Complaints Against a Gold Wall: Fans vs. Finance

Business is one of the few things in this life that is clearly black and white: you are either making money or you aren’t. WWE is making money. Hand over fist. It is a fact that many fans would like to deny and scoff, but it is unavoidable – if you are not a fan of Vince McMahon’s creative output, it does not matter.

The numbers for WWE’s Q2 report was released and the numbers are great if you are an employee, shareholder or sponsor for the company. Revenues went up an astounding 31% to the tune of $281.6 million, which boasts the largest quarterly revenue in the history of WWE. Operating income doubled. The network is holding to 1.8 million subscribers. Video views are at 14.4 BILLION and 509 million hours viewed. Oh, and there’s that little deal with Fox. Following the release of these numbers and events, WWE stock surged to $84.61 a share.

What does this all mean?

If you are a fan of WWE and root for their success, you are justified in your fandom. The things you like to see will continue – maybe even increase. If you are a shareholder, you are ESTATIC. There has never been a better time to own a piece of the company. If you are an executive from Fox, NBC, YouTube or Facebook, these numbers are more than satisfying because it shows not only great financial solvency, but the potential that the company’s monetary ceiling has still not been reached, and those profits may not slow down anytime soon. The Greatest Royal Rumble brought in at least $40 million. Total Divas and Total Bellas hold a sustained, dedicated presence on cable. Miz & Mrs. is expected to penetrate mainstream viewership further. Television deals with the UK, India, Canada and Australia are strong and continue to assist in revenue.

What does this mean further?

If you are a detractor of WWE’s creative direction, or are of the mindset that the WWE juggernaut is slowing down because “ratings are down” or point out things like the lack of pyro and set production value is a sign of dwindling profits, you may have been slapped with a hard dose of reality. Whatever WWE is doing is not just profitable, but mind-numbingly profitable.

I wrote a column shortly after the venom of the 2015 Royal Rumble, where Roman Reigns was met with absolute vitriol. The #cancelwwenetwork began to trend on Twitter and I pointed out the small profits WWE was making at the time compared to their expenses. I believed that the crowning of Roman Reigns as the face of the company was hurting WWE’s bottom line.

Oh, man…was I wrong. The egg on my face has fried and soured.

When any company undertakes (HA) an IPO, one of the main opportunities it faces is the ability to expand into a new market and diversify its portfolio. It also has a better gauge of investment risk, and investors looking to take a chance because it is easier to gain a greater understanding of what desirable stock options to offer. Increased liquidity (cash within the company) only increases capital gains and attract talent to grant stock awards. WWE has diversified not only its company through expansion into reality television, The Network, film production credits, toy and video game licensing, but they have taken the lead on the future of media consumption: WWE has 29 MILLION subscribers on their YouTube Channel, bragging over 100 million views a month.

We talk about dwindling ratings, but the fact is…ratings no longer matter. Think about it in business terms: If I am a company and I offer a product or service, other companies may want to utilize my reach to advertise off my back. They will want to sponsor my product because they know they can maximize their own visibility. Because of this, I will charge a nominal fee to advertise with me. Television ratings are down, but there are still factors to consider:

1) A weekly viewership of nearly six million…is still six million people. Snickers would like to have six million pairs of eyes on their product to remind them that they aren’t themselves when they’re hungry.

2) Hulu boasts 20 million subscribers to their streaming service, where Raw, Smackdown, NXT and 205 Live are viewed. We don’t have figures on how many of those subs view WWE programming, but it must be enough to justify keeping FOUR WWE-based programs on the service. “Cutting the cord” is the direction television is going, and streaming numbers are becoming more important than ever to sponsors and advertisers. So, not only is 6 million people watching WWE programming on cable television, but millions more are consuming via Hulu.

3) The WWE Network has 1.8 million subscribers. I am 99% certain that those subs view WWE Pay Per Views like WrestleMania, the Royal Rumble and Summerslam. We have another opportunity to generate advertising and sponsorship revenue by attaching big name companies in hopes that they can penetrate a new market through association.

The biggest, and most important – is via YouTube. Most of us are aware of the monetization opportunities any channel has once they reach at least 1,000 subscribers. Let me reiterate: WWE has over 29 MILLION subscribers and average 100 million views every 30 days. If I am a media-based company, why would I worry about 6 million cable television watchers when I can monetize 100 million views a month on the different videos I publish? WWE is monetizing everything. That is the meat of WWE’s portfolio, and honestly – their digital media strategy is one of the most ingenious on the planet.

This is why WWE is not concerned with much long-term storytelling and is a proponent of “moments”: 2-5 minute videos are easy to digest and shareable. It is easier to hook views for those who want to see the reaction to The Hardy’s returning at WrestleMania or a countdown of the top 10 Stone Cold Stunners. Some may not agree with this mindset, and may want to place the blame on our culture of instant gratification and short term memory, but…WWE is reading their market exactly as they should and is executing their strategy flawlessly.

If you’re a fan of wrestling, this may depress you. The wheel is always turning. Nothing changes. Pomposity over creativity, style over substance…perhaps we are in a dark period as a fan of quality wrestling. Most of us are masochists, contributing to the wheel, addicted to the bright lights of WrestleMania, the excitement of the Royal Rumble and the allure of reliving the past on the WWE Network. Some of us can’t help to purchase tickets when WWE events come to town. We may chant and act like we are “hijacking” the show, but WWE has our money. They really don’t give a fuck what you chant. That’s reality.

So, what can we do as fans to change any of this? The answer is simple – nothing. What should we do to rectify this?

