Dan Snyder claims in court filing that minority owner Dwight Schar is trying to extort him via media leaks.
Since November, there’s been an interesting court battle going on with the Washington Football Team, with minority owners Dwight Schar, Fred Smith and Robert Rothman filing a federal lawsuit to try and sell their combined shares (which total 40 percent of the team) as a group to prospective buyers Behdad Eghbali, José Feliciano and Kwanza Jones for $900 million. That above report (from Will Hobson, Mark Maske and Liz Clarke in The Washington Post on Nov. 20) says that “according to people familiar with the situation,” majority owner Dan Snyder (seen above ahead of a 2018 game) is blocking the sale by trying to exercise his right of first refusal for the shares held by Smith and Rothman, but not the 15 percent held by Schar. And this lawsuit has now wound up thoroughly in the media realm, with Snyder claiming in a filing Wednesday that “I firmly believe that Plaintiffs’ motion and supplemental filing and the news articles that they have generated are the latest in the effort to extort me.”
What articles in question are those? Well, the motion referenced came Friday, with that seeing the minority shareholders asking U.S. District Judge Peter J. Messitte to sanction Snyder for “violating a Nov. 19 court order barring all parties from leaking information about negotiations, disparaging one another or otherwise interfering with the process.” The perhaps even more notable recent article was Tuesday’s piece in the Post detailing a $1.6 million confidential settlement paid to a former female employee of the team in 2009 after she accused Snyder of sexual misconduct. And Snyder is now blaming Schar for the recent rounds of headlines.
In the document, Snyder initially focuses on the potential connection between Schar and Monday’s report that Snyder settled a sexual misconduct lawsuit in 2009 for $1.6 million. Although Snyder doesn’t expressly claim that Schar leaked the information to the Washington Post, Snyder suggests that a recent court filing by Schar and the other minority owners contained “irrelevant and spurious material” that, when quoted by the story from the Post regarding the settlement, “improperly give the misleading impression . . . that there was merit to the allegations of misconduct,” and that the purpose of the court filing by Schar and the other minority owners “is now clear: to try to continue to smear me in an effort to gain leverage in this business dispute.”
Snyder then alleges in the declaration that Schar has “knowledge that no evidence of wrongdoing was found after an investigation by a well-respected law firm,” and that Schar “nevertheless threatened to reveal [the settlement] to discredit me and embarrass my family, but which the insurance carrier decided to settle.” Although not expressly linked to the report of the $1.6 million settlement, the context plainly indicates that this statement represents Snyder’s response to the question of whether he engaged in misconduct in connection with the events leading to that settlement.
Snyder’s declaration then pivots to the broader allegation that Schar has tried for months, via articles ultimately appearing in the Washington Post “that characterized the Team and me personally in a negative manner,” to pressure Snyder to sell. Snyder claims that Schar has “funneled information about me and the team to Mary Ellen Blair, a former Executive Assistant with the Team, to be proivided to The Washington Post.” Snyder also contends in the declaration that Blair has confirmed that Schar “told [her] to share information with The Washington Post,” and that Schar’s daughter bought Blair a “‘burned phone’ in order to attempt to escape detection of Mr. Schar’s conspiratorial communications.”
Snyder’s declaration subsequently alleges that, “[f]or the past five months, there have been repeated threats by Mr. Schar and others associated with him.” Snyder’s declaration alleges that, on July 25, Schar threatened Snyder’s personal attorney, “telling him that the threat he has been seeking to hold over me would come out if I didn’t ‘just sell the team’; that I ‘won’t have a choice’; that the story ‘will kill Dan’; and that I ‘will suffer a terrible existence.’”
There are a few things to keep in mind with these back-and-forth filings. One is that media coverage absolutely can have an impact on the outcome of a sale like this, and the minority owners could benefit from negative coverage of Snyder. If pressure builds to a point where Snyder sells his stake in the teame, the minority 40 percent Schar, Smith and Rothman collectively hold suddenly might be more valuable; a buyer of Snyder’s share might pick up the minority shares as well. And that could be a difference of hundreds of millions of dollars.
