wrestling / Columns

The Hamilton Ave Journal 07.15.10: Volume 2 – Issue 146

July 15, 2010 | Posted by JP Prag

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 146

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 Hamilton Ave Journal

WHAT'S NEWS

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.

TOP STORY: NXT Trademark… again?

When the WWE let everyone know they were going to premier NXT, there was a company in the UK called the Scottish Wresting Alliance that had created their own sub-company called NXT. At the time, it looked like SWA was ready to stand up for their name despite having no trademarks. But just a few short weeks later, the company announced that they were folding NXT back into SWA and the fight was over. Most likely the WWE offered them a deal to make this happen, but everything end cordially. This was all covered by the Journal in Issue #124 and Issue #125.

After that, it seemed like all the trademark issues related to NXT were over, but that is apparently not the case.

The NXT trademark is out for opposition, and some companies have filed the initial paperwork. This includes European golf supply maker Acushnet Company and an eye lens company called Intercast Europe. Now, each has a product called “NXT”, so that may be why they have decided to begin the initial paperwork. That said, they may not continue. All they have done thus far is file the paperwork to ask for an extension to do the opposition, not actually put in the opposition. Says Brian Gaynor:

This is common, and many times, no opposition is ever actually filed. Extensions are filed so the potential opposer (sic) can have time to investigate further, or possibly reach a settlement before incurring the expense of filing an actual opposition.

On top of that, trademark law only works where the products are similar. So another wrestling organization already called NXT like SWA had could have a case. But what does a golf ball have to do with wrestling? Mr. Gaynor continues:

With regard to confusion, the issue isn’t someone confusing golf balls with wrestling. WWE filed for 4 marks for NXT in Class 28 for toys and games. Acushnet’s marks are in the same class. Golf balls and toys/games may not be identical, but they don’t have to be …. they may be considered related enough for the USPTO to deny registration to WWE.

In other words, the companies are protecting where they have potential crossover. As such, the WWE may not get all of their marks for NXT. Instead, NXT may actually be limited to the types of products that area allowable. But as far as the television show goes, NXT will be safe no matter what, so long as it is on the air.

Newsbites

Some items of note in the rest of the wrestling business world:

  • Mattel will be releasing their Q2 results tomorrow. The company is expected to beat estimates based on the strengths of brands like the WWE, which sold far better than originally expected.
  • Former WWE Executive Vice President of Global Media Shane McMahon looks to actually move on with his life after leaving the company in January. Mr. McMahon has made an investment with International Sports Management, a sports talent agency out of the UK. It remains to be seen if Mr. McMahon will be actively involved or this is just a monetary deal.
  • After having one television taping, Metro Pro Wrestling has already shuttered its doors. Meanwhile, a new promotion out of Florida is said to be starting up with financial backing from Milton Wilpon, a member of the Wilpon family that owns a number of investment businesses. Mr. Wilpon is said to be personally investing and not going through companies like Sterling Equities (which owns the New York Mets).
  • AAA has moved the release date of their video game to October 12, 2010. Says Abraham Bautista, President of video game developer Slang:

    “Based on the positive feedback we received at the 2010 Electronic Entertainment Expo we decided to push the launch of Lucha Libre AAA: Heroes del Ring closer to the upcoming holiday shopping season. The additional time provides us with several key benefits including the ability to market to a larger audience, build greater street buzz with consumers and continue the development cycle…”

  • On the subject of wrestling video games, WWE All-Stars was rated #43 of 50 by Gamer Informer Magazine for game showed at E3. This is obviously a good sign for the WWE and THQ that the game is getting positive press that will hopefully translate into sales.

    MARKETPLACE

    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 time we should be able to see patterns, trends, and anomalies.

    For the week ending Wednesday July 14, 2010, here are the current standings of the shows:

    Analysis:

    The RAW, SmackDown, and SuperStars being fairly stagnant, the big winners this week come from iMPACT and NXT. First up, iMPACT scored a 1.14 rating, the highest they have seen since the same rating was achieved on the last Thursday show on March 4, 2010. This is TNA’s best sign that they are truly recovering their lost audience and that they do stnd quite hopefully of returning to a 1.2/1.3 average.

    Also reclaiming a lot of the audience was NXT coming in with a 1.11 rating. This is the first time the show has crossed the 1.0 barrier since the 1.07 on June 8, 2010 and only the eighth time the show has done so in its existence. This week was a one-off with the Nexus making an appearance, so it is still conceivable that the ratings will return to expected levels in short order.

