A Look Into a Modern Sports League Debacle
By Michael Santos
The Alliance of American Football was a promising amateur football league that was supposed to complement the NFL during the NFL offseason. It instead turned into “the Fyre Festival” of spring football leagues as it would fold before its first season ended. This is a story of a failed secret tech company, the hazards of trusting in shady investors, and a white-knight investor that went rogue. This is the story of what happened to the Alliance of American Football.
In order to understand the true nature of the AAF, it’s important for us to rewind 20 years to the year 2000, when the formation of a new spring football league was announced to run during the NFL offseason and not only serve as more sports-fodder for football-craving fans, but also to compete with the NFL. They would call this new league the “XFL” and it was co founded by the World Wrestling Entertainment’s own Vince McMahon and Chairman (at the time) of NBC Sports, Dick Ebersol.
The XFL was promised to be a unique league that would revolutionize the sport compared to the NFL, that Vince McMahon had snubbed as the “No Fun League.” Instead, during its inaugural season in 2001, football fans got a spectacle of the sport they knew and loved.
- The rules were different
- The sportscasters (much like the WWE) behaved more like scripted characters
- Players, coaches, cheerleaders, and even game officials had complex (or not-complex) story lines.
- Scantily-clad cheerleaders were encouraged to date players for reality-show-like content.
- Most importantly, the football sucked.
Because XFL rosters were limited to about 38 players per team, as opposed to the NFL’s 53-man rosters, teams lacked depth at key positions, which led to fatigued players offering up poor play with many suffering injuries as a result. All of these factors led to the complete ridicule of the league by sports critics and fans, resulting in the complete folding of the league after only its first season. This brings us to March 20, 2018 when the launch of a spring football league was announced that would rival the NFL, and revolutionize the sport. This time around, the league would be called the Alliance of American Football.
The AAF was the brainchild of filmmaker Charlie Ebersol. Does the name sound familiar? He’s the son of XFL co-founder, Dick Ebersol. In 2016, ESPN aired a short documentary Episode of 30-for-30 titled ‘This was the XFL’ written and directed by Charlie Ebersol. The film broke down the creation of the XFL, as well as it’s eventual collapse. One of the main themes of the film was the question “could spring football work,” to which much of the mistakes of the XFL were listed as warnings.
Around this time, it was rumored that Vince McMahon was going to take another shot at spring football. Meanwhile, Charlie Ebersol also wanted to create a successful spring league. The problem was that Ebersol knew McMahon had the advantage in funding. The only way for him to compete was to beat McMahon to the punch, so he set out to do just that.
Working with former Buffalo Bill’s hall-of-fame GM Bill Polian, Ebersol created an idea for spring football that had so much promise for fans, players, and the game itself. The overall dream was not to compete with the NFL, but to complement it. The league would serve as a way to develop players into NFL-ready stars, and provide an interactive app for fans that would provide up-to-the-minute stats on players and give transparency to game-calls and coaching decisions. This app would ultimately be used for a never-before-seen platform for sports betting. The initial investment goal was for $300 million to get through the first three years, and provide return on investment after three years. They now needed to attract the investors.
“Look, you can’t raise money to launch a football league. Anyone who tells you they can is lying, unless you’ve got a quixotic billionaire who just wanted to spend all of his money,” -Charlie EbersolThe Philadelphia Inquirer Feb. 2019
To attract investors, Ebersol concentrated on his interactive sports app, first raising funds as a tech start-up that ran an entire football league. He gained the backing of Silicon Valley giants like Founders Fund, Keith Rabois, and Peter Chernin. Eventually, Ebersol would get in contact with Reggie Fowler, an investor and former minority owner of the Minnesota Vikings who offered $25 million to be the league’s initial investor through year one of operations. With the cash in hand (for at least the first year), Ebersol announced the formation of the AAF on March 20, 2018 with the first game to air on CBS on Feb. 9, 2019, the weekend after the Super Bowl, and more importantly in less-than a year. The start-up was ready to launch, though it was already on weak footing.
To build the app, Ebersol spared no expense and hired engineers from tech giants like Tesla, Google, Intel and Bitcoin to name a few. The initial intent was promising. During a demo, a smart phone was displayed to the new engineers via video conference. It showed a football game in the center of the screen with tiles on the side of it that zoomed in on a different player on the field. Touching that player’s tile would display that player’s stats, fatigue level, and also allow a user to bet on if that player might be crucial to the next play. From this demonstration, newly hired employees knew the scope of the project ahead, and it needed to be ready before the first game aired in less than six months.
Their challenge was building machine-learning programs from historical football data, that would encapsulate the app’s predictive capabilities; a feature Ebersol coined as “Stats 2.0.” They also needed to develop wearable sensors that players could wear in-game so the app could send biometric data to users so they can track a player’s heart rate in real time.
The end-product, however, was a shadow of what was initially demonstrated to the early-hire employees. The majority of the features originally demonstrated were missing, including the player-tracker feature. The player fatigue tracker was also missing because the sensors they wore kept breaking. There was also no way for the programmers to synchronize the app feed, which ran an impressive 200 milliseconds behind real-time action, to television broadcasts which averaged around 12.5 seconds behind. Early complaints about the app was that it would constantly spoil the game for viewers at home.
