Last year was World Wrestling Entertainment Inc.’s biggest ever for revenue ($1.09 billion) and profit ($180 million), but wrestler Shane “Slapjack” Thorne was worrying about something more pressing: His next paycheck.
Let go in mid-November, Thorne was among approximately 100 wrestlers shed by WWE in the past 12 months, moves that made 2021 a moneymaking success for WWE
chief Vincent K. McMahon and a select few family members and executives.
“Out of sight, out of mind. It’s hard to get bookings. This is a bit of a gap year,” said Thorne, who is bouncing about the independent wrestling circuit in the U.S. and Japan. “Doing indie shows, you work a lot, lot harder to get paid a fraction of what you got at WWE. I am saving every dime, so I don’t end up as ‘Randy the Ram’ [the fictional character from the movie, ‘The Wrestler’].”
The maximum-profit strategy has come at a cost. A diminished roster and less-than-inspiring story lines have cratered TV ratings on Monday Night Raw to an average 1.7 million from 5 million a decade ago. Attendance figures are down, as a two-year-old pandemic and repetitive matches kept fans away. Morale among many of the remaining ranks is unsettled, say current and former employees interviewed by MarketWatch. Meanwhile, rival organization All Elite Wrestling is WWE’s most serious competition in more than 20 years, as rumors swirl in wrestling circles about whether WWE could be on the block.
“It has the surface look of cleaning up the books for a sale,” Scott D’Amore, executive vice president of Impact Wrestling, a rival wrestling circuit, told MarketWatch. “Those are certainly the moves you would make.”
The WWE did not respond to multiple email and voice messages for comment on this story. But a top executive left all options open in regards to a possible sale in an interview last year.
“We’re open for business on anything and everything, and even some of the business plans that we’ve announced recently, I think, are different or unique to what the company has traditionally done,” Nick Khan, WWE’s president, said on the Recode Media podcast in August 2021. “So we’re open for business. If somebody calls, we’ll listen, but we’re not active. We’re not out in the marketplace trying to change that structure.”
Khan’s comment immediately sparked a parlor game in pro wrestling circles on the fate of WWE. Does it end a decadeslong ownership by the McMahon family and end up becoming a property of Walt Disney Co.
or a group led by Dwayne “The Rock” Johnson? Or does it remain in the hands of Mr. McMahon as he grapples with uncertainties about the future?
Wrestlemania, the industry’s equivalent of the Super Bowl that took place in Arlington, Texas, last weekend, was a testament to a wheezing product and stagnant story lines. Steve Austin, 57, who had not wrestled in 19 years, brawled with Kevin Owens in Saturday’s main event. “Jackass” star Johnny Knoxville knocked heads with Sami Zayn in an “anything goes” match. Social media personality Logan Paul teamed with The Miz to beat the Mysterios. The 76-year-old McMahon even tussled with podcaster Pat McAfee before Austin used his signature “stunner” move on McMahon (those two combatants’ combined age: 133).
“They were throwing everything at the wall” to fill 100,000-seat AT&T Stadium in Arlington, Texas, for two nights, Mike Johnson, a writer for PWInsider, told MarketWatch. WWE claimed ticket sales of more than 70,000 each night, though pro wrestling observers were skeptical the crowds were that large.
The road to Wrestlemania was strewn with record quarterly results and belt tightening that used to come in the dreaded annual “spring cleaning” of older talent (wrestlers) after the big show. Over the past year, however, staff cutbacks came every few months, suggesting a short-term strategy of streamlining operations for a possible sale or simply boosting a stock price that, at $62.42 a share as of Wednesday’s close, is 35% below a historic high of $96.73 in June 2018. Lucrative TV deals and a streaming arrangement with Comcast’s Peacock have only increased WWE’s reliance on its media business and less on in-person house shows and pay-per-view events.
McMahon has directed a lot of the cash generated by WWE to shareholders, like himself. Last year, WWE spent $165 million on stock buybacks, repurchasing a record 3.3 million shares, securities filings show. The company also made $36.4 million of dividend payments as part of a payout program that has been going on for years, with more than a third of the dividend cash going to the McMahon family every year, based on their ownership stake.
To the outside observer, it would appear McMahon — who created the modern-day national wrestling promotion — is milking a legacy business. Through a front-loaded TV deal and ongoing cutbacks, WWE was able to squeeze out a banner 2021 financial year despite a decline in virtually every other metric (ticket sales, social media engagement, TV ratings). Wall Street analysts still expect WWE to grow revenue and profit roughly 15% apiece in 2022 on average, despite the record-breaking performance of 2021, according to FactSet.
“Where is the audience? About 8 to 10 million watched wrestling every week during the early 2000s; now it’s about 3 to 4 million,” National Wrestling Alliance President Billy Corgan told MarketWatch. “And yet wrestling dominates social media. Wrestling has made some internal decisions about less people spending more money.”
