TV Deals with ABC/ESPN, FOX “Magnify the Risk of Failure” for XFL

xfl.logo (1)

The XFL has announced a pair of three-year deals with The Walt Disney Company and Fox Corp. The high-profile agreements ensure all 43 league games of the 2020 season will air on network or cable television. More than half are slated to be split between the ABC network and Fox network with the remainder set to air on ESPN or Fox Sports 1. While most tend to believe that wall-to-wall coverage increases the league’s chances of success, former CBS Sports president (and current television consultant, Pilson Communications) Neal Pilson suggested that it also “magnifies the risk of failure.”

Howie Long-Short: There’s no doubt that with more than half of the league’s games set to air on network television that the XFL will have the chance to showcase their product (i.e. fans will find it), but Pilson warns that widespread exposure puts a bullseye on the league’s back. “Television can be as damaging as it is beneficial. If there aren’t enough viewers to spread across all of these networks – which I wonder about – or if the networks fail to show viewership growth, there won’t be an excuse for the lack of interest.”

Pilson’s skepticism stems from his concern that “the league will now be under the spotlight – from a ratings standpoint – from day one” and his belief that having games on “so many competing networks will dilute viewership numbers. The assumption is that being on two or three networks will double or triple the number of people watching and that’s simply not true – unless people are going to watch three, four, five games every weekend, which seems unlikely.” That doesn’t mean he would have advised Oliver Luck & Co. otherwise. “When you have the opportunity to gain this type of exposure, you take it and accept the risks that I’ve been talking about.

Unlike the AAF’s deal with CBS, the XFL isn’t buying network time. Disney and Fox will cover the costs of production and handle game production; they’ll also retain all of the in-game ad inventory. While that should ensure NFL-like broadcast quality and save the league hundreds of thousands of dollars on a per-game basis, it also means they’ve lost 1 of 4 revenue streams and “ultimately you need to have revenue to survive.”

In addition to broadcast rights fees, pro sports leagues generate revenues through sponsorship & advertising, merchandising & licensing and ticket sales. Pilson expects the league to have “some sponsorship & advertising partners” on board for the 2020 season and believes it will collect a “limited amount of merchandising & licensing revenue” in year 1. As for ticket sales, he said, “playing football in cities like New York or Washington in February is a high-risk proposition and given that ticket prices are expected to cost significantly less than NFL seats, even if they do sell well, I don’t believe ticketing is going to drive league revenues. I have a hard time seeing the league realize any significant revenue streams in year 1.

Vince McMahon has earmarked $500 million for the XFL’s rebirth, so he can float the league for a while, but for it to succeed long-term they’ll need to build “fan loyalty and enthusiasm on the local level” and Pilson doesn’t believe that’s going to be easy. “The cities that they’re putting teams in – New York, Washington, Dallas, Seattle – are all strong NFL markets. How many fans in those locales are going to be truly committed to another professional football league?”

Fan Marino: Sports-media consultant Marc Ganis told the WSJ that the league’s only “real competition” between February and May is March Madness, but that’s patently false. The XFL season is 13 weeks long (10 regular season, 3 post-season) and there are very few “off weekends” on the sports calendar during that time. Pilson reminded me that “they’re up against some tent pole events that generate serious ratings year after year; March Madness, the Kentucky Derby, the Daytona 500, The Masters, the NFL draft, the NBA and NHL Playoffs.

There’s also the start of the MLB season and the XFL has planted teams in cities where baseball has strong tradition (think: New York, Boston, Los Angeles, St. Louis). You can say baseball doesn’t draw well on ESPN, but “look at the local ratings on [an RSN like] YES on a Sunday afternoon.”

Interested in Sports Business? Sign-up for our free daily email newsletter list, here!

Author: John Wall Street

At the intersection of sports & finance.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.