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Football’s Famed Failure: Finances of the XFL

Football
Football’s Famed Failure: Finances of the XFL

In the spring of 2001, World Wrestling Entertainment owner and president Vince McMahon introduced a new professional football league that he felt would change the face of sports forever. The Xtreme Football League, or XFL, was designed to be a spring league that would complement the NFL. However, the XFL was to be very different.

The XFL had many unique characteristics that set it apart from the NFL. Games started with an opening scramble for the ball instead of a coin toss. There were no PAT kicks allowed in favour of an extra point system similar to the NFL’s two-point conversion, and one offensive player was allowed to move toward the line of scrimmage before the snap, just like in arena football games. The rules on fair catches were extremely lenient and all stadiums had to be outdoors with grass surfaces. No turf was allowed and all stadium specifications had to be identical with no domes or retractable-roofs. Even the team names leaned towards “extreme” ¬†like the Orlando Rage, San Francisco Demons and Memphis Maniax.

Despite its best efforts to be fresh and entertaining, the XFL failed to get any traction. Critics found the XFL to be silly with its unusual team names, an emphasis on violence, scantily-clad cheerleaders and sensationalist broadcasters like Jesse Ventura, Dick Butkus and famous wrestling broadcaster Jerry “the King” Lawler. The nicknames on the back of some players’ jerseys, most notably Rod “He Hate Me” Smart, only made things worse. The league’s link to the WWE even made some believe that the games were fixed.

The XFL folded after its first season due to substantial losses. The WWE and NBC – the station that aired many XFL games – lost $35 million each.

Despite its early demise, the finances behind the XFL were particularly interesting. Some aspects of the league were radically different from what the NFL was doing, and many of them contributed to the downfall of the league. This was due to not only the expenses of trying to get games set up, but also struggles with the league’s image which in many cases was regarded as silly rather than “extreme” as it had hoped to be from the start.

TV Contracts

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NBC was in a bad place around the start of the century. With the network having lost their rights to broadcast NFL games a few years earlier and ratings struggling in the network’s post-Seinfeld era, NBC was willing to take a big risk to get back into the football broadcasting game.

NBC signed a deal with the WWE worth $30 million per year to broadcast XFL games on Saturday nights. TNN, which eventually became Spike TV and UPN, would also air games, splitting a Sunday deal with NBC. Each network spent around $1 million for the rights to air games on Sunday afternoons.

Needless to say, the networks started to lose their grip as ratings began to decline. One NBC game had a 1.5 rating, the lowest in history for any first-run sports event on a major network in primetime. To make things worse, an announcement of going into the Orlando Rage cheerleaders’ locker room at the half during one game backfired as it clearly appeared to be a fake sketch. In addition, Saturday Night Live creator and producer Lorne Michaels forced NBC to stop broadcasting games at 11 p.m. Eastern because it was forcing his show to air 45 minutes later than usual, hurting its ratings as well.

NBC announced that they were opting out of their contract midway through the season, losing $30 million in the process plus $5 million in buyout and advertising costs. TNN and UPN would continue to air games for the rest of the season. UPN’s loss was minimal compared to the nearly $800 million that the failed network had lost from its inception in 1995 to 2000; the network went under for good in 2006.

Player Contracts

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The XFL had a unique structure for paying its players that no other professional sports league had ever used. All quarterbacks would earn $5,000 per week, resulting in $50,000 for a full season. Kickers would get $3,500 per week each, and all other players would make $4,500 per week.

This strange part of the XFL’s finances was exploited by a few players. Some listed themselves as being backup quarterbacks even though they played completely different positions. The Los Angeles Xtreme lost $20,000 because a kicker and a wide receiver abused the rule. Wide receiver Matt Malloy and punter Noel Prefontaine were listed as backup quarterbacks and therefore got $5,000 per game.

Game Bonuses

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One part of the XFL that was mandated by the league was the monetary bonuses granted to winning players. The system was similar to how NFL teams give performance bonuses to players based on their contracts. However, it was not the teams that awarded bonuses to their players but the league which had complete control over that financial aspect of the game. The XFL got all this bonus money from sponsors and from the WWE’s reserves.

All players on each winning team would get $2,500 in bonus pay for winning a game. With each team having 38 players on their rosters and with 40 possible wins in the regular season, the WWE spent $3.8 million in bonuses to players who won regular season games.

Playoff wins would earn each player $7,500 per game. The league spent $570,000 in bonuses for Los Angeles Xtreme and San Francisco Demons players in the post season.

The biggest bonus came from the Million Dollar Game, or the Big Game at the End of the Season as it was once called. The players on the winning team would split $1 million between them all, amounting to around $25,000 per player.

The Blimp Wreck

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The XFL’s promotional blimp crashed in Oakland not long before the start of the season. Although there were no serious injuries or major damages to properties in the area, the XFL lost $2.5 million in blimp reparations. This ridiculous incident harmed the league’s finances even before the games started.

One Last Point

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XFL broadcasters were highly encouraged to talk about point spreads and other gambling-related activities during games. This was an effort to increase the league’s popularity through promotion of betting on games. This is different from the NFL and other football organizations where announcers are strictly forbidden to talk about the spreads as they cover games. Even so, the NFL to this day has one of the most active fantasy league cultures in all of sports.

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