wrestling / Columns

The Hamilton Ave Journal 12.27.08: Volume 1 – Issue 66

December 27, 2008 | Posted by JP Prag

By JP Prag

Volume 1 – Issue 66

The Hamilton Ave Journal will be moving to Thursdays starting January 1, 2009.


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


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: WWE gets last word in lawsuit for 2008

On December 22, 2008, the WWE filed their final motion to have the lawsuit filed by Scot Levy, et al. to be thrown out of court. If you have not been following this lawsuit, the basics are that three wrestlers have filed a class action lawsuit against the WWE alleging that despite the fact their contracts say they are “independent contractors” that they are actually treated as “employees” and thus were denied rights, benefits, and tax relief that are guaranteed to employees. To follow the history of case:

  • Issue #47: The case is launched and the details are revealed.
  • Issue #49: More details are released by Scot Levy’s team.
  • Issue #50: Q&A session with the Journal to understand the nuances of the case.
  • Issue #54: The WWE files their first motion to dismiss.
  • Issue #63: Scot Levy’s team responds to the motion to dismiss.

    In the latest brief, the WWE provided very few new arguments and instead responded to what Scot Levy’s team was reacting to in the response. For the most part, the WWE made the claim that their contracts explicitly stated that each was an “independent contractor” and that “Plaintiffs cannot escape the clear language of the Booking Contracts…”

    Except that the plaintiffs can. Already covered by the Journal in Issue #63:

    One of the first arguments the WWE makes is that wrestlers knowingly and willingly sign a contract that states that they are “independent contractors” and not “employees”. That is where the lawyers made their first big play:

    [T]he employment status of an individual… is not determined solely by the label used in the contract between parties.” Sharkey v. Ultramar Energy Ltd., 70 F.3D 226 (2d Cir. 1995).

    In Issue #47, the Journal went into far greater detail into how one is determined to be an “employee”, despite whatever a contract says:

    So how does one determine if they are an employee? While Mr. Bischoff tried to use the 17-step test from 1992, the IRS actually uses a 3-prong test nowadays. Should the employer/worker relationship fall into just one of these categories that worker can easily be called an “employee”. Those categories are, according to the IRS:

    1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

    2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

    3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

    After going through how the WWE has in many ways met these criteria, the argument of how a contract is written does not stand up. One of the commentators (JD) on the news blurb stated it quite well:

    Why doesn’t WWE seem to realize that Levy is challenging the LEGALITY OF THE CONTRACTS?! If I draw up a contract that says I get to kill you if you don’t do a job, and you don’t do the job, I don’t actually get to kill you.

    Ash also made some relevant points while responding to others less familiar with contract law:

    The problem is the legality of the contract signed. The contract refers to them as independent contractors, but that doesn’t make them independent contractors under the law. Certain guidelines must be met in order for someone to actually qualify as an independent contractor as opposed to an employee, and vice versa. It’d be like if you signed a contract that referred to you as a monkey…would that make you a monkey? No. Would you be entitled to the same things other people, who aren’t considered monkeys, are entitled to UNDER FEDERAL LAW? Yes. Therefore, this is a contractual issue related to potentially misleading or inaccurate terms used within the contract to describe the wrestlers, which then prevent WWE from following certain federal guidelines. It isn’t SOLELY about money or benefits – it’s about principle and definition under law.

    The WWE has been treating their wrestlers far more like employees than independent contractors for years. Sorry, Vince, but it’s what you got when you destroyed the territorial system.

    The bottom line is that just because a contract states something it does not make it true. For instance, a contract promising sex is not legal in most of the country because that would amount to prostitution and slavery, both of which are against the law. Basic contract law states that any part of a contract that asks for illegal activity or misclassifies something is not valid. So while the three wrestlers and all who they made the lawsuit for may not see anything from the breach of contract perspective nor get an additional dime out of it, they can still get the ruling that they were misclassified and that they are owed those benefits guaranteed an “employee”.

    The biggest thing going against them is the WWE’s other main point to dismiss that the statute of limitations to make this motion has passed. Connecticut state law is quite clear that it must be less than five years to file such a motion and it has been more than five years since the three wrestlers signed contracts. That said, the former WWE-talent have made several counterarguments to this already:

  • The employer-employee relationship did not begin when they signed their contract, but began at some point afterwards and therefore is still within the timeframe.
  • None of these men are residents of the state of Connecticut and most work was done in other states, making this a federal case with no such statute.
  • They are filing on behalf of all such similar situated individuals, which would include anyone currently under WWE contract or signing a contract today.

    Most of the rest of the brief consisted of the WWE’s team taking swipes at the other law firm staying they did not understand the charges they were bringing, that the case was frivolous, and that the team is trying to tack on more charges that were not part of the original motion.

