Barron’s featured former WWE CEO/Senatorial Candidate Linda McMahon and the decline in finances of World Wrestling Entertainment. As McMahon’s political career heats up, the WWE business is cooling.
The article points out that the past three years; WWE popularity has taken a nose dive whereas the UFC has taken over in PPV dominance.
Revenues began to slip at WWE well before Linda [McMahon] left and eventually won the Republican nomination to face Democrat Richard Blumenthal in what looks like a tight contest. In 2009, total sales of $475 million were down 10%. But [WWE] Chief Financial Officer George Barrios proudly notes that profit margins have generally improved since he arrived in 2008. He says WWE earnings should rise when the company finds new performers that connect with its fans. “We are actually pretty happy with the way we’re doing,” says the financial chief.
Payout Perspective:
A reason for the decline in the WWE PPV buys has to do with the poor economy and the frequency of PPVs. Not only does the WWE compete with the UFC for PPV dollars, it is being challenged by rival wrestling organization, TNA, a league that includes Hulk Hogan, Ric Flair and Cactus Jack – notable wrestling figures albeit older. As Barrios indicates, the WWE needs to find a new performer to connect with fans. Although John Cena is a viable candidate, he cannot carry both its Raw brand on USA and Smackdown on the SyFy network. If you do tune in, there are many younger wrestlers that have been given the chance to become the next big thing. But, they have not found the popularity or gimmick that will sell them to the fans.
PPV fatigue can be another reason for the WWE decline in numbers. As mentioned, the lack of recognizable stars along with the saturation (WWE has 3 or 4 original programs on per week) on TV plus the tightening of discretionary income may equal the decline of WWE PPV buys.
The UFC rise in popularity the past couple years is another reason for the decline of the WWE PPV numbers. With the slowed economy, many fans are choosing the UFC over the WWE when it comes to spending their discretionary income on PPVs.
It will be interesting to see how the UFC PPV numbers will be for UFC 121 as the UFC seems to be heavily promoting this show hoping for a big gate and PPV buys. Also, after UFC 121, Zuffa will have done 4 live shows in the past 30 days. The lukewarm reviews of UFC 119 were a red flag for many UFC fans that usually made the monthly PPV purchase. Bloody Elbow notes how some have criticized the UFC for possible PPV-fatigue which has shown through lack of production innovation and a failure to stock its monthly cards with marketable stars. Certainly, the WWE decline in PPV buys could happen to the UFC down the road. It will be up to the UFC to see how it can sustain its market of PPV buys.
One thing that’s often overlooked when you view the numbers is how the WWE product has changed in recent years. For many years, especially the late 1990s to early- or mid-2000s, WWE (and pro wrestling in general) had an adult-oriented product full of profanity, half-naked women, and sadistic (scripted) violence which often included weapons (tables, chairs, sledgehammers, etc) and (real) blood… all aimed at males 18-35, the same target demographic of MMA. As the UFC product gained in popularity, the McMahons decided not to compete with MMA, though there were some stumbles, like the Sylvester Terkay character and the Undertaker’s triangle choke finish. Instead, they took WWE in a PG-friendly direction and return to the kid-friendly product of the late 1980s and early 1990s. They essentially re-branded the product and aimed at a new demographic. Those changes have likely had a more profound effect for the business of the WWE than competition with MMA. Though, in fairness, we should remember that those changes only happened in response to – and in an effort to avoid competition with – the UFC product.
Tony,
Great input, thanks.
TNA shouldn’t be mentioned as a viable competition. Their ratings are mediocre (around 1.2) and the PPV buys are withing 10-20k. It is interesting to mention that their biggest PPV buys were for a PPV which featured Kurt Angle vs. Samoa Joe billed as a “MMA match”, which in essence was a shoot-fight style match like the one Barnett and Sylvia did a while ago. Ratings-wide they tried to make a jump head-to-head with RAW on Monday Night (a reminiscent of the Monday Night Wars between WWE and WCW a decade ago) and crushed down to 0.5
On the ratings side, WWE’s main competitors are football and NCAA’ basketball. Their main focus is merchandise and TV deals. Huge part of these is the so-called “PG” era when the product cut back all the blood, nudity and most of the violence and adopted a more “family friendly” image. Most hardcore fans are bashing their current policy but financially many see it as the right thing for the business. The problem for WWE is that they are no longer the COOL thing. Ten years ago, WWE was the thing and they were using violence, nudity and profanity when these things were still a taboo. UFC are the COOL thing today but it doesn’t mean it will last forever. Hopefully, Dana will learn from history and won’t make the same mistakes.
Tony,
Good points , its interesting because the UFc besides the ring girls has literally no sexually motivated content. The reality tv show has basically 0 female’s and the PPV’s are the same , again minus the ring girls. There are no weapons , literally 0 story line for the PPV events ( if you aren’t an avid follower). My opinion is that as MMA continues to grow ,and gains acceptance we will see more and more presentation added to the fighting. like HBO does for their big fight nights. An example can be seen now that we are in the month of Brocktober. This will keep the public involved despite the barrage of PPV events monthly.
