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The following column is schedule for one fall and is posted at WrestlingHeadlines.com, a LordsofPain.net company. The great Howard Finkel passed away today… Man, that’s a bummer for a year of 2020 which is already becoming the worst year on record in history. Anytime I think of his voice, I think of the good old days of the World Wrestling Federation where Hulk Hogan and Macho Man ruled the days during the 1980s and early 1990s. I LOVE his voice… Best ring announcer, ever, and it’s not a debate.
Rest in peace, Fink. Brian Dennehy, too. I watched “Tommy Boy” tonight in your honor.
Now, for the matter at hand… Ironically, the guy who financially took care of Howard Finkel even though professionally, he kept trying to replace Howard with younger ring announcers and attractive female announcers too. Vince McMahon is under the microscope this week for his various financial and personnel moves. Many fellow wrestlers and fans are speaking out about the many WWE wrestler releases and potentially temporary layoffs.
But I’d like to talk about POLITICS first… In real life, Donald Trump and Vince McMahon are great friends. It probably all started from their business relationship forged from Trump hosting Wrestlemania 4 in 1988 but both guys are commonly associated with the New York City area business life and followed similar paths after their fathers. I also believe that aspects of their personalities have copied onto each other… The Vince McMahon character of the late 1990s had a lot of Trump swagger just as Donald Trump, himself, “got over” as a celebrity and a politician by cutting wrestling promos.
However, since Donald Trump became elected as the United States President during November 2016, Vince McMahon has stayed quiet about politics. Sure, he made donations to Trump, Linda has worked in Trump’s Executive Office as the Small Business Association cabinet member, and now Linda heads up a “Super” pro-Trump Political Action Committee (or Super PAC). Yet, we haven’t seen Vince McMahon cash in any favors directly to help boost his WWE Corporation’s business. I’m sure that there have been labor laws deregulated and the Corporate Tax Rate cut from 35% to 21% have helped, but those helped more than just Vince McMahon.
Things have changed in the past month, however…
Suddenly, the WWE’s operations in the state of Florida have become “Essential” by Governor Ron DeSantis, even passing a separate Executive Order to clarify that stance after several complaints were filed against the WWE Performance Center. By comparison, UFC just tried to have an event on a Reservation Casino in California and that state’s Governor just twisted the arm of the Disney Corporation to shut UFC’s event down. Meanwhile, the the WWE plans on resuming LIVE events at the WWE Performance center to likely abide by their deals with Comcast and FOX. After all, it is “essential” to the WWE to do that.
How did that “essential” label occur in Florida? Getting back to Linda McMahon‘s role on the Donald Trump 2020 Presidential campaign, her America First Action Super PAC announced that it would invest $18.5 Million into the Tampa/Orlando areas (Link) on the same day that Governor DeSantis announced the “essential” Executive Order for sports like events.
And do you want to know why the WWE pushed the Florida government into making them “essential” for Florida? Because at the Performance Center, that is the only place possible that they could film RAW, Smackdown, and Pay Per Views right now. Specifically for RAW and Smackdown, they need to not just keep airing those shows, but to air them LIVE. It is very likely that both Comcast and FOX have specified a certain % or number of LIVE events in their deals at a combined $400 Million per year. While the Houseshow circuit was a money loser, the WWE still made money off of most RAW and Smackdown shows and all Pay Per Views. Plus, the Saudi Arabia shows… WWE made a net profit of $22 Million last year on Live Events alone. That money is gone… Merchandise sales keep declining when your company is pushing Rollins, Reigns, and Strowman as the top guys (been declining since Cena became part-time).
In other words, the WWE needs their TV deals to continue to survive. Hence why the Super PAC likely made a very generous donation to help support the economies (or TV stations) of the Tampa and Orlando areas for $18.5 million combined. If the WWE were to lose either deal, the WWE isn’t just losing the remainder of 2020 money, but also the next 4 years. If lost, the WWE is screwed short-term ($400 Million per year) but also long-term ($2 Billion total). While they are hurting on Live Event money for 2020, there is no guarantee that fans would be willing to pack wrestling arenas again after the COVID-19 has spread fears about being close to other random people. Nobody is drawing and therefore, merchandise will continue to struggle… Besides, in a recessed economy, the last thing people want to buy is WWE merchandise.
The WWE is reducing expenses NOW to offset continued losses seen due to the lack of LIVE Events and lost Merchandise opportunities. As I said above, the WWE made a profit of $22 Million during 2019. Merchandise made a net profit of $32 million. Reportedly, all of the wrestler cuts and salary/compensation reductions will amount to an additional cash flow of $4 million per month, annualized to $36 million per year. That covers SOME of the lost revenue from Live Events and Merchandise losses for 2020.
