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Volume 21 No. 35

Leagues and Governing Bodies

Some of the most skilled marketers, media executives and football lifers have attempted to start spring football leagues and failed. Now comes a new class of entrepreneurs headlined by Charlie Ebersol, Vince McMahon and Don Yee, all highly accomplished, trying to tackle one of the greatest challenges in sports.

Each of them believes that with economic tailwinds, an expanding digital media landscape and a friendly attitude toward fantasy and legalized gambling, they have the code to start another pro football league in the face of precedent that says otherwise.

While startup leagues come and go practically every year, never before has such a collection of wealthy and well-known sports business titans gone to market at the same time with their version of an alternative or complementary league to fill the NFL’s offseason.

Each of the startups has its own approach.

Ebersol, a 35-year-old producer and director with one of the most famous last names in television, has assembled a strong cast of football experts starting with co-founder Bill Polian as well as in-house teams for live events and TV production. He plans to launch the Alliance of American Football in February 2019, the week after Super Bowl LIII.

McMahon, the billionaire wrestling impresario, is back for Round 2 of the XFL, taking what he learned from the first failed attempt to start a new league in 2020.

Yee, an NFL super-agent whose star client is Tom Brady, is going after college-age players looking for a path to the NFL that doesn’t include an 8 a.m. macroeconomics class, sort of an NBA G League for the NFL. Yee’s Pacific Pro Football intends to play in July 2019.

Two other startups are looking to attract fans who want to call their own plays from an app.

Add them up, along with a couple others, and there’s no fewer than six pro football leagues on whiteboards across America (see related directory), all looking for players, coaches, stadiums, media distribution and, most importantly, funding.

Like countless others before them, Ebersol, McMahon, Yee and the others see the de facto monopoly that the NFL has, along with its absolute lock on American media and pop culture. Inevitably, they all come to the same conclusion: “If I could only get X percent of the NFL’s audience …”

That’s the allure that keeps wide-eyed entrepreneurs coming back, thinking they have the answer for an alternative league that could quench the perceived thirst for football during the NFL’s offseason. That’s even after all the flops, which include a handful of forgotten women’s pro football leagues and another half-dozen indoor leagues.

“The NFL has the most fans but the fewest games,” said Jeff Lewis, a former Guggenheim Partners senior managing director, who last year started the American Flag Football League. “That’s produced a math that is apparently irresistible.”

• • • •

But why now? What makes anyone think they can succeed where so many others have failed?

If there is a reason why conditions are favorable, it largely has to do with a flourishing media environment, unprecedented asset appreciation by many sports properties, a surfeit of available capital, and a market for a new kind of fan-friendly football with simpler rules and shorter games.

“Someday, we’re going to look back at this as one of the most dynamic points at the intersection of sports, media and technology,” said Howard Handler, the former NFL and MLS marketing executive, who is project lead for a dozen employees at McMahon’s Alpha Entertainment, the business established to run the XFL. “And the economy is good, too.”

Countered an investment banker who has seen financial plans from four of the new leagues: “The irony is that there are so many interested in new leagues when football is having problems with head trauma and youth participation.”

Vince McMahon, shown in 2000, is back with a new XFL after the league’s first version failed.
Photo: getty images

This crowded class of football startups points to unlimited digital distribution and the ever-growing need for content to feed it. The games are one piece of the content, but the potential for reality TV that documents the journey of these NFL wannabes presents another opportunity. The leagues also are an ideal platform for emerging technologies, whether it’s virtual reality, legal gambling, real-time fantasy football or some yet-uninvited combination of all three.

Will those trends help the leagues generate enough capital when history shows that their money always runs out?

Jim Steeg, a veteran of three decades in the NFL, has been involved with three startups that all followed the same script. He’d volunteer his time for several months and when it came time to establish a budget, he’d face the same shortcomings.

“Here’s the business model and here’s how much money you’ll need,” Steeg would say. “Every time I was told, ‘You’ve got to cut the budget.’ It always gets down to who’s going to come up with the money.”

CBS Sports Chairman Sean McManus, who is backing Ebersol’s Alliance of American Football, said spring leagues have come and gone almost annually since the USFL went out of business in the 1980s. They’re almost always underfunded and without a long-term strategy.

“They don’t have the money, they don’t have personnel signed, and they don’t have a plan for three years, much less 10 years,” McManus said of the typical challenges facing football startups. “I don’t know why there’d be more [leagues] launching now, except that people do understand there’s a market out there, if you can put on a good product. But of all the people we have ever talked to, I like the [Alliance’s] chances the best.”

