Tuesday, May 31, 2016

Calculating ELO for Wrestling

1. Collect Data

Let's use New Japan 1998 for our data-set.

In this example, I'm going to use CageMatch.net as my source though the process of calculating ELO scores for wrestlers once you've distilled events into individual match/personal results would be the same regardless of the source of data.

Here is a copy of raw NJPW 1998 data set.

2. Organize Data

Format data so that you have fed (New Japan Pro Wrestling), event ((23.12.1998) NJPW Battle X-Mas 1998 @ Korakuen Hall in Tokyo, Japan) and results (Yuji Nagata defeats Shinya Makabe (6:42)... Kazuyuki Fujita defeats Akitoshi Saito (6:32)...) in separate columns on the same row.

Duplicate the results column and replace the match division characters (...) with a single-character delimiter (such as "@"). Note that if there is a "...." that should be translated as ".@" not "@." (This is caused when the final person before the match delimiter has a period at the end of their name - i.e. Lizmark Jr.)

Perform a "Text to Columns" transformation on the duplicated results column (with the @ delimiter) and label each column of the individual matches. You may want to apply the TRIM function to the Matches to eliminate any extraneous spaces.

3. Individual Match Rows

Rearrange and append columns so each row has only one match. Label the match # and total number of matches on the show and extract the date from the event column. Create a order column which puts all the matches in order from beginning of the year to end of the year by match number.

4. Split into Teams

Find the keyword that separates the teams (i.e. "defeats" or "vs.") and separate into the "winning team" (team AA) and the "losing team(s)" (team BB). Be sure to break off any time marks from team BB and any stipulation descriptions from team AA. Eliminate special marks like (c).

5. Clean up Teams

Create a new row for each team and note whether they were originally team AA or team BB. Eliminate any match descriptors like "by DQ" or "[Round One]".  Replace team names (nWo Japan) with the team members (Keiji Muto & nWo Sting).

Change teams into people similar to how you changed results into individual matches. Convert "&" and "," into "@" and use a text-to-columns function.

6. Individual People

Move each person to their own row. Add a result column for "win/loss/draw" and if needed go through the process of combining multiple names into a final name column (Great Muta->Keiji Muto).

IMPORTANT: Make sure there isn't any matches that have the same person on both sides. This often happens when you have Unknown in the list, but also can happen during doppleganger matches (Sin Cara vs Sin Cara) or straight-out mistakes such as:

(14.04.1998) NJPW Battle Line Kyushu 1998 - Tag 2 @ in Kagoshima, Japan
Kensuke Sasaki, Tadao Yasuda & Tatsumi Fujinami defeat Junji Hirata, Shinya Hashimoto & Tadao Yasuda (12:17)

These will result in a circular reference.


The key to ELO is having two sheets with the same information in different order and being able to reference back & forth quickly.

One sheet is arranged by person in chronological order.  (PEOPLE)
The other sheet is arranged by match in chronological order. (MATCHES)
It's important that the row references for both sheets are available on both sheets.

On (PEOPLE), the ELO for each wrestler starts a given number. Let's say 1600. The final value for each wrestler is based on the row of the match they are in.

On (MATCHES), you need to add up all of the ELO for each team (let's assume A vs B matches to start simple) and divide by total number of people so you have an adjusted number you can compare (even when it's a handicap match). Once you have the totals for each wrestler (looking up the starting ELO value from the PEOPLE tab based on the row #), you calculate the predicted outcome:

A wins = 10^(ELO_A/400) / (10^(ELO_A/400) + 10^(ELO_B/400) )

The k-value should change by the importance of the match. If you want Tokyo Dome shows (or WrestleMania) to be higher, you should increase the value. Likewise, you could increase the value for title matches or title changes. Often, I will set House Shows to something like 4 and TV shows at 16 and PPVs at 32. You could also have stipulations or even match lenth change the k-value.

The actual value is a number between 0 and 1. 1 = team A won. 0.5 = draw. If you want, you can assigned quarter points for outcomes like "win via DQ" (0.75).

The difference between the (actual values and prediction) x k-value = points change.

Assume you have two wrestlers: A vs B at the Tokyo Dome.
A = ELO 2000
B = ELO 1600

Predicted A wins = 10^(2000/400) / (10^(2000/400) + 10^(1600/400) ) = 10^5 / (10^5 + 10^4) = 0.90909090 (91% chance A wins; 9% chance B wins).

