In Defense Of...7.31.05: Vince Not Buying Out WCW’s Contracts (Part 1 Of 2)
Posted by JP Prag on 07.31.2005
Since when is NOT giving someone a job a crime?
In Defense of…
By JP Prag
Issue #14
VINCE NOT BUYING OUT WCW’S CONTRACTS (Part 1 of 2)
Intro
Hello my pretties, and thanks for coming back to In Defense Of…! Last week we did another one-shot on a hot-hot-hot controversial issue. And even though it has been 8 years since this incident, the feedback proves that this issue is just as button-pushing as ever. What issue was that? Why, I’m talking about none other then Earl Hebner Screwing Bret Hart, of course!
And with some decidedly split decisions, having 59.8% of the vote, Earl Hebner Screwing Bret Hart has been found:
NOT GUILTY!
And with that vote, Earl Hebner officially becomes my number one most reader-response issue EVER (was that English?)! And yet you still don’t talk about me on the message board? Where is the justice in that?
Anyway, I feel like I could have converted about 10% more of the people if I had addressed one issue: According to Dave Meltzer, Bret Hart said that Earl Hebner said, "I swear on my kids lives that I'd quit my job before double-crossing you.” And many of you called me out on this and asked how I could defend Earl Hebner for lying to Bret Hart but not Vince? Well, here’s my answer:
I knew about this statement well beforehand but chose not to include it because I do not believe it is corroborated evidence. Look at what I wrote: Dave Meltzer said that Bret Hart said that Earl Hebner said. That’s third hand evidence, what I would call circumstantial at best. We do not know enough about what was really said, if those even were Earl’s words, or just the words Bret wanted to hear (IE, as time went on, Bret believed what he thought he heard in his head until he was positive it was exactly what he heard). We also do not know if Earl knew about the plan at this point or if he did not find out until the next morning. I personally believe Earl said something to the effect of “I’ll make sure nothing bad happens to you” meaning that he’d make sure Bret was not physically hurt. And that’s exactly what Earl Hebner did; he kept Bret Hart physically safe and sent him on his way.
Since this isn’t a speculation piece, though, I did not want to address it. I do not believe it is firm evidence of anything Earl may have said, and I do not have any evidence to attack it, only opinion. Therefore, those of you who voted guilty, I’d ask you to rethink your position since you are basing it off of a most likely false statement.
Still, the voting is closed, and I have moved on to our next topic!
So perhaps this is you first time clicking on In Defense Of…? Maybe you didn’t read about Earl Hebner Screwing Bret Hart, Dusty Rhodes: Head Booker, The Finger Poke of Doom, Kevin Nash, the Elimination Chamber, or even Eric Bischoff. It might be that you’re an old WCW fan who thought Vince did everything wrong when he bought WCW. Well, for those new to the concept, this article has a pretty simple premise:
Certain people, events, organizations, and storylines in wrestling history have gotten a bum wrap. Certain writers have presented overtly critical comments and outright lies as fact, and others have followed suit. Well no more! “In Defense of…” has one reason: to bring the truth to the wrestling fan!
And that’s what I intend to do.
Me? I’m the One and Only JP, and for the first time in years I am on a week-long vacation. But the funny part is I will probably spend a good deal of that time getting back to you, the readers! That’s ok, this is more fun then work, though it does take quite a bit. Speaking of which, what have you sent me recently?
Some dame walked into my office and said…
Fixxer315 came in with a very convincing story about the InVasion and why Vince did not fail at it. Fixxer had a number of valid points, and I’d rather address them as we go then print them all here. The only problem was that there was too much to cover, and I wanted to focus on particular aspect in of the InVasion: the very beginnings.
But I don’t even want to print what I wrote back to Fixxer because I think that will give too much away. So without further ado…
Why this?
On March 23, 2001, I was in a club in Montreal called the Loft. A more then inebriated man walked over to me, and in a thick French-Canadian accent said, “WWF bought WCW! Can you believe it?”
Of course I couldn’t, but was more surprised that someone would just think to walk over to me in a bar and start talking about wresting. He then pulled out some sheets of paper from his pocket that he had printed out from a reputable website. It said right on top: WWF buys WCW. It was then I knew it was true.
I tried to get him to explain how this had come about, what had happened to Eric Bischoff and Fusient Media Ventures, how much the sale was, what was going to happen to WCW?
He could not tell me. It was loud, he was halfway gone, and there just was too much speculation and questions. Nobody knew what was going to happen.
It was probably one of the saddest days I can remember. The death of an organization I had spent a decade supporting. But at the same time it was exciting. There was a big question of “What’s going to happen next?”
A few days later, Nitro would have its last hoorah, and Shane McMahon would be revealed to be the man who bought WCW right from under Vince’s nose. There was hope yet, even though it was kayfabe hope.
