wrestling / Columns
The Hamilton Ave Journal 01.15.09: Volume 2 – Issue 69
THE HAMILTON AVE JOURNAL
By JP Prag
Volume 2 – Issue 69
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 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: Titan Towers Massacre
After the WWE released Q3 results, the rising costs that had been plaguing the company for a year finally came to light. There was no more room to hide the issue, though WWE CEO Linda McMahon did try to deflect the cause and say that it was mostly due to outside factors. Refusing to look too far internal, the CEO promised $20 million in cost cuts. This promise was a bit too late as the WWE had already outpaced expenses from the same period a year prior by just that amount. Still, that did not stop the cuts from coming.
This past week, the WWE began the new year by cutting cost in the place everyone expected them to come: people. Instead of looking at their processes, assessing their own growing bureaucracy, and looking at the layers upon layers of Executive, Senior, and regular Vice Presidents doing the same jobs for the 550-person company, the WWE decided to make several cuts from the bottom and some for the too-well paid middle.
Remaining employees are reportedly calling the week’s events “The Titan Towers Massacre”. And it began with this bit from a WWE press release:
World Wrestling Entertainment® today announced a 10% reduction of its staff across all areas of its global operations. This reduction will result in annual savings of approximately $8 Million in compensation and benefit costs. Additionally, the Company will incur an approximate $3 Million one-time restructuring charge in the first quarter of 2009.
The staff reduction is consistent with the Company’s previous commitment to implement stronger cost controls, increase earnings and margins, and reduce its cost base by $20 million in 2009. In addition to staffing, the Company has completed a comprehensive evaluation of its operating and capital expenditures and has identified additional efficiencies. Collectively, these initiatives will strengthen the Company’s financial performance.
Now mind you, the WWE is a profitable company. They could have cut no people and still remained quite profitable for the year. Instead, the WWE has focused on the number issues and not the people issues and decided that cutting staff was the way to go. And what did that staff reduction of approximately 60 office heads (including 2 of WWE Chairman Vince McMahon’s limo drivers) and 15 talent/agent heads save the company? All that amounted to was a measly $8 million.
The collateral damage is huge. Employees still in the WWE (an already fast paced, high stress environment) will only feel worse about their situation and may actually become less productive. Jobs may be scarce in this economy, but that does not mean people will not be looking. Many were surprised that the WWE let go so many supervisor level people—persons who were known to have worked their way up through the company and showed their loyalty. From the WWE’s perspective they were cutting some of the highest paid people and thus saving the most. From the employee’s perspective, they saw that loyalty is not rewarded. If the company does not protect and reward people who have worked hardest for it, then why should they?
This same message was sent to talent and agents as the cuts came in. As of Wednesday January 14, 2009, that list included:
Many of those people have been with the WWE for well over a decade and were known for their dedication, commitment, hard work, and good production. The really interesting one is Matt Cappotelli who has been recovering from a brain tumor. The WWE had been good to him keeping him under contract all this time while he could not wrestler, but cutting a person with a debilitating illness as a cost cutting measure sends an awful message. How are wresters supposed to believe the company will take care of them if they get injured if a man recovering from a brain tumor can be cut? Now these wrestlers will most likely want to hide their injuries even more until they are forced into worse condition or major surgery. And unfortunately, they have every right to feel that way.
Again, all these cuts added up to $8 million. That shows right away that the $20 million in extra expenses seen through Q3 2008 was not, for the most part, regular employee and talent related. The WWE has failed to address the real base factors that are causing the rising costs and are instead just looking to bolter the number at any non-monetary cost.
Despite this, the Journal will not be able to prove this until the Q2 2009 results are released. The Q1 results are already tainted by the $3 million impairment charge, but the Q2 results will show that margins are just as bad or have continued to slide.
The street was equally unimpressed with the WWE’s staff cutting announcement. On the day the press release was sent out, WWE closed down 4.5% at $10.51. The price continued to slip at the beginning of the week, closing out January 14, 2009 at $10.22. Although much of that is due to general market conditions, investors have been turning away from the WWE for quite some time. Forbes was impressed with the dividend recently, but most other investors (including the Journal) do not like that the WWE is funding the dividend with cash on hand and not through operations.
