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Beginning of the end of Arena Football League? (again)


Soundwave721
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The Arena League leadership needs to up the game, be more fiducially more responsible. Awarding Vegas a team wasn't smart.

Not getting all the expansion fees before letting them play was the mistake. It seems like the league heard who was involved and stopped checking up on the owners until they didn't make their payments. It's the biggest reason I doubt those Mexican teams ever see the field. I also don't understand what the appeal of putting a team in Vegas is?
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The Arena League leadership needs to up the game, be more fiducially more responsible. Awarding Vegas a team wasn't smart.

Not getting all the expansion fees before letting them play was the mistake. It seems like the league heard who was involved and stopped checking up on the owners until they didn't make their payments. It's the biggest reason I doubt those Mexican teams ever see the field. I also don't understand what the appeal of putting a team in Vegas is?

No, the mistake is one that virtually every start-up sports league makes: failure to ensure franchise viability over an extended period, opting to grab a franchise fee without too much concern as to whether it will be operating five years after it launches.

Oddly enough one exception (at least initially) to this was the USFL. Each franchisee paid (ostensibly) a $6 million entry fee to get in. But each was also required to post an irrevocable letter of credit for $1.5 million, payable to the league in the event that a team failed to meet its obligations and its operations had to be taken over. For example, the Los Angeles Express' original owners (Daniels & Harmon) paid in total $7.5 million to the USFL. They sold the franchise to Oldenburg the following year. When Oldenburg's finances took him under, the league took over the franchise. The first thing they then did was to cash in the letter of credit for the $1.5 million, using those funds to (at least partially) fund the team through the 1985 season while searching for a buyer. Part of the USFL's downfall came when it gave permission to team owners to draw from these funds, undermining the whole system.

Another example was the NASL, which required team owners entering the league to put $3 million in escrow. That money would be returned to the team only on an "as needed" basis, by authority of the commissioner, upon demonstrated hardship. Unfortunately for the league, its commissioners tended to play fast and loose with the definition of "hardship."

The AFL, by contrast, doesn't even have such a system in place - and now, because the whole enterprise is on such shaky ground, they couldn't put it in place if they wanted to.

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