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The Hamilton Ave Journal 06.18.09: Volume 2 – Issue 91

June 18, 2009 | Posted by JP Prag

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 91

ABOUT THE JOURNAL

The Hamilton Ave Journal is the only wrestling news report focused solely on the business of wrestling. Here in the Journal we not only look at the stories that are important to the investor and business-minded person, but also delve deeper into stories that most fans of wrestling would overlook. That is because the Journal is about getting the heart of the matters that affect the companies and outlooks of the wrestling world.

And where is Hamilton Ave? That is the location of the WWE Production Studio in Stamford, CT, and thus the most powerful place in the wrestling world. Besides, The East Main Street Journal just does not have the right ring to it.

Who am I? I am JP Prag: consultant, entrepreneur, businessman, journalist, and wrestling fan.

Now, ring the bell because the market is open.

The Hamilton Ave Journal

WHAT'S NEWS

The Journal’s front page area known as What’s News isn’t just about telling you what has happened. The stories in this section are about what will have an effect on the wrestling industry, individual federations, and the wallets of the fans.

LEAD STORY: Time to sue the WWE

The WWE has not being doing well in their lawsuits recently. First, their long standing case against JAKKS Pacific where the WWE claimed the company was engaging in racketeering and bribery ended with the appeals court ruling in favor of the defendants. Then, Muscle Flex, Inc. claimed a trademark victory over the WWE for their “In the RAW” product not being something that can be confused with the “RAW” television show and brand. This forced the WWE to lose a great deal of their trademark.

Recently, the only victory they have had has been in the Scott Levy, et al. case concerning employee rights in the WWE. The case was dismissed without prejudice, though, so that team is re-working their complaint to have it be within the court’s parameters. No word has come out on the status of that case, but that has not new cases from rolling in.

First in, as reported in the Journal in Issue #85 on May 7, 2009, Joe Hamilton on behalf of former WWE developmental territory DSW has launched a case against the WWE for breach of contract. This week, more details have come out.

Most of the claims are ones that have little to with breach of contract, such as bullying by WWE trainers, the WWE being upset with DSW getting a TV deal with MAVTV, and low moral backstage. But there is one very substantial point.

WWE officials arrived to DSW facilities on April 18, 2007 to announce they were ended their relationship with DSW. DSW claimed that the WWE had to give 90 days notice to sever the contract, but the WWE took that day to remove their equipment, computer programs, data, and personnel. When they did so, they also took property (including intellectual data) that belonged to DSW, causing irreproachable harm.

Co-currently, DSW had events booked at Six Flags starting April 22, 2007 that WWE roster and development talent were booked for. Because the WWE removed their contracted personnel and refused to let them work for DSW without the 90 days notice, Mr. Hamilton was forced to cancel all of the events, also causing monetary damage.

This all led to the eventual shutdown of DSW. Mr. Hamilton is seeking $400,000 in damages from loss of income for the summer shows and undisclosed damages related to breach of contract and punitive charges as the court deems necessary.

While Mr. Hamilton’s suit is not making big waves, there is one that has been capturing media attention. SoBe Entertainment filed a lawsuit earlier this week against “The Big Show” (aka Paul Wight), his wife Bess, and the WWE. There are several plot points to follow in this one.

Allegedly, in 2007 SoBe executives had a meeting Mr. and Mrs. Wight and Hulk Hogan to discuss him becoming a boxer. As part of the agreement (it is unknown at this time if this was a verbal or contractual agreement, but one must assume that it is contractual), Wight agreed that SoBe would be his exclusive management company in exchange for an $84,000 per month salary for his training. SoBe then gave that salary upfront, amounting to $2 million. On top of this, they also gave Mr. Wight a $1 million advance for purchase of a Miami home, which the company felt they could recoup through Mr. Wight’s boxing earnings.

Instead, Mr. Wight allegedly used the home as a tax shelter as he supposedly owes the IRS $450,000. According the Courthouse News Service, the IRS now has a lien against the house.

After receiving these payments, in November 2007 Mr. Wight returned to the WWE. This is where the WWE’s involvement comes into question. SoBe claims that they sent a letter to the WWE explaining Mr. Wight’s contract status with them (which made him their exclusive boxer, wrestler, and fighter), but the WWE chose to ignore those warnings. Then, when the match with Floyd Mayweather was booked for WrestleMania 24, SoBe felt they were being particularly taken advantage of because it was known that Mr. Wight was training to be a boxer through their funding. Now SoBe is claiming that the WWE profited at WrestleMania 24, 25, and “at least seven other PPV events” by using Mr. Wight in a boxing capacity. Furthermore, the WWE was aware of the breach of contract, but chose to ignore it.

