MR. TITO STRIKES BACK – Why WWE Should STOP Having Houseshows

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The World Wrestling Entertainment (WWE)‘s 1st Quarter 2019 Financial Results are out (click here) and the results are quite mixed… Remember, the “WWE Television Slush Fund” doesn’t start counting until October 2019 when Comcast and FOX each have agreed to pay the WWE over $1 billion each for the next 5 years ($2 billion+ total, $200 million+ per show per year, $400 million+ per year). Thus, the First Quarter 2019’s financial results are a result of the existing Television Deal that was effective since September 2014 that paid the WWE roughly between $175-200 Million per year for BOTH RAW and Smackdown to be aired on USA Network by Comcast.

Few highlights of the WWE’s 1st Quarter Financial Results:

– Net Revenues during 1Q 2019 are down by over $5 million versus 1Q 2018. Consequently, Expenses for the same timeframe during 2019 are actually UP by over $20 million.

– Television Revenue is up slightly during 1Q 2019 versus 2018 by just over $2 million, likely due to a few International deals kicking in… If you think about it on a Quarterly basis, WWE’s “media” revenues are set to increase over $50 million per quarter from the 4th Quarter 2019 and beyond. WWE had $135 million “media” revenues during the 1st quarter 2019 alone.

– Live event revenue is DOWN by over $4 million, year over year… This is despite the WWE continually raising prices to attend WWE events, too… Thus, the decline is as a result of FEWER wrestling fans attending WWE events. These numbers reflect the North American audience, for the most part, as the WWE tours the United States and Canada for the strong majority of their events.

– Merchandise revenue is DOWN by just under $3 million, year over year. Merchandise is heavily tied to live events. Fewer people attending live events, fewer buyers of WWE merchandise. However, “eCommerce” part of the “Consumer Products” revenue stream is also down. Thus, fewer are buying WWE merchandise on WWE Shopzone as well.

– WWE Network Subscribers are DOWN this time versus last year by almost 25,000 at period end. Wow… Looks like 1.6 million subs is the “peak” of the WWE Network’s reach and the lost viewership and attendance might be proving the WWE Network to be unworthy to be kept by wrestling fans. Many fans have just been skipping RAW/Smackdown and just watch Pay Per Views. However, if the Pay Per Views aren’t worth watching, the Network’s numbers will continue to decline. In my opinion, Brock Lesnar was the true draw on the WWE Network and the WWE destroying his star during 2018 is staring to do the trick. Ronda Rousey certainly is NOT drawing new subscribers. Lower subscriber numbers just before Wrestlemania 35 is quite indicting on the poor card and lack of stars… Maybe the main event?

Messy, messy, messy…

On top of all of this, the WWE’s viewership data for RAW and Smackdown have declined over the past year since the announcement of the NEW Comcast and FOX deals. I recently saw a report on how FOX could cancel the WWE’s show on their network if the viewership doesn’t improve. The specifics, besides the rough $ amount, have never been released… I don’t know if FOX has an “opt-out” clause in the contract or if FOX is just willing to EAT $200 Million per year. Remember, money is NOT an issue for FOX right now after they just earned $71.3 Billion from the Disney deal but also removes tons of operating expenses off their books from the 21st Century Fox television/film studios (which Disney is now shredding).

So I, the writer of the “Excellence in Column Writing”, have a solution…

STOP having WWE houseshows. (Note: Partial credit to this Scott Keith Tweet for today’s column idea!)

If you look at WWE’s Financial Results for the 1st Quarter 2019, the quarter’s average attendance per WWE event is at 4,800. From numbers reported in the Observer newsletter (which are fed to them by the WWE), they do anywhere from 2,000 to 5,000 per Houseshow. WWE televised events do around 5,000 (Smackdowns) to 10,000… Sometimes, their Pay Per Views can push up to 15,000. Wrestlemania, SummerSlam, and Royal Rumble can still draw strong numbers for those specific Big 3 events, regardless of year. Thus, that average attendance number of 4,800 for 1st Quarter 2019 is pulled down by LOW Houseshow attendance numbers.