With these type of cuts, the WWE says they are still committed to paying out the dividend. The priorities of the company seem completely out of focus. Yet this is all going on with the backdrop that the WWE is still a profitable company and should have no problem maintaining profitability for the year to come. The Journal has criticized the WWE for not being proactive in the past, but this is just another reaction moment where the WWE put their numbers ahead of their people.
The WWE is hardly alone in such moves, but few had the WWE’s level of profitability, cash on hand, and payouts to owners and investors.
TNA’s demographic question
On December 6, 2007, TNA President Dixie Carter came before the Committee of Oversight and Government Reform which was (and supposedly still is) investigating performance enhancing drug use in professional wrestling. Despite the main topic of conversation, these interviews often drifted off the point so the Congresspersons could have a deeper understanding of the wrestling business.
The committee was quite interested in what TNA talent made (a point that was actually censored as confidential, though Ms. Carter admitted 90% of the talent made a certain amount per appearance and that it was not much which is why they allowed work outside of TNA) and contract terms. They also wanted to know about TNA’s own finances, where the Journal learned that in 2007 TNA made roughly $15 million in revenue (in comparison to the WWE’s $486 million). The majority of revenue came from the Spike TV content deal as well as international distribution deals. This, though, led to an interesting bit of conversation:
Q: Okay. And with regard to your television ratings, what is TNA’s prime demographic?
A: We hope our prime demographic is men 18 to 34, but men 18 to 49 is really what Spike TV is looking for and what we have a tendency to deliver the highest demo in.
Q: Okay. Are adolescent males and adolescents in general an important demographic for TNA?
A: They are not at all to the network. Really they just look at that 18 to 49, really 25 to 34 is their key demo that they’re going after, you know. But to us, we’re kind of — we call ourselves Shakespeare to the masses. So it is really — you know, we pride ourselves on being a family friendly show. So we’re trying to get the grandparents back to bringing their children. Where, you know, I would not let my children watch other product necessarily, we try to make it where, you know, it appeals to all ages.
On one hand, Ms. Carter has already stated that the 18-34 demo is all that is important to them. Yet in the next breath she says that children and family entertainment is also important to them. There appears to be quite a lack of focus as these are two different audiences that require two different products. This confusion does seem to come through in product presentation. If the President of the company is not sure, how can the creative team and talent know which way to focus?
The questions went on:
Q: How do you do that? What is your — how would you describe the differences between say the WWE show and a TNA show?
A: The pay-per-views have a rating of a TV 14. So your pay-per-views have a tendency to go a little bit more, be a little bit more violent in like a brutal type of match, like a cage match or you’ll see things such as that. But on television, we bleep out our language. We film at Universal Studios. We are a park attraction. So if that gives you any kind of guidelines of what we have to follow, that is pretty much — that sums it up to me. It is us and Shrek and Dora and Twister. So there is a little of everything in there.
What Ms. Carter failed to realize what she said is that core audience for the TV show is not the core audience for the PPVs. If the television shows are the “family friendly” ones (which would go against what Spike TV wants), then how can you use the television shows to promote the “adult” PPVs? The television show is what is used to sell PPVs, but the television show is not the PPV audience. This may have quite a bit to do with why TNA’s buyrates back barely budged up in the past year. There is a lack of understanding and focus on one audience to take from television to PPV and instead an idea to cultivate two different audiences.
The waters got a bit more murky in the next segment:
Q: Can I just go back to the demographics? One of your sources of revenue are toys?
A: Uh-huh.
Q: Can you describe what kind of?
A: It is mostly collectibles, action figures. And I don’t know if any of the men around this table admit to having any. But it is really — it is more in the collectible side where guys keep the toys and they keep them in their boxes and then they increase in value and things such as that. They’re not as much, you know, play toys as more collectible items.
Q: And who is the target audience for those items?
A: Well, collectibles are a much older demographic. I mean, they are probably — I mean, they are more grown men. I mean, 20s, 30s, 40s, 50s even. Have you seen the 40-Year-Old Virgin with that man that has all the toys? I mean, that is kind of — that’s our audience.
