wrestling / Columns
The Hamilton Ave Journal 03.26.09: Volume 2 – Issue 79
THE HAMILTON AVE JOURNAL
By JP Prag
Volume 2 – Issue 79
ABOUT THE JOURNAL
The Hamilton Ave Journal is the only wrestling news report focused solely on the business of wrestling. Here in the Journal we not only look at the stories that are important to the investor and business-minded person, but also delve deeper into stories that most fans of wrestling would overlook. That is because the Journal is about getting the heart of the matters that affect the companies and outlooks of the wrestling world.
And where is Hamilton Ave? That is the location of the WWE Production Studio in Stamford, CT, and thus the most powerful place in the wrestling world. Besides, The East Main Street Journal just does not have the right ring to it.
Who am I? I am JP Prag: consultant, entrepreneur, businessman, journalist, and wrestling fan.
Now, ring the bell because the market is open.
The Journal’s front page area known as What’s News isn’t just about telling you what has happened. The stories in this section are about what will have an effect on the wrestling industry, individual federations, and the wallets of the fans.
LEAD STORY: Five Dollar Foot Long
WrestleMania is by the far the biggest and most profitable event of the WWE year. The show earns the company approximately $30-40 million in direct net revenue and generates $50 million for the local community. But in tough economic times, even WrestleMania’s success has to be in question.
Instead of scaling back, WWE Executive Vice President of Marketing Michelle Wilson told Variety that this will actually be the most extensive (and therefore most expensive) promotional blitz yet. This included a program through K-mart where people spending $50 or more on WWE merchandise at the store get a $10 coupon for the PPV, appearances in various outlets (including a half dozen articles in Variety), and 1.3 million of direct mail pieces.
All of this has led to supposedly spreading the WrestleMania name and boosting the buyrates when the time comes. Last year’s WrestleMania 24 actually had a few thousand less buys worldwide than WrestleMania 23, but still managed to break one million buys. This year, that number seems a lot more in question.
But just how far can the WWE drop and still make the same or more revenue. Well, let’s look at the past couple of WrestleManias:
Although it is being reported that the WWE raised the price for WrestleMania 25 by $5 this year, that actually is not the case. The $5 raise in price came last year, so the WWE does not have any additional buffer thus far.
In other words, the WWE cannot afford any drop in buyrate. If anything, because of the additional cost of promoting the event (although talent may be less expensive with minimal celebrity involvement) the WWE may actually need a raise in buyrates to make up the difference. Some are projecting lower buyrates for WrestleMania, so what would that mean to the top line?
Even cutting the buys by more than half the PPV will still do fairly well. While this large of a drop is unlikely, the WWE will still walk out on top. On top of this, the WWE still has the tickets and merchandise sale, later DVD sales, and other ancillary income. At the end of the day, even a worst case scenario leaves the WWE in the black.
There is plenty of room for disaster with WrestleMania, but unprofitable is not high on the list.
WWE and their networks
Last month, home of WWE SmackDown MyNetworkTV announced that they would be changing their network status from original programming to just re-runs of existing programming. This excluded flagship program WWE SmackDown which single-handedly helped MyNetwork TV get a slightly higher average rating than the CW Network. People immediately began to write the obituaries for MyNetworkTV, but this seemed unlikely as MyNetworkTV had contracts in place to keep them in existence for years.
This changed this past week as Executive Vice President Paul Franklin announced that MyNetworkTV was nullifying their existing 5-year affiliate deals and are changing them to 1-year deals. Although Mr. Franklin does not expect to lose any affiliates (after all, what are they going to run with no infrastructure?), these one-year deals make it possible for MyNetworkTV to pull the plug a the end of any cycle. The WWE’s existence on the network may stave off this approach for a while, but eventually MyNetworkTV will have to try to transform into something more if they want to succeed.
Going through a transformation is the home of ECW. The soon to be former SciFi network will be rebranding to the “Syfy” channel in order to broaden offerings. This rebranding has been beneficial for ECW as now they have a more logical place in the programming lineup.
