Vince McMahon’s United Football League

by Mike Mitchell @MikeMitchellXFL

“Vince McMahon announces XFL return in 2020.” It’s almost a year now since the big announcement made by Vince McMahon. The headline came very close to being much different.

“Vince McMahon returns to football with The United Football League.” This was almost the announcement made on January 25th of this year.

In 2017, Vince McMahon through his business holdings filed for the trademarks of The United Football League and the UrFL. This was months before VKM enterprises became Alpha Entertainment.

Since the spring of 2001, McMahon had not given up on a starting a football league again, but this time it would be under a new brand and a new vision. A stark contrast from the vision he had nearly two decades ago. The old XFL was dead and buried.

Can you really blame Vince McMahon for having second thoughts about reviving the XFL brand?

No league in the history of sports has the ridicule attached to it that the XFL does. The league where the X means nothing. The brand name itself is notorious but for all the wrong reasons. It’s a punch line, a big joke and is thought of as one of the biggest failures in the history of sports and television. The mainstream sports media and fans saw it as a joke back in 2001, and still to this day. One need not look too far to see the negativity attached to any news or commentary involving the XFL.

In a society where there are created narratives and where perception is the absolute reality. It’s very difficult to change or shake the negative perception that the XFL has attached to it. The league is paying for some of the sins of their past. The past is prologue. We can’t forget the lessons of it.

The biggest hurdle that the XFL is attempting to overcome is the negative stigma attached to it. For all the ardent supporters who think so fondly of the league, there are twice as many people who see the league and it’s attempt at a return as a joke. The XFL to them was everything that was wrong with society and sports. To them, it was trashy, classless, and designed to attract the lowest forms of society.

For all the negatives attached to the original XFL. There were more positives than the naysayers care to understand or even admit. Overlooking the fact that it extended football players and coaches careers, and created careers for future coaches/executives. The league was fan friendly, interactive, and innovative on the field and off. The league itself was way ahead of its time in engaging the fan and bringing them closer to the action than they have ever been.

Vince McMahon getting Oliver Luck to spearhead the new XFL and to follow his vision may have been McMahon’s best hire ever. For a league that is going to be in an uphill battle for credibility. Oliver Luck’s experience and success as an administrator, and in start-up leagues is an extremely valuable asset. The question asked by some naysayers when finding out that Luck is the CEO of the league is usually “Why is someone like him involved with this?”… Luck is respected in many circles and seeing his name attached to The XFL puzzles people. Oliver Luck himself had a negative viewpoint on the original XFL. Part of Oliver’s job is selling the public that The XFL needs to be taken seriously and that it’s going to be a league to be respected.

Everyone associated with the current XFL is going to be fighting the negative perception attached to the league. XFL Director of Player Personnel Eric Galko has even reached out to social media to ask people to have an open mind when it comes to the league. Galko is a respected figure in football circles as the head of Optimum Scouting. He is the director of scouting for YourCallFootball and The Dream Bowl. Galko’s job with the XFL extends beyond just providing teams with scouting reports on thousands of potential players. He is in a position where he has to sell agents and players that The XFL is a viable option. No such sell job needed with the CFL or even the AAF.

The prominent figures of the XFL are all in a position where they are not only selling the league to the public but also to the football community. That means getting players and coaches to buy into the league. It will not be an easy task despite the large amount of money that Vince McMahon is investing on his own.

Announcing prominent cities and stadiums as the league’s homes is not enough. A TV rights package will aid the league in being seen as a reality but it’s going to take a lot of convincing from Oliver Luck and his team, to get football players and coaches to buy in. Convincing them that The XFL is real and that it’s really going to happen and that the league is going to be a world class operation. This will be the difference in having quality play and not having it. If you just have to settle, for whomever will take a chance to be in your league rather than getting the best possible players and coaches under the circumstances.

The truth is that even if Vince McMahon had launched the new UFL this past January. It would have always been associated with and attached to The XFL name anyway. There’s no getting around that. That’s probably why McMahon decided to bring back the XFL name. There’s equity in the brand itself, even if the naysayers will not be treating the league with any type of equity. The XFL returns in name and spirit but the league is going to have a uniquely different resemblance and feel than the last time.

 

The cost of doing business in the XFL

by Mike Mitchell

Five-hundred million dollars. That’s the reported amount that Vince McMahon is investing into the league on his own. The funds are projected to be spent over the course of 3 years. It was initially reported that Vince McMahon would be spending 100 million dollars. When Oliver Luck was asked about this after he was initially hired, Luck said that this figure would only get them to the 20-yard line. The truth is that it takes at least 150 million dollars in expenses to start up and run an 8-team sports league. One of the reasons, Luck took the job was because of McMahon’s large capital investment. It’s something that Luck has cited in many interviews as to why the XFL has a chance to succeed in the long term.

