The Hamilton Ave Journal 10.28.10: Volume 2 – Issue 161

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 161

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.

TOP STORY: WWE bares all

Last week, the WWE began a “Stand Up” campaign in order to fight what the company perceived as unfounded criticism against the organization by certain politicians and media outlets. Unfortunately for the WWE, this led said politicians to say the WWE is colluding with the campaign for Linda McMahon’s Senate run, which would be against the law. The tit-for-tat continued as the days have moved on.

On Friday October 22, 2010, Connecticut Secretary of State Susan Bysiewicz banned anyone from wearing WWE merchandise from going to the polls. According to Ms. Bysiewicz this was because of the law not allowing political slogans, signs, and merchandise within 75 feet of a polling location. While people who have faced similar bans in the past have just turned their shirts inside out, the WWE took this as another assault on the company since their company–they contend–has no affiliation with the campaign. To this, the WWE sent out this response:

The right for World Wrestling Entertainment fans to vote was threatened Friday by Connecticut Secretary of State Susan Bysiewicz, who gave the authority to local poll workers to determine that if anyone shows up to the polls on November 2 wearing any WWE merchandise, whether it is a John Cena T-shirt or a Randy Orton wristband, they may be forced to go home and change, cover it up, or take it off in order to vote.

“Denying our fans the right to vote, denying them their First Amendment rights, regardless if they are Democrat, Republican or Independent, is un-American, unconstitutional and blatantly discriminatory,” said Vince McMahon, Chairman and CEO of WWE.

Per usual, there was no movement over the weekend. Then on Tuesday October 26, 2010 WWE Chairman and CEO Vince McMahon stated:

“On behalf of myself, my company, WWE® fans and any Connecticut citizen who wants to exercise their constitutional right to vote, I have filed a lawsuit today asserting that Susan Bysiewicz’s directive that allows poll workers to refuse registered voters wearing WWE merchandise the right to vote is a flagrant act of censorship and discrimination…”

Mr. McMahon did not have to wait long to celebrate his victory as later that day he said:

“The moment Connecticut Secretary of State Susan Bysiewicz issued an un-American, unconstitutional and discriminatory directive prohibiting voters from wearing WWE® merchandise at the polls, Attorney General Richard Blumenthal should have immediately stepped in to enforce the law. As a result of the Attorney General’s inaction, I brought suit to enforce these basic, fundamental constitutional rights. Within hours of filing the lawsuit, Blumenthal recused himself, and Bysiewicz reversed her position and immediately notified all Local Registrar of Voters and Town Clerks via email. I am pleased that Connecticut voters have had their freedom of expression and their right to vote restored…”

The next day, Ms. Bysiewicz clarified her position and let it be known that this should have been the directive all along:

“Be advised that it is the position of this office that simply wearing WWE apparel at the polls, including apparel with the trade name or logo of the WWE or the name or photograph of any WWE entertainment that does not display the name or photograph of Linda McMahon, U.S. Senate candidate, or the name or logo of Ms. McMahon’s campaign does not trigger a violation. Further, even when an individual is found to be wearing campaign material in violation of the 75 foot restrictions, they should never be told to leave the polls. They should be simply asked to remove or cover the item or apparel in question. Once this is accomplished, the individual should be allowed to vote.”

Again, these arenas are going back and forth trying to make themselves look better, so the battle continues.

Also joining the fray this week is the father of Chris Benoit, Michael Benoit. The Canadian citizen has joined the campaign of Linda McMahon’s opponent Richard Blumenthal and is engaged in a number of speaking engagements.

