WWE Q3 2020 Estimate: Enter The Thunderdome

How will WWE’s Thunderdome production affect the company’s financial outlook?

WWE’s new “Thunderdome” production, which debuted Friday, is the company’s latest response to slumping ratings of Raw and Smackdown. Those two programs, highly valued by NBCUniversal and Fox, respectively, have been challenged for at least a few years, but have been especially hit since the pandemic forced the company to stop running at major arenas before thousands of fans. 

From mid-March to mid-August, all of WWE’s in-ring content has been taped at its Performance Center training facility in Orlando. This made TV production much less expensive, while not affecting guaranteed revenues related to contractual escalating rights fees. In the short-term, taping out of the Performance Center increased WWE’s profits.

The TV program is hurt by the lack of a live audience, and that is a component of declining viewership. There were several questions to executives about ratings on the Q2 call on July 30. After providing a number of reasons why viewership and other consumer metrics were in decline pre-pandemic, CEO Vince McMahon’s latest explanation is that it’s because there are no fans in attendance.


Moving out of the Performance Center and into Orlando’s major sports arena, the Amway Center, and working with The Famous Group to create the “Thunderdome” production, will be more expensive. WWE is reportedly paying just $450,000 for 60 days of residency at the Amway Center, but the production costs associated with the “Thunderdome” are probably far higher. 

I don’t have a strong sense for what the specific production cost and compensation to The Famous Group will be. I could see the expense being somewhat less than, similar to, or somewhat greater than the normal costs of WWE’s production at an arena. Due to this, I am modeling in an operating expense on WWE’s Core Content and Network lines at a slightly increased rate relative to what I estimate were the operating expenses for those segments in the period immediately before Covid took production out of arenas.

This results in a significantly less profitable 2020 than previously estimated, but my estimated net income for the full year remains within the range of the company’s current inflation-adjusted annual net income record, set in 2018 ($99.6 million).

This estimate assumes there will be no ticketed live events for the remainder of the year, and there will be no second lucrative event in Saudi Arabia.

My current estimate of $100 million in net income for full year 2020, implies earnings per share (EPS) of $1.15 for the year, and an EPS of $0.15 for Q3, and $0.20 for Q4.

These estimates are considerably lower than current analyst estimates. Among 11 analysts, the mean EPS estimate for the year is $1.61, with a low of $1.32. The low EPS analyst estimate for Q3 is $0.19 and $0.20 for Q4. However it appears there hasn’t been a new analyst estimate since July 31, well before WWE’s “Thunderdome” announcement on Monday.

Past analyst estimates from Zacks. Current analyst estimates from Refinitiv.

Vince McMahon’s problem is Vince McMahon

WWE has effectively been able to improve television viewership for a week or two with concepts like Raw 25, Smackdown 1000, Raw Reunion, Smackdown’s hyped debut on Fox, and the recent introduction of new concepts “Raw Underground” and the “Thunderdome”.

What WWE hasn’t been able to do is cause any long-lasting improvement to viewership. While Raw and Smackdown remain highly ranked and are the main source of growing revenue for the company, their ratings continue to predictably decline. Smackdown’s viewership is already showing year-over-year declines, despite not yet being through its first full year on Fox, after its move from USA Network in October 2019. Raw doesn’t have the external benefit of having been moved to Fox. It’s lived on the USA Network on Monday nights for many years. Raw is in its 28th consecutive month of year-over-year decline in P2+ and P18-49, as of August.

As of August 23, 2020. Note: Smackdown moved from USA Network to Fox in October 2019.

Friday’s Smackdown, with the first use of the new production set, coincided with the program’s best viewership in months. I believe this is a result of short-term curiosity. Monday’s Raw may benefit as well, but I expect viewership will revert to its usual pattern within a few weeks.

McMahon’s latest answer, that Raw and Smackdown are hindered by the lack of live crowd, and they’ll turnaround once they get fans back doesn’t hold up to scrutiny.

No amount of special effects or reunion programs address the underlying problem which is WWE’s current creative system, under the leadership of McMahon, cannot create stars or any other sort of interest that will result in a long-term increase in consumer interest.

Before Covid, live event ticket and consumer product sales were in decline. WWE Network subscribers, which are showing signs of stabilizing during Covid, saw year-over-year declines throughout 2019.

WWE’s third brand NXT and new competitor All Elite Wrestling entered the major cable picture last fall. They, along with Raw and Smackdown saw their viewership decline following Covid affecting events beginning in mid-March. But since, NXT and AEW have made a comeback while Raw and Smackdown have not. The key difference there is Vince McMahon. McMahon is the head of creative for the company’s main roster Raw and Smackdown brands, which has been the case for decades. NXT’s creative leadership is delegated to McMahon’s son-in-law, EVP Paul Levesque. AEW is a competing business, headed by Tony Khan.

Before Covid, McMahon claimed engagement including viewership would turnaround after certain talent returned from injury. After talent returned from injury and there was no turnaround, McMahon said there’d be a turnaround after new stars were developed on Raw and Smackdown. McMahon created new executive director positions for each brand in June 2019. Those positions have already fully turned over and been consolidated. Smackdown director Eric Bischoff barely lasted a few months before being fired. Paul Heyman almost lasted a year as director of Raw. The two positions have been merged into one under long-time aide Bruce Prichard. Throughout, the overall vision and the main brand’s inability to develop stars hasn’t changed.

We have a 30-plus year track record of creating compelling characters and engaging a variety of audiences, and we obviously remain confident we can continue that with our collective ability, even in the most challenging environments with no live audience.

WWE CEO & Chairman Vince McMahon, WWE Annual Shareholders’ Meeting (7/16/2020)

Executives’ current talking point in response to questions about star development is that the company has a 35-year track record of creating compelling characters and storylines. That claim is undermined by the company’s failure to create a star who boosted long-term economics for the last 15 years.

Creative leadership seems to have gradually lost its understanding of its consumer base over the last two decades. Rather than realize and address that issue, it’s evident there’s a culture of denial about this within the company.

Until WWE, or really McMahon himself, shows a willingness to reckon with the possibility that the core of WWE’s problems with declining interest lies with the CEO’s performance as head of creative, there’s no reason to expect any internal cause of long-term improvement to consumer metrics — TV ratings or otherwise.

WWE is fortunate it finds itself in a media market where the value of live content like its in-ring programming has exploded. There are opportunities to continue to grow its content value despite these issues. New President and Chief Revenue Officer Nick Khan will likely be tasked with selling the company’s pay-per-view events, currently offered via the direct-to-consumer WWE Network streaming service, to major streaming players. Market circumstances insulate the company from larger financial hardship, but also removes the economic pressure that might be cause for introspection needed to deliver more value to shareholders.

Based on Smackdown AAV of $205 million (2 weekly hours), Raw AAV of $265 million (3 weekly hours), and AEW AAV of $45 million (3 weekly hours, 1 not yet delivered)

More concerning for the next few years, WWE is on a trajectory where the viewership margin the company’s flagship shows have over rival AEW’s “Dynamite” program is shrinking.

AEW’s TV deal with WarnerMedia expires at the end of 2023, with an option for WarnerMedia to extend through 2024. If the option is picked up, then negotiations for AEW programming and WWE’s Raw and Smackdown will happen around the same time, in mid-2023.

