XFL II

Already in 2019, professional football fans have already seen the AAF (Association of American Football) come and go.  The league’s on-field product was pretty good, but not good enough to stave off an abrupt ending to play prior to the end of its first (and only) regular season. 

A bankruptcy filing followed soon thereafter. 

What did we learn from the “Crash & Burn” AAF this year? 

  1. There are some die-hard fans that are willing to watch a less-than-NFL quality brand of football once the Super Bowl ends. 
  2. Unfortunately, there may not be enough of those fans willing to pay for tickets (even at $20 apiece) to show up in winter conditions (cold and rain) for a minor-league level quality of play.
  3. Don’t play football in cities which can’t fill-up at least half of the stadium.  Ever.  You need television viewers to see that fans of the team are supportive and having a good time.
  4. Don’t televise football games on networks (CBS Sports Network, NFL Network) which aren’t available on most cable and satellite providers.
  5. Expect (and prepare) to lose a ton of money in Year 1 and, likely, in every subsequent year of play thereafter.
  6. Define what your objectives are (a merger with NFL or a peaceful co-existence as the official developmental league for the NFL) in advance and do not lie to your fans about it beginning on Day 1. 
  7. Have all of your league’s funding (in cash and ready to spend) available from Day 1 and expect to lose three times more cash than you initially budgeted.

With all of those harsh lessons learned by the fledgling AAF this spring, it’s time to welcome back the XFL (Version 2.0) beginning the week after the NFL ends play in February, 2020.

What???

Yes, the XFL is returning to try a reboot after its own “One and Done” football season back in 2001. 

Yes, the XFL II will be owned and controlled by the same primary owner, Vince McMahon, who runs the professional wrestling company WWE.

Yes, the XFL (apparently) has plenty of cash as Mr. McMahon has cashed-out a lot of his WWE stock (upwards of $500 million).   My question is whether he has the stomach to see it all disappear in a heartbeat to bankroll the start-up costs to fund his new venture. 

Let’s now examine our “AAF Lessons Learned” questions above as it pertains to the XFL II:

  1. The original XFL (2001) averaged only 23,500 fans per game for games played during the winter and early spring.   The AAF’s average attendance was only about 15,000 per game.  Even though the AAF played in a few smaller markets and the XFL II, fans shouldn’t be expected to sit outside in wet and cold conditions.  I wouldn’t expect a significantly increase in local attendance with XFL II.
  2. What should be the average ticket price to charge fans to watch a winter-time minor-league football?  I think the XLF II will be hard-pressed to sell tickets for more than an average price of $30-40 per seat. 
  3. That said, will enough fans fill the seats to make the viewers at home believe that the on-field product is worth watching?  The XFL II is beginning with eight teams in seven current NFL cities.  On the east coast, there are teams in New York City, Washington DC, and Tampa.  On the west coast, there will be teams in Seattle and Los Angeles.  In the middle, XLF II will begin with teams in Dallas, Houston, and St. Louis (the only market without an NFL team right now).  I have a hard time believing that these NFL communities will support an additional season of minor-league football.
  4. This is the one area where the league benefits from having Vince McMahon as its fearless leader.  With a three year deal, XFL II games (Saturday and Sunday afternoons) will be telecast on ESPN/ABC and Fox Sports/FS 1.   The odd thing, though, is that the networks will not pay the XFL anything (that’s right – zero) for the broadcast rights as the league will apparently “sell” its own share of commercials in a barter-type broadcast arrangement.  From the networks’ perspective, the potential for losses are minimized while the upside is generous. 
  5. How much money will the league lose?  Let’s review the XFL of 2001.  According to reports, the league lost about $70 million during its first and only season.  Vince McMahon lost half of that amount and NBC (the 50/50 partner) lost the other half.  After the debacle of the AAF this spring, I suspect that the XFL II should be prepared to lose at least $100-150 million in Year 1.
  6. What are the goals for the league?  The only thing which the XFL II has said is that it does NOT want to become a developmental league for the NFL.  Got it.  Do they really want to go head-to-head with the NFL at some point?   The American Football League (AFL) went head-to-head with the NFL for ten seasons before a merger deal was worked.  This is quite unlikely as the NFL won’t plant another franchise in seven of the eight markets.  My best guess is that the league (if it survives) will need to be content as “football light” and hope that enough televisions viewers will watch and, in turn, allow the XFL to make recoup losses on the field via television revenues. 
  7. Though it is true that Vince McMahon has sold more than $400 million of his WWE stock, that doesn’t mean he has the willingness to lose all of that money in two or three years.  Other than his fantasy of grabbing his share of revenue from the billions of dollars generated by the NFL, he seems to be a prudent businessman.  Though the XFL II could syphon off less than 10% of McMahon’s net worth, I cannot see him feeding a loser for more than one season.

