A Potential WWE Sale Is an Existential Threat to the Wrestling Business
A Potential WWE Sale Is an Existential Threat to the Wrestling Business
Vince McMahon's return to the WWE Board spells trouble for the long-term health of not just the company, but the entire wrestling business.
Crossposted at The Duckpin.
During an angle in 2002 where Vince McMahon and Ric Flair were feuding, McMahon cut this promo:
The promo went like this:
"I'm not going to let Ric Flair kill what I created. Because...I'm going to kill what I created! I'm gonna KILL IT! I'm going to kill MY creation! I'm going to inject the WWF with a lethal dose of poison! If anybody's going to kill my creation, I'm going to do it. Me...and the nWo!".
So I ask you, is life now imitating art all these years later?
An SEC filing on Friday shows that Vince McMahon is now back on the board, along with Wilson and Berrios. Three people were removed from the board.
"Today, we announce that the founder of WWE, Vince McMahon, will be returning to the Board," said Chairwoman & Co-CEO Stephanie McMahon, Co-CEO Nick Khan and Chief Content Officer Paul Levesque in a statement released Friday. "We also welcome back Michelle Wilson and George Barrios to our Board of Directors. Together, we look forward to exploring all strategic alternatives to maximize shareholder value."
The board previously rebuffed an attempt from McMahon to return to the company, but he retains the majority of the voting power.
"WWE is entering a critical juncture in its history with the upcoming media rights negotiations coinciding with increased industry-wide demand for quality content and live events and with more companies seeking to own the intellectual property on their platforms," McMahon said Thursday.
McMahon’s return, at this critical juncture, creates problems for both the short and long-term future of the company and, to a point, the wrestling business as a whole.
Short-Term Problems
The immediate concern of WWE fans, myself included, was over the company's creative direction. Paul Levesque, better known as Triple H, took over as the head of creative following McMahon’s initial departure.
During Levesque’s time in management, he has reversed the creative direction McMahon was taking in quite a few areas, particularly regarding the developmental side. A lot of bad storylines were dropped. Pushes were altered. Bad angles were written-off TV. And influx of UK talent from NXT. GUNTHER and Ricochet have been pushed.
On top of it host of people returned to the company, like Johnny Gargano, Karrion Kross, Braun Strowman, Bray Wyatt, Dexter Lumis, and others. While some have been hits and some of have been misses, it really did change the talent pool that Levesque had to choose from.
So the immediate concern was the McMahon was going to come back and takeover creative which would further rock the apple cart. McMahon said in a statement upon his return:
"WWE has an exceptional management team in place," McMahon said, "and I do not intend for my return to have any impact on their roles, duties, or responsibilities."
If McMahon does take over creative, it would destabilize the product heading toward its most important time of the year, the build to Wrestlemania. Ratings would suffer and lower ratings which negatively impact the media deals that McMahon claims are so important to him and urgently required his return.
But that’s not the biggest long-term threat to the company.
Long-Term Threats
The biggest long-term threat to the company and to the business, frankly, would be the sale of WWE to an outside company.
One of the biggest advantages that WWE has always had is that the buck stopped with one guy, Vince McMahon. He ran the company and still is (obviously) its largest shareholder. McMahon did not have to jump through hoops to get things done if he wanted to change the creative direction of the product, or sign a talent, or spend money; he just did it.
But the company has retained JP Morgan to help with the potential sale of the company to a corporate investor. The most widely discussed potential buyers are companies with large media distribution footprints, including Comcast, Disney, Fox, or even……Warner Bros. Discovery.
Anyone who is familiar with WCW and the issues that Eric Bischoff has talked about with the corporate structure of Time Warner and getting things done can understand the risks that WWE would face as a product if sold to a large corporation.
Since WWE’s market cap is $6 billion, anybody with deep pockets could also jump in and make the purchase. Like, say, Shahid Khan, owner of the Jacksonville Jaguars and All Elite Wrestling. That would, truthfully, be better for the company in the long-run since it would allow the company to be run through one owner similar to how it has been run since it was the Capitol Wrestling Corporation seventy year ago.
But corporate ownership may not be the biggest threat to the company:
Saudi Arabia’s Public Investment Fund is emerging as a possible bidder for WWE if the promotion puts itself up for sale, sources told Front Office Sports.
PIF controls about $620 billion in assets. Vince McMahon’s sports entertainment company could be the next possible step in its global sports expansion.
WWE has a deep history with Saudi Arabia, holding its Crown Jewel, WWE Live, and Greatest Royal Rumble events there in recent years. WWE has a 10-year agreement to hold two live events per year in the Kingdom. The deal is worth $100 million a year to WWE, according to Wrestlenomics.
“In the same way they did LIV, there’s an unlimited faucet of dollars there,” LightShed Partners analyst Brandon Ross told Front Office Sports. “The Saudis are already a decent part of the profitability of the company just on those two [Saudi-based WWE] events alone. They’re trying to be relevant in the entertainment world.”
This creates a layer of problems for the WWE.
some of WWE’s top stars would undoubtedly free the company. John Cena, Sami Zayn, and Sand Kevin Owens are among the top WWE stars who have refused to work in Saudi Arabia. The Rock will likely not want to sully his brand in order to get in bed with the Saudis. The WWE would, undoubtedly, be a weaker company under Saudi ownership if only from the talent perspective.
It’s hard to imagine that WWE would be able to garner relevant media deals under Saudi ownership. LIV Golf, another Saudia Arabia Public Investment Fund Property, is currently airing on Facebook, YouTube, and DAZN despite having some of the most famous golfers in the world on their brand. Networks don’t want to be involved with a product that is involved in “sportswashing” Saudi money and the Saudi’s reputation.
The Existential Threat to The Business
Wrestling is a cyclical business. And notwithstanding the growth of All Elite Wrestling during its four years as a product, WWE remains the 800-pound gorilla when it comes to professional wrestling. It’s the name brand that gets the highest market share. But there is also a certain trickle-down success that happens when professional wrestling is on TV and getting good to decent ratings.
Basically, the better WWE does, the better other wrestling companies do. A rising tide that truly lifts all boats.
It is not hard to imagine a future where the WWE is off American network television under Saudi ownership. If the WWE is off of television, AEW’s ratings will suffer as new fans are unable to be created. If new fans aren’t created, they won’t go to indy shows, they won’t train to become wrestlers, and the business dies a long, drawn-out death as companies go under across the country.
Under that scenario, only a strong AEW would be able to keep the entire business afloat. Right now, AEW is not in a position to do that. Their ratings are good, but not great; they do not have the lineage, the resources, or the television deals to make a run at being the #1 company right now. While that *could* change with WWE being sold to the Saudis and losing their NBCUniversal and FOX deals, it would take a lot of promotion and an influx of certain WWE talents i.e. John Cena to make that happen.
It’s Still All An IF.
The idea of WWE sold is still, frankly, a big if. IF the company gets sold and IF a corporate owner takes over. Or IF the company gets sold and IF it is sold to the Saudis. I won’t be convinced that Vince McMahon will ever sell the company until he actually sells the thing.
But no matter what, a potential sale of WWE will send shockwaves across the entire industry, from Titan Tower itself all the way down to the smallest of indy promotions.