Last Call For The XFL

Rather than endure a long climb back after the pandemic, the XFL suspended operations halfway through the 10-game regular season.getty images

This story appears in the April 20-26, 2020 issue of Sports Business Journal. To sign up for a free trial to SBJ, click here.

On the afternoon of March 20, a current of optimism coursed through the Stamford, Conn., headquarters of the XFL and its eight clubs around the country. Despite that day’s decision to cancel the remainder of its season with seven weeks left on the schedule due to the spreading coronavirus, employees were still hopeful. They believed the league was having a successful debut until the pandemic hit, and their faith was bolstered by Commissioner Oliver Luck and President Jeffrey Pollack’s public message to fans that day: We “look forward to playing full seasons for you — and with you — in 2021 and beyond.”

But less than three weeks later, the league was shuttered and its nearly 400 employees were laid off in an April 10 conference call. Three days after that the league’s parent company filed for bankruptcy, bringing a sudden end to the once-promising XFL 2.0, which didn’t even last as long as its infamous forebear that made it through a full season in the early months of 2001.

Even before Vince McMahon pulled the plug, attendance and TV viewership was in decline.alpha entertainment

Sources said troubling signs had bubbled up within days of Luck and Pollack’s season-ending letter going out. There were subtle changes in management direction and a lack of communication that suggested league owner Vince McMahon was already planning to abandon his $500 million commitment.

In the days that followed, the league employees who had tied their careers to the XFL’s splashy relaunch continued to labor under the belief that another season would happen. They weren’t oblivious to the situation — far more established sports properties were furloughing or laying off staff and cutting salaries — but their marching orders were clear: Get ready for 2021.

Planning for budgets, schedules and communications around Season 2 continued unabated. Insiders had no inkling of what was coming. Even on the morning of the fateful conference call that included all league employees and in which everyone was fired, save a skeleton staff to wind down the league, some of the single-entity league’s eight club presidents were frantically calling around, asking for the scuttlebutt.

“It was shocking to see how much they were kept in the dark,” said one source with relationships with several clubs. 

The XFL’s parent company, Alpha Entertainment, filed for Chapter 11 bankruptcy on April 13, listing assets and liabilities between $10 million and $50 million. It’s seeking a judge’s permission to walk away from hundreds of obligations, including those with Luck, Elevate Sports Ventures, ’47 Brand, coaches, venues and even freelance photographers. 

Across the board, former league employees and XFL business partners share a two-tiered perspective on the rapid chain of events: They understood that any startup sports league was bound to be severely tested by the pandemic, but at the same time they knew the XFL had met every business goal until the crisis hit. They also relied on repeated guarantees — made both publicly and privately — that the league would complete two seasons and were buoyed by the fact that with the 2020 season already canceled as of March 20, the league wasn’t even spending what was budgeted.

“It wasn’t like there was some bill sitting around for $8 million they found one day,” said one business partner, wondering what changed between March 20 and the bankruptcy.

The XFL and Pollack declined to answer detailed questions about the last few weeks via the communications agency Hiltzik Strategies, which has been hired to handle the bankruptcy process. The agency referred instead to legal filings and a prepared statement, which reads in part: “Unfortunately, as a new enterprise, we were not insulated from the harsh economic impacts and uncertainties caused by the COVID-19 crisis.” In the court filing, Pollack said the pandemic’s uncertain duration was a key factor in determining that there was no way out.

Within a week of the season’s cancellation, two sources said, orders came down that team and league social media accounts should focus only on “thank-you messaging” around prior games. Any messaging looking forward to future games would be changed; indeed, the social feeds said little about the future after March 20.

The rationale was that there were too many unknowns to commit to anything. Models about the severity, duration and scope of the virus changed daily, and it was even more difficult to say how the XFL would fit into a radically reworked sports schedule even after the pandemic.

That made some sense, insiders said. But nevertheless, it was curious. “I believed that piece of it, but I found it a little bit strange, curious and frustrating that we were sort of in this weird place,” one source said. McMahon’s promise of a multiyear runway was still in force — as far as anyone knew — and of all leagues, the XFL had the most scheduling cushion before it was slated to return in February 2021.

Around that same time, McMahon issued a $5 million secured loan to the league to cover shortfalls, according to its bankruptcy filing. More would be necessary — the league estimated the cancellation of the second half of the season would cost at least $27 million in lost game-day revenue, and indeed, on April 9, one day before the mass layoffs, McMahon loaned the XFL another $4 million.

Before the pandemic hit, the XFL had lost $44 million on revenue of about $14 million through Feb. 29 this year, according to the bankruptcy filings — steep losses, but not unanticipated, and many internal and external sources believed the league was meeting its business goals.

Then around March 31, sources said, outsiders began to notice changes. Pollack pushed Ticketmaster to give the XFL more than $5 million it held in its accounts from XFL transactions on its platform. Ticketmaster hadn’t paid the league because it didn’t have a signed contract with the XFL yet, sources said. Pollack learned of the problem and made it a top priority for the league. A contract was signed and the money was paid out in a few days.

On April 2, Pollack met with McMahon. The substance of that meeting is unknown, but others around league offices had reason to believe it was about 2021 planning. Prior to the meeting, Pollack was briefed on venue agreements, and the possibility of relocating the Tampa Bay Vipers to Orlando and moving the New York Guardians’ home games from MetLife Stadium to Red Bull Arena.