A report was released recently that The AAF is hoping to raise 850 million dollars in funds over the course of their first 5 years. They are seeking investors. That’s a figure that they will need to reach if they hope to continue to have the league running and existing, because expenses in a league are very costly. When you don’t have reliable deep pocketed owners to fund each team. The league itself has to foot the bill for everything. That means everything from insurance, to travel expenses, to broadcast expenses, player and coach salaries, employee salaries, venue rent, technology costs, equipment, amenities, etc, etc, etc.

The pro football streets are filled with the corpses of past leagues who ran out of money. The USFL expanded way too soon. They had owners that were in over their heads and they didn’t have funds to pay their own players, or even feed them or provide them with equipment. They ran out of money and sued the NFL. They won a dollar and closed up shop. 

The NFL ran 15 seasons of their own spring pro football league. The World League stopped operations, was brought back, and became NFL Europe before being laid to rest in it’s final resting place as NFL Europa in 2007. The NFL lost 30 million per season trying to fund their very own developmental league. The NFL kept costs down and still lost roughly 450 million dollars. The NFL had revenue streams set up for their league but the expenses out weighed the profits earned. If they weren’t so smart, they would have probably lost more. 

The United Football League had the funds to start up a league but not enough to make it last. Billionaire William Hambrecht was the sole investor in the league. He got that league running with his own money. They started small with only a handful of teams. They even shelled out some money to pay for some name veteran football players and coaches. The league made several mistakes along the way. Playing in the fall on weekdays was one of them, the product itself was bland in presentation and the branding was poor. However, what ultimately killed The UFL was too much money going in, none coming back. There was no TV contract to help fund the league. No profits to speak of. They had to contract teams, relocate them and by the end. They couldn’t even pay their own players and coaches and had to cease operations. They are still being sued for money that they owe. 

Does it really cost that much to run a league? The answer is a resounding YES. Let’s breakdown what the costs will be and are for the XFL. 

The first major investment that The XFL made was getting sports risk insurance. These steps were taken before Vince McMahon made his relaunch announcement of the XFL. Without it, there would be no league. There are going to be over 400 football players employed with the XFL. In order to run a sports league, you need to have player insurance and invest in risk management and coverage. Vince McMahon needed to line this up before bringing back the XFL. The league has insurance deals with two of the biggest insurance-based companies in the country with The Berkley Group and The Fairly Group. Both groups work with all the top sports leagues and teams. This is a costly expenditure but an absolute necessity. No actual financial figures are available but this cost can be in the neighborhood of tens of millions of dollars. 

Let’s crunch some numbers;

XFL Player salaries have been revealed to the public. They are going to have 4 tiers of player salary. On a seasonal basis, the top tier players will be paid 250 to 300k per season. That may very well just be 8 quarterbacks. 1 for each team. Not counting win bonuses, which are returning to the league. The low-end figure of 250k would have the league’s quarterbacks totaling 2 million dollars for season 1. 

The lowest tier for players is expected to be 50 to 60k per season. Probably kicking specialists, long snappers and practice squad players that will be in that tier. The middle ground will be in the range of 75k to 100k per season. The second tier is expected to be in the 150 to 175k range. So to simplify all these numbers. Let’s assume that the average XFL player salary is 75k. The rosters themselves are supposed to be 45 players plus a 7-man practice squad. A 75k average would bring us to a team total salary cap of roughly 4 million per team. 

8 teams and that means that the league will have to shell out 32 million dollars to their players in year one. 

As reported, the head coaches are going to be paid roughly 500k per season. 8 head coaches and that brings that expenses to 4 million. XFL coaching staffs will not be as large as an NFL staff but there should be at least 10 assistants per team. From the coordinators to the positional coaches. Let’s assume that the average pay for assistant coaches is 200k. Counting the head coach’s salary. Each team staff would end up costing 2.5 million per team. Average that out over 8 teams and the cost of the league’s coaching staff expenses is 20 million.

So the combination of the player and coaching salaries for the 2020 season is 52 million dollars. That’s a conservative figure. 8 teams, 32 million for the players and 20 million for the coaching staffs. 