Several Newsletter writers were making a big deal about the WWE’s reported “$500 Million in Cash and available Borrowing capacity” as a means to keep funding the company and not reduce employment. But again, the WWE stands to lose tens of millions of dollars by NOT having Live Events and reduced Merchandise sales. There’s a real risk that the Coronavirus could extend further into 2020 and again, fans might be hesitant to return to large gatherings even if a Vaccine appears to be have been created. Furthermore, as I’ve repeatedly suggested, the WWE has killed their LIVE events by raising prices repeatedly on both tickets and merchandise. If they are economically strained, the have another reason not to attend WWE events due to the high prices.
WWE could burn through that $500 Million quicker than you think… All it takes is for a real threat to those Comcast and FOX deals to happen and the WWE is in deep trouble. Not only for FOX/Comcast, but RAW and Smackdown are also sold to International Markets for an additional $200-300 Million per year. Those international deals might have LIVE event contractual obligations too. If you can’t operate, you can’t make money… Ask Disney with their Parks, ESPN with NBA coverage, and Theater Film business right now. Disney is reportedly LOSING $30 Million per day (!!) in revenues and now they won’t let CEO Bob Iger retire as he intended to do during 2020.
If the WWE cannot film at the Performance Center, they are COOKED… Therefore, they need that $500 Million as a “safety net” to survive.
But let’s look at the REAL REASON why Expenses were cut by the WWE this past week.
The main goal of a Publicly Traded Corporation is to appease their Shareholders and Shareholders love it when the Net Income (difference between Revenues and Expenses) is either increasing or sustaining the same profit margin as before. The latter point is important, as you could have a case where Revenues are declining but if you’ve reduced Expenses at the same clip or even more, profits can be sustained or improved. Investors of Stock will BUY MORE STOCK if Net Income grows or sustains. Thus, with reduced Revenues for 2020, the WWE obviously reduced Expenses to offset the blow to Net Income for 2020.
And that’s really important to the #1 Shareholder of hte WWE, Vince McMahon, who leverages the WWE to invest in other dealings.
Also announced this week, it was the END of XFL Part Deux. Vince’s second attempt at a Professional Football League closed its doors and the league terminated most employees without any notice. While the Coronavirus drove the final nails in the XFL coffin, it’s a FACT that XFL’s television viewership and live attendance was rapidly declining after the first week. The demise of the XFL was inevitable. In addition to Vince’s own reported investment in the league of $500 Million, the league itself has between $10-50 Million in Debt to clear up. Vince McMahon filed for Bankruptcy for the XFL to protect himself and other investors from harm. Gee, who did he learn those Bankruptcy tricks from? Maybe an old friend?
And maybe Vince is protecting the WWE from losses caused by the XFL’s closure… The Bankruptcy filing revealed that the WWE Corporation has an investment of Class B shares into the XFL… Oh wait a second, here… We were promised by Vince McMahon that XFL 2.0 would be completely separate from the WWE, unlike XFL 1.0 which was funded by the WWE. Now, the terms of the Class B shares could matter in terms of voting rights or dividends owned, depends on what the XFL classifies them as… However, the point being is that the WWE Corporation, with Vince McMahon as the MAJORITY Shareholder and CEO/President & Board Chairman, invested money into the XFL. Now, this will be a LOSS to the WWE Corporation during an already economically stressful year.
Therefore, the XFL’s closure HURTS the WWE because of the WWE’s investment in the XFL. Period.
However, here is the real motive for Vince McMahon. He’s the majority Shareholder of the WWE and owns 28 Million WWE shares himself while he has control of the voting rights of the WWE Corporation’s ownership of WWE shares.
So… When the XFL goes bankrupt, how can Vince McMahon recoup his losses? Maybe if he makes that WWE Stock seem more appealing to investors?
It is rather coincidental that the XFL bankruptcy is immediately followed by these WWE personnel and compensation cuts. Again, Vince is reducing WWE expenses to make the WWE Stock seem more appealing to investors. And if more people buy WWE stock, that drives up the price of the WWE Stock. Who owns the most WWE stock again?
XFL Part 1, WWE New York Restaurant, WWE Films, WWE’s Music Label, and the many Legal issues that the WWE endures over wrestler deaths, injuries, or copyright issues… All are threats to the WWE’s Net Income. How did the WWE offset that? That’s right, Spring Cleaning cuts of pro wrestlers and finding ways to reduce pay.
WWE struggled during the mid-1990s following legal problems and the utter failure of the WBL Bodybuilding promotion. Attendance and business dropped for the WWE and they became very thin on what they paid wrestlers on houses. No wrestler had a downside guarantee… Thus, when World Championship Wrestling started offering guaranteed contracts to guys like Kevin Nash, Scott Hall, and other WWE wrestlers, they pounced at the opportunity.
