• The UFL's Fumbling Attempts to Survive
  • April 30, 2013
  • Law Firm: Proskauer Rose LLP - New York Office
  • Football is a tough sport, and sometimes a team has to call a time out to get a breather and regroup. In October 2012, the United Football League (the "UFL") took a break to deal with the money woes that have plagued the league almost since its inception.

    The UFL was formed in 2007 by financier William ("Bill") Hambrecht, in a bid to challenge the NFL's dominance of the sport. Hambrecht sought to leverage football's general popularity and appeal to a key demographic - described as young men who drink beer - by producing what he called "the most valuable property you can create." Despite the involvement of a number of high-profile investors, however, the UFL has had some tough seasons financially, forcing it to remain perpetually down a few scores.

    The October 2012 time out isn't the first for the UFL. After losing more than $100 million in its first two years, the struggling league hacked the last two weeks off of its 2011 season and accelerated the 2011 championship game in an effort to save millions of dollars and thus secure its long-term existence. The effort was not enough to offset the UFL's economic troubles, however. The 2012 season kicked off in September, but was suspended less than a month after it began, when the league was unable to pay its staff and players.

    Now the game has moved from the field to the courts.

    In March 2013, a group of 78 players and staff members filed suit against the UFL, its member teams, and Bill Hambrecht, seeking millions of dollars in back pay, punitive damages and attorney fees. The players and staff, all associated with the Omaha Nighthawks and Las Vegas Locomotives, allege breach of contract, unjust enrichment, misrepresentation and violation of state labor laws. The complaint filed in Albritton, et al v. UFL Management, LLC, No. A-13-677584-C (Utah Dist. Ct. Clark Cty complaint filed Mar. 1, 2013) alleges that the cash-strapped defendants failed to pay the players and staff for their participation in the UFL's 2012 season as agreed pursuant to their employment agreements. 

    The complaint names Hambrecht personally, stating that in mid-October 2012, the plaintiffs advised Hambrecht that they would no longer participate in the UFL unless and until they were paid.  In a Hail Mary attempt to keep the league alive, Hambrecht promised full payment by the end of the month and offered to personally guarantee their salaries.  Hambrecht allegedly entered agreements with the players and staff pursuant to which he personally guaranteed full payment of all compensation owed by October 31, 2012, and agreed to personally indemnify the plaintiffs in the event the UFL failed to make the required payments and they incurred damages in enforcing the personal guarantees.  To further induce the players to continue with the league, Hambrecht also allegedly paid each player $1,000, which he specifically agreed was not to be credited against the money they were owed.  Shortly thereafter, the defendants disbanded the UFL.

    The plaintiffs contend that payment was not made as promised at the end of October, and that Hambrecht missed at least four additional payment deadlines before the plaintiffs filed suit.

    In a recent court filing, Hambrecht and his fellow defendants are seeking yet another time out. In a motion filed on April 23, 2013, they seek dismissal of the complaint or in the alternative, an order staying the proceedings and compelling arbitration.  If it's up to the players, however, Hambrecht will be hit with a delay of game penalty for failing to pay their salaries when due.