And this is yet another “focus” for the audience. Instead of the general male audience 18-34 or the “family” environment, here is another one in the “geek” market. And even within that the age range goes from 20 to 60, quite a range of options. Although Ms. Carter may have been trying to show that TNA does not market to children (a main concern of the committee), her point further confused who TNA’s audience is.
Although when asked what percentage of the audience was in the 12-17 demographic, Ms. Carter did believe the number was closer to 10-15%. Despite that, the median age of the audience was 39 years old!
Ms. Carter was then questioned how TNA finds talent and what is important to them. This was part of her answer:
Talent is very important. You know, we are about quality in the ring. Ours is not as much about, like, story lines and — I mean, we do have story lines and character development, but it is not the — the focus is not on that. Ours is mostly on the in-ring action. So they have to be — you know, they have to be good wrestlers. They have to have a reputation of being easy to work with.
Interestingly enough, Ms. Carter believes that they are more focused on in-ring production. Yet in n the year since this interview the actual amount of “wrestling” time on a typical episode of TNA iMPACT has decreased while “storyline” elements of exponentially grown. Again, Ms. Carter believes the product is one way when it is presented a totally different way. One has to wonder if it is her confusion over the demographic or if different people in charge of the creative process have different visions are all trying to present their own truth of the world?
The interview eventually turned to drug and steroid use in TNA, but the point between “family friendly” and the “18-34 demo” was made several times. Ms. Carter came off as caring more about talent, understanding of personal situations, less tolerant of substance abuse, and cordial to the committee than WWE Chairman Vince McMahon, but that does not negate the point made here.
TNA may be the haven for wrestlers looking for a better lifestyle and the ability to showcase their talent, but TNA itself does not know which direction it wants to go and cannot grow an audience until they know what that audience is.
Newsbites
Some items of note in the rest of the wrestling business world:
“Linda clearly understands the skills and education needed to succeed in business and the type of highly educated and skilled workforce that must be available to ensure that success”.
This is highly different to the attacks by the Parent Teachers Council (PTC) in the late 1990’s. The WWE’s attempt to rebrand themselves as kid and family friendly entertainment has apparently transversed worlds.
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 January 14, 2008, here are the current standings of our shows:
RAW
Close (This Week’s Rating): 3.5
Open (Last Week’s Rating): 3.4
Percentage Change: ▲ 3.6%
52-Week High: 4.0
52-Week Low: 2.6
All Time High: 8.1
All Time Low: 1.8
SmackDown*
Close (This Week’s Rating): 2.2
Open (Last Week’s Rating): 2.1
Percentage Change: ▲ 4.8%
52-Week High: 2.8
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): 1.4
Percentage Change: ▼ 18.5%
52-Week High: 1.5
52-Week Low: 1.0
All Time High: 2.3
All Time Low: 0.6
TNA iMPACT**
Close (This Week’s Rating): 1.1
Open (Last Week’s Rating): 1.0
Percentage Change: ▲ 10.0%
52-Week High: 1.2
52-Week Low: 0.9
All Time High: 1.2
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
Analysis:
It was beginning to look like it was an up week across the board until late last night ECW’s rating came in at a 1.1, a drop of 18.5%. The heavy competition for the evening seriously cut in to the broadcast’s audience, showing that the ECW audience may not be as “hardcore” as it used to be.
Despite ECW’s drop, the big winner this week was SmackDown—which not only tied its MyNetworkTV rating, but actually had its highest number of viewers to date. SmackDown has done tremendously well in it Friday spot since the move, at least in comparison to other MyNetworkTV shows. With WWE SuperStars premiering on WGN in April being on Thursday nights at 8:00pm and 11:00pm, it does not appear that SmackDown will be leaving Friday anytime soon.