Whenever Vince FAILS at something, he uses the WWE’s finances as his leverage. After all, the WWE is Vince’s company. It’s like his home and uses it like a Credit Line to fund other ventures. However, when those side ventures fail, he has to pay up or recoup the losses somehow. Each time, the wrestlers suffer because they are referred to as “variable costs” for a business. Thanks to a LACK of a Union, Vince McMahon can (a) release wrestlers anytime he wants and (b) can reduce payments on anything that is not guaranteed by the “independent contractor” contract.
You’re damn right that the XFL’s losses are coinciding with the WWE’s recent personnel and compensation cuts… But this Coronavirus health and economic threat made things much sharper. Hence why that release and temporary layoff list was extensive. Vince McMahon, as CEO/President and Board Chairman, has to do things to please shareholders by making the WWE’s Net Income seem as profitable as before or greater than ever. And as the #1 shareholder for the WWE, Vince has a ton of incentives to boost the value of the WWE Stock to recoup his XFL losses and also the WWE Stock’s losses seen during 2019.
WWE Corp is just a Credit Line to Vince McMahon…
Wrestlers need to realize that ASAP…
To the wrestlers who remain… LOOK at what just happened. That could be you tomorrow.
Vince McMahon loves to push terms like “WWE Universe” and that wrestlers together are a “family”. Nope, all of you wrestlers are just an EXPENSE on his Income Statement. If he were to do XFL 3.0 and when that fails, you’ll be another brick in the wall to him.
BUT – If the wrestlers walked out of the WWE today in protest and REFUSED to perform, they’d realize that they have real leverage on Vince McMahon right now. He HAS to put on LIVE events at that Performance Center to abide his Comcast and FOX contracts. On top of that, because the wrestlers are operating in close contact with each other while wrestling in the ring, one could argue that they are being put at risk for COVID-19. Hey, can anyone tell me why Roman Reigns was sent home again?
If there was ever a moment to unionize, now is the time… You’ll just have to convince the top paid guys to join you (Brock, Roman, Orton, Cena) to join a collective movement or it will fail, just as attempts from the past have failed. ALL OF YOU wrestlers are severely underpaid, anyway, as your paychecks only increased recently because of the AEW threat. Otherwise, your paychecks have been flat in comparison to the WWE’s growth in television revenues AND reduction in Pay Per View gates with the WWE Network now in place.
You have no Health Benefits and are only treated for injuries caused in a WWE ring… Nothing long-term. No retirement funding and no Payroll taxes paid because you’re an “independent contractor”. Before this recession, you couldn’t file for Unemployment if the WWE released you… Luckily, the recent Stimulus Bill provides some Unemployment Insurance benefits for the “gig economy” or independent contractors losing their jobs due to this virus. Furthermore, the WWE is the one of the few places where “independent contractors” work exclusively for one company.
WWE wrestlers better start thinking about their roles and value with the company… Someone has to take bumps inside that ring and it’s sure as hell not the army of Executive Vice Presidents, Senior Vice Presidents, and Vice Presidents within the WWE Corporation making way more than most wrestlers taking the physical punishment.
By the way, Triple H, you better rethink your new redesigned title and thinking about opening Performance Centers elsewhere. Your Performance Center here was just wiped out of its coaches and some talent. More is coming your way on expense reduction… Why can’t YOU, as an Executive Vice President and Board Member, DO MORE for the company? Start standing up to Vince. I know that you love the guy like a father, but come on! Quit being a chicken and push real revisions within the WWE.
Now, as for the released wrestlers… Let’s face it, none of the guys released were going to make it within the WWE’s ecosystem. It just wasn’t happening with their idiotic Creative Team in place. The closest anyone got was Rusev and the WWE cut him off at the knees several times when he got close to the top. Anderson & Luke Gallows, despite signing new deals this year to remain with the WWE, you weren’t utilized well within the WWE at all for the past 3-4 years. Among many others… Creative either screwed you or the environment didn’t give you motivation to overcome them. You’re out of work and I hope that you saved your money.
AEW is an option for many wrestlers, as I suspect that Rusev will join them shortly… But remember, they are STILL a new company and the Khan’s aren’t exactly willing to completely subsidize they company. They were hoping that Ticket/Merchandise Sales plus a TV Deal would fund the operations for them. Well, just like WWE, their Live Event revenues are now gone and they are 100% reliant on the TV deal and they MUST provide new wrestling content for TNT each week. They had to cancel a recent Pay Per View and maybe more in the future. This is an Economic Recession and fans are scared to leave their homes right now (along with being forced to not leave their homes).
