wrestling / Columns
The Hamilton Ave Journal 07.23.09: Volume 2 – Issue 96
THE HAMILTON AVE JOURNAL
By JP Prag
Volume 2 – Issue 96
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 not being sent back to development
As reported in the Journal, Jody Hamilton on behalf of the defunct Deep South Wrestling has filed a lawsuit against the WWE for breach of contract, lost wages, and emotional damages. The WWE has taken little time to respond (an oddity compared to their normal legal strategy) and have asked for a point blank dismissal. According to the WWE’s response, they believe that Mr. Hamilton has “failed to state a claim upon which relief may be granted”. As a reminder, the relief Mr. Hamilton asked for was covered in Issue #91:
WWE officials arrived to DSW facilities on April 18, 2007 to announce they were ended their relationship with DSW. DSW claimed that the WWE had to give 90 days notice to sever the contract, but the WWE took that day to remove their equipment, computer programs, data, and personnel. When they did so, they also took property (including intellectual data) that belonged to DSW, causing irreproachable harm.
Co-currently, DSW had events booked at Six Flags starting April 22, 2007 that WWE roster and development talent were booked for. Because the WWE removed their contracted personnel and refused to let them work for DSW without the 90 days notice, Mr. Hamilton was forced to cancel all of the events, also causing monetary damage.
This all led to the eventual shutdown of DSW. Mr. Hamilton is seeking $400,000 in damages from loss of income for the summer shows and undisclosed damages related to breach of contract and punitive charges as the court deems necessary.
It seems clear that Mr. Hamilton is claiming that DSW and he, personally, lost out on $400,000 in revenue based on the WWE allegedly breaching their contract agreements.
What is interesting is that the WWE claims that no contract existed between DSW and the WWE. The WWE claims they just assigned wrestlers to DSW in a loose business agreement and could interfere with them in any way they wished. Since there was no contract, then there would be none to breach.
Verbal contracts are legal, though tough to prove their existence and intent. That said, it would be quite unusual for a company like the WWE to not have a contract. Everyone who works for the WWE, especially the talent, have very specific contracts and terms. It would be strange behavior for the WWE to not have a contract with DSW considering the large amount of talent exchange and intellectual and physical property that moving around.
WWE made one very strong legal note when they said that the “emotional distress” part of the claim should be thrown out since Mr. Hamilton filed his claim two days after the statute of limitations expired. This strategy worked in favor for the WWE in their case with Scott Levy, et al. for employee rights, so the WWE has a point of strength here. Still, the “emotional distress” part was not financially laid out and the $400,000 was specifically sited for lost income.
Now it remains to be seen if the WWE will just do a settlement because it is cheaper than fighting the case, or if they will fight the case on principle. The Journal will continue to monitor the situation as it develops.
Newsbites
Some items of note in the rest of the wrestling business world:
“Muscle Flex believes that it can provide definable evidence that the WWE procured the sale and distribution of ‘Raw’ labeled products which infringe on the ‘In the Raw®’ wares and services that Muscle Flex Inc. legally has full and exclusive rights to use.”
EDITORIAL: This seems like a complete fabrication and loose analysis at best. Mr. Alex would seem to just want to extort money from the WWE instead of developing his own product. What once was a great win of protecting their right to use the word “raw” is now turning into a farce of epic proportions. This is like when the World Wildlife Fund won its case against the WWE for incorrect use of the initials “WWF”. Fine, they won the case and life moved on. But then they sued the WWE for $92 million is lost revenue that the World Wildlife Fund claims they lost because people were confused by the WWF. There is a point where it goes from some type of honorable and sensible batter to just pure extortion, and this is one of those times. END EDITORIAL
TNA iMPACT the Video Game shipped 1 million units. While not a great success, it is a franchise that has potential for growth. Some developer could get the franchise at a bargain basement price in just 90 days time.
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 July 22, 2009, here are the current standings of our shows:
RAW
Close (This Week’s Rating): 3.5
Open (Last Week’s Rating): 3.5
Percentage Change: UNCH
52-Week High: 4.5
52-Week Low: 2.6
All Time High: 8.1
All Time Low: 1.8
SmackDown*
Close (This Week’s Rating): 1.8
Open (Last Week’s Rating): 1.7
Percentage Change: ▲ 5.9%
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): 1.3
Percentage Change: ▼ 7.7%
52-Week High: 1.5
52-Week Low: 0.7
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): 0.9
Open (Last Week’s Rating): 0.8
Percentage Change: ▲ 12.5%
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:
Overall, it was a stagnant week for ratings. Each show only changed by 0.1 in either direction, with the exception of RAW that went nowhere. Despite all the “celebrity appearances”, 3-hours shows, commercial free episodes, and everything else, the WWE has not been able to maintain any audience growth. TNA, too, looks to have plateaued in their current ratings zone of 1.1 to 1.3 and has been downtrending slightly for a couple of month. Is it the summer lows, or have all wrestling shows just lost audience they can’t get back?
