Pretend, refreshingly, that it is 2019. You are a football coach. Perhaps you are unemployed, or a coordinator looking for your next step. You get an interesting call — it’s not the NFL, but a quixotic billionaire with his own upstart league. He wants to pay well for your services, maybe even sweetening the pot with a salary guarantee.
You might be reasonably inclined to take that job, as some big names surely were — Bob Stoops, Kevin Gilbride, Marc Trestman — when the XFL knocked. But with the league now broke and belly-up, these coaches and five others find themselves, collectively, owed millions.
So how much of that cash can they expect to see?
The answer lies in the process initiated by the XFL’s Chapter 11 filing last week, said Gary Leibowitz, a sports attorney and NFL agent.
In the coming months the league will sell whatever of its assets remain — both intellectual property and inventory, such as equipment — with proceeds from those sales chipping away at its outstanding debt.
“I would say it’s a pretty amicable start for a Chapter 11,” said Leibowitz, noting that he represents players who chose to avoid the now-defunct league, signing instead with the less volatile CFL.
The XFL notably diverged from the federated ownership systems of more established leagues, opting to own its franchises outright — a model that offers monarchical cohesion when things go well, and nightmarish liabilities when things go poorly.
Things went poorly. The sums now owed to each of the XFL’s eight coaches — salaries which may have been guaranteed prior to the filing — range from $583,000 to $1.08 million for Stoops, the Oklahoma stalwart who came out of retirement to helm the league’s Dallas Renegades.
In all, the company owes its coaches nearly $5 million, and it lists even deeper arrears to a handful of production companies, marketing firms, arenas, and ticketing agencies. Earnings from the XFL’s liquidation would be distributed among all of these groups pro rata, with each receiving a payout based on the amount they are owed relative to the league’s total debt.
But none will see a penny until Vince McMahon gets his money first.
Before payments go out to so-called unsecured creditors, such as coaches and production contractors, bankruptcy code dictates that secured creditors — McMahon, solely, in this case — must first be paid in full, or agree to a reduced take, Leibowitz said.
McMahon has repeatedly pumped millions into his flopped football venture, putting up an initial stack of cash to reboot the league a year ago, nearly two decades after its first failure. The pro-wrestling baron most recently floated the company a $7 million injection as it faltered against coronavirus shutdowns.
The XFL’s bankruptcy process will likely stretch into the fall.
“By October, November, I would expect the liquidations to be consummated, and the first distributions to unsecured creditors to be paid,” Leibowitz said.
As for how much the league, and its coaches, can expect to recoup from the fire sale?
Still too early to tell.