$1 billion for wrestling: how to make money on the passion to the spectacle

$1 billion for wrestling: how to make money on the passion to the spectacle


After June 2015 Donald trump has announced his intention to stand in presidents of the United States, users of social networks and humorous sites began to discuss that in case of his victory in the Vice-President shall be assigned to another showman — businessman Vince McMahon. Both billionaire similar in temperament and old friends. However, the McMahan jokes bloggers didn’t react.

Like trump, his condition McMahon owes his ability to work the audience. However, its evaluation is almost ten times more modest: trump claims that “worth” $10 billion, and the current assessment of the status of McMahan in the online version of Forbes is slightly more than $1 billion.

For the first time in the Forbes Vince McMahon came in 2001, but a year later left it and didn’t come back until 2014 (when his fortune was estimated at $1.2 billion).

The basis of a state of the McMahon — his company World Wrestling Entertainment (WWE). According to the Commission on securities and markets (SEC), on March 2015 McMahan solely owned 52% of its share capital, which gave him 82% of votes. At current prices on the new York stock exchange the price of this package is about $750 million.

Chapiteau show

WWE predecessor was founded in 1953, the Capitol Wrestling Corporation involved in the reslingovye matches in new York and neighboring States. Its co-owners was the grandfather of Vince, organizer Boxing fights Jess McMahon, and professional wrestler Toots Mondt. The wrestling as an entertainment staged fights originated in the mid-nineteenth century, such performances were arranged at the fairs, both in Europe and in the USA. But by the beginning of XX century, their popularity began to decline because of the retirement of popular wrestlers of that time and newspaper campaign against “fake” stage battles.

In the 1920-ies Mondt was one of the initiators of the reform of professional wrestling, offering a new style of fighting that combines classic wrestling, Greco-Roman wrestling, Boxing and fisticuffs village. Updated view like the American public, wrestling began to attract more and more fans, and the organization of the competition was to make money. As the business Montu needed an experienced sports Manager, and he was attracted to the cooperation of Jess McMahon. But a year after the creation of Capitol Wrestling Jess died, and the company management was assumed by his son, Vince McMahon senior. He immediately made a bet on the rapid growth of television and, in 1955, launched on a commercial TV station DuMont (channel belonged to the same TV manufacturer) weekly sports show broadcast reslingovye matches. A year later, the TV company went bankrupt, unable to compete with ABC, NBC and CBS.

Way to young

In his own family, Vince McMahon was gone, not waiting for the birth of their child. With Vince McMahon Jr. he met when he was already 12 years old. Like his father, he was a fan of wrestling and he wanted time to begin performances in the show Capitol Wrestling. But McMahon Sr. was vehemently against the release of the son on the ring and wished for him a business career. First, the businessman sent his son to study at the military school of Virginia, then at East Carolina University. In 1968 Vince at the age of 22 he received a diploma in business management.

By this time in the American wrestling industry has undergone significant changes. Capitol Wrestling, like the other regional League wrestling, was a part of the Confederation of National Wrestling Alliance (NWA). Just at that time there were about 30 companies — organizers of the competition, but Capitol Wrestling was formed about 70% of all box office receipts NWA because he worked in a densely populated region of the North-Eastern United States. In 1963, after a controversial match for the title company left the NWA and created their own tournament called the World Wide Wrestling Federation (WWWF), later renamed WWF.

Despite the resistance of his father, Vince Jr. never gave up hope to combine a career businessman and participation in the show. In 1969 he appeared in the ring as the host-presenter. Managing the family business he expressed dissatisfaction with the conservative style of his father. Vince didn’t like outdated and predictable the show, the poor development of the TV coverage and the commitment of the regional division of promotions (the event organizers). “Before, all over the U.S. there were about 30 of these little fiefdoms, where each respects the rights of another “princeling” and did not interfere in its Affairs, said the businessman in an interview. — From me to them, of course, no loyalty.” In 1980, McMahon Jr. got his appointment as head of the WWF, and two years later bought out the father and his co-investors 100% Capitol Wrestling for $1.57 million By 1988, all of the assets of McMahan were United under a single brand WWF.

Present name (World Wrestling Entertainment, WWE) the company received in may 2002 the outcome of the court proceedings with the world wildlife Fund, the cause of which was the same acronym (WWF). Even the process of renaming the McMahon managed to turn the show marketing campaign under the slogan Get the F out. The company was officially renamed to explain the desire to focus on entertainment (entertainment) part of the show.

