Lesnar making return to Octagon at UFC 200

June 5, 2016

Brock Lesnar will be returning to the UFC and is slated to fight a yet to be named opponent on July’s UFC 200 card.  The WWE has given Lesnar permission to fight on the card despite being under contract with the UFC.

This UFC promo during the 199 PPV made the news official:

It appears that his opponent will be announced this Monday on ESPN.

Payout Perspective:

This seems like a risky move for the WWE since Lesnar will be fighting one month before the company’s second-biggest event of the year, Summerslam.  You might recall it was in LA a couple years back that Lesnar made his decision to re-sign with the WWE despite entertaining an offer with the UFC.  Apparently, the WWE is fine with the risk.  And you can say that the UFC is fine with the risk as well.  You might recall that Lesnar’s final fights were less than stellar.  Of course, there was an injury Lesnar was going through at the time but he is older and has not fought since December 2011 when he was stopped by Alistair Overeem.  Lesnar was not even in one of the featured main events at Wrestlemania this past year and he has no story lines actively going with the WWE thus far.

Lawsuit over WWE Network royalties promptly dropped by former wrestler

April 12, 2016

Former WWE wrestler Rene Goguen (fka Rene Dupree) has voluntarily dismissed his lawsuit against World Wrestling Entertainment.  The news comes just days after announcing it filed a class action lawsuit against the company for unpaid royalties related to the WWE Network and Netflix.

Goguen claimed breach of contract, breach of fiduciary duty, unjust enrichment and violation of the Connecticut Unfair Trade Practices Act.  The dispute arose out of what Goguen and his attorneys believed were a part of his Booking Contract that he was due royalties for “technology not yet created.”

WWE attorney Jerry McDevitt stated that Goguen signed a contract in 2011 “that destroys his ability to bring these types of claims” according to The Hollywood Reporter.  Aside from the contract, THR pointed to a case which states that state-based rights of publicity are trumped by the federal copyright act.

Goguen Dismissal

Payout Perspective:

The voluntary dismissal obviously means that Goguen’s attorney realized that they did not have a legal shot at surviving a motion to dismiss.  This probably stems from the contract alluded to by McDevitt.  It likely was a waiver of claims related to the WWE Network and Netflix.  One might infer that when the WWE contemplated the Network, ensuring that all performers under contract pre-network would not be able to claim royalties was a necessity to mitigate these types of claims.  The WWE’s lawyers are very aggressive when it comes to legal strategy and one might surmise that the WWE would have sought legal fees from plaintiffs’ attorneys.

2015: The year in pro wrestling

January 9, 2016

We leave the last review of 2015 to that of professional wrestling.

Let’s do some quick hits before we get to the high spots.

  • New Japan debuted on AXS TV to rave reviews. Mauro Ranallo and Josh Barnett served as the English commentators for the shows.
  • Ranallo recently made the move from New Japan and commentating boxing events to being the voice for WWE’s Smackdown. He debuted as the new voice as it the Smackdown brand moved from USA to SyFy this year.
  • Lucha Underground on the El Rey Network was the most-talked about independent hit. The mix of telenovela and independent wrestling action served as something different for wrestling fans.  The second season of the show was in peril as it lacked the necessary funding and a television deal.  However, news surfaced late in the year that it would return to the El Rey Network for a second season starting in January.
  • ESPN and the WWE entered into a partnership in which the sports cable network will feature a weekly segment with WWE wrestlers. 2015 saw ESPN expand a little more into the world of entertainment which included covering Summerslam (which was in Brooklyn, NY this year) and the announcement of Brock Lesnar’s re-signing with the WWE.
  • Lesnar’s signing in early 2015 was big news as it seemed as though he was going to head back to the UFC. He was in attendance at UFC 184 in Los Angeles. He re-signed with Vince McMahon in LA as the WWE was at the Staples Center at the time.  Also in LA at about the same time was Dana White who was promoting the Aldo-McGregor fight.
  • The much maligned TNA Wrestling organization was dropped by SpikeTV and then picked up by Destination America.  Soon thereafter, Ring of Honor was added to Destination America as a syndicated show for the network.  However, it has since moved once again to POP TV.
  • Ronda Rousey appeared with The Rock at WrestleMania in Santa Clara, California. The annual event drew in $139 million in economic impact for the Santa Clara/San Francisco region.
  • The WWE and TapouT announced a joint venture in which performers would wear the former MMA brand which revamped itself into an athletic performance brand.
  • The WWE was one of the many sports leagues to announces a deal with a fantasy sports operator as it announced a deal with DraftKings.

