Last week, Alliance of American Football principal investor Tom Dundon told USA Today he would have to consider folding the first-year league if the NFL — specifically its players’ union — didn’t allow its practice squad players to take part in the fledgling pro-football outfit next season.

With no sign that the NFL or the NFLPA will agree to any sort of player-sharing agreement, that time has come, at least for now. In a letter sent Tuesday to its players and staff members, the league announced it was suspending operations, though it would maintain a small staff “to seek new investment capital and restructure our business. Should those efforts prove successful, we look forward to working with many of you on season two.”

The letter added that players and staff members would be paid through Wednesday. The Action Network’s Darren Rovell subsequently reported that “there is no severance pay” for the players and added, “Last paycheck was for last week’s game.”

“We’re all disappointed, but on the other side, we’ve got to be the champs, right?” said Orlando Apollos Coach Steve Spurrier, whose team leads the AAF with a 7-1 record. “The players, I’m more disappointed for all the players that believed this is my chance to show people that I can play this game. And a lot of them will get opportunities, they’ve shown enough. But yeah, it’s sad to end this way, really sad to end this way.”

Former NFL GM Bill Polian, one of the league’s co-founders, issued a statement Tuesday lamenting the decision to shut down operations, according to multiple reports.

“I am extremely disappointed to learn Tom Dundon has decided to suspend all football operations of the Alliance of American Football,” Polian said in the statement. “When Mr. Dundon took over, it was the belief of my co-founder, Charlie Ebersol, and myself that we would finish the season, pay our creditors, and make the necessary adjustments to move forward in a manner that made economic sense for all. The momentum generated by our players, coaches and football staff had us well positioned for future success. Regrettably, we will not have that opportunity.”

Dundon, owner of the NHL’s Carolina Hurricanes, stepped in to pledge $250 million to the AAF in February after its first weekend of games in exchange for being named chairman of the AAF board of directors. Reports had surfaced that AAF teams struggled to pay their players after the initial contests, though Dundon denied that the league was in danger of becoming insolvent and league officials said the problems stemmed from an issue with their payroll provider.

According to Rovell, Dundon will lose $70 million of that investment, adding that he made the decision to suspend operations “against the wishes” of Polian and Charlie Ebersol, the co-founders. Pro Football Talk’s Mike Florio says the league needed $20 million to get through the end of the season.

Week 9 of the 10-week AAF season was shaping up to be a key moment for the league, and not simply because of jockeying for playoff position. Saturday’s game between Memphis and San Antonio was scheduled to be broadcast by CBS as a lead-in to its NCAA Final Four coverage, and a solid TV rating on the national network could have been a sign that interest remained in the league.

Most AAF games have been televised by TNT, NFL Network or the CBS Sports Network cable channel or streamed on B/R Live. And while early ratings were impressive — the first two AAF games, broadcast by CBS on Feb. 9, drew 3.25 million viewers, more than an NBA game airing on ABC at the same time — those numbers have declined as the season has progressed. Only 340,000 people watched a March 23 game between Orlando and Atlanta on TNT, and the games broadcast by NFL Network that same weekend (one of them featuring former Heisman Trophy winner Johnny Manziel) drew fewer than 300,000 viewers.

“If you’re an AAF player and the league does dissolve. The last check you got will be the last one that you get,” Manziel wrote on Twitter. “No lawsuit or anything else will get you your bread. Save your money and keep your head up. It’s the only choice at this point unless something drastic happens. Just the reality of this unfortunate situation.. great concept, good football on the field and fun for fans to watch. Just not enough money to go around which has been the main problem with 'other’ leagues for a long time.”

The NFLPA reportedly was worried that sharing players with the AAF would violate the NFL’s collective bargaining agreement, specifically restrictions on mandatory offseason workouts. The union also was concerned about the financial ramifications for a player who suffers a serious injury while playing for an AAF team. Nevertheless, the AAF and the NFLPA had “consistent dialogue” over the past few weeks, the MMQB’s Albert Breer reported, adding that the union was “very surprised” that Dundon made his appeal for NFL players public.

Initially envisioned as a development league that eventually could position itself as something of a minor league to the NFL, the AAF generated a sizable amount of interest early thanks in part to novel rule tweaks that did away with kickoffs and onside kicks. But according to Rovell, Dundon tried to speed up the league’s growth and work out an official agreement with the NFL after his $250 million pledge, which gave him sizable say over league operations, including the decision about whether to continue playing.

The XFL, which plans to launch as a late winter/early spring football league in 2020 and was set to vie with the AAF, was quick to revel in its would-be rival’s financial problems. “Don’t worry,” tweeted the XFL, which is owned by WWE chairman Vince McMahon. “We’re not folding.”

“We have said all along the success or failure of other leagues will have no impact on our ability to deliver high-quality, fast-paced, professional football,” the XFL said Tuesday in a statement (via SportsBusiness Journal’s Daniel Kaplan). “The XFL is well-funded, we have time before kick-off to execute our business plan, and we will soon announce a national broadcast and cable TV schedule that makes it easy for fans to find our games consistently every weekend when we launch next February. There is no doubt that avid football fans want more and we’re excited to get going in 2020.”

“Everybody wanted to play out the season and everybody is disappointed,” Spurrier told the Orlando Sentinel’s Mike Bianchi. “Everyone was led to believe that the Alliance was well funded and we could play three years without making and money and this, that and the other. Obviously, everything that was said was not very truthful.”

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