Six years after it ceased operations during its inaugural and only season without crowning a champion, the Alliance of American Football lives on as a pair of court cases.
At the center of the legal battle is the nature of Tom Dundon's investment. As you'll recall, the AAF launched in 2019 to much fanfare but quickly ran out of money. In a detail I was previously unaware of but reported in this story by Front Office Sports, the AAF's original investor, Reggie Fowler, stopped funding the league because he was embroiled in a cryptocurrency scam that would eventually see him placed with a 75-month prison sentence.
So, in February of 2019, in came Dundon. The owner of the NHL's Carolina Hurricanes, Dundon pledged $250 million in exchange for control of the league. And in the numerous stories about its investment -- the AAF was a very well-publicized league -- Dundon made clear his capital infusion would keep the league afloat for years to come.
From CBS:
"One thing on the $250 million -- that's enough to run this league for a long time. What it takes to invest and build, that will get us through for many years. Someone was mentioning to me earlier, they thought I had to go and pay $250 million because they'd spent it. They have not spent that kind of money. And we're good for many years to come with what I just did."
However, Dundon only delivered $70 million of the $250 million he promised, and the Chapter 7 bankruptcy lawsuit alleges Dundon bought the league in order to kill it. After making money elsewhere (Dundon also holds significant stakes in TopGolf and US professional pickleball), Dundon wanted to claim the AAF as a loss to offset his tax liability, according to the lawsuit.
And as for that claim that his $250 million would float the Alliance for years to come? He never actually agreed to his quarter-billion dollar cash infusion on paper, and claims he did so in the press were "marketing." From FOS:
“Despite the $180 million discrepancy, Ebersol executed the Term Sheet, giving up 75% of ESMG’s equity and control of the board,” Dundon argued in a December 2024 court filing. (ESMG is Ebersol Sports Media Group, the company Ebersol owned the AAF through.) “Ebersol allegedly simply took Dundon at his ‘word,’ wholly ignoring that Dundon’s ‘word’ directly conflicted with the Term Sheet’s plain language.“
...
“Dundon testified that statements to the press about a potential $250 million investment were marketing,” the trustee wrote in a filing.
Saltz, Ebersol’s counsel, responded, “People, when they knowingly say false things in marketing, sometimes get sued, don’t they? Not a very good admission, in my opinion.”
Ebersol claims that the $250 million promise from Dundon stopped him from seeking other investors, something Dundon's words at the time backed up. “We won’t bring in anybody for capital. We’re not going to take people’s money,” he told the Associated Press in 2019.
Dundon's purchase was announced Feb. 19, 2019, and the league ceased operations on April 2.
In turn, Dundon is suing AAF founder Charlie Ebersol for the $70 million he gave the league, arguing he was fraudulently induced to invest in the league.
The trail began March 3 in San Antonio, and a ruling could determine whether Dundon bought the AAF to destroy it as a scheme to benefit his own personal finances.