Hulk Hogan banished from WWE as a results of racist comments

Hulk Hogan was terminated by the WWE this past July after audio of a racist rant surfaced.  The audio relates to racist remarks he made 9 years ago.  It appears that the discovery was made as a result of an ongoing Gawker lawsuit in which the former pro wrestler sued the media outlet for publishing a sex tape.  Hogan’s Gawker lawsuit continues into this year as a trial date last summer was continued.

CM Punk sued by WWE physician

UFC contracted fighter CM Punk was sued by a WWE physician for libel.  The lawsuit stems from comments Punk made on Colt Cabana’s podcast about the type of medical treatment he received from the doctor while with the company.  The podcast was one of the most listened to podcasts from Cabana, who was also named in the lawsuit.  A motion to dismiss the case by Punk and Cabana’s lawyers was denied and the lawsuit continues.

More head injury lawsuits filed

The estate of former WWE performer Nelson Lee Frazier sued the WWE for wrongful death as a result of multiple head injuries/concussions while a wrestler with the WWE.  Matt Osborne’s estate filed a similar lawsuit.  In addition, Billy Jack Haynes,, Vito LoGrasso and Evan Singleton also filed lawsuits related head injuries they claimed they suffered while working in the WWE.  The WWE is aggressively defending these lawsuits claiming that they were filed by “ambulance chasing” lawyers.  The WWE file motion to transfer the lawsuits to the company’s home state of Connecticut.

In a unique strategy, the WWE filed a lawsuit against several former WWE stars seeking a declaratory judgment against them. The lawsuit would seek a ruling that any allegations of head trauma are “time-barred” by the statute of limitations.

Via our July post:

The WWE strategy is a result of the growing swell of lawsuits filed by former WWE performers claiming that the company knew or should have known about the risks of head trauma and that they suffered injury as a result.  Although not a named defendant in the lawsuit, the WWE names (and blames) plaintiff attorney Konstantine Kyros for the litigation.  It identifies several notice letters (below) which request that the WWE not destroy any information it may have.  The lawsuit identifies the existing lawsuits Kyros has filed on behalf of former WWE stars including Billy Jack Haynes.

The lawsuit requests a court ruling indicating that the defendants’ claims are time-barred by the statutes of limitations/repose under Connecticut law.  Essentially, the defendants did not file their claims on time.  This is always a very hard issue to consider as most of the claims that wrestlers could make occur when they are still contracted by the company.

The WWE Network

What was once thought as a foolish idea, now reveals that the WWE Network was ahead of the curve with it’s over the top platform.  With UFC Fight Pass making efforts to produce more content for its network reflects the fact that digital platforms are not going anywhere.  Of course, we don’t think the UFC is going away from its PPV business but its digital service is becoming more of an economic driver for the company.

The WWE Network has kept its strategy of offering a free month for new subscribers in growing its current paid subscribers.  Further, the expansion of the network to other countries has helped its subscriber base grow.  In January 2015, it surpassed 1 million subscribers.

Q1: 918,000

Q2: 1,156,000

Q3: 1,173,000

The fourth quarter has yet to be reported, but through September 2015, the WWE has brought in almost 2.3 million unique subscribers and half of those were active as of September 2015.

