WWE reports Q2 revenue of $265.5 million and EPS of $0.34.

WWE beats analyst expectations on revenue by $5 million and EPS by 11 cents.

I estimated $261 million revenue and $0.33 EPS. Higher than all other analysts on the latter.

Earnings press release:

Click to access 2q21-earnings-pr-v2.pdf

Other measures of profit:

Net income for the quarter was $29.2M, down from $43.8M prior year.

Operating income $46.5M, down from $55.7M.

WWE saved enormously in Q2 2020 when they ran TV in the Performance Center. Q2 2021 profitability is well above Q2 2019.

The press release notes WWE spent $18.8 million toward its stock buyback program, as a way to return value to shareholders in addition to the quarterly dividend.

My note: WWE laid off a number of employees and talent during the quarter as well to cut expenses.

Wrestlemania live event business. Footnote in the KPIs notes WM was attended by approximately 20,200 fans each night.

WWE reports $6.7 million in live event revenue for the quarter in which WM were the only events.

I reported in April paid att of 20,172 and 20,634 & $6.2M gate.

What were merchandise sales like for Wrestlemania?

WWE reports $1.3 million in venue merch, the first time that line has any value in it since Q1 2020. This would indicate merch per paid ticket of around $32.

Trending schedules:

Conference call will begin at the top of the hour. Anyone can login and listen here:

https://streaming.webcasts.com/starthere.jsp?ei=1415044&tp_key=0b55bc9719

Business Outlook section of the earnings release.

WWE isn't changing its $270M to $305M adjusted OIBDA (the company's non-GAAP favorite profit metric) for 2021, citing caution related to Covid-19.

WWE anticipates resuming the new HQ buildout in the second half of this year.

The call is beginning. SVP Michael Weitz opens the call with a welcome, introduction, and forward-looking statements disclaimer as normal.

I will note statements from WWE executives. In most cases this won't be direct quotes but paraphrasing and summaries.

Vince McMahon says "we have advances for our live events that look excellent". TV ratings are up.

Short comments as usual and he hands off to Nick Khan.

Nick Khan gives a summary of media industry. Says he'll outline recent deals and how it shows there's a premium on live content. Stephanie will talk about sponsorship segment.

Khan says Disney renewed Wimbledon. Red Bird Capital acquired stake in IPL cricket team. We see similar growth in our own international deal, including Foxtel in Australia.

Ratings are up across all shows following return of live fans. Stephanie will talk ratings growth soon.

Khan talks about Peacock. Viewership of PPV events are up 26% (Backlash), 25% (Hell in a Cell), and 46% (MITB) from prior year performance on standalone WWE Network.

Return to touring. One nuisance to note. This was not a return to live events. We held events via video screens. Not one week of production missed. It felt great for fans, superstars.

A taste of how live evnts are performing. Houston sold-out. Highest grossing non PPV event in Houston.

Live merch sales were up 50% versus previous event in Houston. Keep in mind eCommerce sales have grown since then.

Merch sales for Fort Worth (MITB PPV) were almost 100% greater. These events sold out prior to John Cena's reappearance.

Merch sales for Dallas (Raw) were almost 50% greater than last time in Dallas.

In Cleveland (SD) highest grossing non-PPV gate in Cleveland.

Khan talks WWE having 2 matches at Rolling Loud festival. Almost all fans were under the age of 25. "We saw strong merchandise sales there as well."

Pittsburgh house show was the strongest gate for WWE non-televised event in history in Pittsburgh.

Summerslam takes place from NFL stadium in Las Vegas on Saturday Aug 21. A new night for us (Sat). Without a main event or card announced we sold over 40,000 of 45,000 tickets.

Still Khan: New Years Day PPV in Atlanta. College football championship games are NYE. NFL is not playing that day. So we saw an opening on the sports calendar. We believe ticket sales and viewership will be indicative of that. Rest of the PPV calendar is coming shortly.

We announced our first ever ring announcer competition on TikTok. Winners announce a match at Summerslam. Already 9 million views.

Our 2nd NFT drop leads into Summerslam. This time with John Cena. Follows Undertaker NFT launch before Wrestlemania.

