Friday, April 24, 2020

Vince McMahon's Lawyer Issues Statement On Oliver Luck Lawsuit, Notes On The XFL Folding

Vince McMahon's Lawyer Issues Statement On Oliver Luck Lawsuit, Notes On The XFL Folding
As noted, former XFL CEO & Commissioner Oliver Luck recently filed a lawsuit against Vince McMahon for money owed following the Chapter 11 Bankruptcy filing and folding of the football league.


Luck's lawsuit had some information redacted, likely due to a privacy agreement he was under, but it's believed that Luck is suing the WWE Chairman for several million dollars. Daniel Kaplan of The Athletic reports that McMahon hired Luck for "at least 20 million over multiple years."

Luck was reportedly fired by Vince for just cause, but Luck disputes the allegations that were listed in his termination letter. Luck was fired on April 9, which was two days before the Chapter 11 filing in the state of Delaware.

Sports Business Daily notes how optimism remained throughout the XFL offices on the afternoon of March 20, and among the eight teams around the country. That is when the league made the decision to cancel the remainder of the season due to the COVID-19 outbreak, but employees were still hopeful. Their faith was bolstered by the public message issued by Luck and former XFL President Jeffrey Pollack, which said the league looked forward to returning for the 2021 season, and beyond. Less than three weeks later, the league folded once again and its nearly 400 employees were laid off during a conference call on April 10. Three days later is when the Chapter 11 filing was done, officially putting an end to the league.

Despite the optimism at first, troubling signs started to appear within days of the season-ending message from Luck and Pollack, according to SBD's sources. There were subtle changes in management direction, and a lack of communication gave the impression that McMahon was already planning to abandon his $500 million commitment to league operations. In the next few days, league employees would continue to work with the belief that another season would happen. While other, more established sports leagues were furloughing or laying off employees and making salary cuts, XFL employees were given marching orders and it was clear that they were to get ready for the 2021 season. Employees continued to plan for budgets, schedules and communications for the next season. XFL insiders had no idea of what was coming, even on the morning of the conference call that led to the official end of the league.

Vince's Alpha Entertainment, the parent company of the XFL, filed for bankruptcy on April 13, listing assets and liabilities between $10 million and $50 million. The league is asking a judge to grant permission for them to walk away from hundreds of obligations, including those with Luck, coaches, venues, freelance photographers, and many others. Former league employees and league business partners are now sharing a two-tiered perspective on the quick chain of events in the end. People understood that any start-up sports league would be severely tested by the coronavirus pandemic, but they knew that the league had met every business goal up until the outbreak hit, and they were also relying on repeated guarantees. These guarantees were made publicly and privately, that the league would complete two seasons. The guarantees were buoyed by the fact that the league wasn't even spending what was budgeted.

League sources said within a week of the season's cancellation, orders wee issued for the team and league social media accounts to focus only on "thank you messaging" around past games. They were to change any messaging that looked forward to future games.

Around this time, Vince issued the $5 million secured loan to the league to cover shortfalls from the pandemic. More money would be needed as the league estimated that the cancellation of the rest of the season would cost at least $27 million in lost game-day revenue. Another loan came one day before the mass cuts on April 9 as Vince loaned the league another $4 million. Before the COVID-19 crisis hit, the league had lost $44 million on revenue of around $14 million, through February 29 of this year. These are significant losses but not unanticipated, and sources in and out of the league believed the XFL was meeting its business goals.

It was around March 31 when outsiders started to notice changes. Pollack pushed for Ticketmaster to give the league more than $5 million it held in its accounts from XFL transactions on the Ticketmaster platform. Ticketmaster hadn't paid the league because it didn't have a signed contract with the XFL yet. Pollack learned of this problem and made it a top priority. A contract was then signed and Ticketmaster paid the money within a few days.

Pollack met with Vince on April 2 and while the substance of the meeting is unknown, some believed it had to do with 2021 planning. Before the meeting, Pollack had been briefed on venue agreements and the possibility of relocating the Tampa Bay Vipers to Orlando, and moving the New York Guardians home games from MetLife Stadium to the Red Bull Arena. There was still no idea that anything was as bad as it was. Teams were being told that they'd receive templates for their club business plans for the 2021 season that week, and content plans for the next few months were coming together. Budgets and scheduled were being developed for 2021 and those had been submitted to Luck. The next step would have been meetings to adjust those plans and various contingencies related to the outbreak, but those meetings never happened.

While WWE was dealing with WrestleMania 36 issues and planning their own coronavirus-related cuts, sources said this is when communication began to become inconsistent from Pollack and others in the XFL. One all-hands meeting was scheduled for March 27, but then canceled without an explanation. Some started to wonder about the future.

"In hindsight, of course the writing was on the wall, but in the middle of it, we were just ready to keep going, and wait for the direction and how we were going to keep operating," said one league employee to SBD.

Vince's commitment to spend $500 million to get the XFL off the ground kept employees optimistic. This promise was only attributed indirectly to Vince by un-named league insiders, but also never disputed by Vince's camp after several references in public. There was said to be around $5.6 million in cash on hand when the XFL filed for bankruptcy. On April 8, all XFL team presidents were summoned to a conference call and that's where they heard from Senior Vice President of Team Business Operations Derek Throneburg, who told them that all deposits for 2021 tickets would be returned to customers, whether they asked for them or not. That was troubling enough but there was no response to one major follow-up question - when would the league tells fans about next season?

By that point it was clear to several XFL business partners that the league would not be coming back. Some started to prepare for bankruptcy, while others thought Vince would be taking on a new capital partner. However, most league employees simply didn't know anything. Most employees didn't learn of major issues until that Friday morning when they woke up to a bigger paycheck than expected in their bank accounts. This was a sign of dramatic payroll action, but still Vince's commitment stuck in the minds of many people. Some figured they were getting furloughed or hit with pay cuts, but many did not figure the league would fold. The league officially ended a few hours later with a call that lasted less than 4 minutes. Pollack was the only one to speak and he took no questions. Luck was not on that call and sources report that he was informed of the league folding separately, before the 4 minute call.

Few people outside of Vince and his inner circle understand exactly what changed so dramatically between March 20 and April 10.

It's believed that Luck's lawsuit against McMahon will end up settled out of court. Vince is being represented by Jerry McDevitt of the K&L Gates law firm. McDevitt has represented McMahon and WWE in unrelated matters for several years now. McDevitt released the following statement through Kaplan this week, on behalf of Vince as Vince's response to Luck's lawsuit:

"Oliver Luck's services as Commissioner and CEO of The XFL were terminated by a letter sent to him on Apr. 9, 2020 which explained the reasons for the termination. As to the lawsuit he filed, his allegations will be disputed and the position of Mr. McMahon will be set forth in our response to his lawsuit."

It was noted on Wrestling Observer Radio that Vince had guaranteed Luck the money, and that it was not contingent on the league surviving. This is why Luck left a solid job with the NCAA because even if the XFL folded, he would get paid. The Observer also noted that the leading creditor to the XFL is Vince, and that Luck and other executives aren't on the list because they were fired for just cause. As noted, there are several former head coaches who are on the debt list.

Luck was a big name in sports and well-respected. It's said that the fact Vince would "screw" Luck out of big money has a lot of people in the business and sports worlds down on Vince's reputation right now.

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