It's not good for a brand still trying to establish itself in a pretty inundated sports market. And it's not like the XFL was attracting massive crowds, either. This could be a huge blow to a league still in its infancy.
The other issues were the possibility of needing to move some teams to a new city in 2021. Losing players to the NFL etc doesn't help with continuity of any given roster. That was going to happen even without the 2020 cancellation of the season.
Fans want to see a core of stars on their team along with some roster stability. Many XFL players were older multi season NFL players. It's quite likely roster turnover in 2021 would be significant as " newer " ex NFL players were attracted to the XFL.
I guess we'll see if they return in 2021 and what changes happen. I won't hold my breath.