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. Gerry Brisco Classic Superstars #25 Action Figure (Unknown, item not available)
2. Jack Brisco Classic Superstars #25 Action Figure (Unknown, item not available)
3. John Cena Attitude Adjustment T-Shirt ($25)
4. Jeff Hardy 2 Armband Package ($40, on sale $14.99)
5. Triple H Eversoris T-Shirt ($28)
6. Hardys Purple Logo Pendant ($10)
7. JBL Build N Brawlers Series #5 Action Figure ($11.99, on sale $8.99, on double sale $6.98)
8. WWE White Gift Bag ($3)
9. Hardys 2008 Spiral Notebook ($5, on sale $3)
10. Jeff Hardy Glow In The Dark T-shirt ($20, on sale $9.98)
This is an odd list to say the least. It would appear that the WWE ShopZone was having clearance sales across the board and looking to move our merchandise. Normally this amount of clearance material is saved for TNA’s list, but the WWE needs to move out inventory from time-to-time as well. John Cena and Triple H should be especially proud to have full priced, high margin items make the Top Ten in such a week.
TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:
1. July Holiday Sale – Mix package ($250, on sale $49.99)
2. Against All Odds 2009 PPV DVD ($14.99, on sale $9.99)
3. Lockdown – 2009 DVD ($19.99)
4. Beer Money T-shirt ($19.99)
5. Kurt Angle – Champion DVD ($19.99, on sale $17.99)
6. Cross The Line Triple Pack 2.0 DVD Set ($24.99, on sale $14.99)
7. Jeff Jarrett – King Of The Mountain DVD Autographed ($29.99)
8. Knockouts Trading Card Hobby Box ($74.99, on sale $69.99)
9. Second 2 None DVD Set ($19.99)
TNA make an update for the second week in a row. While most of the items just shuffled positions on the chart, the Second 3 None DVD came back as well as a new Knockouts item related to trading cards. The trading cards continue to be a big seller for TNA, with the Knockouts cards and products leading the way. Being the top rated segments on the shows, the Knockouts are showing that they can also be the top sellers.
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.
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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, the question of the week was if women in most of the high positions in the WWE hurt their product in any way. Brett gave his thoughts:
On the topic of women in high ranking positions, the first thing I thought of was Stephanie as head writer for WWE. More specifically, yesterday I was watching the Ric Flair shoot interview and in it he said something like Vince wanted Stephanie to be a tough businesswoman and I found that to be odd, because she is the head WRITER. Now, while it can be helpful for a writer to know the business side of things, they should really be focused on the writing, and should have other people tell them what they should be writing business wise. I just think too much thinking about business in writing kind of mucks up the creative process. Maybe that’s the reason they keep trying to spike ratings with stunts even though they are apparently re-building, because the head writer is too business focused. Of course, I could be wrong.
It is a fair assessment of not just the head writer, but all of the writers. If the writers are hindering themselves and the creative process because they are trying to tailor to a business result, there can be missed opportunities for development. On the other hand, having a focus and goal should make the writing more dependable and process oriented. That is the message USA President Bonnie Hammer was trying to give. She wants all the shows on USA to have a similar look and feel and a world to work in, but that does not mean the creativity has to end or that business people cannot think creatively and creative people cannot think of the brand message.
But more to the point on the high ranking women officials, I doubt it hinders WWE. Any woman in any position in that company, or any company knows how to do their job. They went to school for it, they’ve probably held positions in other companies and if they are told to keep the focus on a particular demo, they will. I think there is a SLIGHTLY smaller focus on the male demo because it just makes sense to try to get females involved, for a business its the more the merrier, anyone they can take money from, they’ll be more than happy to take that money. Also, don’t forget that anything that happens in that company is approved by Vince, so no I don’t think having women in high ranking positions in WWE makes a difference to the product one way or the other.
And the NFL in particular has had tremendous gains by expanding out into the female demographic. Just because the WWE is shifting their demographic does not mean that they will forget their core, even if the program has a slightly different look and feel to it.
Moving away from the business and going to the old standby PPVs, Odin asks:
I know this is an old chestnut, but how do you think the WWEs business would be affected if they cut back on the number of PPVs entirely, and went back to the Big 4 format? They could move Summerslam forward to June, and Survivor Series forward to September and run one every 3 months (roughly).
They could spend more time building up the card and feuds, a PPV title win would be a huge deal, and with the amount of TV time they have, they wouldn’t need a ‘Saturday Night’s Main Event’ or ‘Clash of the Champions’ type broadcast.
Further, a WWE title match on Raw may mean better ratings, because people wouldn’t expect a 4 minute brawl ending with a run-in to set up the next PPV. In other words, the TV shows would feel more important and may draw in more viewers.
With only 4 PPVs, they would be asking people to spend less of their disposable income on PPVs, so when they came round more people would be able to afford them. With bigger buyrates and bigger cards, it would be like having 4 Wrestlemanias.
I know I’m dreaming here, but I’m curious how it may affect the business side, not the product quality side, which is why I’m asking here.
Would it prove to be too costly?
Would people turn to TNA for monthly PPV?
Would it drastically reduce WWEs visibility, or might it JUST work?
This is a topic that has been covered in a variety of ways in the Journal, but let’s use a real example.
