By Spencer Wingate, a legal assistant for Brock & Scott PLLC in Charlotte, NC and SportInLaw.com author.
Each Friday, The Legal Blitz features an article from our good friends at Sport-In-Law in an effort to fulfill our promise of providing the best sports law content on the Web. This week’s feature details the financial collapse of the United Football League (UFL) and the subsequent legal fallout from its inability to pay bills.
The United Football League is currently dealing with hundreds of millions of dollars in losses. The league has struggled with expansion, franchise shifts, and a variety of financial issues since its inception in 2009. They reportedly lost $225 million in their first three years of existence. The UFL is drowning in debt and they have already defaulted on loans. Reports of players, team personnel, a medical clinic, and a public relations firm not being paid have arisen. Now they face a lawsuit from an insurer for workers’ compensation premiums with the alleged damages exceeding $3 million.
The National Union Fire Insurance of Pittsburgh has filed a complaint in New York County Court claiming the UFL owes them nearly $3.1 million. The company provided workers compensation insurance coverage to the UFL athletes during the 2009 and 2010 seasons. The company is suing as obligations of the program have been broken. The insurer claims it sent a bill to the UFL on December 9, 2011 and sought arbitration as the league owed them $3,095,483.44. The league never disputed the bill or responded. Now the company is seeking an order to compel an arbitration hearing and second cause of action finding the UFL in breach of contract. The complaint states the UFL owes “additional premium, loss reimbursements, adjustments, expenses, fees, interest, and other obligations to National Union pursuant to the Payment Agreements.”
The UFL began play in October 2009 with franchises in Las Vegas, Sacramento, Hartford, and Omaha. Virginia Beach got a team in 2011. All of the franchises did not have an NFL presence in their market. However, it remained unclear if the league would attempt to compete with the NFL or serve as a sort of developmental league.
The league has continuously struggled to establish itself and was forced to shorten the 2011 season due to its abundance of financial problems. Currently the league still has plans to move forward with their fourth season in 2012.