By that point WWE and AEW ratings may be even more comparable than they are now, which could either jeopardize WWE’s content value or may result in the two companies bringing in a similar amount of revenue per hour from the U.S. TV market, and thus contributing to a more competitive environment for WWE, which has been largely unrivaled in the wrestling market since 2001.

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COVID-19 Cases Tick Back Up In Florida Counties Where WWE and AEW Run, Rising In Mexico; Japan Easing Restrictions


Despite a pandemic, many wrestling companies are running wrestling events for video or TV purposes, without fans in attendance.

The safety of those events varies and depends on factors, including the prevalence of COVID-19 in the local area, whether individuals participating are otherwise at risk of being infected, and the precautions being taken in advance of the event.

WWE is taking some precautions, but COVID-19 testing is not known to be among them. This is despite WWE being the biggest wrestling company in the world, running in a state in county where new cases are not in consistent decline. Meanwhile other companies in Florida like AEW and UFC have been able to conduct testing.

Events happening in Mexico — which are few — including one taping held by Lucha Libre AAA are probably similarly unsafe on an individual basis compared to WWE, for similar reasons: regional prevalence and precautions. Some precautions were reportedly taken, but testing was not among them. Again, though, it’s not known that WWE or AAA administered any tests before their events. 

To be clear, AAA has held only two empty building taping, on April 18 and 19. WWE is taping several times a month, with sessions that probably last many hours, often enough to produce three weekly multi-hour programs.

All Elite Wrestling’s events, like WWE’s, are running Florida, where confirmed case prevalence is relatively high. Cases are still on the rise in each of the counties where WWE and AEW are holding events. AEW, however, at least is requiring its personnel to take COVID-19 tests.

Many companies in Japan (notably excluding the country’s biggest company, New Japan Pro-Wrestling) are running events without fans. There’s no appearance that any of them are testing. At least some, possibly all, are screening personnel before events and performing temperature checks. 

Generally, though, in Japan and, in Tokyo particularly, COVID-19 prevalence appears to be much lower than it is in Mexico, the United States, or Florida. Data measuring confirmed cases and COVID-19 related deaths — even when accounting for high testing rates in the U.S. — suggests prevalence in Japan is much lower than it is in Mexico, the U.S., or Florida.

Official states of emergency in Japan, including Tokyo, have been lifted recently. The country will soon be entering phases where gatherings will be allowed again. Japan will probably be the first country to hold wrestling events with large numbers of fans in attendance. If Japan is nearing conditions in which it will be safe to run fan-attended wrestling events again, data shows that the U.S. and Mexico are still far from it.

A major factor that seems to be determining which companies are running events and which are not, less than health and safety, is the revenue companies gain by continuing to produce shows for media partners.

The rest of this article will focus on explaining that data and these tentative conclusions in detail and understanding each company’s situation.

Who’s doing empty building matches?

Since mid-March WWE and AEW have continued to produce weekly television programming out of empty buildings without fans, due to the COVID-19 pandemic. WWE is running out of their Performance Center in Orlando, Florida, which is in Orange County. AEW has been running mainly out of Jacksonville, Florida, which is in Duval County, with some earlier tapings in Georgia. A search of the Cagematch.net event database records that other companies are also running empty building matches. 

In the U.S., Impact is running in Nashville, Tennessee. Its peers like Ring of Honor, Major League Wrestling, and the National Wrestling Alliance haven’t held any events since wider restrictions went into place in mid-March. In fact, executives with the latter three companies have specifically stated they will not be running events at this time.

In Japan: Dragon Gate is running empty building events in Kobe; All Japan Pro-Wrestling in Chiba; DDT in Tokyo; Ice Ribbon in Saitama; Pro Wrestling NOAH in Kawasaki. New Japan Pro-Wrestling hasn’t held an event since February 26.

In Mexico: Lucha Libre AAA ran two days of “Lucha Fighter” tapings on April 18 and 19, as mentioned. AAA’s main rival CMLL hasn’t held any events since March 13.

According to Luchablog, AAA promoter Dorian Roldan gave an interview saying the company is looking at postponing its major annual event TripleMania, which was scheduled for August 22. According to the Wrestling Observer Newsletter, there have been internal communications in CMLL saying the company doesn’t expect to do shows with fans until September at the earliest. The Observer notes CMLL makes its revenue mainly from live events, so doesn’t benefit much from running events without paying fans.

What precautions are being taken?


Here are some quotes from WWE executives on the precautions the company is taking.

WWE Chief Brand Officer Stephanie McMahon to Variety, March 26:

“At a typical event, talent are milling about, they’re at catering or wherever when they’re not actually in part of the show… That’s not allowed now. There’s extensive testing and screening when you first come in the facility regardless of whether you’re a talent, a crew member, or anyone else. Working with our doctors, you have your temperature taken. If you have a temperature over 100.4 degrees, you are automatically asked to leave.”

“If you’ve been out of the country or been in touch or in contact with anybody who’s been out of the country you’re not allowed in the facility… We’re taking every precaution we can. It’s also why you don’t see talent or anyone else in the audience. We really are adhering to all the guidelines that we can to maintain the health and safety of our crew and our performers.”

WWE CEO Vince McMahon and EVP Paul Levesque on WWE Q1 earnings call, April 23 (AUDIO / Automated transcript):

Steven Cahall (Wells Fargo analyst): Vince, could you maybe talk a little bit about talent morale? Some of the other sports leagues, they’ve been shut down, I think in part because players in unions have wanted safety restrictions or testing in place before they get back on the field or on the court. Can you just touch on how your talent is responding to production and also how you’re thinking about access to testing and if you’ve had any insight there and how that might impact your ability to continue producing content?

Vince McMahon: As far as testing is concerned, we do everything imaginable. You can’t even come on the premises, and in fact, if you have a fever, obviously. We have this whole form you have to fill out, and you have to do it every week, in terms of whether or not you’ve been exposed, the idea is a whole long gone.

So we’re doing everything we can for safety and making sure the environment is as good as it possibly can be. Not only monitoring our talent, but our employees as well. Anyone who’s at the training facility, and we’re very careful as to how many people work in and out at one time. We put our talent in a sequestered hotel when they’re here.

We’re performing in small groups in terms of waves. And as far as in the ring is concerned, we have changed the turnbuckles and the ropes in all that kind of stuff between matches. We sort of have a pandemic cleaning, I guess I would say, on a very frequent basis, the Clorox 360 stuff, but we have something additional as well. And Paul Levesque is on the call. Paul, tell us about that new stuff you did was.

Paul Levesque: So it’s a company called Allied BioScience that we worked through. They have a spray that is – there’s a process which makes it cling to surfaces, and the surface, once it’s coated with this, it lasts for 90 to 120 days, and it acts like, sort of how it was explained to me, is it’s like a sword that punctures the cell wall of the virus or what causes the virus and kills it on contact. And that lasts for 90 to 120 days. And it lasts through even the other cleaning and various levels of everything we’re doing.

So we coated our facilities, the Performance Center, our warehouses, even our production trucks with all of that. In addition to what Vince said, it’s a level of cleaning, every single usage, and cleaning between everything. We’re taking every precaution that we have been advised is a best practice to take and then some.

