It did not take long for financial cracks to form in the foundation of the brand new Alliance of American Football.
The Athletic’s David Glenn, citing multiple sources, reported that the league was in danger of not making payroll last week, just the second week of the league’s existence.
In fact, Action Network’s Darren Rovell expanded on that, saying that the AAF actually missed payroll in Week 1 and “told agents that it was a glitch with switching to a new administrator” and that “players would be paid by today.”
Amid all the fanfare a week and a half ago, and a television viewing audience of 3.25 million people who tuned in on CBS for the opening weekend, it seems the AAF still could not escape the money woes that have always plagued new football leagues. The play was decent enough for spring football and most fans seem to be enjoying the league so far.
However, despite that much hyped first week, things took a wild turn pretty quickly.
After all the good publicity the Alliance of American Football has received, people forget that it’s still a startup business.
The crisis was averted. Glenn wrote that Carolina Hurricanes majority owner Tom Dundon will be introduced as the AAF’s new chairman after investing $250 million in the league. The NHL owner’s investment allowed the league to meet its financial obligations.
It’s a reminder that, while the AAF isn’t necessarily competing with the NFL, the previous pro football leagues that tried to go head-to-head with the NFL never had the financial wherewithal to thrive..
AAF’s financial issues tense
Based on the Athletic’s story, the AAF’s situation last week sounded tense.
One source told Glenn that the situation was close to dire:
“Without a new, nine-figure investor, nobody is sure what would have happened. You can always tell people their checks are going to be a little late, but how many are going to show up on the weekend for games when they don’t see anything hit their bank accounts on Friday?”
That’s a stark, shocking contrast to positive atmosphere surrounding the league after its debut. Ratings were decent and much was written about the AAF’s first set of games drawing more viewers than an NBA game on ABC between the Rockets and Thunder.
In other words, the league was riding a wave of great PR. This news could bring that to a grinding halt. It certainly puts a damper on things.
Meeting payroll each week is a huge expense for the AAF. With 52 players on eight teams, and each player making $250k over a three-year contract, that puts player payroll at $104 million for that whole span. With first-year salaries reportedly at $70,000, that would be around $29.1 million this year, or $2.9 million each week for the 10-week season. There are also player bonuses, and coaches, employees, and gameday staffers who need to be paid. For a league in its infancy, that’s a whole lot of money to dedicate solely to payroll.
Without question, starting a new professional league, like any startup business, is a risky venture. So the fact the AAF needs money should come as no surprise. What is surprising is that they needed a lifeline so early. With the XFL gearing up to start next spring, the AAF does not have much time to build up a loyal fanbase and solidify their revenue streams.