Meanwhile, all of these battles have pushed the WWE to open a whole “Stand Up” sub-website as well as a “setting the record straight” article. Among the claims and refutation in there was this gem:

Accusation:
“In 2009, the year that WWE received all $9.8 million in film tax credits, the company laid off about 10 percent of its global workforce, or about 60 workers.”
Eric Gershon – Hartford Courant – Oct. 1, 2010

Truth:

• The company participates in the tax credit program which is designed to grow the film and television industry in Connecticut.
• WWE, like every other public company has a duty to its shareholders to take advantage of approved tax credits, just like other movie and television producers based in CT such as ESPN/ABC and GE/NBC. 
• The tax credits that have been properly taken by WWE have helped the company add approximately 60 employees, returning WWE to workforce levels existing prior to the workforce reduction in January 2009.  
• WWE pays out $60 million in annual salaries for employees based in Connecticut.   
• In 2011, WWE plans to add additional headcount for a WWE cable network, which when up and running is projected to add another 140 jobs in CT.
• Millions of dollars are paid to the state of Connecticut in a variety of taxes by WWE, our employees (personal income tax, real estate taxes, sales taxes, etc.) and the company also employs local vendors and service providers that also end up paying taxes to the state.

What is most interesting about this is that the WWE has already created nearly 60 jobs in relation to the upcoming WWE Network and that they are planning on adding up to 140 more. This network is really a serious effort by the company and it looks to be coming to fruition sometime in 2011.

Of course, the other item of interest is always around how WWE classifies their contracted talent. To this the WWE stated:

Accusation:
“Putting profits before people.”
Richard Blumenthal Ads – 2010

Truth:

• World Wrestling Entertainment first opened its office in 1983 with 13 employees. Today it employees approximately 600 people and pays out $60 million in salaries for those based in Connecticut alone.
• WWE provides a comprehensive benefits package to all full-time employees including medical, dental, vision, 401(k) and employee stock purchase plans.
• 110 employees have been with WWE for more than 10 years.
• WWE has 140 Superstars and Divas currently under contract as independent contractors.
• The average active roster WWE Talent earns more than $550,000 annually, with WWE covering 100 percent of all costs associated with any in-ring related injuries and rehabilitation.
• In 2011, WWE plans to hire between 100-140 employees in anticipation of the launch of the WWE cable network.
• WWE has a longstanding commitment to give back to communities through literacy programs, support of the military and their families, and a more than 25 year relationship with the Make-A-Wish Foundation.

It is true, though, that those average pays are a median and note a mean pay as they few making millions of dollars pull the average up of the large number in FCW making $500 a week. The WWE then went through the Wellness program and all the benefits they do have for current and former talent. They then chose to wrap up with this:

Accusation:
“The allegations against WWE seem to be criminal in nature…because allegations about independent contractors are investigated by the Department of Labor and the Department of Revenue Services…”
Richard Blumenthal – Oct. 4, 2010

Truth:

• WWE has always complied with the law, and constantly reviews its internal practices and procedures to comply with ever-changing employee laws. 
• For the entirety of WWE’s existence, WWE talent have been classified as independent contractors and not employees.
• There is not now, nor has there ever been, any criminal investigation into WWE’s treatment of its Superstars as independent contractors.  
• WWE’s treatment and reporting of its talent as independent contractors has never been challenged or questioned by any federal or state regulatory body during the entirety of WWE’s existence.
• Up until this election, WWE has not been investigated in the past for independent contractor classification.

The latter is not true as they have been sued twice for the issue, but that was from an employee rights perspective. The more interesting one is by the IRS to see if the WWE has been avoiding paying taxes for years.

Newsbites

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

Lucha Libre USA is officially not dead as the company will be making tapings for its second season starting on December 12, 2010.

Spike TV has expanded their confidence and TNA (and perhaps their payments to the company) by airing replays of ReACTION. ReACTION will now additionally air on Fridays at 12:30am and Sunday at 9:00am.

Early buyrates for WWE Night of Champions came in at 169,000 buys, which would be in line with what Breaking Point did in the same spot last year. When Night of Champions took place in July in 2009, the show did 267,000 buys.

As a continued part of the youth movement and PG-initiative, the WWE is planning a number of children’s books among their upcoming releases. No themes, characters, or story details have been given yet.

In honor of eleven years being a public company, WWE Chief Operating Office Donna Goldsmith, Chief Financial Officer George Barrios, Triple H, and Kelly Kelly got to ring the opening bell of the New York Stock Exchange on October 27, 2010.

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 time we should be able to see patterns, trends, and anomalies.