“Wrestling is less popular than it’s ever been, ever,” adds Bryan Alvarez, a former wrestler and bestselling author who co-hosts podcasts on Wrestling Observer Live. “It all began when [rival] WCW [World Championship Wrestling] died, and since then [WWE] has not created another Steve Austin or Rock. There was John Cena, but the audience has been in gradual decline since 2002, and extending Raw to three hours [in 2012] accelerated the decline. People are sick of the same matches every week and them [WWE] firing everybody.”
“WWE is not creating new fans,” Alvarez said. “They are trickling away.”
A short-term money grab?
The return of Steve Austin to Wrestlemania highlighted two nights of slam-bang action that garnered WWE gobloads of fawning mainstream press coverage and provided a vivid illustration of its status as the undisputed king of the ring. For nearly four decades, Wrestlemania has underscored the empire built and maintained by the McMahon family despite the hemorrhaging of fans and talent over the past several years.
When Vincent K. McMahon purchased the parent company of the World Wrestling Federation (WWF) from his father, Vincent J. McMahon, in 1982, he started an overhaul of the organization that reshaped the industry. McMahon immediately moved to get WWF programming on syndicated television nationwide and used revenue generated by TV deals, advertising and tape sales to land talented wrestlers like Hulk Hogan, Rowdy Roddy Piper and Andre the Giant from rival promoters. By the late 1990s, a stable of talent during the so-called Attitude Era emerged with “The Rock,” Austin and Triple H (who would marry McMahon’s daughter, Stephanie, and become a WWE executive.)
Along the way, Donald Trump was a frequent participant in story lines and the WWF was renamed WWE. Eventually, McMahon’s wife, Linda, herself a former WWE executive, served as head of the Small Business Administration under President Trump from 2017 to 2019.
WWE’s stock performance tells its own story. In an October 1999 initial public offering, WWE sold shares at $17 apiece, and the stock quickly soared to $30.50, valuing WWE at $172.5 million. The IPO qualified as a body-slam before the share price gradually declined and bottomed out at $6.86 in 2002. WWE’s share price languished until late 2016, when it began a steep climb to a record $96.73 in 2018. The stock subsequently slumped to $33.93 in late 2019 but has since steadily rebounded with the WWE’s belt-tightening program and lucrative media deals.
At first blush, a dozen rounds of layoffs announced by the WWE since February 2021 and increased reliance on media revenue have driven the fundamental financial performance of WWE. Media sales of $936.2 million accounted for nearly all 2021 revenue, continuing a trend that started before the pandemic in 2019, when media sales were $743.1 million.
“They are a licensing studio with chunky deals,” Brandon Ross, an analyst at LightShed Partners, told MarketWatch. In late January, for example, WWE struck an agreement with Walt Disney Co.
to bring the WWE Network to Disney+ Hotstar streaming service in Indonesia.
WWE is also producing two scripted shows, its first stab at TV fiction, including a drama series, “Pinned,” about a family that runs a wrestling company, for Comcast’s NBCUniversal, according to The Wall Street Journal.
Live events, by contrast, produced net revenue of $57.8 million, representing 5%, of total net revenues in 2021, compared with $125.6 million in 2019, before the pandemic. WWE also generates sales by selling action figures of wrestlers, like Drew McIntyre, along with videogames and books. While its consumer-products division has been steady and generated $101.2 million last year, it is not a source of revenue growth.
Increasingly, WWE is relying on Saudi Arabia, which pays a guaranteed $50 million to $55 million per event, for big paydays despite criticism of doing business in the country and a shareholder lawsuit that claimed investors were misled about the strategic relationship. WWE settled the class action with a $39 million settlement that did not contain an admission of liability.
The calculus around TV revenue has dramatically changed the business. Where TV programs promoted pay-per-views for decades, today’s TV rights deals are so lucrative they serve as vehicles to sell merchandise, future content and subscriptions to WWE’s streaming service on Comcast’s Peacock.
“All these TV deals were a boon for the company, while the pay-per-views have become secondary,” Johnson, the writer for PWInsider, said.
““Where is the audience? About 8 to 10 million watched wrestling every week during the early 2000s; now it’s about 3 to 4 million.” ”
WWE paid out $15.1 million over two years for what appeared to be severance, while also dishing out $12.1 million in 2021 alone for incentive payments to management members for “improved operating performance,” according to securities filings. The company’s head count was reduced to 870 full-time workers from 960 in February 2020, securities filings show. Its roster of wrestling superstars, who operate as independent contractors and not employees, has decreased to 250 from 300 in the past year.