WrestleMania 31 brings $139M in economic impact to SC/SJ region

November 4, 2015

WWE announced that WrestleMania 31 generated $139 million in economic impact for the Santa Clara/San Jose region this past March according to a study commissioned by Enigma Research Corporation.  

The $139 million in economic impact is second to only WrestleMania XXX in New Orleans.  It’s the 4th straight year that the region hosting WM has cleared $100 million in economic impact for the region.

The event last March drew 76,976 fans at Levi Stadium in Santa Clara.  The release also brought up some other interesting notes:

-78% of the fans that attended WrestleMania were from outside the region and stayed an average of 3.3 nights.  Thus, a boon for local hotels, restaurants and other businesses.

-$22 million was spent on hotels and accommodations within the Santa Clara/San Jose region.

-$6.2 million was spent by visitors to the Santa Clara/San Jose region at area restaurants

Last 5 WrestleManias and their economic impact

Wrestlemania 27: Atlanta – $62 million

Wrestlemania 28: Miami – $102.7 million

Wrestlemania 29: NY/NJ – $101.2 million

Wrestlemania 30: New Orleans – $142 million

Wrestlemania 31: Santa Clara – $139 million

Payout Perspective:

WrestleMania is undoubtedly a destination event for many.  One need only look at the economic impact it has for the region especially the hospitality and restaurant industry.  The event can significantly impact local businesses and the WWE has created an event that it can leverage to its benefit in the future.  With certain parts of the country looking for an infusion of economic revenue, an event like WrestleMania could help.  

WWE reports Q3 results

October 29, 2015

The WWE announced its earnings for Q3 2015 on Thursday.  The company reported net income of $10.4 million ($0.14 per share) compared to a loss of $5.9 million ($0.08 loss per share) in Q3 last year.  The results bested most analyst expectations although the stock for the day dropped almost 13% as a result of profit taking.

Total revenue generated for the quarter ending September 30, 2015 were $492.6 million, up from $402.1 million the prior year period.  North America revenue were $373.6 million, up from $318.9 million from September 30, 2014.

The net revenues were $166.2 million at the end of the 3rd quarter as opposed to $120.2 million at the same time last year.

As for the WWE Network, it has about 1.3 million subscribers at the end of the quarter which is better than last year’s 515,000.  WWE CFO George Barrios indicated that the average for the WWE Network was 1,173,000.  At the end of Q3, the WWE Network had 1.233 million paid subscribers and 73,000 free subscribers as a result of the WWE’s rolling “free” months for new customers.  It’s up from the 1.15 million at the end of Q2 but down from 1.33 million at the end of Q1.  The Network revenues are up to $118.6 million.  Last year, at the end of Q3, they were $87.8 million.

The WWE plans to launch the network in Germany and Japan in January.  It also will be available on the Indian subcontinent on November 2.

According to the WWE press release, it has secured 37 new advertisers from the NBC Universal Upfront.

Vince McMahon touted the success of the reported earnings to the value from the WWE’s content.  He also emphasized the television rights deal and network revenue in attributing the international growth which was reported at 43% through the first 9 months of 2015.

Other notes from the earnings call:

Live events revenue increased 20% to $26.1 million from $21.8 million which related to 6 additional events and higher average ticket prices in North America.

Consumer products increased 21% to $22.4 million from $18.5 million in the prior year quarter.  WWE Shop showed an increase over last year’s third quarter as it was up to $6 million from $4.3 million in revenue.

Per Chris Harrington, the WWE barely touched on the ongoing concussion lawsuits only that there have been “increased legal expenses.”

The WWE introduced a 3 month subscription card at Walmart providing a “no credit card required” payment option.

There were 360,000 PPV buys equating to $4.5 million revenue for three events in Q3.  Thus, on average, despite the network about 120,000 households per event still purchase PPVs.