On the tech-side of the league things could not get any worse, while business was running smoothly for the football side of the operation. They had managed to attract some big fish from the NFL like Johnny Manziel as QB for the Memphis Express, and Mike Singletary as coach for the same team, attendance for the first two weeks averaged in the tens of thousands, but didn’t drop from one week to another, viewership at home rivaled some NHL and MLS games. Things on the football side were going great, but then the investment money staggered.
Behind the scenes at AAF corporate operations, Ebersol had been struggling with the investment capital from Reggie Fowler. The disbursements weren’t coming in as promised. They would frequently come in short of the initial $15 million installments, late, and from multiple bank accounts. They would soon be in arrears $13 million to start their training camp, and Ebersol and Polian did not know why. The answer would come months later when Reggie Fowler, the league’s sole investor, was arrested on bank fraud charges. According to prosecutors, he and Israeli businesswoman Ravid Yosef (who remains at large) ran a money laundering operation that involved setting up multiple bank accounts to route money into an obscure cryptocurrency app. They also lied to banks to bypass anti-money laundering laws.
Like an episode of ‘Silicon Valley‘, Ebersol’s initial funding had become so unreliable that he needed to chum up another investor, and fast. Through a personal contact, Ebersol was connected with billionaire Tom Dundon, owner of the Carolina Hurricanes of the NHL. Dundon had been interested in starting up a spring football league, and the AAF was particularly attractive because all the trouble of starting up was already done by Ebersol and Polain. Dundon came in with an investment of $250 million to fund the league through three years, and to buy out both Charlie and father Dick Ebersol’s voting capacity on the league board. On Feb 22, 2019, less than a month from their inaugural games, Ebersol announced via company-wide email that Tom Dundon would serve as the chairman of the AAF’s board of directors. Dundon now owned exclusive decision-making powers for the league, and for Charlie Ebersol, his dream of a successful AAF remained alive.
Shortly after the acquisition, Dundon had determined that the league was spending as if it were the NFL, just without the budget. He immediately ordered the league’s expenses be dropped from close to $100 million to $50 million.
“We would have to cut the players’ salary…”
Polain told him, attempting to stay true to their promise of player empowerment.
“Yeah, but if we don’t, we don’t have a business…”
Dundon made cuts to the budget wherever he could. Engineers on the interactive sports-gambling app soon found themselves without jobs, as Dundon found the app to be non-working. Players and coaches traveled to games on planes much smaller than what they were accustomed to, similar to a scene from the movie ‘Major League’. Their hotels were also inadequate, as the coaching staff that once used to conference rooms for holding meetings and walk-throughs, would now be holding them in parking lots.
It was Dundon’s assessment of their TV broadcast expenditures that may have ultimately spelled the demise of the AAF. In an effort to cut expenses on television broadcasts, Dundon attempted to negotiate with CBS executives, where they would “chip-in” part of the costs, but the revenue from the AAF wasn’t enough to garner more than a pay-your-way deal. Dundon felt he had only one option left, and it was to partner with the NFL.
His plan was to borrow third and fourth string players from the NFL and solidify the AAF as a developmental league instead of as a tech start-up. He even shared ominously in an interview with USA Today that the league would fold if the deal with the NFL failed. On April 1, 2019, Dundon met with executives of the NFLPA to negotiate his plan, and failed. The very next day, he suspended operations.
For players and coaching staff, the next few days would be chaos. The hotels they had been staying in had no way to be paid, so players and coaching staff were ushered out. Many of them had left other jobs and traveled clear across the country, and now many had the feeling of being stranded with no way to get back home. Some players had brought their family with them, and had to scrounge the cash to get hotels for them and their children. Injured players would be left wondering who would be taking care of their medical expenses. On one side of the country, a player sent a text to his friend on the other side asking if everything was okay.
“This feels like the Fyre Festival,” was the message he got back.
Weeks later, the AAF would file for Chapter 7 bankruptcy.
In the aftermath of the crash, none of the principal executives were left unscathed. A large number of players and coaches, disgruntled and feeling misled, sued the league. Charlie Eberson, Tom Dundon, and Bill Polain were all named as defendants. Reggie Fowler was arrested in April of 2019 for his shady banking practices. He faces up to 70 years in prison, and a plea deal for dropped charges has recently fallen through.
For Eberson, he had answered the thematic question on his short film for himself. Spring football could work, but he managed to find all the ways for it to fail. For the fans, the football product worked. It was just the app that didn’t, but much of that was due to an impossible deadline. For the players, the league was an opportunity to achieve their dreams of playing professionally, that didn’t pan out. To Eberson’s defense, his effort joins the ranks of every other failed spring football venture, and his might not be the last. Vince McMahon’s new XFL season starts Saturday February 8th at 2pm ET on ABC, and only time will tell how spectacular that debacle will be if it fails too. Though not completely his fault, Ebersol for now has set the spectacle bar pretty high.