Former partner sues BofA over Commanders sale

A longtime former minority partner of Daniel Snyder filed a federal lawsuit Wednesday against Bank of America, alleging that the bank conspired with the NFL and Snyder to force his three minority partners to sell their stake in the Washington Commanders back to Snyder at a valuation far below the record $6.05 billion that Snyder was paid for the team.

Robert Rothman, the Tampa, Florida, billionaire who is chairman and CEO of Black Diamond Capital, alleges that Bank of America, along with Snyder and NFL officials, who are not named as defendants in the lawsuit, “conspired” to force him and his two fellow minority partners to sell their 40% stake to Snyder for $875 million in April 2021. The sale price reflected a team valuation of less than $3 billion, the lawsuit says. In July 2023, Snyder sold the Commanders for $6.05 billion, which the lawsuit claims “was the culmination of [Bank of America’s] and Snyder’s conspiratorial conduct.”

Bank of America spokesman Bill Halldin said, “We will vigorously defend ourselves against these allegations,” but he had no further comment. John Brownlee, an attorney for Snyder, did not respond to calls for comment Wednesday. NFL spokesman Brian McCarthy declined to comment.

The lawsuit alleges that Bank of America turned “a blind eye” to “financial red flags” raised by Snyder’s financial mismanagement of the team, including an increasing reliance on debt and failure to pay his partners their quarterly share of profits. The centerpiece of Rothman’s lawsuit is the bank’s December 2018 approval of the franchise’s $55 million credit line taken out by Snyder without his minority partners’ knowledge or required approval. The bank allowed Snyder to draw $38 million in March 2019 from the credit line “without verifying Snyder had obtained board approval,” the lawsuit states.

The bank approved the loan at the same time Snyder was allegedly “self-dealing” by paying himself millions of dollars through the Commanders, including charging $3.5 million to place a team logo on his private jet and $7 million in expenses for “yacht(s), residential properties, personal staff, automobiles, and other personal entertainment and lifetime expenses,” according to the lawsuit.

By allegedly ignoring “Snyder’s improper and illegal dealings,” Bank of America executives “knew or reasonably anticipated that Snyder would have to sell the Franchise as a result of Snyder’s indebtedness,” Rothman’s lawyer Brian Kopp wrote in the 45-page complaint filed Wednesday in Tampa federal court.

The lawsuit alleges that the bank repeatedly put its own financial interests ahead of Rothman’s and the other two minority partners. Bank of America “failed to notify Rothman of the Franchises’ improper conduct prior to or after closing the 2018 Loan,” the lawsuit says. The loan “allowed the bad actors to disguise improper financial dealings, cash flow problems and internal Franchise self-dealing to the financial detriment of Rothman.”

The sale of the minority partners’ stake to Snyder — as well as the sale of the franchise to a group led by Josh Harris in July — was brokered by Bank of America. Rothman’s lawsuit alleges that Bank of America’s actions “forced Rothman to sell his franchise shares below market value.”

Rothman, who has been a client of Bank of America’s wealth management arm since the late 1990s, is seeking at least $75 million in compensatory damages.

“For profit and prestige, BofA blind-eyed legal, ethical and moral obligations,” Kopp said Wednesday. “As a client of the BofA’s financial service division, Bob was entitled to honest financial advice free of conflict and bad motive.”

Rothman declined to comment.

ESPN first reported on Dan Snyder’s secret $55 million credit line in February. Snyder’s undisclosed loan — and how he obtained it — became the most contentious issue in the bitter, yearlong clash with the three men who had been minority partners since 2003. How Snyder obtained the credit line without providing the necessary board approval documents to the bank was a central allegation leveled against Snyder by Rothman and his two fellow billionaire partners in a confidential NFL arbitration petition filed in August 2020, a copy of which ESPN obtained.

As ESPN reported, and as the lawsuit states, NFL commissioner Roger Goodell, general counsel Jeffrey Pash and an NFL-appointed arbitrator all refused to investigate the partners’ sweeping allegations of financial wrongdoing against Snyder, including the $55 million loan that was not approved by the team’s board, as required by the team bylaws. The NFL shut down the mediation session after two days in mid-January 2021, and the limited partners reached an agreement with Snyder several months later to sell their 40% stake back to him for $875 million.

