Tom Dundon, the head of a multi-billion dollar bid for the Portland Trail Blazers, spent part of this summer in a San Antonio courtroom, answering questions about the 2019 collapse of a professional football league that imploded shortly after he became its biggest investor.
In February of that year, Dundon was widely characterized as a savior for the struggling Alliance of American Football, a minor league with an upcoming spring season. Just eight weeks later, it had folded.
Since then, the league’s employees, investors and vendors have been battling in bankruptcy court. In recent months, the court’s attention has shifted to whether Dundon is on the hook to the league’s creditors for $180 million.
The basic argument: At one point, Dundon publicly said he was committed to investing $250 million in the league — but he only ever wrote checks totaling $70 million. If he had come through with the entire investment, his critics say, the league might still be alive.
Dundon’s response: 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 got a good look under the financial hood and realized he’d bought a costly lemon.
The legal drama offers a rare window into the business dealings of a person who’s new to Oregon civic affairs, but who could soon own one of the state’s most prized assets — the Trail Blazers, which he’s privately assured investors and officials he intends to keep in Rip City.
Court records show Dundon isn’t afraid of risk, and he moves fast and aggressively when he senses opportunity. He wired millions of dollars to keep the Alliance of American Football afloat within a day of his first conversation about investing.
But the multiyear litigation also raises questions about Dundon’s credibility, revealing that he, on at least one occasion, misled journalists working to explain his investment in a sports franchise.
Dundon has declined to discuss publicly his bid for the Trail Blazers, citing NBA regulations. Through a spokesperson, he declined to answer written questions about the football league’s collapse because the litigation is ongoing.
Dundon, however, later told a reporter he “probably made a mistake” with how he initially characterized his investment in the Alliance of American Football.
‘You just raised Series Infinity’
The Alliance of American Football played its first game on Feb. 9, 2019.
The league aimed to become the official minor league of the NFL. Games would start in February, after the Super Bowl, and the championship would be played before the NFL draft in April, filling a football gap on the annual sports calendar.
The plan had enough promise to attract support from some of football’s biggest names, including NFL Hall of Famers Troy Polamalu and Mike Singletary, who were among the league’s first employees.
Like many startups, the league needed a pile of cash to get off the ground. The business plan anticipated it would lose money for five to six years, according to the trustee in the ongoing bankruptcy case.
Cash problems started almost immediately when the league’s first big investor missed payments as play got underway. The league’s founder, Charles Ebersol, needed to quickly find a deep-pocketed investor.
Just four days after the first AAF game, Dundon and Ebersol spoke by phone for the first time. At the time, Dundon had already purchased the National Hockey League’s Carolina Hurricanes. He had a goal of one day purchasing an NFL or NBA team, according to his later testimony in the bankruptcy case.
According to the trustee in the bankruptcy case, they spoke again the next day and reached an “oral agreement” for Dundon to invest $250 million in the league, in exchange for majority ownership and control of the board.
“Dundon and Ebersol explicitly agreed on these terms,” the trustee said in a July filing.
In corporate bankruptcy cases, trustees work to recover as much money as possible for creditors — at times, as in this case, by pursuing the businesses’ owners personally to pay alleged debts. (Court records from earlier this year suggest Dundon had a net worth of $2 billion at the time, a number both sides had stipulated to in the case, according to the trustee.)
Dundon’s legal team, also in a July filing, disagreed with the trustee’s characterization of the agreement.
“At no point during that initial call or otherwise did Dundon and Ebersol discuss a $250 million agreement,” Dundon’s lawyers said.
By the next day, Dundon, through one of his business entities, had wired the league $5.1 million. The cash was used to cover an immediate payroll shortfall, according to the bankruptcy trustee.
A binding term sheet, seemingly dated the same day, says that, in addition, Dundon, through one of his business entities, committed to a “maximum” investment of $70 million in the league in exchange for 75% ownership and control of its board.
Dundon and league officials immediately drafted a press release about the deal that said he had “committed $250 million to the league.”
“The money is in the bank. I’m committed,” Dundon said in talking points he reviewed the next day before they were sent to a news reporter, according to the bankruptcy trustee. “I have committed to investing $250 million into The Alliance of American Football.”
