One comment Vince McMahon made when announcing the return of the XFL concerns me about its long-term viability.
“One thing we are not is a development league for the NFL,” McMahon told ESPN.
Yes you are. Or at least you should aspire to be.
The surest way for McMahon to blow through the $100 million investment he’s making in the XFL’s relaunch is to try competing with the NFL for talent. Labor costs will always be the number one expense for any business, as McMahon knows well from the WWE, and overpaying for a handful of “star players” will vaporize his investment and have him out of the football business again in the blink of an eye.
Salaries for the best players in the new XFL should top out in the low six figures with roster guys – offensive guards, tight ends, nickel cornerbacks – making 70 or $80,000 a year. That’s a comfortable living wage worth working hard for to continue or pursue a dream of playing professional football.
That’s nowhere near what NFL players make, but the XFL’s players and product shouldn’t be expected to be anywhere near as good as the NFL’s. That’s OK. The NFL has had a 90 year head start.
McMahon says he’s putting roughly $100 million into the XFL – all encompassing. The NFL salary cap in 2018 is expected to rise to $178 million. McMahon’s total investment would barely cover half of one NFL team’s salary. The XFL will have eight teams. And he still hasn’t hired a single coach or secretary or salesperson or rented a stadium.
Trying to compete with the NFL for talent would be pure folly. McMahon must know this.
When negotiating with his WWE “superstars,” Vince McMahon notoriously low-balled them on guaranteed money, guaranteeing, instead, “opportunity.” That “opportunity” often came in the form of higher merchandising, pay-per-view or live event bonuses and for the top performers, it generally worked out. McMahon’s discipline to not overpay for top talent went so far as watching one of the WWE’s biggest stars, Bret Hart, walk away from the company to the competition during a heated battle with then-rival World Championship Wrestling because McMahon was unable to pay Hart’s considerable salary and WCW was offering him more money.
McMahon, smartly, has said players on winning teams will be paid more than those on losing teams.
When you start thinking about the costs associated with this league for players, coaches, front office personnel, insurance, marketing, office space, legal fees, renting the stadiums… all of that adds up. I hope McMahon’s prepared to lose $100 million a year for five years because that’s what I think it will take. He does have a great built-in advantage of a high-powered sales infrastructure and major national sales relationships thanks to the WWE to spur revenue, but this product will lose tens of millions a year for many years before ever approaching profitability.
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