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Ex-AOL Lawyer Tried in Vain to Save Arena Football League

Dec. 3, 2019, 10:45 AM

Former America Online general counsel Randall Boe knew his salvage mission wouldn’t be easy when he took the reins as commissioner of the Arena Football League last year.

The second oldest U.S. professional football league had shrunk from a height of 19 teams to four and was on the brink of dissolution when Boe arrived at the league’s Las Vegas headquarters, which he relocated to Philadelphia. Boe also looked to raise additional third-party capital to capitalize on the media market’s fragmentation by offering quality sports content and catering to sports bettors.

Boe got the AFL assignment because he served as general counsel for Monumental Sports & Entertainment, a Washington-based holding company controlled by former AOL vice chairman Ted Leonsis. MSE wanted to salvage its investment in two of the AFL’s remaining teams, the Baltimore Brigade and the Washington Valor.

Hoping to show he was “all in” on leading the league, Boe relinquished his duties as MSE’s legal chief in June, giving way to a deputy, Abigail Blomstrom, another former AOL in-house lawyer.

But Boe’s work wasn’t enough to save the AFL, best known for marketing handles like the “50-Yard Indoor War” and “Wall2Wall Brawl.” The league announced plans to liquidate after filing for Chapter 7 protection Nov. 27 in Delaware.

Best Efforts

Boe still felt optimistic about the AFL’s future when its 2019 season ended Aug. 11 as a crowd of 12,000 watched the Albany Empire defeat the Philadelphia Soul in Arena Bowl 32.

The AFL had a new collective bargaining agreement with its players’ union and had positioned itself as the top-tier of the fractured indoor football world, Boe said. Competitors include the Indoor Football League and National Arena League, mostly regional entities that include some former AFL teams.

“Their approach is to cut player costs and play in smaller cities with smaller venues and crowds,” said Boe, noting that some of the AFL’s rivals pay players a paltry $250 per game. “No one has an appetite to run this as a small league and lose money. The reason you’re in it is to turn it into something bigger and make it financially viable.”

AOL to AFL

Boe, a former Arent Fox litigator, became deputy general counsel for Dulles, Va.-based AOL LLC in 1996. He oversaw several notable early internet age cases on junk email and online privacy before moving into AOL’s top in-house legal role. He stayed with the company through its $165 billion merger with Time Warner Inc., leaving in late 2006.

After a year of quasi-retirement, Boe took a fortuitous call from Leonsis, who wanted him to serve as general counsel for MSE. In addition to its AFL holdings, MSE would acquire the National Basketball Association’s Washington Wizards and National Hockey League’s Washington Capitals.

After a decade in that role, Boe added the AFL commissioner hat to his MSE responsibilities. Along with Leonsis, Boe adopted a single-entity structure designed to centralize costs and stabilize the struggling league. Just as the Brigade and Valor took the indoor field in 2017, the AFL was faltering again following the demise of its flagship Tampa Bay Storm franchise, as well as the Portland Steel.

“We had a fantastic product—the game was never a problem—it’s a question of how you organize the league and run it. You need to build an audience and footprint that allows you to get national sponsorship and media dollars,” Boe said. “It was a solid plan, but it involved getting to scale fast with a lot of teams. And that takes a lot of money.”

And money often runs out. The Alliance of American Football, an eight-team outdoor league backed by Dallas-based billionaire Tom Dundon, filed for bankruptcy in mid-April, unable to complete its inaugural season.

The AAF’s Chapter 7 case, which is playing out in a San Antonio court, left several law firms in the lurch: Morgan Lewis & Bockius ($2.4 million); Los Angeles-based Sloane Offer Weber & Dern ($25,000); Kilpatrick Townsend & Stockton ($20,000); and Fenwick & West ($173).

The AFL’s Chapter 7 filing looked similar. Among the AFL’s creditors—the league listed up to $10 million in assets against liabilities of up to $50 million—are three large law firms: Weil Gotshal & Manges ($365,373); Duane Morris ($140,000); and Quarles & Brady ($5,873).

Boe said that unlike the AAF, the AFL ran a lean operation. “We put on our entire season for about $20 million—that’s two weeks of AAF money,” he said.

Arena’s End Game

Unfortunately for Boe and a half-dozen other league staffers, it was the AFL’s past that scuttled its future.

An Oct. 16 lawsuit filed by the National Union Fire Insurance Co., which seeks $2.4 million in workers’ compensation premiums from the league, led Boe to suspend its operations. The dispute stems from legacy liabilities incurred by the AFL’s previous owners during another bankruptcy proceeding the league initiated in 2009. Boe said the litigation sunk any hope for long-term success.

A bankruptcy trustee will now take control of the AFL’s remaining assets, including elastic tape, helmets, water bottles, and other paraphernalia, which will be sold to pay back its law firms and other creditors.

Boe will stick around to oversee the AFL’s bankruptcy process, one he acknowledged could result in the league rising again, albeit in a different form. He would prefer to remain in a commissioner-type role, rather than return to an in-house legal position.

“I love the sports media space, which is where AOL really was, and I’d like to find something there,” he said. “Maybe that’s another run at AFL 3.0, or maybe it’s something different.”

To contact the reporter on this story: Brian Baxter in New York at bbaxter@bloomberglaw.com

To contact the editor responsible for this story: Seth Stern at sstern@bloomberglaw.com