For 2023, I estimate AEW will generate about $154 million in net revenue, an increase from $100 million estimated for 2022.
In the company’s fourth full calendar year, the business is likely still not profitable but a strong increase in U.S. media rights fees — presumably currently being negotiated with Warner Bros. Discovery (WBD) — could make the company profitable on an annual basis as early as 2025.
I broke down AEW’s business into three divisions: media, live events, and consumer products — similar to the format of WWE’s public disclosures before the TKO merger.
MEDIA
Television
AEW’s media business, which includes revenue from weekly TV broadcasts and pay-per-view, likely makes up around 60% of total revenue, which I estimate as $98 million.
By far AEW’s most important partner is its U.S. TV distributor, WBD, parent of platforms including TNT, TBS, Bleacher Report, and Max.
AEW CEO Tony Khan in the past has disclosed the value of AEW’s television deal with WBD, agreed to in 2020 (before the introduction of Collision) was worth $175 million over four years, with an option for a fifth year (which has presumably been executed for 2024), which indicates an average annual value of $44 million. Some of that revenue is driven by sharing ad sales with the TV networks that broadcast AEW weekly programs, but I believe the majority of the compensation is guaranteed.
Such deals normally have annual escalators, increasing fees paid to the content provider each year. Without accounting for the launch of Collision in June and only accounting for Dynamite, Rampage, Battle of the Belts, and other shoulder programming, I estimate annual compensation toward AEW’s U.S. TV deal to be about $50 million in 2023, as the company is in the final non-option year of a term that probably has escalating fees.
I estimated any given taping of Dynamite or Collision costs about $650,000 per episode to produce. According to Khan (at a press conference in May), WBD is paying AEW more since Collision was added as an additional weekly touring event. At a minimum, I believe WBD is compensating AEW enough to allow the wrestling company to cover substantial costs from the added weekly live event. Therefore, I’m estimating incremental media revenue related to Collision as about $34 million on an annualized basis, prorated for 2023 to $18 million as there will be just 27 episodes this year for the show that debuted in June. That brings the estimated U.S. TV revenue to about $68 million.
Additional TV revenue from international agreements I estimate are worth a total of $7.8 million. I believe ITV in the U.K. is AEW’s most lucrative international TV partner, followed by Eurosport in India, and Bell Media in Canada.
Pay-per-view
It seems likely AEW reach around 1 million pay-per-view buys for the year over eight events.
I believe total worldwide buys across all platforms have ranged between 90,000 and 190,000, with buys for some events later in the year selling slightly less than events earlier in the year, as fan interest in the company has declined.
For this segment as well as the estimate overall, I’m excluding any business related to Ring of Honor, as Khan insists they are separate companies, though they are both controlled by him and share distribution partners, talent, staff, and probably other services and assets.
I assume domestic PPV buys make up about 65% of all buys, sold at a $50 price point with an average split to AEW of 45%, with a lower average price point for international buys and a slightly lower split.
Under these assumptions, the PPV business generated $19.4 million in revenue for AEW for the year.
To dissuade items like this from becoming fodder for the desperate aggregation cycle: These buy numbers are my own beliefs based somewhat on other reports and Khan’s comments, which may be lower or higher than those reports or comments themselves. These estimates aren’t based on new information I obtained, nor is any other detail in this estimate.
Remaining segments under the media division, sponsorships, and digital advertising, I estimate generating $2.3 million and $1.1 million respectively, bringing total media revenue to $98 million.
LIVE EVENTS
I estimated AEW will generate about $34 million in ticket sales for the year from just over 500,000 ticket sales, including estimates for events in December that haven’t taken place yet.
For gates for other PPV events, we have either claims from Khan or Pollstar data. I accounted for Revolution as a $800,00 gate; Double or Nothing as $964,000; Forbidden Door as $1.2 million; All Out as $800,000; WrestleDream as $533,717; Full Gear as $900,000; and assumed Worlds End at the end of this month as $850,000.
Other ticket sales volume is based on the assumption that about 90% of estimated tickets distributed from WrestleTix analysis represent actual ticket sales.
I estimated average ticket sold prices by event type, derived from results of public records requests and Pollstar data. For AEW’s biggest event, All In, the company claimed a $10 million gate from 81,035 ticket sales.
CONSUMER PRODUCTS
Last, consumer products is a probably smaller but more difficult area to estimate because less is publicly known about these products’ sales.
I broke the division into three segments: eCommerce (online merchandise sales), venue merchandise, and licensing.
Venue merchandise is the easiest of the three parts to estimate because it’s driven by attendees. I estimated venue merchandise per ticket sold at $12, which, based on an estimated 503,350 ticket sales, results in $6 million.
I estimated online merchandise sales at about $4.7 million, the same value I estimated for 2022, which seems reasonable based on AEW’s decline in popularity (reflected in decreased TV ratings and average Dynamite attendance), offset numerically by inflation in the U.S. dollar.