Vince McMahon: And then again as – when these testings come along, you can do this, you can do that. When they become more prevalent and hopefully more accurate, we’ll be right there with the first.

As mentioned earlier, despite AEW and UFC doing testing ahead of events in Florida, and despite Vince McMahon’s comments above that WWE would be doing testing as soon as they’re capable, there’s no impression yet WWE is doing so.

I contacted WWE multiple times to ask for an update on precautions the company is taking and to ask whether any COVID-19 tests have been administered. WWE has yet to respond as of the publishing of this writing. If WWE responds, this article will be updated.


Here are some quotes from AEW executives about their precautions.

AEW President Tony Khan on Twitter, May 6:

AEW EVP Cody Runnels on AEW media call, May 21:

Cody Runnels: It’s so wild, there’s so many stories online about what precautions, you know, wrestling is taking in presenting this. But just to get in the hallway where my office is here at Daily’s Place, I have to get a temperature check. So not only a temperature check in the parking 09:01 lot but a temperature check to get into this hallway. You’ve seen on the program, if you watch Dynamite, the wristbands on everybody’s wrist. [We’re] doing COVID testing in quarantine situations so that you don’t cross-pollinate, the ring crew [is] working overtime to sanitize, the use of masks as much as you possibly can. It’s just been a really unique challenge. Doc Samson and Brice, our medical team are already presented with the challenge of a violent wrestling show. Now there’s this global pandemic, and they have just been so above and beyond and countless hours and making sure that everyone is genuinely tested. No one in this bowl, in this building, no one touching a camera, are wrestling in that ring hasn’t been tested, and that was something that I’m very proud of, team medical, and how they’ve done.


Chuck Carroll (CBS Sports): Cody my question is what if, god forbid, somebody in the company does unfortunately test positive right now for COVID-19, the coronavirus? What steps are in place, what measures are there in place that would ensure that you all would be able to continue moving forward?

Cody Runnels: It’s a great question. The testing is done under quarantine measures. You have scheduled-out blocks for the testing and team medical is the very first individuals to be tested. So there is no cross-pollination. We don’t have – because they’re not done at Daily’s Place – they are done under the quarantine measures. Meaning if you were to test positive, you would then get the nose swab test to confirm the positive, or perhaps it was a false positive. But you would not be in proximity to any of the talent, to any of the crew. They’ve also separated the crew. Their testing measures are done elsewhere. And the talent testing measures are done elsewhere. So those are also two locations. It’s been a lot about spreading out, per our dual doctor role. And we also have multiple doctors, because you then could cross-pollinate potentially if there’s a positive on a test. So we have it set where it would not shut down the production. And I am absolutely not rooting for a positive test but we do need to keep it in mind. And UFC just went through this. We’re testing everyone who comes into our bowl, everyone. Everyone who you can see with your own eye, so if a positive test was to come forward, well, it would just indicate that the testing does work, and that the measures need to be taken. We however have been incredibly fortunate to have no positive test. Hopefully we have no positive test moving forward. But doing [tests] under quarantine measures, according to Doc Michael Sampson, as some of you may know, he’s been in the wrestling industry quite some time, has been the right call for everybody.

Lucha Libre AAA

According to Luchablog, AAA’s precautions for their April 18 taping included “social distancing and facemasks backstage. The wrestlers were in given separate dressing rooms (though they may have not strictly been forced to stay in them; there’s a video of LA Park & Pagano pulling a prank together.) [The] ring and microphone were disinfected between matches, and they were said to be doing the same backstage as often as every five minutes. Match announcers were on separate sides of the stage (and then did it from a studio for the final episodes.) It appeared they were doing temperature checks on the way in, but no COVID testing.”

Dragon Gate

Dragon Gate is apparently doing temperature screening. They pulled wrestlers twice from performing due to high temperature: Yosuke Santa Maria on March and Strong Machine J on March 22.

https://twitter.com/DragonGateEN/status/1233980999161147392 Mar 1, Yosuke Santa Maria


According to an English translation of a May 5 statement from DDT President Sanshiro Takagi, the company is taking the following precautions:

  • temperature and health screening each morning
  • wrestlers told to stay home as much as possible
  • everyone participating has their temperatures checked
  • all non-wrestlers must wear masks
  • press are required to check temperatures beginning 3 days prior
  • video crew wear hazmat suits
  • nonessential personnel are off-limits
  • locker rooms and equipment are disinfected

What have leaders of wrestling companies that haven’t been running empty building events said?

NJPW President Harold Meij, official statement, May 13

Data has clearly shown high levels of infection within cities like Tokyo, and therefore we believe that to stage events even in empty arenas involves a level of unnecessary risk. Even if we take all the possible precautions to maintain the safety of the venue and do all we can to ensure the staff and the wrestlers are healthy, the fact remains that safety is by no means guaranteed.

Meij said NJPW would hold events in Japan and the LA Dojo in the U.S. without fans “when and only when the state of emergency restrictions are lifted, the number of new coronavirus infections declines, and when matches can take place in properly disinfected and safe settings.”

To hold even empty arena matches in these circumstances would reflect badly on ourselves and our industry, and we will not trade our reputation as a positive force for social good, even in the wake of harsh economic realities… It is the goodwill that we have fostered with our audience, our partners, and society that led to Wrestle Kingdom 14 this year becoming a tremendous success allowing us to continue operating in the black. That goodwill must be protected at all costs.

Ring of Honor COO Joe Koff to POST Wrestling, April 14:

I think it’s great for WWE that they are able to operate how they see fit, or how they may even need to for their business. It doesn’t necessarily change our approach to the pandemic though. The safety of all of our performers, staff, vendors, and fans are the most important thing to us right now and we are continuing to improve our infrastructure and find ways to connect with them during this time. Are we eager to get back? Absolutely. For now, we will be monitoring day by day.

Joe Koff on PWI Podcast, April 30:

The decisions that we made, and these go back to early March, we were probably one of the first major promotions that stopped the presses so to speak. It actually happened the week of the Anniversary show, which was on, I think March 13th…I would not have been able to attend the event in Las Vegas because, I was not exposed, but I was in a hotel where somebody tested positively. This was at the beginning of March. Nobody really knew what it was or how to treat it. Everyone was in somewhat of a panic mode. The emergency room wouldn’t even let me come in because I really had no symptoms and had no reason to go in, thank goodness. But, they said don’t travel and don’t go into work. 

My guys were already in Vegas. This was Wednesday, the show was Friday. I’m beginning to feel a little uneasy with what I’m sensing and what I’m seeing. One of my concerns was getting everybody home and safe and where they wanted to be. We have a lot of international talent…I just needed to be sure in my mind as a responsible person and somebody who is in a community of human beings with empathy and compassion that we can get these people home…We acted pretty quickly but the main concern has always been and will always be the people, not only the fans who are very important to me. I wouldn’t want to put anybody in any kind of compromised situation by coming to a Ring of Honor show if it wasn’t a healthy environment for them to watch it. It wasn’t a hard decision to make. It was the only decision to make and I’m glad we did it. (credit ewrestling for transcription)

Major League Wrestling executive Court Bauer on whether MLW would run empty building events in Florida, to POST Wrestling, April 14:

No. I will not put my athletes, crew and staff along with their families at risk of contracting the virus.