The XFL II is going to fight an uphill battle against the ghosts of the AAF and its own XFL-Version 1.

The league will have to prove that it has enough fans willing to show-up in person and plunk down their money to watch the games, enough fans willing to watch every week on television, and ownership willing to lose copious amounts of money for at least three seasons to establish credibility.

If the XFL II starts and completes two full seasons, I, too, will be quite surprised.

R.I.P., A.A.F.!

Pit-i-ful!

The Association of American Football (AAF) is now deceased.  

In the graveyards of start-up professional football leagues, the AAF may have set the record for the quickest demise, as the teams had only played eight games of the ten game regular season.

Dallas Cowboys’ owner, Jerry Jones, can now rent his 12,000 seat (that’s right, 12,000 seat) stadium for another venue now that the AAF’s championship game won’t even be played in Frisco, Texas this month.

What happened, you ask?

Money, of course!

Even one of my generation’s most beloved television characters, Jethro Bodine (who graduated from the sixth grade at Potts School in Beverly Hills), could have worked out the math for this new professional football league.

Sure, Jethro may have needed both of his hands to count the proper number of “naughts” of dollars which the new AAF lost during just two months of play.

For new league to have survived, Charlotte billionaire, Tom Dundon (the football league’s equivalent to Jed Clampett who is…correction, WAS…reportedly worth $1.1 billion) would have to continue losing nearly $10 million per week just to keep the new league afloat.

For his generous $250 million financial donation to the AAF, Dundon effectively bought his way to becoming the league’s chairman in week 2.   

Just because you are (oops again, were) a billionaire doesn’t mean that you have all of your money in cash, either.  It’s hard to watch your fortune heading downward when the league had no realistic chance of making a profit anytime soon (if ever). 

Pardon my pun, but “Dundon was done”.

And here’s why.  The chart below (which reflects my best guesses on most items) clearly shows you that a football league which averages 15,000 fans per game at an average net ticket price of $20 was doomed from Day 1:    

SwampSwami’s Best Guess Estimates
Association of American Football (AAF)
Estimated Costs per Team:Annual
Stadium Lease (5 home games/yr)$250,000
Lease – Team HQ/Practice Facilities$250,000
Referees ($2000/game*4/wk*8 wks)$80,000
Players (52 @ $83,333/yr)$4,333,316
Staff – Coaches$2,000,000
Staff – Management$1,000,000
Staff – Ticket sales/Mktg.$250,000
Staff – Stadium GameDay$50,000
Staff – Medical$300,000
Uniforms ($1000/player)$52,000
Travel – Air$150,000
Travel – Hotel$100,000
Travel – Ground Transp.$25,000
Subtotal – Est. Team Expenses$8,840,316
Plus 20% unforeseen costs:$1,768,063
Subtotal – Team Expenses:$10,608,379
Estimated Expenses – 8 Franchises:$84,867,034
Plus – Est. Leaguewide G&A Expenses
Staff – Executives$2,000,000
Staff – Office and support$1,000,000
Insurance (events, players, staff)$1,000,000
Taxes (Fed, State, City)$1,000,000
Marketing/Promotional Costs $1,000,000
Estimated Expenses – League G&A:$6,000,000
Estimated Expenses – Total:$90,867,034
Revenue Summary:
Average Weekly Attendance15,000
Est. RevenuesPer Week
Ticket prices @ $20 each x 4 games/wk$1,200,000
Concessions @ $10 each x 4 games/wk$600,000
Parking @ $10 each x 4 games/wk$600,000
Weekly Game Revenues:$2,400,000
Times 8 weeks of play:8
Est. AAF Game Revenues:$19,200,000
Media – Network Television$2,000,000
Media – Local Radio rights$80,000
Media Revenues: $2,080,000
Franchise Fees – $1 mm/team:$8,000,000
Estimated Revenues – Total:$29,280,000
AAF Summary:
Estimated Net Losses:-$61,587,034
Estimated Net Losses per team:-$7,698,379

Doing my own unofficial creative SwampSwami financial cyphering, even Jed Clampett himself would have been ruined.  Granny might be happy to return to the hills, but the mansion and Ellie May’s ce-ment pond would have been sold by banker Drysdale if Jed Clampett (I mean, Tom Dundon) kept up this charade.     

If the AAF was losing up to $10 million per week, no one (not even Vince McMahon) would have been willing to lose that much money to save the AAF.

