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What To Know About WWE's Saudi Arabia Travel Issues, Financial Dispute

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What To Know About WWE's Saudi Arabia Travel Issues, Financial Dispute

World Wrestling Entertainment, Inc. (NYSE: WWE) shares traded lower Monday on reports the company’s massive multi-year deal with Saudi Arabia may be in jeopardy.

What Happened

Last week, WWE held its second Crown Jewel event in Saudi Arabia, but there were reports things did not go smoothly from a financial standpoint.

Many WWE talents did not make it back to the U.S. in time for the company’s Friday night "SmackDown" show due to flights from Saudi Arabia being grounded. According to Spanish-language professional wrestling announcer Hugo Savinovich, who claims to have connections to people familiar with the situation in Saudi Arabia, WWE flights were grounded in response to WWE cutting the feed to last week’s event in Saudia Arabia over a financial dispute with the Kingdom.

Savinovich claims Saudi Arabia hasn’t paid up for WWE’s past two events and currently owes WWE between $300 million and $500 million. As a result, WWE CEO Vince McMahon had the live TV feed of Crown Jewel cut in retaliation, Savinovich said. This move reportedly infuriated Saudi Crown Prince Mohammad Bin Salman Al Saud, who ordered the WWE flight back to the U.S. to be delayed for 24 hours, according to Savinovich.

In an official statement, WWE said the flight delays were due to “mechanical issues.”

Why It’s Important

WWE shares tanked last week after the company reported a weak third quarter across the board and cut its full-year OIBDA guidance. Among WWE’s financial issues was a $60 million “outstanding” receivable, which Forbes reports was believed to be money owed by Saudi Arabia.

Last year, Dave Meltzer, founder of the Wrestling Observer Newsletter, told Benzinga WWE’s 10-year deal with Saudi Arabia could be worth in the neighborhood of $450 million. Meltzer reported this week Saudi Arabia completed a $60 million payment to WWE within hours of the Crown Jewel event.

On Monday, Meltzer told Benzinga it’s difficult to know at this point whether or not WWE’s deal with Saudi Arabia or its future events there are in jeopardy, but feedback from WWE talent regarding the situation has been extremely negative.

“Right now a lot of talent doesn't want to go back, but who knows if that will change by the time of the next show,” Meltzer said.

Loop Capital also reportedly said the first two years of the WWE deal with Saudi Arabia could put the total value of the 10-year agreement between $500 million and $1 billion in value. The firm said investors should expect a negative 2019 earnings impact if WWE is forced to write down some or all of the cost of last week’s Crown Jewel event.

After Monday's market close, WWE released a statement saying, "We have a good relationship with our partners, and the feed issues were unrelated to anything of that nature [payment dispute]. We’ve been public with mechanical issues, the charter company has as well.”

Benzinga’s Take

Much of the reporting on the circumstances regarding the Crown Jewel event and the current status of the relationship between WWE and Saudi Arabia has been from second-hand sources up to this point. WWE certainly has a lot of money on the line when it comes to Saudi Arabia, but investors may need to wait for an official statement from the company or the next earnings call in three months to get details on the path forward.

WWE shares traded lower by 4.1% to $53.64 at time of publication.

Do you agree with this take? Email feedback@benzinga.com with your thoughts.

Related Links:

Is WWE's Growth Era Down For The Count?

Analysts Remain Bullish On WWE, Cheer Early Ratings For 'Smackdown' On Fox

Photo credit: Miguel Discart, Flickr

Posted-In: Crown Jewel Dave MeltzerNews Rumors Travel Top Stories Media General Best of Benzinga

 

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