Getting any start-up off the ground comes with a plethora of daunting and difficult challenges. But those challenges can be exponentially more significant for a start-up professional sports league like the Alliance of American Football simply due to the nature of the business.
According to David Glenn of The Athletic, the AAF may already be having the most common issue for any start-up—money. It appears that they were in danger of not making their payroll last week. If that was indeed true, that is not a good sign for even the short-term viability of the AAF let alone the long term.
But the crisis was averted thanks to a $250 million investment by the majority owner of the NHL’s Carolina Hurricanes, Tom Dundon. In a statement released by the league, Dundon talked about what prompted him to make the investment (ESPN):
“As a lifelong sports fan and entrepreneur, I’ve always valued the opportunities generated in the ecosystem of sports and entertainment. I’m impressed with The Alliance’s stunning growth in-stadium and across TV, mobile and social media in just these first few weeks.”
Charlie Ebersol, one of the AAF’s founders, dismissed the notion that the league was having financial issues and needed a bailout. According to him, the league generated interest among several investors after its successful debut. Rather than take on several additional partners, they wanted to seek out a single partner who could make a significant investment.
Ebersol went on to say in his statement how glad he was to be able to add someone with Dundon’s experience in the sports and entertainment industry as well as the world of finance. Along with being the former CEO of a lending firm and the majority owner of an NHL team, Dundon is a co-founder of the Trinity Forest Golf Club in Dallas and an investor in TopGolf.
Dundon is expected to become the new chairman of the AAF. In his report for The Athletic, Glenn pondered the possibility that Dundon’s involvement could result in an expansion franchise in Raleigh in the near future. But his sources said that the earliest that could happen is 2020.
Issues are expected for any start-up in the early stages, especially with one the size of the AAF. But, overall, the reception has been positive for the new league. Its initial numbers from its debut weekend were positive, but that was to be expected since it was a brand-new league.
The big question, though, is whether people will continue to come back once the newness wears off. The numbers for Week Two have yet to be released.
So, whether there was a financial crisis or not, with an investment of $250 million, the league should be in good financial shape going forward (for now).