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Alphadawg7

AAF needed $250m emergency investment to make payroll

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Wow, the AAF has had a successful launch, yet they just faced a major financial crisis that needed a $250 million dollar investment to just make payroll. I do think this league will be successful, but just goes to show just how immense it is to both start a new league and then operate it.  Another reason why I think XFL will fail after one season again.

 

https://bleacherreport.com/articles/2821459-report-aaf-needed-250-million-emergency-investment-to-be-able-to-make-payroll

Edited by Alphadawg7

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Did not know Trent Richardson won the Heisman. Thought Ingram and Henry were the only two Bama players to win. Good deal ;)

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I thought I just saw a thread where someone speculated the league lead by Trent Richardson and Christian Hackeburg would kill the NFL after the league strikes in 2021....

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Another headline grabbing wild exaggeration.  *8 teams, 52 players, $250k piece over THREE YEARS,  that is $104 million and they needed $250 million over a few days?. Even double the number for coaches, AAF personnel, refs,etc, $250 mil in emergency cash infusion laughable exaggeration.

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5 minutes ago, Bfanlc said:

Did not know Trent Richardson won the Heisman. Thought Ingram and Henry were the only two Bama players to win. Good deal ;)

And can you call a coordinator a super bowl champion? Because that’s what Martz was.

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4 minutes ago, Jay_Fixit said:

And can you call a coordinator a super bowl champion? Because that’s what Martz was.

I think that qualifies. Pretty sure you would be proud of the accomplishment, as you should be.

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49 minutes ago, RoyBatty is alive said:

Another headline grabbing wild exaggeration.  *8 teams, 52 players, $250k piece over THREE YEARS,  that is $104 million and they needed $250 million over a few days?. Even double the number for coaches, AAF personnel, refs,etc, $250 mil in emergency cash infusion laughable exaggeration.

 

You're right. That number seems pretty high. Are we missing other expenses? Travel? Insurance?

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1 minute ago, PromoTheRobot said:

 

You're right. That number seems pretty high. Are we missing other expenses? Travel? Insurance?

Certainly but they also have revenue TV, ticket sales, concessions, paraphernalia, etc, the number $250 million doesn't work.

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12 minutes ago, RoyBatty is alive said:

Certainly but they also have revenue TV, ticket sales, concessions, paraphernalia, etc, the number $250 million doesn't work.

 

You don't know if its a revenue TV deal though, and its almost certainly not.  Early deals on new properties generally make 0 revenue on the TV contract and have to pay for production costs out of pocket on non feature games too.  Major League Soccer for instance did not have a revenue generating TV deal when it launched and they almost folded because of financial issues before they finally stabilized.   

 

I seriously doubt the AAF is making money on its broadcasting rights currently.  Likely a 1 year broadcast deal with a 2nd year option much like Major League Rugby did last year with CBS Sports, ESPN+ and ATT streaming.  Network likely covers production costs on its feature game of the week and playoff games (to insure it hits a certain standard), then the home team pays for production costs of all other games each week.  

 

If ratings are strong enough after first season AAF will be in position to opt out after one year and negotiate with other networks or renegotiate with its current ones.  And if ratings are not strong enough to warrant a rev generating deal, they opt in and still have the league on television which is critical.  Not to mention, tickets sales and merchandise sales are minute amounts of revenue compared to expenses at this stage.  

 

And there are a LOT of expenses you are not accounting for.  And most importantly, a LOT of money was already spent to get to this point for all teams, but you are lumping it all in as if its current expenses are the only ones that hit the budgets.  Not to mention, they clearly needed the $250M and went out and got it, so not sure on what grounds you think it doesn't work if it is what was needed.  And they are not going to go get money they need for the one week, they are going to get enough to stabilize for the season.  

Edited by Alphadawg7
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doesn't sound  like they are prepared if they can't meet expenses after one week

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Who was in charge of that budget and forecasting? How could it go so badly so fast? Something sounds wrong here. There should be some big boys in charge of the books on an investment of that size. 

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4 minutes ago, Alphadawg7 said:

 

You don't know if its a revenue TV deal though, and its almost certainly not.  Early deals on new properties generally make 0 revenue on the TV contract and have to pay for production costs out of pocket on non feature games too.  Major League Soccer for instance did not have a revenue generating TV deal when it launched and they almost folded because of financial issues before they finally stabilized.   