The history of pro football startups is not convincing for some predictably skeptical venture capitalists and other money managers looking for rapid return on investment.

“My investors don’t like to lose money, and you have to be prepared to lose money for three to five years,” said one fund manager who saw Ebersol’s pitch.

• • • •

Of the three highest-profile startups, all of which are single-entity leagues, Ebersol’s Alliance of American Football plans to launch first — six days after Super Bowl LIII next February. Ebersol, who grew up in the media business as his father, Dick, chaired NBC Sports, introduced the Alliance in March with NFL luminaries such as former executives Polian and J.K. McKay, and ex-players Troy Polamalu, Justin Tuck and Jared Allen by his side.

“We’re building a very serious business,” Ebersol said. “It’s a media business, it’s a football business, it’s an interactive platform, and to do that we needed to hire the very best people.”

Ebersol revealed some of his investors in March, including Peter Thiel’s Founders Fund, The Chernin Group, Slow Ventures and venture capitalist Keith Rabois, but the Alliance has not said how much money it has raised so far. Meanwhile, Ebersol is moving forward as the fundraising continues. Of the Alliance’s eight planned teams, it has announced five — Atlanta, Memphis, Orlando, Phoenix and Salt Lake City — an indication that the league is prepared to launch on schedule in February.

Ebersol did not reveal specifics about fundraising or how long it would take the league to reach profitability.

“We have a very conservative, very reasonable plan,” he said, “but we’re funded for worst-case scenarios.”

Don Yee’s Pacific Pro Football hopes to offer younger players an alternative to college.
Photo: pacific pro football

The games will feature fewer special teams and real-time fantasy gaming on the league’s app. A unique set of rules are intended to keep the action moving. For example, there won’t be TV timeouts.

CBS Sports will broadcast the first game and the championship game of the Alliance’s inaugural season. The deal is believed to be a revenue-share model between the Alliance and CBS that offers minimal risk for the network, not a traditional rights fee. Other games will be on CBS Sports Network and perhaps other cable channels, as well as the Alliance’s app.

“Charlie came to us with enough money to fund themselves for five years and Bill Polian, one of the most respected NFL personnel execs, is their commissioner,” McManus said. “The more we listened to Charlie’s vision, the more we thought it was worth taking a flyer on. The risk for us is minimal; we have very limited financial exposure. … But I do think there’s an appetite for spring football.”

Later in the summer of 2019, Yee plans to launch Pacific Pro Football, a developmental league for college-age players who are not yet NFL draft-eligible.

Yee, whose advisory board includes Steeg, ex-coach Mike Shanahan and Fox Sports officiating analyst Mike Pereira, will start with a more modest business plan that includes four teams playing in small college or junior college stadiums in the Los Angeles area with a particular emphasis on preparing players for NFL-style football.

“The trend we see is a real misalignment between the college game and NFL,” Yee said. “It’s certainly not the job of the college coaches to get players ready for the NFL. How the game is presented and how players are trained is very different in college compared to what they need to succeed at the NFL level. That’s what we’re offering. This will be an option for players who don’t want to go to college.”

Adidas is on board as a founding partner, meaning it will supply uniforms, gear and marketing advice, but sources indicate that the ongoing fundraising for Pac Pro hasn’t yet reached a point where the league has a green light for 2019.

In the spring of 2020, McMahon’s new XFL is expected to be ready with all of the pro football and fewer of the gimmicks that defined the league in 2001, its only season during its first iteration.

When McMahon announced the XFL’s return in January, the World Wrestling Entertainment chairman and CEO said it would take more than $100 million to get the league off the ground. He has sold $100 million in WWE stock so far to fund the XFL.

McMahon, now seeking an XFL chief executive, is taking the additional year before launching in 2020 to work on stadium deals and media rights. Sources say The Raine Group is working with the league as an adviser.

There also are two startups trying to combine the widespread appeal of EA’s Madden franchise with the massive popularity of fantasy by offering consumers the ability to call plays through an app. Those are the Fan-Controlled Football League and Your Call Football, two leagues trying to meet at the intersection of esports and actual on-the-field competition. So far, the latter is the only one to have held a game.

• • • •

Since the AFL/NFL merger in 1970 produced the NFL juggernaut, there has almost always been at least one group trying to replicate the AFL’s success. But a quintet, after so many have failed?

“It’s the sheer numbers the NFL has, combined with the absolute cultural relevance football has in America,” said the XFL’s Handler.