Khan talks about United States vs. Vince McMahon limited series announcement.

He turns the call over to Stephanie McMahon.

Stephanie talks fan return. She and HHH visited fans before first event with fans. Energy and excitement. The Summer of Cena. NBCU and Fox support return with different campaigns across programming.

WWE applied key learnings, upgraded audio and visual experience. Talks new set.

Steph: Costs associated per episode are on par with 2019 costs of production. July 16 generated 21% YOY increase and 42% increase in "coveted 18-49 demo".

Raw was up 8% YOY and 15% in 18-49.

Steph: TV viewership remained stable, maintaining trend since Thunderdome. From that time from end of Q2. Raw increased moderately and Smackdown increased 7%.

Digital consumption increased 5% to 394M hours. Views increased to 11.2B. 3x increase in Facebook hours.

Steph talks A&E programming. WWE increased 18-49 for A&E.

Sales and sponsorship revenue increase YOY. WWE goes well beyond generating impressions. Customized content ex across multiple lines of business. Utilizing WWE superstars that resonate.

Stephanie praises the Army of the Dead tie-in at Backlash. "Zombies randomly appeared in backstage scenes and popped up around the ring…"

3 of 14 trending topics were tied to the integration. Played significantly role in becoming one of the top movies in Netflix history.

Purelife (water brand) is activating across WWE. Sponsoring Summerslam after party hosted by Tiffany Haddish.

Stephanie talks how WWE's 2020 community action report shows WWE delivers on mission of putting smiles on people's faces.

She turns over to CFO Kristina Salen.

Salen goes over financial highlights in slides. She mentions employees returned from furlough.

Related severance expense of $8.1 million (from layoffs) was excluded in formulation of adjusted OIBDA.

Production expense for Raw and Smackdown will decline with return to touring, Salen says.

My note: In other words, touring is less expensive than Thunderdome.

There was a modest decrease in eCommerce merchandise sales in YOY comparison versus early pandemic, offset by first venue merch revenues since Covid.

Much of Salen's comments consist of reviewing details in the earnings release noted earlier in this thread. Her comments will likely be followed by Q&A with stock analysts.

Notably there's been no mention of a "large-scale international event" (Saudi Arabia event) yet. ( = $50 million in revenue)

The 56-page quarterly report (10-Q) has been published:

https://otp.tools.investis.com/clients/us/wwe/SEC/sec-show.aspx?FilingId=15122038&Cik=0001091907&Type=PDF&hasPdf=1

Q&A begins. First question from David Karnovsky from JPMorgan.

Soccer rights are having an uptick w/ streaming bids. How do you view WWE as similar?

Khan says soccer is #1 sport globally. We see positive not equal to soccer but appeal on the scale. La Liga rights deal high for deal outside U.S. … We think there are more of those deals out there.

JPMorgan asks Salen about number of events for 2021. She says guidance does include "large-scale international events".

Salen says at or below second-half of 2019. Schedule announcements are coming shortly.

Curry Baker from Guggenheim asks on sponsorship, what's size of opportunity next 2-3 years. Areas for increase in monetization?

Stephanie says tough to give projections but we believe significant upside. Peacock increases sponsorship. On digital and social opportunities.

Any update on the MENA TV rights deal? Still in conversations?

Khan says Vince, myself others still into it. Optimistic on the situation. Hope to have some news shortly.

Eric Handler from MKM asks about out of ring TV production plans. How many hours? Preselling these so no risk? Profit centers rather than promotional tools?

Khan says "Yes to all of that… meaning profit center, promotional tools". A&E ratings were good. Look for more.

Handler asks about new HQ. How's capex cadence in 2022. When does it start to decline? Previous plan was to sell existing HQ and off site facility. That still a goal?

Salen says on prior Q, expectation is not to take financial risk like a TV studio would re: out of ring content.

Salen says supply chains are backed up so to meet timeline we need to order materials sooner so they arrive on time in 2022. We anticipate moving to new HQ in Q4 2022. Already broken ground in June. Capex will taper through 2022.

Salen anticipates selling existing buildings.

Brandon Ross from LightShed follows up on sponsorship. With touring return does it go up right away or come in time?