Yes, Vince McMahon of WWE fame thinks he can make a go of his XFL (Version 2.0) next spring.  He sold 3 million shares of WWE stock at over $80/share to put about $250 million in his pocket, too. 

Hey, Vince.  You might want to place to a call to the former chairman of the AAF and see how fast you’re going to burn through your money next year! 

Sometimes, personal egos get in the way of common sense.  In the case of a starting-up a competing professional football league, you better bring deep pockets or a large number of equally egotistical and benevolent rich friends on-board very quickly.

So, good-bye AAF!  Though some of us will miss you, not enough of us got to know you, either! 

Though your on-field product was very appealing, your financial management skills were, in the immortal words of Jed Clampett, “Pit-i-ful!”

Sweep-the-SwampCast! March 29, 2019

If you’re over 50 (yes, I am ancient!), you probably remember a country music-oriented comedy television show called “Hee Haw!“? Every week, the cast performed a variation of a funny song called “Gloom, Despair, and Agony on Me!“.

That little ditty sums up my NCAA men’s and women’s basketball brackets! Poof! Gone for another year!

In today’s weekly audio podcast, I’ll discuss the sad state of my college basketball picks, talk about the New Orleans Saints’ rule change “victory” at the NFL owners’ meeting this week, the latest problems for the fledgling AAF league, XFL owner, Vince McMahon, cashes out 3 million shares of WWE stock to fund his new venture, Arizona Cardinals’ coach Cliff Kingsbury’s “Cell Phone Breaks” for NFL players, and the jersey retirement ceremony for Miami Heat basketball player, Chris Bosh.

All of our shows are available to you via Apple Podcasts. Subscribe today – it’s FREE!

NBA – Let’s sink those tankers!

Mark Cuban owns the NBA’s Dallas Mavericks.  With a reputation as being a maverick himself, the outspoken basketball team owner just cost himself $600,000 by being honest about something that the NBA (and other sports, for that matter) doesn’t want to admit.

While being interviewed recently by NBA legend Julius Erving, Mark Cuban confessed that, for a struggling team like this year’s Dallas Mavericks, one of the surest ways to improve your team quickly is to finish at or near the bottom of the league standings to grab a “sure-fire” draft prospect coming out of college.

For his honesty, Adam Silver (NBA Commissioner and chief censor of free speech) meted out a whopping $600K fine to Cuban for his remarks.  In a multi-billion dollar industry, it isn’t appropriate to tell the Mavericks’ (and the NBA’s) paying customers that their team should try to lose more games today in order to have an improved chance of becoming more competitive next year.

Mark Cuban has apologized for his comments and accepted a hefty penalty for telling the truth.  The NBA already has many skeptics who think that the league’s referees can quietly influence the outcome of games during the playoffs to keep more of the top stars on the court to enhance television ratings and revenue for the league.

Despite their detractors, Vince McMahon’s World Wrestling Entertainment (WWE) makes no bones about pre-arranged outcomes in wrestling match-ups.  The NBA, though, cannot afford to confirm the suspicions that teams falling out of playoff contention are motivated NOT to win games after the All-Star break.

Just like many things in life, people (in this case, professional sports teams) gravitate toward the area of biggest rewards.  This “tanking” strategy is an economic decision whereby non-playoff teams are responding to their best available reward (a better draft pick).  To cure the problem, the NBA (and the NFL, etc.) should eliminate any economic incentive which encourages teams to lose the most games.

Let’s say that the NBA splits its season into two parts.  At the All-Star break, each of the top four teams from the Eastern and Western Conference would clinch a berth in the NBA’s eight-team conference playoffs.  The seeding for those four teams in the playoffs, though, will be determined by the total number of games each team wins for the entire season as the next four playoff seeds will come after conclusion of the second half of the year.

Playoff seeds #5, 6, 7, and 8 will be awarded to the four teams which win the most games during the second half of the season following the NBA’s All-Star break.  In the event that one (or more) of the first half winners also win one of the second half spots, the teams with the best overall record in each conference would be selected to round-out the playoff groupings.  Playoff seeding for all eight teams would be determined by the team’s overall season record.

The emphasis would keep teams (and their fans) focused on winning.  Both halves of the NBA season would become more meaningful and suspenseful. The first half winners remain motivated by the chance to earn the overall home court advantage during the playoffs.  The second half playoff teams would have a chance to bring their fans a playoff berth with a fantastic finish.  This also guarantees that the league’s hottest teams at the end of the year would earn a spot in the NBA playoffs.  Finally, the teams which have played consistently well for the entire year would also have a glimmer of hope to slide into the playoffs based on their overall season record (should any of the first half winners earn another top-four finish in the second half of the season).