A wins. A point change = (1-.91) x 32 = +2.9 points
B point change = (0-.09) x 32 = -2.9 points

New A ELO = 2000 + 2.9 = 2002.9 points
New B ELO = 1600 - 2.9 = 1597.1 points

See also: https://sites.google.com/site/chrisharrington/mookieghana-prowrestlingstatistics/wwf_elo_rankings

You may want to have different ELO ratings for tag & singles matches.

See EXCEL file at: https://sites.google.com/site/eloexample/elo_excel_example

Friday, May 27, 2016

Is WWE Studios profitable?

SpitTake on the F4W board asks, "Is WWE Studios profitable?"

It's a good question. Here's my take:

(WWE switched from using Profit Contribution from 2007 to 2010 to adjusted OIBDA from 2011 to current for their primary measure of "profitability", but the story doesn't change much.)

WWE Studios History
2015: $7.1M revenue / ($0.3 million in Q3 2015 and $0.2 million in Q4 2015 impairment charges) / OIBDA: -$1.5M
2014: $10.9M revenue / ($1.5 million in Q4 2014 impairment charge) / OIBDA: +$0.5M
2013: $10.8M revenue / ($7.0 million in Q3 2013 and $4.7 million Q1 2013 impairment charges) / OIBDA: -$12.7M
2012: $7.9M revenue / ($0.5 million in Q4 2012 and $0.8 million in Q1 2012 impairment charges) OIBDA: -$5.5M
2011: $20.9M revenue / ($12.2 million in Q4 2011 + $5.1 million in Q3 2011 + $3.3 million in Q2 2011 and $2.8 million in Q1 2011 impairment charges) / OIBDA: -$29.3M
2010: $19.6M revenue / Profit Contribution: $0.4M
2009: $7.7M revenue / Profit Contribution: $3.7M
2008: $24.5M revenue / Profit Contribution: $8.9M
2007: $16.0M revenue / (WWE Studios profit contribution includes a $1.9 million impairment charge in Q3 2008 related to the feature film, "See No Evil ," and a $15.7 million impairment charge in Q2 2007 related to the feature film, "The Condemned.") / Profit Contribution: -$13.1M

2007-2015: $125.4M revenue / -$48.6M (mix of OIBDA and Profit Contribution)
The Q1 2016 number was negative OIBDA ($6.8M revenue / $0.4M) but it's better to look at full year comparisons because they often take large impairment charges when it's clear something is underperforming. WWE changed their model in the last few years from fully funding big movies to taking on partners and funding part of production and looking at different distribution models. WWE did get a $35M credit line for the WWE studios (they're using about $28M of it right now).

WWE Studios: As we typically participate in a film’s results subsequent to our distributor’s recoupment of costs, there is a lag between a film’s release and its impact on revenue. At March 31, 2016, the Company had $28.2 million (net of accumulated amortization and impairment charges) of Feature Film Production Assets capitalized on its Consolidated Balance Sheet, of which $14.2 million is for films in-release, $4.2 million is for films in production, and the remaining $9.8 million is for films that are completed, pending release, or developmental projects. We review and revise estimates of ultimate revenue and participation costs at the end of each reporting quarter to reflect the most current information available. If estimates for a film’s ultimate revenue and/or costs are revised and indicate a significant decline in a film’s profitability, or if events or circumstances change that would indicate we should assess whether the fair value of a film is less than its unamortized film costs, we calculate the film's estimated fair value using a discounted cash flows model. If fair value is less than unamortized cost, the film asset is written down to fair value. There were no impairment charges recorded in the periods presented.

In the past, WWE would give lots of detail movie-by-movie in the quarterly (Q1-Q3) 10-Q filings. For instance, here is Q3 2015 10-Q filing:

Unfortunately, WWE seems to have moved away from this level of detail in their latest filing. (This is something I complained about regarding the KPIs in my SeekingAlpha article.)

What about The Marine? Wasn't that successful?

As of Q3 2012, WWE had received $37.8M revenue from The Marine and profit was $15.0M. The Condemned ended up being a money-loser at $10.9M in revenue with a $6.5M loss. 12 Rounds was $11.5M revenue with -$2.9M profit.

The success of the Call for WWE has been exaggerated because WWE only funded about $1.0M of the movie. So, they made $3.4M in OIBDA (which is great) but they only had a small stake in the overall film. As noted, they put in $5.8M for Dead Man Down (released March 2013) and recorded a negative -$4.7M OIBDA as of September 30, 2014.

