In April, Cleveland Browns owner Jimmy Haslam made news for the wrong kind of reasons when his truck stop company, Pilot Flying J, was investigated for fraud by the FBI. The feds have accused the company's sales executives of withholding fuel rebates to defraud trucking companies.
Haslam, who has returned to his position of CEO at Pilot Flying J, has denied having any knowledge of the fraudulent business practices, which has resulted in multiple plea deals from the company's executives. NFL Commissioner Roger Goodell met with Haslam and the league has no plans to remove him from day-to-day operations owner of the Browns.
"Jimmy is doing everything he’s asked. He’s cooperating," Goodell said before the 2013 NFL draft. "He wants to make sure that he is doing all of the right things in that regard and he has assured us that he is going to."
But the situation involving Pilot Flying J has apparently gotten worse, as the Wall Street Journal — via the Cleveland Plain-Dealer — reported last week that the company has $4 billion in debt and the S&P has downgraded the company's credit rating.
From the Wall Street Journal:
"The company's debt nearly doubled to $4 billion in a two-year period through last year, as its owners paid themselves two payments totaling $1.7 billion from it, according to Moody's.
"Last year, Pilot issued $1.1 billion of the debt -- largely to fund the second one, a dividend for $700 million, according to S&P. That was partly so Jimmy could buy the Cleveland Browns."
Last August, Haslam reached an agreement to purchase the Browns from Randy Lerner for $1.05 billion. Haslam paid $700 million up front — the same amount as the dividend — for 70 percent of the Browns and will receive the remaining 30 percent with a $350 million payment on Oct. 16, 2016. According to the Wall Street Journal report, Haslam says the company "could pay down the debt quickly." But $4 billion is a significant sum of money, which raises legitimate questions about the owner's cash flow. The Browns made big splashes on the opening day of free agency in Paul Kruger and Desmond Bryant, but were otherwise quiet and currently rank in the bottom third of the league in terms of cash spending for the 2013 season.
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- Jimmy Haslam
- Pilot Flying J
- Cleveland Browns