SBS XFL Classroom

Diagram Legend

(Box shape) = Decision variable

(+) = Decision causes variable to increase or has a positive relationship with it

(-) = Decision causes variable to decrease or has a negative relationship with it

(+)(-) = Variable can cause increase or decrease or has an alternating positive / negative relationship depending on the condition present

A review of the basic operation of the simulator is presented below.

The XFL Simworld: A Sim Game On League Business Dynamics and Rights Fees

The diagram above shows what impact each decision has on the primary indicators of sports league performance: attendance, revenues, expenses, and TV ratings.

While the simulator is more complicated than the diagram suggests, the illustration focuses on the basic variable relationships shown.

Achieving a good score in the simulator -- and in running a sports league -- calls for a balancing act between determinging how large the league should be and not only what prices are best to charge, but how much one can spend on player salaries and marketing without losing money.

The basic goals are good television ratings and positive net operating income each year in the simulation.

For example, one may consider a business plan that calls for higher player salaries, with the idea that a greater player payroll will draw athletes away from the NFL and boost ratings. It's a great idea, but when to implement it is the question. Try it too early, and you risk losing more money than you gain in higher ratings. Adopt it too late, and it may be too little ratings boost at a time when a big lift and more revenue is desparately needed.

The other problem is that such a plan calls for you to spend money, thus robbing you of any future reserve money you could accumulate for the future. Moreover, higher player salaries may not produce the desire ratings "pop" because the investment may not be great enough to realize such an increase. Unfortunately, it may be large enough to cause you to post losses in net operating income, dig into your reserves, and ulitimately jettison the plan altogether. A scenario which leaves you with no hope for a high ratings future, and the almost certain death of the XFL.

The XFL only lasted one year. Here, in the XFL Simworld, you have the chance to cause the infant league to last for five years -- the length of the leagues business plan.

Using the XFL Simworld In The Classroom

The XFL Simworld is an excellent tool to understand the relationship between sports and television and the role of "rights fees" in league and team operation. It can also be used to help explain "time lags" between decisions and outcomes in the sports business, and in industry as a whole. (In the XFL Simworld a decision to expand the number of teams is not implemented until the next year of the simulation run.)

It can also be used as part of an overall excerize on the XFL itself. Here, one can duplicate the basic decisions that casued the XFL's fall, then test a whole new set of decisions around an alternative business plan.

Unlike the real world, NBC is more foregiving in the XFL Simworld. The user can operate at low ratings for a longer period than was the case in the real world. But not much longer -- NBC can still elect to withdraw its commitment. On the other hand, if you keep the league "in the black" and have excellent TV ratings and a good return on NBC's $50 million investment, you will earn a $600 million television contract with NBC.

The Meaning of Low TV Ratings

Television ratings are a reflection of how many people are watching your XFL telecasts versus Star Trek reruns. The XFL games were scheduled for Saturdays in the real world because it was thought that more peoplem would be at home to watch the contests.

In fact, the opposite was true. The main segment of the American population most likely to watch XFL games was not at home, but at bars and parties. The belief was that the 18-to-24 year olds would be compelled to stay at home and watch the XFL. Burt that didn't occur. The result was low TV ratings.

Low TV ratings mean that advertisers will pay less and less to have their products shown before the viewing audience of the telecast with the ratings problem. The reason is simple: fewer households mean less people around to see the commercial on the nice car, or new camera. Thus, its less likely the desired population of people required to purchase a product will ever see the item to know of its availabilty.

From NBC's perspective the problem is more severe: the network estimated that it would capture the return on its $50 million investment from fees paid by advertisers that booked commercials on XFL telecasts. Thus, the $50 million was an upfront payment to help establish the league, based on an assumed constant annual TV ratings performance.

NBC's "bet" was justified by a healthy 14 ratings share in the XFL's first weekend on television. Then, the wheels fell off the wagon -- TV ratings dropped as viewers returned to their normal Saturday night pattern of activities. NBC's projections of a rapid, three-year investment return were not to come to pass.

NBC did not give the league a chance to capture a steady audience. To look at it from NBC's view, for the XFL to develop a steady core of viewers was a long-term, money losing proposition. The network elected to part company with the World Wrestling Federation's football league.

The World Wrestling Federation gained a valuable lesson in what every sports league commissioner is concerned with: the value of "rights" paid from a TV network to a sports league. Each TV network takes a bet that there will be enough ad revenue gained to offset their investment in the sports league.

Because of the nature of some sports, the losses are constant, but the huge audience is seen as a great opportunity to be "led into" watching their shows shown after the sports telecast. This is especially true for the NFL, and also why NBC elected not to competitively bid for the right to show NFL games. First, they were outbid by CBS. Second, NBC saw the XFL as a way to create television-friendly football without the exhorbitant rights fees. In the case of the NFL, the league's total television contract was $17 billion - a then-record (topped only by their more recent $22 billion deal). Moreover, in an era where there are too many sports leagues and organizations pursuing a limited amount of rights fee money, this was NBC's way to "custom fit" its rights fee budget to a need.

The XFL Library

If you are developing a class project around the subject of the XFL using this simulator, these links below are recommended SBS resources.

The D-XFL Files - An informative and humorous retrospective site on the XFL. Includes all of the teams and the scores of XFL games. But of greatest importance, it includes listings of the actual television ratings.

XFL - Who Needs Football With An Attitude? - An interview with Vince McMahon prior to the start of the XFL's first season.

XFL - R.I.P - Hunter S. Thompson's classic observation of the XFL. This provides the "everyperson's" view of the XFL. If your writing a report, and need a good quote, this is a good source.

Pro Football Weekly Online XFL Archives - This is a very complete breakdown of the XFL for each week. It includes a very consise and informative interview with the late Joel Buschbaum, one of the countries leading experts on pro football talent.

McMahon, NBC, Announce Disbandment of XFL - This is ESPN's account of NBC's decision to end it's XFL-based relationship with the WWF. This includes a reference to the problem of "escalating rights fees."

The Story of the XFL - A comprehensive account of the creation and brief history of the league.

Top Of The News: XFL Exterminated - From Forbes Magazine, this article on why the XFL was terminated.

The Big Picture: The XFL takes its telecasts to the extreme - This article points to some of the innovations presented in XFL games. Methods like the "Sky Cam" are now common in NFL games.

XFL Folds After First Season - CNN-SI's account of the closure of the XFL

Salon. Com XFL Archives - Salon.Com's page is a collection of links to articles on the XFL that have appeared on Salon.Com

ABCNEWS.COM: Where Did The XFL Go Wrong? - This is a great take on the problems of the XFL from a TV ratings and business perspective.

XFL extinct after dismal inaugural season - This is an account of the league's termination from the Las Vegas press, which were served by an XFL team.