Let’s just assume that the WWE draws 4,000 per houseshow as a conservative estimate. The average ticket price for 2019 = $52.38… Thus, they make about $209,000 per show. HOWEVER, they do not pull in the sum total from those events… WWE has trucks that haul rings, barriers, equipment, merchandise, and lighting rigs to those events. Each of those truckers are getting paid per hour, likely with benefits as official WWE employees… Then, the WWE has to pay the Arena to lease that venue for a given night. Oh, and the WWE has to pay their wrestlers part of this live event gate along with merchandise in addition to the downside guarantees already paid per each wrestler. That margin within the $209,000 gets tight really quick.

Compare this to RAW/Smackdown televised events… Those events have higher attendance than RAW or Smackdown, thus more revenue coming in… However, those events are televised and the WWE is making millions per show just on television rights fees. On top of that, the WWE can advertise their WWE brands, merchandise, future events, and whatnot on the televised broadcast. This “double dipping” effect on both television and Pay Per View events makes the WWE a ton of extra revenues. For 2019-2024, the WWE will make almost $4 million per show in television rights alone! And then factor into the fact that televised WWE live events draw MORE than non-televised events.

Then, think about what Vince McMahon said at the 1st Quarter 2019 earnings release:

“While engagement metrics over the past two quarters were impacted by Superstar absences, we believe they will improve as our talent return and we launch our new season following a successful WrestleMania. We remain excited about the future, particularly with our debut on Fox in October.”

“Impacted by superstar absences”, eh?

Of course, we know who he REALLY means and that was the obvious omission of Roman Reigns until his recent return. But there have been other wrestler injuries as seen by absenses at Wrestlemania and their returns partly thereafter. In fact, many of the NXT call-ups were as a result of talent shortfalls seen on the main WWE roster.

So… How are injuries occurring? Maybe doing too much physical activities between working 3 houseshows per week + 1 television taping… If a Pay Per View occurs, a single WWE wrestler could perform up to 5 matches per week.

Now, one could say that the oldtimers worked MUCH MORE than today’s generation of wrestlers. Ric Flair said that he wrestled over 500 matches during a few years within the late 1980s, as he often wrestled on morning shows and then performed on shows at night. WWE’s older schedule placed houseshows everywhere they could during the 1980s and 1990s… They have only eased up during the late 2000s when demand for weekday houseshows dwindled but still pushing 3 houseshows (per brand) + 1 televised show per week (per brand) is still demanding.

But I’d argue that the STYLE of wrestling is more physically demanding TODAY than it was back then, besides the blood back then. Wrestlers now are expected to hit high spots, wrestle in hardcore matches, and work higher paced style matches. If you look at Ric Flair and other professionals of the 1980s and 1990s, their style was more psychological. They could sell “working on the leg” for most of the match and fans believed it. Wrestlers could work more often then because they weren’t physically taxed as they are now. Also, wrestlers could take more to heal quicker from injuries or take something to also mask injuries. There wasn’t a “Wellness Policy” back then… Wrestlers NOW are working a more physical style and they feeling more of the pain than ever. Those “magic healing powers” of the past are now banned substances per WWE’s Wellness Policies since 2006 (following Guerrero’s death) and strengthened after mid-2007 (following Benoit’s death).

With these Comcast/FOX deals set to pump over $2 Billion into the WWE for the next 5 years, the significance of what HOUSESHOWS can provide to the WWE’s bottom line greatly lessens. On top of that, the WWE already has 104 televised live events (RAW & Smackdown * 52 weeks) + 12 Pay Per Views to operate. WWE will probably still want to put on 10-20 International events… Is it really worth keeping the 150 Houseshows that (a) barely add anything to WWE’s bottom lines financially and (b) potentially injure talents from overworking?

Let me add this thought… “Less is More”. One reason why I believe that the National Football League (NFL) remains the #1 league is that you get just 16 weeks of regular season football games and then just 4 for Playoffs. For the rest of the year, you are STARVING for more football… But if had more of it, would you enjoy it? Yeah, we’ve tried that experiment… Springtime football has consistently failed whether it was XFL, Arena Football, or the recently failed AAF that couldn’t even last a season. However, when the NFL spreads itself too thin during the season, numbers decline. The Thursday Night football broadcasts haven’t overwhelmed and the abundance of programming on Sunday has left people tired to watch on Mondays… But then, the NFL dips into other realms such as politics and pop culture. The product can get over-exposed in those realms and turn fans off, especially the political one as sports are often an “escape” from reality for fans.