As the Post‘s Nov. 20 piece noted, the team was estimated at a value of $3.5 billion by Forbes this year. That would make 40 percent worth $1.4 billion. But those valuations usually apply to controlling stakes rather than minority shares, which explains why the accepted offer (which Snyder is blocking with his attempts to exercise a right of first refusal for Smith and Rothman’s shares but not Schar’s, which led to this initial lawsuit) for the group’s 40 percent share was only $900 million. So, yes, there would seem to be incentive for Schar to “smear [Snyder] in an effort to gain leverage in this business dispute.” But that doesn’t necessarily prove that he’s doing it.
It’s worth remembering that just because media coverage has an impact on an outcome, that doesn’t mean the coverage was constructed to create that outcome. The Post‘s discussion of that 2009 $1.6 million settlement is an example of that; yes, that’s coverage that is negative for Snyder’s image, and it’s possibly helpful for Schar. But that settlement itself is absolutely newsworthy, especially with the Post‘s comprehensive coverage this summer of stories of 15 former Washington employees who said they experienced sexual harassment at work, plus stories from female journalists who covered the team (which led to a call for change from the Professional Football Writers of America), plus stories from another 25 employees later on.
That’s led to the NFL conducting an investigation into those reports, with former attorney general Loretta Lynch recently added to that probe. So coverage of that settlement (and of some of the other intertwined actions here) has value to the public beyond what it means for Snyder or Schar. And it’s not proven at all at this point where the coverage of that settlement came from, and what role if any Schar played. And even if Schar or the other minority owners are proven to have been involved in some way, that might have negative impacts on their court case given that November order, but it doesn’t mean that this settlement wasn’t worth covering.
The claims here about Schar buying Blair a burner phone for communications with him also need to be considered carefully for what they are. They are not claims that the Post information is solely sourced from Blair or that the Post improperly handled information from her, but rather only claims that Schar and Blair were in secret contact. That doesn’t necessarily mean anything negative when it comes to the actual Post coverage; if information was obtained from Blair, and if it was run through a proper filter of bias consideration, it could still be valuable even if Schlar did tell Blair to talk to them. That could be bad for Schlar given the no-leak order, but it’s not necessarily an indictment of the paper’s coverage.
It’s also worth noting that Snyder isn’t the only one claiming the other side is using the media against him. As mentioned, the minority owners’ filing Friday claimed Snyder’s side was leaking to The New York Times about a possible sale of their shares to Snyder. And that story, by Ken Belson and Katherine Rosman, had claims of its own about the 2009 settlement, including that “The team fired the woman because it said she lied to the team’s lawyers.”
The minority owners objected to that story in a court filing Monday, and said it showed that Snyder’s side was leaking to the media. Their filing says “This self-serving and one-sided framing of a serious accusation of sexual misconduct against Mr. Snyder, which depicts the victim as someone who ‘lied’ and portrays the settlement solely as a payment ‘to avoid negative publicity if the woman sued,’ further confirms that Mr. Snyder or his agents are the source of the leaks of confidential information.” For what it’s worth, Snyder disputed that in another filing Tuesday, saying he didn’t leak the information himself and he doesn’t believe his advisors did.
At any rate, this isn’t the end of the battle over the media discussion here. There will be a virtual hearing before Judge Messite on Jan. 7, with Snyder, Schar, Rothman and Smith all slated to appear to discuss their back-and-forth claims about the other side leaking information. We’ll see what that leads to. But it’s clear that both sides in this ownership dispute have strong thoughts about what media coverage of it might mean, and that both of them are claiming the other side is leaking information to the media in defiance of a court order on the matter.
WHO IS DAN SNYDER
Daniel Marc Snyder (born November 23, 1964) is an American businessman who is the majority owner of the Washington Football Team, an American football team belonging to the National Football League (NFL). Snyder bought the team, then known as the Redskins, from Jack Kent Cooke‘s estate in 1999. He also founded Snyder Communications.