    MONEY AND INVESTING

    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 selling items for the WWE? WWEShopZone.com releases a list of varying numbers to show what is selling for them:

    1. John Cena Never Give Up T-Shirt ($25.00)
    2. Randy Orton Lobotomy TOP ROPE T-Shirt ($45.00)
    3. WWE 11 Piece School Accessories Value Pack ($9.99)
    4. Randy Orton Lobotomy T-Shirt ($25.00)
    5. Miz I’m Awesome T-Shirt ($25.00)
    6. WWE Red/Blue Reusable Bag ($3.99)
    7. Drew McIntyre Elimination Chamber PPV Series #4 Action Figure ($13.99)
    8. John Cena Never Give Up YOUTH T-Shirt ($22.00)
    9. Satan’s Prison- The Anthology of the Elimination Chamber DVD ($21.50)
    10. John Morrison Sunglasses ($12.00)
    11. New Years Revolution 2005 DVD ($29.99, on sale $24.95, on double sale $2.98)
    12. Rey Mysterio Red Replica Mask ($50, on sale $29.98)
    13. WWE Black Gift Bag ($3.00)
    14. JR’s Beef Jerky – Championship Original ($4.99)
    15. The Undertaker’s Deadliest Matches DVD Package ($59.95, on sale $29.99)
    16. John Cena Never Give up YOUTH Basics T-Shirt ($9.99)
    17. John Cena Never Give up Sweatshirt ($40, on sale $19.98)
    18. Triple H Cross Basics YOUTH T-Shirt ($9.99, on sale $4.98)
    19. Randy Orton Lobotomy Basics YOUTH T-Shirt ($9.99)
    20. D Generation X Army Sweatband Set ($12, on sale $7.98)

    Discounts, less expensive children’s items, and oddities was the name of the game this week. While the expected mix of John Cena, Randy Orton, and the Miz dominated the list, there were some off ones to get through. First up at number seven was Drew McIntyre with his action figure. This is the first time MR. McIntyre has broken through on this list, so it should be interesting to see if he can stay in. John Morrison has done so, but only by the skin of his teeth with his sunglasses. Down a few notches at number fourteen is JR’s Beef Jerky. It would appear that despite closing his restaurant, JR is still finding an outlet for his food through the WWE.

    TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:

    1. Don’s Insane Brown Bag Special ($20)
    2. Mr. Anderson… People Are Fake T-Shirt ($19.99)
    3. Jeff Hardy Enigma T-Shirt (Glow In The Dark) ($19.99)
    4. The Best Of America’s Most Wanted DVD ($24.99, on sale $15.99)
    5. RVD – Video Wall T-shirt ($19.99)
    6. Hogan H Squared Limited Edition T-shirt ($29.99)
    7. Destination X 2010 DVD ($19.99, on sale $15.99)
    8. Unbreakable 2005 DVD ($9.99)
    9. “Hulkamania” T-shirt ($19.99)
    10. Beer Money / MMG “FANDIMONIUM” DVD ($19.99, on sale $14.99)

    In an oddity of the list that does not change, the Beer Money / Motor City Machine Guns rejoined the list in the same position it dropped from last week. Otherwise, everything else has not moved.

    PERSONAL JOURNAL

    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 upcoming weeks? The Personal Journal answers that question.

    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.

    EDITORIALS

    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, almost everything was TNA related, except this one from Jackson from Jackson:

    Please continue to follow the WWE-China relationship, as that could be a major story in years to come (good or bad).

    Of course; China is potentially WWE’s biggest area for growth, so it would be will be quite an interesting area to watch.

    Sticking overseas by moving on to TNA, Donners states:

    I can’t see an Australian tour for TNA any time soon.

    Impact is buried in a pretty late timeslot now and doesn’t pull over 20,000 viewers and Xplosion gets about the same numbers.

    The Hulkamania tour failed badly here, and really nobody other than WWE has pulled a big crowd in quite a while.

    If they couldn’t sell enough tickets last time, I doubt that would change – especially after the damaged goodwill.

    It’s hard to see it being worth the expense.

    It does seem odd that TNA believes they can try to pull this off again. However, the Hulkamania tour was not a failure in that it could pull crowds of up to 7,000 per show, something TNA struggles with regularly. It was just wrought with so many costs that is did make the tour only minimally profitable. That said, TNA has a totally different cost structure than someone running a tour by themselves, so there may be a way to pull it off.

    perez, on the other hand, is confused why TNA goes anywhere at all.

    Why does TNA have to go to all these other places? Shouldn’t they worry about in house first? Or just keep expanding, no matter if they’re ready or not? Damned if do, damned if don’t?

