World Wrestling Entertainment: The Bull Case

World Wrestling Entertainment (WWE) Company History

  • 1926 – “Toots” Mondt starts “Slam Bang Western Style Wrestling”
  • 1952 – Mondt partners with boxing promoter Jess McMahon to form Capital Wrestling Corp (CWC)
  • 1953 – The CWC pledges to the National Wrestling Alliance (NWA) which coordinated activities between regionally focused groups
  • 1954 – Vince McMahon Sr takes over for his father Jess and builds the CWC into the dominant wrestling promotion in the North East
  • 1963 – McMahon Sr and Mondt leave the NWA and form the World Wide Wrestling Federation (WWWF)
  • 1979 – WWWF renamed World Wrestling Federation WWF
  • 1982 – Vince McMahon Jr. buys the company from his father, secretly planning on abandoning the traditional regional model and building a national wrestling power house. McMahon starts signing all of the biggest regionalstars and negotiates television deals, upending the traditional regional model.
  • 1985 – McMahon catapults WWF onto the national stage with Wrestle mania, which incorporated mainstream entertainment with wrestling
  • focus is “Sports Entertainment“ which incorporates stars from music, sports and film world
  • 1993 – Monday Night Raw is launched as live programming
  • 1999 – IPO 11.5M shares $17
  • Mid 90’s – 2001 – WWE and WCW go head to head and destroy each other’s profits
  • 2001 – World Wrestling Entertainment, Inc. (NYSE:WWE) buys WCW and solidifies their position as the dominant wrestling brand

World Wrestling Entertainment: The Bull Case

 

Main Drivers

Live Events / Television

  • 240 – 260 domestic events, 70-80 international events per year
    • ~1,800,000 people attended a live event in 2012
    • Average Ticket Price $44
  • 6.5 hours of original programming per week.
    • RAW on USA Network (Replayed on mun2 and Universal HD)
    • Smack Down on Syfy (Replayed on mun2)
    • World Wrestling Entertainment, Inc. (NYSE:WWE) Main Event on Ion
    • Saturday Morning Slam on The CW
  • 12,000,000 US viewers per week

Pay Per View

  • 10-12 “mega events” per year
  • $44.95 normal events
  • $54.95 Wrestle mania
  • More than 4,000,000 buys in FY`12

Other

  • Merchandise Sales
  • Video Games (Take-Two Interactive Software, Inc. (NASDAQ:TTWO) replaced THQ Inc. (OTCMKTS:THQIQ))
  • Online Video ($1.5B YouTube Views)

Customer Behavior

  • No chance to “go to the next game”
  • Less supply = easier to pass on ticket price increase
  • Difficult to say how much drops to the bottom line (flat fee vs % of door)
  • World Wrestling Entertainment, Inc. (NYSE:WWE) television has a highly attractive demographic making future increases in broadcast rights likely

World Wrestling Entertainment (WWE)




About the Author

VitalyKatsenelson
I was born and raised in Murmansk, Russia (the home for Russia’s northern navy fleet, think Tom Clancy’s Red October). I immigrated to the US from Russia in 1991 with all my family – my three brothers, my father, and my stepmother. (Here is a link to a more detailed story of how my family emigrated from Russia.) My professional career is easily described in one sentence: I invest, I educate, I write, and I could not dream of doing anything else. Here is a slightly more detailed curriculum vitae: I am Chief Investment Officer at Investment Management Associates, Inc (IMA), a value investment firm based in Denver, Colorado. After I received my graduate and undergraduate degrees in finance (cum laude, but who cares) from the University of Colorado at Denver, and finished my CFA designation (three years of my life that are a vague recollection at this point), I wanted to keep learning. I figured the best way to learn is to teach. At first I taught an undergraduate class at the University of Colorado at Denver and later a graduate investment class at the same university that I designed based on my day job. Currently I am on sabbatical from teaching for a while. I found that the university classroom was not big enough for me, so I started writing and, let’s be honest, I needed to let my genetically embedded Russian sarcasm out. I’ve written articles for the Financial Times, Barron’s, BusinessWeek, Christian Science Monitor, New York Post, Institutional Investor … and the list goes on. I was profiled in Barron’s, and have been interviewed by Value Investor Insight, Welling@Weeden, BusinessWeek, BNN, CNBC, and countless radio shows. Finally, my biggest achievement – well actually second biggest; I count quitting smoking in 1992 as the biggest – I’ve authored the Little Book of Sideways Markets (Wiley, 2010) and Active Value Investing (Wiley, 2007).