From the World Football League to any of today’s startups, there’s another catalyst: ego.

“There’s a big vanity component,” said Scott Jacobson, a partner at Madrona Venture Group. “People have a passion for sports and sometimes they overpay for access, including owners.”

How much they’re willing — or able — to pay is the question.

Steeg, a veteran of multiple startup efforts, figures the costs at $6 million to $7 million per team, per season, plus an equal amount for the league office, with three years of funding required “to be taken seriously.” For an eight-team league, that amounts to just under $200 million. That might get a league started, but some say much more will be required to make it last.

Charlie Ebersol’s Alliance of American Football has aligned with CBS Sports.
Photo: alliance of american football

Former NFL consumer products head Frank Vuono was COO of the United Football League, which played four seasons from 2009 to 2012.

“There is room for more football,” Vuono said. “The problem always is money. These [would-be] owners never realize how much it takes.” 

Vuono said each UFL team cost around $15 million per six-game season, plus league overhead and TV production costs.

So, what is the appropriate amount of funding?

“If someone said, ‘We’ll do an eight-team league and spend a billion for the first season,’ I’d say they’d have a chance,” Vuono said. “You just can’t do pro football on a minor league baseball budget.”

Bill Daugherty, the former NBA senior vice president of business development who did a brief stint with the NFL-backed World League of American Football and was an executive with the UFL, agreed that $1 billion was the necessary commitment. Other estimates of startup costs ranged from $200 million, according to a former USFL senior executive, to SportsCorp President Marc Ganis saying a new football league would require $250 million to $500 million in capital commitments.

None of the current startups have that much money raised, industry experts say, but some insiders believe the current economy makes this a favorable time.

“You don’t have to have a network deal anymore to be profitable,” Ganis said. “There’s a perception that the NFL is vulnerable and a perception that younger fans want to be able to consume sports in non-traditional ways. And all of this is happening at a time when there happens to be capital available.”

• • • •

Almost as important as money is time. It’s questionable if any of the leagues can legitimately promise the kind of long-term plan and financial sustainability from ticket sales, media rights and sponsorship that investors seek. Generational sports affinities aren’t formed as quickly as investors want their money back.

Besides, the new class of startups insist that they don’t see themselves as competition for the NFL. They’re just trying to carve out their own space in the pro football marketplace.

“The best way in the past for rich guys to lose money was to try and compete with the NFL,” said George Colony, a lead investor in Your Call Football and chairman at Forrester, a research and advisory firm. “Launching a league to compete with the NFL is a losing proposition. Ours is essentially a technology and gaming story, which could work in baseball or even politics. Why now? Because the technology is mature enough to enable this.”

The Arena Football League has the most continuity among alternative football leagues. It’s still going after launching in 1987, and it’s been around long enough that it even has its own hall of fame. Former AFL Commissioner David Baker figures he sold more than 50 AFL teams during his dozen years as commissioner.

Consequently, “I probably spent more time thinking about what it takes to emerge as a major [football] league than anyone alive,” he said. “Sure, it takes money, but more than just that, it takes time. Most major leagues took 50-plus years to develop.

“The NFL had 50 teams fail before that 1958 Colts-Giants championship game.”

Added Premier Partnerships President Randy Bernstein: “MLS had no competition and it took years to build that up.”

Not until recent years has there been the asset appreciation that makes those who play the high-stakes world of derivatives envious. In 1993, for example, the Carolina Panthers paid the NFL a $140 million fee to enter the league. Now, Jerry Richardson is selling the Panthers to David Tepper for $2.275 billion, a record amount for an American pro sports franchise.

Even with that kind of appreciation in mind, Baker said startups typically make the same mistake when it comes to expectations. He’s advised close to a dozen new leagues and they all have one thing in common.

“All of them thought the NFL was going to buy them or they would be strong enough to force a merger,” he said. “The chances of that are slim and none, and none is gaining ground.”

Scott Rosner, academic director of Columbia University’s sports management master’s degree program, says the draw to a historically bad business proposition for otherwise successful people like Ebersol, McMahon and Yee is a demonstration of simple economic theory.

“Whenever a monopoly is in place long enough, you expect competitors to arise, looking to steal what seems like excess profit,” said Rosner, a one-time season-ticket holder of the USFL Philadelphia Stars.

• • • •

What those failed ventures of the past couldn’t deliver was a solid audience, either on TV or in the stands. The USFL of the 1980s was the exception.

