Posted in: Mr. Tito
MR. TITO STRIKES BACK - Analyzing WWE's 2016 Financials, Trump/WWE, Kurt Angle, and More
By Mr. Tito
Feb 11, 2017 - 6:25:03 PM

Follow Mr. Tito on @titowrestling

Some of the readers here at / have asked me to review the 2016 WWE Financials, as I work in the financial industry when I take the Tito mask off and I've reviewed WWE's financials in the past. So why not write another column for the week? And I shall review WWE Elimination Chamber this weekend as well and you can read my predictions right here. I wrote the predictions just before Smackdown and during the first hour of the show... I'm not feeling as confident about them right now.

My overall thoughts on the WWE's 2016 Financials: pretty damn good.

Through 2016, the WWE is now seeing the WWE Network hit its stride. We're now above the "break even" point and growing. Network Revenues alone went from $159 million during 2015 to almost $181 million during 2016. That's really nice... But I think the REAL STORY is the Brand Extension and Pay Per Views. Despite RAW's television show losing viewers from 2 years ago and the Houseshow markets seeing lower numbers, the WWE maximized its revenue by not just INCREASING the # of Pay Per Views per year but increasing the QUALITY of the Pay Per Views as well.

First of all, let's talk about the Brand Split. The WWE must have amended their deal with Comcast/NBC/Universal because their Television Revenues went up to about $242 million, up from $231 million during 2015. Smackdown went to Tuesdays and now airs LIVE. Viewership is up slightly from what the show used to draw. WWE also saw Total Bellas created on the E! Network. In total, WWE now has 3 hours on Mondays, 2 hours on Tuesdays, and 2 more hours on E! Network for Total Divas and Total Bellas. There's a chance that WWE could own 7 total hours of Primetime television on Comcast/NBC/Universal's Cable/Satellite channels.

But I believe that PAY PER VIEWS are the true driver of income.

Wrestlemania 32 was massive this year in Dallas. Huge money maker... But don't forget SummerSlam 2016 did great business in New York again and Survivor Series 2016 awoke from the dead and drew well in Toronto. Furthermore, NXT's Pay Per Views are proving to be major draws as well. WWE had 15 Pay Per Views during 2016 itself while NXT had 4 Pay Per Views. Think about that for a second... That's 19 major WWE events that you, WWE Network viewer, get to enjoy for only $9.99 a month. That is a STEAL and especially since WWE's Pay Per Views have been of high quality for the last 3 years. On top of the WWE airing those 19 Pay Per Views on the WWE Network and the remnants of the Pay Per View market on Cable/Satellite, WWE is filling arenas with bodies to watch those events. While the Houseshow market has been sagging, the LIVE Televised/Pay Per View attendance is either growing or remains strong. Again, 19 Pay Per Views that packed arenas.

As much as we harp on how bad RAW and/or Smackdown have become (I call them Infomercials), the WWE appears to be purposely saving their best for Pay Per View. And that's a good business model although again, RAW's viewership needs some help. Doing simple math of Total TV Revenues divided by Total Revenues, the WWE obtains 33% of its Total Revenues from television. I believe that last year I calculated roughly 35%... WWE is slightly less dependent on TV but it's still 1/3 of their income. However, I'd argue that Television as seen in about 96 million homes on USA Networks still helps the WWE advertise WWE Network, Pay Per Views, sell merchandise, etc. They still need that exposure in order to advertise that stuff. Like I said, RAW/Smackdown are infomercials although I believe that Smackdown has been solid during 2016 (besides James Ellsworth).

Here's my concern, however... Remember on financials, it's not just Revenues that you have to look at... WWE makes its money off of Profit. Sure, their Net Income (Revenues - Expenses, and other adjustments) was about $34 million compared with around $24 million the year before, but the COSTS still concern me. Total Expenses for the WWE during 2016 were $430 million versus around $397 million during 2015. Yikes... It COSTS more to host a second LIVE show just as it COSTS more to host more shows with a Split Roster. Now granted, the boom in revenues can offset the rise in costs... But what if the WWE over-saturates the market with wrestling and demand to see RAW/Smackdown declines during 2017? It could happen... It takes a lot of energy and effort to make 2 brands look good and compelling to follow. It's probably a good chance that the cheap $9.99 WWE Network price is keeping many around, especially since Pay Per View quality has been steady.

