More change is on the way for WWE. And its not coming cheap

[digforvictory]

They go through phases like this all the time. In that terrible Mick Foley Hardcore Diaries book he said there was a point in late 2003 where the WWE banned the use of any weapons which was why there was that 20 minute beat down from Evolution because he thought without weapons the next best thing to get over the brutality of the beating was to make it extra long.

 

Granted this "Wrestling is banned" thing looks like it's going to be the rule for a while eventually they'll change their mind and go the other way I reckon.

[The Genius]

Some good points a few pages ago about the use of WWE talent in films. It does seem that Vince has finally realized that putting a "WWE entertainer" in a film will put off more people than it will attact whilst at the same time scaring off every major director and actor from their project.

 

I think what they need is more wrestlers to take small parts in big films. How many times are there films with an ensemble cast like The Longest Yard, The Condemned and The Expendables- Austin fit in will with those films as he didn't have too much to do.

 

The Rock was in the Mummy Returns movie and he was a good fit so when they put him in as the lead in the Scorpion King people were more accepting than if they just threw him in to a 2nd rate movie in the way they did with Cena and The Marine. I also wonder how many top directors were offered The Marine and decided the money just wasn't enough to kill their careers (a quick IMDB check reveals that John Bonito who directed The Marine hasn't been given a film for five years since!)

 

Another IMDB check showed that Vinny Jones has had 46 screen credits -probably more than the WWE roster put together and usually as some kind of "heavy" and most of these aren't little British films. I'm sure there are wrestlers who have more presence physically than an ex football player and who can match him in the acting department.

 

There must be some reason why they give these roles to him and not someone in the WWE?

[IANdrewDiceClay]

Here's more news on Vince's next big venture:

Not content to sit on a pat hand, Vince McMahon is going back to the gambling table that throughout his adult life has made him, and at times broken him, for what could be his final major act.

 

At 65, McMahon has never wanted to be a guy whose tombstone read, “Here lies the greatest wrestling promoter that ever lived.” He is, but the fact people think of him as that for some reason bothers him. He spent years trying to act like he was in competition with Ted Turner, even though Turner probably spent a few minutes per year even thinking about wrestling. He’s picked his fights and won big and lost big. So now, he wants to lose the term “wrestling,” the only industry that he ever had any true success in. Some who defend him say it’s because wrestling has a negative connotation in society. And it does. But why would that be? Because for most of the last 27 years, whenever the general public thought of wrestling, it was the product overseen by McMahon that they thought of. Whatever perception wrestling may or may not have had in another lifetime, and that varied greatly based on who was putting it on, has been reshaped on a national basis to whatever people think of the product McMahon has created.

 

So in his next act, World Wrestling Entertainment is now WWE, and the core product, the one that used to be called wrestling, and still is by everyone except those who work directly for him. It has been called sports entertainment by him since 1985. It’s a term that has still, in its third decade, never caught on with anyone except those paid by him to alter their natural speaking patterns. And now he’s amending that to just “entertainment.”

 

“I think every brand has to re-create itself,” he said to the Los Angeles Times. “I want everyone to look at us in a vastly different way than they have.”

 

Just as 26 years of calling it sports entertainment has yielded almost no results, the next attempt is to go on a spending spree to acquire companies involved in similar business models, brands that can be put on television, put on tour and merchandised.

 

Without tipping their hand at what in specific they are looking at, McMahon said, “To me, it is anything that is out there. We can take on a ton of debt.”

 

The latter is in stark contrast to the McMahon way of doing business these last few decades. McMahon never wanted business partners. He used to say when asked about it, “We don’t play well with others.” He took on NBC as a 50% partner in the XFL, a disaster that led to the franchise folding after one season. NBC pulled out, and his other television partners wanted nothing to do with it, even as he was insisting he still could have made it work.