What about the other 14 teams who don’t make the playoffs?  They go into the NBA draft lottery for the next season.  But this time, each team gets only ONE BALL in the hopper (pure chance) so that no team is given an artificial advantage for losing the most games during the regular season.

The result?  Basketball fans get treated to a meaningful first half of the season.  It would improve early season interest and television ratings.  Following the All-Star game, every team then gets a chance to sprint to the finish line to grab the remaining playoff spots or a chance to grab home court advantage.

For the struggling teams, each team is treated the same during the NBA draft lottery so that fans of all 14 non-playoff franchises are motivated to watch the show with equal hope of landing one of the best incoming rookie players.

Your problem is solved, NBA.

Tank you very much!

 

NFL Knee Wars – The Markets Strike Back

I just love to watch free markets at work!  Check out these juicy sports headlines from the past few days:

Dateline:  Baltimore – NFL’s Baltimore Ravens President, Dick Cass, blames the players’ national anthem protests for the increasing number of empty seats at the team’s home football games.

Dateline:  Louisville – Papa John’s Pizza founder John Schnatter steps down as CEO this week after his criticizing of kneeling NFL players may have led to a decrease in the company’s stock price.

Dateline: Stamford, CT – WWE Chairman Vince McMahon sells $100 million of WWE stock amid rumors he might want to bankroll a revival of the XFL to compete with the NFL.

What a fascinating set of market changes resulting from NFL fans’ responding to some of the NFL players’ taking a knee at stadiums this season during the playing of the national anthem.  The initial reason given by the protesting players was that their kneeling was not meant to be disrespectful to the US military or the flag but to raise the awareness of perceived social injustice issues.

The Knee Wars situation escalated after the King of Kneeling (Colin Kaepernick) started his personal protests last season.  It gained favor with many other NFL players to start the 2017 season as more decided to add support for Kaepernick and the social justice issues by kneeling en masse during early season NFL games.

In Baltimore, the Ravens’ players gained international notoriety in their early season game played in London.  Many players dropped to a knee during the playing of the US national anthem, but then rose and stood at attention for the playing of “God Save the Queen”.

Baltimore fans were livid.  The city, steeped in US history, is the home of Fort McHenry.  That is where Francis Scott Key penned “The Star Spangled Banner”after the fort miraculously survived a 25-hour British onslaught in 1814.

As a result of the football players’ actions, Baltimore fans (like many around the league) have mounted their own counter-offensive by staying away in droves.  This comes even though the 2017 Ravens are fighting for an AFC playoff spot with an 8-6 record entering Christmas weekend.

In a rare move of honesty, Baltimore Raven team president, Dick Cass, has reached out to fans and asked them to return for the final two home games against the struggling Indianapolis Colts and the Cincinnati Bengals.  And why not?  Even though the Ravens’ home games usually sellout, fewer fans in the stands means less concessions, parking, and team merchandise revenues generated on game days in Baltimore.

Meanwhile, at the Louisville corporate home of Papa John’s Pizza, founder John Schnatter removed himself as CEO yesterday as the company fought a market backlash from a segment of its stockholders over Schnatter’s critical comments about the kneeling NFL players this season.  This time, the stock market bears have used their Jedi light sabers to slice the value of PZZA by $15 per share during the football season.  The stock has plummeted about 20% in 2017, while the overall US stock market gained about 25% during the same period.

Next, ready to capitalize on the chaos, is none other than the CEO of World Wrestling Entertainment, Vince McMahon.  Vinnie Mac is smiling like the proverbial Cheshire cat as the sports media seems to believe that he will try to revive the XFL again to compete against football’s goliath, the NFL.  Remember back in 2001 when the XFL (a 50/50 partnership between the WWE and NBC) aired spring football games?  The XFL – which gave us eight teams and one memorable player named “He Hate Me” – lost $35 million for each party (out of their initial $100 million investments) and meekly folded after its first season.

The WWE’s McMahon comes from a family of wrestling promoters, so he will play coy on the potential use of his recent $100 million stock sale as long as possible.  The stock price for WWE recently climbed above $30/share after starting the year around $19.  Despite all of the media’s speculation, it is also quite possible that Vince may just be ringing the cash register after his company’s stock price reached a recent high.  However, McMahon loves the media spotlight (any publicity is better than none), so the gullible sports media may be falling for another dark side kayfabe from wrestling’s reigning Emperor.

Heading into the Super Bowl and beyond, the NFL and its owners may have a longer term issue than simply lower ratings, attendance, and revenues in 2017 alone.  The long term costs of this “Knee Wars” saga may be only beginning as “The Force” of the markets strike back!