In all, from Mr. Wight SoBe is seeking the $2 million in salary, their own lien against the Miami home, the home to be sold at foreclosure and SoBe be given the funds of the sales (not the IRS), and any court costs to the recovery of these funds. From the WWE, they are seeking undisclosed lost profit from Mr. Wight not fighting, compensatory damages, and punitive damages. They have asked for a trial jury, though that is not as likely this early in the stage.

All and all, both of these cases have a solid foundation to at least go to trial. The WWE may try to settle out of court, especially with the small price tag for DSW. Then again, the WWE has been known to push cases for a long time. Look no further than the JAKKS Pacific case to see how far and long the WWE will fight for. Either way, both of these cases will be dependent on how clear the contract language is and if there are enough material witnesses to prove that damages were done. Even if someone has breached a contract, that does not mean there have been any damages. DSW and SoBe Entertainment have a long struggle to prove what they potentially loss without ever having really made that money and lost it.

Do not expect any movement from these cases for the next several months. The WWE will have a month or more to respond to each and then the plaintiffs will have to respond. Per usual, these cases could be stretched out for two to three years, and that plays very well into the WWE’s legal strategy. The WWE has a large cash source and legal department while DSW and SoBe Entertainment have very limited coffers.

WWE Studios gets a makeover

WWE Studios got a new head for the second time in a two years as Mike Pavone was named the new president replacing Michael Lake. According to Variety, Mr. Laks is “ankling to pursue other opportunities.” Also according to Variety, this move was a long time coming since the financial results of “12 Rounds” which cost $24 million to produce and has only turned in $15 million world-wide thus far. “12 Rounds” comes out on DVD later this month and could recoup the remainder of its costs, but it is still far below WWE expectations.

Mr. Pavone has been acting as a consultant for the WWE in a creative capacity since 2008. WWE Chairman of the Board Mr. McMahon—who Mr. Pavone will report directly to—said of Mr. Pavone:

“Mike brings a great combination of both filmed entertainment and television experience to his new role. We are confident that he can expand the breadth and depth of opportunities for WWE Studios.”

Additionally, the WWE is expecting Mr. Pavone to help expand WWE Studios into scripted TV shows and reality programs. According to Variety:

[W]hile WWE will continue to produce films for theatrical release, the budgets are likely to come down in order to recoup costs quicker and generate more of a profit going forward.

The WWE’s press release lists Mr. Pavone’s accomplishments:

Pavone has more than 18 years of experience in the film and television industry, working as a writer, producer, director and actor. His projects include notable titles including: The Client (CBS), Prison Break (FOX), High Incident with Steven Spielberg (ABC), Jack & Jill (WB), Against The Grain (NBC), Street Time (Showtime), The Blue Wall (Disney), Northmen for Warner Bros. and Seven Men from Now for Beacon Films.

It will remain to be seen if Mr. Pavone has any more luck than Mr. Lake who had 36 years of experience before joining the WWE.

Newsbites

Some items of note in the rest of the wrestling business world:

  • On the heels of ROH deciding to suspend PPV operations until they are more used to the television schedule and HDNet can take over their production, Dragon Gate USA have announced a new American PPV deal in conjunction with ROH’s former production partner in G-Funk Sports & Entertainment. This is the latest is little skirmishes between the two organizations, although this one the first to represent a significant revenue stream.
  • Much like when Mr. McMahon’s limo exploded, some media outlets are taking the “Donald Trump buys RAW” angle seriously. More so, the street has not reacted favorably to the news. On Tuesday morning, WWE stock opened at $13.24 and close the day down nearly 5% at $12.60 (off lows of $12.23 at mid-day trading). The stock recovered slightly on Wednesday, ending at $12.71.
  • In order to make up more PPV revenue, the WWE has been looking in to going back to closed circuit viewing. This has included the possibility of arena viewings like WrestleMania 1 and 2, movie theater viewing (that is already being testing Canada), and other venues. Some places like the Good Time Emporium in Somerville, MA already do mass showings of PPV for a cover price of about $5 that have proven popular in the past, so the WWE may be realizing that changing their model could driver more revenue.

    MARKETPLACE

    In the Marketplace we look at the trends in television ratings. This section is less for critical analysis by the Journal but more for the reader to see what is really going on and to draw their own conclusions.

    As with stocks, here in the Journal we track the progress of television ratings. If ratings are the barometer by which we judge the product, then over the course of 52 weeks we should be able to see patterns, trends, and anomalies.