Washington Football Team ownership
In May 1999, Snyder purchased the Washington Football Team known at the time as the Washington Redskins, along with Jack Kent Cooke Stadium (now FedExField) for $800 million following the death of previous owner Jack Kent Cooke. At the time, it was the most expensive transaction in sporting history. The deal was financed largely through borrowed money, including $340 million borrowed from Société Générale and $155 million debt assumed on the stadium. Annual loan servicing costs are an estimated $50 million. To pay down the team’s debt, in 2003, he sold 15 percent of the team to real estate developer Dwight Schar for $200 million, 15 percent to Florida financier Robert Rothman for a like amount; and 5 percent to Frederick W. Smith, the founder of FedEx, leaving him with a 65 percent ownership interest. Since Snyder became owner, the team’s annual revenue increased from more than $100 million a year when Snyder took over the team in 1999 to around $245 million by 2005.
WHO IS JOSE’ FELICIANO AND WIFE, KWANZA JONES
CLEARLAKE CAPITAL GROUP, L.P. IS A LEADING PRIVATE
INVESTMENT FIRM FOUNDED IN 2006, BY CO FOUNDERS, JOSE’ FELICIANO AND WIFE, KWANZA JONES
Both Jones and Feliciano made their way to Princeton from modest upbringings and matriculated at a time when the school was far less diverse than it is today. Jones was raised in the Washington D.C.-area and chose Princeton over historically black colleges where her mother and other family members graduated. She studied international affairs and was a letter-winner in track. After graduating in 1993, Jones pursued an eclectic mix of careers in law, music and philanthropy. She worked in courts, taught at schools like New York University and even topped Billboard charts with her music.
Feliciano left Puerto Rico at the age of seventeen to study at Princeton, graduating in 1994 with high honors and a degree in mechanical & aerospace engineering. Afterwards, he cut his teeth on Wall Street as a banker at Goldman Sachs, where he was mentored by Robert F. Smith, who would later create Vista Equity Partners. After getting an MBA at Stanford and doing a stint at Tennenbaum Capital, Feliciano co-founded Clearlake Capital with partner Behdad Eghbali in 2006. On the back of stellar investment results, Clearlake has become one of the fastest growing and most valuable private equity firms in the country, with over $24 billion in assets under management. A 2018 sale of a stake in Clearlake to outside investors made both Feliciano and Eghbali billionaires, according to Forbes’s estimates.
Jones is an artist, investor, lawyer, and entrepreneur who founded SUPERCHARGED, a media company that specializes in self-development and hosts a community-driven platform. She previously taught cross-cultural negotiations at New York University and was a mediator for the New York City Civil Court. She serves on numerous boards, including the board of directors for the Susan G. Komen organization and the board of trustees of Bennett College, a historically black liberal arts college for women. Jones also has recorded multiple music albums, with several of her songs hitting the top ten on Billboard Magazine’s dance/electronic music charts.
Jones and Feliciano were close friends during their time at Princeton. As Jones recalls: After a serious track injury in her senior year, it was Feliciano who would carry her books to class. After graduation, they formed a relationship, got married, and eventually moved to Southern California, where Clearlake is headquartered.
In recent years, Jones and Feliciano have turned their wealth and attention to philanthropy, working to open new doors to educational and entrepreneurial opportunities. In 2018, their $1 million gift to Bennett College, one of the nation’s oldest historically black colleges, was a crucial part of a funding drive that helped keep the school open. Bennett was where Jones’ mother and a number of other family members earned college degrees, propelling them into careers in industries such as law. Jones has also translated her energy and personality into a growing initiative called SUPERCHARGED, a media company and community focused on empowerment.
Feliciano, the recipient of a number of grants and fellowships while studying at Princeton, credits philanthropies like the Robert Toigo Foundation in his rise on Wall Street. Now, behind the scenes, the Kwanza Jones & José E. Feliciano SUPERCHARGED Initiative has become and coming minority-run investment firms, having committed about $50 million to a handful of promising investors.
“Princeton was a catalyst and a validation for me,” reflects Feliciano. “Talent and investment judgment tends to be equally distributed across many different types of people. So if you give them an equal playing field, you will see excellence in many groups of people, who perhaps look a little bit different than they did before.”
WHO IS BEHDAD EGHBALI
#1063 On Forbes List, Behdad Eghbali
REAL TIME NET WORTH
- Behdad Eghbali co-founded Clearlake Capital in 2006. The private equity firm is based in Santa Monica, California.
- Clearlake Capital oversees $10 billion and is known for scoring some of the private equity industry’s best returns.
- Clearlake is known for buying software, industrial and consumer products companies.
Net worth over time