 

I seriously doubt the AAF is making money on its broadcasting rights currently.  Likely a 1 year broadcast deal with a 2nd year option much like Major League Rugby did last year with CBS Sports, ESPN+ and ATT streaming.  Network likely covers production costs on its feature game of the week and playoff games (to insure it hits a certain standard), then the home team pays for production costs of all other games each week.  

 

If ratings are strong enough after first season AAF will be in position to opt out after one year and negotiate with other networks or renegotiate with its current ones.  And if ratings are not strong enough to warrant a rev generating deal, they opt in and still have the league on television which is critical.  Not to mention, tickets sales and merchandise sales are minute amounts of revenue compared to expenses at this stage.  

 

And there are a LOT of expenses you are not accounting for.  And most importantly, a LOT of money was already spent to get to this point for all teams, but you are lumping it all in as if its current expenses are the only ones that hit the budgets.  Not to mention, they clearly needed the $250M and went out and got it, so not sure on what grounds you think it doesn't work if it is what was needed.  And they are not going to go get money they need for the one week, they are going to get enough to stabilize for the season.  

 

 

Yes i could expand this discussion and yes I didn't list every possible expense item, not did i list every possible revenue generator. If three weeks into the season they needed "$250 million to make payroll" then they are the most inept businessman I have ever seen.  Makes zero sense.

 

And yes a lot of money has already been spend, they started with alot of money, you thin they went through it all in three weeks?  Laughable.

 

And i dont know for a fact is they made money on TV, you cite reason why they didn't, i will only  say football, even bad football,  is a hell of a lot more popular in the US than soccer or Rugby.

2 minutes ago, Augie said:

Who was in charge of that budget and forecasting? How could it go so badly so fast? Something sounds wrong here. There should be some big boys in charge of the books on an investment of that size. 

 

Borderline impossible, that is my entire point.

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1 hour ago, Bfanlc said:

Did not know Trent Richardson won the Heisman. Thought Ingram and Henry were the only two Bama players to win. Good deal ;)

he didnt

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I don’t really understand are the XFL and this league planning on competing with each other? It is a long shot one of these leagues finding long term success as is let alone with competition for talent or viewers.

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12 minutes ago, Augie said:

Who was in charge of that budget and forecasting? How could it go so badly so fast? Something sounds wrong here. There should be some big boys in charge of the books on an investment of that size. 

 

Tom Dundon put the money up, majority owner of Carolina Hurricanes.  And he is now expected to take over as Chairman of the AAF.  So sounds like he said the same WTF thing and was like if I put this money up to save all our behinds, then I am gonna run this ship from here on out to make sure it doesn't happen again.

 

But none of this is to be unexpected.  Most start up leagues fail for this reason, operating capital is expensive after massive expenses to set the league up and revenues are slow to ramp up.  So a lot of teams tend to be underfunded hoping to last to profitability.  But the reality is that it generally takes 5 years to get there even though they like to believe it can be done in 2.  And more and more money is needed along the way and the league will have annual "cash calls" that all teams are required to pay into the league to keep the league viable until profitable.  

 

Teams often capitalize for what they feel will be full operations for first 2 to 3 seasons, then find them selves over stretched when they realize how expensive it is to actually run said team.  Ive been involved in 2 start up professional leagues in the US, one of which is playing now.  Seen all this happen before, even to MLS, and its pretty much par for the course.  

 

10 minutes ago, RoyBatty is alive said:

 

 

Yes i could expand this discussion and yes I didn't list every possible expense item, not did i list every possible revenue generator. If three weeks into the season they needed "$250 million to make payroll" then they are the most inept businessman I have ever seen.  Makes zero sense.

 

And yes a lot of money has already been spend, they started with alot of money, you thin they went through it all in three weeks?  Laughable.

 

And i dont know for a fact is they made money on TV, you cite reason why they didn't, i will only  say football, even bad football,  is a hell of a lot more popular in the US than soccer or Rugby.

 

Borderline impossible, that is my entire point.

 

Actually that is not true.  Soccer is a lot bigger right now than start up football and a LOT more profitable.  Rugby is the 2nd largest sport in the world behind only soccer, so combine the 40 million US fans that already exist with Rugby and international demand for the US sport, and you are again grossly underestimating the draw of professional Rugby and its potential revenue.  

 

Its easy to say things based on opinions you have of the sport, its another thing to actually know the facts.  Soccer is so valuable right now that if you want to do an expansion team, the league Fee last year was $140M alone just to for the team before you spend $1 building the team and the average team is worth more than the $250M they just raised to save AAF.  

 

So no disrespect, but your assumptions are off.  