    To try to answer this, Guest#7740 begins:

    Well it would be smart of TNA to maximize profit however they can. Potentially, touring in Australia can also help build the viewing audience there.

    Tours in Europe have been very profitable for both TNA and WWE, so foreign tours can be well worth the effort. However TNA just did not sell many tickets the last time they advertised a tour in Australia. They would have to do several shows to make it worth the effort, I imagine.

    I don’t know if it is a question of TNA being ready to tour, as they have been in Europe several times. It is a question of TNA having developed the Australian/New Zealand market enough to make it worth the effort.

    More hopeful is the fact that TNA was able to have a large house show after proper advertising. This is important because they will be in the Hammerstein Ballroom later this year and they have been shown that traditional advertising for shows work. Whether or not they understand that this can lead to more profitable touring is another question entirely.
    TNA’s house shows have been praised in the past, and with the experience of Jeff Jarrett and Hogan you would hope they can see that US house shows can be a low risk/moderate profit move. But they have disappointed in the past.

    That is the main point of this. TNA does have an audience of millions around the world and should be able to pull in five to eight thousand people wherever they go. That said, the show they did in New York (at the minor league baseball park, not at Hammerstein Ballroom) showed that with the correct focused advertising dollars and effort they can pack a house.

    The tour they attempted in Australia had incredibly little awareness. Perhaps they have learned their lesson and will test the waters again?

    Now, to answer perez’s question, TNA is a global company and their “house” is everywhere. TNA should not be bound by the traditional borders and paths of profitability, but do what works for them. If there is money to be made somewhere, anywhere, that is where they should be. Guest#8431 goes in to some more depth here.

    TNA needs to increase customer awareness of their product, both domestic and foreign.
    As Paul Heyman said and has been said here, they also need to have a clear direction.

    TNA’s revenues should be fine right now, it is protected by long contracts. Successful tours, be they in Australia or in New York, only add to revenues. But if their customer base does not increase meaningfully, neither will their next contracts. That will certainly inhibit growth.
    The contracts present a double edged sword, however. Investments made in advertising today will not result in larger television contracts until the next contract comes into effect. There may be ratings based elevator clauses which we are unaware of, however.

    Still, if advertising is successful there is a larger base which may be interested in house shows, so at least some growth may be realized in the near future.

    Expanding may present problems in TNA management’s growth as business people. Money can bring stability, which helps people ignore the gaping flaws in their business model. I do think that TNA is not ready for growth for several reasons, which would certainly damn them in the long run.

    True, TNA tries to pursue paths that they are not ready for from an infrastructure and size perspective. However, there are ways for the company to grow organically and still maintain profit. This, though, does bring up a questions from Guest#7191:

    Is TNA in profit? I saw a commentator somewhere else say that and I just can’t believe it. Between having a huge roster, big names like Hogan and Angle and Foley etc etc, not having any gate money for tapings, very few house shows and a PPV model that is doing so little for them they are going to drop it.

    Surely Spike isn’t paying millions and millions to have a show that barely hits a 1.0 rating? How many DVDs do they sell, it can’t be for much if they can sporadically appear on that list at 15 dollars for 3.

    Last time Dixie Carter and Jeff Jarrett talked about this, TNA was still profitable, although at a slight margin. But you cannot compare how the WWE does business to how TNA does business as their profitability models are completely different. On top of that, you cannot look at Spike as TNA’s only outlet. TNA is available in over 80 countries around the world. The contract that Spike pays helps cover TNA’s day-to-day costs while the contracts with other television outlets are almost pure profit; that is where TNA makes their big dollars.

    TNA is not about selling pay per view, tickets, or even DVDs. While all of these are areas they hope to be more profitable in the future, right now television rights fees are by far their bread and butter.

    Guest#8157 goes into some further detail on what TNA means to Spike TV anyway, especially a 1.0 rating:

    A show with 1.0 ratings isn’t worth much to the big boys, but is worth plenty for Spike. Since Impact! gets much higher ratings than their average (by a healthy margin), Spike has reason to pay more for the show.

    Getting a sense of reality, 1.2 million regular viewers is quite a bit.

    Spike is not TNA’s only revenue stream, but their largest. They have many overseas contracts.

    IIRC, Hogan is paid for by both TNA and Spike.

    The lower end of TNA’s roster doesn’t get paid when they aren’t told to be in Orlando. So the size of the roster doesn’t come into play as much.

    They lower end of the roster wouldn’t be at the top of the card in the indies either. TNA only has to be competitive compare to the indies in order to be enticing.

    TNA still has thousands show up at their PPV’s. That isn’t no money.