Figuring out team/league employees like trainers, presidents, office staff, marketing, equipment, pr, ticket sales, nutritionists and other employee salaries is a difficult thing to project. The team presidents themselves will make the same or more than the actual head coach. It’s also not taking into account XFL employees like the referees and the salaries of XFL employees like Oliver Luck, Doug Whaley, Sam Schwartzstein, the entire legal staff, etc.

Details were recently released of the agreement that The XFL made with St. Louis to rent out their dome for the upcoming 2020 season. The XFL paid 250,000 down. They then agreed to pay 100,000 per game. That’s 750,000 to rent the venue. The league will receive 100 percent of the ticket sales, minus taxes. However, the city will receive 100 percent of all revenue from concession and catering sales. This goes to show you how costly it can be just to rent these venues out. It’s safe to state that every XFL city didn’t get this sweet of a deal but they are probably all in this neighborhood. Renting world class venues are an expensive expenditure for sports teams/leagues. 

Probably the biggest expense the league will have to make in order to stand out from the crowd is their broadcast expenses. It costs Vince McMahon’s parent company the WWE hundreds of thousands of dollars to run two weekly live broadcasts each week. The XFL was innovative in this field almost 2 decades ago and figures to try and change the game yet again. Sure, the league will have broadcast partners to aid with this but The XFL is going to be implementing a lot of new technology. 4 games are going to be broadcast each week. It’s going to cost the league a lot to air and produce these games. Over the course of a 12-week season, it ends up being 43 games counting the 3 playoff games. It’s hard to put a real figure on what the overall cost will be to produce these games but even if you are on the frugal end, you end up spending millions of dollars over the course of a full season. There’s also travel expenses for all the teams and employees for these games. 

The cost of doing business for year one of The XFL is probably going to be in that 100-150 million-dollar range. This is without a single cent being earned. How does a league see a return on their investment?  Well they probably won’t in year one. They just need to see enough of a return to survive for year 2. 

As far as attendance goes. If the league’s conservative projection of a 20,000 average holds true. 43 games and that would bring the attendance total to 860,000. If the average ticket price is 35 dollars. The return on that would be a little over 30 million dollars. A decent figure but not enough to cover for all the expenses. 

The whole key to surviving and seeing a return on the yearly expenses is going to ultimately be the league’s tv rights package. It’s the bank. It’s where all the money is. Without it, the league dies again…. Quite frankly, it’s the reason that the XFL went after 8 of the top 20 TV markets. There’s more money to be made on the TV side with their current markets than there would have been in smaller markets like Salt Lake for example. 

What will The XFL rights deal look like and what could it be? This is hard to project but we can go through some figures. You can’t compare a league like The XFL to established properties like NASCAR, the NFL, NBA, NHL or MLB. It’s very different. It’s hard as a start-up league to command top dollar. The closest leagues, you can compare The XFL to in terms of potential viewership is the WNBA and MLS. It’s debatable that The XFL can get similar TV deals but we are going to find out soon enough. Here’s an idea of what similar leagues tv deals look like. 

* ESPN and Fox pay 75 million per year to MLS. The national broadcasts for MLS average about 500 thousand viewers. With the exception of games against Mexico, which usually exceed 2 million. 

* ESPN pays The WNBA 12 million per year. This league averages about 200 to 250 thousand viewers per game during the playoffs.

Will a network be willing to make a long term tv deal with The XFL? Something tells me that networks will not extend past 3 years. The deal might end up being a prove it type deal. If The XFL can get closer to the MLS deal than the WNBA deal, than they are really in business. They need to be in that 20 million plus range. Landing a deal with multiple broadcasters could help. They could plant the seed to recoup money down the road. The XFL could get more out of their tv deal by leveraging streaming. They can then use the tv exposure to make more money on advertising and all other potential revenue streams for the league. It’s the only way a league can survive. 

All start-up leagues lose money. That financial bear starts chasing everyone. You don’t have to be faster than the bear. You just have to be faster than the guy that the bear is chasing.

Why becoming a developmental league for The NFL is a recipe for failure

by Mike Mitchell

Minor league football doesn’t work. Developmental leagues don’t work. A farm system football league won’t generate mass interest. By mere design, they go against the competitive league structure that fans clamor for. Could that come off as a blanket statement? Perhaps, but let’s delve into this a little deeper.

By default, any pro football league that is not the NFL can be considered as one of their unofficial developmental leagues. From the CFL to the upcoming AAF and XFL. No affiliation needed, just reality. In truth, the NFL already has a developmental league. It’s called NCAA College Football.

