The Alliance of American Football premiered with an seemingly A team level of management that came with many answers; venture backed funding from the excellence of Peter Thiel, among others; mounting distaste for the NFL, its integrity, Roger Goodell, and off /on field controversies. Yet the Alliance of American Football league faltered within months of operation. The attribution of the entirety of this collapse does not rightfully belong to a single cause. As a student of entrepreneurship, it was once said by a teacher “There is no shortage of money for good ideas.” Somewhere along the line the Alliance of American Football stopped being a good idea. It stopped being a good idea to the point where their lifeline came in the form of Tom Dundon and when the rug got pulled out from underneath them, a second lifeline was unavailable. The NFL could have easily provided the second bailout, thus integrating the league. But the flaws of the Alliance were readily apparent.
Taking on March Madness
The timing of the AAF season left a lot to be desired. But the Alliance of American Football sought to capitalize off of the steep drop in football following the Superbowl. This capitalized on marketing of CBS, their main broadcasting partner, who leveraged the line “football isn’t over yet” to generate viewership. But the timing of the AAF season would have been better served at a greater distance away from a superior product. The Alliance of American Football cannot reasonably match the sheer pageantry of the Superbowl, despite having a high proportion of competitive games in their own repertoire. In terms of ambiance, it would be like going from Teen Titans to Teen Titans Go in the matter of a week. Perhaps capitalizing off of the overflowing demand for football would have worked better if not for the sports behemoth the Alliance of American Football went head to head with: March Madness. College basketball from a sports perspective owns March and early April. That’s three Saturdays and two Sundays the AAF is losing 5/5 year after year. These are essentially wasted weeks in terms of generating interest, buzz, and ratings. Major League Baseball can meander this through longstanding tradition and operating every day of the week so sports fans always have something to watch or talk about, but the AAF relied on weekends. The Alliance of American Football timed their league to the coziest convenience of the NFL and not growing a fan base. Despite these accommodations, the NFL did not provide a lifeline.
When there is a long history of failed leagues in not just football but baseball as well. The history of these other leagues paint a very clear of the existential challenges of cash management, and the pathways to success. The AFL successfully pressured their way into a merger with the NFL, despite inferiority. The USFL could have gone down the same path or even successfully rivaled but instead chose to utilize anti-trust law to their own demise. The Alliance of American Football made more amateur mistakes than their predecessors, despite having a beginning very much like the American Football League.
Toxicity of Silicon Valley
Despite funding issues that arose a year later, when the Alliance of American Football was publicly announced, the leagued seemed well-backed by Silicon Valley venture capitalists. This changed, by the league’s start despite an impressive debut. But this reveals the folly of Charlie Ebersol. Why would a newborn sports league base its operations in San Fransisco? Venture capitalists are everywhere whether we are talking about Boise Idaho or Omaha Nebraska. But the ones in Silicon Valley will throw money at anything including tech that adds redundancy to existing products such as Juicero or Smalt. But the AAF was a far better idea than those yet Silicon Valley perpetuated a myth that became the cash dumpster of the football venture. The AAF presented itself to the public as football with an app that enhanced the experience, but to its investors, it seems that the Alliance of American Football was an app with a football league. In reality, the Alliance of American Football was a football league with an app that did not enhance the experience.
From a software standpoint, it was impressive that the AAF was able to roll out their highly anticipated app on a fixed deadline. It could functionally stream a football game and not drain a phone’s battery nearly to the same extent as games and other streaming apps. However, the AAF, seemingly, reneged on its promise to stream every game on their app. They would show a stream of most games, but most streams were only the raw footage of the game. One could go on Youtube for a better streaming experience.
So what was the point of the app? The AAF was pushing a real-time fantasy game. This game allowed the user to predict the next play with bonus points for accuracy. It was overly simplistic with no option for sacks, turnovers, or special teams. It was, however, true to its real time advertisement. But who then could play it? If one had the stream on their computer, and wanted to play the fantasy game whilst they stream, the stream would be multiple plays behind the app. It’s a spoiler which undermines the live sports watching experience. Yet the AAF pushed this hard. Every commercial break seemed to have a push for this, calling this feature on the app an “easter egg.” One wonders whether the TV networks knew the app was counter intuitive to the general goal of increasing ratings. The Alliance of American Football would have been infinitively better served telling the humble stories of the players during commercial breaks. Fans are interested in the stories of the players. They weren’t interested in playing the app while they watched the actual football. The app was a severe cash drain on the company that one would have reasonably expected a negative cash flow from operations in its first season. With the combining of two cash flow negative functions into one venture, it’s no wonder why the league was pressed for cash right after the league premiered. Plainly put, the app was a waste of money, but the app was not alone.
Charlie Ebersol and the other founders were living the tech startup lifestyle in San Francisco squandering the investments they received on high overhead. Did San Francisco have a team? No. Does San Francisco have special skills the company needed? Management, marketing, and football aren’t unique to Silicon Valley. Is San Francisco one of the most inflated parts of the country? Yes. If you have a hundred dollars to spend on groceries for the month, you are not going to Wholefoods. Yet that is essentially what the Alliance of American Football did. They shopped at Wholefoods on an Aldi’s budget. They did not value cash. How could they when they were in the bubble of Silicon Valley, the environment that told a football league to sink money into an app rather than marketing.
What the AAF did right?
The Alliance of American Football successfully proved their concept. They showed that a second football league could exist, even be a compliment to the NFL. They wanted to show that the NFL could do a better job at harnessing talent. This would have lowered or at least slowed the rising player costs in the NFL by providing more reliable alternatives for players as LeBron James Effect spreads to the NFL in the form of Le’Veon Bell and Antonio Brown. More professional players equals lower wages for owners to pay. But the AAF did not get to see this play out. Another correct action was the team locations. The AAF sought cities that have been snubbed professional football, San Antonio and Birmingham, despite being football hubs. They also chose some of America’s fastest growing municipalities, such as Salt Lake City, Orlando, San Antonio, and Atlanta. Their uniforms and team names were great. This stands in stark contrast to the XFL which strove for large TV markets and has announced no real team names or uniforms. The AAF also provided transparency in officiating, something the NFL hasn’t done, and eliminated less exciting special teams plays. This further exacerbates the folly that led the team to make a predatory deal with a man who had selfish ambitions for the league.
AAF vs XFL
Vince McMahon announced the XFL relaunch after his failed gimmicky run almost twenty years ago. His announcement was vague. Meanwhile, Charlie Ebersol answered many questions during the AAF’s announcement. One would have came away more confident watching Ebersol’s announcement than Vince McMahon’s. Yet the AAF didn’t quite last two months in live operations. Looking back, the Vince McMahon may have been intentionally vague, so as not to give the NFL two entire years to prepare for what he has coming. Such is the Art of War.
“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win” Sun Tzu
The Alliance of American Football failed before the games began. No business plan goes accordingly, but their business plan was faulty for a football league. Their business plan chose not to focus on a single core competency, instead dividing effort onto multiple cash negative fronts. This folly killed a viable concept.