Saturday, October 19, 2013

New USFL rolls on.

I am late writing this piece.  Shortly after I wrote my last entry on the new USFL, I morbidly visited their website and found that the USFL was moving ahead with a targeted launch date of 2014.  for the last couple months I have been thinking "I really need to write a followup..."

The USFL has a blog on their site that is used to broadcast updates to potential fans.  They don't appear to like putting information out there, but use it when they feel they absolutely have to get their view out there.

The "Jaime Cuadra doesn't work here anymore" recent post reminded me of "the two envelope" joke.  There are a hundred takes on that joke.  Sometimes an accountant leaves it for his replacement.  Sometimes both guys are athletic directors...Regardless, the story goes like this:

A new executive is taking over from an old employee.   The guy leaving tells the new guy "I've left two envelopes in the desk drawer labeled #1 & #2. When you are in real trouble open one of them."

So a few months pass and the new guy finds himself in an awful fix.  He cannot imagine a way out.  So he opens the envelope labeled #1". 

The note inside simply says, "Blame me."

So the new guy blames all the trouble on the old guy and all of the pressure on him disappears.

Then a few month later the new guy finds himself in more trouble.  Not knowing what to do, he opens the second envelope.

The note inside says, "Prepare two envelopes."

Michael Dwyer may have funded this new USFL in exactly the wrong way, but his passion for starting a second USFL oozed out of every interview.  He clearly loved the idea of a new USFL.  While he would throw out the company line of it not financially competing with the NFL, he seemed eager to throw out that there would be plenty of familiar faces from the NFL and top names from college.

Honestly, that kind of passion grabs fans and will be hard to replace. You don't hear that stuff from the new USFL under Jim Bailey.  (Jim Bailey is a long time NFL guy.  Based entirely on USFL blog announcements, he kind of hits me as a very bland bean counter.  There is a place for that type, but as a former marketing guy for an Inc 500 company, I'd argue when you are selling "permanently minor league, small market, maybe not on TV, coming soon", a little sizzle from your CEO helps.)

Cuadra had passion.  For someone who destroyed his life stealing money to launch this league, one can well imagine Cuadra writing out two envelopes.

The new USFL had little choice but to throw him under the bus as hard as they could to try distance from his criminal activities, but one suspects true believer Mr. Cuadra may have been OK with that in concept (but perhaps not the actual execution).

So where is the USFL today?

It is hard to say.  The current leadership is keeping a tight lid on things --- just as Michael Dwyer did after the first year in his 3 year "failure to launch".

We do know that 2014 is not on the table.  The league is looking at 2015 now as a start time.  Every delay is brutal.

We don't know the teams...Or do we?

On July 20, 2011, Mr. Cuadra did an interview with a Las Vegas radio station where he laid out what he thought the league would look like by opening day 2012.

He thought they weren't far from having 12 teams in 3 divisions.

Eastern Division
Michigan (city not specified, can it actually not be in Detroit/Pontiac?)
Columbus, OH
Norfolk, VA
with a slot for another undetermined team

Southern Division
Orlando, FL
Memphis, TN
Jackson, MS
with a slot that might be filled by Little Rock, AR or Shreveport, LA

Western Division
Los Angeles, CA (Cuadra's team coached by Sean Salisbury)
Salt Lake City, UT
San Antonio, TX (noted as the frontrunner for a Texas team)
with a slot potentially available for Sacramento, CA or Portland, CA.

It sounds like at the time of the interview that they had 9 ownership groups they considered "mostly acceptable"...

(It is very interesting that in the interview there was some discussion of speculation that the struggling UFL might somehow merge with the new startup USFL, something I would think would have been very unlikely due to UFL debt and the two leagues' differing business model views.  Dwyer was insistent that the new USFL would not pick up the UFL's debt, but would readily welcome their owners.