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. Starrcade: The Essential Collection DVD ($34.95, on sale $23.67)
3. WWE Heritage IV Trading Cards ($2)
4. Hardys Purple Logo Pendant ($10)
5. Jeff Hardy Armband Package ($80, on sale $29.99)
6. WWE Black Gift Bag ($3)
7. John Cena HLR Academy T-Shirt ($25)
8. WWE: The Music Vol 9 CD ($13.47, on sale $9.99)
9. Jeff Hardy Basics YOUTH T-Shirt ($15)
10. CM Punk Fists T-Shirt ($25)
While the usual suspects of Jeff Hardy and John Cena continue to dominate sales, this week saw the addition of a couple of very interesting items. First up is the new Starrcade DVD set, which was just released on Tuesday. This is a good sign for NWA/WCW fans that the product can sell and that the WWE will be more inclined to make more sets like this in the future. Given that the WWE is sitting on the largest collection of historical wrestling archives in the world, they have barely begun to scratch the surface of what they can make off of it.
Also debuting on the list is the surprise high seller WWE: The Music Vol. 9. CDs in the past seven years have been on the complete decline and even the last WWE CD release did not do well. Seeing this so high on the list, even for a week, is a strong and surprising result. It will be interesting to see where this CD shows up in the Billboard charts this week.
TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:
1. Autographed Sting Baseball Bat ($149)
2. Cross The Line Triple Pack DVD Set ($24.99)
3. TNA Ultimate Matches DVD ($19.99)
4. Beer Money T-shirt ($19.99)
5. Mick Foley – Bang Bang T-Shirt ($19.99)
6. TNA Christmas Ornament ($9.99)
7. Autographed Mick Foley & Sting Poster Combo ($49.99)
8. Autographed Sting Poster ($29.99)
The good news is that apparently TNA Christmas Ornaments sell very well far into January.
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 |
| 18 (Jan)
|
19
|
20
|
21
|
22
|
23 | 24
|
| 25
|
26
|
27
|
28 | 29 | 30
|
31
|
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.
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, we start where we spend quite a bit of time: the merchandise! And Guest#4976 says:
I’d like to make just one comment about the DX “commercials”. I think the purpose of those commercials is more to advertise the WWE Shopzone than it is to specifically advertise DX merchandise.
graves9 was quick to respond:
What? No freaking way; stop spinning. They were trying to sell every DX item not nailed down the last few years.
Agreed. While part of the agenda was to send traffic to shopwwe.com, the main focus was at selling DX-related merchandise. The fact that no DX item made the Top Ten during that entire period shows that the investment did not pay off.
Sticking to the merchandise, Just Adam chimes in with:
No comments on this alleged story of Cena’s merch outselling Hogan’s 80s merch back in his Hulkamania prime? I seriously want to see the numbers behind that… seems a little too difficult to swallow in my opinion, considering the market today vs. the market back during the Hulkamania days. Maybe next week…
The key word in your statement was “alleged”. Too many people (even on this own site) are reporting this as fact even though there are no numbers to back it up. Now, could John Cena be outselling Hulk Hogan? Absolutely! The Journal has covered this point before, but Hulk Hogan basically ran with one T-shirt, a few toys, and a light switch through all of the 80’s. And those products cost a lot less back then and had lower margins. John Cena has a far greater depth of products and (more importantly) has a far greater margin. That is why people like Steve Austin and the Rock also probably outsold Hogan in any given year.
On top of that, the WWE has a far greater reach. During the 80’s, they were mainly a North American company with a slight presence in Europe (mostly the UK) and Japan. Today the WWE has programming in 130 countries and merchandise distribution in 120. This is not an apples-to-apples comparison in any way.
John Cena is a tremendous seller and is responsible for a very large portion of the WWE’s merchandise sales. But while the WWE has seen total revenue for merchandise go up slightly through Q3 (those number are going to be quite different when Q4 is released), the average spending per head has decreased. Given that, that means margins are down as well, so therefore there were actually worse results in this year than last year. Either, then, John Cena would be making up and even more disproportionate amount of the sales to make up the gap.
Finishing up our merchandise section, Ellen has several questions. The Journal will take them one at a time.
One thing i’ve noted with TNA: None of the guys from the Frontline are selling items very well. Sting still outsells them, though he is a heel (even if he tries not to act like one).
In this year, Sting may retire, Foley will not be around for long & Kurt Angle may leave for WWE.