Steph says return to events increases opportunity but that hasn't stopped us from growing sales/sponsorship business. We've seen increases across business.

Ross asks Vince AEW seems to be making significant investments in roster and has gained in viewership esp in demo. How do you view them as competitor? Rising Tide?

Vince says it's not a situation where rising tide because Ted Turner was coming after us.

Vince says I don't consider them [AEW] a competition in the way I considered WCW back in the day. I'm not sure what their investments are.

Nick says "it's sort of like a horserace where the horse has blinders on" At the same time everything is competition. Sleep is competition.

Salen is took a complex finance question from Ben Swinburne of Morgan Stanley that I'll have to relisten to later as I'm still recovering from Vince mentioning Ted Turner.

Univision investment in Combate is brought up. Do you see mergers of sports? Crossover events to expand fan engagement? Peacock on Sky in Europe. Are you tagging along?

Nick Khan says not sure we see consolidation in MMA space. UFC guys like their market share.

Nick says Vince's original vision is to have one big global territory. "What was called quote-unquote 'wrestling' at the time." We like any new entrant that's well-financed in the combat space.

Nick says, on Peacock international situation, almost all US media conglomerates are looking to go internationally soon. We're optimistic. Let's see what we have in the next couple of months.

Alan Gould from Loop Capital asks Salen to confirm large scale international event (Saudi event).

Salen says it's included in their financial guidance.

Michael Weitz thanks everyone and ends the call.

Thanks for following along!

We’ll be going live with a special podcast at 9pm ET tonight for subscribers at http://patreon.com/wrestlenomics

Tomorrow is WWE’s Q2 (April to June 2021) earnings report after the close of the market with conference call at 5pm ET. Executives including CEO and chairman Vince McMahon, president and chief revenue Officer Nick Khan, chief brand officer Stephanie McMahon, and chief financial officer Kristina Salen are expected to make comments.

The average analyst estimates a $0.25 earnings per share ratio, according to the Wall Street Journal, which means about $21 million in net income for the quarter.

$252 million for the quarter is expected for revenue, according to Yahoo! Finance.

Before looking at those estimates, I (not a stock analyst) ran an estimate and came up with $27.5 million in net income for the quarter, higher than any stock analyst’s estimate I’ve seen. My revenue estimate is on the high end compared to analyst estimates, at $261 million.

One of the more uncertain factors in the model is anticipating what revenue WWE will get in the “Network” line in the first full quarter under the Peacock deal after getting bigger upfront payments related to transition from the WWE Network in Q1.

I modeled $49 million (plus about $13 million in international revenue) based on Year 1 of presumed escalating payments from Peacock at a reported $1 billion over five years ($200 million average per year).

Thanks to Wrestlemania, WWE will have significant live event revenue to report for the first time since Q1 2020.

Gate receipts showed $6.2 million in revenue related to the two-day event at Raymond James Stadium. There were no other live events in Q2.

WWE executives might give clarity on whether there’s a “large-scale international event” (they won’t say “Saudi Arabia”) in the works. Andrew Zarian and John Pollock have heard October 21 as a return date, which would be in Q4.

Each event in service of the KSA government is worth at least $50 million to WWE. For context that’s 3x a typical pre-Covid Wrestlemania gate and more than one year of TV payments from Turner to AEW.

Expect much discussion of WWE’s return to touring and how that’s affected not just ticket revenues, but, more importantly, TV ratings. There have now been two Raws and Smackdowns back on the road.

Ratings during this two-week period are better than when viewership bottomed out in July 2020, but will those increases sustain?

Wrestling fans can expect any mention of AEW from stock analyst Q&A to be met with a “we’re focused on us” talking point.

What else will we learn? Lately Nick Khan, who does most of the talking on the calls lately, has regaled listeners with insights on the media business. Last call he said NBCU and the NHL would part ways before that was public knowledge.

Will there be hints about next-day rights for Raw and Smackdown currently held by Hulu? That deal expires in 2022 and there’s said to be increased interest since the last time that deal was made in 2018.

Will Nick Khan give an update on his thoughts on whether Amazon, Apple or other new players might have interest in WWE content rights?

