Tom Dundon, Owner of the Carolina Hurricanes, Becomes Chairman of the Alliance of American Football: Will there be Cross-Ownership concerns?

Photo courtesy: abc11.com

Tom Dundon was just named the chairman of the Alliance of American Football (AAF), after investing $250 million. In 2018, Dundon also purchased the majority stake in the Carolina Hurricanes of the National Hockey League (NHL).

That begs the question, how does an owner commit to multiple professional sports franchises? Also, how do professional sports leagues treat owners of multiple sports franchises?

Dundon is not alone in his efforts to be involved in multiple professional sports. Of course, in Buffalo, Terry and Kim Pegula own both the Buffalo Bills of the NFL, and the Buffalo Sabres of the NHL.

There is a short list of others, James Dolan (Knicks/Rangers), Josh Harris (76ers/Devils), John Henry (Red Sox/Liverpool FC), and Shahid Khan (Jaguars/Fulham) to name a few.

Perhaps the owner most involved in multiple sports is Stan Kroenke. Kroenke is the owner of the Los Angeles Rams of the NFL, the Denver Nuggets of the NBA, the Colorado Avalanche of the NHL, the Colorado Rapids of the MLS, the Colorado Mammoths of the National Lacrosse League, and the Los Angeles Gladiators of the Overwatch League.

Kroenke was forced to transfer the ownership of the Avalanche and the Nuggets due to the NFL’s cross ownership rules in 2015. The cross-ownership rule stipulated that the owner of an NFL franchise could not own a professional sports franchise in a different market that also had an NFL franchise located in it. Kroenke transferred ownership to his wife Ann Walton Kroenke.

In October 2018, the NFL announced that it had removed the cross-ownership rule, allowing NFL owners to own non-NFL teams in any market.

Cross-ownership has been an issue for the NFL for some time, as it raises conflicts of interest in multiple cities, and can create problems for the owner of one franchise competing for fans with the owner of a franchise in another league. Problems that may arise among competing owners are: competition over sponsors, ticket sales, licensed products, and dates of events.

There is so much that goes into running a professional sports franchise that goes beyond their team. In order to be successful, owners must be able to market their franchise and keep their fans satisfied. Investing hundreds of millions of dollars, or even billions is a huge financial gamble (the Dallas Cowboys are valued at $4.8 Billion). Thus, owners want to ensure they have every available resource in their market to make their franchise as successful as possible. With that big of an investment, it only makes sense why they would be concerned about competition. The risk to the owner is only elevated with two professional franchises.

The NFL is not the only professional sports league with cross-ownership rules. The NHL does not allow an ownership group to own more than 30 percent of two NHL franchises. Interestingly enough, this problem arose in 2011, when the Canadian company Bell, 18% owner of the Montreal Canadians, purchased 37.5% share in the parent company of the Toronto Maple Leafs. The Montreal Canadians also play in the Bell Centre.

You can see how cross ownership can become tricky, as the structure of the company and the ownership groups can become complex and create conflicts of interest. Bell was ultimately able to retain ownership of the Canadians, and their investment in the Maple Leafs parent company. However, the optics of the investments did not leave fans feeling good. The rivalry between the two teams did not help matters.

Circling back to Tom Dundon, it will be interesting to see how the NHL might respond to Dundon being named the chairman of the AAF. If the AAF blossoms into a bigger venture, there may be some argument about whether Dundon should be allowed to retain his majority ownership of the Carolina Hurricanes.

Dundon remains confident that his ownership of the AAF will not distract him from the Hurricanes. He describes his attitude towards concerns over his commitment to the Hurricanes:

Although I talk to (general manager) Don Waddell and I’m involved, I don’t have a day-to-day responsibility and therefore I have lots of excess time. If I didn’t do this, I was going to go buy a company and start running a company again. I needed more to do. I feel like the Hurricanes are in good hands, the business is running well. It’s still something I love and have conversations about and want to keep improving, but it’s not a full-time job. It never really was. It definitely isn’t at this point.

https://www.newsobserver.com/sports/spt-columns-blogs/luke-decock/article226452965.html

He reiterated his commitment to his fanbase: “The Hurricanes are still the most important thing in my life outside my family,” Dundon said. “I want the Hurricanes to win more than anything. The difference in this league is I just want the league to win.

Photo courtesy: footballscoop.com

The question over whether Dundon can run both the AAF and the Hurricanes will be interesting to watch over the next couple of years. If the Hurricanes win, there will be no issue. If they continue to miss the playoffs, however, I am sure discontent in the fanbase over Dundon’s ability to run a professional sports league and the Hurricanes will be rampant.

Matthew Benedict

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