Particularly, information present that from 2009-2015, the Membership made inappropriate and/or
unexplained accounting entries or changes that lowered shareable revenues held in two methods:
Sponsor, Dealer, and Buyer Misclassifications. Working with forensic accountants, the Investigation recognized, for the 2011-2015 seasons, roughly $9 million, which seems to have been shielded by misclassifying shareable revenues held in accounts associated to sure giant gross sales to sponsors and brokers and clients (the “Sponsor, Dealer and Buyer Misclassifications”). A good portion, roughly $7 million, contains revenues derived from NFL tickets offered or bartered with sponsors at falsely undervalued costs or revenues from facilities related to NFL video games that have been diverted to particular occasions. Contemporaneous emails discussing these revenues indicated a transparent intent to falsify income information to be able to keep away from sharing. For instance, July 2010 communications reveal that the Commanders decided {that a} “much less apparent” option to “keep away from the VTS implications” on an NFL hospitality tent offered to a sponsor was to redirect the income ($17,773) to hospitality tents for a Virginia Tech faculty recreation, regardless that “the deal doesn’t reference VT” and so they “wont [sic] ship the tickets to them.” When an worker requested if it was “kosher” to “simply redirect[] the income to a nonshareable [sic] dept,” a senior govt, replied “its [sic] effective.” Different Sponsor, Dealer, and Buyer Misclassifications seem to have concerned: (i) promoting NFL tickets by way of brokers or on web ticket gross sales platforms after which classifying the ensuing income as particular occasion income; (ii) reclassifying income from NFL tickets as non-shareable income in hospitality accounts (for particular occasions); and (iii) recording forfeited safety deposits on NFL season tickets, as “miscellaneous revenue.”24
Deferred Revenue Transfers. Given the acknowledged use of particular occasions accounts to improperly defend NFL revenues from sharing, a forensic accounting evaluation was carried out on sure transfers of revenues from NFL-related accounts to particular occasion accounts. This evaluation recognized that, for the 2009-2015 seasons, an extra $44.49 million of ticket, parking, license and different revenues initially recorded by the Membership in an account that was recognized as holding NFL-related revenues seems to have been transferred to non-shareable particular occasions accounts (the “Deferred Revenue Transfers”). The Membership not too long ago supplied data exhibiting that the Membership’s accounting practices concerned commingling shareable football-related and non-shareable particular occasion revenues within the authentic account. Regardless of this, due to the absence of obtainable accounting documentation to help the appropriateness of the overwhelming majority of those transfers and the inconsistencies and obvious weaknesses within the Membership’s historic accounting practices, the Investigation couldn’t conclude how a lot of the Deferred Revenue Transfers characterize reliable non-shareable revenues or mirrored improper income shielding practices, together with these recognized within the Sponsor, Dealer, and Buyer Misclassifications.
With a view to decide whether or not, in truth, the Deferred Revenue Transfers included
unreported shareable revenues, we recognized for the Membership the precise normal ledger journal
24
These classes of probably misclassified revenues occurred within the following seasons: 2011 ($0.33 million); 2012 ($3.00 million); 2013 ($1.79 million); 2014 ($1.88 million); 2015 ($2.03 million).
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