    At the end of the year, this highly watched case will most likely not make another move for at least a month or two when a judge will decide how to proceed. Even after that, it will still be months of discovery and scheduling court time before anything will move forward. The WWE may offer a settlement out of court, but the IRS may get involved anyway in an effort to collect back taxes. Given the current economic environment, the IRS may be looking to gain revenue through any means necessary and will be glad to know that they have been denied certain withholdings.

    The Journal will continue to follow this case all through 2009. The far-reaching effects for years to come in the wrestling industry will be impossible to ignore, no matter what the results may be.

    WWE adds executive and new show

    This past week, WWE Corporate made several announcements that will shape a lot of wrestling landscape in 2009. First up, Robert Zimmerman was hired as the new Vice President of Public Relations and Corporate Communications. According to the current public relations writing outlet:

    In his new role, Zimmerman will be a strategic member of WWE’s management team, and oversee business, consumer, financial, and trade press relations and strategy.

    The WWE has been sending out a large number of press releases in the past few months to try to protect their corporate image and bolster stock price, but thus far none have had a positive effect. Mr. Zimmerman will have an uphill battle in the high-stress environment of the WWE to try to give the company a positive image in the eyes of consumers, journalists, and investors. Still, Mr. Zimmerman is hardly a new kid on the block has been media relations type roles for 17 years.

    No start date for Mr. Zimmerman has been announced, but that did not stop the WWE from sending out a press release of their own. Apparently, the WWE and WGN (a contender for SmackDown before the deal was linked with MyNetworkTV) will be launching a new version of “WWE Superstarts” that will start airing in April 2009. All that is known right now is the show will be a 1-hour format in prime-time. Most believe that this will be a magazine style show with the possibility of some original matches or classic content, but there is nothing to substantiate these thoughts.

    WGN America (WGN’s national cable outlet) is mostly available outside of its home in Chicago through DirecTV and Dish Network, but is available on a number of cable outlets as well. They do not have the same reach as MyNetworkTV or the CW, but still reach a considerable percentage of American home (roughly 80-85%).


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

  • WWE Tribute to the Troops scored a 0.9 rating with 2.9 million viewers, dragging down the normal rating for that spot. The WWE specials on NBC have not been beneficial to NBC which has been struggling with ratings this year. If there will be any more primetime specials remains to be seen, but NBC still put this one on after the 1.1 ratings the last special got.
  • In a follow-up from last week, TNA has also started to offer free bonus matches on YouTube. These matches are taped for the syndicated show Xplosion and will now be available to all users on YouTube. This is an interesting marketing vehicle for TNA and it will be interesting to see if free content online can lead to increased ratings on television instead of vice versa.
  • In an effort to control their brand abroad, the NWA has let wrestlers in Mexico know that they can no longer defend non-sanctioned NWA belts without NWA control and approval. The NWA Light Heavyweight, NWA Middleweight and NWA Welterweight will be seized by NWA Mexico from CMLL to be used by the namesake promotion. The Light Heavyweight title was started in 1948 and had permanently moved to Mexico by 1959. The Middleweight title came into recognition from three former titles in 1939 and mostly stayed in Mexico except for a few sojourns in Japan. The Welterweight title started in 1946 in Mexico and also stayed there except for a few trips to Japan. Considering these titles have had little to do with the NWA overall for over 50-60 years, it remains a mystery what the NWA plans to do with them instead of letting them to continue to promote the NWA outside of their own organization.


    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 Thursday December 25, 2008, here are the current standings of our shows:


    Close (This Week’s Rating): 3.2
    Open (Last Week’s Rating): 3.3
    Percentage Change: ▼ 3.9%
    52-Week High: 4.0
    52-Week Low: 2.6
    All Time High: 8.1
    All Time Low: 1.8

    Close (This Week’s Rating): 2.1
    Open (Last Week’s Rating): 2.0
    Percentage Change: ▲ 5.0%
    52-Week High: 2.9
    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.

    Close (This Week’s Rating): UNAV
    Open (Last Week’s Rating): 1.3
    Percentage Change: N/A
    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): 1.0
    Open (Last Week’s Rating): 1.2
    Percentage Change: ▼ 16.7%
    52-Week High: 1.2
    52-Week Low: 0.9
    All Time High: 1.2
    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


    Coming in to end of the year, RAW managed to do much better than the same period 52 weeks ago when they were showing a recap show. That said, at press time ratings for ECW were not available (a clip show itself this year), so it remains to be seen how well that will do. iMPACT also dropped this week to a 1.0 after two weeks in a row of 1.2. Given the last episode of the year was on Christmas, it should be interesting next week to see how that came in. iMPACT had held up extremely well on Thanksgiving for the past few years, but Christmas is a beast of a whole different color. Also, TNA is following up with a mostly clip-show on New Years Day, so the company may have a few weeks of lower ratings to deal with before returning with new content.