Where I live, we have endured in a “beautification” project, where the support of smaller, community-based businesses are encouraged to be supported. We are collaborating to create educational and artistic events that focus on those who live here. We are trying to display a semblance of pride that encourages inclusion, makes sure that the local products, services and events are affordable to ensure participation and local revenue. This may not stop the Walmart or McDonald’s wheel from turning, but it will at least support the wheel of meaningful, independent businesses and minds.

The wheel of professional wrestling is something that has been turning from the late 1800s. It has seen various drivers and owners. Some wheels crumble, some are left behind to rot in the past. Some wheels turn so fast that they dissolve under their own weight. But some of those wheels continue to turn because of us. Ring of Honor still kicks and grows because of us. The growth may just be inch by inch, but it is there. Impact Wrestling took chances, both bold and ridiculously short-sighted, but they are now moving at a pace that satisfies fans and have found their footing to have a very engaging product. CWZ, PWG and PROGRESS is holding court, SHIMMER has a current foothold on the female wrestling scene. Lucha Underground’s passionate cult following is keeping it afloat, and then there is New Japan.

Some people tend to forget how long New Japan Pro Wrestling has been around…since 1972. It’s not like the promotion kick started at Wrestle Kingdom 8. In 1976, Antonio Inoki headlined the biggest wrestling event of the year, when he and Muhammad Ali faced off. Even if the match itself was a sideshow, its importance can’t be denied as it was one of the precursors of Mixed Martial Arts. The event was a success and highly profitable. New Japan may have had its ups and downs over the years, but they have a firm grip on not only the Japanese wrestling scene, but the hardcore fanbase as well. They are THE alternative fans desire.

So…we may not be able to encourage the WWE juggernaut to bend and cater to our whims; fans of straightforward wrestling, treating the art form as a sport and minimizing cartoonish characterization is not WWE’s target audience. Those days have long since passed…and probably dissipated the moment Hulk Hogan won his first WWF Title. The days of racy, adult-oriented Attitude Era trappings are forever in the dust, only survived and remembered through the WWE Network and YouTube clips. Fans are not Daenerys Targaryen – we cannot break the wheel. But we can help turn others.

I am not going to stand on a pulpit and exclaim, or encourage that fans stop purchasing WWE products. That is asinine, impossible and a waste of time. For every one fan that criticizes the WWE’s decisions, there are 10 more that absolutely adore what WWE has to offer. Business dictates that any product or service is worth as much as someone is willing to pay for it. People are willing to pay millions to keep WWE alive. That is fact.

The question is, how much are you willing to pay to support promotions that ARE NOT WWE? What is their worth to you? Does your criticism of WWE fold into the profits of New Japan or Ring of Honor? Last year, NJPW’s revenue increased 21% to the tune of $34 million, which is the second highest grossing year in their history. $34 million looks like ants compared to WWE’s $281 million, but $34 million is $34 million. Perhaps the most impressive number is that 21% increase. That means whatever New Japan has been doing since Wrestle Kingdom 8 – the show that got many new fans jumping on the bandwagon (that is not an insult) is working. Ring of Honor’s Supercard of Honor was the most successful event in the company’s history. All In is already deemed a financial success based on ticket sales alone…and they haven’t even held the show yet. Those who helm all three promotions are sharing a G1 Supercard at Madison Square Garden. What is their worth to you?

There are (mild) rumors about Disney getting into the fold once more to possibly buy out WWE. The Disney monopoly on entertainment is undeniable and intimidating. Imagine them owning the beast that runs mainstream professional wrestling. Then consider their business strategy: they have diversified and cornered the market through Pixar, LucasFilm and Marvel Studios. Disney makes billions upon billions of dollars a year. Acquiring WWE only makes sense – the promotion is family-friendly, boasts larger than life characters and are a merchandising goldmine. They can reach a new fanbase and extend their reach somehow impossibly further than it already is. The wheel keeps on turning. In response to this, how much are you willing to pay and invest in independent cinema, to prevent Disney from being the only game in town? (I am aware of the other major studios, but Disney is the benchmark.)

Finally, what is the value we place on ourselves as fans? We debate the philosophy of what it means to “deserve” something – whether it is through hard work or via entitlement. Is it possible for us to consider our own value and what promotions are willing to spend for us? WrestleMania makes $100 million a year for the company – but we rarely talk about how much money the company pumps in to market the event, build sets, pyrotechnics, paying for production staff and other expenses. They obviously are willing to spend a small fortune to provide the best possible experience for their fans…and those fans are willing to pay top dollar for that experience. The risk is worth the reward.

I’m a nominal investor. I used to own WWE stock (and I foolishly sold it about 18 months ago, unaware of the Fox deal.) I have a 401k. I know enough about trading to be dangerous. I believe I have a mild understanding of what it means to invest and the risk that comes with it. I must be smart, diversify my portfolio when warranted and wisely decide how fast and loose I want to play with the market. Do I keep the conservative route for long term gains, but a potential earning ceiling or do I take a chance and aggressively invest capital with the hope I maximize my earnings? These are questions we should ask as fans as well.

You should not stop holding WWE to a higher standard. Everyone has their right to their opinions. If someone is disgusted with the WWE product – or any wrestling promotion – they have the right to complain. We can’t stop the wheel from turning, but we can take chances and invest our time and energy to support other ventures. They may not become juggernauts, but it will sustain the industry. You either support ALL of wrestling in some capacity, or you don’t. Solvency of the wrestling business, and not the solvency of WWE, is what matters most. It’s a black and white issue.

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