Now, with distribution extending well beyond linear TV, there are many more ways to deliver the product to an audience besides the traditional network deal. That ability to develop a fan following, the leagues hope, will attract sponsors.

“The fragmentation of media channels is nothing but a catalyst for the proliferation of content,” said Elizabeth Lindsey, Wasserman’s managing partner.

Tony Ponturo, former Anheuser-Busch sponsorship and media chief, put some early commercial dollars into both the USFL and the XFL at a time when linear TV had much more of a lock on viewers.

“There are just so many platforms for content now, if one of them can say, ‘We can fill up so many hours at a reasonable rights fee,’ it’s pretty compelling,” Ponturo said. “I remember ESPN building its brand on a 0.3 rating — that was ‘SportsCenter’ when they started.”

Octagon chairman and CEO Rick Dudley estimated he’s seen 30 to 40 failed attempts at new pro football leagues during his nearly four decades in the business, or roughly one a year. Few even got on the field. Dudley, like a lot of industry veterans, shrugs his shoulders at yet another round of startup football leagues.

But the last names and their accomplishments suggest that sports media and marketing power brokers like Ebersol, McMahon and Yee aren’t accustomed to failure, even in a sector like spring football where history has been so unkind.

They can’t all be wrong, can they?

“In a world where content is king, clearly some people think the world is waiting for another football league,” said Dudley, a former NFL marketer. “But four or five leagues simultaneously probably pushes the limits of content being king.”

Alliance of American Football

Planned launch: February 2019
Co-founders: Charlie Ebersol, CEO; Bill Polian, head of football
Executives: Troy Polamalu, head of player relations; J.K. McKay, head of football operations; Tom Veit, head of business operations; Hines Ward, player relations executive; Jared Allen, player relations executive
Format: The single-entity league will be made up of eight teams with 50-player rosters. Each player will earn a base salary of around $50,000.Broadcasting: CBS will air the league’s debut game and its championship game. One regular-season game will air on CBS Sports Network each week. All games will be streamed on the league’s app.

 

Fan-Controlled Football League

Planned launch: 2019
Co-founders: Ray Austin, Sohrob Farudi, Grant Cohen, Patrick Dees
Format: Fans pay to play coach and GM of teams in this seven-on-seven indoor league. Games will last an hour and be played on a 50-yard field. IMG Original Content is the production partner on FCFL games; CAA is the league’s broadcast representative.
Broadcasting: Twitch

 

Pacific Pro Football

Planned launch: July 2019
Co-founders: Don Yee, Ed McCaffrey, Jeff Husvar, John Chung and Lisa McCaffrey
Founding partner: Adidas
Executives: Don Yee, CEO; Bradley Edwards, chief operating officer; John Chung, chief financial officer; Jeff Husvar, chief content officer; Tom Goodhines, vice president of football administration
Format: The single-entity developmental league will field four teams in Southern California for players who are less than four years removed from their high school graduation. The Pac Pro intends to compete against college football programs for players.

 

Your Call Football

Launched: May 2018
Founder: George Colony
Executives: Julie Meringer, president; Susan Maffei, chief financial officer; Sue Develin, vice president of marketing; Collin Vataha, vice president of football operations
Format: The Your Call Football app allows fans to vote on each down from three plays chosen by the coaches on the field.
Broadcasting: The games, which are played outdoors, can be streamed on yourcallfootball.com, YouTube or Barstool Sports.

 

XFL

Planned launch: 2020
Founder: Vince McMahon
Format: In its second iteration, the XFL will be a single-entity structure with plans for eight league-owned teams at launch playing a 10-game regular season followed by two semifinals and a championship game. 

 

Major League Football

Planned launch: March 2019
Executive: Jerry Craig, president, CEO and director
Format: The proposed eight-team league canceled its inaugural 2016 season after an investor failed to follow through on a $20 million financing deal. Negotiations with investors continue with hopes to start playing in 2019.

–– Compiled by Brandon McClung

Sponsorship marketing experts are largely indifferent at the prospect of more pro football.

“It may be a good fit for a brand that couldn’t afford the NFL,” said Nick Kelly, Anheuser-Busch InBev U.S. sports marketing head, who noted Bud Light’s heavy investment in the NFL. “But for traditional sponsors, it’s hard to see them testing out one of these leagues.”

However, Kelly finds the reborn XFL’s potential audience intriguing. “A pooled WWE/NFL audience would be unique; you’d still get males, but it would skew younger, and it would be during the NFL’s offseason. … Right now, that’s probably the only one we’d consider.”