The NFL itself once had a spring pro football league that was designed to be a farm system for them. First called The World League of American Football, then shut down and re-branded as NFL Europe before closing up shop as NFL Europa in 2007. This league had NFL money backing it, players allocated from the NFL to play in it and yet it lost hundreds of millions of dollars. In truth, it was quality football and produced good to very good players. Most football fans know the story of Kurt Warner and Adam Vinatieri. The league even had decent exposure on ABC, FOX and The NFL Network among others. It just never captured the interest of football fans on a large scale.

So why didn’t it work? It’s simple, the games and the teams. If the fans don’t have a rooting interest in either, you don’t have a profitable league. So, what went wrong? The most important element of any sporting event is getting people to care about the outcome of the games. It’s not rocket science. It comes down to, “Do you care who wins or loses?”

In NFL Europe, the outcomes weren’t important. The games were often times treated like NFL preseason games. Quarterbacks would rotate in and out. Other positional players would share playing time. All in an effort to get players on game film for evaluation. That’s great for coaches, players and NFL teams but from a spectator standpoint, the games itself lose all meaning. That’s what you get from a developmental league. The viewing public sees the games as not being important because the actual outcomes are not. Any league that promotes itself as a minor league, it will in turn be treated as such.

Why has the CFL worked and survived all this time? Besides the fact that it is in another country. It’s because of the fans and the league itself. The CFL presents its own brand of pro football. It’s not a carbon copy or a lesser minor league version of the NFL. It has its own endearing qualities. The league has tradition and fan bases that are passionate and care about their teams winning and losing. They have the recipe for a league with a true competitive structure.

There’s nothing wrong with minor league sports. In fact, there is a lot to love about them. It provides players, coaches, officials and team employees, the opportunity to keep their dream of working in the big leagues alive. Great for those people but when it comes to appealing to the mass public, you come off as just that minor.

As for the AAF, under Bill Polian’s guidance and influence their main goal is to become a feeder system/developmental league for The NFL. That’s his end game. The rebirth of NFLE in the states. Get the NFL to endorse the AAF and back the league financially. Other leagues have had this vision and idea. The defunct UFL after looking like they would attempt to capitalize on the NFL’s labor issues, entertained the possibility of becoming a developmental league. The defunct FXFL run by Brian Woods positioned themselves with the premise of being just that for the NFL. Woods closed up shop and now runs The Spring League. A different yet more cost-effective way of giving prospective pro players a shot to go to the NFL or get back into the league.

The new spring pro-football leagues, the XFL and AAF, are going to provide great opportunity for prospective pro players. Considering the fact that in 2017, despite the fact over 16,000 college football players were eligible for the NFL draft, only 253 players were drafted. Some of the undrafted made their way to the league as college free agents, but we are talking about over 15,000 college football players with no chance to become pro-football players.

This is all good but positioning and promoting yourself as a minor developmental league is the kiss of death. What football personnel want is a developmental league, what football fans want is a strong alternative to the NFL and for something to fill the void when the NFL and NCAA seasons have ended. That’s the whole point of a spring pro football league. To appeal to die-hard football fans when there is NO FOOTBALL.

It’s what the original USFL had going for it, before it was mismanaged greatly on several fronts. The USFL had its own unique feel and felt like a legit pro sports league. There were fans who embraced the teams and players and speak glowingly of that fan feel for the league to this very day, three decades later.

How does a league achieve that type of fan connection? You do it by taking what the NFL and NCAA does well and try to make it better. You take what they don’t do well and improve upon it. You present an exciting new brand of football that innovates on the field and on the broadcast level. Present the league as being something major, exciting and on the cutting edge. Make fans care about the teams and games.

The XFL and AAF have both taken public stances where they are not adversarial to the NFL. This is a good thing. You don’t want to alienate the die-hard NFL fans and supporters. They are the consumers that you are targeting after all. You also don’t want to get the mainstream sports media against you. The original XFL riled up supporters by taking shots at the NFL and boasted about bringing smash-mouth football back. There were some things that they innovated like broadcasting interviews with players to the stadium live, the sky cam and the “bubba cam” but the XFL made a lot of enemies with their renegade league approach. There is still joy to this day from people that they failed in 2001.

Both The AAF and XFL have to take the approach of trying to present the best possible football leagues that they can. It’s the only chance they have to be taken seriously. On the field and off. If in any way, they come off as minor league. They will be ignored. Best case scenario? If the AAF becomes the NFL’s version of the NBA’s Gatorade League. (Yes, that’s what it’s called now). Then, they will exist but who will even notice or care.