The businessman has set the company the task of regional promotion to become American. For starters, Vince hired a famous and charismatic wrestlers (Hulk Hogan, Mr. T, Roddy Piper) and concluded an agreement on mutual promotion with MTV. In March 1985 in the heart of new York held its first show “Ruslania”, which consisted of several highly publicized fights. To recoup the cost of active promotion and implementation of the event, McMahon decided to make pay not only the passage to the arena, but also TV shows. For a nominal fee he invited the audience to buy the rights to view the show live on MTV.

To do this, McMahan used the method of pay-per-view (“pay per view”, PPV) in the early 1980’s, only gained popularity when showing football matches and Boxing matches. The viewer associated with the television provider and buy from him one-time subscription. View “Ruslania” in 1985, bought only a few thousand people. But by the time of the “Raslani-III” in two years the number of subscribers increased to 400 thousand people. One show has brought us the McMahon more than $10 million.

The following two “Ruslania” 1988 and 1989 were held at the same arena — in the Assembly Hall in Atlantic city, close to the famous casino Trump Plaza. To promote the event, the organizers said that the venue of the competitions itself serves as a casino. With this trick began a long friendship between Vince McMahon with Donald trump.

Two eccentric businessman quickly found a common language: many subsequently show McMahan was held on the grounds of the trump, and by the next candidate in US presidents has taken part in them as an expert or a guest star.

In 2007, McMahon even called trump on the fight called “Battle of the billionaires”. Instead of businessmen in the ring on their behalf fought a wrestler, but he whose athlete has lost, under the terms of the battle was to shave my head. Won athlete of trump, and happy billionaire himself of McMahan shaved live. The rights to view this show, bought almost 1.2 million people. Spectacle cost them a total of $53.4 million Two years later Vince again used trump to attract viewers then he loudly announced the sale of other rights on one of their shows, but a week later bought it back.

Dear Americans, Don't Fuck it up!

Goldmine

By the late 1980s, McMahon realized that to attract new audiences need not only a quality show, but also a variety of products. At that time, WWF conducted two or three major PPV shows a year, now their number increased to 12. There are new formats weekly views, and a flexible subscription system. By the end of 2014, the company’s revenue from PPV and other subscriptions totaled $115 million, or 21% of total turnover ($539 million).

About 15% of revenue is generated by selling goods for fans. Many of the wrestlers are well-known actors and “socialites”, and McMahan successfully uses their images in numerous merchandise: from t-shirts and posters to picture frames and decorative buckles. Consumer goods in 2014, brought his company nearly $80 million, according to a disclosure to the SEC.

The remaining part of income is reselling the the rights to broadcast the show, the license for video games, income from the participation of wrestlers in the shooting of films and advertising etc.

In order to keep the interest of the audience, the writers of the company of McMahon worked tirelessly on the plot of the show, every wrestler they have their way and a special role. McMahan himself unlike the father actively participates in the performances and narrative productions designed to draw the attention of the audience. For example, in June 2007, he faked his death, allegedly exploded in a limo.

However, even this involvement in the company’s business has not always saved him from the failures: in 2014, its quotes of the day fell to 43%. The reason was the publication of quarterly reports with a loss of $8 million and released on the eve of the report of the investment Fund Lemelson that the WWE stock is highly overvalued.

Previous years WWE has been a profitable company: in 2013 its net profit amounted to $2.8 million in 2012 to $31.4 million, a year earlier, to $24.8 million But last year its losses have exceeded $30 million (that did not stop Vince to get about $19 million in the form of dividends). Poor results of the company explained to start your own service-based video streaming WWE Network, which has required significant investment. The WWE promised to get 1 million subscribers on all of their shows. By the summer of 2015 goal was achieved. And in the first half of 2015 WWE showed nearly $15 million in net profit.

With WWE in the USA continues to compete with several major organizers of similar competitions, but the group of McMahon for 30 years has become the largest of them — now she has eight foreign offices and 300 regular show, which is broadcast in 175 countries.

WWE remains a family business — except for Vince to shareholders of the company are his wife Linda, daughter Stephanie (aka brand Manager) and son-in-law Paul Levesque (Vice President of WWE, who also acts in the ring under the alias Triple H). As WWE CEO McMahon earns a salary of $1.25 million per year, including all bonuses, his total compensation can reach $5 million.