Basically, WWE strategy has shifted to smaller investments in films and smaller rewards (and losses). Made-for-TV movies like Christmas Bounty or Jingle all the Way 2 have been profitable. Kid's movies like Scooby Doo WrestleMania mystery was profitable (+$1.6M OIBDA on +$2.5M Revenue). I would bet that The Flintstones & WWE: Stone Age Smackdown will be profitable. Oculus was another example of throwing in $3M to fund it, and losing $1.6M in OIBDA so far. We'll see what happens but I think they should stick with less horror and more kids.

Why does WWE have a film studio anyways?

The argument that I've used is that it's part of WWE's identity as an "entertainment brand". If they didn't have the WWE Studios then they would be running an OTT service - which shows wrestling. They'd be doing television programming - which is wrestling. They'd be selling merchandise - of wrestlers. It's hard for them to pretend they're anything but a global wrestling company. However, the WWE Studios is part of their entertainment branding and gives them all these partnerships with Hollywood studios so they can pretend they're more than just a wrestling company.

Jackanape: "Why not just be proud of being the biggest wrestling company in history though?"
I don't know. Maybe it's because Vince sees himself as a general promoter and general businessman. He yearns to be recognize as such.

While Vince sees wrestling as a bailiwick he can dominate, he thinks: why not promote Evel Knevel jumps, Boxing matches, movies, casinos, amusement park rides, video games, action figures, reality television shows, exercise lines, vitamins and supplements, singing & dancing bodybuilding pay-per-views, ice cream bars, and so forth?

-Chris Harrington

Thursday, May 19, 2016

Barrios at Needham Emerging Technology Conference (5/19/16)

Presentation & Audio here: http://wsw.com/webcast/needham77/wwe/

Laura Martin, Needham, introduces George Barrios. She notes they still have a $25 buy rating on WWE.

George Barrios gives his normal investment pitch to start the presentation.

The 70-80% views outside the US is important.

Barrios uses the Joseph Campbell "Hero's Journey" as the analogy for what WWE does.

Barrios notes that WWE doesn't put the same content in each pillar - it's not just the same programming over & over again.

WWE has their major TV rights agreements tied up through 2018. However, this does include the CTH/Thailand estimates which ended up with that international distributor defaulting on their contract for non-payment. This has never been addressed publicly by WWE.

Barrios notes they have "up to about 5,100 hours of WWE Network content and 150,000 hours in their library"

Laura Martin asks: "If YouTube is only $10M annually, why do I care?"

George Barrios' answer:

Three layers: First, the ability to engage 24/7 (we measure by time). When you're an entertainment property that means your ultimate measure is time. Our ability to drive that number continually higher is hugely important to us. That means more action figures and more subscriptions and more viewership in Pay TV (which manifests itself in the renewal pay cycle). Second, Kid's TV time is all about YouTube & NetFlix - that's where they spend their time. Multi-generational viewing continues in front of the TV but more & more of our next generational fans will come from these platforms. Lastly, if you look over the last hundred years of media, the money has followed the eyeballs. But it takes time. It takes the money longer than the behavior. The behavior changes and the money at first stays where the old behavior was, and then there's a tipping point. Eventually that becomes a big money maker.
Martin: "I can't directly generate money from it. But it lowers the cost of customer acquisition. But the social chatter lowers cost of acquiring a new WWE Network subscriber or a new television viewer... It broadens the funnel at the top and hopefully it trickles down."

Barrios: "Not hopefully! By our math, it happens."

George Barrios is quoting the David Carr article, "The Stream Finally Cracks the Dam of Cable TV" about the "scary place" which is the "long, dark hallway" when you're embarking of these sort of investments which involve changes in how media is distributed and consumed.

Barrios notes that they were six-months in and were "still trying to escape gravity".

Barrios talks about decision to partner instead of go-it-alone when WWE was launching the WWE Network.

Martin: What did you do wrong?
Barrios: Biggest regret - we didn't do it earlier.
Martin: Doesn't count.

