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WWE Is A Massive And Growing Business
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Hey Friends,
World Wrestling Entertainment (WWE) is one of the biggest businesses in sports.
The world’s largest professional wrestling organization reported more than $1 billion in revenue last year. That’s up 12% year-over-year and was the highest annual revenue total in the company’s 42-year history.
They finished the year with $327 million in operating income before depreciation and amortization (OIBDA), released guidance for $360M to $375M in OIBDA this year, and returned more than $200 million in capital to shareholders through share repurchase and dividends.
In simple terms, it was a monster year for the WWE. Even with COVID-19 causing fans to miss live events for the first 6+ months of the year.
And here are a few visuals from Brandon Thurston at Wrestlenomics that show how big (and profitable!) WWE has become over the years.
The stock has been active also. After idling in-and-around the mid-20s for nearly two decades, WWE has watched its stock price triple over the last five years, and with a 62.44 close yesterday, the stock has almost doubled from its March 2020 pandemic low.
But here’s the craziest part — I think the WWE is just getting started.
Chief Executive Vince McMahon, who bought the company from his father in 1982 and has run it since, hired Nick Khan last year as President of the WWE. Khan previously led the television division at Creative Artists Agency (CAA), and his experience and expertise made an immediate impact.
The WWE shut down its in-house streaming network, which had about 1.1 million subscribers in the US, and signed a five-year deal with NBC’s Peacock, which is worth more than $1 billion in total.
That tripled their subscriber viewership overnight, and with the WWE Network & Peacock both priced at $9.99/month, it was even a great deal for fans. They got the same wrestling content they were already paying for and gained access to Peacock’s entire entertainment library for free.
That was just step one though. Since then, Vince McMahon, Nick Khan, and the rest of the WWE executive team have been busy. They signed a big licensing deal with Fanatics. They pivoted to a new strategy for premium live events, focusing on staging these events in large stadiums rather than small arenas.
That should 3-4x their gate revenue (from ~$1.5M to ~$5M+) at marquee events like SummerSlam.
But they also signed a deal with Blockchain Creative Labs to launch an NFT marketplace using their digital IP. They agreed to a consumer product deal with Panini to be the exclusive provider of WWE trading cards, and they invested heavily in their social product and growth.
WWE Social Media Audience
Facebook: 500 million
Instagram: 226 million
Twitter: 221 million
YouTube: 87 million
TikTok: 16 million
That’s more than 1 billion social media followers in total, and it makes WWE one of the world’s largest digital sports properties, proving that their strategy is paying off.
Now, this weekend, nearly 200,000 people from 47 countries will descend on Arlington, Texas, for the first full-capacity, two-day WrestleMania event in history.
It’s the second time that Cowboy’s Stadium has hosted the “Greatest Spectacle in Sports Entertainment,” and the Dallas Sports Commission says this year’s event is projected to generate more than $200 million for the local economy.
Wrestlemania is one of the biggest events in American sports annually—the numbers prove that—but WWE has an even more significant opportunity in content.
Sure, they signed a licensing deal with Disney+ Hotstar in January. That will make their network accessible to millions of fans in the Asia-Pacific Region. Still, I think the bigger opportunity is in scripted and unscripted television.
The Wall Street Journal reported yesterday that WWE is starting to produce fictionalized TV shows. Why? They want to “generate more revenue outside of the wrestling ring and capitalize on streaming services’ growing hunger for fresh content.”
Maybe that doesn’t incrementally change WWE’s financial outlook. But WWE undoubtedly sits on a treasure trove that includes some of the world’s most premium and unique IP.
They publically admit they want to be like Marvel, the failing comic book company that became a box-office behemoth through film TV, and theme parks, and this is the first step in WWE attempting to replicate their success.
Production costs and global box office revenue of selected Marvel Comics movies from 2002 to 2021 (in millions USD)
So we all know WWE has the IP, but can they build the catalog and monetize it?
My guess is yes. They already have more than ten shows in the works. And with the supply and demand equation fundamentally shifting content prices higher due to the rise of streaming, their unique cast of personalities will command a premium.
This doesn’t mean they will blow financial expectations out of the water. I’m not an equity analyst. I don’t own any of the stock. This isn’t financial advice, and you should do your own research. But Vince McMahon has built an incredible business, and I wouldn’t bet against them.
I hope everyone has a great weekend. We’ll talk on Monday.
Ps. If you’re interested in the business behind wrestling, I highly recommend following Brandon Thurston. He runs Wrestlenomics and does an incredible job.
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Avi Dabir is the Vice President of Business Development at FTX. He has been committed to spending more than $500 million on sports partnerships, including deals with the Miami Heat, Major League Baseball, the Mercedes Formula 1 team, Tom Brady, Stephen Curry, Naomi Osaka, and Shohei Ohtani.
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