Cleveland Browns owner Jimmy Haslam is under federal investigation over payments prosecutors say he made to executives at Pilot Travel Centers that could have had a billion-dollar impact on the sale of his stake in the company to the Warren Buffett-helmed Berkshire Hathaway, Bloomberg reported on December 13.
Haslam has served as the majority owner of the Browns, alongside his wife, Dee, since October 2012. The 69-year-old businessman also serves as the chairman of the board of the Pilot Flying J truck stop chain and has numerous other executive-level involvements in the sports world.
The Haslams have the option to sell the remaining 20% stake in Pilot to Berkshire Hathaway, which already owns the other 80%, after January 1, 2024, the Associated Press reported.
Jimmy Haslam Sued Warren Buffett in October 2023 Over Accounting Methods
Payments that could have artificially increased the value of Haslam’s stake in Pilot Travel Centers are at the heart of this legal issue.
“Prosecutors in the Southern District of New York are reviewing the alleged payments, which could have boosted the value of Haslam’s Pilot shares, according to people familiar with the matter. The probe was disclosed at a court hearing in a civil lawsuit between Haslam and Berkshire,” Bloomberg reported.
This isn’t the first recent legal interaction between Haslam, who owns Pilot Corp., according to Bloomberg, and his fellow billionaire, who helms the company that holds majority ownership in Pilot Travel, the truck-stop chain.
The Browns owner sued Buffett in October, claiming Berkshire attempted to devalue the remaining Pilot stake that hadn’t yet been sold.
As Reuters reported in October 2023, “According to a complaint made public on Thursday in Delaware Chancery Court, Berkshire has unilaterally and without consent adopted ‘pushdown’ accounting rules that artificially reduce Pilot’s earnings before interest and taxes, and ‘grossly’ reduce how much the Haslams would receive if they sold their remaining stake. The complaint said the family objected repeatedly, but Buffett refused to commit not to use pushdown accounting.”
The new investigation has come to light due to information exchanged before the civil trial over accounting methods used in the sale, Bloomberg reported.
According to the outlet, Haslam alleged that Buffett-installed Pilot Travel executives altered accounting methods to devalue his holdings by $1.2 billion if he chooses to sell his remaining stake to Buffett.
Meanwhile, Buffett’s lawyers claim Haslam “launched an ‘illicit scheme’ involving secret pledges of bonuses to be paid out of his own pocket to 15 senior executives and other managers. He promised the millions of dollars in ‘side payments’ to the executives to boost short-term profit at the expense of Pilot Travel’s long-term value, Berkshire’s attorneys allege,” Bloomberg reported.
Among other claims, Berkshire also alleges that David Clothier, Pilot Travel’s controller, received a side bonus and altered financial records to benefit Haslam, according to the outlet
A Delaware-based trial on Haslam’s accounting allegations is set to take place in January 2024, according to Bloomberg.
Haslam Also Owns NBA & MLS Teams
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Haslam purchased the Browns franchise from Randy Lerner for $1 billion in 2012, but that’s by no means his only tie to the world of sports. It’s not even his only NFL connection.
The billionaire bought a minority stake in the Pittsburgh Steelers four years earlier in 2008, though he was forced to divest in 2013 upon purchasing the Browns. NFL bylaws prohibit simultaneous ownership stakes in multiple teams.
Since Haslam’s Cleveland purchase, which officially took place seven games into the 2012 campaign, the Browns have made the playoffs just once, losing to the Kansas City Chiefs in the Divisional Round after going 11-5 during the 2020 regular season. That could change at the conclusion of an injury-plagued 2023 campaign that has featured four different starting quarterbacks.
Jimmy and Dee Haslam also bought a stake in the NBA’s Milwaukee Bucks from Marc Lasry in early 2023. The NBA board of governors approved the sale in April after the Haslams reached a late-February agreement with Lasry to purchase 25% of the Bucks for $3.5 million, joining Wes Edens and Jamie Dinan as co-owners, per ESPN.
Haslam also purchased the MLS’ Columbus Crew from Anthony Precourt in 2018, and that’s been arguably his most successful tenure as a sports executive. Not only did he keep the club from moving, but he’s also won two MLS Cups (2020 and 2023).
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