Is current Smackdown rights holder Fox comfortable with its partner promoting Peacock and delivering viewership hovering around 2 million?

As usual, I’ll live tweet information from WWE’s newly published documents and from the conference call.

We’ll do a special Wrestlenomics podcast on Thursday night after the call for subscribers at http://patreon.com/wrestlenomics.

Disclaimer: I do not and have not in the past held any stock positions or ownership in World Wrestling Entertainment, Inc. (NYSE: WWE) or any wrestling companies. I have no plans to initiate any such positions.

Wrestlenomics content does not constitute investment advice and should not be construed as investment research.

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On the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo took a look at the growing decline of Raw ratings. Raw recently hit a record low 1,472,000 viewers early this month. Many were quick to point out linear TV viewership in general is down in large part due to streaming, which is true. However, Thurston addressed that argument.

“People have asked lately, I’ve seen people discussing, yes, Raw is at an all-time low, but is Raw really declining at a rate that is worse than comparable shows, worse than the decline of TV overall?

“I know we’ve talked about this with some regularity, but I think it’s worth revisiting and going into some detail to show the answer is, ‘Yes’,” Thurston said. “Raw is doing worse than other sports programs. Raw, over the last couple years, has been doing worse than TV in general.”

Thurston broke down how and compared Raw’s decline in ratings compared to other sports broadcasts using a timeframe from 2016 to 2020. Raw was down 41% during this period, and the NBA Conference Finals on TNT was down 55%. However, other telecasts like the NFL Draft are up 30%, and the NBA Conference Finals on ESPN was only down 30%.

“A lot of different sports telecasts have held up over these four years better than Raw has,” Thurston said. “So yes, ‘streaming is the future,’ but TV ratings still matter, and TV ratings for other programs have declined, but not quite as bad in most cases than Raw has.”

Thurston has also included 2021 in this timeframe as well. These numbers are as of June 30, and they show that Raw is down 42% from 2016 to the first half of 2021. The NBA Conference Finals on TNT are down 52%, but the NBA Conference Finals on ESPN are only down 1%. Thurston then took a deep dive on Raw ratings compared to non-news cable programs.

“Now that’s just sports. Let’s say you don’t want to compare Raw to sports programs because wrestling isn’t real sports, and you shouldn’t compare Raw to other sports because sports are just more popular and they’re gonna hold up better,” Thurston explained. “Let’s make a stronger argument, people are more likely to watch WWE stuff on DVR than they are to watch actual shoot sports on DVR.

“Let’s talk about non-cable news programs, the top 50 from Showbuzz Daily from 2017 to 2020. In ‘17 and ‘18 Raw did hold up better than the top 15 non-news cable programs, but in 2019 and 2020, Raw declined more sharply. Raw was down year over year in 2019, 14%. Top 50 non-news cable, only half as bad, 7%. That’s pre pandemic when they still had live crowds. 2020, Raw was down 22% compared to non-news cable, which was down 15%.”

Thurston transitioned into talking about the popularity of WWE compared to other sports leagues. He references a Seeking Alpha article he wrote in 2016 titled “WWE TV Ratings No Longer Reflect Popularity”. At the time, metrics like Google web search, live attendance and merchandise sales were not in line with WWE’s decline in ratings.

However, looking at it in a more current lens, worldwide Google web search has now caught up to WWE’s ratings decline. Thurston found in his research that the Indian Premier League (IPL) was the most searched sports league in 2020. The cricket league that was founded in 2008 has seen a sharp rise in growth over the years and was valued at $6.7 billion in 2018 and had signed a $2.55 billion international media rights deal with Fox.

Coming in behind the IPL was the English Premier League (EPL) followed by NBA and NFL. After a significant drop, La Liga comes after. La Liga is the top division of Spanish football (soccer) and is home to top teams like FC Barcelona and Real Madrid and one of the best players in the sport, Lionel Messi.

In 2015, when Thurston wrote his original article, WWE was one of the most searched leagues behind the NBA and the NFL. However, in 2016 and to today, WWE has declined in Google web search while leagues like the IPL, EPL and La Liga have grown.

