AAF collapse sparks $184 million lawsuit against Tom Dundon

New York Rangers v Carolina Hurricanes
Getty Images

At one point during the short-lived spring football experiment that was the Alliance of American Football, billionaire and Carolina Hurricanes owner Tom Dundon bought the operation. Not long after that, he pulled the plug on it.

Via Daniel Kaplan of TheAthletic.com, the trustee overseeing the AAF’s bankruptcy has sued Dundon for at least $184 million. Dundon allegedly took the league into bankruptcy when alternatives to ending the business existed.

In turn, Dundon has sued AAF founder Charlie Ebersol for $70 million. That’s the amount of Dundon’s cash investment in the league.

“Dundon and his associates dealt on their reputation and the league’s trust, which they induced, luring the league into ceding ownership and control, believing Dundon, as Dundon repeatedly told the league and the press, was committed to the League for ‘years to come,’” the lawsuit against Dundon contends. “Dundon’s ‘years to come’ lasted only 46 days. Instead of the $250 million financing commitment Dundon had promised, Dundon and his entities used the control they garnered to force the league to liquidate after investing less than $70 million and shut down with just two weeks remaining in the regular season.”

The full story of the AAF has never been told. It appears that the league lacked the proper funding to be a viable operation, and that it essentially tried to will that funding into existence.

Along the way, debts were incurred that will likely never be fully paid. If the new lawsuit manages to secure a nine-figure payment from Dundon, some of the people who lost money in reliance on the belief that the AAF actually had money will perhaps get some more of their money back.

6 responses to “AAF collapse sparks $184 million lawsuit against Tom Dundon

  1. Dundon Teldar Paper’d the league right when it was on the verge of establishing a relationship with the NFL.

  2. It’s called “Risk” and the vast majority of new businesses don’t survive because they underestimate the various risks involved in going from startup to paying the bills from the income to generating return on investment for the owners to long term success.

    Smart people regulate their risk by investing what they can afford to lose. If after some time and a professional analysis, if they see potential they invest more that they can risk. If not they pull the plug and limit their losses.

    People forget that it was decades (and putting a TV in almost every home) before the NFL went from at best America’s 5th most popular sport (baseball, boxing, horse racing and college football were all bigger) to becoming highly profitable. And it is only thru the intervention of TV that it is the mega-empire it is today.

    The REASON the AFL managed to compete was that they had the resources (with network backing) to draw top talent away from the NFL. There was a demand for more quality professional football that the NFL wasn’t meeting and they managed to be competitive (see: Super Bowl and SB III).

    To compete in the football market today you are up against a NFL league minimum salary of $700k plus for guys no one has ever heard of and MAYBE sees the field on special teams. Never mind having to pay for a Allen or Mahomes.

    While Dundon may be less than ‘ethical’ (and the vast majority of super wealthy are) they aren’t fools. I’m pretty sure once they got all the inside financial information (having been involved in a number of mergers I KNOW there are always financial surprises that come to light after the contract is signed) and ran a cost\benefit analysis they realized they had just bought a donkey to try and run in the Kentucky Derby.

  3. This Dundon guy is a real slimeball. No one knows how he made his money in Dallas. Watch him carefully as he’s likely committed all kinds of financial crimes already. Snake oil salesman.

Leave a Reply

You must be logged in to leave a comment. Not a member? Register now!

This site uses Akismet to reduce spam. Learn how your comment data is processed.