Tuesday, March 15, 2016

Worked WM Attendance numbers

year   reported    actual      Diff
2009    71,617     61,617     10,000 
2010    72,219     61,093     11,126 
2011    72,744     61,661     11,083 
2012    78,363     66,500     11,863 
2013    80,676     72,000     8,676 
2014    75,167     65,000     10,167 
2015    76,976     67,000     9,976 

WWE attendance numbers occupy an interesting intersection between promotional gusto and pertinent investor information.


Let's take an example such as WrestleMania 31.

On April 1, 2015, WWE released a press release "WRESTLEMANIA BREAKS MORE RECORDS". And I quote, "WrestleMania 31 broke the attendance record for Levi’s Stadium as 76,976 fans from all 50 states and 53 countries converged on the home of the San Francisco 49ers."

However, if you look at the KPI (Key Performance Indicators) slides there's a slightly different story:

This indicates that during Q1 2015, WWE average paid attendance was 7,400 over 73 North American shows (including WrestleMania 31). If you exclude WM31, WWE average attendance was 6,700 over 72 North American shows.

That would imply that WrestleMania 31 paid attendance was 7400x73-6700x72 = 540,200 - 482,400 = 57,800. However, this chart is using very round numbers. The w/WM # could be as high as 7499 (rounded down to 7.4) and the w/o WM # could be as low as 6650. Or it could be the 7,350 and 6,749. That gives us a range of 68,600 (high) to 50,600 (low)

Dave Meltzer has published that the actual attendance for WrestleMania 31 was 67,000 (which would imply around somewhere between 6,650-6,724 w/o WM and 7,477-7,550 w/ WM numbers) which is within the range.

What's far outside of the range would be a number like 76,000 paid attendance which would have put the w/ WM average of North American attendance in Q1 up into the 7,600-7,700 range instead of 7,400 number they reported.

However, there is (as always) caveats. WWE's press release didn't say "paid attendance". Were there possibly 10,000 papered tickets to WrestleMania 31? Possible? Yes. Likely? No.

Dave Meltzer has posted that, "Mania was set up for 66,000 last year at first. They added extra seats for 4,000 more. The people at the 49ers who run the stadium that I know joked that they actually with sales and freebies had enough to legit sellout, and then they added the bleachers and had 3,000 empties."

Furthermore, WWE's own legal filings suggested that the capacity for Levi's Stadium was 66,060. (Each year, WWE files a lawsuit against "John and Jane Does and XYZ Corporation" for trademark infringement, counterfeiting and dilution under the Lanham Act. It's a technique they've used in the past to go after people associated with the "unlawful manufacture, distribution and/or sale of counterfeit merchandise bearing unauthorized copies of WWE's registered and unregistered trademarks and service marks." I noted that in the exhibit of their lawsuit, filed 3/18/2015, WWE included a list of upcoming WWE events, including WrestleMania, with details which included building capacity.)

So, that's where we stand with modern attendance records. WWE will claim one thing on television and often back that up with a press release. They may even briefly mention it during a conference call (though I looked through last year's the Q1 and Q2 transcripts and didn't see any mention of it). I believe that WWE thinks other organizations (such as NFL) make similarly inflated attendance claims, and it's only an entertainment statistic.


However, what matters is the actual revenue that the event generates. On that front, I believe the numbers that WWE reports. Analysts are FAR more interested in seeing the inflated live event numbers than they are about truly understanding whether the once-a-year WrestleMania attendance figure is a worked or real number.

To that end, analysts are far more interested in the details of WWE Network subscriber behavior around WrestleMania. How many people are signing up? How many are first-time subscribers people? How long do those people stick around for? How does the subscribership split between domestic and international groups? Those are the sort of datapoints that investors are hungry for. Those are the areas where you see probing questions during the conference calls.

I don't believe WWE feels any compunction to "tell the truth" about attendance numbers in any forum outside of SEC filings and possibly on conference calls. I don't think that investors are that fixated on the topic, except to note that overall North American average paid attendance has been stagnant at about 6,000/event for several years. The mega-events (SummerSlam, WrestleMania, the UK tour) may signal bright spots, but overall WWE is achieving higher live event revenue through raising ticket prices and running more events (i.e. expanding NXT touring).


When we're talking about historical attendance records, there's certainly a different dynamic at play. First of all, many of the people (like Barrios) with WWE today weren't with the company 15 or 30 years ago. Some are just going to repeat the talking points they've heard and been fed. Second of all, World Wrestling Federation (Titan Sports) was not a publicly traded company until 1999. They wouldn't see any need to "tell the truth" when it comes to attendance numbers to the outside public.