Other leagues that are above WWE in 2020 Google web searches are Formula 1 (F1), UFC and MLB. WWE only beats out the NHL and NASCAR in this metric. Thurston gave his analysis of this data.

“It doesn’t seem very debatable to me that WWE has declined in popularity over the last four, five years,” Thurston said. “They’re amazingly popular on YouTube and on forms of social and digital media, which I think, in many ways, wrestling is predisposed to being popular on those media platforms. The trajectory is, in a number of ways, pointing downwards. You’ve got declining ticket sales before the pandemic. You’ve got declining merchandise sales before the pandemic. You’ve got declining licensing revenues before the pandemic.”

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Wrestlenomics is not affiliated with or licensed by Nielsen.

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On the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo discussed the possible effects the return of fans at shows will have on television ratings. AEW will resume touring starting with Road Rager in Miami on July 7, and WWE will kick off a multi-city tour on July 16. Thurston and Gullo broke down what effect they think fans will have on TV ratings for Raw and Smackdown.

Since recording the episode, Thurston has added predictions for monthly averages for AEW Dynamite, WWE NXT, and AEW Rampage, seen in the charts below. Rampage debuts on TNT on Friday in a 10pm Eastern time-slot, beginning August 13, before both AEW weekly shows move to TBS in 2022.

Averages for Smackdown and Rampage in December will be challenged by running on Christmas Eve and New Years Eve, which fall on the last two Fridays of the year. Thurston anticipates Rampage will begin by performing close to Friday Night Dynamite’s Hour 1 average (562,000 viewers total, 277,000 in 18-49), and wane from there. The amount of time viewers are willing to spend watching AEW will be spread more thin, which will cause Dynamite’s viewership to be slightly lower than it would be otherwise as well.

By the end of the year, he sees Dynamite and Raw’s 18-49 viewer counts drawing close to one another, but not quite overlapping.

Chris Gullo: Fans are coming back. We had a Dynamite in front of fans on Wednesday, and we’re gonna have fans in WWE crowds in a couple weeks. How much of an effect do you really think it makes on the ratings because you’ve heard, ‘Oh, wrestling’s hard to watch with no fans, or in Thunderdome or with the same fans at Daily’s Place.’ Well now, we have live audiences all around the country.

They’re going to fill arenas. Do you really think it’s gonna make that huge of a difference on the ratings? I think because it’s summer, it won’t, but that’s just me. I don’t think, after a year and a half, someone goes, ‘I think I’m gonna watch Raw again because they have fans.’

Brandon Thurston: I was looking at what the month-to-month trends usually are, and usually, July is up from June and then August is up from July. I just sort of went through each week and tried to do a rough prediction of what I think is going to happen, trying to take into account holidays and things like that.

General overview, I think that there’s definitely going to be a short-term bump with Raw with its first event in front of live fans. It will pop a pretty big number over what it had been doing in the weeks leading up to it. Smackdown, same thing. I don’t know this, but I think they’re going to bring in John Cena and probably advertise him ahead of time and maybe he’ll start a program off with Roman Reigns heading towards Summerslam.

I think there’s going to be a short-term boost, and after that, both of these programs are just not good enough and don’t make people feel like watching them enough to sustain a long-term increase in ratings compared to their trends over the last year and a half during the pandemic.

Thurston noted WWE investors have high expectations for TV ratings when fans return.

Thurston: In July 2020, Vince was grilled on the earnings call about ratings and the excuse was that, well, once we get fans back in attendance, ratings will improve, and the Thunderdome was introduced partly to address that.

And the Thunderdome did coincide with ratings stabilizing. But I think investors are really expecting a major boost in ratings when fans return.

With the prediction that Raw and Smackdown will have a short-term boost, Thurston explained predictions for total viewership numbers for Raw and Smackdown for the remainder of the year. These predictions also take into account the NFL season where there will not be a lead-in during the holiday season like there was last year that led to a big number for Smackdown on Christmas.

