The Hamilton Ave Journal 06.11.09: Volume 2 – Issue 90

Posted by JP Prag on 06.11.2009

Is the WWE happy with the WrestleMania 25 buyrate? Does the company understand that MMA is competition? Will ROH ever have a PPV again? Will TNA ever stop tweating? Can the USA network show pride in RAW? Have ratings finally seen a rebound? Does anyone plan on starting a wrestling company in the UK? All this and more is answered in this week’s edition of the Hamilton Ave Journal!

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 90

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: WWE confused about a lot, but does well

Inside the WWE this past week, turmoil has been the key word. Among the usual happenings of rocky ratings and storyline directions, the WWE also started releasing talent. It began in the developmental system with Maverick Darsow, Lupe Santiago, and Jon Cutler, but worked its way up to the main roster with recent PPV participant Umaga. At the same time, injuries to major members of the roster, especially new WWE Champion Batista, have caused a flurry of questions of whether the WWE is paying attention to all of their moving parts. Many decisions and projects are going on at the same time, but details are being lost along the way, including some rather large ones.

Still, that has not seemed to phased the street. Instead, investors have actually been reacting very well to the WWE. Yesterday, the stock closed at $14.01, the highest level seen since the beginning of November 2008.

This could be because the WWE is quite good at making the best of a tough situation. Early numbers came out that WrestleMania 25 did 970,000 buys. The final number is expected to be higher as other countries' results come in, but the WWE must be happy with the number. Internal estimates were coming in as low as 800,000 buys. Despite being below the 1.05 million last year and the 1.25 million the year before, the WWE is still poised to make quite the profit here. In a tough economy like this one, these are still impressive numbers.

The other piece of news that may have helped was WWE COO Donna Goldsmith speaking at the Noble Financial Emerging Growth Equity Conference. The presentation was the typical one that is usually given by WWE CEO Linda McMahon, with a few twists. Most interesting was Mrs. Goldsmiths' comments on her company's competition:

"The MMAs have definitely been gaining popularity. And can you say the take a share of dollar? [Shrugs] Maybe on the PPV front… umm… which is tough business, the PPV. We have not felt it in our other areas, and the reason being they do not have real stars. They don't have a storyline. Someone gets knocked out or hurt, that may the last you ever see from them again."

She continued:

"As far as the PPV goes, we need to find new ways to innovate to get that share of dollars—we are competing for the same share of dollar! But I must tell you, up until this point we have really not felt any of that pain…. I think it is somewhat of a difference audience; we're still learning because it is still relatively new…"

Perhaps Mrs. Goldsmith needs to be reminded of the Top Ten North American PPV buyrates from 2008:

1. Boxing: Oscar De La Hoya vs. Manny Pacquiao, Dec. 6, 1,250,000
2. UFC: Brock Lesnar vs. Randy Couture, Nov. 15, 1,010,000
3. Wrestling: WrestleMania, Floyd Mayweather Jr. vs. Paul "Big Show" Wight, March 30, 670,000
4. UFC: Georges St. Pierre vs. Jon Fitch/Lesnar vs. Heath Herring, Aug. 9, 625,000
5. UFC: Lesnar vs. Frank Mir, Feb. 2, 600,000
6. UFC: Quinton Jackson vs. Forrest Griffin, July 5, 540,000
7. UFC: St. Pierre vs. Matt Serra, April 19, 530,000
8. Boxing: Felix Trinidad vs. Roy Jones Jr., Jan. 19, 500,000
9. UFC: Chuck Liddell vs. Rashad Evans, Sept. 6, 480,000
10. UFC: B.J. Penn vs. Sean Sherk/Tito Ortiz vs. Lyoto Machida, May 24, 475,000

UFC took 7 of the 10 spots, with one PPV doing 1 million buys domestically alone (not including international contributions). Mrs. Goldsmith seems to eager to dismiss MMA and the long term implications on the business. It is not "some" of the same dollar, but all of the same dollar. People have limited funds per month, and the more they spend on MMA, the less they potentially have for the WWE.

The important thing for the WWE to remember in all situations is that they are not just in competition with other sports entertainment companies; they are in competition with all entertainment, including sports. Anything that takes attention and dollars away from the WWE is competition, and the sooner they accept that the sooner they will be able to compete for those dollars.