McMahon set the table for WWE’s new corporate strategy in the winter of 2019, when the company’s board authorized a $500 million stock buyback program, the first in the company’s history. WWE repurchased $83 million of its stock in 2019 and then paused the program in 2020 amid the pandemic. In total, WWE has repurchased $249 million of stock in the first three years of the program, securities filings show.
On the flip side, there has been gradually diminishing TV ratings and diluted content at monthly non-TV events.
In February, a reduced roster forced WWE to use golden oldies like Bill Goldberg, 55, and Lita, 44, who hadn’t wrestled in 17 years, as main event performers during the WWE Elimination Chamber. During the Royal Rumble in January, nearly half of the 30 females participating in a battle royal were not on the WWE roster. Among them: Ivory, 60, Lita, and Mickie James, who was then cut without notice in April 2021. She discovered her belongings in a plastic garbage bag.
At the same time, wrestling – like nearly all mainstream media properties – has ceded eyeballs to social media and other entertainment options. Alphabet Inc.’s
YouTube has become a popular destination to watch classic matches for free, while smartphones running Meta Platform’s
Instagram and Tik Tok have stolen would-be wrestling fans altogether. The rise of alternative fighting organizations like MMA and UFC have further reduced viewership. [WWE’s social numbers are strong, though they declined last year, according to the company’s securities filings — YouTube views of WWE content declined to 15 billion in 2021 from 21 billion in 2020, for example.]
General sentiment is that McMahon will maintain control, especially fresh off a series of moves that revamped the WWE’s executive offices.
“As I read it, there is no immediate plan to sell the business,” Brandon Ross, an analyst at LightShed Partners, told MarketWatch. “It is Vince’s show. Pun intended.”
“My belief is that they won’t sell as long as Vince McMahon is healthy, unless they’re made a huge offer that also guaranteed Vince continued control of WWE,” adds Brandon Thurston, editor of Wrestlenomics. “Cashing out as a billionaire would be nice, but he wants control.”
The August 2020 hiring of Khan, formerly co-head of television at talent agency CAA, signaled even more focus on licensing deals. At the same time, WWE Chief Brand Officer Stephanie McMahon has become more of a corporate face since WWE co-presidents George Barrios and Michelle Wilson were forced out in January 2020. She and Khan typically do most of the talking during the WWE’s quarterly earnings calls, answering analysts’ questions.
“We are absolutely exploring the metaverse as an opportunity for WWE, especially as the theory unfolds, but that’s really where more and more people are going to go to connect and socialize,” Stephanie McMahon said during a conference call in February. “WWE is a community-based business, it’s all about our fans coming together to share this experience. We think there are huge opportunities to expand upon that in the metaverse itself.”
The rise of AEW
Atrophy began to slowly set in at the then-World Wrestling Federation, Alvarez and others contend, with the death of rival WCW, a one-time ratings juggernaut, in 2001. [WWF purchased WCW’s name, logo and videotape library for $4.2 million. WWF changed its name to WWE in 2002 after the company lost a lawsuit filed by the World Wildlife Fund over the WWF trademark.] But the hemorrhaging of fans and TV ratings became more of a problem starting in 2012, with the expansion of Monday Night Raw to three hours. Tellingly, WWE removed the phrase “We believe that WWE has a passionate fan base” in its annual financial filing in 2021 after including it in previous years.
To underline the sour tone, WWE Chief Brand Officer Stephanie McMahon has told crowds they were just like her, except she was rich and educated. “I know it was part of the story line, but it’s like going to a restaurant and having the waiter call you poor and dumb,” Lance Storm, a former WWE wrestler now working as a trainer for Impact Wrestling, told MarketWatch. “With WWE, the customer is always wrong, and when the customer goes elsewhere, WWE management blames the fan.”
The death of WCW essentially created a 20-year vacuum on major cable channels for a second major wrestling organization at a time when talent had never been deeper. Absent top-flight competition for nearly two decades, WWE got complacent and moved on to other interests, leaving a void in the industry, say Alvarez and others.
Lifelong wrestling fan Tony Khan noticed. As many wrestling fans moved on to other interests with the dawn and growth of social media, Khan — chief football strategy officer of the NFL’s Jacksonville Jaguars — saw the opening he had planned on for years.
Khan, the son of Jaguars owner, billionaire Shahid Khan, is also general manager of English soccer team Fulham F.C. and owner of TruMedia Networks.
“I was looking at the availability of top talent in early 2019 and escalating live-TV rights fees. There was a growing sentiment of discontent for years. All these factors contributed to the AEW launch in early 2019,” Khan told MarketWatch. “The organization had to be three letters, and one of them had to be a W for wrestling.”
