Connect with us

Economy

Why the Alliance of American Football failed

Published

on

Why the Alliance of American Football failed

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.

Past Mistakes

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.

Final Thoughts

“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.

Advertisement

0

Economy

The CFPB must protect consumers from abusive debt collection practices

Published

on

The CFPB must protect consumers from abusive debt collection practices

Washington, D.C. – Dennis M. Kelleher, President and CEO of Better Markets, issued the following statement with the filing of a comment letter on the Consumer Financial Protection Bureau’s (“CFPB’s”) proposed rules implementing the Fair Debt Collection Practices Act:

“Almost all Americans pay their debts and most of those who don’t are facing circumstances beyond their control like unemployment, a medical calamity, and other usually tragic occurrences. Congress enacted the Fair Debt Collection Practices Act (“FDCPA”) to protect those vulnerable Americans from shocking, egregious, and abusive practices by the debt collection industry: calling homes repeatedly day and night; calling employers to get people fired; calling friends, neighbors, and relatives to embarrass people; and generally harassing people nonstop to boost their profits. The list of horror stories is long and revolting.

“The CFPB is now charged with implementing and enforcing the FDCPA and it must be guided by Congress’s clear and unequivocal objective to protect consumers not the debt collection industry. It must strongly and clearly regulate a business model that is embedded with incentives to pursue debtors ruthlessly using abusive tactics.

“The CFPB has proposed a rule to implement the provisions of the FDCPA. While it has a few modest consumer protections in it, the proposal also opens too many loopholes and ambiguities that will enable debt collectors to once again engage in too many near-abusive or outright abusive practices. For example, as we detailed in our comment letter, the proposal allows too many communications with debtors, essentially amounting to legalized harassment, and it would create an escape hatch from liability when debt collectors file lawsuits to collect on debts that are actually time-barred under the law.

“The CFPB must finalize a rule consistent with the letter and spirit of the FDCPA, which means it must put consumer interests over debt collectors and meaningfully constrain their impulse to engage in abusive but highly profitable practices.”

###

Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

Continue Reading

Democrats

‘Lite’ versions of Medicare-for-All are no better – and possibly worse – than the real thing

Published

on

Lite versions of Medicare-for-All are no better - and possibly worse - than the real thing

How do Joe Biden, Kamala Harris, Pete Buttigieg, and other Democratic candidates plan on sinking Elizabeth Warren and Bernie Sanders? By highlighting how their radical Medicare-for-All proposals are several steps too far to the left for America and by offering “lighter” versions of their semi-popular healthcare plans. But there’s a problem with their proposals. All of them will lead to the same conclusion – single-payer healthcare – and all of them may actually be more damaging to the economy along the way.

This is saying a lot since the $32 trillion Medicare-for-All is an absolute existential threat to the United States economy. How could these lighter versions be worse?

Before we answer that, let’s look at what would happen if Buttigieg’s Medicare-for-All-Who-Wants-It, Biden’s Obamacare 2.0, or Harris’s Medicare-for-All plus private supplements ever become law in America. They all come at it from different angles, but what they’re describing is a public option for health insurance that would be taxpayer-funded and remove the out-of-pocket expenses from those who choose to take it instead of a private healthcare plan. This sounds reasonable to many Americans who want health insurance available to everyone, even those who cannot afford it, but who do not want to lose their own health insurance.

But what nobody’s mentioning is that the holes in a public option create problems for everyone, including:

  • Dichotomous healthcare services. There will be “good” healthcare offered to those with private insurance and “bad” healthcare offered to those taking the public option. We see this in action with the VA, which was intended to offer superior services to veterans. But the opposite has been proven to be the case. When government injects itself as an option against the private market, invariably the solutions they present are unambiguously inferior to the private variations. Americans will not be told of this dichotomy. Instead, they will find out when it’s too late that the healthcare they’re receiving is horrible compared to what they would have received under the private market option.
  • Increased costs across the board. What does a public option mean for the private market? Fewer customers. Fewer businesses enticing employees with health insurance benefits. Fewer healthy people paying for healthcare while higher-cost participants make private insurance more expensive for everyone. As for those on the public option, their acceptance of taxpayer-funded health insurance will, of course, drive up taxes for nearly everyone, including the middle class that nobody seems to want to admit will get hit with these taxes.
  • An eventual shift towards single-payerAs private health insurance becomes less lucrative and eventually becomes a money-loser, companies will start pulling out. We already saw this without the public option in Obamacare. Throw in a public option and it eventually becomes cost-prohibitive to offer anything other than supplemental insurance for uncovered procedures such as cosmetic surgery. The public option will become single payer by default within 3-5 years after it’s launched.

