We’ve already heard a lot about the closure of the Alliance of American Football, but more news just keeps coming. Former AAF investor ,Tom Dundon, who many thought would be the savior of the league is now sticking another knife in the wound of the former company.
Daniel Kaplan of TheAthletic.com reports that Dundon has filed a claim in the Alliance of American Football’s bankruptcy case. Dundon says that he was coerced into investing in the fledgling league due to “misrepresentations” and is looking to retrieve the $70 Million that he had put into the AAF to keep them afloat, before ultimately pulling the plug on April 2 prior to week 9.
“Even though AAF executives told [Dundon Capital Partners] its contribution would get the AAF through the first season, those executives knew at the time of the execution of the Term Sheet that the AAF would likely need an additional $50,000,000 (including League revenue) on top of [Dundon Capital Partners’] investment of up to $70,000,000 to get through the first season,” the document alleges. “The AAF and its executives never disclosed this information to [Dundon Capital Partners].”
Basically, Dundon was led to believe that his $70 Million would be enough for the league to make it through it’s first season. When in reality the AAF knew that it would require roughly $120 Million.
“The AAF further represented that it could survive the season with only $55,000,000, leaving substantial capital to prepare for the following season,” the document contends. “During the weeks following the execution of the Term Sheet, [Dundon Capital Partners] learned a number of alarming facts that revealed that the AAF was not forthcoming with Dundon and [Dundon Capital Partners]. [Dundon Capital Partners] learned that, in addition to not having the funds to pay salaries after the first week of the League’s games, the AAF also had accumulated more than $13,000,000 in unpaid debts and commitments. The AAF did not disclose these unpaid debts or commitments to [Dundon Capital Partners] prior to the execution of the February 14, 2019 Term Sheet.”
The former investor also states that the Alliance failed to inform him of “ongoing threatened litigation from a past associate who claimed to be a co-founder of the League and who was suing to obtain a 50% interest in the AAF.”
All in all, this is just another sad story about a league that many of us enjoyed watching. Fortunately, from what we’ve seen coming out of the XFL, there doesn’t seem to be any financial issues.