That hope would begin to arise on May 28, 2001 when Lance Storm ran into the ring during a WWF match, and the return of WCW seemed be floating to the surface. Things soon picked up with Hugh Morrus hitting the No Laughing Matter Moonsault on Edge the next week. And then it was quiet for a while, until June 25, 2001 when Mike Awesome jumped Rhyno in the back and won the Hardcore Title (24/7 Rules in effect). Thus, as PK said, the InVasion began!
But as time went on, something became obvious. Though important people like Booker T (the World and US Champion) and DDP (former World Champion) were on board with the InVasion, there were several people missing. Where were Hulk Hogan, Kevin Nash, Scott Hall, Scott Steiner, Ric Flair, Sting, Goldberg, and many others. Why had Vince not brought these men in?
And as the InVasion soured and slowly became WWF vs. WWF-turncoats, and finally ending in the Rock vs. Stone Cold, the question remained: why had Vince not brought in the big guns?
People say Vince intentionally wanted to destroy WCW, that he wanted to prove the superiority of the WWF, and that his ego would not let WCW shine. While this may or may not all be true, Vince had solid reasons for not brining in the big boys of WCW, and he was in the right to refuse them passage to the land then known as the World Wrestling Federation.
Where have all the good people gone? And why can’t I get that song out of my head?
First off, you have to understand a little bit about the then AOL-Time Warner’s corporate structure. Everyone who worked for any division of ATW had a contract with ATW, not with the division they worked for. Therefore, even if a division was sold off (like say when Time Warner sold off Warner Music), ATW could keep the key personnel they wanted and send the rest of the rabble with the sale. Much like in a bankruptcy sale, the person who buys these contracts also assumes all of the debt, that being the remainder of the employees’ contacts.
Everyone is WCW was under contract to ATW (with the exception of Eric Bischoff who was being paid as an independent consultant). When ATW sold all of the assets of WCW, including the WCW brand name, they did not sell off their wrestling division. They simply renamed the division the Universal Wrestling Corporation, which was the actual name for the wresting division when Turner first bought JCP. Kind of poetic, isn’t it?
UWC became a clearing house. Vince decided to take a lot of younger talent as prospects, and later Booker T and DDP negotiated for a settlement out of their WCW deals (which they did themselves) and then signed new WWF contracts. But what about the people left behind. What was wrong with them?
Scott Steiner – Scott wrestled on the final Nitro and lost the World Heavyweight Championship to Booker T in the first match of the night. But even if WCW was not going to fold, Scott Steiner would not have been champion for much longer. He was fighting dropped foot syndrome, a dieses that makes it impossible to hold his foot in a single position and maintain balance. This was common knowledge, along with nagging knee, neck, shoulder, elbow, and back problems. Scott needed time away from the ring, and was making a good deal of money since he had been with WCW so long and had moved into the main event. Acquiring his contact would only get Vince a few months of service when Scott needed serious time off to treat his injuries. Allowing UWC to pay Scott to sit at home was the best decision and gave Steiner the monetary protection while he got to recuperate. WCW did not need a mouthpiece in the WWF like Steiner, as there were plenty of other logical choices.
Kevin Nash – Kevin Nash was another man facing serious injuries and was already 40 years old. His contact was thus that he could come and go as he pleased, so Vince would most likely have to pay him a bonus on top of his contract to keep him around. Nash was also extremely burnt out by this point, and needed time away from the business to regain his earlier form. Also, before Vince Russo stepped in, Nash had been involved in the booking process, and would expect more creative control. Vince and the other personalities in the WWF at the time (see below) would not want that, and therefore Nash would have been a disruption at the least. Shortly after the sale of WCW, Nash was also suing the UWC for back royalties and compensations he said he was owed. The WWF would not want to get involved in that lawsuit, and Nash would lose all ground if he took a job with the WWF at that time.
Scott Hall – Although Kevin Nash would try to protect Scott Hall when Nash was head booker, he would not push him (as we covered in In Defense of… Kevin Nash). This is because Scott Hall’s personal problems far outweighed his professional ones. Despite dealing with some old injuries, Scott Hall had been away long enough to heel. But with so many other destructive personalities already around dealing with personal issues (Austin, Guerrero, Regal, Waltman), Vince could not afford to take on someone else who was going to need more help outside the ring them give back inside of it.
Sting – Sting was the franchise of WCW, and the only oldschool main eventer who had never been in the WWF. Every dream match was possible with Sting, if it weren’t for three things. First, Sting was burnt out on wrestling. The booking era of Vince Russo had taken the passion out of Sting, and he really did not have the drive to wrestle anymore (although he would later get it back to return to the WWA and NWA-TNA). Second, Sting’s contract was set up so that he was only required to make a certain number of appearances per year (a la Goldberg), and he already surpassed that. He had 18 more months on his contact at the time, and therefore every appearance would be another pay special. Finally, well, I’ll let Sting talk for himself:
I'm disappointed that we turned to shock and munch to hang with [the WWF]… All these years I had parents telling me, 'We're glad we can actually let our kids watch your show.' All those people that said that to me over the years can't say that anymore.