If the young draws fail to make any impact on the fan bas , does it bode well for TNA?.
A number of the members of the Frontline do sell well or have in the past. In particular AJ Styles has been in TNA’s Top Selling lists for large stints of time. Samoa Joe when champion—though—had a lot of trouble staying on the list. TNA’s biggest problem with merchandise is really around volume. Someone or something can be a top seller, but the volume on it is nothing compared to what is seen in the WWE Top Ten list. Also, while the WWE’s list tends to focus on individuals, TNA’s list (at least in the past) has focused on either events or special packages. In other words, TNA’s normal, full priced items are not selling at a volume high enough to compete with their discounted items and no individual star outshines the events they are in.
Also, does being the champion increase your sales? When HHH Was the champ on SD, he didn’t move as many items as Jeff. Right now, Cena and Jeff are the champs & are outselling everyone.
Oftentimes, it does. CM Punk made the list when he became champion, as did Edge on several occasions. But you are correct in that it is not always a one-to-one relationship. Triple H, Batista, and Chris Jericho particularly come to mind as people who rarely saw the Top Ten while champion, though all have made the list when not.
One last point in relation to the above. Conversely, do merch sales influence wrestling storylines? For e.g ., a few people think that Jeff was given the title because he sells a lot of stuff.
The Journal is one of those that agree with that statement. If someone like Mike Knox was suspended for failing the wellness test twice in a year, caused an incident while boarding an airplane, and showed up late to shows, he would have been let go long ago. Jeff Hardy not only gets additional chances, but gets promotions (in a sense) because he sells so well.
Then again, the organizations do not always look at the numbers and respond to them. Jeff has been selling like this for quite some time, yet the WWE did not make any moves well before his first suspension. The Motor City Machine Guns used to be consistently in TNA’s Top Selling list, but TNA was in the middle of punishing them for refusing to blade in a match and instead decided to push them aside instead of take advantage of the interest. Both companies have been known to go against the sales in order to complete their vision, but have often had their mind changed by how people sell.
Leaving merchandise, Harry wants to know some of the Journal’s future:
Will you add WWE Superstars and TNA Epix to your ratings chart? because if so then there will be plenty of crossing lines (except iMpact and Epix jk lol). Just wondering.
It would be an interesting thought since they will be regular weekly shows (at least Superstars. Not much is known about Epix yet. Epix may end up in syndication, in which case it would be a moot point.). Although the Journal has not tracked temporary shows like Hulk Hogan’s Championship Wrestling, these shows could be added. If the ratings are readily available, then it may make sense to add them. Perhaps they should be listed on a different chart, a so-called “Small Cap” of show ratings.
Wrapping up this week is Kevin and his thoughts on the governments involvement in steroids in wrestling:
I highly doubt the government will do anything about steroids in general. There are too many pressing issues, and besides, steroids are going on the outs because of detect-ability. Most athletes in general are using HGH nowadays, undetectable without a blood test. Will the government require one to give up their blood just to go through with something that the government doesn’t care about?
HGH is the bigger issue today because, as you say, it is undetectable in a traditional urine test. There have been advances, though, in detecting HGH in more conventional ways that may make that no longer the drug of choice. That said, the government will chase the issue for a while, forget it, some other tragedy will happen, and it will come up again. Most likely, nothing will ever happen. Any changes for drug testing will come if a union can get involved, and that is still a long time off, too. Meanwhile, the WWE is interested in at least having the policy and enforcing it sometimes because it makes them look good with advertisers and networks, their real audience. So long as these companies are willing to pay the WWE and accept the policy at face value, the WWE will continue to go ahead as everything is done to the best of their abilities.
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!!
This concludes Issue #69 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.
Till then!
More Trending Stories
- Notes on Names Backstage at WWE SmackDown for Draft Night 1 (POSSIBLE SPOILERS)
- Backstage Rumor on New Claim Alleging CM Punk Tried to Have Colt Cabana Fired From AEW
- PG Era Considered To Be Done In WWE, Note On Plans For Content Going Forward
- Becky Lynch On Her Reaction Backstage After Nia Jax Punch, Jax Apologizing
