The giant sports entertainment promoter and one-time pro-wrestling monopoly, World Wrestling Entertainment (WWE.NYSE), hit hard times this past week, as senior management positions unexpectedly opened up just days before head honcho Vince McMahon steps sideways to take another shot at starting a new football league in the United States.
With McMahon committed to spending $500 million to his pet project, the revival of the Xtreme Football League (XFL), and with much of that capital having come from his selling of WWE stock over the last year, Co-Presidents George Barrios and Michelle Wilson announced Friday they’d be leaving the company, effective immediately.
Onlookers are, properly, assuming the WWE management exits and the XFL restart are connected.
That news saw WWE stock drop 20% as various analysts downgraded their outlook on the company, a drop big enough to warrant headlines even before taking into consideration that WWE stock has dropped by around 40% year over year. Facing new competition from independent and fledgling wrestling promotions, and with revenues expected to be on the low end of earnings forecasts, the WWE hasn’t faced this much headwind since the steroid saga of the 1990’s.
Though wrestling may not be everyone’s cup of team, it’s important to remember that WWE is in actual fact a media content creation and live events company, which puts it in the same business as the NFL, E-sports, Netflix, the UFC, and Disney. Bums on seats is big business right now as various streaming giants combat each other in the hunt for eyeballs and subscription dollars. That makes the WWE a very big deal, and a 20% price drop something that could be a harbinger of doom or an investment opportunity.
At the current share price, WWE continues to be a $3.6 billion company, with solid ongoing revenues from TV, licensing, live events, and streaming, but wrestling has long been a fickle business that requires ongoing care and maintenance to avoid going stale quickly.
The collapse of Ted Turner’s WCW promotion in the early 2000’s, barely a year after it had bested WWE in the national TV ratings, came as a result of a single TV executive’s decision to take Turner Broadcasting in ‘another direction’, and an inability to find a replacement in quick time. Though the WWE now is far larger than it was in 2001, alternative promotions are surging as hipster nostalgia interest takes hold and the cartoony nature of the WWE product devolves into something closer to soap opera than sports.
The indie resurgence of wrestling can be seen in the rise of AEW, a 13-month-old promotion that already has a TV deal and drew over 10,000 fans to its first live event, and Smashing Pumpkins front man Billy Corgan’s purchase and re-launch of the National Wrestling Alliance (NWA), now a Youtube-streamed, shot for broadcast series that drew 600,000 viewers on its first episode.
In Vancouver alone this past few weeks, indie wrestling promoters have sold out local venues on four different occasions, including the 1,000 person capacity Commodore Ballroom, usually reserved for A-list touring bands. The increasingly high quality of minor league performers is contributing to the increase in interest, as is the edge local promotions can give to their shows that broadcast TV productions aren’t allowed to match.
I’m a wrestling fan from way back, and even spent a little time in my younger years as a touring ref on a wrestling show, so this resurgence is of special interest to me. While the WWE is still a money printer, it’s looking more precarious with every passing month, and with the demand for streamed content only getting higher as Netflix, Disney, Crave, Warner Bros, Youtube, and more fight for time in front of our eyes, the last thing the world leader in sports entertainment needs is its driving force of the last forty years going up against the NFL.
The fall has already been heavy and, like a powerbomb from the top rope to the concrete floor, the worst is yet to come.
— Chris Parry