From Royal Rumble to Armageddon, the WWE has 14 events that yield nearly 4.4 million buys and $195 million in gross revenue (the WWE only gets 50% of this; 50% automatically goes to the PPV companies). If you break it down to just what the “Big 4” do now, they equate to 2.2 million buys and $109 million. Assuming the price stays the same for these PPVs, the WWE would have to do an additional 1.8 million buys among the four PPVs. Breaking it down:
As you can see by this, the WWE would need to have an increase of nearly 45% per PPV, a number that is highly unlikely just by people saving up. More than likely, if people had more disposable income in a given month they would spend it on something else. Whether that is a TNA PPV, and UFC PPV, a video game, a couple of DVDs, or something else is irrelevant. It would just be money the WWE would not recover.
So how could the WWE maintain the same revenue with only four PPVs and the same number of customers? Well, they would have to raise the price. Right now, the “Big 4” have an average price of about $50. In order to get the same revenue number, the WWE would have to raise the price to nearly $90 for these shows. When you change the price, you also have work in the numbers of how many people leave because of price. Given the amount of people that would not buy the product because of the price and working backwards, the price of these PPVs would have to be about $140 per show.
From that you can see the WWE is in a much better position, even with an overabundance of PPVs. Focusing on increasing buyrates and finding other methods for delivery should be their main goal, not looking for ways to make up revenue by manipulating the drivers.
How to get there, though, is the question. [Explanative Deleted] the ppv’s says:
The huge problem with Pay Per Views is there is no [explanative deleted] story lines anymore… it’s just like a wimpy little [explanative deleted] zit face kid wanting to blow his wod every 30 minutes. Except it’s with the PPV’s every 3 weeks. I say have a Pay Per View every other month give your story lines time to build up to epic matches at the view and hire a new creative team for RAW.
Your language aside, there is a point to be made here. The WWE originally had each brand working towards a PPV every other month, but then PPV buys began to dip. Their quick fix was to combine the brands for every PPV and—at the beginning—it worked. Since then, though, the PPV numbers have continued to drop, showing it was not a lack of talent on each show.
Leaving the numbers behind, TNA and the WWE going head-to-head provided some interesting possibilities. Indianguy says:
During the infamous Monday Night wars there used to be a lot of talent swapping many performers and that I have heard a bunch of office staff as well. Tis about the time TNA starts doing that.
TNA not being a public company, I don’t know who does their number crunching. But they could really do well by getting WWE’s CFO (CMO and other such vital positions not related to wrestling) or maybe a level just below these into their fold.
They have started to move well and gain momentum (for a company which is not even 10 yrs old) and now is the time for the mom and pop shop to expand into a proper business setting. I know they might already have some talented people but people who have worked with WWE or other Sports n Entertainment company might do them really good.
TNA has hired many key positions such at their CMO Steve Allison who came from Midway Games (before the collapse). The one thing they do not want to do is become top heavy like the WWE and just fill positions for the sake of filling positions. TNA needs to be able to maintain their entrepreneurial spirit while bringing in quality talent on the executive level on an as-needed basis.
Does TNA have that future? While some continue to argue “no” no matter what statistics are shown about TNA’s relative success, Guest#6560 is not one of those people:
NFL vs. AFL – NFL vs. WFL – NFL vs. USFL…
In each instance there was a saturation of the market and ultimately the lesser of the two organizations either folded or was absorbed into the “mainstay”.
TNA has outlived all of those football organizations. While I agree, apples and oranges, it just shows that there have been many, many others that have attempted and failed where TNA has succeeded but is given little to NO credit by the majority of the IWC.
They have to build up their brand recognition, brand loyalty, fan-base, etc etc etc.
They have not taken one giant step that cost them dearly but they seem to have a sound business strategy and are doing things the right way.
I for one have been to one of their house shows (in Austin Texas and if they would come back I would go again, but they haven’t) and I have been to WWE shows – tapings etc. And HANDS DOWN TNA was the better experience.
I think that TNA could be the viable contender that WCW was but in a better way since WCW really only focused money and effort that produced for 83 weeks and TNA is just building and building.
I am intrigued and look forward to the next 5 years. If they reach 5 years, technically they are older than WCW was – not counting JCP because it was run by different folks.
Not counting the pre-companies that became WCW is an error in judgment since it led to their credibility and market share, but TNA has potential. Your point is sound in that they have outlasted most other who have tried. Overall, they have a financial strategy and are profitable by a small margin. While the product is not for everyone, it certainly could be for more than their current audience. So long as TNA can focus on attainable goals, organic growth, and maintaining profitability, they can be around forever. If they want to do a major financial gambit (think XFL premiering in prime-time to go with your example above), then they may lose it all in a one-or-nothing deal. TNA could use some conservatism in their growth strategy and build up a reserve before taking a major risk.
They have mostly shown themselves to be frugal, so continuing that mindset should lend TNA well to being around in five years.
Plenty more was written, so be sure to take a look. And if you enjoy the Journal, why not bookmark 411wrestling.com and make it your home page? You can do that by clicking here.
This concludes Issue #96 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.
Till then!