Dundon’s financial support sparked national headlines, with The Athletic, ESPN and others reporting that he had not just pledged but invested $250 million.
The misleading headlines went uncorrected and Dundon rode the wave of good publicity, saying repeatedly that he was committed to rescuing the foundering football league.
“We have the capital to do whatever we need to do to make this thing successful,” he told USA Today.
“Once I put my name on this, we’re going to make this work, right? This is what I’m committed to doing,” he said in a televised interview with Rich Eisen, broadcast on Feb. 28, 2019, according to the bankruptcy trustee.
“There’s a big difference between continuing to raise capital like every startup does, right? … Series A, Series B,” Dundon told CBS Sports, according to the bankruptcy trustee. “I told Charlie, ‘You just raised Series Infinity,’ right? Like, it’s done now.”
‘Material overstatements and unrealistic projections’
As the congratulatory media tour ended, problems developed behind the scenes, according to documents filed as part of the bankruptcy proceedings.
Revenue projections Dundon received from Ebersol were $5 million higher than what the league’s finance committee had looked at weeks earlier, Dundon’s lawyers said in a legal filing this summer. Projected expenses that Ebersol gave Dundon were $21 million lower than the budget set by the finance committee, they argued in court filings.
“The materials Ebersol sent Dundon contained material overstatements and unrealistic projections,” Dundon’s lawyers said.
Ebersol’s attorneys did not respond to an email seeking comment.
Dundon’s team also found the league’s accounting to be lacking and expenses to be wildly unchecked, his attorneys wrote in the court filing. Teams flew on chartered planes. The league paid double what players in the rival XFL made. Headcount had ballooned to 900 employees.
In sum, “the league was in poor financial condition, and bills were piling up,” Dundon’s lawyers wrote this summer in the legal filing.
By April 2019, Dundon had decided to pull the plug.
The league stopped operating on April 2. It filed bankruptcy on April 17.
“The league failed and shut down because it was insolvent and was not a viable business,” Dundon’s lawyers wrote this summer.
‘We never committed $250 million’
In recent months, bankruptcy trustees and Dundon’s lawyers have been fighting over whether Dundon is on the hook for another $180 million to the league’s creditors.
The bankruptcy trustee concluded he is.
“Dundon entered into an oral agreement with Ebersol to invest $250 million in capital,” the trustee wrote in a 183-page report filed in July. “Dundon breached the agreement by failing to provide the full amount of funding promised, falling $180,280,810 short of his funding commitment.”
Dundon, and his lawyers, have argued otherwise, but a judge has yet to rule on the matter.
“We never committed $250 million to anybody,” Dundon testified in a December 2024 deposition.
Dundon said he’d committed to invest $70 million and he had the capacity to invest or raise more.
A term sheet entered in the court record supports Dundon’s testimony. The document, drafted in February 2019, calls for a “maximum cumulative commitment of $70,000,000.”
The board of Ebersol Sports Media Group, the league’s parent company, met a little more than a week after the term sheet was drafted and approved the deal. There is no mention of a possible $250 million investment in the minutes of the board meeting, which also are entered in the court record.
But what about Dundon’s statements to the media about investing $250 million?
“I have committed to investing $250 million into the Alliance of American Football,” Dundon told the Sports Business Journal, through a spokesperson, on Feb. 22, 2019.
Dundon would later say his comments to the press shouldn’t be taken as fact, much less legally binding.
“I wasn’t trying to tell the truth to the media, I was trying to tell a story,” Dundon testified this summer, according to the bankruptcy trustee’s 183-page findings of fact.
The trustee characterized Dundon’s testimony as “consistently inconsistent” and “not credible,” alleging numerous conflicting statements.
For instance, in his testimony, Dundon was asked, “Did you state publicly you agreed to invest $250 million?”
He answered “yes,” according to the bankruptcy trustee, who said Dundon elsewhere testified “no” when asked if he publicly stated he agreed to invest $250 million.
At his December deposition, Dundon was asked about the press release that said he had committed to invest $250 million in the league.
He characterized the document as “marketing” and “not a contract.”
“There’s a big difference between ‘committed’ in a press release and ‘committed’ in a term sheet,” he said.
If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.