The XFL is looking for more money. Where is it going to come from?

Johnny Manziel may never don an XFL uniform, but the league still needs a money infusion.

If you watch ESPN’s 30 for 30 on the XFL, one of things the documentary does a great job of capturing is the breakneck pace the league moved to get ready to play. With just one year between announcement to kickoff, the XFL had to move breathlessly to get the league up and running.

This time around, the XFL has given themselves two years of lead time. The immediate and obvious benefit is the optics: this signals that the league is taking a more thoughtful approach. But what are the other benefits to this extra year?

One answer appears to be figuring out the finances. McMahon has stated multiple times, most recently on a WWE Investor conference call, that the current funding will not be sufficient. We know that the XFL’s parent company, Alpha Entertainment, started with $95,791,200 after Vince McMahon liquidated WWE stock. That might be enough to get the XFL through its first season: the original XFL lost roughly $70-$93.8 million, depending who you ask or how you’re counting. For all the bad things you can say about the original XFL, they paid their bills, and McMahon surely has no interest in leaving so little margin for error this time around.

So, where might additional funding come from?

McMahon himself

McMahon has already committed over $95 million to the XFL.

McMahon obviously has much more of his own personal fortune to draw from, but if the plan was to solely rely on liquidated WWE stock, it stands to reason that he probably would have gotten it over with all at once. Beyond the impact to him personally, the CEO of a company unloading stock can have an adverse effect on stockholder confidence.

When news of the initial sale of stock broke, WWE released a statement that said “Mr. McMahon has informed the Company that he has no current plan to sell additional shares of the Company’s stock and that he intends to continue in his capacity as the Company’s Chairman and Chief Executive Officer for the foreseeable future.”

Other major investors

Since divesting in UFC, Frank and Lorenzo Fertitta launched Fertitta Capital with $500 million to pursue direct investments.

In the original incarnation, NBC approached WWE about getting involved and the two companies eventually became joint owners, with each putting in $50 million. There’s nothing stopping other individuals or entities from stepping up to the table this time around. As a reference point, Mark Cuban reportedly paid $5 million for a 5% stake in the ill-fated United Football League in 2010.

Team Owners

Major League Soccer’s single entity status hasn’t stopped wealthy team owners like Arthur Blank from getting in on the fun.

McMahon specifically said at the opening press conference that the league would be a single entity operation rather than pursuing a franchise model. That might appear to rule out individual team owners, but remember that Major League Soccer also considers itself a single entity, instead giving owners an operating license for an individual team and a 1/23rd share of the league.

In terms of how much the XFL could fetch for an operating license, it’s worth looking again at the United Football League. Ahead of the 2010 season, it was reported that owners invested $10 million plus a personal commitment to cover opening-season losses up to another $10 million in exchange for a one-half interest in a team.

Individual fans

This guy owns a piece of the Green Bay Packers.

Community owned football teams include the Green Bay Packers in the NFL and the Edmonton Eskimos, Saskatchewan Roughriders, and Winnipeg Blue Bombers in the CFL. The NFL has banned the community ownership structure, but teams building new stadiums regularly rely on personal seat licenses (PSLs) to help fund the project. PSLs are paid licenses that entitle the holder to the right to buy season tickets for a certain seat in a stadium. As a reference point, the PSL prices for the new Giants Stadium ran from $1,000 to $20,000.

The XFL, a league that promises to “give the game of football back to fans” could theoretically explore a similar set up, exchanging season tickets and a small stake in the team in exchange for a hefty chunk of change up front. And while there’s no real indication that this is something the XFL is considering, it’s interesting that Pro Football Talk’s Twitter account threw it out as a theoretical:

The XFL has largely been quite since the initial press conference, but based on ESPN’s Darren Rovell clarifying on Twitter that Johnny Manziel has not yet been ruled ineligible, we can infer that the XFL is communicating with media behind the scenes. If the XFL were going to release a trial balloon, Mike Florio and Pro Football Talk are as good a medium as any.

To answer Florio’s question, would I invest my money in the XFL? For my sake, I sort of hope that’s not an option. The list of men who have made a buck in pro football is very short. It took the NFL decades to achieve profitability, and after a century, the CFL is still only barely coming out ahead. The XFL lost a lot of money the first time around, and most recently, the UFL lost even more.

The right reason to invest in pro football is because you love the sport and can afford to lose some money to be able to say that you are a part of it. That’s the attitude that originally sustained the NFL and the attitude that allowed the American Football League to survive long enough to force a merger. Hopefully anyone who invests in the XFL, no matter how big or how small, will share that same mindset.

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