Khan soon found another wrestling fan on the TV side who understood the value of live weekly wrestling content. “We’re in a war for people’s time,” Brett Weitz, general manager of AT&T Inc.’s
TNT, TBS and truTV, told MarketWatch. “Our philosophy is come for the wrestling, stay for everything else (movies from Marvel, DC and Star Wars, live sports). Wrestling fits perfectly into our schedule.”
The block of entertainment is skewed for what wrestling observers believe is the AEW audience, which they say tends to be younger, more affluent and better educated than their WWE counterparts. Indeed, a significant slice of the AEW fan base are former WWE supporters who wanted a fresher product, Alvarez and others contend.
“The lapsed fan is coming back,” Khan said.
To be sure, WWE remains TV king with an audience consistently 50% larger than that of AEW, and its holdovers are fiercely invested in the product. “Put it this way, World War III could break out and WWE fans would only care if Smackdown was pre-empted,” Alvarez said.
Where the industry is headed is encouraging despite the WWE’s ongoing cutbacks, said Impact Wrestling’s D’Amore. There’s an abundance of talent, he said, more places to work and more TV and online forums in which to be seen.
“You’re looking at a vibrant wrestling scene with different successful approaches and organizations that take different approaches. It’s a great time in the industry,” D’Amore, who has 30 years in the wrestling business, told MarketWatch. “True, there has been audience erosion, but TV numbers in general are down from 10, 20 years ago. For full scope, you need to look at all media, including TV, streaming services, social media.”
But it is wrestling’s kaleidoscope of choice that has put it in a precarious position, contends Corgan, the industry’s resident contrarian who thinks the mainstream audience has been neglected. “Wrestling has gone to the edges to sustain the heat, and it has lost the middle,” he told MarketWatch.
“WWE has ruled the business, and Vince has won. He is the only successful wrestling promoter in history, but what happens after that?” said Corgan, who is applying many of the same principles that made his band The Smashing Pumpkins successful to the wrestling biz. These include long-form storytelling and finding an audience that exists.
“We are on the precipice of things breaking loose, and may the next-generation promoter win. When we started our band in 1988, people laughed at us and insisted rock was dead. I get those same looks from people in the wrestling community.”
What wrestlers think
Most former WWE employees declined to talk to MarketWatch because they pined for a return to the dominant company in the industry. Those who agreed to be interviewed described a highly structured work environment with instructions on what to say and how to act, often the day of a match.
“It could be like a game of telephone,” AEW wrestler Ruby Soho, who was let go by WWE in June 2021, told MarketWatch. “WWE helped me grow and I am fortunate to have that experience. [AEW] is very freeing for me. I can sit down with Tony [Khan] rather than be told how to present myself.”
The constant drumbeat of WWE cuts, however, created fear and insecurity, she added. “That was heavy. We’re on the road as much as we are with our families,” Soho said. “When you lose them, it’s hard. That weighed a lot on people. This journey can end at any time.”
“WWE makes it very difficult to hold on to hope,” said Malakai Black, whom WWE let go in June 2021 after an excruciating stretch of several months in which he met with McMahon seven to eight times and spent hours trying to develop his character.
WWE’s Khan, in a podcast with The Town last week, insisted the organization’s treatment of talent is no different than any other star-based system. He maintained Will Smith was not removed from the Academy Awards after assaulting Chris Rock because Smith is an A-lister.
“It’s the same with us. It’s a meritocracy,” Khan said. “If you’re at the top of the card, maybe you have a bigger dressing room than someone at the bottom of the card. Everyone has [the] same opportunity to earn their way.”
Even before the WWE began a yearlong austerity program, it hinted at what was to come at the start of the COVID-19 pandemic. In April 2020, the Good Brothers, the tag team of Doc Gallows and Karl Anderson, were let go shortly after a well-received cinematic “boneyard” match vs. The Undertaker at Wrestlemania.
WWE “had too many people on the roster,” Anderson told MarketWatch. “That’s just the business.”
If there was any silver lining, Anderson and Gallows said, it was the abundance of other — though smaller — wrestling organizations. Within two minutes of leaving WWE, the team was talking to Impact Wrestling about work. Since then, they’ve worked at Impact, AEW and New Japan.
The Good Brothers are an outlier, however, because of their well-established record in pro wrestling circles. Not everyone, especially those in the developmental ranks, are guaranteed work.
“In general, no one is safe. When I was there, it was fun. But as you get to a higher level, that is where things get very toxic,” said Russell Gene Taylor, 35, who goes by the wrestling name Tyler Rust. He wrestled for WWE’s developmental NXT operation for a year before he was let go in August 2021. “Nick Khan wants to make a lot of changes. His idea was, ‘Let’s cut a bunch of wrestlers.’”
“I don’t hold resentment. I knew the day I signed that contract, I knew I could be laid off the next day after moving to Orlando,” Taylor said. “We all know the risk involved.”