Payout Perspective:

The key takeaway might be that the WWE expects its WWE television rights fees and the growth of WWE Network subscribers will be the key drivers of WWE’s future revenue growth.  The WWE’s move to produce more live, original content for its Network is evidence that the company is investing heavy into its OTT platform as key for the future.  It’s interesting to note that the WWE did not address the reason for its “increased legal expenses.”  Then again, it’s likely that it did not want to make any comment on ongoing litigation.   Overall, the earnings report reflects a healthy company with earnings growth.

Lesnar’s ESPN comments sparked by twitter query

August 19, 2015

Brock Lesnar is making the rounds on behalf of the WWE as it promotes the company’s second-biggest event of the year, Summerslam, at the Barclay’s Center in Brooklyn, New York.  The biggest news to come out of Lesnar’s appearance was his comments that Vince McMahon is a better promoter than Dana White.

The statement itself is not that controversial.  The 38-year-old Lesnar signed a lucrative deal with the WWE and as he said he upon announcing the  re-signing with the WWE he gets paid full-time for working part-time.  So, for him to take the side of the WWE is not that extraordinary.

But the reason for the question by ESPN was based on a twitter back and forth between Dana White and a fan in which White stated that wrestling is “fake.”  Well, of course it is.  And there’s no dispute there.  Yet, we should probably go all the way back to the source for the response: some guy on twitter.  The question asked by the guy to White is to whether UFC PPVs should be priced at $9.99 like WWE PPVs.

Obviously the second half of the tweet may be tongue in cheek as both White and twitter guy know its fake.

One might assume the question was based on whether the UFC should go to the WWE model of placing its PPVs on Fight Pass like the WWE has done or whether the UFC should charge its fans a discounted rate for PPVs that do not have big stars appearing on them.

White told the twitter follower that wrestling is “fake” and one might read into that response that based on its scripted finish the price point should reflect accordingly.  Still, the back and forth seems rather innocuous.

As with most of White’s tweets, it did not go unnoticed.  WWE Champion Seth Rollins chimed in with a response to White’s “fake” comments.

Fast forward to yesterday in which ESPN hosted Lesnar. The question which got MMA web sites to sit up at their keyboards and take notice was the now infamous White tweet that wrestling is fake.  Lesnar responded with perhaps an honest response in stating that McMahon is a better promoter than Dana White and explained the differences between UFC and WWE.

Payout Perspective:

I would argue that the UFC and WWE business models are similar but not the same. It’s clear that the WWE has taken a big step with its WWE Network as opposed to what the UFC is doing with Fight Pass.  The WWE received steep criticism from the outset with its plan as it essentially invested heavily into the over the top network while planning on moving its PPVs to the platform. Not only did this deteriorate its PPV business, it put off its previous distributing partners that received a revenue split from the PPVs.  The distributors still receive a PPV cut, but it is less than before.

The question about whether UFC PPVs should be $9.99 needs to be addressed because it’s such an illogical question from the start. The UFC business model is predicated on the success of its PPVs. While the company receives revenue from event gates, merchandise and Fight Pass subscriptions among other revenue streams, PPVs remains one of the biggest pieces of the UFC financial pie. Starting this year, it increased its PPV price point $5 to $59.99 which likely meant an increase in PPV revenue. To suggest it cut UFC PPVs by $50 so more people can afford it seems way off the business model. Yet, it’s not wrong for someone on twitter to ask. And perhaps White’s response was appropriate as he was making the point that its business of real fighting is different from the WWE’s.

But, as with anything on twitter, it exploded into more.  While most web sites, including this one, are picking up Lesnar’s comments, the underlying cause for the news is predicated on non-news.  A question from someone on twitter that escalated.  It’s an obvious commentary on the state of what is news nowadays.

ESPN picked up the twitter back and forth from White and asked Lesnar. Thus, what was an innocuous question about lowering PPV prices turned into Lesnar calling out White on ESPN. Of course, just a few months ago, Lesnar showed up in LA at UFC 184 with White and entertained thoughts of going back to the UFC. So, it’s unknown how personal White will take the slight. In the past, McMahon has taken swipes at the UFC with no response by White. One might expect nothing more to come of this since the WWE would like to have Ronda Rousey make another appearance at next year’s Wrestlemania in Dallas. Thus, a working relationship between the two companies is warranted for that to happen.

