Sports Business Journals Ben Fischer has an interesting piece regarding the United Football League. He talks with Fox Sports CEO Eric Shanks and RedBird founder and managing partner Gerry Cardinale about how they came together to form the UFL. The article talks about when they came together, why they didn’t during the XFL Bankruptcy in 2021, the future of the UFL and more. Worth a full read, but we give you some of the highlights along with additional information.
The Genesis of the United Football League
This decision was made during a dinner between Fox Sports CEO Eric Shanks and RedBird Capital Partners founder and managing partner Gerry Cardinale. The dinner would become a transformative decision in the landscape of American football leagues.
“By last July, a merged league was so clearly the right move that Cardinale and Shanks agreed to a deal over a single red-wine-infused dinner, just days after the USFL championship game.”
Divergent Paths and the Road to Merger
Initially, both parties considered acquiring Vince McMahon’s XFL during its bankruptcy proceedings in 2021. However, different paths were taken as RedBird Capital went on to secure a deal with Dwayne “The Rock” Johnson and Dany Garcia for the XFL, while Fox Sports took a different route by reviving the USFL.
“They discussed bidding together to buy Vince McMahon’s XFL out of bankruptcy in 2021, but RedBird instead did the deal for about $15 million with Dwayne “The Rock” Johnson and Dany Garcia. Then, Fox pursued its own strategy, buying the intellectual property of the old USFL and rushing to market to beat the XFL by playing its first game in April 2022. The XFL launched a year later.”
A United Front Against Traditional Competitors
Shanks emphasized that the rivalry was never about the USFL against the XFL; instead, it was about establishing a foothold in a competitive entertainment landscape. The merger symbolizes a strategic alignment against a common ‘competitor’: the crowded second-quarter sports and entertainment schedule.
Shanks said. “Everybody has to understand that our competition wasn’t between USFL and XFL when we merged. Our competition is everything else in the second quarter.”
Fischer mentions that Disney, along with FOX, still holds equity in the UFL. We have seen the announced sports TV merger between ESPN, Fox and Warner Bros. Discovery, which was meant to compete against streaming services like Netflix and Amazon. If successful, the UFL could be valuable property as part of their joint service.
Collaboration for Sustainability
One of the merger’s cornerstone principles is collaboration towards a sustainable future for the league. Shanks elaborated on the synergies between Fox and RedBird, highlighting both entities’ services to bolster the league’s profitability and sustainability.
“We’re actually both providing services to this league, so the league itself is more profitable until it does stand on its own two feet, if it ever does,” Shanks said. “You may always get marketing help from Fox, you may always get sponsorship help from RedBird, that might be the right model going forward. We’re starting on second or third base with this thing because the infrastructure RedBird and Fox have, and the media expertise from ESPN and Fox.”
The Financial Outlook
Gerry Cardinale’s comments on the league’s financial health underscore a confidence in its self-sufficiency and openness to strategic partnerships.
Cardinale says the league is “very self-sufficient from a capital standpoint” and would not, on its face, need more strategic involvement from potential new investors. But it may be open to local investors, a la an MLS-style owner-operator arrangement.
We have heard from sources that teams like the St. Louis Battlehawks and DC Defenders could fetch hundreds of millions, while other markets could be running in the $50 to $75 million range. Of course, this depends on how the league does over the next two years. We have heard for some time that the Memphis Showboats could be owned by FedEx founder Fred Smith, who was influential in bringing the team back to the USFL.
Cardinale, for a long time, has wanted to model the XFL, now UFL, like Major League Soccer and believes they could be bigger than that sports league. MLS doesn’t have a single ownership structure like the NFL. Teams are owned by individual investors or groups. There’s no league-mandated operational model, allowing each owner to manage their team with some central guidelines from MLS. The UFL would follow this model as well. In 2019, David Tepper acquired the Charlotte MLS expansion team for approximately $325 million.
The emphasis on collaboration between Fox and Disney, the pursuit of sustainability, and the league’s financial health illustrates a well-thought-out strategy to establish the UFL as a significant player in the American sports landscape. 2024 will be a major test. If these two entities can’t make it work, no one will.