As part of the rebranding effort for the station, ECW will also go through a change. According to WWE Executive Vice President of Television Production Kevin Dun:
“The marketing and the branding is definitely a 50-50 effort.”
So whatever plans are in the work for ECW appear to be a joint thought process between the WWE and Syfy.
Newsbites
Some items of note in the rest of the wrestling business world:
With a focus on how marketing drives the fundamental monetization of Video Game IP, The 4th Annual MI6 Conference will explore new and innovative ways game publishers, studios, and consoles are increasing revenues across traditional and non-traditional spectrum.
The final awards will be handed out on April 8, 2009 in San Francisco.
In the Marketplace we look at the trends in television ratings. This section is less for critical analysis by the Journal but more for the reader to see what is really going on and to draw their own conclusions.
As with stocks, here in the Journal we track the progress of television ratings. If ratings are the barometer by which we judge the product, then over the course of 52 weeks we should be able to see patterns, trends, and anomalies.
For the week ending Wednesday March 25, 2009, here are the current standings of our shows:
RAW
Close (This Week’s Rating): 3.5
Open (Last Week’s Rating): 3.6
Percentage Change: ▼ 2.8%
52-Week High: 4.1
52-Week Low: 2.6
All Time High: 8.1
All Time Low: 1.8
SmackDown*
Close (This Week’s Rating): 2.1
Open (Last Week’s Rating): 1.9
Percentage Change: ▲ 10.5%
52-Week High: 2.7
52-Week Low: 1.6
All Time High: 5.8
All Time Low: 1.0
* SmackDown! ratings may include fast overnight if final ratings are not posted. Also, SmackDown! ratings are for the prior week as overnights are not available before this article goes to print.
ECW
Close (This Week’s Rating): 1.3
Open (Last Week’s Rating): 1.4
Percentage Change: ▼ 7.4%
52-Week High: 1.5
52-Week Low: 1.0
All Time High: 2.3
All Time Low: 0.6
TNA iMPACT**
Close (This Week’s Rating): 1.3
Open (Last Week’s Rating): 1.2
Percentage Change: ▲ 11.7%
52-Week High: 1.3
52-Week Low: 0.9
All Time High: 1.3
All Time Low: 0.6
** TNA iMPACT’s are for the prior week as ratings may not be available at the time of the Journal’s posting
Analysis:
Going in to WrestleMania, the numbers have not been great for the WWE. SmackDown regained much of its ground after an off-week, but both RAW and ECW again dropped. WWE Chairman Vince McMahon recently said in an interview with THR.com:
Quite frankly our TV ratings have been very good. We averaged over a 4, I think, three weeks ago. Last week and the week before it was a bit less so because of a number of factors: how many people watched TV and one-off events.
Well that 4.1 was five weeks ago and has been completely downhill ever since. The higher numbers seen in those short weeks were the one-offs as the low-to-mid 3’s have been the norm for the year.
The other thing Mr. McMahon said was about TNA’s ratings:
Their TV ratings are a fraction of ours.
Last week, TNA’s ratings fractions were:
Although TNA is no where in the WWE’s territory yet for reach and revenue, ignoring them as competition is not a worthwhile effort. It is the same as denying that the UFC as competition. Mr. McMahon said:
Most people thought at one point that we would be competitors. But it turns out they are not competition to us at all, or hardly at all. They are sport, we are entertainment; it’s a huge difference. The revenue they have cut into is that of boxing.
Several years ago, Mr. McMahon admitted that all forms of entertainment are competition. That is the stand he should continue to take as it is honest and can help the WWE deal with their current situations. The UFC is competition in that they not only take eyeballs away from the WWE, but people may decide to buy a UFC PPV instead of a WWE PPV. Ignoring that fact makes Mr. McMahon sound quite out of touch—even more out of touch than this other statement about TNA:
My concern with TNA is that they are TV-14, and we are PG. They have to change with the times. I think some of the things they do on television are reprehensible, but it is a TV-14 rating.