But then again, someone might ask another question of White on twitter which may once again be blown out of proportion.

WWE reports 2nd quarter earnings

July 30, 2015

The WWE announced its second quarter earnings on Thursday and the numbers pleased many analysts.  The WWE reported net income of $5.1 million ($0.07 per share) compared to a net loss of $14.5 million ($0.19 loss per share) in the second quarter last year.

The WWE reported quarterly revenue of $150.2 million exceeding $1.5 million better than analysts expectations.

The total number of WWE Network subscribers increased 75% from the second quarter in 2014.  The WWE Network had 1,156,000 paid subscribers at 2015 2nd quarter end.  It is a 31% increase from the first quarter of 2015.  The network continues to think of its future plans which includes new content and adding approximately 180 hours of original content by year’s end.

WWE stock has increased 59% since the start of 2015.  It closed up $2.88, 17%, to $19.36 on Thursday.

Notable earnings highlights and announcements:

  • Live Event revenues decreased 34% to $26.4 million from $40.3 million in the prior year quarter primarily due to the timing of WrestleMania.
  • The WWE video game, WWE2K15, has done well. It has assisted in boosting the Consumer Products Division revenues up 36% from $16.0 million to $21.8 million this quarter.  Licensing revenues increased 105% from $5.5 million to $11.3 million on the strength of the game based on higher unit sales and effective royalty rates.
  • WWE Studios increased slightly from $1.7 million (Q2 in 2014) to $2.1 million this year.
  • In enticing fans to subscribe to the WWE, it plans to introduce a 3 month subscription card at retail which would give a “no credit card required” payment option.
  • Despite the Network, PPV buys are still solid with an average of approximately 56,000 for the 3 events of the second quarter. Although not considered a PPV, a July 4th live event from Japan, Beast in the East become the most watched program of all-time on the network excluding PPVs.
  • Television revenues increased 19% from $43.8 million (Q2 in 2014) to $52.1 million. The revenues do not include the timing of Total Divas which began airing in July.

Payout Perspective:

The one take in comparing the WWE Network from this quarter last year was that the network was only available in the U.S. in July 2014.  Now, the WWE has expanded internationally.  Still, a bulk of the over 1 million subscribers are in the U.S.  The earnings report is a win for the WWE as it appears that its most recent big gamble, the network, is doing well.  The big challenge is maintaining and retaining subscribers.  There is still a deficit in the amount of investment in the infrastructure of the network lost PPV revenue and TV licensing fees.  Yet, the network appears to have caught on.

WWE files lawsuit against former performers

July 2, 2015

WWE has filed a lawsuit against several former WWE stars seeking a declaratory judgment against them.  The complaint, filed in federal court in Connecticut is a result of a pre-litigation letter concerning potential concussion lawsuits against the company.

Robert Windham (aka Blackjack Mulligan), Thomas Billington (aka Dynamite Kid), James Ware (aka Koko B. Ware) and Oreal Perras (aka Ivan Koloff) are the named defendants.  The WWE is seeking a court order stating that any potential lawsuit alleging traumatic brain injuries “and/or tort claims Defendants have threatened against WWE are time-barred by the applicable statutes of limitations/statues of repose under Connecticut law.”

The WWE strategy is a result of the growing swell of lawsuits filed by former WWE performers claiming that the company knew or should have known about the risks of head trauma and that they suffered injury as a result.  Although not a named defendant in the lawsuit, the WWE names (and blames) plaintiff attorney Konstantine Kyros for the litigation.  It identifies several notice letters (below) which request that the WWE not destroy any information it may have.  The lawsuit identifies the existing lawsuits Kyros has filed on behalf of former WWE stars including Billy Jack Haynes.

