Alpha Entertainment LLC (XFL) – Start-Up Football League Founded by Wrestling Promoter Vince McMahon Files Chapter 11 Citing COVID-19, First Day Motions Include Requests to Reject All Player Contracts

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April 13, 2020 – Alpha Entertainment LLC (XFL) and one affiliated Debtor (“XFL” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 20-10940. The Debtors, owners of a start-up professional football league, are represented by Michael R. Nestor of Young Conaway Stargatt & Taylor, LLP. 

The Debtors’ lead petition notes between 1,000 and 5,000 creditors; estimated assets between $10.0mn and $50.0mn; and estimated liabilities between $10.0mn and $50.0mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) St. Louis Sports Commission ($1.6mn trade debt), (ii) Bexel NEP Integrated ($1.2mn trade debt) and (iii) Robert Stoops ($1.1mn employee contract debt). In addition to Robert Stoops, the former head coach of the Oklahoma Sooners and now a former head coach of the XFL's Dallas Renegades, interesting names on the Debtor's list of top 25 unsecured creditors (all owed at least $200k) are former Canadian Football League ("CFL") head coach Marc Trestman ($778k); former NFL quarterback and head coach Jim Zorn ($583k); and former NFL player, assistant NFL coach and Bob Stoops protege, Jonathan Hayes ($633k). The standard coaching salary in the XFL appears to be $583k, although the Debtor (amongst others) may be unhappy with the obligation to disclose that mark and amounts paid to certain coaches in excess of the standard. Welcome to Chapter 11.

In a March 20th "Message to Fans," XFL CEO Oliver Luck (a former NFL quarterback and father of former Colts quarterback Andrew Luck) stated: "The COVID-19 pandemic, and the most recent local and state regulations, have left the XFL no choice but to officially cancel the remainder of the 2020 season. This decision has been made with the health and safety of the entire XFL family as our top priority. 

We’re grateful for the incredible response and look forward to playing full seasons for you — and with you —  in 2021 and beyond.

When our teams return to the field, we’ll make every effort to ensure your faith in us is rewarded with even more fun and excitement. Your passion is our purpose, and everything we do, every day and for every season to come, is For the Love of Football." 

Somehow that now seems unlikely. Amongst the first filings by the Debtor are motions to reject contracts with all of its players and assistant coaches. We attach the motion in respect of the Dallas Renegades [Docket No. 16] as an example.

Events Leading to the Chapter 11 Filing

In a declaration in support of the Chapter 11 filing (the “Pollack Declaration”), Jeffrey N. Pollack, the Debtor's President and Chief Operating Officer, detailed the events leading to XFL’s Chapter 11 filing. the Pollack Declaration states: "Unfortunately, the Debtor was not immune from the disruption of the global COVID-19 pandemic that has shuttered much of the United States and forced every major American sports league to suspend, if not cancel, their seasons.5  On March 12, 2020, the Debtor canceled the remainder of its regular season, and on March 20, 2020, the Debtor made the difficult, but necessary, decision to cancel the remainder of the XFL’s inaugural season after just five weeks.  

It is estimated that cancellation of the final five weeks of league’s regular season “negated approximately $27 million in fan spending on gameday-related items” such as ticket sales and food, beverage, and merchandise purchases, to say nothing of the revenue from playoff games or the lost opportunities for sponsorship revenue and brand development.6  With the league shuttered and no games being played (or revenue being generated), the COVID-19 pandemic left the Debtor facing near-term liquidity issues.  With the duration of the pandemic uncertain and the Debtor’s operating expenses continuing unabated, the Debtor was left with few viable alternatives outside of chapter 11."

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