I will note that I have been surprised to find court filings by WWE which reference the allegedly worked WrestleMania III attendance number.

In the 2004 version of the WrestleMania anti-bootlegging lawsuit, the company refers to "Subsequent Wrestlemanias have occurred in such sites as the Pontiac Silverdome in Pontiac, Michigan (Wrestlemania III), which drew over 90,000 spectators" (page 5-6)

I am not a lawyer so I cannot speak to whether including a disputed fact like this a court filing has any questionable legality. My experience with reading these filings is that in the "factual background section), the company can make whatever claims they would like and it's up to others to challenge or deny them. Since this attendance fact is not highly relevant to the proceeding at hand, there really was no meaningful reason that the "fact" would be challenged. The thrust of this part was establishing that WrestleMania is a big deal and whether it's 78k or 93k, the point would stand.

Essentially, unless the lawyer filing the case knew that the report 90k+ attendance number for WM3 was an outright lie (and one specifically that had shown to be false - such as there was a deposition or an affidavit to the contrary), I would propose that it would be reasonable for them to include this statement in the filings without thinking twice they need to dig into that particular (then) 17-year-old claim.

There are cases of a pre-public WWF revealing detailed live event revenue numbers. WWF had to work with commissions and often needed to pay taxes based on live gates. For instance, during Titan Sport's battle with the State of New Jersey's boxing and wrestling media rights tax, WWF went into extreme detail about live event revenue, closed-circuit revenue, international television rights and PPV purchases of WrestleMania IV. Likewise, the Ventura royalties lawsuit revealed details of the WWF business around video-tape sales and royalties payments. I haven't found any cases that directly covered WM III in a meaningful way that would touch upon the true attendance at that time, but it's possible there was some fact disclosed in a lawsuit that would provide an enlightened discourse on this subject.

Only case that might come to mind would be something involving Hulk Hogan. However, while Terry Bollea may say something in a deposition, I truly don't trust or believe his memory when it comes to facts like what was the true attendance of WrestleMania III. In both the Ultimate Warrior and Gawker lawsuits, he's made many claims under oath which do not fit with established facts and timelines, especially around his wrestling career.

Wednesday, March 09, 2016

WWE Business 2016-2017 Survey Results

I put out a survey on Twitter with a few questions about what others thought would be appropriate goals and targets for WWE in 2016-2017.

First question was about "expertise" on WWE business.

I put respondents into three major buckets of respondents as it related their WWE Business "expertise":
  1. HIGH - "I follow WWE Business extremely closely. For instance, I am likely to read their SEC filings, listen to conference calls, check out the KPIs and monitor investor events." (8 people)
  2. MEDIUM - "I follow WWE Business closely. I sometimes listen to WWE conference calls or read reports. I will usually read good articles about WWE business." (14 people)
  3. LOW - "I occasionally follow WWE Business. Once in awhile, I will read articles or coverage of WWE business." (9 people)
While this expertise judgment is completely self-selecting, it's nice to see three large groups emerge so we can compare how they answered the questions, and create "weighted" predictions.

First, I listed fifteen different "priorities" and asked respondents to rank them as business objectives for 2016-2017.


I ended up creating six scores (an average rank in each expertise and and average rank after where I threw out the min/max scores) and weighting the scores to come up with this "final" objective list:
  1. Growing number of paid domestic WWE Network subscribers
  2. Growing number of paid international WWE Network subscribers
  3. Monetization of Digital Media (advertising sales on websites, sales of various broadband & mobile content, YouTube)
  4. Expansion of International Television Rights for core Raw/Smackdown in remaining markets (outisde of major deals signed in 2014-2015)
  5. Expansion of Domestic Television Rights (adding programming such as Tough Enough, Total Divas, NXT, Superstars)
  6. Improving Licensing Revenue (license fees & royalties - video games, toys, apparel)
  7. Growing International Live Event Revenue (core WWE - adjusting dates, ticket prices, tour packages, etc)
  8. Growing revenue generated by NXT brand (touring, merchandise, etc)
  9. Growing Domestic Live Event Revenue (core WWE - adjusting dates, ticket prices, tour packages, etc)
  10. Launching WWE Network in China
  11. Growing WWEShop Revenue
  12. Outside Investment Projects (i.e. TapouT, Phunware, Tout, Marvel Ventures)
  13. Growing Venue Merchandise Revenue
  14. Growing revenue from WWE Studios (investing, producing, distributing filmed entertainment)
  15. Additional Home Entertainment Revenue (home entertainment platforms - DVD, Blu-Ray, subscription outlets)


#1 and #2 Growing WWE Paid Subs

In all three groups of experts, Growing Paid WWE Network Subscriptions both Domestically & Internationally topped the list of priorities. 

