The WWE Thread

[Natrix]

Rough day for VKM...LOL!

Vince McMahon lost $350 million as of market close on Friday, as shares in his WWE took a beating from investors. The stock was down more than 40% since the market open. In fact, the stock, which had closed just below $20 on Thursday, opened down below $11. That immediately knocked the WWE boss out of the billionaire ranks, putting his net worth now at an estimated $750 million.

The stock fell after news that WWE had signed a new television deal with NBCUniversal for less than some investors had hoped. Benchmark analyst Mike Hickey estimated WWE got a 50% raise over its last TV agreement, but he expected the new deal to pay WWE double or triple its previous one.

“The company’s valuation could take a heavy beating this morning, as the new domestic TV deal with NBCUniversal likely disappointed investors,” he wrote in a report downgrading the price target for the company’s stock from $29.12 to $19.96.

WWE executives kept an even tone but offered little additional guidance. “We never commented publicly on the expectation,” said George Barrios, chief strategy and financial officer. “We said we were undervalued by the math that we had done.”

The new TV deal hit at a turbulent time for WWE and McMahon. The company’s shares shot up 89% in the first three months of 2014, and McMahon’s net worth peaked in mid-March at $1.6 billion. But shares dropped 29% the week after WWE announced its new online streaming network had only 667,000 subscribers, taking a $325 million chunk out of McMahon’s fortune. He remained a billionaire until this morning.

Some investors saw the trouble coming. Intrepid Capital Management, once WWE’s largest outside investor, sold its 10% stake in January. Intrepid’s Jayme Wiggins told Forbes in a feature story on McMahon that he thought the billionaire was getting too excited about his new online streaming network.

That concern remains, but Wiggins now has additional questions after reading the company’s financial projections provided in the news release about the TV deal. The online streaming network should break even when it has 1.5 million subscribers, according to Wiggins, but WWE said its operating income will be just $40-$60 million at that point—even with new TV deals that will add $90 million to the company’s revenue.

“The question is why their numbers are so low given this renewal,” Wiggins said. “With the information that they put out there, it seems to imply that their core business isn’t making money.”

It is possible that the TV deals have a steep escalation in later years, Wiggins cautioned, so WWE might not be getting $90 million a year by the time it reaches 1.5 million subscribers on the online network, which could account for the underwhelming projections.

“If that’s at play here, it could kind of mitigate all of this bearishness that’s happening today,” Wiggins said. “There is definitely some confusion here, which is why you’re seeing the stock drop.”

Barrios offered little to clear up the confusion. “I don’t want to talk about the specifics of how the contracts are structured,” he said. “I think it’s pretty typical that there is some escalation in them, but we haven’t gone into detail on any of that.”

Cutting TV deals is how McMahon built such a massive fortune in the first place. He got his start in 1972 working for his father’s small, regional wrestling promotions company. Ten years later, he bought out his father and set about taking WWE national. He used pay-per-view to jack up revenues and reach a national audience, making stars out of wrestlers like Hulk Hogan and turning himself into a TV personality in his own right. With TV numbers growing, attendance at live performances blew up.

McMahon became a billionaire for the first time in 2000, still holding onto a huge stake in the company. But WWE stock dropped a year later and didn’t recover that ground until January of this year, about 13 years or so later, when McMahon—who owns 52% today—rejoined the billionaire ranks. Now he’s down and out once again.

 

[King Darkness]

And this too

firm Lemelson Capital announced today that they have taken a major stake in WWE shares and have called on WWE's Board of Directors to replace the current executive management team. Below is their press release:

Lemelson Capital Announces Stake In World Wrestling Entertainment And Calls On Board To Pursue New Management Or Ownership

Marlborough, MA, May 16, 2014 -- Lemelson Capital, LLC, a private investment management firm, today announced that they had taken a stake in shares of World Wrestling Entertainment (WWE) and called on the Board of Directors to replace the executive management team of the company following a period of consistent losses, execution issues and material misstatements.

Despite the stock's roughly 63% correction since Lemelson Capital's original short call less than two months ago (from $30.37 on March 17 to $11.33 as of publication of this release), the firm today also reiterated that fair value of WWE's common stock is between $8.25 and $11.88.

Lemelson Capital's original short thesis can be found here:

"WWE has affirmed that even with one million subscribers for its WWE network, the company stands to lose between $45 million and $52 million in FY 2014, which validates the original short thesis," said Emmanuel Lemelson, Chief Investment Officer of Lemelson Capital Management. "This follows what we believe to be material misrepresentations by the company about both the performance and operating profit model of its WWE network, which the company has wrongly labeled 'a homerun'," said Lemelson.

Lemelson Capital today also called on WWE's Board of Directors to promptly replace the company's executive management team, or explore the sale of the business, and said that such changes are a necessary component of any successful strategy going forward. "For example, promoting the WWE direct network's value to shareholders without a fair and accurate discussion of the implications to a traditional network revenue circumvented management's fiduciary responsibility as stewards of investor's capital, and is part of what has emerged as a pattern over recent years. Further, there are no pending operational developments in the pipeline to offset these significant losses," Lemelson added.

Lemelson Capital and its clients are long shares of WWE.

 

[Sidious-66]

This reeks of bad WCW business material and not something that Vince/WWE would screw up.

He overhyped his numbers plain and simple.

 

[devlinboy]

Hostile takeover?? I dont think they would be able to buy up the voting rights from the McMahon family.

 

[karamazov80]

I just saw this on BBTS, which is pretty dang cool IMO:

https://www.bigbadtoystore.com/bbts/product.aspx?product=NEC12528&mode=retail

 

[ashkanls]

WWE = what a mess (besides the Shield angle). Should have had Brian out and taken the belts from him atleast vs saying we took them and here they are hanging.

