NFL Rules, Legal Issues Extending Commanders Sale Process
Irwin Kishner, co-chair of Herrick's Sports Law Group, was interviewed by Law360 in an article discussing the process of selling the Washington Commanders and the reasons and considerations behind the extended length of time to complete the sale.
The longtime owner of the Commanders revealed that he was exploring a sale of the franchise in November 2022. In May 2023, a deal was announced with a group featuring Apollo Global Management LLC co-founder Josh Harris and NBA legend Earvin "Magic" Johnson officially agreeing to buy the Commanders for a record $6.05 billion. The article notes that the transfer of the team may not be approved until August 2023.
The article further states that the sale of the Commanders is a complicated process citing legal issues and the necessity that bidders implement creative funding strategies for the historic price tag while satisfying league rules.
"The seller is usually walking away with a boatload of money by now, and that's the end of it," said Kishner. "But this is a different deal, structured in a different way. What does that mean going forward, what is the precedent going forward?"
The article explains that "[t]he acceleration in franchise valuations, at its most simplistic, tends to mean more investors are needed – and that butts up against a few NFL ownership rules. Ownership groups are limited to 25 partners, including the lead partner; the lead partner must own at least 30%, and the group cannot carry more than $1.1 billion in debt. The NFL also does not allow ownership by public corporations, private equity firms, foreign-based ownership or sovereign wealth funds or . . . nonprofit groups." Further, the structure of the buying group and deal have to be scrutinized by the league finance committee, which is comprised of owners, who advise the group and whose recommendations carry the greatest weight when there is a vote of the full ownership.
"Ultimately, when the sale of the Commanders has finally been completed, the NFL will have a new norm for owners and sales that fits the current times, according to Kishner."
"As team valuations rise, I think you need to evolve your rules structure, so that it's conducive to putting the best product on the field," he said.
Read the full article in Law360 here. Access may require a subscription.