John Pollock and Brandon Thurston go through the fourth-quarter and year-end TKO earnings report, and welcome John Arezzi to the program.
Pollock & Thurston go through Tuesday’s TKO earnings and the call with analysts with the key points from the report, the Netflix deal, the Vince McMahon & WWE scandal, a lawsuit settlement figure & more.
Then, they welcome John Arezzi from the Pro Wrestling Spotlight show to reflect on his coverage of the WWF scandals from the early ‘90s, meeting Mel Phillips in 1974, and the comparisons to the ongoing issues surrounding WWE.
Discussion of Vince McMahon on the call was minimal. McMahon still owns 11.8% of all TKO shares, although he resigned from his roles with TKO and WWE last month.
“[Vince McMahon will] do whatever he’s going to do and we’re on the sideline,” TKO COO Mark Shapiro said in response to an analyst question on whether McMahon intends to sell any of his shares.
“We’ll have a look, we’ll see. We have no idea on timing. We’re not having any discussion with him. He’s given us no point of view on his motive or if he plans to sell or not sell, or if he does, how much. So we’re going to wait around and find out just like you.”
Because of his resignation, McMahon was forced to forfeit 86,918 shares of unvested stock compensation, which have a market value of about $7.4 million. Those forfeited units are nominal compared to the 20,352,105 TKO shares he still holds.
TKO’s annual report makes clear, as previous TKO and WWE filings have previously, that McMahon is still paying “certain counterparties” installments. This refers to various nondisclosure agreements McMahon made to prevent women who formerly worked for the company from possibly coming forward with sexual misconduct claims. Despite McMahon’s recent separation from the company, these costs are still being counted toward TKO’s expenses and liabilities.
In connection with the acquisition of WWE, the Company assumed $3.5 million of liabilities related to future payments owed by Mr. McMahon to certain counterparties, of which $2.0 million was paid directly by Mr. McMahon during the period of September 12, 2023 through December 31, 2023.
MLW got a $20 million settlement
TKO’s annual report revealed WWE settled with MLW for $20 million to dismiss MLW’s antitrust lawsuit against WWE in December. From TKO’s annual report:
On December 22, 2023, the parties [WWE and MLW] notified the court that they had entered into a settlement agreement in the amount of $20.0 million and stipulated that the case should be voluntarily dismissed with prejudice. In light of the settlement, the case was dismissed with prejudice on December 26, 2023.
My reading of the statement in the filing is that WWE paid $20 million and didn’t pay anything additional toward MLW’s legal costs. MLW likely shared a healthy portion of the settlement amount with the high-profile Kasowitz firm that was representing MLW. Read literally, WWE’s $20 million settlement cost wouldn’t include any of WWE’s own legal costs toward litigating this case.
Ari Emanuel is TKO’s new Chairman
TKO CEO Ari Emanuel was established as TKO Board Chairman, as of Feb. 22, replacing Vince McMahon in that role. Emanuel was already a TKO Board member previously. Steve Koonin, who works full-time as CEO of the Atlanta Hawks and State Farm Arena, has been established as lead independent director.
Financial stuff
For the full year of 2023, WWE generated $1.326 billion in revenue. UFC generated $1.292 billion.
TKO’s net income (the final measure of profitability) for the year was $175.7 million. In future years the company should be more profitable as this year was impacted by merger, restructuring, and severance costs. In 2022, WWE and UFC. combined, recorded $389 million in net income.
Both companies were profitable in 2023, but UFC is more profitable, despite generating slightly less revenue. TKO breaks down separate profitability metrics for WWE and UFC only into its preferred non-GAAP measure, adjusted EBITDA (which excludes interest costs, taxes, depreciation, amortization, legal costs, merger costs, and other expenses at TKO’s whim). By that measure, UFC recorded $755.7 million and WWE recorded $533.1 million for 2023.
Dwayne Johnson’s IP deal
The contract giving Dwayne Johnson all rights to intellectual property related to his Rock character was disclosed in the annual report. As part of his agreement to join the TKO Board last month, the company had already disclosed that Johnson was given these IP rights as well as $30 million in TKO stock. The stock will be given to him in installments through the end of 2025.
