ESPN obtains XFL streaming rights for Europe, Middle East & Africa

ESPN Files Limited Objection in XFL Bankruptcy Case

Recent court filings show the XFL has attempted to keep the broadcasting deal with ESPN as part of the potential sale. ESPN has filed a limited objection to this in court, but is open to working with the league in the future..

In bankruptcy court, the debtor can choose to assume, or reject certain ongoing contracts. When McMahon and Disney agreed to have the XFL televised on ABC and ESPN, the deal was two-fold.

Broadcasting rights, and a Profit Participation Interest Agreement (PPIA). While they are separate contracts, they were merged by a signature from Vince McMahon and neither can be assumed without the other.

Both were agreed upon and stipulated that McMahon-and others that had ESPN approval-as reasons that ESPN signed. The PPIA stipulated that ESPN’s compensation came straight from Alpha’s profits. Therefore, and according to bankruptcy code, the PPIA cannot be included as an asset.

Now that Vince McMahon will no longer be with the league, ESPN has objected to continuing the agreement.

” Accordingly, under section 365(c) of the Bankruptcy Code, the Telecast Agreement and the PPIA constitute both a personal service contract and a financial accommodation agreement that the Debtor may not assume and assign without ESPN’s consent. Without knowing the identity and business plan of the proposed Successful Bidder, ESPN objects and does not consent to the potential assumption and assignment of the Telecast Agreement and the PPIA pursuant to the Notice.”

The limited objection by ESPN does not mean that the network will not broadcast the league going forward. It means that they reserve the right to reject the deal with the new owner, if said ownership does not meet their standards.

It also says, f Vincent McMahon iand his team of professionals are not running the XFL enterprise, then a key consideration for the Telecast Agreement and the PPIA has disappeared, and ESPN cannot be compelled to join in a partnership with an assignee absent ESPN’s express consent.

The telecast rights, and profit agreement cannot be separated, if the debtor (Alpha/McMahon) assumes one, he assumes them both. And ESPN reserves the right to negate them both, depending on who buys the league.

It’s a limited objection, because ESPN could kill the deal in its entirety. Per the PPIA contract, Alpha is in breach by trying to separate it from the Telecast Agreement. But ESPN has chosen not to, and remains at least partially interested as to who the buyer may be. But again, reserving the right to walk away.

Naturally, going into the sale a potential buyer would love to have a broadcast partner on board. So far, it seems like that will be in Disney’s hands to decide if they want to continue the relationship. So far, there hasn’t been any news on the FOX front, but that could be another avenue as well.