December 24, 2012 by Charlie Eisenhood in Livewire with 2 comments
We have lots of details about how the AUDL is changing in our news write-up. But I think it’s important to step back and take a broader view of what happened here.
In the very first article I wrote for Ultiworld back in mid-July, I discussed the fundamental challenges underlying the lawsuit between the AUDL and its teams, which had just been revealed.
I wrote at the time:
[quote]It is strange to see a professional sports league suing one of its own teams. Most leagues are structured with the team owners or a Board of Directors electing a President or Commissioner to handle front office issues like rules, league expansion, etc. In the AUDL, prospective franchise owners pay the League for the right to play in it, but little else. There have been frequent complaints from players and owners about issues including marketing, sponsorship, profit sharing, insurance, and rule enforcement – the day-to-day operational issues that confront the teams, all of which face tight budgets.
[Connecticut Constitution GM John] Korber says that AUDL isn’t thinking about that. The League’s incentive, he claims, is to sell more franchises and not to deal with “policies that increase the value of the current teams.” Of course, the owners want to increase the value of their team. “The realities of those incentives have created a completely disjointed operation,” said Korber. He went further, suggesting that you could “effectively see the League as a Ponzi scheme” that sells franchises but does not worry about creating a sustainable league.
Because of this, Korber expects to see a very different League as early as next year. He thinks the current eight owners will either buy out Moore, find a way to put some elective board into place along the lines of Major League Baseball or the National Hockey League, or leave the League and form their own.[/quote]
Amazingly prescient — literally each of those things happened. Team owners bought out Moore and put in an elective board. Oh, and one team left the league and formed its own.
If you really step back, you’ll see that all of the drama in the AUDL was caused by this one core misalignment of incentives. It literally had to change to salvage a chance at a functioning league.
That change didn’t come easy, however. Moore was reluctant — for obvious reasons — to give up his ownership stake. Remember that he had the vision to start professional ultimate in the first place; this league is his baby. Although we don’t yet know the price he got for 90% of his shares, he probably made off pretty well.
In many ways, this should be seen as a reset, a new beginning for a league that barely resembles what it did last season. Only four teams from year one remain in the league — and the new owners have most of the power (and most of the money).
But the year of experience that the league has — as choppy as it was — gives them the upper-hand heading into their upcoming battle for supremacy with Major League Ultimate. Being the first mover is important.
And remember this investor who was on the fence between the MLU and the AUDL? His misgivings about the AUDL have now, at least theoretically, been handled. I expect he will be much more likely to put his money in with the AUDL at this point. We will follow up with him after the holidays.
I think anyone who is watching this unfold can certainly see that this is an encouraging position for the AUDL to put themselves in. They now have money, a clearer vision, and the right organizational structure to be successful. There’s a long way still to go, but they’re — finally — on the right track.