Nobody outside of the health insurance industry likes the health insurance industry, but over a hundred million Americans rely on this industry to keep themselves and their families from paying the extremely high costs for medical care. The combination of health insurance driving medical expenses and a government driving the health insurance industry has resulted in diapers costing $20 each after birth. They know most American will not care about the details as long as they’re not paying for it out of pocket, so they can encourage hospitals and doctors to charge outrageous rates. This all changes for the worst once single-payer is in place.

Back to the original premise – these “lighter” options could actually be worse for America than full-blown and immediate Medicare-for-All. With the latter, everything is upfront. They will tax us at extremely high rates to pay for their pet project. It will be horrible. But it will be understood from the beginning. With the half-measures proposed by the “moderates” in the group, the way it all pans out will be in a constant state of radical evolution. Prices will fluctuate so rapidly that changes will need to be made on the fly. It’s like inserting a knife into our backs slowly instead of just plunging it right in. The constant tearing of tissues over time may make us bleed out faster than if they just stabbed us quickly.

The various public option proposals are all single-payer-in-training. They will invariably become Medicare-for-All because private insurance will die a slow death as a result. Meanwhile, our healthcare quality and economy will die much more rapidly.

We are currently forming the American Conservative Movement. If you are interested in learning more, we will be sending out information in a few weeks.

American Conservative Movement

Continue Reading

Democrats

How much longer will Elizabeth Warren dodge the middle-class tax increase question?

Published

on

How much longer will Elizabeth Warren dodge the middle-class tax increase question

Senator Elizabeth Warren refuses to acknowledge that her Medicare-for-All plan will require a middle-class tax increase. She implies it in her answer to the question by focusing on “costs will go down,” meaning people will pay less in healthcare expenses that, in her view, should compensate for the tax increases. But she absolutely, positively refuses to admit that taxes will go up, dodging the question clumsily every time she’s asked.

It’s starting to get uncomfortable. Even left-wing entertainer Stephen Colbert pressed her on the issue. He offered her a new way of pushing the message forward, equating the taxes we’d pay for her healthcare plan to the taxes we pay for public education. Even with the friendly host, Warren refused to admit her plan would require a middle-class tax cut. Unfortunately, this bodes ill for all American taxpayers as this refusal to say the words means it’s likely much worse than we can possibly imagine.

Watch her stumble through to not answer the question:

What is she hiding? She knows her plan requires middle-class tax increases and likely a downward extension in the tax bracket that will mean lower-income Americans who currently do not pay taxes will be forced to. But her focus has always been on making “rich corporations and wealthy individuals” pay for it. This message works because it creates an “us versus them” mentality within her base.

What Warren knows is that many in her base are not being crushed under the weight of medical expenses. She knows all of them will see their taxes go up, and unless they’re currently paying a ton out of pocket for their healthcare, their overall “costs” will not go down, as she promises. The burden of high medical costs is not as mainstream as she claims, which is why she refuses to acknowledge taxes will rise dramatically under her plan. She wants them to be focused on “free” medical care even if the “costs” for many if not most of her supporters will actually rise.

When a politician refuses to directly answer questions about their premier policy proposal, be afraid. Bernie Sanders might be a mess, but at least he’s honest about taxes rising across the board. Warren is not being honest at all.

We are currently forming the American Conservative Movement. If you are interested in learning more, we will be sending out information in a few weeks.

American Conservative Movement

Continue Reading

Facebook

Trending