As Cleveland Browns owner Jimmy Haslam prepares to head to court with Warren Buffet over the multi-billion dollar sale of Pilot Travel Centers, one of the NFL’s most well-known owners is facing accusations of bribery from one of the richest men in the world.
Buffet and Haslam have been negotiating a deal for years, with Buffet’s company Berkshire Hathaway paying $11 billion for an 80 percent stake in Pilot in 2017 and 2023. The Haslam family received $2.758 billion in 2017 for a 38.6 percent stake followed by an $8.2 billion payment this year. However, the negotiation process over the final 20 percent stake has turned ugly.
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Haslam has accused Berkshire of trying to drive down the value of Pilot Corp. by allegedly changing its accounting for Pilot to lower the business’s profits. Doing so would significantly reduce the final payment for the remaining stake.
Now, Buffet’s company has filed a countersuit, alleging to the Delaware Chancery Court that Jimmy Haslam devised a scheme to promise “massive side payments” to top Pilot employees in exchange for them inflating the company’s short-term profits. Berkshire claims that promised payments influence the employees’ decision-making, encouraging them to make short-term calls that would boost profits even at the cost of long-term value to the company.
As explained by Jonathan Well of the Wall Street Journal, the ongoing legal fight between Buffet and Haslam’s family could have significant ramifications. All of this stems from the battle over the sale of Pilot Corp. and a 20 percent stake worth more than $1 billion, though Buffet claims the remaining stake is valued at $3.2 billion.
It’s all tied to how the two sides are valuing Pilot Corp. Buffet’s group is arguing that the Haslam family inflated the value of the company to try and get more money out of Berkshire Hathaway. The company already paid $11 billion for 80 percent of Pilot Corp. with the final payment being negotiated with disagreements over the perceived value.
While the legal process could solve the matter, allegations of bribery complicate things. There’s also the possibility that Haslam doesn’t receive the final amount of money he expected, which could be more than $1 billion dollars in lost value.
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- Cleveland Browns cap liabilities (2024): $284.675 million
It might not seem like a story with football implications, but the Browns are in a challenging spot heading into 2024. Cleveland is currently projected to be $8.8 million over the salary cap and the costliest part of Deshaun Watson’s contract is about to kick in. If Haslam doesn’t receive the money he expects or there are financial consequences to the bribery allegations, it could lead to Browns’ ownership tightening its spending.
The Delaware judge overseeing the case scheduled a two-day trial in January 2024 for the allegations against Haslam. In order for a ruling to be made at that trial, however, Berkshire can’t request additional evidence beforehand and must limit the number of witnesses it provides.