As far as "innovating" PPV, the WWE used to be a worldwide leader in this market. While they still do much better than 95% of all other PPV offerings, their position at the top of the ladder has been severely displaced by the UFC. Meanwhile, UFC was founded in 1993 and has seen explosive growth in the past five years. They are no longer a "relative" newcomer and the WWE needs to get over their old guard attitude and start addressing today.


Newsbites

Some items of note in the rest of the wrestling business world:

After months of poor performance (and actually being kicked out of Canada for a while), ROH has officially decided to suspend doing PPVs after the event this Friday June 12, 2009. The decision was made as ROH wants to focus on the TV show and believes that if they return to PPV in the future that HDNet will be there production partner instead of G-Funk Entertainment. The ending of PPV will most likely not be a blow to ROH as the shows were expensive to produce and took over 6 months to recoup dollars from the PPV industry. In general, ROH did much better in their direct DVD market than in the casual PPV market.

As promised, the WWE went after Justin.tv during the broadcast of last Sunday's Extreme Rules PPV. Streams were continually shut down due to demands from the "copyright owners". Still, this is only one site of many and there is no telling the cost to the WWE to constantly search for and send requests in all during the PPV.

In a throwback to WCW's methods, TNA has signed a deal with Stacker2 that literally puts advertising right in the middle of the ring. Product placement has been one of the fastest growing advertising methods and should provide TNA with additional revenue that they do not see from the Spike sponsors.

TNA is also really pushing new technology. Jeremy Borash actually send Twitter updates throughout the weekend during live events. Statistically speaking, according to Nielson 60% of Twitter users fail to return after a month of use. Given that, it is only a matter of time before Twitter runs out of potential customers and falls off, but it should be interesting to see if TNA can use the service to any type of profitability in the meantime.

USA Network recently sent out a press release touting their best May numbers ever. As a change of pace, the network actually called out the WWE for their accomplishments in this field:

Every May telecast of WWE MONDAY NIGHT RAW appeared in May's top 25 telecasts, leading USA to deliver more M18-34 than any broadcaster but Fox in RAW's regular timeslot (Mon 9-11P) and out-performing ABC among M18-49 and M25-54 in May.




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 June 10, 2009, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.6
Open (Last Week's Rating): 3.4
Percentage Change: ▲ 5.9%
52-Week High: 4.1
52-Week Low: 2.6
All Time High: 8.1
All Time Low: 1.8

SmackDown*
Close (This Week's Rating): 1.9
Open (Last Week's Rating): 1.7
Percentage Change: ▲ 11.8%
52-Week High: 2.5
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): 1.2
Open (Last Week's Rating): 1.1
Percentage Change: ▲ 14.3%
52-Week High: 1.5
52-Week Low: 0.9
All Time High: 2.3
All Time Low: 0.6

TNA iMPACT**
Close (This Week's Rating): 1.1
Open (Last Week's Rating): 1.2
Percentage Change: ▼ 8.3%
52-Week High: 1.3
52-Week Low: 0.9
All Time High: 1.3
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

SuperStars***
Close (This Week's Rating): 1.0
Open (Last Week's Rating): 0.8
Percentage Change: ▲ 31.6%
52-Week High: 1.0
52-Week Low: 0.8
All Time High: 1.0
All Time Low: 0.8

*** SuperStars ratings may include fast overnight if final ratings are not posted. Also, SuperStars ratings are for the prior week as overnights are not available before this article goes to print.

Analysis:

This past week was a major ratings recovery for wrestling. While none of the WWE's shows saw fantastic numbers, RAW was up 5.9% to 3.6, SmackDown up 11.8% to 1.9, ECW up 14.3% to 1.2, and SuperStars up 31.6% to an all-time high of a 1.0. Although all ECW and SmackDown are down to last year, RAW is back in line this week and SuperStars saw major growth. The question remains if these gains can be held on to or if this is just part of a ding-dong affect that we have been growing used to seeing.

The one sour note was TNA iMPACT again slipping to a 1.1. Just as the WWE has trouble maintaining momentum, so too would it seem TNA. They are still trending above this time last year by 0.2, but TNA should be riding the momentum that began at the beginning of the year and seems to have slipped off since mid-May. While not doing poorly, TNA is still not showing they can consistently maintain their new audience.




