it would have worked if Vince thought things through past only having the WWF succeed.
Vince could have used ECW as a minor league/developmental federation. Similar to how he was doing anyway by sending his newly signed/fresh out the gym talent down to ECW and eventually calling them up to the WWF, he could have kept that formula working. In ECW, the talent could have worked on their cardio, basic wrestling, promo ability, basically, the basics, but at the same time, involve them in real situations to put on a show. When the talent is ready or have shown improvement in key areas, the talent relations/scouting department will send the "polished" talent to WCW.
In WCW, the talent now has to work on other skills, that ECW didn't improve on, like working with smaller wrestlers, getting the gimmick polished and/or overhauled, and those types of things. In WCW, you have to work harder and work with more established talent, who will bring the best out of the individual. In WCW, there will be chance encounters with WWF wrestlers who were not doing so well in the WWF and were relegated to WCW for more work. So WCW is the middle tier to make it to the WWF. Once a wrestler has improved in all key areas that the WWF desires in their talent, and the fans who watch the show are solidly behind this individual, the WWF snatches them up when the timing is right. If they fail in WCW, they either stay, or get relegated back to ECW, where if they don't show any more improvement, FUTURE ENDEAVOR them.
Once a talent has shined in WCW and they have built a fanbase, the WWF will bring them up to the top tier. The WWF could have been used as RAW is used, only the top talent work there. So if someone falls out of favor with the fans (X-Pac level), or they develop issues, or whatever it may be, they get relegated to WCW to work on those issues. And the trend continues up and down the tiers.
This could have been played out on TV, seeing the development and future stardom of the wrestlers, seeing them rise and fall. ECW could have been seen in smaller markets and updated on WCW and WWF TV, so the TV clearances and money shelled out for an inferior product would have been minimum. Then WCW would have gotten the same type of TV clearance as the WWF, but not focused on as much. The WWF would have been the place to be, as only the true stars of the industry played. Placing talent on the different levels would have been no problem, and there are an abundance of talent to place on each tier and shifting them around to hone their craft would have such a piece of cake. At least they could have observed everyone as they grew into stars or duds.
It was like that anyway, but Vince could have simply grasped the concept, controlled it better, and made out with 3 additional revenue streams. But his ego got in the way, and he elected to crush and put to rest everything that tested him and allowed his own product to become stale. But it worked out in his favor anyway because people still pack the shows and buy the merchandise. But if he kept 1 or both feds, he would have revenue, much more than what he's getting now.