Zennie62 on YouTube

Saturday, June 02, 2007

Why Bill Hambrecht and Mark Cuban's UFL - United Football League - Will Fail

Well, all I can say is "here we go again." A group of rich guys with egos -- no women involved here -- think that because they have enough money to start a football league, it will automatically work.

In the newest example, we have the to-be-called United Football League , or UFL. This is an idea started by San Francisco Bay Area investment banking maverick Bill Hambrick, who's firm WR Hambrick and Company I remember as Hambrick and Quist, and who employed a friend of mine from Skyline High School school, Marla Goldstein.

Ok, enough of that.

Hambrick managed to come up with this idea of the UFL and get Internet entrepreneur and Dallas Mavericks owner (funny, how the word mavericks comes up here more than once) to sign on as the first owner of a team. As I understand the UFL concept, they're going to establish cities in areas where the NFL does not have a team, and "compete" with the NFL for players that come out of college "lower than the second round."

OK. Here's the foundation upon which their failure will be based -- if they ever get enough owners to start an eight team league. The lessons of football league failure are captured in that business school case study called The XFL.

In fact, I created a system dynamics online simulation now called the XFL Simworld , and with Forio Business Simulations created a company around it called Sports Business Simulations .

The idea of the XFL Simworld is to make the right business decision to cause the XFL to last longer than the one year it did in reality.

What I've learned after countless hours and years of analysis, and design, and play and test and watching others run the sim is this: people watch people. What I mean in detail is that the XFL's biggest mistake was that it didn't have players people cared to watch. Mark Cuban's right about the "pent-up demand for football" but that doesn't mean anyone will come out and watch you and me play pro football.

What I learned from the XFL Simworld is that the XFL, and now the UFL, stand a better chance of survival if they hire recently retired or close to retiring NFL players and mix them with college players. Why? Because each of the NFL players close to ending their careers either by choice or for other reasons has their own brand name. For example, you know who Keyshawn Johnson is if you're even a causal fan of the game. But do you know who Jacoby Jones is?


See that's my point. Jacoby Jones is a wide receiver from tiny Lane College, drafted by the Houston Texans in the third round of the 2007 NFL Draft. That's one of the rounds Hambrecht and Cuban say they're going to "compete" with the NFL for players. That's great for the player and for the NFL, because the NFL doesn't have to worry about paying that player who may have dropped to the lower rounds for weird reasons more than a third round pick, and the player at least has another place to go, but don't think there's going to be a bidding war -- in fact, I predict the opposite.

The Jacoby Jones of the world may try to use the UFL as a negotiating ploy, and wind up not being signed by the NFL team. It's basic math -- there are more "third round level" players, than first round level players, so someone else who fell past the eyes of NFL scouts may look better in free agency than the third round pick using an upstart league to cause a bidding war. So Jacoby Jones goes to the UFL and gets the same money he would have earned as a third round pick by the Houston Texans. Fine, so he's happy. Meanwhile, the UFL gets a player no one ever heard of, and no one save for his family, friends, and the curious, will come out to see or turn on the TV to watch.

What Hambrecht and Cuban miss is that football is entertainment. The bottom line is to put people in seats at the stadium and have them watch on television. People follow names. They'd sooner watch a team with Keyshawn Johnson than one with Jacoby Jones. That's one big reason why the XFL failed; it lacked name NFL players to maintain TV ratings. Without them, XFL ratings dropped like a rock, and the league folded after NBC pulled from its commitment.

The UFL faces the same fate for that reason, and one more that's in a way related to the first problem I discuss. It's team location. In the XFL Simworld, the player has the option of having XFL teams in NFL cities, cities of the actual XFL, and warm weather cities. Which combination brings the best attendance? The Warm Weather Option, of course. This scenario was created based on the problems the real XFL faced in having constantly high attendance in all cities.

The best city for this in the XFL system was San Francisco, where the February through May climate was constantly mild, and never burdened with snow. Snow's a big deterent to the fortunes of a new football league hiring players no one has ever heard of. People don't buy tickets to teams that hire unknown players to play in cold weather.

Better to have a Southern Strategy.

With all of this, you'd think Bill Hambrecht and Mark Cuban would have thought more carefully before launching the UFL as a business. But they didn't, and I'm not surprised. There's one common element in all of these "new football league" cases -- ego. Someone always thinks they can clobber, outdo, take advantage of, or just plain be the next NFL. And in all cases, that never comes to pass. The UFL has all of the color of failure for that reason and the ones I gave above. What Hambrecht and Cuban should really do is work to start an NFL team to LA.

In other words, they're not going to beat the NFL, so they might as well join them.


Anonymous said...

I know who Jacoby Jones is...

Unknown said...

then again, there are people who read press reports and think they are an expert on someone else's businessplans...

i like our preparation better.


Anonymous said...

The NFL will not put a team in LA until they are absolutely forced to, because there is no incentive to do so. NFL Fans in SoCal will watch football whether they have a team or not, so the ratings are identical (by far the primary source of football revenue), LA had a lower avg attendance than smaller towns with less entertainment competition, and the city is far too big of a carrot for the NFL to let it stop. From now until eternity, any team in football can get a brand new stadium, simply by threatening to move to LA. I expect a new stadium for each franchise every 30 years as everyone uses this chance to bilk their hometown.

Zennie said...

Hey Dan,

Isn't that all the better reason to have an NFL team in LA? Also, aren't you forgetting the matter of how the stadium is designed?

In other words, what if it's part of an entertainment village, where people can live and shop?

digman1017 said...

The league will fail if they try compete with the NFL with a minor league. on the other hand it will succeed if they try to compliment the NFL with a new game of football that offers the public a fresh new football thrill. Check out www.capturefootball.com to see the future of stadium sports.

Anonymous said...

I'm in the business and I have been doing research on a new professional football league strategy. In my opinion their approach is completely wrong. But, as happens many times, if you throw enough money at it, it might stick.


Anonymous said...

I am in the sports entertainment business. My belief is that there would be great interest in another professional football league, if done correctly. The little that I know about the UFL leads me to believe that it will not be successful. But, then again, I've seen stranger things happen if enough money is thrown at it.

I have been developing a plan for a professional football league that I believe will be successful. The UFL is based on faulty premises that have failed in the past. What is it they say about the definition of crazy?

Another professional football league is feasible and would stand the test of time if done correctly.

Travis Cochran said...

I have to disagree with this article and I think that your own arguments agree with me. You say that, "What I learned from the XFL Simworld is that the XFL, and now the UFL, stand a better chance of survival if they hire recently retired or close to retiring NFL players and mix them with college players." Well...that's what the UFL is doing.

Take a look at the Las Vegas Locos. The Locos have Marcel Shipp, a marketable NFL player with a good career as an Arizona Cardinal. The Locos also had (before he was made available to the expansion draft)Casey Flair, popular receiver from the hometown college, UNLV. This mix of fresh talent and veteran work ethic led the Locos to a victory in the championship game of the Premiere Season.

This is the same mix that will lead to UFL cities falling in love with their franchises.

The UFL is here to stay and I am glad.

Visit the new Zennie62.com

Zennie62 blog net

Google Analytics Alternative