If you live in a big city that the WWE tours regularly, it can get expensive FAST. For 2018, I actually attended 2 out of 3 events held in Pittsburgh, PA. I was at the Smackdown before Wrestlemania and Extreme Rules Pay Per View. I was exhausted after spending all day to attend each event and my wallet took a beating each day not just from the tickets, but gasoline to drive up there, paying for parking, needing to each, and the Daniel Bryan t-shirt that I decided to buy at Smackdown to honor his return to the ring. The WWE actually had a Houseshow in December for Pittsburgh, PA… I was like “no way”! Where I live, I’m within driving distance Columbus and Cleveland as well… I could have attended many events there. Just no way… 2 was enough, as WWE’s ticket prices are higher and again, attending events at an arena take up TIME to get there, get seated, enjoying the event, and then driving home. It’s a major expense of money and time (time = money).

BUT… If the WWE only tours for Television and Pay Per View, the bigger cities won’t be burned out… Fans might actually be willing to PAY MORE for the few events, too…

And the WWE could even hold television tapings in the smaller arenas for which they only do Houseshows. With the magic of television, they can make any smaller arena that holds up to 6,000 maximum look gigantic. Fact is that the WWE has to censor showing half of the arena for the non-televised side because of poor attendance. Upper decks are often tarped off. However, a smaller arena will pack all sides of the arena and fill the upper decks. The “allure” of having televised events in smaller arenas will build strong demand and appreciation for the WWE to host televised events in their markets again. WWE has mostly kept their televised events or tapings in bigger cities since the Attitude Era but the fanbase is much smaller now in North America than it was back then.

So what about the WWE rosters who are no longer working up to 3 times a week at Houseshows?

Very simple… Their work will be concentrated on rehearsing and preparing for the Televised and Pay Per View events.

Why RAW and Smackdown SUCK right now is because everything is done 100% on-the-fly. Scripts are completed just before both shows start and wrestlers know the DAY OF the show what they are doing. Hence, why most wrestlers struggle through their scripted promos, why wrestler’s hearts aren’t into their own actions, and why the continuity from show-to-show is never there. The result? Lower television viewership.

However, imagine if WWE wrestlers could have extensive dress rehearsals before RAW, Smackdown, and Pay Per Views INSTEAD of needing to wrestle many Houseshows. WWE could set-up a studio in Stamford, CT with a ring that allows wrestlers to rehearse their scripted lines and for wrestlers to practice their specific matches for RAW or Smackdown. Wrestlers can focus more on increasing their quality of televised performances instead of wasting mileage in front of smaller Houseshow crowds. WWE officials and wrestlers can work on choreography of moves, matches, promos, and reactions. Furthermore, the wrestlers can be more involved in the television product instead of just quickly comprehending whatever the Creative Team rigged up on the same day (right there is the issue, giving wrestlers actual power).

WWE could become the Television Show that they’ve always wanted to be… Scripts could improve with time, wrestlers would have more time to learn their scripts and practice their actions, and wrestlers would be much healthier to pull it off. WWE could also put some cost savings from less capital expense of their houseshows into improving the looks of their television shows as well.

This is unlikely to happen, though…

I believe that the reason why RAW/Smackdown brands exist and why extensive touring schedule remains is to keep the WWE monopoly in tact. By flooding the wrestling market with WWE product, it discourages other competitors from even challenging the WWE. “WWE” is now synonymous with “wrestling” or “pro wrestling”, sort of like how “Coke” is with brown colored sodas or “Bandaid” is with elastic scripts to cover cuts. As you can see since 2001, nobody has been able to overcome the WWE’s reach into the North American market. Furthermore, WWE’s capital strength and “economies of scale” (look that one up) makes it very difficult for any competitor to rise up to them on a national level. If you go back to the 1990s, the only reason why World Championship Wrestling (WCW) could compete with the WWE is because WCW was backed by billionaire Ted Turner and then the Time Warner corporation. WWE was only a private company back then and WCW could overwhelm them with resources. Then, the WWE found Stone Cold Steve Austin, pushed Vince as a heel, and introduced everyone to the Rock… By 1999, the WWE turned public too… By 2001, Time Warner sold WCW to the WWE and it was over. Nobody with WWE’s resource and focus on funding wrestling has appeared since.