    For the week ending Wednesday June 17, 2009, here are the current standings of our shows:

    Ratings

    RAW
    Close (This Week’s Rating): 3.6
    Open (Last Week’s Rating): 3.6
    Percentage Change: UNCH
    52-Week High: 4.1
    52-Week Low: 2.6
    All Time High: 8.1
    All Time Low: 1.8

    SmackDown*
    Close (This Week’s Rating): 1.8
    Open (Last Week’s Rating): 1.9
    Percentage Change: ▼ 5.3%
    52-Week High: 2.5
    52-Week Low: 1.6
    All Time High: 5.8
    All Time Low: 1.0

    * SmackDown! ratings may include fast overnight if final ratings are not posted. Also, SmackDown! ratings are for the prior week as overnights are not available before this article goes to print.

    ECW
    Close (This Week’s Rating): 1.1
    Open (Last Week’s Rating): 1.2
    Percentage Change: ▼ 8.3%
    52-Week High: 1.5
    52-Week Low: 0.9
    All Time High: 2.3
    All Time Low: 0.6

    TNA iMPACT**
    Close (This Week’s Rating): 1.1
    Open (Last Week’s Rating): 1.1
    Percentage Change: UNCH
    52-Week High: 1.3
    52-Week Low: 0.9
    All Time High: 1.3
    All Time Low: 0.6
    ** TNA iMPACT’s are for the prior week as ratings may not be available at the time of the Journal’s posting

    SuperStars***
    Close (This Week’s Rating): 0.9
    Open (Last Week’s Rating): 1.0
    Percentage Change: ▼ 10.0%
    52-Week High: 1.0
    52-Week Low: 0.8
    All Time High: 1.0
    All Time Low: 0.8

    *** SuperStars ratings may include fast overnight if final ratings are not posted. Also, SuperStars ratings are for the prior week as overnights are not available before this article goes to print.

    Analysis:

    After a couple of weeks of comebacks, things look like they are leveling down again. SuperStars, ECW, and SmackDown all dropped this week while RAW and iMPACT maintained their ratings. It should be noted that RAW actually did a 3.9 in their normal 2-hours slot and were dragged down slightly by their first hour. This was a poorer performance than the last 3-hour RAW on April 13, 2009 which did a 3.7 rating, but still much better than the 3.0 the 3-hour RAW received on December 8, 2009. Hopefully the WWE used this show to capture and maintain viewers, otherwise they are still going to be in the 3.2 to 3.4 range on a normal week.

    MONEY AND INVESTING

    We all know that wrestling is a business, but we don’t often pay attention to what sells and makes money. Money and Investing looks into the top selling items in the world of wrestling and any interesting figures that may have come out this week.

    What are the top ten selling items for the WWE? From WWEShopZone.com:

    1. Hardys Green Pendant ($10)
    2. Macho Madness-Macho Madness – The Randy Savage Ultimate Collection 3-Disc DVD Package ($60.95, on sale $28.99)
    3. Triple H Eversoris T-Shirt ($28)
    4. John Cena HLR Academy T-Shirt ($25)
    5. WWE World Heavyweight Championship Plastic Title Belt ($19.99)
    6. WWE Ultimate Rivals Trading Cards ($2)
    7. Jeff Hardy PPV #20 Action Figure ($39,99, on sale $22.99)
    8. Jeff Hardy 2 Armband Package ($40, on sale $14.99)
    9. WWE White Gift Bag ($)
    10. Batista Basics T-Shirt ($14.99)

    In a VERY rare occurrence, the WWE did not update their list this week. They normally update this daily, so something must be going on in the back rooms of WWEShop.com.

    TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:

    1. Beer Money T-Shirt ($19.99)
    2. Cross The Line Triple Pack DVD Set ($24.99, on sale $10.88)
    3. Jeff Jarrett King of Mountain DVD Set ($29.99)
    4. Motor City Machine Guns T-shirt ($19.99)
    5. TNA Logo T-Shirt Special ($24.99)
    6. Nash “Big Sexy Tour” T-shirt (2008 Version) ($19.99)
    7. Main Event Mafia – Black T-shirt ($19.99)
    8. Single Pack Of Five Impact Trading Cards ($2.49)

    Now Kurt Angle fell off the bottom of the list, but everything else remained the same.

    PERSONAL JOURNAL

    Wrestling isn’t just about watching and reading. The best way to be a wrestling fan is to experience it live. Where is wrestling coming to in the next 2 weeks? The Personal Journal answers that question.

