• by David Goetzl  @dgoetzl, November 10, 2009

A New York judge has awarded NBC Universal $1.6 million, but the company won't benefit from the decision. Instead, its efforts to recoup the money from the Arena Football League have moved to a federal bankruptcy court.

The default judgment was issued in a New York state court late last month as the AFL essentially failed to defend itself.

The judge awarded NBCU the full amount, plus interest. But the outcome is uncertain, since the AFL filed for bankruptcy in August.

NBCU had alleged the league owed it the money for failing to share ad revenue when NBC carried AFL games several years ago.

While NBCU won the New York case, the battlefield is elsewhere. NBCU is trying to obtain a portion of the $1.6 million through the AFL bankruptcy proceedings in an Illinois federal court. NBCU is the league's largest unsecured creditor.

NBCU filed the New York case in late 2008 before the AFL sought bankruptcy protection. In light of the economic downturn, the AFL subsequently suspended play for the 2009 season -- after many years of being considered a success.

It is unclear whether NBCU will receive any compensation via the bankruptcy case. There could be an auction of the AFL's assets, which one document values at $2.5 million, although NBCU would likely receive only a small amount of any proceeds.

A representative for NBCU declined comment. A lawyer for the AFL could not be reached.

NBC broadcast AFL games for four seasons from 2003-06. The network and league had a revenue-sharing agreement. NBC would sell the ad time and hope to recoup its production costs. Any additional ad revenues would be shared between the parties.

But so little advertising was sold that the AFL was entitled to no money, according to court papers in the New York case.

Still, the league had rights to sell other advertising, such as signage on the field and on players' uniforms.

And if an advertiser bought a package of on-field inventory and time on NBC, the network would be entitled to some portion of the bundle, NBCU said in court filings.

NBCU alleged the AFL owed it the $1.6 million for revenues generated under that arrangement, specifically money resulting from 2006 deals with ADT Security, the Las Vegas tourism authority and Electronic Arts.

The AFL has "maliciously and without justification" failed to pay what it owed, NBCU charged in court papers.

After NBC dropped the AFL, ESPN later began carrying league games. ESPN is also listed as an unsecured creditor in the federal bankruptcy proceedings -- as owed $540,000. (ESPN had a small stake in the AFL.)

Fox Sports Net also carried games and joined NBCU in filing suit in New York State Supreme Court against the AFL, seeking $33,000. As with the NBCU matter in that court, that case's relevance is suspect.