It may be that the new USFL's nine (?) ownership groups would have been better served to offer to "buy" 3 of the UFL's teams.  That would secure 12 owners, give 12 teams to allow money making scheduling, and could have mostly guaranteed a 2012 launch. 

The UFL was running it's course.   If the new USFL had offered $3 million dollar life boat checks each to Paul Pelosi (Sacramento Mountain Lions), Bill Hambrecht (Las Vegas Locomotives), and Bill Mayer (Virginia Beach Destroyers) --- in trust until January 2012 --- to shutter the UFL and play a full season (or more) in the new USFL, it seems fairly likely the trio may have considered it.  It could have been publically sold as purchasing the goodwill and name value the UFL generated --- Even though the UFL had little of either --- but in truth would have been about bribing that trio to reject their UFL business model for the new USFL's.

That kind of offer would have cost the new USFL ownership groups $1 million each.  One wonders if the nine (?) new USFL ownership groups have burned through a million each in retaining their operational personnel in the years they have been waiting to launch.

It is very possible that doing the interview on a Las Vegas radio station and mentioning the possibility of a merger was entirely about fishing for 3 more owners...  Sadly with the new USFL's stance on UFL debt, they may have been fishing with no bait.)

On a June 12th new USFL post ---shortly after Cuadra was gone ---  the new league leadership wrote, "When the league launches, it will play a 14-game regular season with eight teams..."  The 9 teams Cuadra mentioned --- minus his LA franchise --- would give the league 8 teams...

No NFL markets

The latest post explains the USFL leadership's logic behind not pursuing NFL or MLB cities.  I thought it was a reasonable post to put out to sway fan opinion, but their logic that NFL teams fulfill NFL cities "appetite for football" is simply not supported at all ---unless you evaluate this as a true minor league.

Look at the classic USFL which competed against the NFL for select players. 

The classic USFL's "A grade markets" for attendance (cities that averaged over 40,000 per game for at least one season) were New Jersey, Jacksonville, Tampa Bay, and Denver.  3 of the 4 were NFL cities.  Philadelphia, Houston, and Detroit were solid markets.  Detroit drew like 60,000 fans to their 1983 playoff game. 

Even the USFL's NFL markets that were not successful attendance draws were much better than most assume. 

Chicago drew the same numbers as Detroit and Philadelphia in year 1, but then their 12-6 all-star team was traded for PART of the worst team in the league  (4-14 Arizona).  That largely explains why the USFL failed in Chicago.  If the trade of teams doesn't happen, there is every reason to believe that the Chicago fan support would have rivaled that in Detroit and Philadelphia.

LA slightly outdrew that trio in year 1 with an 8-10, no-name team coached by CFL legend Hugh Campbell.  I think what happened in year two is that the season ticket holders from year 1 who sat in a stadium with 70,000 empty seats in year 1 were not as eager to renew as in other markets.   It is unnerving to sit in cavernous empty stadiums.  (In addition, the team was totally overhauled ---fans develop their favorite players... I wonder if LA fans felt like their new owner was spending the league out of business on unproven college players.)

Boston was simply a facility issue. They had the opposite problem as LA. Having a stadium that only seats 20,000 effectively guaranteed the 11-7 Breakers average attendance would top out in the 12-16K range as when you have potential sellout games, you only draw 18-20K.  They drew 12,817 on average.  With a better stadium situation in year two, the Breakers drew quite well in NFL city New Orleans.   In their only season there, they drew 30,557 per game even though the team crumbled under injuries to 8-10.

And the Federals were just bad timing.  They offered a lousy team (tied for the league's worst record at 4-14) to DC fans against vs. a Redskins team at the height of their popularity that happened to be dominating the NFL. 

Are you really telling me the new USFL doesn't need markets where they can potentially draw 40,000 plus per game in short order?

The idea that all NFL cities would have "football fatigue" is just not supported at all by classic USFL numbers.  It appears to be bad logic coated in a reasonable (but wrong) premise.