    Sunday Monday Tuesday Wednesday Thursday Friday Saturday
    21 (Jun)

  • TNA Slamiversary (Detroit, MI)
  • RAW Live (Dubuque, IA)
  • SmackDown / ECW Live (Kalamazoo, MI)
  • 22

  • RAW / SuperStars (Green Bay, WI)
  • SmackDown / ECW Live (Valparaiso, IN)
  • 23

  • SmackDown / ECW (Milwaukee, WI)
  • TNA iMPACT (Orlando, FL)
  • 24

  • TNA iMPACT (Orlando, FL)
  • 25

  • TNA iMPACT (Orlando, FL)
  • 26

  • ROH Live (Detroit, MI)
  • 27

  • WWE SuperShow (Reno, NV)
  • ROH Live (Chicago Ridge, IL)
  • 28

  • WWE The Bash (Sacramento, CA)
  • 29

  • RAW / SuperStars (San Jose, CA)
  • 30

  • SmackDown / ECW (Fresno, CA)
  • 1 (Jul)

  • SmackDown / ECW Live (Bakersfield, CA)
  • 2

  • SmackDown / ECW Live (Palm Springs, CA)
  • 3

  • RAW Live (Auckland, New Zealand)
  • SmackDown / ECW Live (San Diego, CA)
  • 4

  • RAW Live (Sydney, New South Wales, Australia)
  • Do you know a wrestling event coming up? Send one in to The Hamilton Ave Journal and we’ll be sure to add it to the list.

    EDITORIALS

    The Editorials section is designed for you, the readers, to respond to the views presented in the Journal, send an important news item, or talk about another overlooked business related item in wrestling. Just beware: the Journal reserves the right to respond back.

    From the commentary section last week, TNA’s lack of updating came up. Guest#7950 wonders:

    Which is more likely when it comes to TNA’s top items?

    A) Pure laziness.
    B) People buying them enough that none of the items saw no change.
    C) Because they read 411 and they enjoy pissing you off.

    While letter C would be incredibly self-gratifying, it is not likely (though the Journal has talked with the TNA CMO directly in the past). Letter B is possible for a short while, but there should still be slight weekly variations. When it comes to Letter A, Brett has a difference thought:

    I actually think it’s because they don’t have enough manpower to perform everything that is necessary, and if something is going to be ignored, it’s going to be that list.

    The Journal has covered this in the past, but this list can be automatically generated through some simple queries and then loaded once a week. More than that, it is indicative of TNA’s bigger problem of not being able to pay attention to all of the little details. When they updated the list in full 3 weeks ago, they put Christian Cage back in. That is the type of mistake that they should not be making, especially twice in the same year. Yet, because no one seems to bother with the details, these are they type of things that get through.

    Brett continued with his thoughts on the WWE, UFC, and PPVs:

    WWE obviously only acts as though they don’t see UFC as competition. Vince has always said that they are in competition with any entertainment company and I’d say the more similar a product is to the WWE product, the more likely they are competing with them. I could be wrong but didn’t WWE try to sign away UFC’s Play by Play guy a few years ago? As a matter of fact, I’d say the PG move is primarily based as a way to counter act the UFC. The UFC can take my demo, but kids don’t necessarily want to see something so violent with characters they might perceive as bland. Kids love over the top characters (comic books, Power Rangers, Ninja Turtles, etc.) and they also like simulated violence where they don’t have to watch the true repercussions of what might happen if you punch a guy in the face.

    Yes, the WWE tried to sign away Mike Goldberg in 2005 to be the voice of RAW. They have also flirted with starting their own MMA promotion or buying an existing one, especially because WWE Senior Vice President of Global Media Shane McMahon is a big MMA fan. JBL being involved with OVW and their new MMA offshoot may also be a way of the WWE testing the waters.

    I’m beginning to think that WWE’s product is so available that it could be hurting their PPV numbers. As my dad used to say, “Why did we buy the PPV? We’re finding out who won the next night anyway” and if you’re a WWE and UFC fan, the storylines and who won the matches are most important, not necessarily how the match was (especially now that certain world title matches aren’t exactly living up to expectations).

    In the UFC, I’m almost sure that their product isn’t as readily available (they certainly don’t have a show on Friday and another on Monday), and add on top of that, the fight is what matters in UFC. The fight is the story, they have very simple storylines, but ultimately they aren’t needed… As opposed to UFC, Raw will offer PPV-esque matches weekly that you can see for free and you don’t know who is gonna win. Not sure what my point was, i rambled a bit their.

    This is a point the Journal has been making for some time about the over-exposure of the product. By having so much for available for free on TV (7 hours of WWE programming, 2 hours of TNA, 5 hours of Spanish language programming, various local promotions with an hour a week), there is little extra need to see and pay for anything else. The WWE has also seen it in their attendance figures when cities that do well in ratings fail to attract sell out crowds who instead opt to still watch from home. The WWE has made the at-home product all that is necessary, even more than the live experience of the PPVs.

