The Alliance of American Football spent the last week touting a $250 million investment from Carolina Hurricanes owner Tom Dundon, but there was “no massive check.” Dundon denied making a payment to the league in that amount and explained that the quarter billion dollar figure being floated is at the “top end” of the total the league would need if it were to pursue aggressive expansion “over many years.” While the size of Dundon’s investment remains in question, the billionaire businessman did confirm that he “bought the league.”
Howie Long-Short: Charlie Ebersol is the Founder of the Alliance of American Football and spent Friday afternoon telling me that “in terms of one single check coming in from an investor, [Dundon’s investment] was way beyond what we could have expected. [It puts the league] in a situation now, where the cash on hand gives us 3-5 years of runway – if we completely screw up.” So, needless to say I was surprised to see that Dundon told SBJ that “if you just wanted to run the business as it sits today, it would be crazy to spend $250 million; it wouldn’t pass the smell test. Why would any rational or sane person do that?” Dundon confirmed rumors that his participation remains a week to week proposition and that he could stop funding at any time, but offered the caveat “every business would shut down if nobody wants its product.”
One of the reasons Dundon’s commitment drew so much media attention was that the AAF failed to make its Week 2 payroll on time. Many suspected that the league had run out of money and that the Hurricanes’ owner was bailing them out, but Ebersol insists it was a payroll error and that the timing was a coincidence. “This company is 13 months old, we’ve grown to upwards of 1300 employees league and we overestimated the ease in which we could move from one payroll system to another. We had to [change payroll systems] because the players and coaches require different insurance coverage than everybody else. We had always planned for the change to occur with the players’ first paycheck.” I should have asked why the players’ first paycheck wasn’t paid in Week 1.
Tom Dundon’s value to the AAF goes beyond the money he invested into the league. The Alliance generates its revenues through the sale of media rights and sponsorships and with live events (think: tickets, f&b, parking). The “existinginfrastructure Dundon has in place [in Carolina] – to sell those tickets and sponsorship packages – gives us the ability to consolidate down. Remember, we’re a single entity – most of our organization is centrally located and that group drives revenue for all our teams.”
It’s unclear just how much revenue the AAF is generating, but Ebersol seemed to confirm rumors that CBS is not paying the league to carry games. “The league’s relationships with our broadcast partners is not just predicated on television. We negotiated multi-year broadcast partnerships with networks that could offer sponsorship sales and other infrastructure. Traditional media deals – you write me a check, then I let you put my product on your channel – were less interesting to us. We saw more value in a larger relationship.”
Fan Marino: NFL Network viewership is up +450% YoY on Saturday and Sunday evenings – without the league “spending any money on marketing.” That’s promising and supports Charlie’s thesis that people want to consume live football in the winter/spring.
The league’s greatest success thus far has been “showing people we could put quality football on and that we could get people to watch, not just on television – but on our platform.” The league averaged over a million users during its first weekend and grew that figure by almost +50% during the second weekend. The 3.5 million fans using AAF digital platforms – in real time – are also a particularly “engaged audience; they’re not just passively consuming video, they’re interacting with each play on our free to play platform. That engagement has led to significant sponsorship dollars because sponsors see them as more valuable consumers. We know who they are, we know where they are and we know what their appetites are, which enables sponsors to interact with them in a different way.”
The AAF has been able to draw viewers through the first few weeks, but a long history of failed pro football ventures and competition from other start-up leagues (think: XFL, Pac-Pro) has me wondering if the league has staying power. Charlie insists that “everyone who has attempted [launching a startup football league] before me has failed because they failed to invest in the quality of football. We invested heavily in the quality of football. They did not invest in the quality of the broadcast. We invested heavily in our broadcasts. The quality of the content is what matters. Anyone who tells you differently is delusional. The fact that our league looks, feels and acts like real football is a function of the granular detail we took.”
NFL Europe failed, so I would debate that mimicking the NFL is a surefire path to success, but if the league’s goal is to be “a developmental league for the NFL” then it makes sense to target people with NFL experience. As Charlie pointed out, “all our head coaches have coached in the NFL (see: Mike Singletary, Mike Martz). All our GM have been NFL GMs. The league’s entire scouting department comes from the NFL. 35 of our 80 officials are ODP certified. Mike Pereira and Dean Blandino are our head officials. All our rules committee members have either served on the NFL rules committee or are currently serving on it. This is the best place to play if your goal is to get back to (or to) the NFL.” The message is getting across. 81% of the league’s players have played in an NFL game.
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