To contrast how valuable Johnson’s Board deal is, Brad Keywell, founder of an AI software company, was added to the Board at the same time and was given a stock award of $182,000 and an annual retainer of $107,000.
The IP contract, which wasn’t previously published, details the IP Johnson now has rights to, which includes the name “The Rock”, “Rocky Maivia” and many of his well-known wrestling move names and catchphrases. From the agreement:
“Rock IP” means any and all Intellectual Property Rights throughout the world at any time owned by the TKO Group Parties, or any of their respective Affiliates, whether registered or unregistered, relating to (a) the following ring names and taglines: “The Rock”, “Rocky Maivia”, “Team Corporate”, “Rock Nation”, “The Nation”, “Roody Poo”, “Candy Ass”, “Jabroni”, “If you smell what The Rock is cooking”, “The Samoan Sensation”, “The Blue Chipper”, “The Brahma Bull”, “The People’s Champion”, “The Great One”, “Know Your Role and Shut Your Mouth”, “Team Bring It”, “The Rock Just Bring It”, “The People’s Elbow”, “Rock Bottom”, “Finally, The Rock has come back to …”, “It doesn’t matter what…”, “Blue Hell”, “The millions… (and millions)”, “Rockpocalypse”, “Project Rock” and “The most electrifying man in sports and entertainment”, (b) the logos and all other Intellectual Property Rights set forth on Schedule A, (c) all other service marks and trademarks relating to the items in clause (a) and (b) and (c) all other nicknames, caricatures, voice, signature, gestures, routines, costumes or parts of costumes, accessories, crowns, relating to the items in clause (a) , (b) or (c).
Where will Raw air in the U.S. from October to December?
TKO CFO Andrew Schleimer said the company is working on distribution for U.S. broadcast rights for Raw for the fourth quarter of this year. There’s currently no TV home set for Raw for October through December of this year. Raw’s deal with NBCUniversal to broadcast on the USA Network expires at the end of September 2024, and the Netflix deal doesn’t start until January 2025.
“We are in the process of securing distribution for Raw during the interim period in Q4,” Schleimer said on the call. “We will provide further details once we have an update.”
Due to uncertainty about what revenue U.S. Raw rights will provide in the fourth quarter, TKO assumed no profitability toward U.S. rights for Raw in that period included in the company’s guidance of $1.15 billion to $1.17 billion in adjusted EBITDA for the full year of 2024.
WWE business percentage differences: attendance, PLE viewership
The earnings release stated WWE’s live event average attendance increased by 34% in 2023, but no actual average attendance number was given.
We have 2022 full-year numbers, though, for WWE pre-merger. If we assume TKO is referring to worldwide attendance, then, this disclosure would imply average annual attendance for WWE in 2023 was about 8,300.
That’s based on WWE’s 2022 reporting that it ran 231 events, drawing a total of 1,429,800 attendees for an average attendance of about 6,200.
I believe these numbers reflect paid attendees. Checking these numbers against WrestleTix’s estimates of tickets distributed, WWE distributed an average of 6,962 tickets in 2022 and 8,980 in 2023, an increase of 29%, a delta close to the 34% reported increase.
In case the release actually refers only to U.S. and Canadian attendance, WrestleTix numbers confirm a closer percentage difference: 6,753 in 2022, up 32% to 8,945 in 2023. In that case, WWE reported North American average attendance in 2022 of 6,070. A 34% increase over 6,070 would imply North American average attendance in 2023 of about 8,100.
TKO’s release also said the two PLEs in 2023 saw domestic viewership increases on Peacock of 25% (presumably Fastlane) and 22% (presumably Survivor Series).
PLE viewership on Peacock continues to benefit from increases in Peacock subscribers, which were at 31 million in Q4, up 55% from 20 million subscribers in Q4 2022, according to Comcast’s reporting.
TKO stock response
As of 11:00 am ET on Wednesday, TKO shares were trading at $85.27, down about 1%, just under the major indexes, on the first day of trading since the company reported earnings on Tuesday evening.
