AAF Declares Chapter 7 Bankruptcy
The Alliance of American Football (AAF) is an eight-team league that began this year in order to compete with the National Football League (NFL) for the viewership of football fans throughout the United States. Unfortunately, after just eight games into its first season, the league filed for Chapter 7 bankruptcy on April 17, 2019, in a Texas court.
Under Legendary Field Exhibitions LLC, the AAF had $48,366,188.90 in liabilities, $11,372,298.68 in assets, and $536,160.68 in cash. Regarding liabilities, it owes creditors $9,642,171.
In addition, the league allegedly owes MGM International $7 million, CBS more than $5 million, and Arizona State University over $1.2 million.
Chapter 7 bankruptcy is the most common form of bankruptcy in the U.S. The league will essentially collect and sell its assets to pay back creditors. While any property is exempt from Chapter 7, all other assets must be liquidated.
The AAF experienced financial struggles early in the season, leading Carolina Hurricanes owner Tom Dundon to pledge $250 million before week-two games in order for the league to remain afloat. However, Dundon went back on his pledge and cut off the league in April, resulting in three class-action lawsuits.
Before the league suspended operations, founders Bill Polian and Charlie Ebersol hoped it could transform into a development league for the NFL. But since the NFL was reluctant to let their players participate in the league, the financial troubles finally caught up with the AAF.