The encyclopedia · Finance & Accounting · Financial decision · 2018–2020
Vince McMahon's XFL relaunch lasted five weeks before bankruptcy
Vince McMahon's 2020 XFL relaunch, with up to $500M behind it, played only five weeks before the pandemic ended it; Chapter 11 came three days later.
XFL · Alpha Entertainment · 2020-04
What happened
Determined to fix what broke in 2001, Vince McMahon relaunched the XFL through a separate company, Alpha Entertainment, saying he was prepared to invest as much as $500 million — five times his stake in the original league — funded by selling $100 million of WWE stock in December 2017 and another $270 million in March 2019. The eight-team single-entity league kicked off on 8 February 2020, and the first week drew an average of 3.1 million viewers.
The audience slid — 1.5 million by week five — but the pandemic landed the killing blow. Games were cancelled on 12 March 2020, and on 10 April the league suspended operations and laid off its staff: without game revenue the financial commitments were unsustainable. On 13 April 2020 Alpha Entertainment filed Chapter 11 in Delaware, listing assets and liabilities of $10 million to $50 million and blaming the pandemic for 'tens of millions of dollars' in lost revenue. Seven of the eight head coaches were among the top unsecured creditors, led by Bob Stoops, owed $1.08 million.
The bankruptcy ended McMahon's second XFL in ten weeks of games and five weeks of play. On 3 August 2020 a consortium led by Dwayne Johnson, Dany Garcia and RedBird Capital's Gerry Cardinale bought the league out of court for $15 million — court-approved four days later — a fraction of what had been put in.
Why it happened
- A spring league with no television-rights cushion had five weeks of gate and broadcast revenue when the pandemic shut stadiums.
- Viewership halved from 3.1 million in week one to 1.5 million by week five, weakening the case for patient money.
- The single-entity structure concentrated every payroll and lease in one company with $10M–$50M in listed assets.
The lesson
McMahon pledged up to $500M for a league that played five weeks. With no TV-rights cushion, one cancelled season took it to Chapter 11, and it sold for $15M.
Aftermath
The league was bought by the Johnson-Garcia-Cardinale consortium on 3 August 2020 and ran under new ownership until 2023.
Sources
- Wikipedia — XFL (2020–2023) (Vince McMahon established Alpha Entertainment to fund the league separately from WWE, prepared to invest up to $500 million — five times the original 2001 investment — including $100 million in WWE stock sold December 2017 and $270 million liquidated March 2019; season began 8 February 2020 with eight teams as a single entity; operations suspended 10 April 2020 after games cancelled 12 March 2020; Chapter 11 filed 13 April 2020 listing $10M–$50M assets and liabilities; averaged 3.1 million viewers week one, 1.5 million by week five; sold to consortium led by Dwayne Johnson, Dany Garcia and Gerry Cardinale of RedBird Capital Partners for $15 million, purchased 3 August 2020, court approved 7 August 2020; filing said the pandemic deprived the league of tens of millions of dollars in revenue)
- USA Today, 13 April 2020 — XFL files for Chapter 11 bankruptcy days after laying off employees (filed in Delaware 13 April 2020; assets and liabilities estimated $10 million to $50 million; league canceled its inaugural season in March 2020 due to the coronavirus pandemic; employees laid off and operations suspended 10 April 2020; seven of eight head coaches among top unsecured creditors, led by Bob Stoops owed $1.08 million; Vince McMahon identified as owner of the second XFL iteration)
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