    Within the next few weeks, the Journal will once again revisit the ratings predictors and see how the end of the year came out.


    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. WWE Ultimate Rivals Trading Cards ($2)
    2. WWE Heritage IV Trading Cards ($2)
    3. WWE Black Gift Bag ($3)
    4. Hardys Green Pendant ($10)
    5. Jeff Hardy Armbands ($20, on sale $10)
    6. WWE Holiday Gift Wrap ($6)
    7. Jeff Hardy Armband Package ($80, on sale $29.99)
    8. Hardys Purple Logo Pendant ($10)
    9. WWE 2009 Day Dream Calendar ($13.99, on sale $9.98)
    10. WWE Red Gift Bag ($3)

    With the final week before Christmas (and overlapping with Chanukah), things do not look that good on the WWE’s list. They are dominated by items $10 and under (9 of the 10) and things on sale. Much like other retailers, the WWE has had to discount and sell lower-priced, lower-margin items in order to try to keep revenue at a comparable level. As will be expected, this will translate right to the WWE’s bottom line. When they release the year-end results in about seven weeks, there will be no surprise when we see a rise in costs of goods sold for consumer products.

    Also of interest this week is top earner John Cena falling off the list. Is this just temporary for the end of the year, or does Cena’s new items not have the same momentum as his old ones?

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

    1. Autographed Sting Baseball Bat ($149)
    2. Cross The Line Triple Pack DVD Set ($24.99)
    3. TNA Ultimate Matches DVD ($19.99)
    4. Beer Money T-shirt ($19.99)
    5. Mick Foley – Bang Bang T-Shirt ($19.99)
    6. TNA Christmas Ornament ($9.99)
    7. Autographed Mick Foley & Sting Poster Combo ($49.99)
    8. Autographed Sting Poster ($29.99)

    Not only does TNA not update their list, but the site still states on December 26, 2008:

    “Order by 12/19/08 to have it Delivered By Christmas”

    As will be seen in the Editorials, this statement may not be true, either. If TNA wants to be a serious contender in merchandising and wants to maintain customer loyalty and trust, they really need to get all of their different houses in order. The company continues to grow exponentially in areas like international distribution and outlet distribution, but they refuse to get their foundation and base processes in order. At this point, it is not just a continual embarrassment for the company, but is costing them customers and future sales.


    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.

    Sunday Monday Tuesday Wednesday Thursday Friday Saturday
    28 (Dec)

  • RAW / ECW Live (New York City, NY)
  • SmackDown Live (Raleigh, NC)
  • 29

  • RAW / ECW (Manchester, NH)
  • SmackDown Live (Richmond, VA)
  • 30

  • SmackDown (East Rutherford, NJ)
  • RAW / ECW Live (Portland, OR)
  • 31 1 (Jan) 2

  • RAW / ECW Live (Ft. Lauderdale, FL)
  • 3

  • RAW / ECW Live (Lake Charles, LA)
  • SmackDown Live (Tyler, TX)
  • 4

  • RAW / ECW Live (Baton Rouge, LA)
  • SmackDown Live (Bossier City, LA)
  • 5

  • RAW / ECW (New Orleans, LA)
  • SmackDown Live (Alexandria, LA)
  • 6 7 8 9

  • RAW / ECW Live (Winnipeg, Manitoba, Canada)
  • SmackDown Live (Hot Springs, AR)
  • TNA Live (Wilson, NC)
  • 10

  • RAW / ECW Live (Rochester, MN)
  • SmackDown Live (Poplar Bluff, MO)
  • 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, TNA merchandising was the issue du jour. First up was Brett:

    I bought some TNA shirts during their black Friday sale and I still haven’t got them, does anyone know what I can do to get them? I sent an E-Mail but haven’t gotten a response.

    Brett, you are not the first person to write the Journal about missing merchandise and slow order fulfillment. As a matter of fact, on TNA’s own website there have been mentions by people in the product comments about slow or incomplete shipping. TNA claims an easy process to contact them and resolve issues, but every follow-up mentioned to the Journal has resulted in no response. As mentioned in the Money and Investing section, TNA needs to get their departments in order before they start to lose more customers. The Journal has contacted people higher up in the TNA organization, but thus far there has been no response or comment. Given the company is mostly on vacation right now, do not expect to get much if any response until January.

    Steve307 follows up with this thought:

    I love the weekly stab at TNA’s Top 10 list.

    And MacDollarz continues that with:

    I don’t think it matters in the long run TNA not updating the website merch list.

    Its cool you point it out though.

