The potential for an XFL-CFL merger is genuine, according to inside sources. Here’s what the potential deal would bring for both leagues.

There is the potential for an XFL-CFL merger, according to inside sources around both teams. Talks have been ongoing over the last several weeks, although nothing is finalized.

Mike Mitchell, a Fansided contributor, reported on the XFL Markcast podcast that the agreement would detail an umbrella-style business. Both businesses would operate independently but would fall under the same ownership and could share in sponsorship deals.

Mitchell isn’t just a Fansided writer. He covers the XFL on xflnewshub.com and the CFL on cflnewshub.com. He’s a respected insider who has covered both leagues phenomenally over his writing career. His scoops are always on point.

“I will know more in the coming weeks as I continue to communicate with people up the ladder in both leagues,” Mitchell told me. “It hasn’t been easy navigating these waters with everyone under Non-Disclosure Agreements.”

“Although the full details are still a work in progress and not yet confirmed or finalized, the name ‘NewCo,’ a generic name typically used as a stand-in by most companies intending to have a combined entity, seems to provide the most vital clue since March to where the XFL and CFL could be headed together in the future.”

The XFL’s ownership

Currently, the XFL is owned by RedBird Capital, a private investment firm that owns several key sports companies, founded in 2014. They own Yankees Entertainment and Sports (YES) Network, which airs New York Yankees baseball games, Fenway Sports Group, and OneTeam. They currently manage $4.5B in assets.

Gerry Cardinale, a billionaire investor, founded RedBird Capital. Cardinale made his fortune with Goldman Sachs in New York and founding YES Network in 2001. Once he started his own investment firm, he became a gold toucher in the stock market.

RedBird Capital purchased the XFL in August of 2020, in part with Dany Garcia and Dwayne “The Rock” Johnson. The Trio purchased the league and its assets for $15M. Clearly, RedBird Capital believes that it can make money on the XFL product.

The XFL hired longtime ESPN producer, Jay Rothman

Obviously, the XFL had a potentially good product. The ratings that they produced across ESPN and FOX Sports networks were all favorable. They recently hired Jay Rothman to a production and an advisory role directly for the XFL. His career includes 33 years at ESPN, where he won multiple Emmy Awards, working with the highest levels of football. He was the executive producer of the NFL Draft and Monday Night Football from 2001 to 2020.

RedBird isn’t afraid to go out and make big hires to bolster the presence of the league. Clearly, they believe that they have a potentially excellent product.

One of the great things that the XFL did with its broadcasts in 2020 was the raw openness of the games. Referees were live, and conversations between them and the booth could be heard. Listening to coaches call plays, and the microphones on the field proved to make it an enjoyable product.

The CFL is struggling for money

When the CFL canceled its 2020 season due to Covid-19, the league lost a tremendous amount of money that has struggled to keep the league afloat. In fact, they are going to lose money if the 2021 season is played. The question that remains for the league is just how little money they can lose.

The biggest issue that the league has had is the fact that the Canadian government has failed to produce any loans to help their business. The Canadian government has paid businesses across the country in interest-free loans as pandemic relief. However, they could not agree to a loan to pay to the CFL, asking for $30M on top of the $10M that they received in wage subsidy.

This would be why the CFL would be looking to potentially merge with the XFL – to combine forces with RedBird Capital and play the 2021 season and beyond. They’ve already been forced to postpone their season start once, moving to August 5th, and covid regulations in Canada may push that back even further. Rumors have been that the CFL won’t play either their 2021 or 2022 seasons – and that would be devastating to the CFL.

The potential holdups

Each CFL team is owned individually, not holding an overall owner. Six of the teams are independently owned, while three franchises are publicly owned. Therefore, it could be challenging for the leagues to merge completely.

It sounds like the leagues are looking to run an umbrella-business structure. The overall “ownership” would go to RedBird Capital, but each league would run individually. This could potentially allow the CFL to retain ownership of the individual franchises but pay out a percentage of profits to RedBird for financing the league.

RedBird might not see as great of a product as the XFL too. The amount of money that they are willing to invest could be substantially less than the CFL wants. If that is the case, then a hold-up is completely understandable.

What you can expect from an XFL-CFL merger

Because of the nature of this venture, I wouldn’t expect there to be XFL vs. CFL games. I don’t believe there will be a shared rulebook or any real competitiveness between both leagues. Rather, I believe that the merger would be strictly for business while the leagues would operate normally.

Mitchell told the XFL Show that a merger would mean sharing everything. “What would come from that is sharing in marketing and promotion, TV deals, streaming deals. Everything.”

Can we expect this merger to be finalized? Maybe not, as details have been so short to come forward. The lack of production towards this deal since it was announced as a possibility in February certainly indicates that it could not happen. The CFL does have a history of franchises struggling to make money in the past. Poor ownership and poor decision-making have led to that.

It all depends on what RedBird Capitol see’s in the potential of the CFL. We will see what that vision is.