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. Macho Madness-Macho Madness - The Randy Savage Ultimate Collection 3-Disc DVD Package ($60.95, on sale $28.99)
3. Triple H Eversoris T-Shirt ($28)
4. John Cena HLR Academy T-Shirt ($25)
5. WWE World Heavyweight Championship Plastic Title Belt ($19.99)
6. WWE Ultimate Rivals Trading Cards ($2)
7. Jeff Hardy PPV #20 Action Figure ($39,99, on sale $22.99)
8. Jeff Hardy 2 Armband Package ($40, on sale $14.99)
9. WWE White Gift Bag ($)
10. Batista Basics T-Shirt ($14.99)

While the usual suspects were in full force (and Jeff Hardy even premiered a new item), there were a couple of interesting items this week. First up, Randy Savage made his debut in the Top Ten with his forthcoming DVD set. DVD sets are notorious for short shelf life in the Top Ten, so it will be interesting to see how long he can stick around. Down at the bottom of the list is Batista, appearing once again after winning the championship. Of course, the timing could not be worse. With his injury, except Batista to slip off the list for quite some time to come.


TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:

1. Beer Money T-Shirt ($19.99)
2. Cross The Line Triple Pack DVD Set ($24.99, on sale $10.88)
4. Jeff Jarrett King of Mountain DVD Set ($29.99)
3. Motor City Machine Guns T-shirt ($19.99)
5. TNA Logo T-Shirt Special ($24.99)
6. Nash "Big Sexy Tour" T-shirt (2008 Version) ($19.99)
7. Main Event Mafia – Black T-shirt ($19.99)
8. Single Pack Of Five Impact Trading Cards ($2.49)
9. Kurt Angle - Champion DVD ($19.99, on sale $17.99)

And the streak of three weeks of product updates comes to and end. It was an excellent ride while it lasted, TNA.




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
14 (Jun) SmackDown / ECW Live (Hershey, PA) TNA Live (Kearney, NE)	15 RAW / SuperStars (Charlotte, NC)	16 SmackDown / ECW (Roanoke, VA)	17	18	19 ROH on HDNet (Philadelphia, PA) RAW Live (Des Moines, IA) TNA Live (Grand Rapids, MI)	20 ROH on HDNet (Philadelphia, PA) RAW Live (Moline, IL) SmackDown / ECW Live (Saginaw, MI)
21 TNA Slamiversary (Detroit, MI) RAW Live (Dubuque, IA) SmackDown / ECW Live (Kalamazoo, MI)	22 RAW / SuperStars (Green Bay, WI) SmackDown / ECW Live (Valparaiso, IN)	23 SmackDown / ECW (Milwaukee, WI) TNA iMPACT (Orlando, FL)	24 TNA iMPACT (Orlando, FL)	25 TNA iMPACT (Orlando, FL)	26 ROH Live (Detroit, MI)	27 WWE SuperShow (Reno, NV) ROH Live (Chicago Ridge, IL)

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, UK wrestling was a surprisingly hot topic. First up is Daishi:

Having close ties to a UK promoter, I hope i can shed a little light here.

The main reason that the UK based wrestling scene is it is still tainted by memories of "World of Sport" from the seventies / eighties, with Big Daddy and Giant Haystacks being probably the two most named wrestlers in most of the 30+ demographics.

Watch this clip to see where the problem lies in that.



Whilst the 15-30 market have been brought up on US based (mainly WWF / WWE) wrestling, there was, until less than 10 years ago, almost no advertised UK indy scene - "British" wrestling (rounds based, 10 count on a knockdown, etc) died in the mid eighties. Even now, whilst the UK indies are gaining in popularity and starting to get a foothold, the lack of "name" talent, and the fact that advertising is limited to usually second rate, cheap looking posters displayed in the window of the local butcher, means that the 30+ parent who's eight year old kid, wearing his HLR t-shirt and Hardy arm-sleeves won't take their child to the local gym to see some kids pretending to do "American wrestling".

When the WWE or TNA comes to town, it is a "big thing" - with the associated big ticket price. WWE were charging £45 (~$65) per ticket for essentially a house show at the 10,000 capacity arena in Newcastle - a local show would probably charge £5-8 per ticket for a show in a 100 capacity gym.

