Major League Football investor breaches contract, pulls $20M away from Lakewood Ranch-based league

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BY MATT M. JOHNSON via Bradenton Herald

LAKEWOOD RANCH — Just days away from starting its free-agent player draft, Major League Football has disclosed that an investor pulled out of a contract that was supposed to bring $20 million to the fledgling league.

On Feb. 5, the Lakewood Ranch-based league filed a Form 8K/A with the Securities and Exchange Commission that details what league officials call a “breach” of the contract.

Frank Murtha, the league’s senior executive vice president, said the expected investment would have given Clairemont Private Investment Group, a Texas company, shares of stock in the league as well as first right of refusal to start an expansion franchise team in Missouri City, Texas.

In a press release issued Monday, league officials said they intend to pursue “legal remedies” against Clairemont and its chairman, Robert Queen Jr. Clairemont’s investment was to be used for the league’s operating expenses and would have been the first of several “other private and institutional investors scheduled to make contributions,” Murtha said.

Commenting on the issue Monday afternoon, Murtha struck a conciliatory tone about the contract dispute. He said league officials are still trying to ink an investment contract with Clairemont.

“He wasn’t the Lone Ranger,” he said of Queen. “We’re still in some discussions with him.”

Clairemont and the eight-team league entered into an initial $15 million securities purchase agreement in September. The parties later canceled that agreement, then inked a new one in October for $20 million. Clairemont officials could not be reached for comment Monday on the issue.

The failure to complete the contract and get Clairemont’s money on time will likely push the start of training camp and league play back a couple weeks, Murtha said. MLFB had initially planned to start its league games at the beginning of April.

Major League Football is scheduled to commence its free agent player draft on Feb. 15. The league has already received about 1,400 signed contracts from potential players looking to take to the field for one of the league’s teams. A set of drafts in January brought eight so-called “franchise players” to the league, as well as hundreds of other players in a territorial draft and a national draft. Each team in the league will start the preseason with 80 players on its roster.

SEC documents show that MLFB’s expenses greatly exceed revenue. In a third-quarter 2015 filing, the league reported bringing in $24,250 of revenue for the six months ended Oct. 31.

Operating expenses far outstripped income, totaling just over $1.8 million for the six-month period, documents show. Overall, MLFB recorded a $2.75 million net loss for the period with the SEC.

Outside of the deal with Clairemont, the league reported in its most recent quarterly filing two sales of stock totaling $150,000 in November.

Another hiccup in the league’s startup took place in December, when Jerry Vainisi, the league’s expected CEO, pulled out of the last stage of finalizing his employment contract. Murtha said Vainisi will likely remain involved with the league, but he did not specify how.

The league relocated its headquarters from Delaware to Lakewood Ranch last year. The Manatee County Commission approved a $200,000-plus incentive grant for MLFB, but the league must meet certain criteria such as creating jobs to get that money.

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