Licensing is the most difficult segment to estimate. I believe AEW’s three biggest licenses this year were with Yuke’s (which published Fight Forever, AEW’s first console video game), Jazwares (action figures), and Upper Deck (trading cards). I estimate Yuke’s revenue at $8 million, Jazwares at $1.8 million, Upper Deck at $1.3 million, and an additional $250,000 to miscellaneous partnerships, for a total of $11.3 million on product licensing. That’s a small fraction compared to the roughly $79 million I estimate WWE will generate in this area in the same year, which seems like a plausible disparity given other disparities between the two companies I understand better.
Overall those three segments total $22 million in revenue.
NEAREST COMPARISONS
In terms of revenue generated by other wrestling companies, there are wide gaps on either side of AEW.
WWE reported $1.3 billion in the twelve months from Oct 1, 2022 to Sept. 30, 2023. That’s more than eight times the estimated revenue for AEW, $154 million.
New Japan almost certainly has the third-highest revenue among wrestling companies globally. For the twelve months ending Jun. 30, 2023, New Japan recorded $36.2 million in revenue. $154 million for AEW from January to December 2023 is just over four times that.
EXPENSES AND PROFITABILITY
This is the first time I’ve tried to estimate AEW’s expenses and profitability, admittedly with a wide range of uncertainty as public indicators on expenses are few.
I separated AEW expenses into five categories: talent compensation; media and event operating expenses (excluding talent); consumer products operating expenses; general and administration expenses; and marketing and selling expenses.
Talent expenses I estimated as the highest of the five. I assumed the average talent is paid $450,000 annually. I counted 188 roster members, based on the number of people listed on AEW’s official website. That brings total talent compensation to about $85 million.
Media and event operating expenses I estimated at $66 million for the year, itemized by event type.
I assumed consumer products licensing expenses were 60% of revenue for that division, based on the ratio of revenue-to-operating expense WWE has reported.
I assumed general and administration expenses were 10% of total revenue and marketing expenses were 6% of total revenue, also based on WWE’s normal ratio for those values.
That brings estimated total expenses to just over $188 million.
Simply subtracting expenses ($188 million) from revenue ($154 million) gives us EBITDA (earnings before interest, taxes, depreciation, and amortization) of $34 million in losses for the year.
AEW’s net income (taking into account interest, taxes, deprecation, and amortization), almost by definition, would be more negative.
AEW’s path to profitability relies largely on getting a strong increase in media rights compensation from WBD.
If AEW gets a 2x increase in TV rights value over about $70 million (I choose to focus on that lower number as it’s closer to a pro forma AAV of the current deal rather than the increased compensation for 2024), that would mean about $140 million annually from domestic media rights, more than double what that revenue stream may have generated this year, and greater incremental revenue than AEW’s negative EBITDA. Without major increases to AEW’s expenses or cannibalization to other revenue streams (PPV is one to keep in mind), AEW could be profitable in periods soon after such payments go into effect.
Does it actually make sense for AEW to get a 2x increase in rights fees?
Based on viewership in the last 52 weeks, WBD’s cost per viewer hour for AEW currently, taking all three weekly shows into account, is about $0.42.
WWE Raw’s cost per viewer hour under its current deal is $1.00. With an expected increase in fees for Raw, that rate will only get higher and thus the disparity between AEW and WWE would become greater, possibly fortifying the case for a strong increase for AEW.
I’ll forgo applying this comparison to Smackdown’s new deal to move to the USA Network because viewership on that network will most likely be lower than it currently is on higher-reach Fox.
For a pessimistic case against AEW, though, look to NXT’s new deal with The CW, which I reported previously is worth about $26 million per year. NXT is delivering viewership now that’s right in the middle of Dynamite and Collision’s averages. Measured against its current viewership of the trailing year, NXT’s cost per viewer hour is $0.35, already less than the current rate for AEW.
I believe WBD owns a minority, non-controlling stake in AEW, which Khan’s recent evasive comments about being open to WBD having a greater stake, seemed to support.
Ultimately it probably comes down to whether WBD wants to continue to be in the wrestling business. AEW isn’t a sustainable business unless it gets a sufficient media deal from WBD. Again, that means paying about $140 million per year for AEW throughout the late 2020s.
And if they don’t want to continue to be in the wrestling business, what do they program in AEW’s current time slots that the conglomerate views as a preferable strategic option? That answer isn’t clear. AEW’s ratings are down but not so low that it’s clear rerun sitcoms and movies are a better option.
What new sports rights or other programming might replace the 260 annual hours of TV AEW produces? The new rights WBD picked up from NASCAR don’t alone constitute enough air time to be the answer. The plausible notion that WBD might end up with fewer — not more — hours of NBA games when those rights are renewed doesn’t support a pessimistic case for AEW. UFC seems like an option, with WWE’s sister company’s rights expiring in 2025. Maybe WBD could expand its existing deal with the NHL to add more games. And of course, WWE Raw rights are on the market.
It’s questionable whether those options are more cost-effective for WBD than renewing AEW programming, which, unlike the aforementioned properties, WBD probably has an equity stake in.
Possibly getting AEW over the hump to a deal that allows it to become profitable is the fact that some of AEW’s rights are currently unused, namely, next-day streaming rights for weekly programs, and rights to growing its library. The option to put AEW PPV events on WBD’s streaming service, or otherwise make WBD the exclusive domestic distributor of those events could also add value to such a deal.
brandon@wrestlenomics.com