Last year, WWE made some efforts to scale back their production a bit on their televised shows. That paid off with Television costs reducing from $129 million during 2015 to around $120 million during 2016. Considering that WWE now has to show 5 hours of LIVE programming on non-Pay Per View weeks and then 8+ hours on Pay Per Views, this is a big success and welcoming as an investor. HOWEVER, more Pay Per Views to watch, more bandwidth being used. Make WWE Network more appealing, as the subscriber is up, it will cause more server use and more server space to be purchased. Plus, I can imagine that Broadband carriers (like Comcast) are getting some sort of cut. WWE Network's costs went from $107 million during 2015 to around $123 million during 2016. That's a big jump when you consider that content, other than Pay Per Views, wasn't abnormally added compared to previous years when WWE had to strongly sell the WWE Network product.

But then there are other things as you look at the WWE's 2016 10-K Annual Report. Corporate or administrative expenses are up from $193 during 2015 to around $219 during 2016. Depreciation is up, Investment expense is up, and taxes paid are higher. Remember, and I wonder about Linda McMahon's involvement with the Trump Administration, WWE has probably been paying a higher Corporate Income Tax for the past few years and they can't exactly outsource their labor like other companies. Granted, they get away with lower benefits payments due to their "independent contractor" status, but there are expenses for expanding their business the way that they did. WWE's business model through paying wrestlers, paying ring crews, trucks to haul equipment, corporate costs, and many highly paid officials in Stamford, CT... It adds up. Split the rosters in half, those costs will sure to rise.

HOWEVER - If the WWE can keep building on their Pay Per View momentum, as both Brands have put on entertaining shows and now, Rumble, Wrestlemania, Money in the Bank, SummerSlam, and Survivor Series (the "Big 5") can now be marketed harder as BIG events... The just have to somehow improve the quality of their Television shows to enhance viewership among USA Networks, Hulu, YouTube, and DVRs. In my opinion, if they can find the next top drawing babyface, that could do it... But if you're a wrestling fan, WWE Network has certainly delighted you.

The impressive thing to me is how the WWE is able to pull in more $$$ per fans than ever. The fanbase has declined over the past 3 years... I've quoted the 1 million number from RAW as they used to average around 4 million, now do around 3 million. I've studied Hulu and YouTube numbers... I'm just not buying into their numbers as being significant. I already proved that DVR numbers have declined from being between 400,000 to 500,000 about 5 years ago to ranging from 300,000 to 400,000 now. However, the loyal fans that remain are enjoying the spoils of the WWE Network feeding them an impressive 19 Pay Per Views a year along with cool weekly shows like NXT and Talking Smack. Despite the fan base shrinking, the WWE is able to pull out more dollars per fan than ever. Furthermore, they are making certain Pay Per Views as major box office attractions and cities are beginning to really climb over each other to get major WWE Pay Per Views.

Continue to invest heavily into your Developmental program and NXT to develop the stars of tomorrow. Triple H has performed well overseeing that since 2012 although he's more reliant on free agency than anything. Still, having a strong NXT brand that can put on legitimate Pay Per View shows has been a plus for the WWE. The "Class of 2016" has stocked the WWE with talent and now, the WWE just has to figure out how to use them. Lots of potential... BUT, they have to get the babyface superstars correct. As I've said repeatedly now, if the WWE is focused on getting Roman Reigns over, HE NEEDS HELP. Immediately trade Sheamus/Cesaro to the Smackdown roster for Dean Ambrose to join RAW. #ReuniteTheShield as babyfaces and push them as a trio HARD! Braun Strowman, Kevin Owens, Chris Jericho, Rusev, Brock Lesnar, Triple H, and any heel available could be thrown at them. So simple.

Otherwise, WWE has to pray that another wrestler from the developmental system within the last 7 years can breakout. I like Apollo Crews, Jason Jordan, and Big E, but they need some work and victories. Maybe Big Cass, although I'd like to see him have more in-ring work before getting such a push.

Wrestling needs its plowhorse babyface draw to grow the business. They had it with Hulk Hogan during the 1980s along with very strong heels (Piper, Ordorff, Savage, Andre, etc.). After Hogan diminished, WWE had dark days between 1990 and 1997 until Steve Austin and the Rock were ready to carry the business. John Cena has been the man since 2004. WWE has tried and tried with Reigns since 2014 but the fans are rejecting him. It's just not working... You need that guy that media outlets want to cover and Hollywood wants to utilize for TV shows or movies. Nobody, and I repeat nobody, is beating down Roman's door. And WWE lost fans since that 2014 mega push. He cannot do it alone, #ReuniteTheShield.

Amazing what a financial machine that the WWE has become despite some shortcomings... WWE Network, baby.

But will fans' attention spans remain for this Brand Extension? Will WWE's?