Now if you want to compare it to a true minor league offering that sells itself that way --- say UFL or WLAF --- well, OK, you get no argument from me. 

San Francisco is a perfect example.  The XFL said they were going to compete with the NFL and marketed the crap out of essentially the same caliber of league the new USFL is building.  The SF Demons averaged 34,954.

The UFL on the other hand chucked any illusion of competing against the NFL for a minor league brand far before their first season.  The UFL's California Redwoods drew an average of about 6500. Now certainly from a marketing perspective the UFL did almost nothing right, but the attendance is what it is. 6500 is an embarrassing number.  It is a striking difference.

The XFL drew over 22K a game to Las Vegas, the UFL's Locos drew 14,000 in their best season average.  The XFL's Orlando Rage drew over 25K a game, the UFL's Tuskers drew 11K in their best season.

The WLAF had attendance around 25K a game in their two years in existence, but their fans support was far, far stronger outside the US than inside.  And that was with the NFL brand backing them and marketing their league.

The WLAF was seen as minor league in the US and drew minor league numbers.   For this reason, the NFL pulled the plug on the WLAF after two years and then revamped the WLAF into a foreign market venture.

The Orlando Thunder was a relatively successful American WLAF football team but they only drew 16-17K a game.  The Sacramento Surge was run by an out and out great owner, but they only drew about 20K.  Really the only strongly attended WLAF team was the no-brainer --- the NY/New Jersey Knights --- who averaged over 30K a game. (Football fatigue in NFL cities? Please.)

Minor league US football will not fund the travel, stadium costs, 45+ player rosters, football coaching staffs, and all the front office personnel that is required.

The whole concept of non-competitive minor league football just sucks.

When the UFL opened I (rather impolitely) wrote at the time that if a bunch of millionaires want to light some money on fire they should just call me and I'll do it.  (I know.  That was not a very nice thing to say. I was horribly frustrated with their business plan.)

What is the point of pouring millions of dollars into starting a league no one will see?  If just doing it is the point, what is the difference between making up imaginary teams and game results and posting the results?

Minor league offerings are bush league.

It isn't just NFL cities that will balk at supporting minor league teams. Big city fans do not support bush league ball.

Think about it.  Why doesn't anyone ESPN pay big money for FCS content?  Because it is minor league college football mostly played in small rural towns.

Why don't FCS schools like Villanova (Philadelphia), Portland State, Sacramento State draw big crowds? (For that reason, why don't lower level FBS schools in big markets like SMU, UNT, Temple, Houston, and Rice?) Why don't schools like Boston U and UT  Arlington play football at all anymore? Because big cities do not support small time football at the required support levels.

That is why FCS success stories (Montana, Montana State, the Dakotas) are almost without fail located in small towns in small media markets where there is almost no other competition for fan sports dollars.

Certainly the new USFL can load up on markets like the UFL's Omaha and draw 16-20K averages, but there won't be any significant TV revenue supporting the venture.

The only thing that happens by choosing smaller markets is that you get a league no one wants to watch on TV.  More than anything else, that killed the UFL.

To me, the new USFL appears to be surrendering a lot of useful TV revenue for no reason by selecting these markets.

Given that path, I am frankly still not very excited by their chances.

In my opinion, the NFL is the most vulnerable to a competing league that it has been since the days of the classic USFL. (While I don't do marketing as my source of income anymore, I do want a league to compete with the NFL long term.  If the new USFL wants to hire me as a consultant, I'll get off my ass and put all my supporting arguments for this contention into a powerpoint.)

But that is vs. a competing league.  IMO a second "real" football league would have to compete to survive.  The true football as a business model simply dictates it.  There is too much cost involved.

Guys if you don't have the money to compete at a higher level than the UFL, do yourselves a favor and start an arena football league instead.  Your attendance will be the same or maybe even better and your costs will be far, far lower.  At least there your money (and enjoyment) will last quite a bit longer.

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