    Please note: this is not a personal vendetta against TNA by the Journal, but simply pointing out what is happening within TNA. Although whether or not TNA updated their top selling merchandise list has any impact of potential sales is not as relevant, but it is indicative of the bigger problem: TNA is not organized nor are they motivated by details. If the company is going to release a top selling merchandise list, they should be committed to updating it. If they cannot do that, then they need to scrap the list. This is true for many aspects of TNA, and they do a lot of things decently to poor instead of a few things extremely well. Instead of highlighting what is good and strong about the organization, TNA continually brings to the forefront everything they do not do well.

    Moving on to the WWE selling front, TAT want to know:

    “In the top ten selling PPVs of 2008, the WWE only cracked the list once with WrestleMania 24.”

    Is it possible this has something to do with there being more WWE PPV than calendar months?

    Possibly, but the WWE broke the list three times the prior year with even more PPVs than calendar months that year. At the beginning of this year, minor PPV buys were up, but major PPV buys were way down. By the end of the year, both major and minor PPVs had large drops in buyrates that will be apparent when the WWE releases year-end results in seven weeks. The other thing that happened this year was the UFC did phenomenally well.

    The WWE produces 5 hours of free original entertainment a week, so their PPVs have far less meaning than a UFC PPV. On the other hand, the WWE makes significantly more on TV rights than the UFC does, so there is a balance to consider. At some point, the PPV model may not be viable anymore, and the WWE has taken steps to make sure they are safe. PPV only represents 25% of their revenue, so even without PPV the WWE is still financially viable. For now, though, the WWE is going to try to get as much as possible out of PPV as they can.

    On the subject of ratings, Tiffany Miller wants to know:

    When did raw have an 8.1 rating? I know it must of been quite some time ago.

    Check out Issue #50 of the Journal in the Editorials section where this topic is fully covered.

    Wrapping up this week (and year) with the money is Iron Knee:

    A question about the dividend. Don’t the McMahons make a large portion of their income from the dividends? That might be the reason why they are loathe to cut it.

    According to an SEC filing by the “Vincent K. McMahon 2004 Irrevocable Trust”, on July 6, 2007:

    [There are] 43,421,427 shares of the Class B Common Stock, $.01 par value per share (“Class B Common Stock”), of World Wrestling Entertainment, Inc. (the “Company”) beneficially owned by Vincent K. McMahon. Mr. McMahon beneficially owns 91.0% of the issued and outstanding shares of Class B Common Stock and approximately 86.7% of the Company’s total voting power.

    Given that there 79.79 million shares outstanding today of Class A and Class B stock, Mr. McMahon still controls roughly the same amount of the company today. At the same time, Stephanie McMahon owns 44,809 shares, Shane McMahon owns 43,400 shares, and Linda McMahon owns 566,760 shares. All of the McMahon family members have foregone the additional $0.12 per share for the dividend, so they are receiving $0.24 per share per quarter for their ownership, roughly translating to on an annual basis:

  • Vince McMahon: $41.68 million
  • Stephanie McMahon: $0.04 million
  • Shane McMahon: $0.04 million
  • Linda McMahon: $0.54 million

    So yes, that is a good portion of all of their incomes and they would be loath to cut it. But at the same time, there are a large number of members of the board and corporate officers who have a major stake in the dividend yield as well. For instance:

  • George Barrios (CFO): 25,000 shares – $36,000 per year
  • Jared Bartie (Executive Vice President, General Counsel): 20,000 shares – $28,800 per year
  • Kevin Dunn (Executive Vice President, Television Production and member of the Board of Directors): 121,150 – $174,456 per year
  • Donna Goldsmith (Executive Vice President, Consumer Product and member of the Board of Directors): 78,684 shares – $113,305 per year
  • David Kenin (Member of the Board of Directors): 9,758 shares – $14,051 per year
  • John Laurinaitus (Senior Vice President – Talent Relations): 44,099 shares – $63,503 per year
  • Michael Solomon (Member of the Board of Directors): 96,449 shares – $138,887 per year
  • Michael Sileck (Chief Operating Office and Member of the Board of Directors): 231,363 shares – $333,163 per year

    And this is just a partially compiled list of nearly 4 dozen individuals and intuitions that the WWE and the McMahons have close ties to. Given this list, there is a conflict of interest between those who issue the dividend (the Board of Directors) and the other stock holders. Since the Board of Directors and corporate officers benefit so directly from the dividends as well, Mr. McMahon and his family would also not want to cut the incomes of their most loyal soldiers by taking away this substantial pay. In the end, it is not just about the McMahons but plenty of other people involved in running the company.

    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 #66 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

    Till then!

    The Hamilton Ave Journal will be moving to Thursdays starting January 1, 2009.

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