Why the XFL failed again

• Read about The Rock buying the XFL here
• Vince McMahon’s XFL has failed once again, filing for bankruptcy on 11 April 2020
• Sources said to ESPN that the rights to the XFL could be sold as part of the bankruptcy to another party
• Now ex-Commissioner, Oliver Luck, is suing Vince McMahon

The second iteration of the Xtreme Football League (XFL), the brainchild of WWE head honcho Vince McMahon, came to a shuddering halt on 13th April 2020.

The XFL failed again.

The league filed for bankruptcy on that day, having previously announced in a conference call to its staff on 10th April that it was suspending its operations and there would not be a season in 2021.

The league had cancelled the remaining games of the 2020 season on 20th March in response to the ongoing COVID-19 pandemic. It was just five games into its ten game regular season.

It All Looked So Promising…

Previously, I’ve explored why the original XFL failed in 2001 (read it here). The original XFL had a host of problems but with the XFL 2.0 it really looked like the league could become a viable professional football organisation behind the NFL.

McMahon, of course, has faced up to failure previously, with WWE very nearly being blitzed out of existence by Ted Turner’s World Championship Wrestling (WCW) in the mid-90s. Business Wars from Wonderly did a great job of detailing this in a recent podcast series – read my review here.

This version of the XFL made some critical and smart moves.

McMahon pledged a whopping $500 million of his own money into the XFL, setting up Alpha Entertainment which owned the XFL. He even sole 3.2 million shares (worth $272 million) in 2019 to help fund Alpha Entertainment.

The league was also modeled on Major League Soccer (MLS) in which all the team franchises were owned and operated by the league centrally.

Clearly the XFL was stocking up on a significant war chest to fund the league for multiple seasons (unlike the AAF which embarrassingly ran out of money soon into its first season this year – read more about the AAF here).

It hired Oliver Luck as Commissioner (paying him $20 million over a multiyear contract), poaching him from the NCAA 2014, the NCAA where he was executive vice president for regulatory affairs. Luck spent two years before the launch of the league this year on research and development.

This R&D project ranged from the rules of the game to iteration of marketing, negotiating broadcast deals and also structuring payments for players and player safety programmes.

In 2019, the XFL even partnered with The Spring League, a football development league, to test out its new rules before kickoff in 2020.

Lights, Camera, Action

On Saturday 8th February, XFL 2.0 kicked off with an eight team league, culminating in the Championship game on 26th April, which was due to be played in the TDECU Stadium in Houston, Texas.

The startup league was broadcast on ABC/ESPN and Fox, yet didn’t earn a dime from the deal and ratings had declined steeply from the debut game of the 2020 season (to average just 800,000 viewers, which is right on the threshold of the league retaining a broadcast deal).

Yet this version of the league was much better to watch.

Games were fun! Star players emerged! Fans were engaged!

The LA Wildcats .vs. Tampa Bay Vipers put up 75 points combined in one game, PJ Walker became a breakout star and fans loved their beersnakes.

So, why the hell did the XFL fail (again)?

Reading the Chapter 11 bankruptcy document is a fascinating insight into the XFL (read it here).

The leagues revenue totalled $14 million, but net losses were $44 million and it employed 400 employees, along with 500 football players. That is a chunky investment to say the least.

On 15th March, the league announced that a player for the Seattle Dragons had actually tested positive for COVID-19 and five days later the league season was cancelled.

It puts it failure squarely at the door of the ongoing COVID-19 pandemic as the reason as to why the XFL folded.

But is COVID-19 the real reason?

In the Chapter 11 document, the XFL estimates that it lost $27 million in revenue due to the league cancelling its first season on 20th March. This doesn’t take into account what the playoffs would have generated either (instead just focusing on the remaining five games of the season). Liabilities range between $10 million to $50 million.

There are between 1,000 – 5,000 creditors, including the biggest one being the St. Louis Sports Commission ($1.6 million) and seven of the leagues eight coaches are listed as creditors also. Only Pep Hamilton, coach of the now former D.C. Defenders was not listed as a creditor within the document.

While XFL 2.0 had undoubtedly done a better job than the first iteration in 2001, as noted by Petition, a legal analysis site, game attendance took a big dive in February, while ratings continued to drop heavily by the final week of the XFL in March. Also, problems with the true game attendance figures may have being masking how many people were turning up to games, relying instead on “distributed tickets (i.e. not sold, or bought for by fans).

Yet, I do think there is credibility that COVID-19 cratered the XFL’s attempted rebirth. Look at the first XFL – the first game drew a huge 14 million viewers but by the time of the Million Dollar game (the crazy name they had for the Championship) it dropped to 2 million. Such a massive drop (along with other issues facing the league) was the death knell for it in 2001.

However, with such a variety of OTT sports channels, this version of the XFL had performed well, even if it was hitting an average of 800,000 viewers for games by the time it shuttered. By contrast, this newer version had more realistic goals, was built with a view for the long term and anticipated a few lean years to hopefully provide a credible alternative/credible sister league to the NFL.

The biggest issue with the COVID-19 crisis is that we still (as of writing) have no idea when sport (even in empty arenas) could come back. I’m not even sure it should given the risks even associated with holding sports.

Due to this uncertainty, it is no surprise McMahon decided to shut it down for good.

Luck .vs. McMahon

Yet even with the league less than a few weeks dead, things appear to be getting messy.

In a piece in The Athletic, it stated that Oliver Luck, CEO of the XFL while it was alive, was fired on 9th April, just days before the bankruptcy filing after receiving a termination letter from the XFL on that day.

Luck contends, according to The Athletic, that he was “wrongfully terminated”.

Vince McMahon’s lawyers responded: “Oliver Luck’s services as Commissioner and CEO of The XFL were terminated by a letter sent to him on Apr. 9, 2020 which explained the reasons for the termination. As to the lawsuit he filed, his allegations will be disputed and the position of Mr. McMahon will be set forth in our response to his lawsuit.”

It will be interesting to hear this one play out and we may get an insight into what really went wrong with the XFL that hasn’t been made public yet.

Will We Ever See The XFL Again? XFL 3.0?

Given the huge outlay of money put down on the XFL 2.0, the level of R&D and blood, sweat and tears, I can’t see the league coming back in any guise, even if Alpha Entertainment manages to sell the league’s intellectual property to another party or McMahon decides to weather out the COVID-19 storm and relaunch as XFL 3.0.

In the Chapter 11 document:

All we are left with are better memories of this version of the XFL, in terms of the quality of play, engagement from fans and just a more well rounded and thought out product. I think the XFL’s last Tweet sums up if we’ll see it again …