 

[Grenouille]

Wow, this thread has petered out. Battleground sucked for the most part, but I did enjoy the Usos/Wyatts match.

The better stuff is all the SNMEs they've uploaded to the network. They dumped a bunch on today including 2 Main Event specials. I still love the twin referee angle.

 

[EVILFACE]

Recently watched the WWE: Ultimate Warrior: The Ultimate Collection on Netflix. Pretty good set. It's creepy watching it knowing he died shortly after it was released. His shoot was always good to listen to. Sounded so honest with his tales.

 

[yruh8n]

Maybe Vinnie Mac can recover some of the money he lost in the market by suing the plastic surgeon that worked on Stephanie. What a train wreck.

 

[karamazov80]

Wow, this thread has petered out. Battleground sucked for the most part, but I did enjoy the Usos/Wyatts match.

The better stuff is all the SNMEs they've uploaded to the network. They dumped a bunch on today including 2 Main Event specials. I still love the twin referee angle.

Damn, didn't know SNMEs were now on WWE Network. Definitely gives me something to look forward to, as I had lost a bit of interest in the network in general. My own interest has really waned with wrestling since Bryan went out. Now, they've taken Heyman from Cesaro for no discernible reason, after using Heyman to keep him as a full fledged heel (which isn't what the fans wanted, and wasn't the best thing for his career). Easy to forget how hot he was right after Wrestlemania, just begging for a serious push. But, no. He gets beat by a 3MB guy at the PPV apparently. So, my two favorite guys are in a rut of sorts. Miz is IC champ, Cena is champion, and that sucks. Lesnar is coming back, but he's just a special attraction to be used sparingly, and is fighting (yawn) Cena again. My gut tells me Rollins won't win the championship when he cashes in (if he even gets the chance, and doesn't lose the briefcase to Reigns or something). I liked the idea of the Stardust thing at first, but now it seems like they're just going full on comedy with it, which isn't going to be good for Cody. It should be genuinely weird like Golddust originally was if they are going to make him any kind of legitimate contender. The best things about WWE to my eyes right now are those awesome Uso/Wyatt family matches. And they signed KENTA, but I fully expect them to squander that opportunity.

 

[The Amazing Spider-Man]

Why in the world would anyone in there right mind in WWE feel comfortable with Roman Reigns vs. Brock Lesnar at Wrestlemania??? WOW. Sadly, Brock doesn't utilize his original moveset he performed until Wrestlemania 20, and all Roman Reigns has is: Samoan drop, Apron kick to head, LAZY AJ Styles superman punch without the springboard, and the spear...smh

 

[karamazov80]

Feels like WWE is trying to groom Reigns to be their next major face of the company. He's got the size and look (most important to them), and decent in-ring abilities. His mic skills aren't great, but he's got some charisma. I didn't feel like they really wanted Bryan to be the primary face that they put forward for the next few years.

 

[karamazov80]

I was just thinking yesterday about how Punk really picked a terrible time to leave. They are begging guys to step up and be major, crowd-pleasing good guys, and few on their roster are able to step up to that role. Batista was obviously a bust, then Bryan gets the injury, and guys like Cesaro get squandered. It's now just basically Cena, or an unproven commodity in Reigns to carry that torch. If Punk were still around, I think there's a 50/50 chance he would be champ right now.

 

[Jaycepticon]

I was just thinking yesterday about how Punk really picked a terrible time to leave. They are begging guys to step up and be major, crowd-pleasing good guys, and few on their roster are able to step up to that role. Batista was obviously a bust, then Bryan gets the injury, and guys like Cesaro get squandered. It's now just basically Cena, or an unproven commodity in Reigns to carry that torch. If Punk were still around, I think there's a 50/50 chance he would be champ right now.

On the flip side to that, they've had Ziggler for years and the decide to give the IC strap to Johnny Cage(Miz)? It's blatantly clear they have no idea what to do with real talent because they don't sell as much merch.

 

[The Amazing Spider-Man]

On the flip side to that, they've had Ziggler for years and the decide to give the IC strap to Johnny Cage(Miz)? It's blatantly clear they have no idea what to do with real talent because they don't sell as much merch.

They're flat out idiots. For some reason, less talent seems to pay off. They wanna see big ripped guys with average to low talent, instead of smaller/average size guys with great talent in the main event spotlight. They should search a hell of alot harder to find ripped guys with great ring talent because they're not doing a good job.

The horrible losses in profit stemming from the creation of WWE network is icing on the "idot" cake.

 

[Fritz]

You guys are too negative. Everything will be ok as long as you Bo-lieve.

 

[karamazov80]

LOL

They're flat out idiots. For some reason, less talent seems to pay off. They wanna see big ripped guys with average to low talent, instead of smaller/average size guys with great talent in the main event spotlight. They should search a hell of alot harder to find ripped guys with great ring talent because they're not doing a good job.

The horrible losses in profit stemming from the creation of WWE network is icing on the "idot" cake.

Thing is though, that's been the WWE's primary MO since 1984 or so, with a handful of obvious exceptions to that rule for Bret Hart, HBK, Austin (sort of--he was a pretty big guy), and arguably Edge. But yeah, Ziggler or Cesaro would have been great choices to win that match last night.

 

[Grenouille]

I really thought Cesaro was ready to completely bust out after WrestleMania as a full on face. I think they really confused the matter by putting him with Paul Heyman. It split his reactions and then then the writers apparently lost interest and he's stuck in the rut he's currently in.

 

[GodzillaSpawn]

So...Sting is back? Has he fought?

 

[Grenouille]

So...Sting is back? Has he fought?

Nope. So far he's just been in a commercial announcing he's the pre-order bonus for this year's video game. They're also selling some merch on WWE Shop too.