As sponsorship vice president of the XFL during the first iteration of the league, Paul Kayaian sold more than $40 million of sponsorship deals to the likes of Burger King and Gatorade. He still sees value in a spring league, but only if the level of play is intriguing to the audience.

“The basic premise hasn’t changed: America loves football and there’s a letdown after the Super Bowl,” said Kayaian, who’s taught a college course on the failed league. “The one thing we couldn’t control was the quality of play. That has to be better to attract sponsors.”

Daniel Glantz, AIG global head of sponsorship, noted that many bigger brands are averse to startup properties. AIG is passing on the new football leagues for now.

“Whether it’s esports or something like this [spring football], trying to predict how they’ll develop is difficult,” he said, “so there’s a tendency for marketers, particularly at larger brands, to sit on the sidelines and see who survives.”

With a sponsorship of USA Rugby, this summer’s Rugby World Cup Sevens tournament and a jersey patch deal with the New Zealand All Blacks, rugby is AIG’s biggest sports platform. However, in 2016 it did venture into the new sports property world with sponsorship of the Drone Racing League. “You look for authentic connections,” Glantz explained, “and we were one of the first to provide drone insurance.”

With Reebok supporting an off-field marketing platform of cross-training and conditioning, U.S. marketing head John Lynch said a spring football league would not fit with its sponsorship strategy. However, “football is in a bit of a disruption period because of concussion concerns and media consumption changing, so you wonder if there isn’t a different way,” Lynch said. “The [spring] leagues we’ve seen have had some rule changes. Maybe now there’s a bigger opportunity to disrupt by changing rules more dramatically.”

Octagon Chairman and CEO Rick Dudley, whose firm represents big brands including Bank of America, BMW and Taco Bell, said he’s skeptical of the new football efforts.

“I don’t know that the world is waiting for another league,” he said, “but you have to take Vince McMahon seriously because of his money and ability to create a show, and obviously the [Charlie] Ebersol group has some pedigree.”

Nick Carey, Wells Fargo senior vice president and head of sponsorship, said some of the shoulder programming for the new leagues might be what differentiates them. Imagine a 24-hour-a-day locker-room feed, or a reality show based on a league’s top star.

“We’re not in the buy mode at all now,” Carey said, “but the NFL can’t fill every media pipe, and with digital and social being so inexpensive, everyone’s looking for content.”

World Football League

(1974-75)

 Led by Gary Davidson, who helped create the American Basketball Association and World Hockey Association, the league boasted high-profile NFL alums such as Larry Csonka and Calvin Hill. Its ability to lure players led to the demise of two other short-lived leagues — the Atlantic Coast Football League and the Seaboard Football League.

USFL

(1983-85)

 The startup attracted several big names, including Jim Kelly, Steve Young, Herschel Walker and Reggie White, but crashed after it left its spring season for the fall and sued the NFL. The USFL was awarded only $3 in damages in that antitrust case and subsequently folded.

Herschel Walker was a high-profile signing for the USFL in 1983.
Photo: getty images

Regional Football League

(1999)

 The six-team spring developmental league struggled
to play an eight-game regular season and lost more than $6 million during its only season.

AF2

(1999-2009)

 A total of 60 mostly small or mid-sized markets hosted teams in what was a feeder league for the Arena Football League. The death knell sounded when the AFL canceled its 2009 season. Three former af2 clubs still exist in other leagues.

XFL

(2001)

 WWE and NBC attracted an impressive roster of sponsors and started off with respectable attendance in eight markets, but the success was short-lived and the league folded after one season and $70 million in losses. The league announced in January that it was returning in 2020.

All American Football League

(2008)

 The concept was to play in college stadiums featuring alumni players, but the league had a $30 million shortfall before its scheduled 2008 debut and never got off the ground.

World Football League

(2008-10)

 The second iteration of this league consisted of six teams. The Oklahoma Thunder moved to, and still plays in, the Gridiron Developmental Football League.

United Football League

(2009-12)

 Positioned as a feeder league for the NFL, the UFL lost an estimated $120 million in its first three years. Carolina Panthers kicker Graham Gano is believed to be the only UFL alum still in the NFL.

Fall Experimental Football League

(2014-15)

 Five teams played a total of 13 games over two short seasons.

Source: SportsBusiness Journal research

The Fan-Controlled Football League is banking on the idea that digital currency will provide new meaning to the fan experience.

The FCFL’s fan token system will allow fans to buy or invest in teams and the league, and to call plays or make decisions collectively. The tokens are similar to bitcoin in that they will be digital currency.

