Beginning or end -- What went wrong in WUSA?

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By Scott French, Soccer America

The WUSA, unable to meet sponsorship goals, suspended operations, but the response to the league's demise, in the backdrop of the Women's World Cup, sparked optimism that women's pro soccer could resume in some form next spring.

When the end, as it were, finally arrived, there were expressions of shock among the WUSA's corps of players, executives and front-office employees, but the surprise wasn't that the world's best women's league was finished, just that it was finished now.

A business plan built on unrealistic expectations finally crumpled around the Women's United Soccer Association, forcing a suspension of operations -- the first step in a dissolution process expected to be completed next spring -- just six days before the U.S. women's national team opened defense of its Women's World Cup title.

The timing was either brilliant or horrible, maybe a little of both.

WUSA officials had hoped the fourth edition of the women's championships would shine a spotlight on their enterprise and lure desperately needed dollars from investors and sponsors. Turned out the desperation was far worse than anyone imagined.

After watching more than $100 million of investment capital disappear in less than four years, the WUSA's board of governors unanimously voted to pull the plug when it became clear that a projected annual budget shortfall of $16 million could not, would not, be closed.

The league had identified, heading into the 2002 season, the need to locate eight companies, each willing to part with $2.5 million a year for exclusive sponsorship rights within certain categories, such as sports apparel, beverages, fast food, automobiles and so forth. Officials had figured they'd have four on board by the end of the year and another four signed up by the conclusion of the third season this summer. Only two -- Hyundai and Johnson & Johnson -- had signed up, both promising $2 million a year.

"We didn't see any immediate impact that could bridge the funding problem," said John S. Hendricks, the league founder and chairman of the board of governors. "We tried as a last resort to look around the country to see if there were any alliances that we could make ... piggyback on the infrastructure of other sports teams [and leagues]. That was just too challenging. There were very few opportunities where we could tackle this."

The death knell, although Hendricks and others within the league denied it, appeared to arrive when Anschutz Entertainment Group, the primary benefactor of Major League Soccer, passed at the start of September on investing in the league. The WUSA, which had a by-turns contentious and cooperative relationship with MLS, had been in talks with AEG chief executive officer Tim Leiweke most of 2003. Many in American soccer had figured that Philip Anschutz, AEG's multibillionaire leader, would play WUSA savior should the need arrive.

When it did arrive, Anschutz balked.

Who could blame him? The WUSA bled money from the start, going through its $40 million initial investment -- meant to last five years - in its inaugural season. Investors were hit up for funds twice more, for $20 million at the end of 2001 and $40 million six months later. By the start of 2003, Hendricks said, "it was clear we were running out of finances."

Two investors, Time Warner (which operated the New York Power and Carolina Courage) and Comcast Cable (operator of the Philadelphia Charge), were prepared to bail when the third season ended with the Washington Freedom's Founders Cup title on Aug. 24.

"In August, it was pretty critical, getting down to running out of [money]," Hendricks said. In the days before the Sept. 15 announcement, "we were in jeopardy that if we didn't shut down, we would not have a good [employee] severance plan, and it would likely force us into bankruptcy."

FAULTY PREMISE. The WUSA was doomed from the start. Hendricks, who made his fortune with Discovery Communications, had fallen in love with the U.S. women's team at the 1996 Olympics, and the fabulously successful 1999 Women's World Cup convinced him that a women's soccer league could be a success in America.

Other cable-television executives, most notably cable pioneer (and billionaire) Amos B. Hostetter Jr., joined Hendricks. None had a background in soccer, and most saw the WUSA as little more than programming for their primary businesses.

They predicted 2.0 television ratings -- the 2003 season earned an average 0.1 rating on the nearly unknown PAX network -- and proclaimed they would break even with an average attendance of 6,500 paying $12.50 per ticket.

