While we do not yet know the full financial impact of Coronavirus on America’s four major professional sports leagues (NFL, NBA, NHL and MLB), the pandemic has claimed its first US sports league casualty – namely, WWE chairman, Vince McMahon’s, reincarnated XFL.
The eight-team league’s parent company, Alpha Entertainment, LLC, filed for Chapter 11 in Delaware last week, after it was forced to suspend operations and furlough employees less than a month after its season began due to the pandemic.“Unfortunately, as a new enterprise, we were not insulated from the harsh economic impacts and uncertainties caused by the COVID-19 crisis. Accordingly, we have filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code,” stated the company.
Published reports reflect that the league generated $14 Million in revenue during its first month of operations, and lost $44 Million despite having broadcasting contracts with ESPN and Fox. McMahon, who it turns out owns 100% of Alpha, either directly or through WWE, is the only secured creditor and has proposed a $3.5 Million DIP loan to get the league to a sale of its assets – primarily intellectual property including the slogan “for the Love of Football.” Its largest creditors include its coaches, former commissioner, and the St. Louis Sports Commission.
Bankruptcy Judge Laurie Selber Silverstein did not approve either the DIP loan or the debtor’s request for authority to refund season ticket holders during first day hearings, but rather, delayed those and other matters to May 13th to provide creditors an opportunity to appear and be heard given that the debtor has more than $5 Million in cash on hand when it filed.
While the case may provide little insight into the fate of the nations’ four major sports leagues given how well-established and well capitalized they are, it should certainly provide some interesting legal issues.
If you have questions about options available to your business during this time, please contact one of Bast Amron’s Insolvency Litigators.