Mr. McMahon morally questioning another company’s content is about as hypocritical and revisionist history as it gets. THR.com attempted to follow up on this by probing Mr. McMahon on the recent home invasion angle, but Mr. McMahon basically brushed the topic off.
We all know that wrestling is a business, but we don’t often pay attention to what sells and makes money. Money and Investing looks into the top selling items in the world of wrestling and any interesting figures that may have come out this week.
What are the top ten selling items for the WWE? From WWEShopZone.com:
1. Jeff Hardy 3 Armband Package ($60, on sale $20)
2. Triple H Eversoris T-Shirt ($28)
3. Hardys Green Pendant ($10)
4. John Cena HLR Academy T-Shirt ($25)
5. WWE Encyclopedia Hardcover Book ($45, on sale $39)
6. Jeff Hardy Immune to Fear T-Shirt ($25)
7. Undertaker Hells Gate T-Shirt ($25)
8. WWE Ultimate Rivals Trading Cards ($2)
9. Hardys Purple Logo Pendant ($10)
10. WWE White Gift Bag ($3)
Check out the Editorials section below for information on the lack of Randy Orton in the Top Ten this week.
TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:
1. 2006 Complete Year PPV DVD Set ($69.99)
2. 2007 Complete Year PPV DVD Set ($69.99)
3. TNA Logo T-Shirt Special ($24.99)4. Christian Cage: The Instant Classic DVD ($19.99, on sale $9.99)
4. Main Event Mafia – Black T-shirt ($19.99)
5. Autographed Sting Baseball Bat ($149)
6. Frontline T-Shirt ($19.99)
7. Cross The Line Triple Pack ($24.99)
Only one small change was made to the list this week: Christian Cage was finally removed. It looks like two months of badgering by the Journal resulted in the company realizing they should not be advertising a WWE Superstar. On the other hand, they did not update the list beyond this, showing a lack of commitment to keeping a true list available.
Wrestling isn’t just about watching and reading. The best way to be a wrestling fan is to experience it live. Where is wrestling coming to in the next 2 weeks? The Personal Journal answers that question.
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Do you know a wrestling event coming up? Send one in to The Hamilton Ave Journal and we’ll be sure to add it to the list.
The Editorials section is designed for you, the readers, to respond to the views presented in the Journal, send an important news item, or talk about another overlooked business related item in wrestling. Just beware: the Journal reserves the right to respond back.
From the commentary section last week, one of the biggest topics continued to be about downloading PPVs. Steve307 says:
While some people are going to download PPV’s no matter what the cost, surely a good chunk of those people would be willing to pay for the shows if they weren’t so expensive? $39.95 for three hours of largely glorified episodes of Raw (with title changes) is hardly worth it. So bring the price down to $24.95. They can always jack the price back up when the economy recovers.
Yes, there would be a fair amount of more people willing to buy PPVs at a lower cost. The question is does the volume of new buyers make up for the lower selling price?
180,000 buys x $39.95 = $7.2 million
>288,217 buys x $24.95 >= $7.2 million
Therefore, in order to maintain the same level of revenue, buyrates would have to increase 160%! It is highly unlikely that dropping the price of the PPVs that much will result in an 160% increase in buyrates, so therefore the WWE is still in the business of maximizing revenue. This point was covered above in the WrestleMania price increase, but it is worth re-visiting here for the regular PPVs.
In the same subject of online streaming, Donners said:
There were, apparently, 200,000 people watching a live stream of No Way Out. And that’s just one of several streams.
The Journal cannot substantiate this number as no reporter was on hand for any of the live streams, but that number seems high. Is it possible that people got disconnected and reconnected multiple times and that each one of these reconnections was counted as a “new” steam?
Brett brings the point back home to what the Journal was covering last week:
I’ll tack this on also. I’ve downloaded PPVs before. If I didn’t have that option, and could either pay to watch the PPV or not watch at all, I would not watch at all. As a matter of fact, I do still pay for certain PPVs (Royal Rumble, SummerSlam, and WrestleMania).