Bauer to Newsweek, May 13:

I looked at [the situation] pragmatically and talked with my network partner and they were very comfortable with my strategy to fill content,” Bauer told Newsweek.

Live television has value,” Bauer explained. “But because of the pandemic you don’t know if people are going to covet live sports programming the same way without having something that’s taped for moments like this or be more forward thinking to have a docu-series like The Last Dance.

National Wrestling Alliance VP Dave Lagana in an official statement, March 16:

The National Wrestling Alliance, given the uncertain course of this world health crisis, is suspending normal operations until June as far as any live performances… However, we will continue to produce content in the interim, and thank fans in advance for their continued support.

The health and safety of our wrestlers, in-house and NWA staff, and fans are of the utmost importance during the global pandemic of COVID-19. We look forward to seeing you all soon.

What does COVID-19 data tell us about the safety of empty building wrestling events?

First, what metrics are we going to look at?

  • COVID-19 tests
  • confirmed cases of COVID-19
  • deaths due to COVID-19

These metrics will mostly be considered on a per capita basis, to adjust for the difference in population among the regions that will be compared.

We’re looking at daily measurements of those three metrics, in effort to understand how COVID-19 prevalence has developed over time. In some cases, I found data going all the way back to January, in other cases, only going back to mid-April.

The regions mainly concerned with are:

  • United States, and with in that
    • Florida, and with that
      • Orange County
      • Duval County
  • Japan, and with in that
    • Tokyo metro area
  • Mexico

I’m not aware of long-term data in particular for cities like Mexico City, Orlando, or Jacksonville.

What are we trying to learn?

We’re trying to learn whether any of this data can tell us something about how safe or unsafe it is to continue to do empty building wrestling shows in some of the places where they’re happening.

Where did the data come from?

The Florida data for April 17 and after is from the Florida Department of Health COVID-19 dashboard; data for April 16 and prior is from The New York Times via Google.

The Tokyo data is from Tokyo Metropolitan Government’s CSV files.

The national data for the United States, Japan, and Mexico are from CSV files found on ourworldindata.org, which ultimately sources their data from government data sources via the European CDC. Further explanations about their data sources can be found on their website.

You can see how I organized the data in this Google spreadsheet.

Before going further, let’s recognize some limits of this data, including:

  • A study of confirmed COVID-19 cases doesn’t count many cases that are not confirmed for a number of reasons (inaccurate testing, lack of available testing, etc.)
  • A study of COVID-19 deaths may be incomplete due to a lack of ability to confirm the death was COVID-19 related, due to the same problems related to studying cases. It seems to me, though, the portion of uncounted deaths would be considerably lower than the portion of uncounted cases, since it stands to reason a person who dies from the disease is likely to have received medical attention immediately before death and therefore those people are more likely to be tested, maybe repeatedly so.
  • Confirmed cases (and deaths) may be higher in areas where testing is more prevalent.

Confirmed cases

With that said, what does the data show about COVID-19 cases, deaths, and testing in the aforementioned regions?

How do confirmed COVID-19 cases (per capita) compare among the United States, Japan, and Mexico? The U.S. has more confirmed cases per million people than the other two countries, by many multiples. Confirmed cases for the U.S., though, are declining, as indicated by the direction of the 7-day moving average for the U.S.

Let’s take the U.S. off the chart so we can better compare Florida, Mexico and Japan.

In mid-April, daily cases per million for Mexico and Japan were about the same. Since then, cases are on the rise in Mexico, and on the decline in Japan.

Confirmed cases per million in Florida greatly outpace that of Japan as well.

More concerning, cases in Florida are on the rise most days since May 11. This comes as Florida is easing restrictions, reopening many businesses and services.

A weekly breakdown of cases provides a another comparison among these regions.

From May 14 to May 21, Japan found 3 confirmed cases per million, compared to 283 in Florida, and 550 in the overall U.S.

What if you don’t adjust for population?

Japan has a much higher population than Florida, about 126.5 million in Japan to Florida’s 21.5 million people. Even so, Japan is seeing fewer confirmed cases than Florida. Here we can also see daily cases are declining in Japan while they are increasing in Florida since May 11.


As mentioned, though, there are limits around only studying confirmed cases. There are many kinds of COVID-19 testing. Many tests return false negative results, and many actual cases are probably recovered from without the infected person ever testing positive or being tested at all.

But might the reason why the U.S. (and therefore maybe Florida also) have relatively high numbers of confirmed cases is because the U.S. has a high number of tests?

Testing units in the available data are in different types, unfortunately. The data for Japan counts people tested. The data for Mexico counts cases tested. The data for the U.S. is inconsistent. Even so, the margin is so wide that it’s very likely true that the U.S. is well ahead of Japan and Mexico for tests per capita.

So does the high number of tests happening in the U.S. actually over-represent COVID-19 prevalence in the country? Not necessarily. In fact, despite leading in testing, Japan is ahead of the U.S. in terms of total tests per confirmed cases. Again, the data available is in inconsistent units, but the data suggests that testing in the U.S. is finding positive tests at a higher rate than in Japan. 

That apparent fact is complicated by inaccurate testing. At a minimum, though, it doesn’t support the idea that the U.S. is only far ahead in COVID-19 cases because of its high number of tests.

Looking at the testing data by the three individual countries, testing numbers are growing in each.


Maybe, though, deaths provide some hints about the relative prevalence of COVID-19 in the regions we’re looking at.

How do the United States, Japan, and Mexico compare for COVID-19 related deaths? Similar to the results for confirmed cases, the U.S. is ahead (though to a smaller margin) than either Mexico or Japan. And deaths in the U.S. are on the decline. Deaths in Mexico are on the rise.

What if you take the United States off the chart?

In recent weeks, deaths per million in Mexico are increasingly ahead of those in Japan. 

And more recently, deaths per million in Mexico are increasing ahead of those of Florida, where deaths are declining.

On a closer look at deaths in Japan, though, the 7-day moving average indicates deaths in that country are not yet in a consistent pattern of decline, averaging around 20 deaths per day for the last few weeks.

Duval County, Orange County, Tokyo metro area

Let’s look more specifically at regions where high numbers of empty building wrestling events are taking place: Duval County (home of AEW’s events in Jacksonville) and Orange County (home of WWE’s events in Orlando), compared to the Tokyo metro area. DDT is running in Tokyo; All Japan and Ice Ribbon have run events in nearby cities Chiba and Saitama.

How do confirmed cases compare?

Cases per capita in Duval and Orange counties are higher, by multiples, compared to the Tokyo area. In fact, cases in Tokyo are in a consistent pattern of decline; cases in the two Florida counties have been in a consistent pattern of growth since the beginning of May. Like the increase in cases in Florida overall, this increase coincides somewhat with the easing of restrictions in the state.

What does the data mean for empty building wrestling events?

COVID-19 prevalence is probably the strongest factor in determining the risk associated with operating wrestling events, as it relates to the health of the people involved and the public who they will subsequently come in contact with. In other words, the more prevalent the virus is in a given area, the less safe it is to operate events in that area that bring people in close proximity, if all other factors are equal.