As sound as my idea just presented about “ending Houseshows” appears, it won’t happen. WWE‘s strength exists by being a distant #1. Making matters worse, the rest of the wrestling pie is divided up by a bunch of smaller companies who don’t have the capital means or desire to straight up defeat the WWE. Impact, MLW, Ring of Honor, New Japan, and now AEW are all fighting for the smaller slice of pie.

UNLESS… The WWE keeps declining.

But they can’t thanks to Comcast/FOX‘s $2 Billion television deals over the next 5 years.

I don’t care how much Live Event and Merchandise numbers drop, as Comcast/FOX have just subsidized the WWE’s existence for the next 5 years.

Thus, someone like All Elite Wrestling (AEW) should create a “5 Year Plan”… Don’t hotshot on trying to grow for 2019. No successful wrestling promotion has ever become an overnight success. It took years for WWE to become the national powerhouse. Vince McMahon bought his company from his father who had years upon years of building his brand in the Northeast. Even after Vince bought the company from his dad, it took him over 3 years to make it to Wrestlemania #1 and then 2 more years to explode with Wrestlemania 3. If you look at World Championship Wrestling (WCW), they had decades of Mid South and NWA wrestling backing their operation before Ted Turner formed “WCW” during the late 1980s. It wasn’t until 1996 and spending millions later that WCW became the #1 company.

Remember with WCW, they only beat a declining WWE through 1996… The reason why Scott Hall and Kevin Nash jumped to WCW was over money, as the declining WWE wasn’t paying them much from houses and nothing was guaranteed. Meanwhile, WCW was offering large guaranteed contracts. And that is what AEW should focus on for 2024, defeating a declining WWE. Do you really believe, at the pace that the WWE is going right now, that they’ll earn $2 Billion for another 5 years once their television deals expire during 2024? And Vince McMahon will be 5 years older with a major financial loss from Round 2 of XFL under his belt. I don’t trust Stephanie McMahon to be in charge…

Take baby steps, AEW, and “wait it out”. Get all of the wrestling knowledge out of Jim Ross that you can and build for the future. Let the other smaller competitors spend themselves out of it, too… Impact tried to sell itself to the AEW folks just before AEW launched, as revenues aren’t coming in and Dixie Carter debt is probably still being paid off. I just don’t see Sinclair caring that much, long-term, about Ring of Honor. New Japan lost key talents and will soon lose the goodwill with American fans that they’ve gained for the past few years.

The WWE, however, can squash any competitors if they simply IMPROVE the quality of their on-screen products with RAW, Smackdown, and Pay Per Views. In my opinion, ending the Houseshow circuit is a valid solution and then requiring “dress rehearsal” days of WWE wrestlers on the days leading up to RAW, Smackdown, and Pay Per Views with closed door training and preparation. I doubt this would happen because the WWE likes the control that it has over the wrestlers and giving them scripts on the DAY OF the events exacts that control. WWE doesn’t want their “independent contractors” to know what the booking is days before the event, as wrestlers might offer their opinion on how to change or improve it…

In short, I would end Houseshows because:

(a) Profit margins are slim on shows drawing 2,000 to 5,000 shows.
(b) Multiple WWE live events per cities burn cities out.
(c) Greater chances of injuring wrestlers by having them perform too much.
(d) Wrestling too much burns wrestlers out.
(e) Wrestlers could work with the WWE to better script out and prepare for televised shows.
(f) Save on travel and trucking costs.

I also believe that the WWE should put more focus into letting the NXT brand grow, but that’s another story… WWE’s talent raids of that promotion have hurt that from being the REAL brand extension that they could have had… NXT should have been the “brand extension” during 2016, not splitting a weak WWE roster into two halves instead and poorly pushing any NXT call-up since.

Back to the retirement home, as I have the new Avengers film to watch again, the final season of Game of Thrones, and lots of Nintendo Switch to enjoy. Oh, and yelling at kids to “get off my lawn” while talking to chairs. Lots of fun!

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And remember… To purchase the Doc’s book Greatest Matches and Rivalries of the Wrestlemania Era via Amazon.com in the United States, GO HERE. To purchase this book via Amazon.com in the United Kingdom, GO HERE. If those don’t work, please inquire Doc via Twitter through his handle @TheDocLoP.

BUY THE BOOK!

So just chill… Until the next episode!

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