Dwayne Johnson, AKA, The Rock, has bought a stake in the XFL! The XFL, Vince McMahon’s failed experiment of a supplemental football; a little brother, the minor leagues to the NFL was sold by WWE Chairman, Vince McMahon after a 2nd failed attempt. To be fair, the XFL was having a better than expected draw, play, and excitement; chalk it up to the 19 shutdown. McMahon’s $100 million investment looks foolish considering, The Rock and partners paid $15 million for rights before bankruptcy. Although, the XFL is believed to have $10 to $50 million in liabilities, this is not a deal breaker for The People’s Champion and partners, Dany Garcia, (Wife) and RedBird Capital. If they get the TV contracts correct, this will be a major slap in the face to McMahon, returning an investment in year three. The XFL’s revenue of $20 million, in 2020’s shortened season, (4 games) paints an optimistic vision.
To put into the perspective the money on the table, the NFL receives $5 Billion a year from its TV rights, I’m willing to bet The Rock can drop “The People’s Elbow,” and chew on a little of that. 10% would account for $500 million and let’s cut that down 90%, and $50 million in revenue would be realistic goal for the XFL in year one. Obviously, I’ll point out, I’m not in the inner workings of the deal. I’m just putting together what facts are available, while using deductive reasoning and critical thinking.
If you have 8 teams with 46 players suiting up for 10 games that earn a base of $27,040, start every game, $16,850, and wins half of the games, $11,110; yields an average salary of $55,000. Let’s use conservative numbers and say every player starts every game, with a base of $16 million. Now we add the bonus to half the players for half of their games won, $2 million. Additionally the XFL put $10 million into health insurance for every player. Coaches earned an average salary of $500k, times 8, equals $4 million. Combined players and coaches salaries, plus insurance are estimated to be, $32 million. Not bad, considering the highest paid player in the NFL guaranteed in 2020 is Russel Wilson, $35 million.
Even if the current TV contracts hold, with the networks fronting the cash, $400k per game, (40 in a season), $16 million in production costs and assuming most of the advertising revenue the XFL will be assessable on major platforms, ESPN, ESPN2, ABC, Fox, and FS1. With the charisma, character, clout, and sports entertainment The Rock brings, “Just Bring It,” you bet the ratings will hold because Dwayne crosses platforms, he is seen and heard in a lot of circles; from Disney to WWE. I think you would agree, if we were players and represented the XFL, with a commissioner named, The Rock, I would feel a sense of duty to do my best. Not to mention this seed was planted in the HBO series “Ballers,” where Dwayne ends up the face of the Kansas City Chiefs, silencing all the doubters in a Conan the Barbarian way. I’m reasoning, the public will be accepting of something they’ve already experienced. Makes sense to me.
So, why such a sweetheart of a deal, first, The Rock has 3 partners splitting $15 million, so we’re talking one motion picture, Jumanji reboot, to cover his stake to start. Mr. and Mrs. Johnson are worth $340 million and RedBird has $4 billion in assets under management, future funding is in place for the 3 years until profit; hopefully. (And what great leverage of other people’s money) If we use Vince McMahon’s initial investment of $100 million, as a base to get the league up and running, I’m going to assume the new owners will be on the hook for $80 million for the 2021 season. Mr. McMahon simply hit his breaking point with the XFL, the juice wasn’t worth the squeeze, he burned through a lot of his personal assets and he cut ties. A wise choice, so often emotion controls are business decisions. Instead, we must believe in the numbers; the Law of Averages.
The ratings for the first 4 games of the 2020 XFL season averaged 3.12 million, on par with AAF. Although on Feb. 8th and 9th, the XFL bested the NBA and college hoops; proving an audience does exist, even if it’s degenerates on Draft Kings. A below average episode of WWE Raw draws 1.6 million, set in July 2020. I’m estimating the former WWE Champ, movie star, and former Hurricane National Champ can come up with a viewership of 4 million year one and bring more endorsements than Vinny Mac could dream of.
If we estimate $80 million in initial capital, with sales at $50 million in year one, not including new TV, or endorsement deals, the loss is acceptable. But, year two projections should be the neighborhood of $100 million in revenue. I’m betting year three will be the make or break for the Big TV Money; this is what Vince was betting on. If the XFL could prove ratings and revenue, modestly, they could secure a contract with a guarantee profit to broadcast and split advertising revenue. It would be worth hundreds of millions, now add the additional partnerships, putting butts in the seats, selling merchandise, cross promotions, and a share of the ad buys, that’s a great ROI!
The product is in demand, after Americans pulled the plug on the Super Bowl LIV, where 26 million wagered in 2020, a combined $6.8 Billion; the XFL fills a need. Sports betting becomes more mainstream today, recently, Capital One Arena in D.C., opened William Hill U.S. bookmaker, with 7 windows and 9 kiosks. With the lost revenue to states due to the economic shutdown, I wouldn’t be surprised to see this fast tracked in other states. It’s better than higher taxes I suppose.
Look for “The People’s Champ,” to meet you at Jabroni Lane for some pie!
