So yesterday, I said I would post more about what transpired, in 2008, 2009, and the return in 2010. Along with the large part that Brett Bouchy individually plays in this league. This will be long, so be sure to settle in and enjoy the read. Jim Foster had this grand idea, we all know that. He went to a local Intellectual Property Attorney here in Chicago. That attorney is now the guy whose name adorns the American Conference Trophy, William “Bill” Niro. Niro agreed to do the patent filing for Foster, but wanted more than just a fee. So he called his other attorney friend to help set up a Limited Liability Company (LLC) to incorporate and hold the patent in the corporation. That attorney friend was none other than the man Lew Halboth calls “Jerry the Kurse”. The two attorneys pushed Foster into making them partners in a new entity named “Gridiron Enterprises, LLC”. The partners were Foster, Niro and Kurz. The patent was granted to Gridiron in 1990. And the league had its hiccups as it grew. But, what people seem to forget when they say “Big Money” came in later, was that in 1988 “Big Money” was in the game. The owner of the 4 time champion Detroit Drive was Mike Illitch, owner of Little Caesars and the Detroit Tigers. Skipping forward in time came a key moment in 1998, in that year not only was Tom Benson awarded a franchise in New Orleans, but Los Angeles was awarded a franchise to being play in 2000. But the most important item was that Gridiron Enterprises, LLC (owned by Foster, Niro and Kurz), sold the rights to the AFL Patent to the AFL. The deal was some cash, but also an “Equity stake” in the AFL itself. Meaning that Kurz, Niro and Foster’s company was a shareholder in the AFL entity. The league grew, and as we like to say, “Big Business” came in. Under Baker the attendance and valuations skyrocketed, but so did the bloat at the league level. There were two league offices (Manhattan and Chicago). There were 60 or so employees of the AFL, to support just 16 teams. So debts spiraled. In 2007, the Patent for the AFL style of play expired. However, Gridiron Enterprises was still part owners of the AFL as “Shareholders” if you will. Then 2008 came and the debts were so large, it was obvious to the owners and the league creditors that the league would not survive financially. The majority of owners got together and began reaching out to private equity investors to give up ownership in the AFL in return for a cash infusion. That actually was agreed to, but the debt was still too large. Many banks, to include Fifth Third, were owed large sums of money. So the owners and the Private equity company began working with all of the debt holders, to restructure and lower the debt. The negotiations were successful and the Private Equity Company was set to step in. What happened? Well, one shareholder and creditor was not willing to accept their now reduced ownership valuation. You guessed it, Gridiron Enterprises, LLC. So they filed an “Involuntary Bankruptcy” in essence, to force all the owners out, so they could regain full control of the league. Yet, as Bankruptcies go, the Federal Judge appoints an Attorney to act as a Trustee for the company that filed, in this case the AFL. That Trustee is responsible for getting all debtors listed, all assets listed, etc. They also put a “value” on the assets that remain. They then attempt to find buyers for the assets, take the funds from the sale and distribute them to some of the creditors as it can. Alex Mogila was appointed as Trustee of the AFL. He put a valuation of $2.5M on the assets of the league. The assets included the names and logos of most of the teams (Save the Desperados) as well as a 51% ownership stake in the AF2. At this point, the AF2 was still operating and being run by Jerry Kurz. Jerry also put together a group to include several AF2 owners, Bill Niro, Brett Bouchy and others. They formed Arena Football 1, LLC. Then they auction for the AFL assets were held. AF1 bid $6.1M. Crazy when you realize that the Trustee valued it at 2.5M. Another bidder put in a bid of $6M. That bidder was a group of other former AFL owners to include Alan Levine (former owner of the Chicago Rush), through an entity called Acquisition Holdings. Kurz and Niro, being attorneys in Chicago, had dealings with Mogila who was based out of Schaumburg, IL. So isn’t it interesting they beat out the other by just .1 million? Almost as if they knew what the bid of Acquisition Holdings was??? Then there came some legal battles, in how could Kurz bid on the AFL, as he was employed by it as director of the AF2 (owned by AFL). Those were all approved by the Bankruptcy Judge. The sale had not been fully completed, when teams started marketing a 2010 season. This upset Alan Levin, and he filed suit to block them from marketing the Chicago Rush until the sale closed. This was resolved in court. So, you can see, Kurz and Niro forced the BK, were able to re-acquire control of the AFL. For his help, Niro was awarded the Chicago Rush with a % ownership and managing partner control. He then went out and sought other investors, thereby selling shares, and profiting. After 2010, the other new owners realized they had to put more money into the team. They did a “cash call”, and Bill Niro refused to put in more cash, so the tag of “managing partner” was removed and his ownership share was diluted to nearly nothing. One of the other owners along with Niro was Jerry Kurz’ wife. So when they sold shares, she was able to profit as well. Kurz, as we know, was given the roll of Commish! The AF1 was set up to where the players were not employees of the franchises, but rather of the league. Each team was then granted 1/Nth ownership of the league. Where N is the number of active teams plus 1. That extra One… interesting story. So this year we have 14 teams. So each team has a vote, but there are actually 15 votes. Who controls the extra vote? BRETT BOUCHY!!!! So he has two votes. One as owner of a team, but also for owning that extra “Nth”. We will get more into Bouchy’s history with dealings with Stephen B Carlson of Aspen Capital Group and his SEC Violations in another post. When you read that one, you will understand why I would never be his partner in a lemonade stand let alone as an owner in this league. Because this post is so long, I will write a new one on that.
Posted on: Fri, 23 May 2014 17:59:11 +0000
Trending Topics
Recently Viewed Topics
© 2015