Realistically, there's not a lot WWE can do to affect their largest revenue stream (Television Rights) and their Wall Street Cred is pretty much predicated on how many WWE Network subscribers they gain, retain and lose each quarter. 

#3 Digital Media Monetization

This was something that Medium & High Expertise voters thought of highly (rating it #3) while Low Expertise voters put it squarely in the middle (ranking it #7). WWE talks a lot about their social media numbers, but despite impressive YouTube views, the company isn't raking in very much money from this revenue stream. This may be a good example of a topic which hardcore WWE business analysts think a lot about, but more casual observers are less concerned with.

#4 Expansion of Int'l TV Rights

The "high expertise" group rated this topic #5 (elevating Domestic TV Rights to #4) while the "low expertise" rated this topic #3. Medium experts ranked this #4.
WWE largest bundle of Television Rights included US, Canada, Mexico, Thailand, UK, India and UAE. There's still deals outside of that core group, including Italy, Germany, Spain and Japan. Some of those deals are coming up for renewal. There's be well-documented problems with the CTH deal in Thailand (WWE recently secured a default judgment against the broadcaster for non-payment of rights). And of course, WWE is always looking to expand their foothold in China.

#5 Expansion of Domestic TV Rights

Total Divas on E! has been a revenue-generating endeavor for the company which has exposed elements of the WWE product to new viewers (particularly females). This year's Tough Enough outing was not a ratings hit (even with publicity generated by the Hulk Hogan racist remarks) but demonstrated that USA Network still had some appetite for excess WWE programming. With SmackDown moved to USA, it seems unlikely USA is going to expand their wrestling footprint, but it's possible that another NBCU sister network may have some interest. WWE may even find a suitor outside of the Universal family of channels. Of course, while NXT airs on the WWE Network, it does appear on terrestrial television in overseas markets. Likewise, Main Event and Superstars and along with recap shows like Afterburn and Bottom Line still air in other countries. In other words, there is additional programming that could be sold. The question is whether WWE will choose to do this.

There's a real difference of opinions among the three groups. High Expertise ranked this in the top five (#4) while medium expertise put it #6 and low expertise dropped this to #13.

#6 Improve Licensing Revenue

In January, WWE and 2K announced a multi-year extension for the video game licensing. Historically, Q1 is the big quarter for the company. It will be interesting to see whether the Divas revolution or NXT talent will generate any new opportunities for new license agreements. High expertise ranked this #6 and medium expertise ranked this #5. Low expertise dropped this topic to #9. Like Digital Media, this is a quiet revenue stream which can make a big different but isn't as flashy as TV rights or WWE Network subscriber numbers.

#7 Growing International Live Event Revenue

Interesting to see International Live Event Revenue ranked higher than Domestic Live Event Revenue as a priority. This was true with both High (#7 intl/#11 dom.) and Medium expertise groups (#8/ dom/#10 intl). Low expertise groups ranked growing Int'l & Domestic live event revenue as top five priorities (#4 dom and #5 int'l). With the worldwide expansion of the WWE Network, and the exposure of secondary touring brands such as NXT, there are new opportunities for WWE to grow this revenue stream. The WWE Network dynamic also transform the game when it comes to traditional restrictions around holding a PPV or television taping overseas.

#8 Growing NXT Revenue

Honestly, this isn't a separate priority -- it's integrated with television revenue, licensing opportunities, new merchandise lines and touring strategies. Every single WWE conference call has one constant - someone will ask about the NXT brand. Beyond a traditional developmental league, NXT has worldwide exposure. Putting this in the middle of the pack feels right - it's a sexy idea, but it's hard one to execute in a massively financially impactful way. High expertise put this at #8, medium expertise at #11 and low expertise at #6.

#9 Growing Domestic Live Event Revenue

The success of 2015 was extracting more revenue from WWE fans per ticket in both the North American and International markets. Average NA live event attendance has been flat for years, so generating more revenue was a significant success in 2015. While low expertise respondents ranked this #4, both medium & high expertise put this in the bottom third (#10 and #11 respectively).