Apparently in advance of empty building events, most, if not all, are screening for symptoms. So the number of tests isn’t as relevant, unless we know who is being tested. In the United States if mainly symptomatic people or people who had contact with a COVID-19 case are being tested, which seems likely, then the testing data may not apply to wrestling situations. Any people exhibiting COVID-19-like symptoms are probably excluded before they enter the building.

Broad testing shows about half of people who are infected with COVID-19 don’t show symptoms.

To help me understand this data, I corresponded with Dr. Alex Patel, an ICU doctor from Toronto. I shared the data and my initial impressions of it with Dr. Patel, who also discussed the data with a colleague who has a background in epidemiology.

We know from Iceland,” Dr. Patel wrote, “that if you broadly test the whole population you will get a positive rate of about 0.8% (87/10,797). If you do target testing of high risk people (symptoms, travelers, close contacts), its about a 13% positive rate. Those numbers vary by country, but what is interesting is that half of all cases in the general population are asymptomatic or pre-symptomatic.”

Let’s assume the average person working on a wrestling event is probably similar to an average person out of the population.

Dr. Patel wrote further:

[People working empty building wrestling events] may be at higher risk because of traveling, but let’s just say [they’re like the] general population,” Dr. Patel wrote. “Let’s also assume the risk of having [COVID-19] in all comers is X%. We know X is likely higher in the U.S. and Florida than in Japan, based on the number of positive tests they are getting, all things being equal, per thousand.

We know that based on symptoms, they will identify about half of the positives. The other half (X/2) will slip by, and we know this number is greater in the U.S. and Mexico than Japan. Likely twice as high in the U.S., if not more, since they are testing more broadly, [and are] likely testing more asymptotic [people] than Japan, we assume.

The safety of the show hinges on the odds that someone slips by the screening system and into the arena, where they are currently checking for symptoms. We can assume that the ratio of asymptomatic to symptomatic is close to 50% each, so, roughly, they will catch half of the cases.

The odds then that someone presents to the door with COVID-19 is dependent on what the rate of community prevalence is of the disease. That means the percentage of people that have it without an identifiable reason to do so (e.g., long-term care, healthcare workers, travelers).

So if we assume that of the testing done daily, about 30%-50% is going to be on those at high risk like long-term care and healthcare workers, so about 50-70% is going to be on community members who have symptoms or contact with a person with symptoms, but no real high-risk exposure. 

The percentage of positive testing reflects a larger degree of community spread and a larger proportion of positives hitting the door.


The odds that a random person presenting to the empty arena show will swab positive for the virus is higher in Florida, we would assume, based on the data.

To have a chance of excluding people who are positive cases but are asymptomatic companies would need, at a minimum, to be enacting some form of COVID-19 testing — which WWE apparently doesn’t do, despite still producing many hours of TV each week. And while many COVID-19 tests result in false negatives, it’s certainly provides more cover than not doing testing at all.

There are obviously economic motivators at play for all promotions that are weighing into their decisions about whether or not to run events, and how often. New Japan doesn’t have major TV rights fees, so gains little by running events; they haven’t ran any kind of event since February 26. WWE and AEW are heavily financially dependent on TV rights fees, so they have continued.

It tells you something about how much safety is weighing into the decision-making. Above the health of personnel and the public, the bigger deciding factor seems to be how much media revenue is at stake.

Although they have plans to do so, New Japan still haven’t run empty building events, even though its home area has probably been safer for some time than it is currently in Orange and Duval counties and much of the U.S.. Additionally, many of the next-biggest companies in Japan are running empty events, so there seems to be some bandwagon cover for them. But maybe the other Japanese companies have more to gain financially due to their TV commitments, which I don’t know much about.

I do wonder if the U.S., or certain large areas within the country, had Japan or Tokyo’s level of COVID-19 prevalence, whether we would already be seeing fans welcome at events again, maybe on a limited “social distancing” basis or not.

According to the latest Wrestling Observer Newsletter, Vince McMahon was hoping to be able to do Summerslam in Boston in August, which is unlikely based on comments made by Boston’s mayor, ruling out the possibility of baseball happening at Fenway Park by August.

Despite COVID-19, WWE Will Set Profit Records in 2020 If TV Fees Remain

It’s evident my earlier estimate of WWE profitability was too low. I estimated that the company would record $121 million in operating income for 2020, in the scenario that there were no more live events for the rest of 2020.

After a more detailed estimate of WWE’s revenues and expenses, and with improved knowledge learned in the last several weeks, an operating income of $280 million (under the same, no-more-live-events-in-2020 scenario) is more likely.

Click to enlarge

Following the company’s Q1 earnings report, we now have a better idea of how much money is being saved by producing TV out of WWE’s Performance Center, versus running at sports arenas. In this new model, I estimate the average quarterly expense related to producing Raw and Smackdown (Core Content Rights Fees) in the PC to be about $50 million per quarter (or $55 million in Q4 due to one additional episode of Raw and possible other rising costs). To be more charitable to the possibility that WWE will be under financial hardship, this estimate of Raw, Smackdown, and NXT related expenses is somewhat aggressive. Settling on $50 million per quarter in the Core Content Rights segment is based on aiming higher than WWE’s implied operating expenses for the similar Television segment from 2015 to 2017, a time when Raw and Smackdown were run weekly at arenas and when the segment possibly included expenses related to other parts of business including advertising and reality TV series. (See p. 3-4 of WWE’s 2017 Annual Report)

Implied segment expenses between 2015 and 2017 are derived from WWE’s previous reporting. The company’s reporting method at that time, disclosed segment revenues and segment operating income. Deducing expenses therefore is simply a matter of subtracting the corresponding operating income from revenue in each instance. (WWE changed its reporting method after the end of 2017 to report operating income for its three divisions [Media, Live Events, and Consumer Products], only.)

The results of this deductive math are below (with variances in the far right column to test how consistent results were over the quarters shown):

Data source: WWE Trending Schedules, 2015-2017 (via Wrestlenomics archive)

From 2015 to 2017, expenses in the Television segment were never higher than $40.8 million (Q3 2015). Even though these expenses are from a time when WWE was running Raw and Smackdown at arenas, where it’s clearly more expensive than repeated tapings at the Performance Center, in the interest of being aggressive and in the interest of anticipating higher talent expenses and accounting for expenses related to NXT (which were likely accounted to the WWE Network segment in previous years), I chose to estimate a quarterly Core Content Rights Fees operating expense of at least $50 million per quarter in the remaining quarters of 2020.

Talent expenses since 2017 have likely increased substantially due to competition from All Elite Wrestling and others, and NXT costs are now included in the segment, but net expenses related to producing TV at the Performance Center are likely much lower due to avoiding costs associated with running Raw and Smackdown at sports arenas. TV expenses may also be lower thanks to a consolidated taping schedule and far less required load time for production equipment.

CEO Vince McMahon’s comments on the April 23 earnings conference call directly support the idea that the production of Raw and Smackdown at the Performance Center is much less expensive than running at an arena.

Well, I think that obviously the cost is nowhere near the differential in terms of a live event in an arena and what we’re doing – the Performance Center we hardly have to change anything. The trons are in one location in the stage, and in one location. So there’s not much at all moving anything in or moving anything outside. So that saves a lot of money.

