Vince McMahon pulled the plug on the XFL – for a second time – last Friday (April 10). The league officially suspended operations and nearly all XFL employees were laid off during a conference call with CEO Jeffrey Pollack. In a public statement, McMahon blamed the “the uncertainty of the current environment” for the unexpected decision. The announcement came just one month (March 12) after the league cancelled the balance of its regular season due to the Coronavirus outbreak. At the time, postseason play was said to still be a possibility and McMahon maintained he was committed to playing the 2021 season as scheduled.
Howie Long-Short: To understand why McMahon dropped the curtain on his spring football league one must be paying attention to the business of the WWE. World Wrestling Entertainment also reversed course at the end of last week announcing RAW, NXT and SmackDown would all once again air live moving forward (the company had pre-taped shows over the last couple of weeks and was planning to film several more episodes over the weekend). The timing of the two announcements does not appear to be a coincidence. Both decisions are driven by McMahon’s concerns that media rights budgets have been – or will be – slashed.
Dave Meltzer (EIC, Wrestling Observer Newsletter) explained that the reason for WWE’s change in plans – which seemingly puts the wrestlers and staff at greater risk – is that McMahon wants to avoid giving FOX or NBCUniversal a reason to void the company’s lucrative television contracts. WWE’s deal with NBCUniversal requires that 49 of the 52 weekly RAW episodes air live and WON reported that the company has a similar pact in place with FOX Sports for SmackDown.
With both media entities “not doing well financially” (FOX is down -35% since February 19, CMCSA is down -20% since February 20th), Meltzer says it reasons to believe the WWE boss fears that one or both publicly traded broadcast partners could use the contract clause to get out of their deal. Of course, just because it’s a possibility doesn’t mean it’s likely to happen. NBCUniversal relies heavily on WWE for content and with so much uncertainty surrounding when sports will return new FOX (which is focused on news and sports) probably would be hesitant to give up the little sports-centric programming it has right now.
The XFL business model was always predicated on building enough equity in the league to warrant a lucrative television deal, so when McMahon realized his broadcast partners were struggling and “the prospects of getting big money for the league’s broadcast rights [over the next year or two] were dwindling, he decided to [fold up shop].” Remember, the WWE chairman has also reportedly been shopping WWE PPVs to OTT providers. It’s likely he had a strong grasp on what the market could/would bear for the rights to spring football in a down economy.
McMahon isn’t going broke. Forbes pegs his net worth at $1.8 billion. But that’s down from $3.3 billion in October of 2018 and with his core business suffering (think: +/- $20 million in revenue lost on WM with the event behind closed doors, no house shows) it’s fair to reason he may have lost his appetite for funding the startup league. There’s also been some speculation that the WWE exec is concerned he may need the capital previously earmarked for the XFL ($500 million over 3 years) to backstop his wrestling outfit should it default on the TV contracts. Of course, now that the state of Florida has deemed the WWE an ‘essential business‘ there is no reason to believe the company will.
The XFL’s television ratings (declined -19% between Weeks 4 and 5) likely didn’t impact McMahon’s decision to quit funding the league (he was committed to ‘21 when the games were suspended in March), but it’s fair to wonder if the uncertainty surrounding when the 2020 NFL season will kickoff played in. “If Coronavirus forces the league to start late and the playoffs are bumped into February (or later), they’ll overlap with the ’21 XFL season. Obviously, the XFL isn’t going to get any attention with the NFL playoffs going on.
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