#10 Launching the WWE Network in China

The ranking for this initiative reflected very different thoughts on the feasibility/opportunity of WWE Network in China. High expertise respondents ranked this #10 while Low & Medium put it higher (#8 and #7). China remains the last major marketplace without access to the WWE Network though the barriers to entry are phenomenally rigid.

#11 Growing WWEShop Revenue

High expertise and Medium expertise respondents both ranked this #9 while low expertise respondents ranked it #12. Utilizing Amazon UK as an European distribution partner. Q4'15 hit record levels for online orders. It will be interesting to see if WWE is able to tie WWE Network profiles to WWEShopping options in the future - providing more seamless data integration options and improved recommendation mechanisms.

#12 Outside Investment Projects

We don't hear a lot about investment projects until either they go bust (and WWE takes a write-off) or WWE starts screaming about TOUT every week on Raw. The exception has been the TapouT joint-venture with ABG. It's a recasting the brand from MMA wear to lifestyle fitness. In the past, investments in companies like Phunware or touring attraction Marvel Ventures, has been buried in financial documents or briefly mentioned on conference calls. TapouT will be a far more visible project which will include utilizing WWE superstars as models. All three expertise groups ranked this initiative similarly - #11 (low), #13 (medium), #12 (high).

#13 Growing Venue Merchandise

WWE actually started a new live event project in 2015 where they allowed fans to order venue merchandise from their phone while at their seat and pick it up on their way of out of the arena. While high expertise fans saw a little more potential in this revenue stream (#10 rank), this initiative was #12 and #13 for medium/low expertise respondents. It may surprise a casual observer that Venue Merchandise generated over $22 million in revenue in 2015 which was more than traditional PPV, digital Media, Home Entertainment or WWE Studios.

#14 Growing WWE Studios Revenue

After a decade of projects from producing, distributing, co-financing and partnering, WWE Studios (formerly WWE Films) has remained a separate division on WWE's books. There have been shifts in strategy to move low-budget, low-investment, distribution-centric models. In 2015, WWE began their new partnership with Warner Bros and has continued to leverage their brands (Scooy Doo, Flintstones) for kid-friendly WWE movies. However, the positive ROI on most projects has been minimal outside of made-for-TV fare. WWE has yet to integrate their film catalog with their over-the-top streaming network. Overall, WWE Studios was ranked as a last or second-last priority by all three categories of expert respondents.

#15 Additional Home Entertainment Revenue

While there may still be some demand for Home Entertainment, especially rare content in collector formats, the overall trajectory for WWE Home Entertainment has been downwards-sloping for five years. The core unit is still DVDs - not BluRays, and the combination of the WWE Network on-demand availability and the lack of untapped directions have contributed to a stagnant sector. Similar to WWE Studios, Home Entertainment ranked last or second-to-last in each of the groups.


The next question looked at WWE Network characteristics and offered voters the option of rating each high (score 2.0), medium (score 1.0) or low (score 0.0).

Overall, the top five initiatives were:

  1. Adding back catalog content to the WWE Network Library
  2. Additional tierary Live Event specials (Beast in the East, King of the Ring, Roadblock)
  3. Enhanced Searching Options
  4. Cutting down on simultaneous users
  5. Expanded external WWE Network awareness/advertising campaigns
These rankings were generally similar among the high expertise respondents - Cutting down on simultaneous users, other live events (outside of PPVs), expanding WWE Network awareness/advertising, enhancing search options and adding back catalog all had scores at 1.4 or higher. 

Medium expertise respondents were only passionate about adding back catalog and enhancing the search options. Low expertise respondents felt strongly about other live events and back catalog. 

Daily Live Content & WWE Films on the WWE Network were supported more by "high expertise" respondents than other groups. NXT Programming expansion was not a popular option among any group. The high expertise group felt very strongly about reducing number of simultaneous users - no doubt a measure they believed would spurn additional account signups from the free-loaders.


The question was, "How many subscribers will WWE announce the day after WrestleMania?"

Respondents were given the option of choosing "paid subscribers" and/or "total subscribers (including free)". WWE announced in early March that new subscribers would be able to watch WrestleMania for free as part of their free month trial. These numbers were collected after this promotion was announced and should reflect that information in their estimates.