At this point, there was still no inkling among the rank and file that anything was amiss. Teams were told they’d receive templates for their club business plans for the 2021 season that week. Content plans were coming together for the next few months.

Download the XFL Attendance and TV Viewership

Budgets and schedules were being developed for the 2021 season’s football operations, and had been submitted to Luck. The next step would be meetings to adjust those plans for various virus-related contingencies. But those meetings never happened.

The weekend after Pollack met with McMahon, his core property, WWE, became one of the only sports and entertainment entities to air a new event during the pandemic. WrestleMania 36 was shown from Tampa without fans, pre-recorded. It was not without its charm, wrestling fans and critics said, but the financial cost to WWE was abundant. On April 15, only 10 days after WrestleMania, WWE laid off a number of performers and said it would cut executive and board member compensation, furlough some of its workforce, cut vendors and consulting and defer capital expenses.

During this period, sources said, communication began to become inconsistent from Pollack and others. One all-hands meeting was scheduled for March 27 and then canceled without explanation. Some started to wonder.

“In hindsight, of course the writing was on the wall, but in the middle of it, we were just ready to keep going, and wait for the direction and how we were going to keep operating,” said one league employee. 

McMahon’s promise to spend $500 million to get the league off the ground — a promise only attributed indirectly to him by unnamed league insiders, but also never disputed by McMahon’s camp after many public references — kept employees optimistic. There was about $5.6 million in cash on hand when the XFL filed bankruptcy.

After the initial March 12 suspension of play, “There were a few hours when I thought the league was going to fold,” said former DC Defenders Content Director Troy Machir. “But then I thought, ‘This is a $500 million investment. You don’t just pull the plug when you’re in unprecedented times.’”

On April 8, all team presidents were summoned to a conference call. There, they heard from Derek Throneburg, senior vice president of team business operations, that all deposits for 2021 tickets would be returned to customers — whether or not they’d asked for them.

That was troubling enough, but even more alarming, there was no response to the obvious followup question: “What do we tell fans about next season?”

By then, it was clear to several business partners that the league wouldn’t be coming back. Preparations for a bankruptcy began in some corners. But still, others thought the financial maneuver was done in anticipation of McMahon taking on a new capital partner. But most league employees simply didn’t know anything.

The rank and file only learned that anything was amiss on Friday morning, when they woke up to bank accounts with a bigger paycheck than expected — an ominous sign of dramatic payroll action. But even then, McMahon’s bluster about his commitment stuck in many minds.

“Knowing the landscape of what’s going on not only in sports but in the whole world, my first thought was: We’re getting furloughed, or everybody’s taking a pay cut,” another senior league staffer said. “I didn’t think of them shuttering the league.”

Commissioner Oliver Luck was the public face of the league, and now his contract is just one of many left in the hands of a bankruptcy court.getty images

The XFL experiment ended a few hours later with a call that lasted less than four minutes. Only Pollack spoke. He took no questions. The public face of the league, Luck, was not on the call, and insiders say he was informed of the end separately, prior to the call.

What exactly changed so dramatically between March 20 and April 10? Few people outside of McMahon and his closest inner circle understand exactly. The pandemic-related losses were steep and made the path to profitability more challenging, but Luck said two years earlier that all parties knew the XFL launch would cost hundreds of millions of dollars. Others said it was simply the gradual realization of how long the pandemic shutdown would last and how long the effects would be.

Officially, the XFL’s demise is unrelated to the WWE. But its shared ownership means that pressure on the dominant property affects the smaller property’s ability to fund losses, and McMahon has seen his net worth shrink from $3.3 billion in October 2018 to $1.9 billion today, according to Forbes. The WWE was a minority shareholder in the league, and many insiders wonder if the wrestling giant’s recent downslide could have fueled the dramatic move on the XFL.

As Machir, the DC Defenders’ content director, said: “When you saw WWE taking a financial hit and then seasons for next year [in other sports] are maybe affected, that’s when we realized for us the ice was a lot thinner.”

The XFL’s legacy will include good reviews of the on-field product, decent attendance figures and respectable ratings. One longtime football veteran took the demise in stride, focusing not on the league’s failure but on its successes. “We can walk out of here with our heads high,” he said. “It wasn’t shut down because the product wasn’t good.”  

Staff writers Mark J. Burns, Karn Dhingra and Eric Prisbell contributed to this report. 

XFL Timeline

Jan. 24, 2018: Vince McMahon announces the relaunch of the XFL 17 years after the original version shuttered; it will be a single entity, owned by his personal holding company, Alpha Entertainment.

Dec. 5, 2018: Dallas, Houston, Los Angeles, New York, St. Louis, Seattle, Tampa and Washington, D.C., announced as inaugural teams. Venues also announced.

May 6, 2019: Fox and Disney announce media deals that will put every XFL game on major cable or broadcast channels.

Feb. 8, 2020: DC Defenders defeat Seattle Dragons 31-19 in XFL relaunch debut, in front of 17,163 people at Audi Field. 3.3 million people watch on ABC.

March 12: XFL season suspended, one day after initially announcing plans to play game in Seattle in front of no fans as coronavirus scare spreads. 

March 20: Season canceled.

April 13: Alpha Entertainment files for bankruptcy, three days after all operations were suspended and staff fired.