After returning to last year’s list following a hiatus that stretched back to the early 2000s, today we learned Vince McMahon wasn’t on Forbes’ 2015 list of The World’s Billionaires. It shouldn’t really come as a surprise if you review WWE’s financial struggles in 2014 coupled with where the company’s stock was when last year’s list was compiled.
If we take a look at WWE’s stock from January ‘11 all the way through October ‘13 the price mostly hovers between $8-12/share. Starting towards the end of November ‘13 there was a steady climb over $14/share, peaking at an impressive $31/share as of March 20th, 2014. This steady ascent was likely due to several factors (in no particular order): the WWE Network promotion and eventual launch (2/24/14), high hopes for WWE’s upcoming cable deal with NBCUniversal (signed 5/16/14), and the buzz about/revenue from WrestleMania 30 (4/6/14). That sound you hear is Daniel Bryan fans screaming in agony over the fact that he’s not headlining this year, too.
Everything looked to be headed in the right direction while their stock was going all brahma bull-y. The WWE hadn’t seen stock prices so high since The Attitude Era. What happened? Some would point to Lemelson Capital taking new stake in the company and subsequently blaming current executive management for failing to deliver. This is to be taken with a grain of salt as investment funds are largely profit-driven and getting rich quick was never an option. Neither was replacing Vince. To date Lemelson has now sold down to one share.
It’s also fair to say that the WWE Network has failed to meet expectations when you look at the reality of the numbers. Sure, they hit 1 million subscribers, but is that a realistically sustainable number considering there will likely be a precipitous drop after WrestleMania later this month? What was the true impact of #CancelWWENetwork started by, according to Vince, the “vocal minority” he thinks will still be glued to the television the next week? Is there enough content outside of NXT to keep the average or casual fan watching? How often can they afford to offer new subscribers a free month? I absolutely love WWE Network and have watched more hours of wrestling since signing up than I care to admit. There are countless hours of content (my preference is The Legends of Wrestling roundtables) for die-hards. What is the draw for the casual fan who doesn’t order every pay-per-view? It’s going to take something not currently on file to keep them subscribed and add another 300,000-400,000 subscribers needed to break even, globally?
The much-anticipated TV deal was met with Luger-like heat. The already inflated stock price plummeted almost 50% the day after the deal was announced and McMahon had lost almost $360 million by the time the bell rang on Wall Street. Hopes were that the domestic TV fee rights would be negotiated at 4-6 times what the final agreed-upon rate was. Another detriment of the contract is that it locked WWE into running Monday Night Raw as a three hour show; a format adopted in July 2012 and many say contributes to its current diluted, choppy feel. Every week they have to produce the equivalent of a live movie. Not an easy task for any writing team. Anytime you are talking about these types of financial loses there is going to be fallout. Unfortunately WWE had to lay off 7% of their staff in 2014.
This is the most exciting time of the year in the world of Sports Entertainment. We’ll see how WrestleMania sets the tone for the rest of the year. There are a lot of unanswered questions and we are only three weeks away. Does Brock stay? Will Samoa Joe make an appearance? Will they finally, for the love of all that is Hogan, turn Cena? One thing is for sure, Vince McMahon will keep doing what he thinks is “best for…” nope I can’t do it. Too easy.