WWF Takes a Hit as It Enters the Football Arena - TheStreet

Updated from 10:37 a.m. EST

Shares of

World Wrestling Federation Entertainment

(WWFE)

got body slammed as the company took a leap from the wrestling ring to the not-so-frozen tundra.

The wildly successful "pro wrestling" league said Thursday that it planned to start a professional spring football league, to be called

XFL

, next February. Vince McMahon, chairman of the WWF, promised "football with attitude."

"The appetite for professional football continues long past the Super Bowl," McMahon said.

Both

Merrill Lynch

and

Wit Capital

downgraded WWF stock on the news. However, McMahon was unfazed. Said McMahon: "They can kiss my a--."

He added that he hoped investors would maintain confidence in the WWF's ability to build the XFL brand with the same success it has had in building its wrestling franchise.

WWF shares were down 3, or 19%, to 13 1/8 by midafternoon. (Shares closed down 4 3/16, or 25.4%, at 12 5/16.)

WWF officials distinguish this effort from other startup leagues that have failed in the past because of the marketing might, TV production expertise and merchandising experience WWF already has in place. "We have core competencies ... that no other startup league has ever had," said Basil V. DeVito Jr., president of new business development for WWF. DeVito will run the XFL on a day-to-day basis.

Brian McCarthy, a spokesman for the

National Football League

, declined to comment on the WWF's move.

The WWF, which raised around $170 million in its initial public offering last fall, will spend something "south of $100 million" to start up the league and expects the XFL to be profitable in three years, McMahon said. The company is not interested in partners to defray some of the cost, McMahon added. "We don't play well with others."

The league will roll out in eight cities, including New York, Los Angeles, Miami, Houston, Chicago and San Francisco, and will double the number of teams within five years. The league has signed leases for stadiums in L.A., Miami, Orlando, San Francisco and Washington and is closing in on a deal for a New York venue, DeVito said.

The XFL is in discussions with several potential broadcast and cable partners, DeVito said, and expects to announce its TV deals soon. TV scheduling of games will likely be for both weekends and primetime.

WWF executives said they hope to fill a void by offering football immediately following the Super Bowl to capitalize on the enormous publicity that game fetches, as well as fact that TV viewership is at its highest during February, a notoriously slow month for pro sports. "I personally think that figure skating s----," McMahon said, though he acknowledged the presence of both college and pro basketball and hockey as other winter sport competitors.

McMahon made no bones about the XFL's need to draw core NFL viewers but hopes to have appeal beyond that. "We're also looking to draw the younger audience that the NFL can't seem to attract." Much of the WWF's audience is comprised of young men.

The WWF has not ruled out eventually offering the XFL championship game on a pay-per-view basis, McMahon added. Many WWF events are made available only through pay per view.

Among the issues the league would face is the level of play. "The quality of play will not be NFL quality," said Seth Weber, analyst at

Merrill Lynch

, which helped manage WWF's IPO.

The WWF, which has made its wrestling popular by staging it, would also have to overcome doubts among football fans that the football games are not staged as well. McMahon rolled his eyes at questions regarding scripting of XFL outcomes. "This will be 100% sport."

Introducing a risky venture like a football league makes the future of the company's stock cloudy.

"It certainly makes the future less clear," said Jordan Rohan, analyst with

Wit Capital

, which assisted in the IPO as well. "The outcome of this is unpredictable." That said, the WWF does need to expand its brand beyond wrestling and its programming beyond the 7-9 hours it offers on the

UPN

and

USA

television networks, Rohan said. He downgraded WWF from outperform to venture.

Weber of Merrill Lynch downgraded his long-term rating on the WWF this morning from buy to accumulate. "They're better off focusing on wrestling," he said. "There are other ways you can extend the wrestling brand that would be a better return on investment."

At the same time, the WWF could have success turning its young male fans into football fans, Rohan noted.

WWF Smackdown

on UPN made ratings inroads into

Monday Night Football

broadcasts on

Walt Disney's

(DIS) - Get Report

ABC

last season.

TV partners, a must for the league's success, could obviously include UPN -- the WWF is responsible for 35-40% of the fledgling network's ratings -- and USA. Another possibility is

TNN

, Rohan said.

While other football leagues have started spring football, none has done so with nearly the success of the NFL. The

United States Football

made an ill-fated attempt in the 1980s. The WWF won't have the spring to itself; competitors include arena football, which is played indoors, and the NFL's

NFL Europe

.

After losing their rights to broadcasting NFL games two years ago,

NBC

and

Turner Network Television

flirted with the idea of starting a league of their own before abandoning those plans last year.