Paid Subscriber Number
Average: 1,379,264
Median: 1,416,500
Min: 1,000,000
Max: 1,600,000

High Expertise Avg: 1,422,167
Medium Expertise Avg: 1,379,403
Low Expertise Avg: 1,250,000

Paid Subscriber day after WM - Weighted judgment: 1,378,038

Total Subscriber Number
Average: 1,697,012
Median: 1,684,000
Min: 1,400,000
Max: 2,150,000

High Expertise Avg: 1,705,500
Medium Expertise Avg: 1,705,025
Low Expertise Avg: 1,670,800

Total Subscriber day after WM - Weighted judgment: 1,677,913

For perspective, here is the "paid subscriber" numbers for the past 8 quarters:

paid subscribers
as of qtr end
paid subs.
paid subs.
avg paid subs
over quarter
  940,000   277,000    1,237,000

On April 7, 2014, WWE announced they had 667,287 subscribers.

We do not know the exact number of subscribers for WrestleMania 31, but it's interesting to note that in the week between 3/31/14 and 4/7/14, WWE had added over 172,000 "domestic" subscribers.


Lastly, I had asked respondents on their opinion on the question, "Should WWE continue offering free 1-month subscriptions to new users?"

Answers were predominately split into two groups:

  • "Yes - but only in months outside of blockbuster events such as WrestleMania, Royal Rumble or Summer Slam." - 18 votes
  • "Yes - they are a streaming service like Netflix or Hulu or HBO Go. It's part of the industry model." - 10 votes
The "Not Blockbuster" group was 85% of the high expertise group, 50% of the medium expertise group and 67% of the low expertise group. 

I suspect, but don't know for sure, that age may also have played a role in the response to this question. 

Looking at home country for respondents, 6 out of 7 "high expertise" respondents chose "outside of blockbuster months" - included "did not identify country", European and North American voters. Among "medium expertise", the vote was split 6-6 with North Americans going 50/50, Europeans going 75% "not blockbuster" and "did not identify country" voting 2-0 for "industry model". In low expertise, the vote was 6-3 in favor of Blockbuster but North Americans were 1-1 split, Europeans were 2-0 for "outside blockbuster" and "did not identify country" (East Timor?) chose 3-2 for "outside Blockbuster".


For those interested in seeing the raw data used in this survey, please see my Google document.

Wednesday, March 02, 2016

What I wrote/did February 2016

Since I work on a little different projects but I don't always post about them in the same place, I figured I'd try to recap each month some of my favorite datapoints/articles/tidbits that I worked on each month.



2/24/2016 -- WWE Q4 Results, podcasts, odds & ends


2/10/2016 -- Predictions For WWE Q4 Revenue (a primer on WWE results including a list of very pertinent questions at the end)

2/24/2016 -- Does Shane McMahon's Return To Television Include A Corporate WWE Position? (a look at YOD, Shane McMahon and whether he will return to WWE as a corporate executive)

My SA article about YOD/WWE was later quoted in a NYPost article published 2/25/16 Shane McMahon’s return to WWE ‘Raw’ fuels talk of C-suite role:

But Chris Harrington, who covers the financials of professional wrestling for Wrestlenomics Radio, called Shane’s possible return to WWE’s executive suite “a tantalizing puzzle piece” in light of the company’s designs on China.
“He has spent years focused on the issue of how do you generate real revenue with Chinese OTT media,” Harrington wrote Wednesday in a piece for Seeking Alpha. “That’s a topic where WWE needs an expert.”
Sadly, this quote did not make the print version.


2/11/2016 -- KEY TAKEAWAYS FROM WWE'S 2015 Q4, FULL '15 FINANCIAL RESULTS (my article cover 2015 results)

2/11/2016 -- WOL: FREE SHOW TALKING DANIEL BRYAN, WWE NETWORK NUMBERS, MORE! (quick run-in to talk about WWE results)

2/12/2016 -- WOL: CHRIS HARRINGTON ON WWE FINANCES, DR. LUCHA, NEWS ON KEVIN RANDLEMAN AND MORE! (interview with Bryan Alvarez & Mike Sempervive on the WWE 2015 reuslts)

2/24/2016 -- WOL: SHANE MCMAHON UPDATE, CHINA COMPANY, TONS OF NEWS AND MORE! (interview with Bryan Alvarez & Mike Sempervive on Shane McMahon's YOD company)


2/12/2016 -- WRESTLENOMICS RADIO: WWE Q4 EARNINGS REPORT (30 minute podcast covering Q4 results and clips from WWE Conference Call)