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Major League Football (MLFB)
8 minute read · Issue Number 116 · April 15th, 2022
After reading my post about investing in sports, a reader pointed me towards the Major League Football (MLFB) – the only publicly-traded sports league seeking to develop and operate a professional spring football league in the US.
I spent hours doing proper due diligence, diving into their financial statements, and understanding the business. Turns out – the league has yet to play a game and earn a dollar in revenue!
My first thought was, “wow – that’s so random!” – but the cool thing about public companies is that they have to disclose their business model, financials, risk factors, strategy, and other relevant information to the public.
I thought it was interesting to look at the ‘back-end’ of a league project – so here’s the summary of the research with my main takeaways:
Major League Football (MLFB) was founded in 2014 to create a professional spring football league with six teams and form an entertainment brand that would:
Provide fans a high-quality sports competition during the NFL and college football off-seasons
Serve as a pipeline to develop and train players, young coaches, officials, and stakeholders in the industry
Become the developmental league for the NFL (similar to the NBA G League or Triple-A baseball)
“Although MLFB’s ticket pricing will be a fraction of that of the established professional leagues (NBA, MLB, NHL, and NFL), its ultimate goal will be to offer its fans an incomparable value-added experience for their entertainment dollar.”
The MLFB is targeting prime emerging and under-represented cities in sports like Ohio, Virginia, Alabama, Arkansas, Texas, and Florida to establish and attract peripheral football fans from all over the country.
Here’s how they describe their short term goals:
The MLFB is focusing strongly on building solutions through innovation and technology to reduce the business's operational costs as much as possible.
The league is aiming for three main revenue streams:
Traditional (broadcasting deals) and new media (streaming, socials)
Sponsors & controlled advertising
Merchandising & licensing
Even though the project has been a few years in the making, the league has struggled to debut its first season due to management issues, lack of financing, and a global pandemic.
“Our failure to raise additional financing in a timely manner would adversely affect our ability to pursue our business plan and could cause us to delay launching our league and our proposed business plan.”
A key issue on the MLFB financials is that they have significant debt, and the league has yet to generate revenues – hence, the stock is only worth a few pennies.
However, in early April 2022, the MLFB received a Term Sheet for a $7.5m Equity Line Investment from an institutional investor. That could help raise more funds through a second term sheet, making it seem like this league could happen soon.
Takeaways (but not financial advice)
The MLFB is an ambitious plan looking to fill a gap in the sports and entertainment markets
If the league ends up proving successful by adding value to fans, teams, and players during the off-season, it may set itself up for big potential partnerships (such as the NFL) and solid profits in the long run
While going public and making the ownership of a league available to any investor is interesting, I'm not too fond of the process in which the company did so
As an investor, value is vital, and in this case – debt financing does not equal to value
Due to the natural state of the project, I’d mark it as a risky asset with extremely high volatility as an investment– nevertheless, its latest announced funding could be the catalyst for more funding and a first pilot season
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