Sting, as a born-again Christian and a believer in the family value of wrestling, could not stand the WWF’s product. Although that has not stopped people like Chris Jericho or Ted Dibiase from being a part of the WWE, it is at least one of the factors (money and appearances being the others) that has stopped Sting from making a Wrestlemania moment.
Rey Mysterio – Although not a main eventer, Rey Mysterio was often lamented as a top choice to join the WWF, especially if they wanted to do anything with the Light-heavyweight and Cruiserweight divisions. People now-a-days point to Mysterio’s excellent entrance and rise to the near top of SmackDown! as proof that Rey Mysterio would have been an excellent acquisition. Except people forget that Rey Mysterio was sans mask back then, and was running around as Konnan Jr. To keep up the storylines of WCW, Rey would come in as he was, which was not a very successful gimmick for him. Also, Rey was coming off of his about sixteenth knee surgery, an injury that has never healed (he had to take time off for it again not too long ago). On top of that, being in WCW so long, Rey was making substantially more then most WWF upper-midcarders. Rey would most likely end up in a lower card position during the InVasion, but still be making more then guys that would now be pushed to the side. The investment was not worth it then, but giving him time to recuperate and come in at a lower cost with a new (old) storyline and mask became the best way for the WWF to capitalize on Rey.
Ric Flair – The other top name that personified WCW, Flair was well into his 50’s at the time of WCW’s purchase. Also, he was making top dollar beyond all over main eventers in the WWF. He was not in wrestling shape (why he wore a t-shirt on the final Nitro), and would definitely not work a full time schedule. He had spent the past 10 years in frustration butting heads with Bischoff and Russo, and nobody thought then that he had any gas left in the tank. Although we were surprised later after the end of the InVasion to find out just how much Ric Flair could go, at this point in history it looked like Flair was ready to hang up the boots forever.
Goldberg – Arguably the man that could draw the most money for a WWF-led WCW, Goldberg was completely burnt out on the business. Vince Russo had treated him horribly, and Goldberg was not a fan of the direction he was going. Much like Sting, Goldberg has also used up all the days in his contact and was more then happy to sit at home and pursue his acting dreams. Unlike Sting, even if Goldberg were to have had his contact taken over by the WWF, he probably would not have shown up. Besides all of that, do not forget that Goldberg lost a “You’re Fired” match to Buff Bagwell and Lex Luger in January. But this was in fact so he could go and have shoulder surgery. So acquiring an injured, disgruntled, and WWF-hating Goldberg would not be the best move.
Hulk Hogan – Hulk Hogan is the biggest name in professional wrestling. No, he transcends the sport. You can be as much of a Hogan hater as you want, it does not matter. The man was more important to wrestling history and bringing it into the mainstream then anyone or anything else. Even someone who has never watched a single wrestling match in their life knows the name Hulk Hogan.
So why wasn’t he brought in?
Hogan was last seen at Bash at the Beach in 2000, walking out with the Hulk Hogan Memorial Belt after pinning Jeff Jarrett. Because Vince Russo made so many disparaging remarks about Hogan, Hogan was busy suing WCW, a suit the WWF would not want to become involved with. On top of all that, Hogan had never fully recovered from his knee surgery, and obviously was well beyond his prime of adding to the product.
But Hogan’s contact was the real kicker. Not only could he come and go as he pleased, he would have to be paid $250,000 per appearance. And if you wanted him on PPV, that would cost you a portion of the PPV revenue! Beyond all that is what led to the Bash at the Beach incident to begin with; Hogan had a creative control clause in his contact. Vince had already learned his lesson in creative control clauses from Bret Hart, and could not have another talent in his company who had the legal right to refuse to do anything they did not want to do.
So as you can see, none of these men with their current contracts would have been a smart move for the WWF. But you still might think the WWF could have pulled it off with their deep pockets…
Economic VS. Normal Profit
Even though these superstars would have been expensive beyond belief, many people still say that Vince could afford it. After all, this was just after the peak of professional wrestling, and Vince had more money then anyone could imagine. The WWFE was a publicly traded company with a very large profit margin.
Despite the fact that acquiring these talents would cost tens of millions, many people say Vince McMahon should have bitten the bullet for the short term. In the end, he could have negotiated out better contracts or they could have hit the road. By then, all of the WWF vs. WCW dream matches could have happened.
But there is one major flaw in this argument: profit.
And this requires a little more explanation then you think.