WWE CEO Vince McMahon, WWE Q1 2020 Earnings Conference Call (April 23, 2020)

In this updated model I also anticipated somewhat lower expenses related to the WWE Network. A substantial portion of the expense related to the Network is from producing pay-per-view events. If there are no arena events for the rest of the year, those events will be less expensive to run at WWE’s own facilities.

Like in the previous model, I’m assuming there are no revenues after Q1 related to ticket sales or venue merchandise. I modeled in some expenses however related to those areas throughout the year, possibly due to factors like building holds and maintaining employees or infrastructure. 25% of 2019’s Live Event division expenses were calculated for corresponding 2020 quarters (Q2-Q4). Likewise for the Venue Merchandise segment within the Consumer Products division.

To determine WWE Network revenues, average paid subscribers were estimated to decline for the remainder of 2020 at a rate based on the Q1 year-over-year growth rates in domestic and international markets, separately, at -9% and -4%, respectively.

Year-over-year declines for Q2-Q4 in the eCommerce and Product Licensing segments were also extrapolated onto remaining quarters at the rate of the Q1 year-over-year growth rate of -9% and -18%, respectively. Exceptionally, additional year-over-year losses in Q4 were anticipated, related to the cancellation of this year’s WWE 2K21 game, confirmed on the April 23 call, which likely would have released for sale in Q4.

This estimate anticipates no additional major live event in Saudi Arabia, which would have provided revenue of around $50 million in the Other segment within the Media division. Also in that division, I’m estimating 10 episodes of Total Bellas in Q2, with an average revenue per episode of just under $1 million. It’s assumed there are no additional new reality TV episodes in the year beyond Q2.

Modeled into the Advertising & Sponsorship segment is an anticipated growth in YouTube views (evident from early 2020 results), but a decrease in CPM, related to lower advertising demand. Also in this segment, -33% growth in on-air sponsorships is anticipated in Q2-Q4, due to lower ad demand as well.

But what else encourages a higher estimate of WWE’s profitability?

We also learned on the April 23 call, from interim CFO Frank Riddick, that WWE’s increase in rights payments from its second-most important TV market India, will go into effect beginning in Q2. WWE recently completed a new five-year agreement with Sony in that market to broadcast WWE programming, which represents a 1.8x increase from the previous five-year term. The value of the new deal is believed to be an average of $50 million per year, likely escalating over the term. The previous deal is believed to have been worth $28 million on average per year.

Although he declined not to give specific guidance, Riddick also affirmed that WWE expects the company to be profitable in Q2. That’s despite the absence of expected operating income (probably more than $15 million) related to Wrestlemania and its adjacent events and merchandise sales.

If you assume everything else equal, based on the cost reductions, yes [Q2] should be profitable.

WWE Interim CFO Frank Riddick, WWE Q1 2020 Earnings Call (April 23, 2020)

WWE’s TV rights fees are the key to the company’s finances during the COVID-19 crisis, and in general in this era. McMahon gave some reassurance that WWE’s TV partners are being supportive during this unusual time. There was no indication or hint that fees might be cut for some reason. Despite delivering TV shows without live audiences, TV partners so far seem happy to continue paying promised fees at a time when there’s little other new sports content available.

Our [TV] partners obviously are not doing as well as they would like to, nor are we. But as far as the content is concerned, they totally get it… We have a really good relationship with [NBCUniversal and Fox]. And they have our backs, as we do theirs.

WWE CEO Vince McMahon, WWE Q1 2020 Earnings Conference Call (April 23, 2020)

As long as WWE’s expected contractual fees continue to be paid, it’s difficult to imagine a scenario in which WWE is not profitable in 2020.

For the sake of exercise, and to consider to what extent April 15 cuts of employees and talent was economically necessary, if we were to be very pessimistic and wiped out all revenue in Q2, Q3, and Q4, except for TV rights (Core Content Rights Fees) and WWE Network, and still maintained all expenses in all segments, WWE gets to $168 million operating income for 2020, still ahead of 2019’s $116.5 million operating income.

A highly pessimistic exercise, removing all revenue sources Q2-Q4 except TV rights fees and WWE Network
(click to enlarge)

To be even more extreme, if every subscriber cancelled the WWE Network on April 1 (which is obviously not the case based on WWE’s post-Wrestlemania disclosure) and the company generated no revenue from Q2-Q4 in any segment except for Core Content Rights Fees, but kept on all segment expenses, total operating income for the year is still $44 million. It’s finally possible, in that unrealistic scenario, depending on interest, taxes, and other uncertain investment costs, net income could come in just under $0.

An extremely pessimistic exercise, removing all revenue Q2-Q4, except TV rights fees (click to enlarge)

To get an idea of how financially necessary the cost-cutting announced on April 15 was, none of the scenarios in this article try to account for the $4 million WWE said it will save as a result of layoffs, furloughs, talent releases, and cuts to executive compensation.

If the conditions of the cuts and furloughs were maintained through the rest of the year, $4 million in monthly savings over eight-and-a-half months comes to a total savings of $34 million for the full year. Those savings, not factored into the tables above, make it even more difficult to conceive of a money-losing 2020 for WWE.


Upon a more detailed analysis of WWE’s finances and additional knowledge gained since my previous estimate on March 31, it’s extremely likely WWE will be profitable in 2020. Unless TV partners cut or become unable to pay WWE’s escalating rights fees, which there’s no sign of yet, WWE will have a profitable year. In fact, despite the effects of COVID-19, it’s likely WWE will report its highest operating income in company history (even when adjusting for inflation). Depending on less certain interest expenses, investments, and taxes, it’s quite possible, too, the company will break its annual net income record of $99.6 million, set in 2018.

Will Audiences That Turn Off Empty Arena Shows Come Back?

The short-term effects of COVID19 to WWE’s, and maybe AEW’s, finances may actually be positive, not negative. The inability to run normal live events actually reduces costs. TV rights payments to the company from broadcast partners, related to flagship programs Raw and Smackdown, appear unimpeded. In other words, the cost of producing programming has been greatly reduced, while the revenue directly generated from programming is unchanged.

Despite being unable to run normal live events in the last 19 days of the quarter due to COVID19, WWE was actually more profitable in Q1 than its own pre-COVID19 guidance predicted. The company also was more profitable and generated more revenue than the consensus estimate of financial analysts who had the benefit of being able to consider COVID19 effects.

If WWE doesn’t run any normal live events for the rest of the year and TV fees remain intact, the company may be more profitable in 2020 than it would’ve been in a pandemic-free 2020. (I’m working on an estimate that looks into how profitable WWE would be in the scenario there are no events for the rest of the year, which I’ll be posting soon.)

However there are long-term risks to audience stability for wrestling companies like WWE and All Elite Wrestling. The low cost programming WWE is producing in its Performance Center training facility and that AEW is producing out of other small buildings, in front of no fans, while highly cost-effective in the short-term, is not exciting for viewers. TV viewership of Raw, Smackdown, NXT and AEW Dynamite is declining. Despite the U.S. population being urged to stay in their homes, closer to their televisions, this is not translating to more people watching those wrestling programs. 

Data source: Showbuzzdaily.com

Given the habitual nature of wrestling viewership and the lack of strategy that’s shown to be able to win new fans or win back lapsed ones for more than a week or two, I’m skeptical that audiences will return to pre-COVID19 levels whenever wrestling events can happen in front of live audiences again. Consequently, draining interest in wrestling TV shows and streaming/pay-per-view events without live crowds may have considerable downstream effects that are long-lasting or permanent.

