How Dan Snyder Bought the Redskins and Changed the Franchise

How Dan Snyder Bought the Redskins and Changed the Franchise

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Daniel Snyder is the current owner of the Washington Redskins football team, the Johnny Rockets 50s-themed restaurant chain and Chairman of the Board of Six Flags Inc. He and his wife Tanya have three children who attend a private school in Bethesda, Maryland. Dan Snyder led an investment group that bought the Redskins and their home stadium through a blind auction in 1999, which has altered the course of the franchise.

Background

Daniel Snyder founded Snyder Communications Inc. in 1988, along with his older sister, Michele. This company’s primary business is outsourcing marketing services, including database marketing, direct marketing and proprietary product sampling. Snyder Communications was earning $43 million in annual revenue in 1995 and went public in 1996, making Snyder the youngest person to head a company listed on the New York Stock Exchange at the age of 31. Snyder Communications’ annual revenue grew to $333 million in 1997.

Initial Bids

Former Redskins owner Jack Kent Cooke died in April 1997, leaving most of his estate to fund a college scholarship in his name. At that time, his son, Jack Kent Cooke Jr., expressed his desire to make the winning bid to keep the Redskins in the Cooke family.

Real estate financier Andrew Penson made the first offer of $450 million for the Redskins and their stadium in August 1998, before the bidding even opened. That offer would have been the highest price that anyone has ever paid for an NFL franchise, but the bidding would go much higher. After the initial round of bidding opened, additional groups led by the following investors made offers:

  • Baltimore Orioles majority owner Peter Angelos
  • Fort Worth investor David Bonderman
  • Arizona hotelier Sam Grossman
  • New Jersey Devils owner John J. McMullen
  • New York real estate investor Howard Milstein

Experts at that time expected the winning bid to exceed $500 million.

Snyder’s Involvement

The news that Dan Snyder intended to make a bid for the Redskins broke on Nov. 7, 1998. The Washington Post reported that Snyder would join the bidding after it received a memorandum that Morgan Stanley Dean Witter had distributed to prospective buyers. Snyder formed an alliance with Milstein and his brother Edward a few days before the initial bids were due on Nov. 23. The next step was for six trustees to review the bidders and select the ones who would advance to the second round of bidding. A three-fourths majority of NFL owners would then need to approve the transfer of ownership.

Second Round

The trustees invited eight investment groups to submit second bids by Dec. 22. Daniel Snyder and Howard Milstein offered over $700 million in cash, stipulating the offer would expire the day after the bids were due. The NFL declined that offer, although Snyder’s investment group remained in the running. The NFL’s finance committee spent the next two months reviewing offers and requested additional documentation on Snyder’s financing plan in mid-February. It also hired a private investigator to perform background checks on both Snyder and Milstein at that time.

The NFL then asked Milstein to restructure a $400 million loan that accounted for the majority of the bid from Snyder’s group. The primary reason for this request was that the NFL felt this plan carried too much debt, increasing the risk of the deal falling through. News reports also indicated that some NFL owners felt Milstein was overly litigious. Nevertheless, Snyder and Milstein agreed on Jan. 10, 1999 to buy the Redskins for about $800 million.

NFL Requirements and Final Sale

Snyder and Milstein asked for a delay on the NFL’s vote to approve their purchase. They met with NFL Commissioner Paul Tagliabue, who granted the request on Mar. 17, 1999. Tagliabue stated that the reason for the extension was because the involved parties all agreed that getting approval was a media event rather than a business process. Milstein added that he and Snyder would fully satisfy the NFL’s requirements, as indicated by their willingness to wait additional time for a decision. Tampa Bay Buccaneers owner Malcolm Glazer also compared the approval to a marriage due to the caution required for both processes.

NFL owners rescheduled the vote for April 7, by which time Milstein received had $125 million from his father. Milstein claimed it was a gift, but some owners were concerned that it was actually a loan. Additional barriers to approval included the fact that Milstein’s portion of the offer was largely secured by real estate holdings, since that market was volatile at the time. Snyder and Milstein withdrew their offer when it became clear they lacked the needed support from NFL owners.

Dan Snyder then began working to secure the financing he would need to make the $800 million offer without Milstein’s support. Additional backing came from family members as well as Fred Drasner and Mortimer Zucker, two of the original investors in Snyder Communication. This financing included $350 million in equity, causing Cooke to increase his bid to $720 million. However, Cooke withdrew that offer in late April as it became clear that Snyder was nearing an agreement with the trustees. NFL owners finally voted to approve the sale of the Redskin to Snyder’s investment group on May 25, 1999, breaking the previous record for the sale of an NFL franchise by over $250 million.

Aftermath

The Redskins’ annual profit has increased by almost $100 million during Daniel Snyder’s ownership of the franchise. They also had the second-highest gross annual income after the Dallas Cowboys as of 2007. This financial success is primarily due to an agreement with FedEx to rename the Redskins’ stadium to FedExField, a deal work $207 million. Sponsorships with major corporations like Anheuser-Busch, Nextel and Pepsi have also contributed to the Redskins’ financial success under Snyder’s leadership.

Additional sources of revenue generation include enlarging the stadium’s capacity to 84,000, which is currently the highest in the NFL. Snyder also added more club seats and sold existing club seats that had previously remained vacant. Other franchises are now following Snyder’s model for revenue generation.

Learn more about how Dan Snyder purchased the Redskins here: https://www.washingtonpost.com/sports/2019/05/24/how-daniel-snyder-bought-redskins-years-ago/

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