    I believe the estimate of their yearly revenue is $50 million. A well run business in most industries has about a 4-5% margin. Some industries are lower.

    So it is entirely conceivable that TNA has a couple million left if they played their cards right.

    And that is really it. Spike on average has a 0.6 to 0.7 average rating (including iMPACT), so a 1.0 to them is very good. On top of that, TNA’s cost structure is lower because there are far fewer people with guarantees, and even those with guarantees like Sting are far below what the WWE pays and Spike sometimes does help cover the cost.

    You also have to consider that guys like Hogan make up their contracts in other areas: notably merchandise. Since debuting, Hulk Hogan has consistently been at the top of TNA’s top selling charts (despite how infrequently they are updated). Because of this, Hogan can make up the cost of himself without being a burden to the company, despite not causing a growth in ratings.

    Although TNA may be profitable by a thin margin, V is not impressed:

    Only a very bad or very stupid company would run with such a low margin.

    Actually, most supermarkets run on margins of less than 3%. Your neighborhood drycleaner, the people who sell coal, most fast food restaurants, and many other successful companies run on similar margins. With such low margins, you are just more dependent on higher volume. The WWE’s model works differently in that they have an 18% margin created by cutting costs. Additional sales translate very well to the bottom line, but they are not dependent on that. Commodities sellers, though, need to sell more to stay afloat. Guest#9754 comes in with an even bigger example:

    I believe a business magazine ran a list of most profitable industries. Even insurance companies come out to about that much after tax profit.

    The issue is competition. Most industries have it. If you run too high a margin your competitors will simply undercut you, possibly offering more quality or services than you.

    Since this is after everybody’s pay and all the expenses, loans, etc. It is actually quite a bit.

    The bottom line in this section is this: ratings and profit are not good or bad, they are only relative to your surroundings. A 1.0 is fantastic for Spike, moderate for USA, and terrible for NBC. $5 million in profit is fantastic for TNA, the worst year in 30 years for the WWE, and the complete end of NBC-Universal. It all depends on who and what the company is as to what these numbers mean.

    Speaking of TNA’s cost structure, Korsen want to know:

    Regarding TNA, something I’ve been wondering about for a while…

    How much more expensive is it for them to do the occasional live Impact show as opposed to the pre-recorded shows they’ve been showing every week since the move back to Thursday?

    I mean it’s not like they’re dragging TV equipment all over the country. They basically have their own TV studio in Orlando. So why can’t they do even every other episode live?

    I know the obvious answer is that they tape multiple week’s shows over a day or two period, but wouldn’t it be worth it to spend the extra money in exchange for the buzz they could generate just from people not knowing what’s going to happen in advance every single week.

    I mean, for me, one of my favorite things about a live TV wrestling show is that theoretically “anything can happen”… and, even if it usually doesn’t, the potential is still part of the appeal for me. I guess I just feel like TNA is making a mistake by not having live non-PPV TV shows anymore.

    To answer the questions, first is BringTheNoise:

    Quite a lot. You need a lot of equipment to broadcast live that you don’t need to tape a show and then have the network broadcast it. You also have to pay for satellite time for a live broadcast.

    Not only that, but the show would be on a Thursday. If they had a PPV on Sunday, they would have to pay to fly everyone home and then fly them back again. Also, keeping talent on a Friday when they can have more lucrative pay days from independents also means that TNA needs to pay the talent more. All and all, there are a lot of superfluous costs that add up quite quick.

    BringTheNoise continues:

    They did broadcast live every other week when they were on Mondays. Now The Journal may correct if I’m wrong, but I don’t recall that making a difference either way to the ratings. Live shows drew more or less equal ratings to taped shows, so why spend the extra cash when there’s no benefit to doing it?

    Overall, the live shows did slightly better than the taped ones, but there wer so many other factors involved from WrestleMania to major championship games, to other TV events. Frankly, it was not on long enough to hazard a guess. And this is the point Guest#1209 makes:

    With a couple of exceptions, TNA’s live shows did much better than their tape shows.

    The problem is, you can’t gage how live shows would affect the TNA audience, because they’ve never had two back to back live shows. When TNA did one live show, the ratings would go up, but the next week they were back to taped. For live TV to really be interesting, you need several weeks of live, to build up an atmosphere. One week on, one week off leads to little drama or suspense built.

    Or an inconsistent message and moving the show three times in six weeks leads to a confused audience.

    Plenty more was written, so be sure to take a look. And if you enjoy the Journal, why not bookmark 411wrestling.com and make it your home page? You can do that by clicking here.

    CLOSING BELL

    This concludes Issue #146 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

    Till then!

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