MoffettNathanson lowered its stock price target to $90, down from $95 previously, according to Mike Ozanian of Forbes.
John Pollock and Brandon Thurston present a special edition of the show as they speak with former WWF wrestler Nick Kiniski about an allegation against a former official
Kiniski speaks about his tenure with the company and speaks publicly for the first time about an alleged proposition made by a former official with the company. Kiniski recounts what was said to him, who he informed, and the circumstances behind leaving the company.
Former wrestler Nick Kiniski says he was propositioned by a WWF official during his tenure with the company in the ‘80s and he alerted Vince McMahon.
Appearing on Pollock & Thurston, Kiniski spoke publicly for the first time about an incident while wrestling for the World Wrestling Federation and encountering the unwanted advancements of official Terry Garvin.
He would come up to me and hit on me … I won’t say what he said, but you’ll understand the meaning behind it. He says ‘Hey Nick, let me perform oral sex on you, you can read a Playboy and you’ll have it made for life.’ And, you know, he is my boss, he controls my boss. This is my livelihood, what I want to do, I kind of joked with him, I said ‘Hey Terry, you know, I’m not that way. But if I ever change, you’ll be the first. I’ll let you be the first.’ We just kinda laughed it off. But he was always kind of coming up and joking, and one time he came to my hotel room late at night and I told him to leave. Knocked at the door. So, it put me in a very awkward position, you know?
Kiniski, the son of former NWA Heavyweight Champion Gene Kiniski, came into the business against the wishes of his famous father. He worked his way through various territories in the U.S. and toured for New Japan Pro Wrestling. His career included stints with World Class, Texas All-Star Wrestling, and the Pacific Northwest for promoter Don Owen.
He arrived in the WWF in the summer of 1986 as a regular and started to develop a good reputation among those in the company and observers.
My career was going good, I was travelling, I was enjoying it, that’s all I ever wanted to do in life. You go out there on a card with Hulk Hogan, so they were sellouts. It’s an unbelievable adrenaline rush.
Kiniski was informed to lose a bit of weight by road agent Rene Goulet (Robert Bédard) with the expectation that the company would be getting behind him.
Standing in the way of career advancement was Garvin, Kiniski reflects, noting how the official would frequently hit on the wrestler and is sure that his failure to acquiesce impacted his trajectory to the next level.
There’s no doubt about it. ‘Hey, if you let me do this, you’ll have it made for life financially.’ I mean, there’s no other way to take that.
Kiniski took his concerns regarding Garvin straight to the top by contacting company head Vince McMahon after a show in Portland, Oregon:
I remember where it was, it was in Milwaukie, Oregon, we wrestled in Portland. I called Vince, and I said ‘Hey, Vince, I don’t think this is right. Terry’s hitting on me. I don’t appreciate that and I would like it to stop.’ And Vince said ‘Oh, ok. I’ll deal with it.’ And that was it.
Kiniski is listed as having wrestled in the city on Feb. 10, 1987, per the History of WWE website.
Not only did McMahon not act on the knowledge of a complaint levied at one of his officials for propositioning a talent, but Kiniski continued to deal with the problems from Garvin.
Nothing changed. [Garvin would] still say ‘Hey, have you thought about your proposition?’ as he walks by in the dressing room.
Garvin’s roles during his tenure with the company included vice president of operations and was among the personnel who resigned in 1992 amid sexual misconduct allegations.
The late Barry Orton spoke of a 1978 incident involving Garvin, who was the booker in Amarillo during this period. The two were in a car with Garvin repeatedly harassing Orton and trying to perform oral sex on him. Orton spoke about the incident in 2006 with SLAM Wrestling:
I didn’t feel threatened or anything. Maybe a little uncomfortable because he was being so persistent because he did it every 30 miles and this was a six-hour trip. When we got there, it was over. I wasn’t traumatized. He was so hurt or whatever that he didn’t even ride back with me.
