NFL football team," Rep. Raja Krishnamoorthi (D-Ill) told ESPN. He signed the letter along with the chairwoman of the committee, Rep. Carol Maloney (D-NY). "It really helps to color the culture and impunity that other witnesses have described and the evidence of severe dysfunction."
In a statement included in the letter, Maloney said, "This new information on potential financial misconduct suggests that the rot under Dan Snyder's leadership is much deeper than imagined. It further reinforces the concern that this organization has been allowed to operate with impunity for far too long."
In the letter, the committee says Friedman claimed the team maintained two books -- one that was shared with the NFL with the underreported ticket revenue -- and another that included the accurate revenue and was shown to owner Dan Snyder.
Washington denied the allegations and referred to a statement the team released on March 31. A team spokesperson said in that release, "The team categorically denies any suggestion of financial impropriety of any kind at any time. We adhere to strict internal processes that are consistent with industry and accounting standards, are audited annually by a globally respected independent auditing firm, and are also subject to regular audits by the NFL. We continue to cooperate fully with the Committee's work."
The House Oversight and Reform Committee might still hold a hearing on the investigation into the workplace. Krishnamoorthi said, for now, they want to let the FTC investigate the financial allegations.
"It seems like every week or every time we speak with a witness we learn something new," Krishnamoorthi said. "At this point I won't be surprised about anything the witnesses say with regard to the team. ... Ownership thinks it can get away with things that other people can't."
Friedman, who spent 24 years with the organization before being fired in October 2020, discussed multiple allegations with the committee: a failure to return security deposits to customers; the organization converting security deposits into nonshareable revenue; the concealment of ticket revenue from the NFL and misleading customers to sell higher-priced tickets.
Friedman, who started working for the franchise under late owner Jack Kent Cooke, held the title of vice president of sales and customer service when he was fired. According to the letter, his job was to "oversee sales and customer service for all regular and premium seating at FedEx Field, including club, dream and loge seats."
When FedEx Field opened in 1997, the organization required a one-time refundable security deposit for certain premium seating as well as private skybox suites. The deposit was for 25% of the cost of the seats. That deposit was supposed to be returned within 30 days of when the agreement ended.
But, Friedman said, after Snyder bought the team in 1999, team executives told employees to make it difficult for customers to receive their deposits by increasing the steps needed to receive the money. Some deposits did get returned.
Friedman said they also would keep the deposits from people who either had forgotten about them or from family members who inherited the seats from a deceased relative and were unaware the returnable deposits existed. With corporate accounts, he said, the name on the agreement might change over time and, once again, the new person might not know about the initial deposit.
Friedman said he was told by Snyder and his former chief operating officer, Mitch Gershman, to find dormant accounts where the likelihood of the customer coming forward and asking for the deposit refund is "as close to zero as possible." They would then convert the credit on the customer's account that reflected the security deposit into what they termed "juice" -- or revenue gained by the team through this practice.
He said a lot of these practices began in earnest after the team's revenue from attendance declined around 2006 when, according to the letter, "things started to get a little tougher for the team financially."
Friedman said they ended this practice around 2017 after Snyder, through their chief financial officer, Stephen Choi, told him to stop. Choi, who is no longer with the organization, did not immediately respond to a request for comment.
Friedman told the committee, "I think that they had gotten a little bit concerned that maybe some people were onto them here. And that really, that stopped en masse."
Friedman also presented the committee with a spreadsheet that showed two season tickets registered to NFL commissioner Roger Goodell, with an unreturned deposit of $1,000. The spreadsheet showed that the deposit was collected before Goodell was elected commissioner in 2006. According to the letter, the committee does not know when the deposit was paid or if it has been returned.
According to a May 6, 2014, email provided by Friedman, he requested help from Choi on processing additional ticket sales and revenue from standing room only tickets for the upcoming season. In the email, Friedman told Choi that he was charging $55 per ticket, but they were priced at $44 in the system. Choi directed him to apply the "juice" from that extra $11 per ticket to the Navy-Notre Dame game to be held that same year.
Teams are required to share 40% of their revenue with the other 31 teams. But the college game was considered nonshareable revenue, which meant that Washington would receive an additional $162,360.
Friedman told the committee this sort of scenario happened "at least a dozen times."
In an email from April 1, 2013, the letter states that executives "appear to discuss intentionally processing" $88,000 in shareable revenue from game tickets as nonshareable licensing fees from a Kenny Chesney concert the following month.
Friedman also said that Choi and Gershman told him to "misrepresent" the availability of general-admission tickets. Washington used to boast of a season-ticket waiting list of 160,000 -- in 2018, former chief operating officer Brian LaFemina said, for the first time, that there was no waiting list. Friedman said he would tell fans they could avoid the waiting list by purchasing premium-priced tickets. The team would sell the general-admission seats to ticket brokers.
Friedman said the team's former general counsel, Dave Donovan, accused him of being a rogue employee. Friedman said he was asked to write a letter of apology to Snyder about this practice. But, Friedman said, he was never reprimanded and instead he later received a raise.
Friedman told the committee that he retained these emails because "I knew what was happening in these emails was wrong, and I did not want to be hung out to dry by the team again and have someone come back and make the claim that I was doing this on my own."
Former team employee Rachel Engleson, who worked for Friedman, told the committee that she had let attorney Beth Wilkinson know about rumors of this financial practice during her investigation into Washington's workplace culture. Engleson told the committee that Friedman had shared his reasons for keeping the emails or other documents relating to various requests.
The NFL's investigation resulted in a $10 million fine. The league said Snyder was stepping away from the day-to-day duties of the team.
Congress then began looking into Washington's workplace culture in October. In February, former team employee Tiffani Johnston said in a roundtable session that Snyder had put his hand on her knee, against her wishes, under the table at a dinner. He later tried to force her into his limousine, an allegation corroborated by Friedman. The league is now investigating that allegation; Johnston declined to speak to Wilkinson so this was the first time it had been raised.
As for the letter to the FTC, a Republican spokesperson said, "Committee Republicans will be providing the FTC with additional context to ensure that they have the full story when evaluating the Democrats' latest letter and not just one-sided cherry-picked information."
Krishnamoorthi also said the NFL has not turned over "all the documents it should." He said the league is producing documents on a rolling basis.
"But we're finding the NFL and team ownership keep pointing fingers at each other with regard to why they're not producing more information," Krishnamoorthi said, "and the fact is we're getting the information in other ways and more witnesses are coming forward, as you can tell from Mr. Friedman's testimony they're willing to talk about a lot over a long period of time."
The NFL released a statement to ESPN Tuesday, from 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," the league said.
In a statement Lisa Banks and Debra Katz, the attorneys who represents Friedman and approximately 40 other former employees, called the financial practices "damning."
The statement said in part, "It's clear that the team's misconduct goes well beyond the sexual harassment and abuse of employees already documented and has also impacted the bottom line of the NFL, other NFL owners, and the team's fans."
Source: www.espn.com - NFL