Exactly—even though the WWE may drop price, there are plenty of people who would not ever pay at all no matter the price. The WWE has not been doing enough to entice people to make them believe that buying is worth it all. If there was no internet, buyrates would only be marginally better as most people would not watch at all rather than pay for something they don’t see as much value in.
Next up is a point the Journal was hoping would be brought up. First by Brad:
Orton booked as an uber heel who rules all the world = Merch sales
Orton as HHHs bitch = Fail
Really simple to me!
Guest#8580 follows through on this thought:
Yeah lot’s of people are saying this and I have to agree. Orton was red-hot after his Rumble win but in the last few weeks he has been made to look like such a bitch by HHH it’s ridiculous.
This is classic HHH behaviour – he will make Orton look like a fag and himself (HHH) look like an invincible god, then he will job the title to Orton at WrestleMania or Backlash and everyone will say “Wow, HHH jobbed to Orton clean, what a guy!”
HHH is a self-obsessed dickhead with a superiority complex and he has to share a LOT of the blame for the decline of the quality of the WWE product in the last few years. Asshole.
The Journal was waiting to see what would happen in this week’s Top Ten before drawing any conclusions, but it looks like a trend has started for the absent Randy Orton. Whatever your opinion of Triple H, since beginning a programming with Randy Orton, Orton’s numbers have dipped below the radar. Looking back at the four weeks to WrestleMania last year, at the beginning of the cycle John Cena, Triple H, and Randy Orton were well represented in the Top Ten. By the week before WrestleMania, Randy Orton was off the list, John Cena was down to one item, and Triple H had four items (his highest ever).
Sticking to the other usual subjects, the employee lawsuit against the WWE came up by Good Robot Cena:
You know, with this whole lawsuit by Raven and others, I think a lot of people are behind just to see the “Evil Empire” that they see WWE as being get humbled.
They don’t seem to realize that while a classification change to employee would hurt WWE, it would absolutely KILL TNA and RoH. Other feds are able to stick truer to the legal “independent contractor” model, but once you’re on TV, you HAVE to start exercising more control over your performers (You can’t, for example, let your World Champion sign a 1 night deal with WWE and job to Santino.)
WWE can absorb these costs. TNA conceivably can for a while, but will be hurt much worse. And RoH wouldn’t have a prayer.
You are correct that the WWE can easily absorb the costs. For TNA it will be more difficult, but their pay scale is so far below the WWE that the rise in cost is not as percentage wise significant. Also, since they are so young the costs can be better built into the growth structure plan. Since Dixie Carter reports that TNA is profitable right now and that most of their growth comes from international distribution, TNA should actually be fine.
ROH is the odd one as their workers could be considered independent contractors. If they get bigger and start exercising more control over where their guys work, than they are employees. ROH, like TNA, can actually benefit by not having much of pre-existing structures in place. It will be a much larger hit to them, but doable with proper financial planning.
The real problem is if a company like OVW wanted to go national and put people under contract. It now becomes a lot more cost prohibitive to become a true employee organization, making the barriers to entry higher. So yes, it does take competition down a little bit. On the other hand, every other start-up in America has to deal with paying employee-related taxes. If they can plan for it, so could any other wrestling company on the grow.
That wraps up the major topics. Last week, the Journal also contained an editorial on the coverage of the death of Andrew “Test” Martin. Some people seemed to miss the point that the criticisms was specifically against the Associated Press for not doing enough research in this story and many others. This was not an attack on all reports and all news organizations in the world. This was specifically against the Associated Press because their articles are taken and replayed ad nausea in newspapers and online sources across the world. One mistake in there goes on forever, and the Journal does not believe they take that responsibility seriously enough. Andrew Martin is only one of many topics that they not done a thorough job of in the past, whether inside or outside wrestling. All the Journal is asking for is less sensationalism and hearsay and more research and detailed reporting from the AP.
Plenty more was written, so be sure to take a look. And of course, a week would not be complete without a good dose of JP Prag’s own HIDDEN HIGHLIGHTS!!
This concludes Issue #79 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.
Till then!
