All that’s left of AFL on the block
TMC
By JOHN LOMBARDO
Staff writer
Published November 02, 2009 : Page 01
The AFL’s Philadelphia Soul had to fight to win 17 games and the right
to hoist the Jim Foster ArenaBowl trophy in 2008. Now, anyone with a
checkbook will likely be able to buy the championship hardware as part
of a bankruptcy auction set for Nov. 25.
If the 60-pound silver trophy isn’t attractive enough, how about the
authentic playing field from the Grand Rapids Rampage franchise? The
field is listed as an asset of the shuttered league, which is now in
Chapter 11 bankruptcy protection. The Northern District of Illinois
U.S. Bankruptcy Court has appointed a trustee to sell the AFL’s
assets.
As a result, the AFL’s intellectual property, including the name and
logo for the league and all of its teams’ names and logos, is on the
block along with myriad other items, such a 25 boxes of AFL equipment
stashed in an O’Hare Airport storage facility, 40 boxes of AFL
merchandise, and two flat-screen televisions still attached to a wall
in the league’s Chicago office.
It is unclear what the sale means for any future iteration of the
league, or whether a buyer of the AFL assets will resurrect it. A
group led by Jerry Kurz, a co-investor in the AFL, already has created
arenafootbal1, a new startup indoor league based in Tulsa, Okla.
There is no minimum bid or value listed for the assets and all
proceeds are earmarked for a wide-ranging list of AFL creditors,
including Fifth Third Bank, the largest secured creditor, which is
owed $7.7 million. Other nonsecured creditors include former rights
holder NBC, which is owed $1.59 million. Former AFL Commissioner David
Baker is owed $985,000.
Baker said he is “saddened and disappointed” by what has happened to
the league, adding that in 2008, the AFL had a $1 million gate for the
ArenaBowl, record expansion fees and record attendance. “I sincerely
believed the league was never stronger,” he said.
Former TV rights holder and minority investor ESPN is owed $540,000
and the AFL Philadelphia Soul franchise, co-owned by Jon Bon Jovi, is
due $219,250. Full disclosure: Street & Smith’s Sports Group,
publisher of SportsBusiness Journal, is owed $6,250 as an unsecured
creditor.
“The real value is in the intellectual property,” said Alex Moglia of
Moglia Advisors, a Schaumburg, Ill.-based corporate restructuring firm
that was appointed on Oct. 20 to serve as the trustee to sell the
AFL’s assets. As for the Foster Trophy, it’s likely to be sold after
Moglia determines that it is AFL property.
“We preliminarily conclude that the trophy is included,” said John
Collen, a partner at Tressler, which is representing Moglia
Associates.
The AFL successfully filed in late August to move from a forced
Chapter 7 bankruptcy to Chapter 11 protection in late August, the
latest twist in the league’s demise. Jim Renacci, owner of the
Columbus Destroyers, is listed as acting chief executive officer of
the AFL. He did not return calls for comment.
“A Chapter 11 takes the bankruptcy into a public forum and creates a
fair and thorough sale process,” said Richard Lauter, an attorney in
the Chicago office of the law firm Freeborn & Peters, which has been
retained to represent the creditors committee made up of the largest
unsecured creditors. “In any bankruptcy, the value of any asset is
what someone is willing to pay for it. That’s the hallmark of the
bankruptcy sales process.”
The deadline to submit a bid on the AFL is Nov. 20, with the auction
set for Nov. 25. There is no requirement that a bid must include all
assets listed. It is also possible that a “stalking horse” bid will
already be filed by the auction date, a process that could drive up
the value of the sale.
“In the sales process, you can have what is known as a stalking horse
bid, and it is an initial bid that is out as the baseline for other
bidders to exceed,” Lauter said.