Thurston: Let’s talk about what the averages were for June. I’m just gonna talk about total viewership here. Raw averaged 1.67 million viewers. Smackdown averaged about 2 million flat, which I think is the first time that the average comes in below 2 million on Fox. I think in July, about 1.7 million for Raw and 2.1 million for Smackdown, so they’re both up. This is for the second half of the month only, including live fans in attendance again, and then in August, 1.75 million for Raw and 1.20 million for Smackdown. And then in September, we’ll start to get back into the season of Monday Night Football, in the case of Raw, and I see it falling about 1.60 million for Raw and then maybe Smackdown, I feel like this is being generous, but Smackdown staying above 2.1 million.

It certainly may have John Cena throughout August, but then I see it really slipping for Raw down to 1.5 million, and Smackdown getting to 2 million flat again. Smackdown, the way the calendar works this year, is going to land on Christmas Eve and New Year’s Eve. So those ratings, almost certainly, are going to plunge. I see Raw doing 1.5 million through the prime of the football season so that will be scraping record lows again. To be fair, I expected that to happen last year, and it did not go as badly as I expected. I think that’s partly thanks to the Thunderdome, remember through the summer where they were panicking with things like Raw Underground.

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Brandon Thurston
brandon@wrestlenomics.com

This is an early release for Wrestlenomics subscribers. This article will be posted publicly later. Running studies like this is possible because of your continued support. Thank you as always!

For the third consecutive quarter AEW Dynamite had the highest Net Promoter Score among the programs measured, scoring a +0.58 for responses collected June 24 to July 1. Dynamite was followed in the same order as prior studies, by WWE programs NXT (+0.48), Smackdown (+0.19), and lastly Raw which had a negative score (-0.06). The highest possible score is +1.00, the lowest, -1.00.

This quarter’s set of responses was less positive in most cases, and sentiment for Raw and Smackdown declined strongly from the previous quarter-year, when Raw scored +0.26 and Smackdown, +0.50. NXT and Dynamite were down several points, too, from +0.61 and +0.68, respectively.

A Net Promoter Score study, which is used in many businesses, asks respondents how likely they would be to recommend a product they use (in this case various wrestling programs) to a friend. The metric is believed to be a strong predictor of revenue growth potential.

In our methodology, likelihood to recommend is measured using a 0 to 5 scale, with “0” meaning the respondent “definitely would not recommend” and a “5” indicating they “definitely would”. Net Promoter Score is then calculated by subtracting the percentage of responses answering 0 to 3 (“detractors”) from the percentage of responses answering 5 (“promoters”). Responses of 4 (“passives”) are not included in the formula. This methodology differs from most NPS studies, which use a 10-point scale. We continue to use a 5-point scale because it allows us to give subjects a more readable survey form. We might use a 10-point scale in the future.

Responses were gathered independently by Wrestlenomics, using a Facebook ad. The ad was targeted only at users from the United States. Responses were counted as valid for these results only if the subject selected “United States”, from a set of other options, as the country they currently live in. The ad was also served to users on Instagram, which accounted for 9% of responses.

Thanks to support from Wrestlenomics subscribers, we spent more on this quarter’s ad, which resulted in more samples being collected than in previous studies. Samples for regular viewers referenced above ranged between 218 (for NXT) and 307 (for Smackdown).

Responses were not gathered through our own organic sharing of the survey form, as we believe this would result in more biased responses. It was possible though for users on Facebook to share the promoted ad post.

We choose to emphasize regular current viewers separately from occasional current or lapsed viewers. Presumably regular current viewers are most engaged and aware of what each program currently has to offer. Regular viewers’ responses also skew positive while occasional or lapsed viewers skew negative.

NPS results for lapsed viewers and occasional viewers are here:

A lapsed viewer is defined as one who selects the option, “I used to watch it regularly OR occasionally”, in reference to a given program.

Responses for Impact Wrestling, Ring of Honor, and New Japan Pro-Wrestling had smaller sample sizes, so it may not be fair to compare them to the four most popular programs discussed above, and it’s questionable how meaningful these results are, especially the New Japan results, which have the smallest sample sizes.

Survey response results were adjusted for disparities in gender and race relative to known demographic makeup of major wrestling television programs.

The median age for a respondent for this quarter was 40 years old, up from 37 in the previous quarter, but down from 44 for our first study in December.