Been a while since I did an Ask Tito section... My email inbox is so full that it will explode, so it's time to clear a few repeat questions out:


Can TNA ever survive?

As long as someone is willing to take a loss for a "hobby", yes it can. Simple is that. If someone with deep pockets wants to imitate Vince McMahon, they can. TNA has lasted for a long time like that and accumulated lots of debt. Somehow, they are still alive. There are many, many sports franchises out there that incur losses annually. WCW before 1996 took losses because Ted Turner loved pro wrestling and was willing to absorb the losses. Then, he got competitive and tried to spend money during 1993 and beyond to attempt to win. As long as you have millionaires or billionaires willing to lose money for a hobby, something can exist.

I shall warn, though... 252,000 on the last TNA show is awful and with the WWE split into 2 brands, it can flood the market with product to make it hard for TNA to matter. I believe that the only way TNA could ever grow is if a bigger Cable Network invests in them. Same concept as above... If they had a Ted Turner like figure within a Cable channel who wanted to win, that's TNA's only hope to ever grow. They need stronger TV exposure to help market their Pay Per View shows, Live shows, and to also attract talent to join them. Pop TV isn't doing them any favors despite being available in 75 million homes. It's a poorly marketed channel to begin with and thus that channel won't do a wrestling promotion any favors.

I think what Lucha Underground just did could be huge... Netflix, baby. Binge watching pro wrestling. We'll see if Lucha can keep feeding Netflix content and if that creates enough interest that it gives Lucha more resources to grow. It could be fun.


Should WWE be inducting other wrestling promotions or wrestlers into their Hall of Fame?

Absolutely. WWE needs to remain a dominant term associated with pro wrestling. For example, Band-aids for elastic strips, Coke for cola drinks, Q-Tips to clean your ears, Kleenex to blow your nose, etc. It's a brand name that replaces the actual product's name. WWE should strive for their Hall of Fame to loosely become the Pro Wrestling Hall of Fame. Furthermore, I believe if the WWE owns the video library of those promotions, those promotions' lineage is absorbed into the WWE. I'm 100% OK with any NWA/WCW inductions because WWE actively bought WCW during 2001. AWA wrestlers deserve to get in because WWE raided the hell out of that promotion and without their key stars, WWE wouldn't have dominated.

Induct other promotional guys just to keep the trend of forcing "WWE" and "wrestling" to be interchangeable terms.


What's your opinion of Jimmy Snuka?

None. I'm giving him no tributes, nor shall I offer an opinion on his recent passing or career. Only thing that I'll keep saying is that my sympathies are with his remaining family.

So quit asking.


Should Kurt Angle wrestle for the WWE?

No. I'd love to see Kurt in the WWE ring again, but he's 48 years old and a hard 48 at that. Lots of miles racked up on that body due to the wrestling business since late 1999. Given the era he was from along with the injuries, I would hate for Angle to join other wrestlers from that era. In my opinion, I'd send him to NXT as a trainer. Not so much the in-ring stuff, but cutting promos and generating heat as a personality. The NXT guys can actually work but it's the promo/personality stuff that needs work down there.

If Angle replaced Foley as the General Manager of RAW, that would be huge. I love Foley and wish nothing but the best for him, but his character allows for Stephanie to bully him non-stop. Stephanie needs a personality that can challenge and/or humiliate her from time to time. Angle is perfect and they had great chemistry together back during 2000 (oh God, that was over 16 years ago!).


Which side are you taking in the Jim Cornette vs. Vince Russo feud?

Being honest here, they are both losing this feud. They've made it too personal and in the end, it's probably scaring any promotion from doing work with them. For Cornette, he's brutally honest and isn't afraid to say anything. Whether it's on YouShoot or podcasts, Cornette has heavily ripped his former employers and has nailed shut any opportunities to return. However, Cornette's photographic memory of the past (which allows him to easily tell many stories) and fearless attitude has allowed him to do well outside of the business with podcasts and appearances. I just worry that it wouldn't give him another shot at a Creative Team somewhere.

Vince Russo, on the other hand, has to find a way to shake off the association with WCW's closing and TNA's growth problems. WCW was in deep trouble through 1999 before Russo joined them and those big veteran contracts weren't coming off the books anytime soon. For TNA, he lacked an owner with a vision. Many creative minds have passed through TNA's doors, including Russo, Cornette, Eric Bischoff, Dutch Mantell, etc., and it still didn't matter. Executive decisions on overall creative direction, production, developmental, marketing, etc. stopped TNA's growth during the early 2010s. While Russo's ideas weren't setting the world on fire, he is quickly scapegoated for the culture there by wrestling fans and later SpikeTV. However, it's a reputation that he struggles to shake about assisting in the downfalls of WCW and TNA.