For the week ending Wednesday October 27, 2010, here are the current standings of the shows:

Analysis:

Every show took a hit this week with iMPACT leading the way. iMPACT dropped 17% back down to 1.16 after a rare 1.40 rating the week before. As noted last week, one rating is hardly a pattern and neither is this one. The import record for TNA is that this is the eighth week in a row with 1.0+ rating, and one of the 13 of the past 14 weeks with a similar number. They have managed to regain the audience lost with the move to Monday, but have not yet built upon it.

The WWE is having trouble holding on to their existence audience as well. RAW, SmackDown, and SuperStars all slipped this past week facing heavy competition from football and baseball. SmackDown tied its premier rating on SyFy from four weeks ago, but again this is not a trend as not enough data is available yet.

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 selling items for the WWE? WWEShopZone.com releases a list of varying numbers to show what is selling for them:

1. Randy Orton Limited Edition T-Shirt ($29.99)
John Cena Cenation T-Shirt ($24.99)
John Cena Cenation Sweatband Set ($11.99)
John Cena Cenation Baseball Cap ($19.99)
Nexus Logo T-Shirt ($24.99, on sale $19.95)
Undertaker Limited Edition T-Shirt ($29.99)
Randy Orton Viper T-Shirt ($24.99)
Triple H Limited Edition T-Shirt ($29.99)
Edge Limited Edition T-Shirt ($29.99)
Nexus Armband ($7.99)
John Cena Cenation YOUTH T-Shirt ($21.99)
John Cena Never Give Up Sweatband Set ($11.99)
John Cena Never Give Up Baseball Cap ($19.99)
D Generation X Army Cadet Cap ($20, on sale $3.00)
John Cena Experience DVD/T-Shirt (with Bonus Signed Card) Package ($59.95, on sale $31.99)
John Cena Never Give Up T-Shirt ($24.99, on sale $19.95)
Rey Mysterio 2010 YOUTH Halloween Package ($36.99)
Nexus Logo Cuff Bracelet ($11.99)
D Generation X Army Pendant ($10, on sale $2.50)
John Cena Cenation Cuff Bracelet ($11.99)

The WWE found a way to boost the bottom line with a set of “limited edition” t-shirts costing $29.99. The Undertaker, Triple H, and Edge were all able to take advantage of a shirt that it costs the WWE only a few cents more to produce than the regular ones, but still raise the prices by $5. Meanwhile, John Cena dominated basically everything else with eight spots, followed by the Nexus gaining another spot to three items, and Randy Orton coming up with two.

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

1. Don’s Insane Brown Bag Special ($20)
2. Jeff Hardy “The Ring Is My Canvas” T-shirt ($19.99)
3. Jeff Hardy Arm Bands ($9.99)
4. Jeff Hardy Enigma T-Shirt (Glow In The Dark) ($19.99)
5. Mr. Anderson………People Are Fake T-Shirt ($19.99)
6. Mr. Anderson “A**HOLE” T-Shirt ($19.99)
7. Hulk Hogan Bandana ($9.99, on sale $7.99)
8. TNA The Best of the Asylum Years Volume 1 ($19.99, on sale $17.99)
9. RVD – Video Wall T-shirt ($19.99)
10. TNA Winged Warrior T-Shirt ($24.99)

In the wake of the “They” (two weeks later), TNA has updated their top selling list to let us know that not much has changed. Don West’s grab bag still dominates the list and Jeff Hardy has somehow expanded his items. Those fighting against the Immortals in Mr. Anderson and RVD also held on or grew in size, but otherwise no one buy Hulk Hogan has a spot on the list. Noticeably missing are any TNA originals.

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 upcoming weeks? The Personal Journal answers that question.

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. Now, let’s break down the topics from last week’s commentary section:

Voting in CT

Good succinct analysis of the legal situation WWE now finds itself in. Law aside, I suspect the timing and extravagance of the Stand Up campaign will not resonate well with CT voters anyway. Don’t have to be a lawyer to know which dog barks the loudest.
– 007

At this point, it does not even matter if the “Stand Up” campaign is election tampering or not; the voters have got it into their heads that it potentially is and the damage has been done.

I hope I am not the only one to see the irony of the situation.

