New league needs bailout, after one week
Owner of the NHL’s Carolina Hurricanes comes to the rescue of AAF with $250 million
The Alliance of American Football came into existence with what appeared to be sound financial backing.
The league, co-founded by television and film producer Charlie Ebersol and longtime National Football League personnel executive Bill Polian, received funding from a number of high-profile venture capital firms, including the Founders Fund backed by billionaire Peter Thiel and the Chernin Group, which also owns a majority stake in Barstool Sports. Salaries would be kept low, at least compared with the NFL: Each AAF player signs a three-year, non-guaranteed contract worth $250,000. The league has TV deals with CBS Sports, Turner Sports and the NFL Network.
In other words, the AAF seemed to be going out of its way to avoid the financial imprudence that doomed previous challengers to the NFL, such as the XFL (which itself is set for a revival next year) and the USFL before that. Apparently, it wasn’t enough.
According to David Glenn of The Athletic, the AAF needed a $250-million investment from Carolina Hurricanes majority owner Tom Dundon simply to make payroll after its first weekend of games Feb. 9-10. In return, Dundon will be introduced as the league’s new chair, Glenn reports.
“Without a new, nine-figure investor, nobody is sure what would have happened,” an unnamed source told Glenn. “You can always tell people their cheques are going to be a little late, but how many are going to show up on the weekend for games when they don’t see anything hit their bank accounts on Friday?”
The Hurricanes confirmed Dundon’s AAF investment and his appointment as AAF chair in a news released issued Tuesday morning.
“This was a terrific opportunity for Tom to expand his investment in the sports world,” Hurricanes President and General Manager Don Waddell said in the statement. “The AAF is off to an exciting start as a league and was founded on some truly unique and groundbreaking concepts.
As recounted by author Jeff Pearlman in his recently released book about the USFL called “Football for a Buck,” a number of teams in that briefly ascendant 1980s league had trouble paying their players, mainly because a number of the team owners were not on as financially sound ground as they let on when they joined the league.
On paper, the AAF shouldn’t have this problem: All of the teams are owned by the league itself and not individual owners. But if the AAF blew through its initial funding before the second weekend of its regular season, it could be a sign of future problems down the road.
Otherwise, the initial returns were promising. TV ratings on CBS for the league’s inaugural games were better than expected. The league’s noted rule changes — no kickoffs, no extra points, no onside kicks, teams must go for two following touchdowns — were seen as worthy. Though a few games were sparsely attended, the San Antonio Commanders have averaged nearly 30,000 fans over their first two games.