Are You Ready for Some More Football?

Oh, man, not another football league! Dutch-auction IPO pioneer Bill Hambrecht and Google (NASDAQ:GOOG) executive Tim Armstrong are bankrolling the new United Football League. It's a long shot -- or a Hail Mary, for those who like their metaphors peppered with gridiron references -- but believers are starting to come around.

Always-opinionated Dallas Mavericks owner Mark Cuban chimed in this week with the reasons why he considers the National Football League currently vulnerable to the UFL:

• The demand for quality football is there.
• The monopolistic NFL needs competition, to shake off the feds.
• The NFL's collective bargaining agreement forces teams to overpay their stars, with little money left for non-starters. That opens up the talent pool of mid-tier players for the UFL.
• Many major markets -- like Los Angeles, Orlando, and Las Vegas -- don't have teams.
• Cuban feels that there are a lot of sharp minds at work in the UFL.
• Football is a great television product.

Cuban is so convinced that the UFL has a shot that he's become the first prospective owner to announce his intentions to run a UFL team.

As always, Cuban makes plenty of great points. Unfortunately, his memory isn't as deep as his stock portfolio.

Here's where you pull the guard
The UFL isn't the first league to think it could hit at the NFL's weak spots. The USFL made a big splash in the early 1980s, signing some of the game's biggest stars, like Herschel Walker, Jim Kelly, and Doug Flutie. The league folded in just three seasons.

The XFL didn't even make it that long, barely limping through its only season in 2001. World Wrestling Entertainment (NYSE:WWE) figured it would learn from the USFL's mistakes. It locked up television rights with a desperate NBC. True to its wrestling roots, it stocked the teams with titillating cheerleaders and gave them plenty of in-game screen time.

The leagues had their hearts in the right place. Many of their innovations -- like the on-field XFL SkyCams and USFL's instant replay challenges and two-point conversions -- were eventually absorbed into the NFL bloodstream.

In an effort to displace the NFL or at least remain competitive, rival leagues actually wound up making the NFL even stronger. Let's see what new wrinkles will work their way into the NFL after the UFL breaks them in.

Delay of game
Cuban, Hambrecht, and Armstrong are forgetting that they're dealing with a much stronger NFL than the one that vanquished the XFL six years ago, rubbed out the USFL more than two decades ago, and ultimately swallowed the AFL nearly four decades ago.

Every subsequent incarnation of an anti-NFL league must face an NFL with fatter salary contracts (which is why the AFL was somewhat able to compete in the 1960s, the USFL was able to land a few stars in the 1980s, and the XFL was down to just Tommy Maddox in 2001).

Cuban indicates that the UFL can feast on NFL-caliber talent, but that's a pricier proposition with every passing year. The rookie minimum salary in the NFL this year is $285,000, but what first-year player who makes an NFL squad will throw it all away by running off to join an unproven league with limited payroll upside? So up the scale we go, with second-year NFL players guaranteed at least $360,000, third-year players making $435,000, and so on. How much can any upstart league truly afford to pay its players?

The NFL can compensate generously because of huge broadcasting contracts. That exposure fills up stadiums and pads salaries with endorsement deals. How do you compete with that cycle? The XFL had to offer a revenue-sharing deal to get NBC on board, and NBC still got burned. How far up the cable dial will the UFL need to go for coverage? How many years can UFL owners subsidize generous payrolls for a product with a historically short shelf life? If that's not a luxury, then the UFL's competition will really be arena football, not the NFL.

The NFL is the equivalent of eBay (NASDAQ:EBAY) in this situation. There may be cheaper auction sites out there, like Overstock.com (NASDAQ:OSTK), or free listing outlets, like Craigslist, but serious sellers know where the serious buyers are.

If there's a way to out-NFL the NFL at its own game, don't you think someone would have come up with the better mousetrap by now? As a football fan, there's nothing I'd love more than to see the new league work. Unfortunately, I'm a realist. Cuban's reasons why the UFL will work are also the same reasons why it won't:

• The demand for quality football is there ... but the talent gap has widened with every new league.
• The monopolistic NFL needs competition ... but it won't get it from another major indoor football league that just happens to play outdoors.
• The NFL's collective bargaining agreement forces teams to overpay its stars, with little money left for non-starters ... yet the UFL likely won't be able to afford even the NFL practice-squad rosters.
• Many major markets -- like Los Angeles, Orlando, and Las Vegas -- don't have teams ... yet these same markets couldn't support the XFL in 2001.
• Cuban feels that there are a lot of sharp minds at work in the UFL ... but brilliance is no match for logic.
• Football is a great television product ... but NBC's 2001 books indicate that's not always a sure path to profits.

Good luck with the Hail Mary, UFL. Let's hope the line gives you enough time to heave the ball deep into the end zone.

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Longtime Fool contributor Rick Munarriz will admit to watching a few XFL games, but wonders why his local MIFL Miami Vice Squad can't seem to get on the field. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool's disclosure policy has no salary cap.