 

The company may have been operating in debt prior to the first WrestleMania, given that many bills were late in being paid. But that was a gamble that paid off, and it wasn’t until the mid-90s when the company had major financial issues. During that era, right before the boom that took the company to its greatest heights, the company did take out some loans to keep going. But once it raised the price of its secondary PPV shows, they were back in black. And then, once the company went public, the selling of a minority of stock to the public left them with hundreds of millions in cash on hand. It has not been good for the original investors. After the first day WWE went public, the stock was at $42 a share. Now it is at $11.13, not an all-time low, but at the lower end of the usual up-and-down swings.

 

The recent drop is because the investing public is not confident of the latest planned move. And perhaps even more, is facing the reality that with the move, the company’s huge dividend of 36 cents a share per quarter (a whopping 12.8% return per year based on the current price) will have to be slashed if they use their cash on hand for purchases or to use debt. It was the cash on hand that has been used to fund the dividend because company profits could not sustain it.

 

Pro wrestling in the U.S. has been a declining business for a decade. Its saving grace has been a huge shift in the entertainment economy. Pro wrestling has always been aimed at being relatively inexpensive entertainment as compared with most sporting events. But as costs for all events held in major arenas have skyrocketed, the $10 to $12 average ticket price of the 80s and early 90s has been able to be increased to $30 to $40 for most shows, and more than $60 for major events. That’s still a bargain compared to the NFL, NBA, NHL or Baseball. When they come to town, they push the low ticket price, whether it be $15 or $20, and promote themselves as the best bargain in entertainment. In addition, the fragmenting of television, and wrestling’s ability to draw a reliable audience, not one that could sustain on a network, but one that is very valuable on cable, has led to escalating television rights fees. The introduction of sports specific stations looking for programming–sports–the very term McMahon in the U.S. wants to run from is the genre that keeps him afloat in much of the rest of the world, and willing to pay for a sports-like product that resonates better on television than all but major sports, has allowed them to make money from television. Once a loss-leader, now television pays the bills as some of the traditional core metrics have declined.

 

But with diverse revenue streams, even when wrestling isn’t connecting with the public like it once was, making a profit in the wrestling business is the easiest it has ever been. But that’s not enough.

 

Both WWE and TNA are doing national rebranding campaigns, and most likely, WWE will do the better job of the two. WWE will be using the slogan, “Bigger, Badder, Better,”

 

They also officially announced HHH heading up the developmental program, something that has been in the works for months. They pushed the idea the signing of Sin Cara was his first move, which is why Sin Cara was rushed onto the main roster and given the push coming in. Gerald Brisco’s new role is to scout college wrestlers. For the most part, the college wrestlers who came to WWE were those who took the initiative themselves as opposed to being recruited, although the company did specifically recruit Kurt Angle, Brock Lesnar and Bobby Lashley, as well as Muhammed Lawal (King Mo), who ended up doing MMA instead but has talked about coming to WWE after his MMA career is over.

 

McMahon’s financial failures outside of wrestling are almost as legendary as his financial successes within in. Starting with the Evil Knievel snake river canyon jump, the biggest closed-circuit fiasco in history, which forced him into personal bankruptcy, failing as a music concert promoter, a boxing promoter, a movie producer the first time (Shane Productions), music companies (twice), an attempt to turn bodybuilding into a PPV entity, marketing bodybuilding supplements, a Times Square restaurant, his wife’s senate run and best known of all, a football league.

 

The WWE internally talked like this in the late 90s in particular. Wrestling caught on fire and McMahon believed he had the secret of attraction the hard-to-reach 18-34 male demo to television, which wrestling was doing huge with at the time.

 

During that period the WWE made attempts to purchase, among other things, the Harlem Globetrotters, the Pro Bull Riding tour and the Canadian Football League. None materialized, although being rebuffed by the Canadian league owners was part of the reason for forming the XFL, with the idea they would offer higher contracts and thus raid the CFL of the second-tier of players that weren’t good enough at the time to make NFL rosters, and take their market after turning him down. That didn’t work out so well. Before selling to UFC, the Pride Fighting Championships attempted to sell to McMahon, but McMahon wasn’t interested. At times McMahon had enough interest in starting an MMA group that he had hired people on the periphery to get the ball rolling, with the idea of building around Bob Sapp, who would be pushed as a pro wrestling attraction and an MMA star. McMahon at the time had his wrestling vision for MMA, wanting to build around big guys with the right look. But Sapp was under contract to K-1, and McMahon eventually lost interest.

