Washington Commanders might have engaged in ‘unlawful’ financial conduct, Congress alleges to FTC

Washington Commanders might have engaged in ‘unlawful’ financial conduct, Congress alleges to FTC

USA News

The House Oversight Committee announced Tuesday that it has reason to believe the Washington Commanders and owner Daniel Snyder might have withheld or concealed ticket revenue and related funds as part of “a troubling, long-running, and potentially unlawful pattern of financial conduct.”

In a letter sent to the Federal Trade Commission on Tuesday, the committee said that as part of its ongoing investigation into allegations of a toxic workplace culture within the Commanders’ organization, it obtained evidence that the team might have underreported some of its ticket revenue to the NFL. A portion of ticket revenue is pooled among NFL teams as part of the league’s revenue-sharing agreement.

The committee also informed the FTC, which investigates deceptive business practices, that the team might have intentionally withheld “approximately $5 million” in refundable ticket deposits that it owed to fans and corporations.

“This new information suggests that in addition to fostering a hostile workplace culture, Mr. Snyder also may have cheated the team’s fans and the NFL,” Rep. Carolyn Maloney (D-N.Y.) said in a statement.

“While the focus of our investigation remains the Commanders’ toxic work environment, I hope the FTC will review this troubling financial conduct and determine whether further action is necessary. We must have accountability.”

In response to a request for comment, Commanders spokesperson referred USA TODAY Sports to the statement it released in late March, in which it categorically denied “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,” the team said. “We continue to cooperate fully with the Committee’s work.”

NFL spokesperson Brian McCarthy said the league is also cooperating and has turned over more than 210,000 pages of documents to the committee.

“The NFL has engaged formerchair Mary Jo White to review the serious matters raised by the committee,” McCarthy said.

In its letter, which spans 19 pages and was first reported by The Washington Post, the House Oversight Committee details how it received information about the alleged financial misconduct from Jason Friedman, a former sales executive who spent 24 years with the Commanders.

Friedman told the committee that, among other things, the Commanders used “two sets of books” for financial accounting – one of which underreported ticket revenue to the NFL. He also provided emails to the committee between himself and other team executives in which they appear to discuss reallocating ticket revenue, which they termed “juice.”

One email exchange appears to reference counting “juice” from a Washington home game as revenue from a college football game between Navy and Notre Dame.

“Even though we sold $811,800 worth of tickets, we reported that sale to the NFL at a total of $721,600, leaving $162,360 of juice, of money that would just go right into the owner’s pocket and didn’t have to be exposed to the NFL revenue sharing program,” Friedman told the committee, according to an excerpt of his interview included in the letter.

Friedman also claimed the Commanders would “improperly convert certain unclaimed security deposits into revenue for the team to use for other purposes.”

According to the letter, Friedman told the committee that  the team would require some fans or businesses to pay a refundable security deposit for a lease on premium seats, then fail to refund that deposit when the lease expired. Those deposits would also be converted into “juice,” Friedman claimed.

“(Many) of (the customers) forgot about it,” he told the committee, according to an excerpt included in the letter.

“In many cases, with corporate accounts, the attention name on the account would change over time. So the person who entered into the lease and agreed to pay the security deposit would be different from the person who was managing the account when the lease expired ten years later, and the new point of contact wouldn’t know to ask for the security deposit.”

Attorneys Lisa Banks and Debra Katz, who represent Friedman, described the House Committee’s letter as “damning” saying it shows that the Commanders’ misconduct “goes well beyond the sexual harassment and abuse of employees already documented.”

A spokesperson for Republicans on the House Oversight Committee, meanwhile, dismissed the letter as a poor use of the committee’s time, describing Friedman as a “disgruntled ex-employee who had limited access to the team’s finances.”

Contact Tom Schad at tschad@usatoday.com or on Twitter @Tom_Schad.

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