The lawsuit also states, “During this process, Snyder privately and publicly commented that ‘nobody can f— with me’ as Snyder insinuated that he would use the ‘dirt’ that he had accumulated on individuals including, but not limited to, NFL owners, the NFL Commissioner and other business people associated with the NFL.”

One source with firsthand knowledge of the arbitration proceedings told ESPN that Rothman and his two fellow minority partners — FedEx chairman Frederick W. Smith and Dwight Schar, chairman of publicly traded home construction company NVR Inc. — believed Goodell and Pash had sided with Snyder over them. “They buried it and didn’t investigate it and covered it up,” the source told ESPN. Rothman also alleges that Bank of America, through Elliot McCabe, managing director of its Sports Finance & Advisory Group, “established a civil conspiracy … along with other unnamed co-conspirators, all of which acted with malicious motive in concert … including but not limited to the refusal of defendants and the NFL to investigate and take action against Snyder.” McCabe had no immediate comment, Halldin said.

“One way to get a controversial owner out is to allow him to over-leverage the franchise,” Kopp told ESPN on Wednesday. “Like those invested in real estate, owners can be asset-rich but cash-strapped. Two primary beneficiaries here are Bank of America and the NFL. In the end, the NFL eliminates a controversial owner, Bank of America garners significant profits and, in my opinion, neither cares who suffers harm as a result.”

The necessary approval to obtain the $55 million credit line by the Commanders’ board of directors, which the three minority partners served on, was never provided to Bank of America, despite bank officials asking Commanders executives repeatedly for it over the course of two months, the lawsuit states.

The odd circumstances surrounding the bank’s approval of Snyder’s credit line has caught the attention of federal prosecutors in the Eastern District of Virginia. Late last year, a federal grand jury issued subpoenas for documents involving the loan, sources say. In recent weeks, two sources with firsthand knowledge of the investigation told ESPN the criminal inquiry is continuing.

After they discovered the $55 million credit line in December 2019, the three minority partners sought all documents related to it, the lawsuit states. However, Bank of America allegedly refused to turn over any documents to the limited partners without a subpoena or court order. In October 2020, the three partners received an offer to purchase their combined 40% interest in the team. But Snyder allegedly blocked the negotiations. The lawsuit alleges that he and the bank were motivated to block the sale to a third party because Rothman would have gained access to materials related to the 2018 loan and other evidence of Snyder’s financial wrongdoing. After the two-day NFL mediation ended without an agreement in January 2021, Rothman alleges, McCabe “maintained that Rothman’s shares in the Franchise were ‘non-voting,’ subject to a ‘deep minority discount,’ and that the entire enterprise value of the Franchise was less than $3 billion.”

McCabe also allegedly told Rothman, through Snyder’s representatives, that “Snyder had no plan to sell the Franchise,” even in the months after the three minority partners sold back their interest in the Commanders to Snyder. The lawsuit alleges that McCabe “intentionally withheld information” regarding Snyder’s financial difficulties from Rothman “because Rothman would have refused to sell his 15.168 percent stake in the franchise if Rothman was aware of Snyder’s financial position.”

“With the assistance and cooperation of Defendants, Snyder refused to provide financial information, interfered with due diligence, and blocked the involvement of other investment banks in order to impede Rothman’s ability to obtain the true market value of Rothman’s ownership stake in the Franchise,” the lawsuit states.

In 2003, Bank of America presented the offer to Rothman to purchase 10% of the team. Bank of America also lent Snyder $875 million to buy out his three partners on April 2, 2021, the lawsuit states. And on Nov. 2, 2022, Snyder announced he had hired Bank of America/BofA Security to market and sell the Commanders.

“Defendants, along with named and unnamed co-conspirators, committed wire fraud, mail fraud, refused to provide financial information, interfered with due diligence, blocked the involvement of other investment banks and committed corporate improprieties on behalf of the Franchise in a way that negatively impacted monetary distributions to Rothman, Schar and Smith,” the lawsuit states.

On July 20, NFL owners unanimously approved Snyder’s sale of the Commanders to Harris and two dozen limited partners for $6.05 billion, an American sports franchise record. That same day, following an investigation, the NFL fined Snyder $60 million for sexual harassment allegations against him, the team’s toxic workplace culture and “financial improprieties.”