Peter Vessenes is driving this aspect of the FCFL’s business. He’s a pioneer with both bitcoin and blockchain technology, which is the network that manages digital currency exchanges.

Vessenes launched his first bitcoin company, CoinLab Inc., in 2011 and was a co-founder of the Bitcoin Foundation back in 2012 when crypto currency was in its infancy. Now he’s bullish on using the technology for the fan experience and fan ownership or control of teams and sports leagues. Vessenes has put a new “low seven figures investment” in the FCFL and its fan token system. “Those seem like experiments worth doing,” he said.

FCFL aims to be an eight-team football league where fans can call plays, pick players and coaches, and design logos. It plans to launch in 2019. The league sees the digital token system as the best way to provide transparency to decisions made by fans.

Sohrob Farudi, FCFL’s CEO and co-founder, said the fan-based venture has a goal of raising $30 million from the sale of tokens. The tokens are expected to be priced around 1 cent each, but pricing may vary. After that presale of tokens is complete, the only way fans will be able to acquire them is by interacting with teams such as by voting on logos, providing scouting reports or watching content.

Farudi said Vessenes’ investment opens up his fan experience and fan-controlled venture to a whole new technology and investor class. He said he’s next headed to Singapore to talk to Asian investors about the venture.

The No. 1 criticism of the original XFL was the quality of play. It didn’t live up to all the promotion. We believe you can trace that to the league not having enough time to properly develop the entire organization and to vet the competitive product. That’s why we’re giving ourselves the proper amount of runway. … There’s certainly a lot of learnings from the original XFL, but we’re also taking a fresh look at what people want from the game itself, as far as format and rules, and we’re spending a lot of time on building the fan experience.

There have been a lot of attempts to build a spring league in the past. Many failed because they didn’t have sufficient funding; a lot of them failed because they didn’t have experienced leadership. We have both of those things locked and loaded. It’s a privilege to be managing a new enterprise and to not have a significant portion of our time spent on fundraising.

XFL is a brand with fan recognition and a reputation for innovation. We’re going to deliver authentic, high-energy football for the whole family at an affordable price. We’re going to deliver games that are faster paced, with fewer play stoppages and simpler rules. We are going to deliver a great stadium experience and work hard to bring fans closer to the game. We’re going to place a lot of value on player safety, health and wellness, and delivering 24/7 content.

We’ll certainly be authentic, credible football, even though we have some opportunity to do things differently, to make pace better and rules simpler and have a more engaging and dynamic experience.

— Terry Lefton

Over the last half-dozen years, at least, there’s been an explosion of different content distributors and platforms, particularly in the digital arena, many of whom desire live football games but they’re not able to access it.

We’ve seen rising consciousness among players at the college level. … Those players would like to have a different option available to them that’s presently available in every other sport. Every sport except football has an early professional path.

There are lots of sponsors and technology companies that would like to align with a football product, but the barrier to entry at the NFL and NCAA level is very, very high. It’s very difficult for them to enter the business, test products, get data and advance their product development.

Within the college football ecosystem, you have a group of haves and have-nots, and the sponsorship dollars and the television dollars are chasing the haves, meaning the power five. Over the next few years, there may be many have-nots that will be confronted with the decision on whether they can afford to continue to play college football. We’re already seeing it at some level where four Arizona junior colleges will eliminate football programs, and they supplied a lot of football players to power five programs. We also saw a case at the University of Cincinnati where four-year students would spend almost $5,000 each to subsidize football, even if they never went to a game.

People in the artistic space see that programming like “Last Chance U,” or “Hard Knocks” or ESPN’s draft shows … fans enjoy hearing about the journey these players take.

— Michael Smith

I have the benefit of history and can look at what worked and what didn’t work. … Look at the number of tickets that got sold (by the XFL) in 2001; they were averaging 25,000 tickets a game. But where they started to lose audience and lose ticket sales, it was the overly violent and salacious stuff. On one side, it showed that people wanted football, but they wanted real football.

We spent two years getting exactly the right television partner, exactly the right digital team to build our direct-to-consumer gaming platform, exactly the right football people. And we’re only going to announce this when we have 100 percent of our partnerships in place. Most of these people announce and don’t have a plan, like sewing together a parachute after you’ve jumped out of a plane.

Anybody who says they can measure success in year one is not a serious contender. Our business model is not based on one year. If, after the first game, we have the greatest ratings in history, I’ll say, “OK.” If you tell me we had the worst ratings in history, I’ll say, “OK.” This is not short term, it’s long term. Ask the MLS.