 

McMahon said he’s learned from his mistakes, saying that when it comes to acquisitions, they will stick to the entertainment business.

 

In a move that in some form is believed to be related, former Connecticut Governor and Senator Lowell Weicker has left his position on the WWE Board of Directors after 12 years. Weicker said it was a mutual decision and gave no reason for it, only to say it had nothing to do with the fact he supported Chris Dodd in the U.S. Senate race over Linda McMahon. Weicker’s resignation means three of the ten members of the board have resigned in the past six months, along with the leaving of Chief Operating Officer Donna Goldsmith. An article in the Greenwich Times indicated a change in the board may have to do with the company’s new goals.

 

“You may have read we are implementing a new business model, so the company feels that it is a good time to identify new directors to provide a fresh perspective to the company,” said WWE spokesman Robert Zimmerman regarding the changes.

 

In recent years, the company has once again started a movie division, which has yet to produce either a hit or a movie critically acclaimed, although the division for its history is still slightly in the black due to strong DVD sales of some of its initial offerings. But it lost money this past year. And part of its initial goal has already been dropped, the idea that putting wrestling talent in lead roles of movies would make them movie stars, and thus, more marketable and more larger-than-life.

 

It is possible, at least arguable, that you can say being the lead in a WWE movie made John Cena a bigger star. I don’t believe it’s the case, but you can’t prove it either way. But Steve Austin was so successful in furthering his character in a movie that the deal for a series of movies is still, years later, waiting for the second offering. Kane, Big Show and HHH got no bump out of being featured as leads in movies. And I dare say the young guys that movies were supposed to make into new headliners, the no-longer existing Mr. Kennedy and barely-existing Ted DiBiase, did zero.

 

The latest strategy is to do cheap movies, avoid the theaters (except for almost non-existent one weekend opens), and build around real actors while getting a name wrestler in the mix, while using their television show to promote that a star wrestler is in the DVD release. Thus far, that strategy has operated in the red, although they believe it will be profitable.

 

Part of the expansion is the new television network, which has been talked about for some time. If the plan is to use their endless hours of footage and do some cheaply produced talk shows they can do okay. If they get into trying to produce original programming, then it gets trickier.

 

He talked about producing live events and television shows, sending their television team and outsourcing them.

 

“No one does television production better than we do,” he said. “It’s damn near the Olympics. We know more about live event touring than anyone in the United States.”

 

That’s an overstatement, since McMahon has never been able to put together a television production anywhere close to the level of HBO’s sports presentations.

 

Jay Kaplan, the portfolio manager of Royce & Associates, which owns 9% of the company, making the fund the No. 2 shareholder behind Vince McMahon, still feels this is a wrestling company.

 

“I think that the most important thing right now is the return of the health of the core business,” he said. “One of the markets big concerns is they are losing market share to real fighting.”

 

Whether this is a fair appraisal of the situation, many have reacted to this move as an admission that pro wrestling is not a long-term growth industry and that after more than a decade, the company has been unable to produce the level of mainstream star that has historically carried the promotion, such as a Bruno Sammartino, Hulk Hogan, Steve Austin or The Rock. Part of it is guys like that just don’t come around very often. The scripted nature of the promos and lack of connection with the public at any kind of a deep level would make it impossible for a Sammartino-like character to exist in modern wrestling, plus a character like that is only created when you build for years around that person. With Hogan it’s the same thing, plus seeing a big juiced up guy with blond hair like a Hogan or Superstar Graham with limited in-ring would be difficult to get over to the modern audience. Austin was pure luck, a very good worker who could portray a character that clicked at the time and they got completely behind. And Rock had a unique interview ability, look and charisma. It should be noted that since 2001, when interviews became scripted, they have yet to create that person. They have created money draws in Batista and John Cena, but with the exception of Batista in 2005 when he was chasing the title, the watering down of the title and making results of matches and the title itself meaningless has taken away one of the prime goals. It should also be noted that by over-angling, the hot shotting of the past that created the legendary confrontations no longer means anything. Basically, by eliminating the key building blocks, they’ve made it far more difficult, maybe impossible, to create the standout star that takes it to a new level like the aforementioned people did in the past and others had done on a regional basis, and works in other sports such as in golf and basketball.