The average person thinks of profit this way: the selling price of the goods or services times the quantity minus the cost to produce those goods times the quantity (and once in a while they might remember to take out the taxes). Now, if you take this a step further and also subtract out the overhead, administrative, and general business costs, the money left over would be what we call normal profit. I sold this, and this is how much I made.
There is another type of profit, though, that comes into play, and that is Economic Profit. Economic profit begins with Normal profit; you take what you sold, subtract all your costs, and there you go. But then you also start to subtract what are known as “opportunity costs”. Opportunity costs are what you gave up in order to make that money.
Take for instance your paycheck. Let’s say you make $10 an hour at the stationary store and work 40 hours a week, so your paycheck is $400 a week. Take out taxes, insurance, and other benefits, and you are probably taking home $300 a week. That is your normal profit. Now, what if you had turned down a job at the card store for $12 an hour for 20 hours a week? That’s another $240 lost opportunity, so you are down to $60 in economic profit. Or more so, what if instead of working for 5 hours, you could have gone to the beach with your girlfriend? What is the value of those 5 hours that you lost at the beach with your girl? Let’s say it is $200. Now, suddenly, your economic profit (or rather loss) is negative $140. So if you had taken the higher paying job with fewer hours but spent more time with your girlfriend, your normal profit would be lower but your economic profit would be higher! Interesting, huh?
Let us now apply this to the WWF.
Overall, we’ll say the superstars listed above would have cost the WWF $40 million. To make up those costs, there is a super PPV named InVasion that does a 2.0 buyrate, or about 800,000 buys. If this PPV cost $45, then that would be $36 million dollars. Add in the live gate attendance of 25,000 people with ticket, merchandise, and concession sales on average $100 a head, and that’s another $2.5 million. On top of that, home video units sell another 100,000 copies at $30 a pop, for another $3 million. And finally, ratings go up so much that the WWF can charge advertisers an additional $10.5 million for the month to advertise on RAW and SmackDown!.
In total, that brings us to a total revenue of $52 million for a total cost of $40 million, or $12 million in normal profit.
Sounds pretty good, right? A quick $12 million to line the pockets of the WWF, McMahon, and the stock holders, and everything would be great!
Except it is not really $12 million.
What were the opportunity costs to make that $12 million. Well, first off, you would put the pushed of Benoit and Jericho on hold, two superstars that could make you a lot of money down the line. And what about all of the guys in OVW and HWA who would now have to spend another year or two waiting to get up to big show because there wasn’t a spot for them? There is a wasted cost of investment and future stars that could also be important to the company. More so then that, what about time? These guys were coming directly from the end of WCW, an extremely political environment. How much time would have to be spent to keep their egos in line and to stop problems from arising. How much time would be spent trying to convince them to go along with a storyline or a job? Even more then that, what could Vince, Stephanie, Shane, Slaughter, Brisco, Patterson, et al have been doing to earn the WWF more money if they were not so busy dealing with these personalities.
The time spent to create that $12 million “profit” could end up in the neighborhood of $100 million, and just like that the economic profit (loss) turns into a negative $88 million.
And of course, I was being extremely generous with the normal profit numbers to begin with. That is an absolute best case scenario, and we all know that that never happens. In reality, bringing in the top dogs of WCW would have hurt the WWF short and long term financially, while also draining the other resources of the company. The true cost of business far outweighs the normal costs.
The millionaires you already know
Let us not forget, though, that there were a number of big name millionaires already in the WWF. The short list includes Stone Cold Steve Austin, the Rock, Kurt Angle, the Undertaker, Kane, and the Big Show (HHH was out with injury). Do you think for a moment that any of these men, especially Austin and Taker, would step aside so that a WCW guy could take their place at the top of the card? Absolutely not! Look at how Austin reacted to being pushed down the card to fight Scott Hall at WrestleMania as proof. Not to mention that Rikishi, Benoit, Jericho, and Bradshaw were all getting sort-of pushed at this time, and none of them would want to lose that momentum.
Every political factor in the WWF would fight against any WCW guy getting a top spot above the people that had “paid their dues” in the WWF already. But there was another big outside factor with three initials that was holding WCW down, and it had nothing to do with wrestling!
RECESS!
Well kids, that wraps up part one of this two part case. When we return, we’ll examine the aforementioned large three lettered factor that was keeping the big WCW names out of the WWF, take a look around the rest of the WWF corporate profile, and spend a good deal of time examining the intentions of the WWF as a whole at the time of the acquisition. And I imagine there will be a few more topics, depending on the reader responses. I only get better with those who argue with me… or people know agree with me and make great points. Either one would be great!
So tune in next week for In Defense of… Vince Not Buying Out WCW’s Contracts (Part 2 of 2)!!
Know a particular person, event, organization, storyline, etc… in wrestling history that needs a defense? E-mail the One and Only JP at lookforme@mikefine.com, and I’ll be glad to hear your case.