Linda McMahon’s poll numbers increase against Blumenthal, and all of a sudden wave after wave of anti-WWE propaganda comes out, the very first investigation into the company’s use of independent contractors is launched, and now as soon as the WWE launches a response to allegations which may or may not be accurate…or as accurate today as they were 20 years ago…the Democrats again launch an offensive.

I have zero doubt that as soon as the election is over, and if Blumenthal wins, all lawsuits and investigations against the McMahon’s and WWE will disappear.

I am not a Republican. I am actually a Civil Libertarian, but this just reeks of the Democrats using a very despicable and well thought out strategy to goad the WWE into a response, and then use that against Linda McMahon’s campaign.

I can’t say I am right, I don’t believe I am wrong, I really hope that I am wrong.

If I am right, then this is about as low as any party can get, and Blumenthal and the Democrats should be embarrassed for crossing over to the darkest of dark sides of politics.
– Darth Mortis

You are hardly the only one who wonders at the timing of these investigations. But sadly, as one of the other commentators noted, this is not as low as any political party can and has gone.

TNA in the long run

“Now, does TNA have a long-term business plan? TNA President Dixie Carter, Jeff Jarrett, and Eric Bischoff all claim they do,”

Why even post this? Clearly, they don’t.
– Hindu Friend

Yeah…the plan is for ALL of them to get maximum TV time, especially Dixie “Vince Wannabe” Carter, and apparently to get rid of all that damned wrestling they have on that show!
– Bake Dizzle

Actually the Jeff Hardy turn could be seen as a long term thing. Many in the business have made comments the E plays it too safe and this is a reason for their dropping popularity. TNA has sacrificed short to mid-term merch sales in order to hopefully attract long term increase in rating’s and awareness. Is it more of a gamble? Yes. Is it sacrificing long term for short term? Not necessarily.
– Hyde_Hill

Why bring it up? Because the top ranking people in the company all say they have a plan and it is a question of whether or not they do.

It is interesting as Bake points out that Dixie Carter has spent a lot of time on TV in the past year after saying for years that she did not want to be a character. Either she changed her mind or others convinced her; either way it is a total change of position.

Now, as Hyde_Hill points out there could be a plan and TNA is taking some risks. Are they very major risks? Not particularly as the company does not have those type of dependencies on merchandise sales.

PPV Prices

Feel free to ignore this if I’ve missed it in a previous column, but when discussing PPV revenue do you take into account the fact that international buys, which seem to make up a bigger and bigger proportion of the total buyrate, aren’t charged at the same price as in the US? The cost of a PPV in the UK is £14.95 or about $23 and I’m sure this fluctuates in other territories with exchange rates and local economic conditions.
– Bruno

At one point the Journal did do an analysis and used an average price for the PPVs, but it does make a difference of a few million dollars. Until last year, the international component as a total of PPV buys was growing, but now those have been dropping overall (while some places like Mexico have been growing significantly) making the domestic component higher.

There’s been a lot of discussion about reducing PPVs, PPV revenue, etc. But I’m wondering about the actual costs involved for the WWE to put on a PPV. From a pure production standpoint, is it really that much more expensive than doing an average live episode of Raw? To me the only two factors that separate it from a Raw broadcast are the extra money spent to promote the show and the cost to have the cable companies air the show on their PPV networks. Granted, I don’t know quite how that aspect works. I assume they pay the PPV company a percentage of each buy but I could be completely wrong about that.

My point is that, even though I wish they’d reduce PPVs just because I think it would improve the quality of the product, I don’t see why they ever would if they’re not spending all that much to air them in the first place.
– Korsen

The venues seem to be larger, so the cost of the building itself is higher.
The set-ups are more elaborate, which also means more expensive. Especially true for Wrestlemania.

Both RAW and PPV’s need a satellite uplink, so it is a wash there.

More camera men and people in the booth, for higher production value – faster editing, more camera angles to choose from, etc. You also want more redundancy to avoid missing anything. This is more critical in a PPV than a regular show.

Smaller roster for the show itself, but there are fan appreciation events, etc. Plus there is a PPV payout for the talent that makes it on the show.
– Guest#1724

Not to mention that the WWE pays out the PPV companies 50% of the revenue right off the top.

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

Till then!