The Alliance of American Football filed for bankruptcy protection on Wednesday. In the aftermath of the commencement of the liquidation of the league, co-founder Charlie Ebersol has broken his silence.
“I know everyone has conspiracy theories,” Ebersol told John Ourand of SportsBusiness Journal. “But, unfortunately, this may have just died because the main investor and the founders had different visions of what the company was supposed to be. . . . Our long-term vision for building something slowly and getting enterprise value was not aligned with [Tom Dundon’s] vision of how he saw the league.”
It’s not clear what Ebersol means by “conspiracy theories”; the prevailing view is that the AAF behaved as if it had enough money to fund multiple seasons when in reality it didn’t. It had commitments, first from primary investor Reggie Fowler and then from Tom Dundon. But the AAF at not point had the money in the bank to pay the bills for even one full season, much less two or more.
“We raised over $170 million in the second quarter of last year,” Ebersol said. “We ultimately raised well over $200 million before the launch of the football league. When it became clear that our primary investor [presumably Fowler] was either not able to, or not performing in line with the signed contracts which had been vetted by multiple banks . . . we went out to the market after the success of the first weekend and offered to let other people buy in. Ultimately Tom made an offer to buy in.”
In other words, the AAF never had the money in the bank to pay the bills for even one full season, much less two or more.
Even after Dundon committed $250 million to the operations, reports quickly emerged that he could pull the plug at any time. He eventually did, and that’s where the disconnect arose between Dundon and co-founders Charlie Ebersol and Bill Polian. Ebersol and Polian wanted Dundon to stay the course, but Dundon decided to stop throwing good money after bad.
Now, there isn’t enough money to pay the bills. And there never was. With more than $48 million in liabilities and less than $12 million in assets, most creditors will be stuck — unless they can fashion legal arguments that would allow them to pursue anyone and everyone who created the impression that money was in the bank when in reality it wasn’t.