I can’t remember if it was Matthew Ball or Scott Galloway who’s said it: that the COVID-19 pandemic is accelerating trajectories of media trends, maybe even in trends in personal relationships. Developments that may have under normal conditions taken a year to transpire, take only a few months. Netflix greatly exceeded subscriber expectations for Q1. Disney+ acquired 50 million subscribers in just five months. If you were doomed to divorce your spouse two years from now, well, maybe now that you’re forced to spend so many more hours at home together, you’re now doomed to divorce within a year.

Maybe this theory is applicable to the seemingly unalterable decline in at least WWE’s TV viewing audience. If, for example, Raw’s viewership was going to start averaging 1.5 million viewers by June 2021, the intervention of COVID-19 and empty building wrestling might accelerate that destiny up to, say, February 2021.

To contribute to long-term growth and stability, linear wrestling TV shows try to serve not only as a means to collect lucrative TV rights fees but as an economic battery that drives audiences and consumer business. Further, the Network/PPV events that programs like Raw, Smackdown, NXT and AEW Dynamite build to and sell are similarly hindered by having to be performed for no live audience.

Less is known about privately-held AEW, which has been in business for barely a year. But nearly all of WWE’s publicly-known consumer metrics have been gradually declining since 2016. 

WWE Network subscribers, TV viewership (weighed against wider trends), and consumer product sales may continue to suffer over the duration of the COVID19 crisis. That may be driven by economic hardships of consumers but probably also by the less engaging TV product. In a post-COVID19 environment, those metrics may have weak, if any, recovery.

Certainly external factors like an increase in entertainment options are a factor to some extent in the decline of WWE’s popularity. It’s apparent though that the quality of the product has suffered. This is supported somewhat by declines in reception metrics shown above. Most importantly, WWE hasn’t succeeded at developing a star to replace the increasingly absent John Cena. Roman Reigns is arguably the company’s most important full-time star. He’s been gone, too, not appearing on TV since the end of March when he withdrew from participating in Wrestlemania because of health concerns.

In fact, the company’s product style and creative vision continuously undermines the likelihood that such a new star will be developed for WWE. Given the seeming inevitability of the attrition to WWE consumer metrics of the last few years, it’s hard to imagine them showing positive growth or audiences returning in large numbers until such a star emerges, or, quite frankly, until CEO Vince McMahon is no longer leading creative.

It’s likely there will be fleeting resurgences in some consumer metrics soon after a return to normal live events. The patterns of performance related to special episodes of Raw and Smackdown, though, have shown such increases are temporary, and audiences return to baseline trends after one or two weeks.

Thinking about the assumption that wrestling audiences will bounce back after COVID19, I’m reminded of a possibly relevant moment in wrestling history. In 2001, WCW programs Nitro and Thunder ran their final episodes in March of that year, following the sale of WCW to WWE (then-WWF). Some expected that WWF programs, Raw and Smackdown, which ran head-to-head with Nitro and Thunder, and were no longer opposed by competing wrestling shows, would absorb some significant portion of the newly homeless WCW audience. They didn’t. WWF viewership following the folding of WCW declined slightly for the rest of the year. Whatever captive audience WCW held apparently stopped watching wrestling altogether. There’s no sign they ever came back.

Maybe wrestling fans are creatures of habit. Compared to 2001, there’s greater demand for consumers’ attention today. Viewers gradually tuning out of Raw, Smackdown, NXT and Dynamite may be finding new habits, and may be hard-pressed to return to those programs, unless new, economically-significant stars emerge.

I’m not sure there’s any better alternative to maintain wrestling audiences than the current approach of taping matches in empty buildings. Electing to air library content of old matches may or may not satisfy TV contracts, but any such strategy would succeed at holding the attention of even fewer viewers.

In the short-term, expenses are down and profitability is actually up, almost certainly for WWE and probably for AEW too. Wrestling companies may be wise to think now about how they can reinvest the unexpected cash flow to fortify their business and recapture audiences when normal live events can be held again.

In the meantime, Raw and Smackdown continue to be highly ranked among other TV shows on the same night; AEW’s ranking on Wednesday has fallen somewhat, but continues to stay in the top 50; NXT is falling out of the top 50 most weeks recently. Networks are still happy enough to have some form of sports-like, somewhat DVR-proof content to give WWE and AEW their expected payments. Whether wrestling can continue to attract audiences that networks will pay large TV rights fees for, three or four years from now when new deals are negotiated, is too far over the horizon yet to see.

WWE Deemed Essential in Florida May Be Unsafe But Probably Isn’t Result Of A “Bribe”

There’s understandable suspicion that there’s a connection between Linda McMahon’s pro-Trump super PAC, America First Action, allocating $18.5 million to Florida on the same day (April 9) that Florida governor Ron DeSantis amended his stay-home order which allows WWE to run tapings at the Performance Center in Orlando, Florida.

As dubious as it seems, and without diminishing how destructive as money in politics is to democracy, I doubt the super PAC spending and the amendment are truly connected — not that politicians, especially Republican politicians in the Trump era have ever earned the benefit of the doubt. The timing is conspicuous, but the allocation of the money for Florida doesn’t seem unusual in timing or amount. And the benefit to DeSantis is more incidental than direct.

The announcement to invest $18.6 million in advertising in Florida, dedicated to the re-election of Donald Trump, was made simultaneously with the announcement of $8 million in spending for North Carolina. The week prior, the super PAC announced it would spend millions in other swing states, Pennsylvania ($5.5 million), Wisconsin ($2.7 million) and Michigan ($2 million). True, among these states the spending for Florida is the highest, but Florida has the most electoral votes among these states. The state has been won by every presidential election victor since 1996, and with the exception of 1992, every election since 1964.

This spending on advertising will benefit Trump’s reelection bid, so it will also likely benefit other Republicans down-ballot in November. DeSantis himself, though, was elected in 2018 and is not up for reelection until 2022.

The memorandum amending the Florida governor’s stay-home order

It’s notable, too, that the amendment to the Florida stay-home does not specifically name WWE or wrestling. While it’s quite possible that WWE lobbied for the amendment, its language seems directed more generally at sports and entertainment activities that are produced without a live audience.

The low information reading of this situation is that Linda McMahon gave Ron DeSantis millions of dollars, and DeSantis subsequently granted WWE specific permission to continue tapings. That’s not what happened.

In case it’s not clear, this is not a defense of insidious and plutocratic organizations like America First Action, nor of WWE’s choice to unnecessarily risk the health of its workers and the public by continuing with tapings. Instead, upon a more informed look at the situation, it’s apparent that the investment in pro-Trump advertising in Florida and the allowance of WWE’s Orlando tapings are likely not as related as they may seem on a more superficial assessment.

But if people of wealth and power are doing bad things, why make any subtle distinctions? Our reflexive willingness to allow low information to affirm a view that all political actions are corrupt only blunts our ability to distinguish just politics from the unjust. Indeed, did you not just read “just politics” as an oxymoron? That reflex prevents us from undoing genuine corruption. The ease at which we jump to undue conclusions deepens our distrust and polarizations, and reinforces our helpless complex that laughs at the notion that any political action is worthwhile. The brilliance of corrupt power in our time is that it benefits from the cool self-defeat of the cynical people it exploits.

