Cleveland Browns owner Jimmy Haslam’s Pilot Flying J company is $4 billion in debt and has a “downgraded” credit rating, according to the Wall Street Journal.
Pilot Flying J was recently investigated by the FBI for possible fraud. Haslam has denied any knowledge of the company’s alleged questionable business dealings.
A dozen trucking companies sued Pilot Flying J and five former employees pleaded guilty to charges stemming from the FBI investigation.
The Haslam family also sold their shares in the Class AA Tennessee Smokies minor league baseball team.
At the time of the FBI investigation, Haslam said at a news conference that Browns fans need not worry.
“(The investigation) appears to be centered on a very insignificant number of customers and the application of rebates ... owed to customers were not paid. ... We of course disagree with that.”
But since then he has been offering settlements to trucking companies.
Of greater concern, however, is Haslam’s future as the Browns owner in the wake of the Wall Street Journal report, which stated that Pilot Flying J’s debt nearly doubled to $4 billion over the last two years while the owners gave themselves two payments totaling $1.7 billion from it, according to Moody’s Investors Service.
Pilot issued $1.1 billion of the debt last year, mainly to fund a $700 million dividend, which was partly to enable Haslam to buy the Browns, according to Standard and Poor’s Corp.
Moody’s provides credit ratings, research and risk analysis and S&P is a financial services company that researches stocks and bonds.
Not only is Pilot Flying J nearly $4 billion in debt before it was raided but the Wall Street Journal also reported that S&P classified its financial risk as significant.
But Pilot Flying J’s cashflow is not known.
The Wall Street Journal also reported that Haslam believes Flying Pilot J could pay down the debt quickly. The Browns could turn a profit for Haslam and he may have profited from the sale of the Smokies.
He bought the Smokies for a reported $7.5 million in 2002. Most Southern League franchises are now reportedly worth about $12 million range. However, no purchase price was made public.
Haslam bought the Browns from Randy Lerner last year for about $1 billion. He paid Lerner $700 million up front and owes $300 million by Oct. 16, 2016.