WWE can charge that much because they are the big dog that only comes to town rarely. With the right promotion and a "name" PPV, they could probably fill the 56,000+ seater St. James Park in the same city.

TNA are starting to get quite the following in the UK due to their deal with Bravo, but the local scene is a pale comparison in terms of image, popularity and unfortunately, most times, product.

So to sum it all up, the independent British scene died in the early 80's and the American style has become so popular that there is no room to compete. Japan is starting to see this affect as well as the American organizations are gaining market share and dominance while some of the local organizations are beginning to slip. Mexico has this issue as well, but has also been moving in to the American market due to the large increases in the Latino population. Guest#5860 follows up on your thought, though:

Pretty much every kid growing up will watch WWE at some point. It has been ingrained into the consciousness here [in the UK], and now TNA as well is jumping on this. However, because of this, I think part of the appeal of wrestling is because it seen as being very American, and thus over-the-top, expensive and exciting, whereas a British wrestling show would be looked down on as dry and boring.

As noted above, Japan is seeing pretty much the same thing. In Japanese wrestling, the audience is supposed to sit quietly and applaud good moves. But many people in the younger generation want to act like the American audience. Both the WWE and TNA know the audience is a part of the show, and the audience knows they are as well. As such, the audience will want to act out as part of the show, which goes with the overall experience. In Japan, that is a relatively new concept, much like the UK 30 years ago.

BringTheNoise brings up what happens when competition tries to form:

1PW was probably the biggest attempt by a UK promoter to do Sports Entertainment in the UK - and it went bust in under a year. It's back now, but stumbling along without the big names that drew the crowds. It would seem that it's the company name rather than the wrestlers that draw in the UK, as TNA and 1PW used a lot of the same talent.

Well, companies are brands nowadays. It is rare when one name is a draw, but John Cena and Jeff Hardy certainly qualify as folks who do that (though not the extent of a Hulk Hogan, Steve Austin, Ric Falir, Dusty Rhodes, or the Rock in prior generations). Just putting a wrestling show out there is not necessarily going to draw people in. GVSBfan seems to have a differing opinion to that:

As I am based in the UK, and have attended a few UK indy shows. I have to say that part of the problem comes from the demographic. The hardcore British fans tend to be mid teens to early 20s, and as such it doesn't appear to be a friendly family environment (I don't think this is true necessarily, although certainly evening shows often have a rowdy crowd who have had a few drinks before hand). Without family attendance, it is always going to be a niche market over here.

I don't understand why a company doesn't set up shows in seaside resorts (and as someone mentioned above, theme parks) and build up a audience that way. With more people choosing to save money by holidaying in the UK, I would think that this would be an ideal time to be building up an audience. A slightly different approach may be necessary, possibly more emphasis on the athleticism to avoid "panto" comparisons ( another drawback of wrestlings image in this country - which really annoys me, until the WWE runs another stupid, tasteless or over the top angle...).

There is money to be made from Wrestling in this country - even if audiences reached 400 - 500, or 2000 - 4000 for bigger shows, and there are so many TV channels crying out for a new show (rather than re-runs of re-runs!) in the UK.

Even in the UK wrestling on TV will suffer from the same problem it does in America: advertiser perception of the audience. Even though RAW is consistently the top rated show on cable, it cannot come close to lower rated shows for advertising dollars. Advertisers just simply believe that the wrestling audience is not their target demographic and do not spend money, so they do not invest in the product. Readers of the Journal know the advertisers are mistaken about the demographic and their spending power. Just reading the WWE 10Q reports will prove that. Still, a perception is worth more than the facts in some cases.

The other big topic was around SmackDown's ratings. Michael Shawn ponders:

Why does SD have such a low rating in spite of being widely regarded as the best show?

I think it is because Americans have very poor taste; they like movies like Mall Cop and vote for Twilight in award shows. They watch RAW & moan about it instead of switching to SD. It's not the network or Friday night, because ratings for SD used to be quite high when HHH was around, it is the bad taste of the audience. No matter how bad RAW gets, people will watch it. But for SD, they will give excuses for not watching it .