Barrios OTT regret: When we launched - we had a 6-month commitment pricing - no promotional element - no free trial. #wweneedham

Laura Martin asked re: value proposition of the WWE Network pointing out the original conceit was to have WM separate/premium. #wweneedham

Barrios: "Our analog was the 12 PPVs annually provided through the MVPD community. The whole conceit of the Network in 2011 was thinking about that flat PPV business, monetizing our large & growing archive, and the best place to create new content. At $60 you have x amount of people 900,000-1,000,000 homes that bought 3-4 PPVs each year. At $9.99 with all this content, not just the three hours, we believed we could get beyond that 900,000 to 1,000,000. Now we're at 1.5 million which is up 25% year-over-year- we turned $80 million business into $160 million business - doubled. You have to believe lower price point, more content - penetrate more users."

Barrios talks about BB homes and goal to 3-4 million subscribers.

Barrios on Churn:
"Anyone work in a subscription business? You work in one,there's churn.Subscription businesses are like retail."
 "Two years ago there was 2 people who worked in a subscription business. I was one of them."
"There will always be churn but we always want it to be lower than it is now."

Martin: "the 3M-4M sub projection - how does the looks sub mix in maturity?"

Barrios: "Prelaunch est was 25%-30% come from outside US. 15 years from now, it might be different."

Martin: How are you using Data from OTT to change programming & advertising? 


5-6% of revenue in 2010 came from a digital source. Now it's 30% in 2015 primarily because of the WWE Network but we've had growth across all our digital businesses. Amount of data that we collect has quintupled in last 24 months because of WWE Network. We've always invested in technology but we're probably investing 3-4x vs what we used to.
The data helps us within each business. I'm able to run WWE Network more effectively because of the data in a variety of ways. I can see what people are looking at or watching. What are people watching? What shows? Where to spend money on programming the next time around?). It's not a survey or sampling like Nielsen. We get real data.
It helps us on the marketing. When you have the data, you can have customer profiles based on the data.
Netflix says they have 72,000 customer segments. That's 1,000-2,000 people in each segment. We started with one. We have more now. (Martin: Dozens?) It's there and climbing fast.
We don't care if it's a 12-year old boy and a 45-year old woman watching the same show - that's now a segment.
Even predicting churn which helps you stop it. Our predictive model has 25 different models based on which country they come from, are they a win-back, viewing habits and time of acquisition. My guess is a year from now it'll be 50 datapoints.
Similar stories on data on our e-commerce is how you sell more t-shirts. The real magic on the data side is how to integrate all of these data sets with the holy grail being social.
All these social platforms have different data structures. The ability to link our FB data to my YouTube data to our ticketing data to e-commerce data to Network dat ais a long slog for us. But that's what we're working on. We think that's what's super powerful. That's WWE 360 2.0.
Audience Q&A

Audience: Why did subs go fly last year given enormous growth of content and spending on the Network?
Barrios: We've seen a cyclicality to the Network around WrestleMania. We have a big event. WM is the biggest "funnel-filler" to the Network. The math around that means we'll see year-over-year growth but may see a sequential decline. Right now to continue to get to that 3-4 million, a cyclical peak that drives year-over-year growth but sequential decline. That gets to the power of that special event. I remember being at HBO and we'd seen the same thing in our core programming back then but not in the degree we see it because WrestleMania is our Super Bowl.

Q: UFC is for sale. Is WWE interested in purchasing it? If it gets an elevated valuations what implications for WWE valuations?
Barrios: We don't talk about acquisitions. I'm not going to answer that question. As far of the valuation, not much - it just keeps amplying the value of content. It just another datapoint.
Martin points out UFC valuation is possibly 4B. Which is like three-times as large as you (WWE), even though you're forty years old.

Barrios: I'll give you a buck if you can find a subscription service that doesn't give it away for free.
Martin: Maybe they don't give their SuperBowl for free.
Barrios: There's no cost to you. Other than that opportunity cost for that subscriber. We said, "Why wouldn't we do it?"

Martin: Do you suspend 30-day free trial for period over WrestleMania? Then opportunity cost is only $10 for that period.

Barrios is calling their churn "average 10% a month".

On the earning call, the day after WrestleMania, if things moved the way they've moved in the past, we thought we'd average 1.5 million +/- 2%. We expect it would be similar to what we've seen before.

Martin: 10% churn is about 10-months. They pay for 10 months and churn out. 
Barrios: Not a lot of people report Churn. Netflix doesn't. 

Barrios is now playing "how many different ways to calculate churn" (subscriber churn vs order
Barrios says different between sub & order churn as join 1/1,leave 1/15, rejoin 1/20 is a win-back and a loss. In the Cable business, if you're a sub in both periods, no churn.