Regular viewers of WWE and AEW programs were similar in age. Regular viewers of Ring of Honor and Impact tended to be older. NXT had the youngest median response by a slight margin, the opposite of data we see from TV viewership, where NXT measures the oldest.

Examples of what the ad looked like on Facebook:

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On the latest edition of Wrestlenomics Radio, Brandon Thurston and Chris Gullo broke down a Forbes feature on AEW CEO Tony Khan and All Elite Wrestling. Underneath colorful language in the article about piledrivers, sleeper holds, and chairshots, there were also some details about AEW’s finances. Thurston and Gullo dove deep into AEW’s financial state.

Chris Gullo: On AEW profitability [the article reads], “Khan expects its wrestling division to be profitable this year, though an eight-figure investment in video game development will keep the company in the red for now.”

And this line blew up on social media from people that understood what he meant, understand the investment, and people that are like, “Oh, this company, they’re putting all their money into a video game, and they’re gonna go bankrupt.” People can take a step aside and realize that they’re making an investment in a video game industry, which honestly, I think they’ll do very well in, and they’ll make that money back tenfold.

Brandon Thurston: Maybe. The takeaway for me here is that this implies that AEW has not been profitable yet, even though the Wrestling Observer Newsletter has said that AEW became profitable after they made their January 2020 deal where they renewed their deal with Warner Media at a higher rate, $175 million over four years, which, as this article also mentions, $43.75 million on an average annual basis.

So AEW has not been profitable, on an annual basis anyway. There’s different ways you can cut up time, but on an annual basis, they have not been profitable, apparently. That’s takeaway number one. Secondly, eight figures is a lot of figures. That’s somewhere between $10 million and $99 million. Who knows how much money they’re really investing. A lot though, more than $10 million.

Thurston estimated AEW generated about $64 million in revenue in 2020. The majority of that money he believes comes from U.S. broadcast partner, WarnerMedia, which owns Turner networks TNT and TBS.

Another challenge for profitability is the expense of producing television programs like Dynamite on a weekly basis. Each taping costs the company more than $500,000 before paying talent, Thurston believes. AEW likely saved on costs, though, by consolidating tapings and airing non-live episodes of Dynamite this and last year during the pandemic.

When AEW and WarnerMedia announced in May that Dynamite and new program Rampage would move form TNT to TBS, there was one report that AEW might’ve gotten an “eight figure payday” from Turner in exchange for agreeing to the move. Thurston is skeptical AEW was compensated to that degree.

Gullo: You could say that eight-figure number that they got to move [Dynamite and Rampage] from TNT to TBS [in 2022], they could basically invest that amount of money.

Thurston: I don’t believe that. You’re saying that they’re getting more money because they’re moving to TBS? Over what time, on an annual basis? You’re telling me they got a $10 million increase on an annual basis? On a deal that’s about $40 million per year, they got a 25% increase?

Gullo: The point I’m trying to make is that the world is burning, that’s the perspective that a lot of people are taking on social media because of this investment in the video game. It’s not. I think they’ll do well on that, and then there are other areas they can replace that investment.

Thurston: I will say this, there’s a tremendous amount of misleading information and incorrectly-believed information about AEW’s financial state that I think people in AEW are fine to have out there.

Tony Khan gave an interview to PWInsider on Tuesday where he said, “I know the wrestling end is profitable this year.”

The Khan family made an earlier investment, the AEW CEO mentioned, in Epic Games, the developer and publisher of Fortnite, among other games.

“I’m an investor in the gaming space, and I think I’ve been a savvy investor,” Khan said. “I made a large investment with my family that I pushed my family to make and kind of, along with AEW, I would describe it as one of the two investments where I’ve kind of dragged my dad across the goal line a little bit.”

“We put $20 million into Epic Games, which looks pretty smart now because it’s worth a lot more than that now.”

It’s not clear what gaming companies AEW has invested in. AEW’s gaming partners seem like likely candidates. Those include console game developer Yukes and mobile game developers KamaGames (maker of AEW’s casino game) and Crystallized Games (creator of the AEW GM currently developing).

The original transcript of the podcast was edited for conciseness and clarity.