QUESTION OF THE DAY: Do you think the McMahon family will still own the WWE in five years? Why or why not?
Hi kids.
Welcome to another edition of The Eternal Optimist. The WWE has made significant changes to the way that they do business over the past several years. I have noticed a striking similarity between the direction that they are moving in and the direction another prominent company in a similar industry moved in prior to a significant change. With that in mind:
The Eternal Optimist Presents: Is A Sale Of The WWE Imminent?
The idea that the WWE could be sold isn’t one that comes from out of left field. Stephanie McMahon, during an interview with BloomBerg Businesweek in February of 2018, was asked about the potential of a sale to a large media mogul such as Disney or Fox. Her response was telling:
We’ve certainly thought about it. It would be foolish not to.
Additionally, in December of 2017, Dave Meltzer spoke on the possibility of Vince getting out of the business via Wrestling Observer Radio. Here’s what Meltzer had to say on the topic:
There is an argument for the McMahons to sell right now, especially when you look at the interest of the key owners. Shane and Linda are already on the outside, so the sale would only give them more money, and they could have more liquid assets. Stephanie seems to be pursuing a mainstream, charitable corporate path that could be best pursued within WWE or a foundation using her own money. Only Triple H clearly has his future set on running a wrestling company. The odds are that if somebody buys WWE and Vince gets out, the odds are really strong that Triple H, Vince’s protege, would be the guy put in charge, because they won’t think of anybody else.
While the abovementioned quotes show that there may be some interest from the McMahons on selling the company, they don’t given any indication that it’s on the horizon anytime in the near future.
I on the other hand, believe that it’s going to happen much sooner than people expect. As I see the recent developments on the part of the WWE, I can’t help but see stark comparisons to steps that the Ultimate Fighting Championship (UFC) took prior to selling their company.
The WWE has followed the UFC pattern in three different areas. As was the case with the UFC, all three of these movements have arguably made the product worse off in the long term.
The Emergence Of The Women’s Division:
What The UFC Did: They signed Ronda Rousey. She was a superstar and the UFC believed that introducing Women’s MMA into their product would ultimately make their brand more appealing to wider range of people.
The UFC’s rationale was that by making the product more appealing to a wider range of people, the brand would be more valuable to potential investors. They weren’t wrong.
Why This Ultimately Hurt The UFC In The Long Run: The Ronda Rousey phenomenon was a tremendous financial success for a short period of time. Once she moved on, the UFC was left with divisions that they had created that no one wanted to watch. The lack of finishes on the women’s side led to many boring fights between fighters the general audience didn’t care about. The women’s divisions in the UFC still lack depth and have largely diluted the product.
What The WWE Did: They shifted the focus from “Divas” to “Female Superstars”, and ultimately, signed Ronda Rousey.
The rationale was the same as it was for the UFC. The women weren’t being featured prominently but rather as side show acts, and this shift to focus on the athletic competition was thought to be able to entice a wider range of fans to the product. Again, this is something that would make the WWE more appealing to potential investors.
Why This Ultimately Hurt The WWE In The Long Run: The unfortunate reality is that the WWE has very few competitors on the women’s division that can put on PPV matches the caliber of which just about every male superstar on the roster can. The increased presence of female wrestlers has led to more matches on Pay Per View of a lower quality. The lack of depth in the divisions continue to be an issue. Furthermore, the WWE appears to have overestimated the drawing power of a shift in focus, as evidenced by Evolution ticket sales struggling.
The Focus On International Markets:
What The UFC Did: They started holding events all over the world. They went from holding events in the U.S. solely to holding events in Canada, Brazil, Mexico, UK, Japan, China and many other markets.
The rationale was simple – this was an opportunity to create more fans – more eyeballs to watch the product. Who might care about a sport having international v national appeal? Potential investors.
Why This Ultimately Hurt The UFC In The Long Run: With very little exception, fan interest was hot and heavy the first few times the UFC ventured into a market, and petered out over time. Furthermore, the increase in international shows led to far too many events per year and an extreme dilution of the quality of show presents. Matches that originally took place on the prelims were now main events or co-main events. Overall interest in the product waned, because the quality of show being presented simply wasn’t as good as it was before.
What The WWE Did: Create “Super Shows” in markets such as Saudi Arabia and Australia.
The rationale is that these countries are financially lucrative and open the floodgates to creating new fans. New fans = new eyeballs on the product = a more attractive company for investors.
Why This Ultimately Hurt The WWE In The Long Run: Granted, the “long run” hasn’t had the opportunity to play out yet, but here’s where this is ultimately going. There is so much money involved that the WWE is putting their biggest and best matches on these shows.
The problem? Their bread and butter shows such as Wrestlemania and Summerslam no longer feel special. They almost pale in comparison to the cards being put on elsewhere. The fickleness of the international market will likely play itself out much in the same way it has for the UFC, but the long-term damage to the WWE’s established marquee shows will have already been done.
If you want to see how this has affected the WWE short term, look no further than Hell In A Cell. The WWE sacrificed their main event to build interest in the main event that they were planning for Crown Jewel in Saudi Arabia. Furthermore, the writing for Raw and Smackdown has largely been on autopilot. Monday Night Raw featured the same main event for three weeks in a row. The WWE’s focus on the large international shows are short term moneymakers, but the lack of effort on the nuts and bolts of their product will drive viewers away in droves.
The Focus On Mainstream Sponsors:
What The UFC Did: Made Reebok their official sponsor for fighter gear.
The rationale was simple – all of the major sports had official sponsors. The UFC needed one too. Having an official sponsor gave them “legitimacy” as a global brand in the eyes of potential investors.
Why This Ultimately Hurt The UFC In The Long Run: Reebok now paid a set sponsorship rate to each fighter based on the number of fights that they had. For the bottom feeders who couldn’t get sponsors on their own, this was a good thing. For the big names, they lost a tremendous amount of their income because the top end of the fighter payout paled in comparison to what they could earn on their own. Fighters let their contracts expire and the UFC has lost a tremendous amount of talent to other organizations.
What The WWE Did: Make Tapout an official clothing sponsor and created their own cancer charity, “Connor’s Cure”.
The rationale was twofold. An official clothing sponsor created legitimacy in the same way that it did for the UFC. The charity, while ultimately doing a tremendous amount of good, is being leveraged by the WWE to improve their standing in the community. Who cares about issues of that nature? Potential investors.
Why This Ultimately Hurt The WWE In The Long Run: The WWE was built around characters having creative freedom and an ability to be edgier than one would expect. All of that has dissipated. With every addition of a new sponsor and/or charitable endeavor, that’s another special interest group that the WWE has to be cognizant of when presenting content on television.
Every promo is cookie cutter – no one speaks out of turn. As such, the characters have become largely replaceable. If the WWE isn’t building new stars, they aren’t looking to the future. That is a gigantic problem.
Conclusion – What This Means.
I strongly believe that the WWE has used the UFC as a blueprint for how to make their company more valuable in the eyes of investors in preparation for a sale. Much as was the case with the UFC, the decisions made by the WWE are creating significant long-term issues for the quality of product, in exchange for short term appeal to likely buyers.
The UFC sold the company shortly after they completed this three-step endeavor. The WWE is reaching the end of the same three-step endeavor. As such, don’t be shocked if and when the McMahons cash out sooner than you think.
That’s a wrap kids. Thank you for reading. Agree or disagree? Sound off below!
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