If gold stars were awarded based on the rate that any individual could lose money, WWE’s Vince McMahon would have a big book full of the little golden stickers to show off for everyone to see. According to Yahoo Sports, McMahon has lost a whopping $750 million in the last two months climaxing at a staggering single day loss of $350 million earlier this month.
Early 2014 looked optimistic for the WWE as the organization’s shares increased by 89% within the first few months of the year and McMahon himself amassed a fortune of $1.6 billion by mid-March of this year. Fate can be a vengeful muse, and as the Inquisitr recently reported, McMahon has lost as much as $842 million since Wrestlemania.
McMahon’s and WWE’s perceived Achilles heel seems to be the recent announcement between WWE and NBCUniversal of a new television deal last week; immediately after which the WWE lost close to 50% of its value. This whole kerfuffle seems to beg the question, why did investors hate this deal enough to pile drive McMahon and the WWE into potential financial submission?
According to Maggie McGrath with Forbes.com, McMahon’s and WWE’s negotiated deal with NBCUniversal is simply “underwhelming” in the eyes of its investors. WWE’s Monday night Raw program will continue to air in a three hour block on USA Network and its Friday Night Smackdown will continue to air on Syfy. The unsatisfactory portion of the agreement according to Benchmark analyst Mike Hickey is that “We estimate that management negotiated a +50% in domestic TV rights fees with NBCUniversal, meaningfully below the guided multiple of 2X to 3X.”
In other words, when Vince McMahon comes across looking wimpy to his investors, he and the WWE stand to lose big at least in the short term.
Not all contenders have abandoned McMahon’s corner on the issue according to the Inquisitr and Miami Herald’s Jim Varsallone. Varsallone is quick to remind us mere mortals and painfully pessimistic stock market analysts that when we’re dealing with Vince McMahon, we’re not dealing with any old amateur on the issue of where the WWE is headed and where it needs to go financially. After all, McMahon has been around longer than some known business moguls like cable TV titan Ted Turner. When it comes guiding the WWE to greatness, this isn’t McMahon’s first rodeo. Varsallone goes on to make the case that sure, WWE lost $8 million dollars for the quarter. And let’s say that WWE continued to lose $8 million for each quarter in the year totaling a loss of $32 million annually. One still has to factor in the new TV deal raise of $60 million annually; which even after subtracting the $32 million loss, WWE and McMahon still come out $28 million ahead.
It’s proven that the stock market and associated analysts are often a knee jerk reactionary force. One could make a case for or against their psychic value of looking into the future success or failure of any organization. The ultimate question as to whether McMahon is leading the WWE to win the next title fight or suffer a humiliating financial defeat would likely best be answered by McMahon himself.
“There should be no confusion on Wall Street as it is extraordinary to have reached more than 660,000 WWE Network subscribers only 42 days after launch, putting us on track to reach 1 million subscribers by the end of the year. We feel good about nearly doubling the value of our four largest TV deals around the world.”
Clearly, Vince McMahon shows no signs of backing down.