One thing that stands out to me is where PPV’s are purchased. I’m sure when you look at the bars & restaurants they aren’t buying many WWE ppv’s then advertising to the public like they are with the UFC shows.
Another thing i look at is how far down the line the sport is being supported. Now that there are things like kids pancreas , Jiu jitsu , and grappling people aren’t as scared of MMA in general. I believe it gives more connectivity to the average consumer. The average PPV buyer may not train but it is now more likely then ever that he/she knows a fighter , a trainer , ect , therefore motivating them to buy a MMA event over WWE.
I look at it like Pee Wee football , and even tho all those kids wont make it to the pros, they all look back at that time in their life and can relate to the NFL guys or their favorite college team players.
As the MMA ( UFC ) grows and gets more youth involved we will continue to see positive results for PPV sales. Will they grow steady , will it be a win / win every time ? prob not , but the fact that there are still a ton of people that aren’t familiar with the sport, and this is a good sign to me. i feel it says there is plenty of more room to grow. Even if the average PPv buyer purchases 1 less event a year or quarter i could see 1st time buyers off setting that. Im sure someone with some really good math could quantify that, not my strong point.
Another great story from MMA Payout thanks as always.
I don’t have much to comment on the WWE stuff, as I don’t really follow that
The UFC PPV fatigue, however, is at best overblown. The numbers from sites that actually pay attention to the business (like this one) have shown UFC steadily increasing their sales in every aspect. Every so often UFC has a card that ends up a stinker (like 119), but I’d rather have that than just keeping guys on the shelf for months “just in case” to make sure that there’s a blockbuster every 3 months.
I may choose not to get every PPV, but I’m happy to have the option. Why people think UFC needs to run less events, giving you less options for MMA, and fighters less opportunities to fight and get paid, is beyond me.
When BloodyElbow talks about it, they have a dubious grasp of the business side at best (Kid Nate has said he doesn’t pay attention to that stuff, but apparently it doesn’t stop him from writing articles) and use outliers like UFC 100 like they’re a baseline. It’s silly.
That said, I do think UFC is reaching a ceiling with how many PPV shows it can do a year. However, I think we’ll see a lot more of the free international/UFN/Versus/etc. cards coming up. As they continue expanding, they’ll want to keep expanding their avenues for showcasing young talent.
Jason Harris –
Kid Nate’s “Zuffa in Trouble” series of over the top articles are just done for website hits. He’s basically the Glenn Beck of MMA “bloggers”. He’ll do anything for the website traffic. His obsession with Dana White’s money is hilarious.
As far as the UFC doing too many shows….. I think they’re just testing the waters to see what ceiling of the PPV model is. I think they’ve reached it and don’t expect them to go above the numbers of shows they do now. You might see them pull back one or two shows next year.
JJ: I think that the UFC would be wise to pull back a show or two. Thinking about it, I think another reason to space out PPVs is the injury issue. Many fights have to be juggled due to injuries which could hurt the top of a PPV card.
Instead, they could include more WEC live events on Versus. It is my opinion that Zuffa, sometime down the road, would like to phase in a WEC PPV every other month or so. Aldo v. Faber was the test to see how well received it would/could be.
The only problem I can see is a talent disparity. Ben Henderson and Jose Aldo are a step above in their divisions. Although the WEC divisions are entertaining, it is clear that title matchups are mismatches if you face Smooth or Aldo.
@JJ: Yeah, I’ve realize that. BE went from a solid news aggregator to a tabloid over the course of a few months. It’s silly to watch the guy swear up and down that Zuffa/UFC/Fertittas are broke or whatever else despite the best efforts of informed people to prove him wrong in the comments.
@Jason Cruz: I agreee. My friends and I are the hardest of the hardcore, but even I’ve skipped some shows this year. More than one PPV a month is really pushing the limit, IMO, but for something special I could see them doing two. 14 or so PPVs a year is about the ceiling, after that it’s getting to the point where I’m watching at the bar.
Which brings up a point I’ve wondered about and maybe some of the payout people know, how are bar PPV’s accounted in the total? Do they count for total PPV buys? Aren’t they sold on a different pricing rate? I wonder how much revenue that accounts for. In my area (southern california) just about every bar shows the UFC events.
One of the reasons the McMahon’s cleaned up WWE because Linda McMahon is running for office.
One thing I don’t think is mentioned when discussing the UFC and WWE is what makes the UFC unique. It is most frustrating to view analysis which skirts the main point and the reason for the popularity of the UFC.
It’s real.
Those are real fighters fighting real fights. The UFC does not mind if some fighter trash talks, it helps some sales, but what really captivates the crowd is the reality of the fights and the skill of the fighters.
The UFC is as close to a real fight as you can get. Everthing is included from every martial art which is effective in a real contest. The fans know that. UFC fights are not so predictable, anything can and very often does happen–fans love that uncertainty—it makes the fights exciting.
What the UFC does better than boxing is that it puts a face on the fighters, not just the stars–but the fights always come first. If a fighter is a star–he will get a few chances after a loss–but at some point–if he keeps losing, he is gone.
So when people analyze the success of the UFC they should remember the 800 pound gorilla in the room—the fights are real.