A few months ago, WWE (NYSE:TKO) celebrated the 40th anniversary of its annual mega-event WrestleMania. It was a two-night extravaganza that marked the end of its “season.” Although given professional wrestling has no off-season that’s a bit of an odd term, but like football has the Super Bowl and baseball has the World Series, WrestleMania is seen as an ending point.
Yet this year’s WrestleMania was different and for the first time the “season” ender really WAS an ending of sorts, and it was one that investors were anxiously awaiting. So now with some distance between us and the last pinfall from Lincoln Financial Field in Philadelphia (where the event was held), it seems like a good time to look back and see how hitting the reset button really went and what the future may hold for this company.
First as always, some background.
If you’re reading this, then you are very likely familiar with the downfall of Vincent Kennedy McMahon – the architect of WWE. And if that’s the case, you really don’t need a massive refresher, but to topline it, McMahon found himself being accused of a number of various misdeeds, and he was forced out of the company.
While nothing has been proven, and it will probably be a long while before we even get to that point, the whole thing was enough to make things complicated for a company that was just formed. You’ll remember not long before McMahon’s world was flipped upside down, he sold WWE to Endeavor, who merged it with their UFC business to create a new entity – TKO.
Now though, McMahon went from being in control of all aspects of WWE to being a part of a larger entity where he had power, but everyone knew it was never going to be complete power. Even with allies on the board, these new allegations meant McMahon’s time on top was running out and while he has looked to be down for the count in the past … this time was different.
So McMahon ultimately stepped away and shockingly did go into that good night, possibly never to return to the squared circle.
As I write it, it still doesn’t seem real.
Fans know that McMahon has come and gone in the past a few times but even then, he always had his thumb on the scale calling the shots from afar. But this time may really be different and an equally surprising thing happen in McMahon’s absence.
WWE shined.
WrestleMania 40 was a massive success.
Viewership rose over 40%, merchandise sales were up over 20% and across social there were over 650 million views, the most for any WrestleMania.
And while numbers are ultimately important here (even more so now), the story behind the numbers was equally impressive. The feud at the top of the wrestling card was electric and steeped in rich history written by legends in the business.
It could have easily gone the other way as well.
McMahon had a history of knowing what the fans wanted and doing the opposite … something that riled up the base to no end. Yes, it worked, but the cost of that “success” was becoming greater and greater. Now though, under the leadership of McMahon’s son-in-law, former WWE Champion Paul “Triple H” Levesque, something seemed different.
And it was.
The main event ended with the fan favorite getting the win and creating the type of moment wrestling fans long for, but rarely receive. It was a real storybook ending – exactly what the business needed to move forward.
It was for all intents and purposes, an on-air reset to mirror the one happening off-air.
In the time since, we’ve seen WWE keep that momentum and Levesque put his stamp on this new era of the company. WWE has extended the olive branch to rival promotion Total Nonstop Action (TNA) to create crossover moments, it has grown its international presence with back-to-back premium live events (formally known as pay-per-views) and it has continued to build real stories that weren’t abandoned on a whim, as had been the case for decades.
Levesque is building trust with his locker-room, his board and his fans.
And in this business, that type of trust is even harder to earn.
Also keep in mind this is NOT the traditional case of nepotism where someone gets into power only because of family. While that certainly played a role, you can’t over-state enough Levesque’s knowledge, experience and passion for the industry.
He was the perfect person to step in and pick up the pieces. And it is at a time where TKO really needs that type of leadership.
For one, TKO recently merged the WWE and UFC live event teams into one unit, with eyes reportedly on more “All-Star” weekends. These would be mega-watt events where fans would have UFC and WWE cards running on back-to-back nights in the same city. We have already seen a few instances of this in recent months but there is potential for it to be even more blown out.
That could be a massive boost for the company’s stock and overall long-term performance. While it seems unlikely a WWE and UFC cross-over match would happen, this is the next best thing. These two brands combining forces to put on a spectacle every month in a new city would only make the entire entity more powerful.
Cities are already lining up to court WWE to bring one of its big events to their area, and having that come with a big UFC presence could create the same type of WrestleMania hype year-round in various markets.
We are also now seeing a variation of that approach as this week WWE announced a multi-event deal with the state of Indiana. This first-of-its-kind agreement will see three of the company’s big four premium live events come to Indianapolis’ Lucas Oil Field.
This is a big deal for WWE, which traditionally divides its events up across the country to ensure fans from all over have access. To put down stakes in one city for three of its biggest events is a telling sign about its future direction. Keep in mind, this isn’t just about those three big shows, it’s about the TV shows airing in the run-up/aftermath that will likely all be in that same area.
So now you have all three of its brands (RAW, Smackdown, NXT), three of its big events and the annual Hall of Fame ceremony that comes with WrestleMania weekend. It is a huge win for Indiana and also for WWE which wouldn’t be doing this unless it was financially worth their while.
This begins in January 2025 with the Royal Rumble event – and speaking of January, that is also when WWE’s flagship program “Monday Night RAW” has its own big “moment” coming up. For the first time, the show is leaving cable and going to Netflix (NFLX). It is a major paradigm shift that will paywall the show, potentially angering its most loyal fans.
Yet what works in WWE/TKO’s favor is that Netflix has always been in tight control of its numbers and data, so even if viewership falls off a cliff (which it won’t), WWE is insulated. The two companies will find some sort of metric to crow over, and the media will take it and run with it.
Although what is more likely to happen is that WWE’s base grows – that’s not to say there won’t be pushback or some declines in ratings (again, we won’t ever really know), but all of those I’d venture will be from domestic areas.
The genius of the Netflix deal is that while in the US only RAW is shifting over, globally it is the majority of WWE’s assets. How Comcast streaming service Peacock is the one-stop shop of WWE Stateside, Netflix will now assume the role internationally. Having the type of exposure should make up for any declines from American audiences.
It’s still too soon to say how WWE and its new parent company will do a few years down the road, but just in a few months into the new regime, you can already see signs of potential.
TKO overall will be a fascinating company to watch in the new few quarters because it is re-writing the rule-book in real-time. There is no real road map for what they are going through, but Levesque and his team (along with that of Endeavor) are certainly doing whatever they can to find their footing and ensure their investors remain satisfied.
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