This post was based on a portion of audio from the episode of Wrestlenomics Radio, published April 18, 2020.

WWE Layoffs Were Morally Heartless and Economically Unnecessary

It’s been suggested to me that every five years or so WWE goes through a cyclical change like this, the last one in 2014 after the WWE Network didn’t gain subscribers as quickly as they had hoped and there was a lot of cost-cutting in a year where the company was not profitable overall. 

WWE announced cost-cutting, layoffs, furloughs, and talent releases on April 15. Some of that may have been inevitable after the termination of George Barrios and Michelle Wilson, former co-presidents of WWE. There are probably a lot of people around them who in the name of regime change, and in the name of Vince McMahon’s apparent belief that too much was invested in customer data, would have been out eventually. Probably not now though, and certainly not in these numbers. And, by the way, WWE still hasn’t replaced its former co-presidents, not that they likely will in the midst of such wide economic uncertainty.

Brandon Ross (Lightshed analyst): Just philosophically, one of the key aspects to the WWE Network has been that it allows you to have a direct-to-consumer relationship and access to real first party the data. Would keeping those be important in any strategic alternatives and do these still matter to you or do you think that was a misplaced priority in the past?

Vince McMahon: I think it’s misplaced. It was one of our goals, still continues to be, but when you’re playing with some of the [major streaming players], it depends on whether or not we can negotiate holding on to things of that nature. Sometimes, you know the big boys want all of that for themselves, so it’s a matter of really negotiation. It’s what we keep. If we could keep it, absolutely.

WWE Q4 2019 earnings call, February 6, 2020

But WWE’s cost-cutting at this time is not something that’s necessary to keep the company profitable. It’s likely a move to keep the company as profitable as it had hoped it would be at the beginning of this year. 

Certainly WWE has a fiduciary responsibility to its investors, but I would suggest, radically, that it has a higher moral responsibility to not lay off workers in the middle of a pandemic if it can afford not to do so. 

WWE cumulative operating income scenarios for COVID-19 restrictions, based on my earlier financial risk assessment model. Operating income is a profit metric.

The effects of COVID-19 give WWE a cloud cover to cut costs, to furlough or layoff a growing employee population; to cut wrestlers from an overgrown roster, a roster that had been growing not so much do you add to its own company but to keep that talent from adding to other companies. 

WWE head count of employees and talent, 2001-2019

Underappreciated is that the cost cutting, and particularly the cutting of talent who fans are familiar with and have an affinity for, is a public message — and a talent message as well — whether the company wants it to be or not. Regardless of the economic argument that you can make for why it’s cost-effective and more profitable to cut costs, the public story, whether you agree with it or not, whether you feel that it’s accurate or not, is that WWE is the bad guy again. 

Especially over the last five years WWE has done a lot to damage its trust with its audience and with its talent, and we’ve seen what has happened to other damaged wrestling brands in recent history, brands that people don’t feel comfortable spending their money or time on. But WWE is the biggest and strongest wrestling brand that’s ever existed. It’s the company that is best positioned to withstand a lot of self-inflicted brand damage. 

How sustainable though is this self-destructive process that doesn’t show any signs of slowing down? This isn’t the 90s and it isn’t the 2000s, or 2010, or even the year 2015. An increasing portion of the wrestling audience is aware of news events like those that occurred the other day. That portion of the audience is increasing, not just because the audience overall is decreasing, but because people are evermore online and never more aware of the inner workings, or at least perceptions about the inner workings of wrestling. In the 90s, such a story would be shrouded in hard-to-find newsletters, and would go untouched by mainstream media that took wrestling even less seriously than it does today.

The monthly value of WWE’s savings by enacting cost cutting, compared to other monthly costs
*Savings from reductions sourced from April 15 press release.
*Stock dividend spending and aggregate stock repurchase value based on information from WWE’s 2019 10-K.
*Vince McMahon’s dividends based on 28,697,568 shares, reported on SC13D from March 24, 2020
*WWE dividend payment is $0.12 per share, as of press release from April 16, 2020

The notion now that people won’t be smart enough to understand what’s going on is unsustainable. And the notion that people are just wrong or they don’t “get” the story that they think is negative, doesn’t matter. Their perception of the brand and how much they can trust it is what matters. 

It’s the trust of your customers and the trust of your workers, which is a hard thing to measure, which isn’t a metric that’s on any of the KPIs on the corporate website, which probably isn’t even on any of the documents in the internal folders, it’s those things that are among a wrestling company’s most important assets. It’s also often really difficult for a wrestling promoter to admit to themselves that they’ve damaged those assets. 

Maybe someday those trust relationships will reveal themselves to have been even more valuable than the most massive media rights deal, and more valuable than delayed eight-figure payments from authoritarian governments.

If we think back again to the nostalgic 90s and think about what the turning point was in the competition between WCW and WWF: Was the turning point WrestleMania 14? Was it Starrcade ‘98? Was it the Finger Poke of Doom? Was it when WWF started to consistently beat Nitro in the ratings? 

TV ratings for the “Monday Night Wars” competition between WWF Raw and WCW Nitro

One signal I think was important was when talent like Chris Jericho, Eddie Guerrero, Chris Benoit, and Dean Malenko realized that they couldn’t trust WCW, they wouldn’t be creatively fulfilled there, or have a fair shot at upward mobility. 

The Revival finally got their release recently, following the exit of a dissatisfied Jon Moxley, Brodie Lee, and, coincidentally, Chris Jericho. Does this sound at all familiar? Now pile on the unwilling releases of some 20-30 additional wrestlers.

But those are just economic concerns. Does a company like WWE — or AEW for that matter, which is still going to run a pay-per-view in an empty building on May 23rd — have any moral responsibilities? Will anyone scrutinize them? Media? Politicians? 

On each of two of my favorite non-wrestling podcasts, Pivot and Recode Decode, both hosted by Kara Swisher, the news of pro wrestling being deemed essential was brought up only as a way to drop Linda McMahon’s name and laugh. The subject was not worthy of discussion beyond that.

“But it’s just wrestling! If people in pro wrestling are exposing themselves to coronavirus, well, that’s natural selection for you!”

We’re learning at this time which companies and which people are actually willing to be uncomfortable for the sake of other people’s well-being. We’re being reminded that for some, philanthropy and service are effective vehicles en route to gathering profit and power. Some of us have been fantasizing for some time that those with power, eventually, in a dire enough situation would reach the point where some shred of decency would be revealed, and where their care for other people would finally exceed their care for economics or for their own comfort or for their own power itself.

We’ve been living under the impression that maybe in a big enough crisis there would be some distinction. We’re learning these days that for some there is no distinction. For some there is just one mode of value, there’s just one way to interpret the world, one goal. And it’s not a greater good for the most or all people; but the accumulation and retention of control, the reassurance that one will always have or will have even more of the control that one has now, whether that control is a company, an industry, or a public office.

You can get over it or lose. The kinds of people who care about things like some basic concept of decency are the kinds of people who don’t win the business competitions. They don’t get to dominate industries. The people who put economics above all remain the winners of a kind.

This post is based on audio from the episode of Wrestlenomics Radio, published April 18, 2020.