Edited by Alphadawg7
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7 minutes ago, Leonhart2017 said:

I don’t really understand are the XFL and this league planning on competing with each other? It is a long shot one of these leagues finding long term success as is let alone with competition for talent or viewers.

 

If I was the XFL I would just fold now and save the money.  McMahon and his ego will never do that, but this is a terrible move to launch next year after the AAF has gotten a season under their belt.  Their ONLY shot was to get out before AAF and put out a great product when they did.  Instead, AAF has launched first with both a great product so far, but also the support of the NFL.  The XFL has been playing the heel role against the NFL, and betting on this notion that enough people are tired of the NFL that it will work which is a stupid approach and will certainly fail.  

 

The NFL is massive, and for all the pissing and moaning about it, the ratings keep going up and its NEVER going away in our life time.  To take them on head on is a losing battle, and the AAF was smart and built itself with a strong tie to the NFL.  This gives it the best chance at success, and the XFL now is going to have even lesser players than the AAF degrading the football even more.  

 

RIP XFL...again.

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I dont care about any disrespect, you and i disagree.  You clearly have more experiences starting up leagues, never been involved and never put any money into them, they are for people with big egos imo, money pits. But i am painfully aware of startups and the hidden costs put a $250 mil cash infusion to meet payroll after 2-3 weeks is absurd, that is my only point.   

 

And as for Soccer-rugby-football popularity,  confusing world popularity  vs US.  Good luck getting a TV contract for second rate US rugby league.  And yes soccer is popular in the US.  But all the soccer fans I know watch Premier League,  Bundes, etc, they watch the world class soccer, not the third rate MLS.

 

AAF viewership has been very strong.

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Vince McMahon just negotiated a $2 Billion+ TV deal for WWE.  I would be shocked if the XFL broadcasting rights didn't come up in those conversations at some point whether it would be with FOX and USA where Raw and SmackDown are located this Fall or with another network they had conversations with along the way.  One advantage the XFL will have is that they have been through all this once before.  Successful or not 20 years ago, there were plenty of lessons to be learned.  I am sure they have a much better grasp on what challenges will be faced this time around.  As a football fan, I hope one, or even both of these leagues, find success.

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1 hour ago, Chuck Wagon said:

I thought I just saw a thread where someone speculated the league lead by Trent Richardson and Christian Hackeburg would kill the NFL after the league strikes in 2021....

Was it the NFL that made the investment.

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24 minutes ago, Alphadawg7 said:

 

If I was the XFL I would just fold now and save the money.  McMahon and his ego will never do that, but this is a terrible move to launch next year after the AAF has gotten a season under their belt.  Their ONLY shot was to get out before AAF and put out a great product when they did.  Instead, AAF has launched first with both a great product so far, but also the support of the NFL.  The XFL has been playing the heel role against the NFL, and betting on this notion that enough people are tired of the NFL that it will work which is a stupid approach and will certainly fail.  

 

The NFL is massive, and for all the pissing and moaning about it, the ratings keep going up and its NEVER going away in our life time.  To take them on head on is a losing battle, and the AAF was smart and built itself with a strong tie to the NFL.  This gives it the best chance at success, and the XFL now is going to have even lesser players than the AAF degrading the football even more.  

 

RIP XFL...again.

Yeah Vince McMahon is a great marketer/promoter however the type of football he puts on the field didn’t match the hype in 2001 and I don’t really see any reason it will be different this time around. The league’s down fall was the product. The games felt like NFL preseason games. They may bring some innovative ideas but that is not going to make the league viable in the long term.

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2 hours ago, RoyBatty is alive said:

Another headline grabbing wild exaggeration.  *8 teams, 52 players, $250k piece over THREE YEARS,  that is $104 million and they needed $250 million over a few days?. Even double the number for coaches, AAF personnel, refs,etc, $250 mil in emergency cash infusion laughable exaggeration.

 

He bought ownership into the league with that $250M.  Its not the amount used to pay for payroll.  Its a cash infusion.  Potentially missing payroll may have prompted the search for additional funding, but it has nothing to do with what that figure of $250M represents.  Its just the number they negotiated for whatever % ownership in the league he gets.

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1 minute ago, Mark80 said:

 

He bought ownership into the league with that $250M.  Its not the amount used to pay for payroll.  Its a cash infusion.  Potentially missing payroll may have prompted the search for additional funding, but it has nothing to do with what that figure of $250M represents.  Its just the number they negotiated for whatever % ownership in the league he gets.

Well this makes 100% sense.

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