    On the subject of PPVs, streaming sites continue to be a hot topic. mr ideaman ponders:

    With WWE going after streaming sites what are your thoughts on WWE offering PPVs at a reduced price online? Since there would be no PPV provider to share profits with, they should be able to go pretty cheap right?

    Guest#5960 shared his thoughts on this one:

    Well, the WWE did try that model when they first introduced the streaming PPVs, and it caused a decrease in actual PPV buys, so the WWE made a decision to make them the same price so that way people would be more inclined to watch it on a big screen TV. There are plenty of streaming websites out there and finding a stream of Extreme Rules was actually easy. They focus on justin.tv because that site is U.S.-based. Other sites like ustream.tv are based outside of the U.S., which means it is more difficult for them to go after them.

    Yes, it is a losing battle for the WWE to go after streaming sites because they are all over the world, especially in countries that do not have strong intellectual property laws. That said, even though there may have been a decrease in PPV buys, the profit margin on the streaming is much higher so it would be better for them. More likely, they have an agreement with the PPV providers to have the same price on their site as with the PPV channels so the PPV channels feel it is fair competition and they are not being cannibalized by their content provider.

    Even still, the WWE should look to get out of such an agreement. Times have changed so much that there is not much to expect from buyrate drops. Instead, the WWE could capture more of the illegal streaming audience which, as you pointed out, is growing and is not deterred by the WWE’s actions. mogamer represents that part of the audience:

    I’m one of the few people who don’t have a pay TV service and I catch most wrestling via streaming. So I would pay $20 – $25 for a PPV. Until you can get an actual HD picture via streaming, I (and most people) wouldn’t pay the same as a TV pay per view.

    Exactly; the quality of the online streaming does not match the quality of TV and therefore should not be the same price, but at a discount.

    Leaving WWE PPV’s behind, Gangsta wants to go back to international scene:

    Last I’ve check, AAA beat WWE and kick them out their timeslot. WWE was push to a later timeslot. AAA got their 3 hours back and AAA is still the most watch wrestling show in Mexico. AAA is the only company that could claim recent defeat on the WWE. THAT’s A FACT!!!!!!!

    Which leads me to another question: with AAA recent success US house show tour which outdrew TNA biggest shows, I don’t understand why they can’t get on a bigger network in the states? My guess is that Televisa won’t allow it but if AAA was on Univision, I bet the ratings will outdraw Raw on most weeks.

    The Journal is sorry to let you know, Gangsta, but your numbers are way off. RAW’s ratings in recent weeks have actually been toping 14.0, while AAA has dropped from 14.0 level to the 7.5 to 8.0 range. AAA is maintaining well, but when WWE programming comes up later in the day they actually are doing better than AAA on the same station. Meanwhile, CMLL has dropped to the 3.5 range.

    (Readers please note that Mexican ratings and US ratings are totally different and do not represent the same number of people.)

    You are correct that AAA does hold some recent defeats of the WWE in Mexico, but TNA hold recent defeats of RAW in the UK and in other countries. In Japan the local promotions outperform the WWE and TNA much of the time, but it is still a major battleground for both.

    And although the Latino population in the United States is growing by leaps and bounds, Latinos and Hispanics of all races represent about 15% of the population today. That means there is not enough base to support AAA being the size of the US in America, but is very possible for them to be the size of TNA. By 2050 Latino and Hispanic populations are expected to rise to over 30% of the population, so there is a point where AAA could get as big as the WWE.

    Despite that, there is a much larger problem for AAA and that is media conglomeration. NBC-Universal, the broadcast partner of the WWE, owns Telemundo, Mun2, Telemundo Internacional, CNBC Latin America, and various other Spanish language cable stations, network broadcast partners, and more. Meanwhile, Viacom (TNA’s media partner) has been working for years to expand their Spanish language assets. Galavision and Univision remain relatively independent amound some other smaller affiliates, but it seems only a matter of time before they come under the control of one of the big four (NBC-Universal, Viacom, ABC-Disney, or NewCorp [aka Fox]). Given that Fox has a working relationship with the WWE as well, AAA would best be involved with ABC-Disney. This could also especially help with ESPN Deportes, but ABC-Disney has long shown an aversion to professional wrestling in any form.

    Plenty more was written, so be sure to take a look. And of course, a week would not be complete without a good dose of JP Prag’s own HIDDEN HIGHLIGHTS!!

    If you enjoy the Journal, why not bookmark 411wrestling.com and make it your home page? You can do that by clicking here.

    CLOSING BELL

    This concludes Issue #91 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

    Till then!

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