Folding of XFL Could Be Sign of Things to Come for Pro Sports

Brian Tinsman
April 13, 2020 - 11:06 am
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Sports entertainment mogul Vince McMahon has given up on the XFL for the second time in 20 years, following Friday's announcement that the upstart football league was suspending operations, laying off most of its staff, and had no plans for a 2021 season.

Regardless of how you feel about McMahon or the XFL as a product, it's a sign of what could be to come for professional sports leagues on the bubble.

In a matter of weeks, COVID-19 has had economic impacts in the U.S. that exceed the depths of the Great Depression and 2008 recession. While headlines suggest that the virus is being contained, there is no cure or preventative vaccine to stop the next big outbreak.

Sports leagues are businesses, and all businesses are fueled by consumer confidence and certainty. Arguably, there has never been a more uncertain time. The XFL could be the first of many that will close and never return.

Starting at the top, America's big four sports leagues have the resources to wait this out, at least for a season or two. The owners are billionaires, many of the players are millionaires, and there enough alternative forms of revenue and engagement to allow them to pay the overhead on marketing and sales teams.

MLB will survive after owners and players agreed to a $170 million salary advance for players that will be paid out over two months. Players will pay their mortgages and not lose service time if the season is shortened or canceled. As of yet, no new forms of revenue have been announced to support America's oldest professional league.

The NFL has been a bit more reluctant to back off of business as usual, only recently announcing that the entire NFL Draft will be conducted remotely, with teams, players and the commissioner all practicing social distancing. The real crime in this solution is that Roger Goodell won't get to hear the fans booing him from his basement.

The NFL is well established in the e-sports market thanks to decades of the simulation Madden franchise, created by EA Sports. Last month, the NFL also inked a deal with Take-Two sports, which brings back memories of the NFL 2K series. This new game will not be a simulation experience, but rather a "fun, approachable and social experience." Whatever that means, it is sure to line the league and the players' pockets with a new form of revenue.

The NBA and NHL are also both in wait-and-see scenarios, as they are attempting to close out what is left of their 2019-20 seasons.

The NBA reportedly has a 25-day plan in place that would allow players to get back into playing shape over the course of a month. At that point, the regular season would likely end (teams have 13-16 games left unplayed) and the league would move to an abbreviated version of the playoffs.

The NHL's comeback plans for the 2019-20 season could include finishing out the 12-13 games to be played for each team, then starting the playoffs, all in neutral-site cities that are not currently in lockdown. If the rest of the regular season was canceled, the Caps would win the Metro Division and enter the playoffs with the third-best record in the Eastern Conference.

These leagues (plus Major League Soccer) can survive thanks to their $30 billion in profits each year. However, each month that the in-season MLB, NBA, NHL and MLS teams don't play costs the leagues a combined $2 billion in lost revenue, so nothing is a given.

COVID-19 is likely to cost the NBA, NHL and MLB a combined $1 billion in lost TV ad revenue between March and May, based on last year's numbers.

Think about the leagues that don't have TV revenue to fall back on.

Sports like professional lacrosse, rugby, swimming, and most women's sports operate off of game day ticket revenue and the goodwill of philanthropic owners who believe in the sport. Particularly with the collapse of the stock market, those owners may have shifting priorities in the post-coronavirus world.

It's not that Vince McMahon was in any danger of going under before he dissolved the XFL, and he could still change his mind and bring it back for 2021 and beyond.

But if a league that had a national TV audience and averaged nearly 15,000 in-person fans per game is the canary in the coalmine, then the closure of leagues is only just beginning.

Brian Tinsman has covered D.C. sports since 2011, both from the team marketing and skeptical fan perspectives. Tweet your criticisms @Brian_Tinsman.

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