My investors, I told them that if they’re looking to make their money back in year one, this is the wrong business. If you’re looking to make your money back in year 10, that’s the business model I’m building, and we’re fortunate enough to have partners who are only thinking about the five-, seven-, 10-year plan.

Launching a football league by itself would not work. Launching a football league by itself with just a media partner would not work. You have to be holistic and you have to have experts in each area, including financing.

— Michael Smith

In this week’s First Look podcast, SBJ’s Abe Madkour, John Ourand and Terry Lefton discuss the stories in our May 28 edition, including new spring football leagues, Nike replacing Under Armour in MLB, and a wrap-up of the 2018 Sports Business Awards.

Three sites are vying for the 2020 NFL draft, after the league last week awarded Nashville the right to host the 2019 football festival during its meeting in Atlanta.

Las Vegas, Kansas City and a joint bid from Canton, Ohio, and Cleveland all seek the draft that will fall prior to the 100th anniversary season of the NFL. Those three, along with Denver, were finalists for 2019. (Denver has an unspecified conflict in 2020.)

Canton, site of the Pro Football Hall of Fame, has tried for several years to secure the draft but discovered it is all but impossible to beat out cities that have NFL teams. Now, by pairing with the Browns, the hall of fame has eased that issue.

The inclusion of Las Vegas shows yet again the NFL’s evolving tolerance of sports gambling. Last year, the owners agreed to allow the Oakland Raiders to relocate to Sin City, a move expected in 2020. And the recent Supreme Court decision overturning the largely national ban of sports gambling compelled the NFL to call for federal regulation of the sector.

TABLE STAKES: Sports gambling got very little attention from owners as they focused on other matters, like the national anthem and awarding big events. But it is on the radar of the league, obviously.

“There is a lot that has to happen in terms of regulation at both the federal and state level, so we have a long way to go to really see what the landscape is going to look like,” said Art Rooney, the Pittsburgh Steelers owner.

Asked about changes to NFL policies, such as allowing gambling sponsorships or bets at stadiums, Rooney said to expect decisions on such matters sometime this year.

WHO’S IN CONTROL? Nashville getting the draft is recognition of the city’s enthusiasm for mega spectacles, which was on display during both the Titans’ uniform unveiling last month and the Predators’ run to the Stanley Cup Final last year. 

Nevertheless, Titans ownership is still operating out of compliance with league rules. Two years ago, the NFL fined the owners, the heirs to late owner Bud Adams, for not having a designated control owner. The heirs have been unable to agree on who should be in charge, for the time being giving that role to Amy Strunk, Adams’ daughter. In the press conference announcing the draft, Strunk described herself as the “controlling” owner, the first time in many years of covering NFL meetings we have heard an owner use that adjective.

As has been the case for the past couple of years, she was the team’s ownership member who cast votes for the franchise at last week’s meetings.

Two league sources told us different things: One said that the Titans structure will soon be resolved, while another said otherwise. Steve Underwood, the team president, genially waved off the question when asked. So, the Titans may have the draft, they just don’t have ownership clarity. The league requires one owner to have full voting control.

ANTHEM VIEW: This meeting will of course be long remembered as the one at which the NFL declared that kneeling during the national anthem is disrespectful to the American flag and said there are fines for teams with players who do so.

In my opinion, the NFL’s business had already taken whatever hit it was going to take from the controversy. It seems there were enough owners who strongly believed that players should stand for the anthem, as they are required to do in the NBA, or at least were spooked by what political turmoil could ensue from the kneeling. Some clearly disagreed. 49ers owner Jed York abstained from the vote, and New York Jets owner Chris Johnson — who has assumed the role while his brother Woody serves as U.S. Ambassador to the United Kingdom — pledged to cover any potential player fines. (That is an easy gesture because the policy leaves it up to the teams as to whether or not they will punish players who kneel for the anthem.)

The bigger question is if the league will lose whatever goodwill it had built up with players as the two sides eye collective-bargaining talks. It’s hard to imagine at this point that it won’t. This upcoming season is the seventh of the 10-year CBA.

The NFL is considering investing in its own fleet of jets as teams continue to face escalating travel costs chartering their own aircraft.

With the airline industry flying at near full capacity, securing team charters is increasingly difficult. Costs last year doubled to an average of nearly $4 million per club for those leasing planes, team sources said, and that rise looks likely to continue. Worse, some teams worry that they could ultimately find themselves without access to charters as airlines decide the planes are better used in traditional commercial roles.