Martin: Your 10% might equate to 7% in the Cable business.

The call is over. Last question was Barrios explaining how live events work in terms of what talent

More coverage of WWE Q1 Results and WWE International Market Strategy at SeekingAlpha.

Monday, May 09, 2016

WWE Subsidiaries

While they love to call themselves "WWE", the company is still technically the full "World Wrestling Entertainment, Inc." title.

Second, there is a list of all SUBSIDIARIES OF WORLD WRESTLING ENTERTAINMENT, INC. (All subsidiaries are wholly-owned, directly or indirectly, except where indicated) that is filed every year with their annual report: http://www.sec.gov/Archives/edgar/data/1091907/000109190716000046/wwe-20151231xex211.htm

2015 10-K: 
  • TSI Realty Company (a Delaware corporation)
  •  Event Services, Inc. (a Delaware corporation)
  • WM Labor MGT, Inc. (a Delaware corporation)
  • Event Services (Nola), LLC (a Louisiana corporation)
  • WWE Jet Services, Inc. (a Delaware corporation)
  • WWE Network, LLC (a Delaware limited liability company)
  • WWE Studios, Inc. (a Delaware corporation)
  • Studios Originals, Inc. (a Delaware corporation)
  • WWE Studios Finance Holding Corp. (a Delaware corporation
  • WWE Studios Finance Corp. (a Delaware corporation
  • Erebus Pictures, LLC (a Delaware limited liability company) (50 percent owned)
  • Covert Films, LLC (a Delaware limited liability company)
  • Good and Bad Cop, LLC (a Louisiana limited liability company)
  • WWE Films Development, Inc. (a Delaware corporation)
  • WWE Studios Production, Inc. (a Delaware corporation)
  • WWE TE Productions, Inc. (a Delaware corporation)
  • WWE LH Productions, Inc. (a Delaware corporation)
  • Marine Productions Australia Pty Limited (an Australia corporation)
  • Marine 3, LLC (a Louisiana limited liability company)
  • Marine: Homefront, Inc. (a Delaware corporation)
  • Twelve RR, Inc. (a Delaware corporation)
  • Six Forty Two Films, Inc. (a Delaware corporation)
  • One More Time Films, Inc. (a Delaware corporation)
  • Mind’s Eye Films, Inc. (a Delaware corporation)
  • Incarnate Investments, Inc. (a Delaware corporation)
  • Fourth Marine Films, Inc. (a Delaware corporation)
  • Marine 4 Films, Inc. (a British Columbia company)
  • Triangle Films, Inc. (a Delaware corporation)
  • Action Six Pack #1, Inc. (a Delaware corporation)
  • Vendetta Pictures, Inc. (a British Columbia company)
  • Asp #2, Inc. (a Delaware corporation)
  • Lockdown Films, Inc. (a British Columbia company)
  • The Condemned 2, Inc. (a Delaware corporation)
  • Interrogation Films, Inc. (a British Columbia company)
  • SLH Films, Inc. (a Delaware corporation)
  • BB Films, Inc. (a Delaware corporation)
  • House Pictures, Inc. (a Delaware corporation)
  • Temple Films, Ltd. (a British Columbia company)
  • Railway Films, Inc. (a British Columbia company)
  • Ticking Films, Inc. (a British Columbia company)
  • WWE Properties International, Inc. (a Delaware corporation)
  • XFL, LLC (50 percent owned)
  • WWE Japan LLC (a Japanese limited liability company)
  • WWE Australia Pty Limited (an Australia limited liability company)
  • World Wrestling Entertainment (International) Limited (a UK corporation)
  • World Wrestling Entertainment Canada, Inc. (a Canadian corporation)
  • WWE Asia Pacific Pte, Ltd. (a Singapore corporation)
  • WWE Germany GmbH  (a German corporation)
These companies fall into general buckets:
a) TV Production Companies
b) Film Production Companies
c) Overseas WWE offices/companies for paying international taxes for int'l tours (Japan, Australia)
d) Outside projects (XFL, used to include"Stephanie Music" company, etc.)
e) WWE Ventures that involve a large bank loan (like the WWE Jet)
f) Live Event Production Business (I believe "Event Services, Inc." is technically the subsidiary that's responsible for setting up live events with the electronics, ramp, ring, etc and has to pay taxes in each state)