Former ring boy Tom Cole accused Garvin of harassment in two instances when he was sixteen years old, and another when was nineteen. After turning down the advance from Garvin in February 1990, he was fired and was informed it was a decision made by Garvin.
The breaking point for Kiniski was when he sensed he was being punished for issuing the complaint. On a weekend loop, Kiniski recalls that he worked a live event on a Friday night and was set to wrestle the following evening when the company opted to give him the night off and therefore, would not receive a payoff for the missed show.
I talked to Vince, I said ‘This isn’t right, Vince. I complain, and now you guys are punishing me. I’ll finish my bookings, but I’m not putting any guys over. Put me in the ring we’ll see what happens.’ Vince knows I could take care of myself, so he said ‘No.’ I said, ‘I’m done.’ I said,‘I’ll finish my matches,’ ‘Nope, you’re done now.’ ‘Thank you very much.’
When speaking with Kiniski, he believed the Saturday night card was in California. We cross-referenced his account with WWF results from 1987 on the History of WWE website. Kiniski wrestled The Iron Sheik on Friday, May 16 in Landover, Maryland. The following night, Kiniski was advertised for a match against Iron Mike Sharpe at Maple Leaf Gardens in Toronto, but it didn’t take place. Four days later, Kiniski wrestled his last match that we are aware of with WWF against Ron Bass in Nashville, Tennessee. Kiniski was advertised for a May 23 match against Pete Doherty in Hartford, Connecticut, which did not take place as advertised.
Kiniski acknowledged in a follow-up with us that his dates could be off given that these events occurred thirty-seven years ago but remembers the conversations very clearly.
Vince McMahon: No, I mean these are things – you don’t hear rumors of sexual harassment. If in fact you have someone that may be gay, then sure, you’re going to hear locker room horseplay, that’s going to happen but just that. Anyone can always come to me, they’ve always been able to come to me and tell me if anything is out of line.
King: So, any of your wrestlers could have come to you and said, that the guy in the office is coming on with me…
McMahon: Absolutely. Notwithstanding the fact, I wouldn’t have wanted to be that guy because any of my wrestlers would have broken his neck. I mean, you just don’t do things like that.
In 2020, David Bixenspan wrote a feature for Business Insider and discovered contemporaneous reporting from columnist Phil Mushnick and Dave Meltzer of the Wrestling Observer Newsletter that former ring announcer Mel Phillips was fired by the company in 1988. McMahon spoke on the record to both reporters in 1992 and shared that Phillips was fired for taking an “unnatural” interest in young boys, yet was re-hired, with the provision that he “steer clear from kids.”
After Garvin resigned from the company in 1992, he never returned to the WWF and died of stomach cancer in August 1998.
With the recent stories involving the WWE and other past performers speaking publicly, Kiniski felt compelled to share his own experience
I could’ve talked about it before but I don’t think it would have gotten any traction. And I just don’t want any young people who are in, especially the wrestling business, or any business work where they get a pro-quo, or this happens to them. I think it shouldn’t be in the workplace.
After I got out of wrestling, I didn’t even follow it. Just in the last few years … It was out in the scuttlebutt [about] what happened to me. People would want to call and interview me and stuff, but I didn’t want to be like ‘Hey I have sour grapes and I’m just mad.’ I just moved on with my life.
Kiniski would join the AWA immediately after leaving the WWF and would wind down his career in 1988. In his post-wrestling life, Kiniski has had several careers and has tried to stay positive despite this cloud over his WWF experience.
I was probably lucky to get out of the industry. It’s a hard lifestyle. I’m very successful, I got to be a fire chief, I’ve got to be an owner of bars, life’s been very good for me. I’ve got a place in Palm Springs, Arizona, I get to travel. So, I was probably lucky I got out of the business because I’d probably be beat up in a wheelchair. Just not a good lifestyle.
They didn’t take my pride from me. I felt I never did anything wrong and it worked out very well for me. I just feel very sorry for the people that it didn’t work out for and hopefully, it never happens again.
Special thanks to Brandon Thurston, Neal Flanagan & Jack Wannan for assistance with this story.