People [ including the kids of today ] in USA Do not appreciate quality anymore and have very bad taste .

One must assume you are not American. In general around the world (except in Mexico) SmackDown does lower ratings than RAW. You should check your own country's ratings and settle your disappointment on the bad taste of your own people. Iron Knee presents an odder idea:

SD gets low rating because it is on the former My Network. Many My channels are on the UHF band and thus draw less viewers. Furthermore, it is often pre-empted for basketball, hockey, or baseball. Thus, SD does not become appointment viewing.

Another reason for its low ratings is its Friday night timeslot. There's a reason that networks don't schedule their best shows on Friday; no one's home.

The Friday night timeslot will lower ratings for sure, but it is no death slot for them. SmackDown moved to Friday night on September 9, 2005. So for almost four years the program has thrived in that spot. True, before then SmackDown regularly had 3.0-3.2 ratings, but the managed to stay in the 2.5-2.8 range until April 2006. They even got a 3.0 as late as February 24, 2006. Then, in 2007 things got even better. The month of February 2007 averaged a 3.1 rating and peaked at a 3.3 on February 23, 2007. Basically, they had two years of minimal ratings loss because of the timeslot. From that point on they sunk further and further down the ratings chain.

Now to clear up some misconception. First, there is "former' MyNetworkTV. MyNetworkTV still exists, is owned by NewsCorp (owners of Fox), and provides programs for member stations. MyNetworkTV is actually available in more homes than the CW was. However, MyNetworkTV is missing a few major markets and makes up the numbers from minor ones. In those markets, SmackDown airs at a different time. For instance, in Providence, RI SmackDown airs at 11:30pm on the local Fox affiliate.

As for the "UHF" band, that only applies to analog dial TVs. Any TV built in the past 15 years has digital channels. Also, 85% of Americans have cable or satellite, so they do not view channels in "bands", but just in order. From a channel lineup perspective, all local stations come well before cable stations, so people channel surfing would come to SmackDown first, not the other way around.

Brad B wants to throw in another theory:

Smackdown suffers from being a taped show. Period. Yes, you can avoid the spoilers and watch events as they unfold, but it's not easy particularly if you participate in wrestling forums or chat rooms where some dummy will no doubt leak information you wanted to avoid.

Also, WWE's insistence on reshooting different segments or redoing match endings in post production makes it look so bush league. It's almost as if anyone relegated to the Smackdown roster isn't considered trustworthy enough to get the job done in the promo department on live TV.

Raw, on the other hand, declining quality or not, is live almost every single week. Despite spoilers about who is backstage or finding out the main event a few hours before it airs, it still has that aura of "anything can happen."

You greatly overestimate the amount of fans reading wrestling websites and whatnot. While the percentage is growing, the vast majority just watch the shows and nothing else. However, most people are aware that RAW is live and that gives it a special quality. More so, RAW has been branded as must-see destination TV while SmackDown has not. The WWE does not spend enough time focusing of branding both shows at the same time. When they do, SmackDown has been much more successful than it is at the moment.

Of course, what would an issue of the Journal be without more talk about illegal steams. Streams himself says:

I watched Wrestlemania 20 as a live webcast back in the day for a slight discount off the PPV price (I think it was $35 for a $45 PPV.) It was the only way I could see the show, the quality was decent, and afterwards, I was overjoyed that I spent that money.

I "found" Wrestlemania 25, 1 day after the event... and I didn't even bother to watch it until 3 days later. "Deleted!"

I agree: if you make the product available in the methods/formats the customer wants, and offer it at fair market value, people WILL buy...

...BUT make the damn PRODUCT better, and people will buy it anyway!

What more is there to add? Maybe what Rich says:

WWE already hold's streams on their site for every PPV for the same price. In fact I watched WrestleMania on WWE.com for the same price with very good quality.

The problem is exactly what you said: the same price. As Steams pointed out, that used to be at a discount. Why would customers want to pay full price for something that is perceived as lower quality and that can be gotten for a cheaper price (free) for a little less quality? If you are going to go into a format war with the competition, you have to at least make the price worth it. And full PPV price is not the right point.


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!!

If you enjoy the Journal, why not bookmark 411mania.com and make it your home page? You can do that by clicking here.




This concludes Issue #90 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!