Such crowds did materialize -- Hendricks said another 16,000 per game would be needed to solve the WUSA's money problems -- but the expected sponsorship dollars did not. Start-up costs were far greater than expected, and bloated league and team staffs ate up funds. Player salaries, as high as $80,000 and $85,000 for the "founding" players -- members of the '99 U.S. team, some of whom were in no way deserving of such pay -- added to the expense.

A poor economy helped doom efforts to lure sponsors, but assumptions about the market's love affair with Mia, Brandi and Co. were way off target.

"I was intoxicated by what I witnessed during the '99 World Cup, and all the sponsors surrounding that event," Hendricks admitted. "I mistakenly assumed [such support would] flow over to the league."

By Year 2, the league had slashed staff and moved its headquarters from New York to investor Cox Enterprises' Atlanta offices, where it could siphon off Cox's resources. Expenses were cut considerably, and, at the 2002 season's end, officials declared that sponsorship revenues were rising and profitability was four or five years away.

That was far from the truth, and word leaked out that Time Warner and Comcast wanted to sever their relationships with the league. Difficulties finding investors to replace them led to fears, even expectations, that the WUSA was failing, although most observers thought a fourth season -- but not a fifth -- was a certainty.

Expenses were cut further in 2003, with roster sizes and player salaries trimmed considerably, but there was little in the business plan, or in the league's economic history, to entice CEOs to part with cash.

Women's professional team sports have long struggled to draw an audience or economic support in a congested American sports scene, and the idea that investors and sponsors should support women's sports because it is "the right thing to do" does not reflect the realities of the marketplace.

Nike, a longtime soccer supporter (which made Mia Hamm a wealthy woman), paid $90 million to then-high school basketball star LeBron James, but it has resisted repeated efforts by the WUSA to increase its support of the league beyond outfitting three teams.

"It's a discouraging thing to read about huge deals to sponsor one athlete, in the tens of millions of dollars," Hendricks said. "Some minor NFL stars sign $2.5 million deals. Why not do one less shoe deal and spread that $2.5 million to 160 players, support women's professional soccer and allow little girls the chance to dream that maybe they can play professional sports. That's something all of us guys got -- [professional sports] was always a dream, regardless of whether we could do it."

THE FUTURE. Hendricks said the decision to announce the WUSA's suspension of operations was all about avoiding bankruptcy, providing employees a decent severance package and enabling players to figure out the next steps in their lives. It was not, he said, a last-ditch ploy to convince prospective sponsors that the league would die unless they stepped up immediately.

Within hours of the announcement, such support was beginning to materialize.

"People are coming out of the woodwork," reported U.S. national team captain Julie Foudy, a member of the board of governors.

The league passed on its intellectual property rights -- names, logos and such -- to the Players Association, whose chief, John Langel, is heading a committee that is working to revamp the league's business plan and work with potential sponsors to create viable packages.

The committee includes Hendricks and Hostetter, two team general managers (Boston's Joe Cummings and San Jose's Marlene Bjornsrud), two league vice presidents (Thom Meredith and Kerry Tatlock), Foudy and Carolina defender Carla Overbeck, women's sports advocates Billie Jean King and Donna Lopiano and, Langel said, "a representative of a major sports sponsor that hasn't been a big WUSA sponsor."

Among those contacting the league about sponsorship, Langel said, were a financial institution and a shoe/apparel company. Hendricks identified another as a furniture manufacturer and retailer.

"We're hearing words," Langel said, "but we need to hear complete sentences."

If such interest leads to sponsorship deals, the WUSA could be back in business next spring or in 2005. Competition options for next year include full and shortened seasons, a barnstorming tour and a six-week tournament in which matches would be played in one venue or in a series of venues.

Hendricks said the league could go -- as a new entity -- even if the entire $16 million gap is not closed. Any new business plan is expected to mandate far less expense, and investors and sponsors, he said, were receptive to being involved if the deficits were in the range of $500,000 to $600,000 per team, about $4 million to $4.8 million total.

"If eight sponsors surface, and [sponsorships] did sell quickly," he said, "we could relaunch without missing a beat."

Scott French is a senior editor at Soccer America magazine.