Sports Business July 31, 2009, 7:05PM EST

The United Football League's Game Plan

Bill Hambrecht, AOL Chairman Tim Armstrong, and other wealthy investors say they want the UFL to be Off Broadway to the NFL's Broadway

Story Tools

Despite decades of failures to challenge the National Football League's lock on professional football, a new league is stepping onto the gridiron. Come October the United Football League (UFL) will kick off its premiere season with four teams playing six games in seven cities. Its championship game will be held the day after Thanksgiving in Las Vegas—perhaps a fitting venue, considering that a string of football league startups have proved a bad bet since the American Football League's success in bidding for talent prompted the NFL to merge with it in 1970.

The new league was founded in 2007 by Bill Hambrecht, founder and CEO of San Francisco-based financial-services firm WR Hambrecht. Investors include several high-profile executives: AOL (TWX) Chairman and CEO Tim Armstrong; Paul Pelosi, a financial-services executive in San Francisco and husband of U.S. House Speaker Nancy Pelosi; and Bill Mayer, co-founder of Park Avenue Equity Partners, a New York private equity firm. Hambrecht and Armstrong provided an initial $20 million, and Mayer, Pelosi, and a group of unnamed investors followed with $30 million. In total the league says it has secured $70 million and a national broadcast contract with Comcast's (CMCSA) Versus cable sports network. The UFL has a two-year contract with Versus, says Mayer, lead owner of the New York franchise.

To control costs, the United Football League is starting small, with franchises in New York, Orlando, Las Vegas, and San Francisco. Teams will share practice facilities in Vero Beach, Fla., and Casa Grande, Ariz. They will also share stadiums with other teams and have a salary cap of roughly $6 million. The average UFL ticket price will be $20—less than a third of the average $72.20 football fans shelled out for National Football League tickets last season.

Starting Small, with a Prudent Business Plan

UFL management is undaunted by the sport's business track record, the latest casualty occurring when the indoor Arena Football League canceled its 2009 season and cut two of its 17 franchises. Arena Football is planning a comeback in 2010. Arena's move marks the fourth time a league has been sidelined in the past two decades. The XFL flamed out in 2001 after only one season despite the efforts of Vince McMahon, chairman of World Wrestling Entertainment (WWE), to brand it as a tougher, more volatile league. From 1983-85, the United States Football League gained some traction by fielding such future NFL stars as Herschel Walker, Jim Kelly, and Steve Young. The upstart league essentially bankrupted itself after a minority group of owners, led by New Jersey Generals owner Donald Trump, filed an antitrust suit against the NFL in a failed attempt to force a merger. Even the NFL's own development league, NFL Europa, shut down in 2007 after 16 years in business.

UFL Commissioner Mike Huyghue says he would like to see a UFL/NFL relationship evolve along the lines of Broadway and Off Broadway theater, where the hierarchy is well-established but talent flows between the two. Huyghue says the league's strategy is to run a sound operation instead of trying to upstage the NFL by offering players huge contracts or watering down the football experience with gimmicks.

"We built the league so it's run like a business," says Huyghue.