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Dundon, who filed as an unsecured creditor, alleged that AAF executives misled him about the league’s financial situation in order to entice him to make a sizable investment. The billionaire, who also owns the NHL’s Carolina Hurricanes, pledged $250 million in funding to the league and became its majority shareholder in February, just weeks before it collapsed.
“Even though AAF executives told DCP (Dundon Capital Partners) its contribution would get the AAF through the first season, those executives knew at the time of the execution of the Term Sheet that the AAF would likely need an additional $50,000,000 (including League revenue) on top of DCP’s investment of up to $70,000,000 to get through the first season,” the filing said, as first reported by The Athletic. “The AAF and its executives never disclosed this information to DCP.”
Dundon’s filing further alleges that AAF executives claimed that the league could complete its first season using just $55 million of his initial investment, with the rest in reserve for future seasons. However, Dundon said that a review of the league’s finances revealed it had more than $13 million in debt that it did not reveal prior to his investment.
Co-founded by entrepreneur Charlie Ebersol and former NFL executive Bill Polian, the AAF began play last February touting a streamlined on-field product, an innovative digital companion app for viewers and financial contributions from several high-profile investors. While early television ratings and reviews were strong, the league soon ran into funding issues.
Dundon, who became the league’s majority owner and chairman with his investment, opted to pull funding in April after the AAF failed to reach terms on a partnership with the NFL. The league drew widespread criticism for its handling of the wind-down, which left many players and vendors with unpaid bills.
The AAF filed for bankruptcy protection in April, disclosing $11 million in assets against $48 million in liabilities.