Dwayne "The Rock" Johnson Wants To Compete With The NFL

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Hey Friends,

The National Football League is the most successful and profitable sports league globally. So it’s no surprise that people would want to disrupt their business, launch a competitor, and eat away at the multi-billion-dollar profit machine they have built.

Many have tried, and many have failed. More than 50 outdoor, indoor, developmental, and semi-professional leagues, both domestically and internationally, have launched since the National Football League played its first season in 1920.

But very few of these leagues have had the capital and resources to give it three separate attempts across multiple decades — yet that’s exactly what Dwayne Johnson, Dany Garcia, and RedBird Capital are now trying to do with the XFL.

The XFL held its first season in 2001. It was a joint venture between Vince McMahon at the World Wrestling Federation (WWE’s former name) and Dick Ebersol at NBC, which had just lost the rights to broadcast NFL games. And the goal was simple —build a legitimate NFL competitor by introducing more “entertainment” to the sport.

But we all know what happened next. The league got off to a hot start, but the shock factor wore off quickly, and viewership took a nosedive. The XFL folded after just one season, and it’s estimated McMahon and Ebersol lost $35 million on the project.

“It was a colossal failure,” Vince McMahon later said.

But like any great entrepreneur that is obsessed with winning, McMahon had to give it another shot. So nearly two decades later, he sold more than $250 million of WWE stock (~4% of the business) and announced that the XFL would be relaunching in 2020.

And to be fair, it went much better this time. McMahon publicly committed to investing $500 million in the league. He hired Oliver Luck as commissioner. They signed legitimate players and coaches. They secured sponsorships from blue-chip companies like Gatorade and Anheuser-Busch, and the first five weeks of the 2020 season averaged between 1.5 million and 3.1 million viewers. That’s pretty good.

But then COVID-19 came, and it wrecked the entire business. The league was forced to shut down mid-season, and with a 7-figure monthly burn rate, the XFL laid off its entire workforce and filed for Chapter 11 bankruptcy just a month later.

It’s estimated that Vince McMahon spent another $200 million on the XFL reboot.

So this is where it gets interesting. Because Dwayne “The Rock” Johnson, his business partner Dany Garcia, and RedBird Capital, called up the XFL just hours before the bankruptcy auction was set to begin and acquired the league for $15 million.

They have since made some key hires, including former NFL and NBA executives, Dean Blandino for officiating and rules, and all eight head coaches. They signed a partnership agreement with the NFL, which will accelerate research and development initiatives, and their first season is already set to start in less than nine months.

But none of those items are bigger than the multi-year broadcasting deal they closed this week with ESPN. Why? Because millions of households will now have access to all 43 XFL games across ABC, ESPN, and FX — that’s huge for a (new) sports league.

And why would ESPN do this? Well, because it’s (relatively) cheap, they can sell 30-second ads for $70k+ throughout the game, and it gives them a direct competitor to the USFL on Fox. Oh yeah, it probably doesn’t hurt that Disney has a pretty good relationship with Dwayne Johnson—the world’s highest-paid actor—that they don’t want to mess up.

This is undoubtedly a big win to kick off the XFL’s third attempt. But the work is far from over. Building a large professional sports league from scratch is extremely difficult, and there is a reason why 50+ entrepreneurs have tried and failed.

Still, if there is anyone up for the task, it’s the group currently running the show. Dwayne Johnson and Dany Garcia have built an incredible business, and they understand the value of audience and attention better than anyone. So when you add in a prominent sports & entertainment investment firm like RedBird Capital, things start to get interesting. We’ll see what happens.

I hope everyone has a great day. I’ll talk to you tomorrow.

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