Trailblazers: Vince McMahon Takes His Empire, And An Industry, Over The Top
The life of a World Wrestling Entertainment (NYSE: WWE) employee can be a grueling one.
The company performed 321 live events, including 65 international, in front of nearly two million fans in 2013.
Professional wrestling, or what WWE likes to label "sports-entertainment," has changed dramatically over the last 30 years. At the forefront is the industry's biggest name and innovator; the man who turned a regional, low-class business into a billion-dollar corporation. And after three decades, Vince McMahon -- WWE Chairman, CEO and part-time performer -- continues to break barriers, bend rules and reshape the sports and entertainment industry.
A Brief History
McMahon joined WWE (formerly World Wrestling Federation or WWF) in 1972 and purchased the company from his father 10 years later -- boxing and wrestling promotion has been a McMahon family business as far back as 1909. With the youngest of the clan now in charge, was it time to reach the glass ceiling?
"Had my father known what I was going to do, he never would have sold his stock to me," McMahon told Sports Illustrated in 1991. "In the old days, there were wrestling fiefdoms all over the country, each with its own little lord in charge."
McMahon began spreading the Northeast-based company around the country, hiring talent from others promotions. This eventually led to the ground-breaking live event, Wrestlemania, in 1985. If the event failed, McMahon would not be here today. But with a mixture of Muhammad Ali, MTV and Hulkamania, the inaugural event at Madison Square Garden was a rousing success, with nearly 400,000 buys on closed-circuit television. McMahon and his father have subsequently been honored as members of the MSG Hall of Fame.
Revolutionizing Revenue Stream
WWE was off and running, setting various ratings and attendance records ever since. McMahon's vision came to a head with an IPO in October 1999. When asked one area McMahon has revolutionized, Brad Adgate, senior vice president and research director at Horizon Media, put turning pay-per-view into a revenue stream at the top. WWE introduced PPV to Wrestlemania with the event's third edition in 1987. Wrestlemania III brought over 93,000 fans to the Pontiac Silverdome, an indoor attendance record that was held until the 2010 NBA All-Star Game.
Wrestlemania 28, held in 2012 at Sun Life Stadium in Miami, Florida, reached 1,217,000 buys, making it the most purchased wrestling event in history, with global gross sales in excess of $67 million. The event also set a new record for the highest grossing live event ($8.9 million) in the company's history.
On the network side, McMahon and NBC's Dick Ebersol have had a long-time relationship. In 1988, The Main Event drew a 15.2 rating (33 million viewers), the largest audience ever for a wrestling event. By comparison, the company's flagship Monday Night Raw once drew an average of six million viewers per week during pro wrestling's peak. Raw launched in 1993 on the USA Network, and has become one of the longest-running episodic programs in television history.
Adgate believes the money drawn from television advertising is too valuable for WWE to go completely over-the-top with its programming in the near future.
"They have an extensive library of content that can be used," Adgate told Benzinga. "The audience profile young males are among the heaviest users of streaming video."
WWE Network was introduced in February, an over-the-top channel that WWE spent $75 million on over the last three years. At $9.99 per month, subscribers have access to original programming, over 1,000 hours of historical content and -- what's ruffled some feathers -- each of WWE's monthly pay-per-views (which usually cost about $40 on their own).
This comes at a time when WWE is also negotiating for a new television deal -- its current contract with NBC Universal (NASDAQ: CMCSA) ends in September. Adgate said the first-screen experience (television) is still the cash cow for WWE and other sports leagues that have their own cable networks.
"The new TV deals comes down to the notion that WWE believes it is live sports and should command live sports dollars," said Adgate, who thinks WWE will stick with NBC Universal. "At issue is the networks cannot get advertisers to consider the WWE as live sports like the NFL or NBA."
McMahon has rebounded from many notable scandals (steroids, deaths) and failures (a Times Square restaurant, the XFL). A WWE movie studio was even launched in 2002. It, too, looked like another failure, but its most recent film -- 2013's The Call -- grossed $68 million worldwide against a $13 million budget. McMahon is leaving his mark beyond the wrestling arena.
"With the XFL it was how he changed TV coverage of football with [high] wires giving it a video game look," said Adgate. "I know the XFL didn't work out but football camera angles have gotten better on the television."
With Wrestlemania XXX coming to New Orleans on April 6, many past and present faces will be on hand. It will be interesting to see how WWE Network can handle the heavy traffic, after facing some streaming issues a couple months ago. After the last three decades, maybe it's best to just trust Mr. McMahon.
*Benzinga reached out to Vince McMahon and WWE, but they could not be reached for comment.*
*The Trailbazer series will look at various figures in business, sports and entertainment who have 'changed the game' in their respective capacity.*
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