The lawsuit requests a court ruling indicating that the defendants’ claims are time-barred by the statutes of limitations/repose under Connecticut law.  Essentially, the defendants did not file their claims on time.  This is always a very hard issue to consider as most of the claims that wrestlers could make occur when they are still contracted by the company.

WWE v. Windham, et al.

Ex A – Kyros Letter on Behalf of Windham

Payout Perspective:

One can see the strategy for the WWE here as it recognizes the growing litigation on the horizon.  It need only look at the NFL and NHL lawsuits to know that it needs to block the potential floodgates of litigation.  The estate of Matt Osborne was the latest to file a lawsuit against the WWE. Recently, a court in Oregon where the Haynes lawsuit was filed transferred the case to Connecticut upon WWE motion.  The WWE is seeking to do the same in other lawsuits filed across the country.  Based on the WWE’s filing here, it would seem that once it brings the case under Connecticut jurisdiction, it will file a motion to dismiss based on the applicable statute of limitations under Connecticut law.

We will keep you posted.

WWE Network averages 918,000 subscribers through Q1 2015

March 30, 2015

The WWE announced its network subscription numbers on Monday and Wall Street was unimpressed.  The WWE Network surpassed 1.3 million subscribers which is almost double its total from a year ago.  The current average is approximately 918,000 paid subscribers through the first quarter of 2015.

The WWE stock dipped during the day on Monday on “confusion over the company’s subscription growth,” according to analyst Laura Martin of Needham & Co.  Last year, the company announced WWE Network subscriptions at 667,000.  The average is at 918,000 per company press release.

The WWE Network surpassed 1 million subscribers in late January.

Payout Perspective:

As of the time of this writing, WWE stock was rallying in after-hours trading.  The 1.3 million subscribers sounds like a good number considering we are over a year in with the platform, but the fluctuations in how many subscribers there are at a current time still remains a source of confusion for investors.  Thus, this may be the reason the stock dipped today.  The network announced 8 new original series for the network during WrestleMania 31 on Sunday which the company hopes will facilitate consumer retention of the network.

WWE Network celebrates one year

February 25, 2015

The WWE celebrated the one year anniversary of its network on Tuesday by allowing all free access to its network.  Variety also posted an article summarizing what the company learned with its over the top network.

Its clear that the Network is inextricably tied with the company’s future financial performance as it is stated in the WWE’s latest earnings report that the company’s future financial performance is dependent on subscription adoption of the WWE Network.

The company surprised analysts by besting Wall Street expectations for the fourth quarter and all of 2014.  While the company has incurred a net lost due primarily to the large investment in the network, it has not been as heavy as previously predicted.

As it reported in January, the network surpassed 1 million subscribers and is picking up more viewers as it rolls out in more foreign companies.  It has also done well with its promotions for the network including a free November and allowing subscribers to pay mont-to-month rather than establish a 6 month commitment as it was originally rolled out.

Variety cited 4 lessons the WWE has learned since its launch last February. Among the lessons it indicated the “balancing act” the company had with its “direct-to-consumer” initiative while maintaining its partnerships for distribution.  Essentially, this means keeping the people paying for its television rights fees happy as while as having amicable relations with the cable and satellite company.  The latter being a harder balance considering the company has cut into PPV revenues.  It also may have angered companies by playing most of the Royal Rumble last month during an episode of Raw due to the live event cancellation as a result of snow.

Payout Perspective:

The WWE Network has had measured success despite criticism about the product.  It may have not met its lofty expectations of subscribers yet but one may have to wait to see how it fares with international distribution. For its part, the WWE has been willing to make changes on the fly to the network (i.e. Free November, month-to-month payment, content, convenient options for viewer usage, etc.) It was a bold move for the WWE to take this step to create the network and the early adopters have spoken.  In year 2, we will see if more subscribers add on, or if the Network will face more hurdles for subscribers and retention.

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