A Texas bankruptcy judge on Tuesday ruled largely in favor of soon-to-be Trail Blazers owner Tom Dundon in a messy legal dispute related to a professional football league that collapsed shortly after Dundon became its biggest investor.
In February 2019, Dundon was described as a savior for the struggling Alliance of American Football, a minor professional football league with an upcoming spring season. Just eight weeks later, it collapsed.
In the years since, the league’s employees, investors and vendors have battled in bankruptcy court, including over whether Dundon or his businesses were on the hook to the league’s creditors for $180 million.
Tuesday’s 199-page order by a Texas bankruptcy judge concluded they aren’t — a welcome development for Dundon and his co-investors, who are expected to finalize their purchase of the Blazers in four short months.
The gist of the bankruptcy dispute: Dundon told several media outlets he was committed to investing $250 million in the football league — but he only wrote checks totaling $70 million. Creditors argued if he had come through with the entire investment the league might still be alive.
Dundon and his attorneys argued he never formally agreed to invest $250 million, and instead of throwing good money after bad, he pulled the plug on the league after he realized he’d bought a costly lemon. He described his press statements as puffery.
After six years of legal filings and a trial, the judge mostly agreed with Dundon.
“The Court believes the parties likely discussed $250 million as the total investment figure, but finds that (the league’s founder) and Dundon agreed only on $70 million,” the judge wrote.
But the judge didn’t fully absolve Dundon. The court found that he engaged in self-dealing by giving free or discounted advertising during the league’s broadcasts to friends and associated businesses.
Dundon had argued giving away ad space was a strategic business decision, but the judge wasn’t convinced. The adverse ruling, however, amounted to little more than a legal slap on the wrist. Given the league folded, the judge only awarded creditors $1 in damages.
Lawyers and spokespeople for Dundon and the football league didn’t immediately respond to requests for comment.