Personally, I like listening to Cornette's podcasts over Vince Russo's. Seems to me like we're getting the real person in Cornette for his shows and a wrestling character with Russo's shows. I'd probably side with Cornette only because his podcasts entertain me more, but the fact of the matter is that 2 guys with lots of Creative experience aren't even being sniffed at by the WWE. That's a shame because in their primes, both added to the wrestling business significantly. Seems to me that Cornette struggles with how wrestling became so corporate while Vince Russo is heavily reliant on the quality of talent. Russo went from having Austin, Rock, and Foley in the WWE who he could easily work with to a WCW roster with stubborn veterans and a weaker developmental system. Because of that infrastructure disadvantage in WCW, Russo had to throw additional ideas at the wall and it made his WCW tenure look bad. Ditto TNA. It's like Russo was always trying to over-compensate with thinner rosters. Cornette seems to do better on a smaller scale and when he's in charge without much oversight.

I just wish both would end their silly feud. Pointless unless you're using that heat to sell podcasts... Hmmm...


Why hasn't Emma returned from injury to the WWE main roster?

WWE doesn't have a clue how to use her upon return, that's why. News sources reported that. Furthermore, she's a heel wrestler and Charlotte runs the RAW roster with Nia Jax quickly gaining favor. If I were to guess, the plan may be for Emma to reunite with Dana Brooke to continue their work when both were called up last year. That's my guess, as Dana is out with an injury too and set to return.


Why isn't Shinsuke Nakamura on the Main WWE roster?

Too stiff for one... Until he can work a safer style, notably with those kicks, he won't be seeing the WWE roster anytime soon. I also believe that Vince McMahon is just overall hesitant to push a Japanese wrestler on his main WWE roster. And I don't say that because Vince dislikes Japanese people, but he dislikes the style pushed by Japanese wrestling. Furthermore, the language barrier is an issue as converting the Japanese language to English, and vice versa, is very difficult. Vince pushes promos on his products and wants his wrestlers to be easily understood by fans (that goes for American wrestlers too). Until Nakamura can work a safer style and incorporate what WWE wants, he'll remain on NXT... But is that a bad thing? It's an attraction for NXT...


Is Donald Trump good for WWE's business?

Of course he is. For one, he won't ever challenge why WWE has "independent contractors" as employees. Linda McMahon getting a spot in the administration helps ensure that any Executive wing of the government won't ever challenge the WWE on labor laws. Big plus for the WWE... But where the WWE could benefit more is if Trump and the GOP in the House/Senate can successful pass a Corporate Tax Cut package. WWE pays a 35% Corporate Tax Rate which for 2016, cost them about $19 million that subtracted off of their $53 million earned in Income before taxes. I've heard Trump/GOP say that they want the rate down to 25%. Doing the math, they would have saved about $6 million in taxes during 2016 with that 25% rate.

To this day, I'm surprised that the WWE is able to maintain its business model of considering wrestlers as "independent contractors". I'm not sure how they get away with it other than it probably allows them to pay wrestlers more in net salary. That is probably why nobody challenges it or unionizes.


How much longer will you write as Mr. Tito?

Well, I haven't announced any retirement plans... So I'll keep writing these columns as long as you keep reading them. Thus, I'm here to stay. I feel that I'm in a pretty good groove as a writer and wrestling fan. I thank WWE Network for that. Before, I just had RAW and I refused to watch Smackdown. Now, I can watch all of the Pay Per Views, NXT, and can just casually watch RAW/Smackdown. Taking Mondays OFF to watch RAW on Hulu for Tuesday has probably been the method to my success. Watching a Pay Per View and then seeing RAW for 3 hours on USA Network would drive me crazy. I don't know how any of you can tolerate that... Furthermore for me, Mondays are always busy for me and the last thing I need is for 3 hours of RAW to irritate me. Having Monday Night OFF has a wrestling fan has kept me sane as a fan and as a writer. WWE's Pay Per Views being good for the past 3 years has also kept me sane.

Next year during October 1998 will be my 20th year as Mr. Tito. I may evaluate things then or I may just keep going. I have writing these columns down to a fine science and have been really happy with my columns over the past year. I also want to write more columns like the ones where I used actual statistical analysis to prove whether or not Brock Lesnar was a draw upon his 2012 return or if John Cena was a draw as Champion. Performing actual research and a little bit of science on wrestling stuff fascinates me.

So I'm not going anywhere, folks... Here to stay, baby.


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