According to the Securities and Exchange Commission, WWE Chairman Vince McMahon sold 3.2 million shares (+/- 4% of the outstanding total) of company stock worth +/- $272 million last week, capital he’ll use to help fund XFL 2.0. To date, he’s unloaded +/- $400 million worth of WWE shares or roughly 80% of the $500 million pledged to the league over the next 3 years; $500 million would represent a war chest 7x greater than what was spent on a single season back in ’01 ($70 million). Coincidentally, the regulatory filing posted on the same day that Alliance of American Football (AAF) majority owner Tom Dundon (pledged a max of $250 million) announced that his league would fold if the NFLPA continues to oppose the allocation of players. It’s being reported that the Carolina Hurricanes owner could make a decision to shutter the competing spring football league as soon as today.
Howie Long-Short: Vince McMahon isn’t interested in building a developmental football league like the AAF – he wants to build a sustainable standalone entity, but Commissioner Oliver Luck told me “we understand where we stand in the football ecosystem. We know the goal for most players is to play in the NFL, so we’ll make sure our players and coaches have the ability, if the opportunity arises – after our season – to sign a contract with an NFL team.”
Some have taken the league’s decision to take up residence in 8 NFL markets as a shot across the NFL’s bow, but the XFL isn’t looking to compete with the football behemoth, either. The cities selected were identified by McKinsey Consulting as the ones with the greatest density of “passionate” football fans. “There’s about 85 million football fans in this country. 40 million self-identify as hard-core fans and all our research indicates that those people will continue to consume football after the Super Bowl. A secondary rationale [for selecting the markets chosen] was that prospective national television broadcast partners favor leagues where the large markets are represented.”
Luck acknowledges that “the graveyard is littered with tombstones of failed spring football leagues” and that the odds of success aren’t in the XFL’s favor, but McMahon has “committed significant capital” – enough to get the league through at least the first 3 years (perhaps as many as 5). That’s critical because “if you think back to the USFL, after 3 years they had begun to build a brand. Had they had the discipline to stay in the spring and continue to grow their franchises and get the kinds of quality players they were getting, that league might still be around; and if that league were still around, it would be a pretty valuable sports asset.”
McMahon’s investment will give the league the necessary runway, but Luck says that disciplined decision making and a laser-like focus “on the handful of things that really matter” will enable the start-up league to grow. For the XFL, that’s “playing good quality football, getting the best talent and the best coaches that we possibly can, and selling tickets. I still think that [selling tickets] is the single biggest indicator – even more than television ratings – of the interest level the local marketplace has in a franchise.” Perhaps that explains why the AAF is on the brink of collapse. While the league has put up respectable television viewership numbers, it has struggled to draw fans to the stadium; I heard back in Dec. that one franchise had sold less than 500 season ticket packages.
Fan Marino: The AAF drew nearly 3 million viewers in the first week, but Oliver says there was never any concern expressed within the XFL offices that the league might have lost out on a “first mover advantage.” “If you’re prepared to take advantage of it, there might be an advantage to getting out there first, but if you’re rushing into it then there’s not.” Considering a start-up pro football league needs to hire personnel, sign stadium leases, get coaches on board, negotiate broadcast agreements and sponsorship pacts, sell seats and mesh 45+ guys into a cohesive unit – and that the Alliance tried to do all of that in 7 months – it’s safe to say the XFL was wise to let the AAF serve as the sacrificial lamb.
Editor note: Keep an eye out for Part 2 of our XFL story with Oliver Luck next week.
Interested in Sports Business? Sign-up for our free daily email newsletter list, here!