The New England Patriots purchased two 767 airplanes last year.
Photo: getty images

A typical NFL team needs a 747 jet, often retrofitted for its needs.

At last week’s spring owners meeting in Atlanta, NFL football operations executives presented several options, including one in which the league would invest capital into a new company that would secure long-term rights to the jets from a specific airline. Another option is for the league to negotiate on behalf of a group of teams, at least 10, with a single carrier.

It could not be determined which aviation companies the NFL has been talking with.

The sources all declined to be identified, citing the maturing stage of the process. The league could get a term sheet next month on the proposal to invest into a company that would secure the jets, with a full owners vote at their next meeting in October, one team source said.

Not all NFL teams are hurting in this area. The New England Patriots last year purchased two 767s, and clubs located in cities that are hubs for airlines — like Dallas, Atlanta and New York — often find it easier because the airlines have more planes available there.

But teams such as Green Bay, Baltimore and Jacksonville, to name a few, often have to turn to high-cost leasing firms. The Jaguars, for example, last season went with Atlas Air, seeing their costs double to $4 million.

The NBA for several years has secured planes for most of its clubs through an exclusive deal with Delta. The needs of the two leagues are different. The NBA has far more trips to offer an airline like Delta, with 10 times the number of regular-season games and a far longer postseason. And the airplanes are smaller because of each team’s smaller roster size. The NBA planes are retrofitted to account for the players’ height.

MLB and the NHL leave travel decisions to the teams. MLS actually restricts its teams to four charter flights per season, otherwise players have to fly commercial.

The Big3 enters its second season with a schedule that features seven new markets as the startup 3-on-3 basketball league looks to draw more fans from last year’s inaugural season, which averaged 11,500 fans per game.

 

New Big3 markets this year include Houston, Atlanta, Miami, Detroit, Boston, Oakland and Toronto, with New York, Chicago and Dallas returning. Games held last year in Philadelphia; Charlotte; Tulsa, Okla.; Lexington, Ky.; and Las Vegas are not returning to the league.

The eight-team league, which features former NBA stars, tips off June 22 in Houston at the Toyota Center.

“A lot of markets are based on where people reached out to us and were very aggressive about wanting us,” said Jeff Kwatinetz, who co-founded the Big3 along with rapper Ice Cube. “Last year we were selling a concept and a lot of people underestimated what we were doing. This year, we were virtually able to go where the best demand was.”

Kwatinetz would not disclose specific ticket sales for the upcoming season, but said he expects the league to surpass last year’s attendance.

Last year, the two biggest stops for the league were at the American Airlines Center in Dallas and at the Barclays Center in Brooklyn where both events drew about 15,000 fans.

Julius Erving, coach of the Big3 team Tri-State, congratulates David Hawkins on being drafted by the team. Erving is one of several former NBA stars tied to the 3-on-3 basketball league.
Photo: getty images

Another major change this season for the league is the addition of live broadcasts of the games on Fox and FS1. Unlike last season, where the games were taped and shown on Sundays, four events of the 10-week schedule this season will be shown live on Fox on Friday nights, with the six other weeks of the schedule to be shown on FS1 also on Friday nights. Fox has paid an undisclosed rights fee to the Big3 for the programming.

“We are simply growing upon what we started last year,” said Amy Trask, chief executive officer of the Big3. “We will be broadcast in 36 countries and the games are going to be on prime time and live.”

Adidas this year is the league’s newest sponsor with a three-year, $15 million deal that makes the company the official outfitter of the Big3. Adidas will activate in each market with a “Young3” grassroots youth initiative designed to get more people to play 3-on-3 basketball.

Other sponsors are expected to be added this season, league officials said.

“We’ve talked to eight or nine different partners and are hopeful for some to come on board,” said Big3 Commissioner Clyde Drexler. “Finding the right partner is a big part of that.”

Drexler replaces Roger Mason Jr., who departed as commissioner after the inaugural season.

While the Big3 will retain its eight-team, 10-week schedule, it has expanded team rosters from five to six players and the league has added former NBA stars such as Baron Davis, Carlos Boozer, Metta World Peace, Drew Gooden and Nate Robinson.

The salary structure remains the same. Each player receives a base salary of $10,000 per game, with additional revenue sharing based on team performance.

“The real upside is that we have a revenue split and teams get paid based on what place they come in,” Kwatinetz said. “It keeps our interests aligned.”