BUT REMEMBER… As George Santayana once said, “those who do not remember history are condemned to repeat it”
How did World Championship Wrestling grow as a company again from 1994 through 1998? Oh yeah, they signed WWE castaways like Hulk Hogan, Macho Man Randy Savage, Kevin Nash, Scott Hall, and Lex Luger to deals. Oh, and how did the WWE rebound as a company? On the backs of WCW castaways like the Undertaker, Mick Foley, Triple H, Steve Austin, and Jim Ross.
As I said in a column last year… Dean Ambrose/Jon Moxley was a big signing but he couldn’t do it alone… AEW needs more underappreciated former WWE talents, who were clearly screwed by the WWE, to join them. Luke Harper was a great signing. The Revival will be amazing in AEW. Rusev is another heavyweight type wrestler that they are seeking to strengthen the top of their roster.
These specific signings of clearly screwed former WWE wrestlers are the foundational building blocks of a wrestling company… Hey, isn’t Cody Rhodes one of them? And didn’t the WWE take Chris Jericho‘s talent for granted too?
If only Vince McMahon would be less ashamed at being a wrestling promoter and would just invest his time/energy into making a logical wrestling product, AEW wouldn’t be a threat to him at all… In fact, before his XFL folded, he didn’t see AEW as a threat to him during 2020. The Revival were granted their full releases without any no-compete clauses. Then, he had to close the XFL and be forced to file bankruptcy to protect him from some losses… Suddenly, more WWE wrestlers are released but this time with a 90 day non-compete clause. I think that he knows someone like the caliber of Rusev could join AEW and become a decent star. Vince is also betting that most of 2020 is screwed through and that most signings won’t matter.
These wrestlers need to join AEW and prove Vince McMahon wrong.
Opportunity knocks for many released WWE wrestlers right now… Don’t be sad, get angry as Steve Austin and Mick Foley did. It lit fires under their arses to become greater than they could ever imagine. Triple H was insulted to be just a Tag Team wrestler in WCW and wanted to prove that he could be a great singles wrestler. Undertaker was thought of as nothing by Ole Anderson and other WCW executives during 1990. He proved them very wrong. Jim Ross was thought of as “Bill Watts’s boy” and just let go during early 1993. Ross not only gave the WWE a great announcer, but an amazing talent evaluator who brought in those disgruntled WCW wrestlers like Austin and Foley. Then, he built an amazing farm system to develop new talent forever for the WWE (well, not in 2020).
Vince McMahon and the WWE are at their most vulnerable state ever and not just from the Coronavirus but idiotic mistakes like trying to recreate the XFL. If current WWE wrestlers and now former WWE wrestlers don’t pounce on this opportunity to “stick it to Vince”, it will be business as usual. Current WWE wrestlers shouldn’t complain when the next wave of returns happens because you’ve clearly been warned by Vince’s actions.
Until you can prove that you are MORE than just an “variable cost” line on Vince’s Income Statement as a Expense, you are considered the “sap” of his WWE Family Tree.
So just chill… Until the next episode!
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Play my Super Mario Maker 2 courses on the Nintendo Switch:
Die Hard (themed after the Bruce Willis Film): 2YH-48W-HMG
Die Hard 2 – Die Harder: QQ1-MHW-YTF
Die Hard with a Vengeance: 5MB-2YG-VRG
Hoarding the Toilet Paper: 43G-S79-TVG
Star Trek 2 – The Wrath of Khan: 1LV-L7L-KDF
Inside Her: FC1-TW9-7YG
Star Wars vs. Star Trek: N3X-R6M-Y9G
Legend of Zelda – Ocarina of Time Wrong Warp: 2RX-QCV-N9G
Super Link Bros: HBD-H5C-QRF
Santa Bowser Came Early: GL8-F48-3XG
Super Wrestling Bros: 0H6-9HT-S5G
WWE Royal Rumble: SDH-JC2-HFG
WWE Elimination Chamber: P3B-5DJ-91G
WCW World War 3: BT4-W1Y-HRG
Extreme Championship Wrestling: 42J-4GT-W3G
BEST OF TITO’s POLITICAL CARTOONS
– Alfred E. Vince McMahon on Wrestlemania 36
– WWE’s “Developmental System”
– How Triple H views CM Punk’s physique
– How Pro Wrestling Controversies keep pulling me out of the Retirement Home
– Seth Rollins cannot resist the Internet!
– Truth About WWE’s “Executive Directors”
– More Truth About WWE’s “Executive Directors”
– Jim Cornette as Godzilla against Indy Mudshow Wrestlers
© Mr. Tito and LordsofPain.net/WrestlingHeadlines.com – 1998-2020
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