Before becoming invested in another spring league, most watchers want to know, “Will the XFL survive 2023?”. It’s a rational question, especially for a league steeped in a history of false starts and actual season-canceling in past versions. But the focus of this financial/strategic look at this XFL is how they’re poised to succeed this time.
Will the XFL Survive? (Funding and Foundation questions).
Main owners of the XFL are Dwayne “The Rock” Johnson, his ex-wife and media mogul (IMDB producer credits here) Dani Garcia, along with Redbird Capital. The group purchased the XFL for the bargain price of $15 million from WWE owner Vince McMahon in 2020.
Most people assume it was strictly the pandemic that wiped out the 2020 XFL. But an unorthodox media deal (fully detailed in this article) gave the media rights to ESPN and others for basically free while the XFL relied on local sponsorships and stadium income. That’s an unusual deal, and an unfortunate one to have in a worldwide pandemic. The current ownership group has a solid foundation, and a good income start, detailed below.
Will the XFL Survive? (Income Flow and Growth Prospects)
The lifeblood to any current sports league is a big-name TV deal. The Hollywood Reporter detailed the multi-year deal, and all the league’s games will be on ESPN, ABC, or FX through the 2027 season. Current deals of course have a high level of secrecy. (As opposed to the previous XFL 2020 deal that was litigated publicly).
But an informative article claiming an inside source (h/t USFL Newsroom) states that there is a substantial upfront payment for the rights. The article points out the contrast to the earlier 2020 media deal, which I linked the citation above.
Another key income part of the pie is in-person attendance. The XFL has 8 stadiums (here’s a breakdown of all 8) for loud, screaming fans. The stadiums will use only the lower bowls, to create a boisterous atmosphere, and a great crowded-looking appearance for TV shots. (The upper areas can be opened up for playoff games). With a centralized ownership of all 8 teams, the XFL no doubt would have used that leverage to negotiate a favorable deal with each of the venues.
Will the XFL Survive? (Cost Control and Central decisions)
The USFL uses a hub-and-spoke system for its teams. It’s effective and controls costs because teams all train in the same location, in Arlington, Texas. The cost of an NFL training camp is high, and a closely guarded secret. However, there have been some attempts to uncover that, including this excellent article. Their estimate of a Bills training camp, from a university’s tax records, was about $400,000 per team. .
With training camp, and continuing on-season training, occurring at the same facility, that expense is cut 80-90%. Plus, with “The Rock”, and Dani Garcia, being high-level Hollywood players, they can negotiate a sweetheart deal, especially with long-term commitment.
The coaches, as well as the players, are under a strict pay scale. The league hired the coaches, many of them are well-known and bankable NFL and college names. (Coach summaries in this excellent article by the “unbiased sports journalist”, Jamie Malloy). . The short-term impact is no competitiveness for higher player and coach salaries, and this limits expense exposure.
Past spring leagues have gotten high-profile players and coaches like Steve Young, Steve Spurrier, Herschel Walker, Johnny Manziel, and the upward salary pressure strained those leagues. The XFL salary structure is high enough to attract top-level college players that missed the pros, but the salary is roughly equal to the USFL so there is some competitiveness there.
Will the XFL Survive? (Summary and guess)
The guaranteed income from a 4-year TV deal is a great start. The conglomerate of owners is very tight-fisted on costs and has made wise business decisions. Whether the product on the field, plus the fan’s fickle interests will produce a long life span for this league is up to the public.
For other financial and spring league articles(here) follow me @ajayxemem on Twitter.
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