 

That’s not a death-knell to the business by any means, but the idea pro wrestling could be the fifth most popular sport in the country as it was at many points in the past may be something out of their reach. And in doing so, to become a growth stock, it has to become more of a conglomerate. In doing so, the risks become higher. Buying companies within an entertainment framework that they believe they know as opposed to properties in businesses they don’t know mitigates the risk. But again, there is no proven track record in entertainment. They have yet to produce one critically acclaimed movie in multiple tries. They have yet to show any success in the entertainment world at anything that wasn’t an offshoot of an already popular pro wrestling business that has its roots nationally dating back a century.

 

This will not be the time to keep the stock when it comes to a short-term strategy. Wall Street has seemingly decided this isn’t a good move, and the price will take another hit when the dividend is cut, which will have to happen if they are going to spend money on acquisitions. Over the long term, the stock price will be dependent upon whether they can acquire companies and make money with them, as well as if they can show growth in their existing wrestling property.

 

A company press release hinted at the dividend changing. Since February 2008, the company has had a dual dividend. It was $1.44 per share per year to all stockholders except the McMahons. It was 96 cents per year for the McMahons, based on a three-year waiver of the increased dividend for other shareholders. That figure still left them with about $45 million in dividend earnings per year, taxed at 15% instead of the 35% or so if the money came in salary would be taxed. However, the waiver the McMahons took on the separate dividend has expired and at this time they’ve given no indication they will accept a dual dividend. The dual dividend meant about $20.8 million each quarter. No longer having that waived would mean the company would be paying out $26.3 million in quarterly dividends, roughly double the average profits. Even without spending money on new acquisitions, that figure would no longer be feasible. The McMahon share would jump to nearly $68 million per year.

 

The 2010 annual report even hinted as such, saying, “We cannot assure our stockholders that dividends will be paid in the figure, or that, if paid, dividends will be at the same amount or with the same frequency as in the past. Any reduction in our dividend payments could have a negative effect on our stock price. Over the last three calender years, the company’s cumulative dividend payment totaled $247.3 million and its cash from operating activities less net purchases of property plant and equipment totaled $152.2 million.”

 

In other words, they are spelling out ahead of time that they’ve overpaid dividends the last three years by a great margin.

 

Some of the people seeing this new direction, including those who have worked for the company in the past, see this as an exit strategy, of making a lot of acquisitions of entertainment content, including having a television station, as a way to sell to one of the major media conglomerates. Vince said, “I don’t see that happening.”

 

Others can see it as something that has been part of the Vince McMahon mind set from his attempted forays into boxing and the movies more than 20 years ago. McMahon does not want to be what people perceive him to be, and unless he can be successful outside wrestling, that perception will never change.

 

-

Dave Meltzer

[PowerButchi]

As regards the new way of making films, they're doing that with that "The Way I Am" or whatever it's called. Randy Orton is in it for about 3 minutes, but it's built around a decent plot and proper actors. The reviews aren't that bad for it either. It's the way forward, I'd say. Fuck the action films off, just have someone like Santino in a comedic cameo or something.

[The Genius]

As regards the new way of making films, they're doing that with that "The Way I Am" or whatever it's called. Randy Orton is in it for about 3 minutes, but it's built around a decent plot and proper actors. The reviews aren't that bad for it either. It's the way forward, I'd say. Fuck the action films off, just have someone like Santino in a comedic cameo or something.

I agree! I think with wrestlers in films quite often less is more. Santino as say a pissed off Pizza delivery guy in a show stealing scene in a movie would be memorable compared to say Santino trying to carry a movie for two hours.

 

Obviously with time and experience they'd all get a bit better to the point where them being the lead in a movie wasn't as painful as say The Marine.