The Hamilton Ave Journal 02.09.08: Volume 1 – Issue 20

Posted by JP Prag on 02.09.2008

The WWE parts ways with the CW, OVW, and talent while TNA contemplates a live future. Also, both companies release DVD sales figures, RAW gives back everything it gained, and Triple H fights Jeff Hardy in the Top Ten.

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 1 – Issue 20

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.




WHAT'S NEWS

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 and CW part ways

In a story that has already been picked up by the Associated Press, Variety, and the Hollywood Reporter, both the CW Network (a joint venture of Time Warner and CBS/Viacom) and the WWE sent out a press release stating that SmackDown! will leave the network at the end of the 2007/2008 season. Since SmackDown! traditionally has "season premier" episodes in September, it is likely that the show will have a new home by then.

On January 31, 2008, an exclusive negotiations clause with the CW ended and the WWE began to seek out other potential partners. Despite being a relative ratings success for the CW and its UPN predecessor, no explanation was given in the press release as to why the two are parting ways. Oftentimes, the WWE programming has been out-of-sync with the general direction of the network as the CW heavily caters to women and UPN had a mixed direction between in its audience selection. Despite this, the show consistently delivered ratings and an audience the networks have been hard pressed to create otherwise. Variety reports:

It's believed CW execs were open to the idea of keeping "Smackdown" on their air, but only at the right price. Since that price wasn't available, CW execs seemed to have decided to bite the bullet and move on without wrestling.

Judging by this comment, it is likely that the WWE wanted to raise the price of SmackDown!. Currently, the network pays a fixed price for SmackDown! and is then responsible for selling advertising time to recoup the costs.

After ten years on UPN/CW, there are some options open to where SmackDown! may find a home. The WWE already has a strong relationship with NBC/Universal and therefore SmackDown! could move to one of their networks. Although NBC itself does not seem a possibility (SmackDown! does not do nearly well enough in the network ratings to be considered for a Friday prime-time spot on NBC), USA and Bravo remain contenders. Additionally, rumors are floating that the WWE is in talk with Newscorp who recently bough My Network TV. Fox itself does well enough in the ratings, but Newscorp is looking got a way to boost its new division. Many of the My Network affiliates used to carry UPN before the merger to CW.

If negotiations with Newscorp continue, it also means that FX and Fox Sports are contenders. Newscorp also owns the Wall Street Journal, New York Post, and MySpace (as well as MySpace TV), giving the WWE many other outlets for advertising and content. It should be noted that rumors are that TNA has been negotiations with Newscorp to air additional programming on My Network TV as well.

Although an extension was signed through 2009 with the CW, it appears that the contract is non-binding. The WWE also recently signed an extension for ECW on SciFi (a subsidiary of NBC-Universal) that carries the show through December 2008. With Bonnie Hammer no longer in charge of SciFi, it remains to be seen if ECW will be picked up again or if they would be interested in taking on SmackDown!.

In the meantime, expect advertising for WWE SmackDown! to trail off for the rest of the year as the CW does not want to push a show leaving the network. Although it is still the consistently highest rated show on the network, the CW will be using this time to find replacement programming. Of course, if the writer's strike continues the CW will have no original programming available for the fall season; although a deal is expected to be signed today.


WWE ends development in Ohio, releases talent

On Thursday morning February 7, 2008 WWE management members Ty Bailey and John Laurinaitis met with WWE contracted developmental talent in OVW and let them know that the WWE would be ending its relationship with OVW effective immediately. OVW has survived as a WWE development territory since 2000 when the organization split from the NWA. Founded and still owned by Danny Davis, OVW has local television and a training facility.

Last that evening, the WWE release a press statement about the move. Most of the talent will be moved over to the latest WWE development territory FCW. Currently, FCW has 35 contracted development wrestlers and is expected to increase that number to 70 in short order. Still, with only one territory it means there will be less spots available. Six developmental wrestlers were already let go and most are expecting there to more cuts in the near future. The talent was already fearing cuts before learning about the ending of the relationship, especially since the WWE recently made all of them film vignettes explaining who they were and how long they had been in the system.

Although many would like to blame Bobby Lashley leaving the company as a final nail in the coffin on the system since Lashley came from OVW, it is more likely this plan has been in motion for almost a year. The WWE has worked hard to get FCW up and running and has put considerable resources behind it. There are several reasons that Florida makes more sense for the WWE and the wrestlers:

With favorable weather year-round, it is easy to get into and out of Florida at any time, especially Tampa with its own airport.

Kentucky is not a central location for any airline or major interstate transit system.

There is no state income tax in Florida. Since the average developmental talent makes $500 a week, any savings would a great benefit (although it is 14.5% more expensive to live in Tampa).

Many WWE wrestlers live in Florida (for the same income tax reason) and can visit the facility more easily.

The WWE is often on the east coast and can easily be in contact with the organization.

The WWE started this organization almost from scratch and has much more control over it.

Although this move is beneficial for the WWE and most of the remaining talent, OVW is most likely to suffer. The WWE was providing a lot of funding and support, and the wrestlers got to work there at no cost to OVW. With all of that suddenly being pulled away, OVW will have to severely cut back operations. Additionally, OVW started a school called "Derby City Wrestling" where wrestlers paid to be on the roster and to be trained. Most hoped this would be a way to be noticed by the WWE and be signed to a development contract. With no WWE personnel regularly at OVW, many wrestlers may take their money to Florida in the hopes of getting noticed.

OVW now joins the long list of former development territories of the WWE including:

Deep South Wrestling (DSW) – tried to continue operations but has not had a show since October 2007 (although the website remains active).

Heartland Wrestling Association – formerly a WCW development territory, the WWE gained them during the acquisition and then cut relations within a year. Although seeming to shut down in August 2007, HWA resumed operations in November and has shows schedules through 2008 after it was revealed the owners and investors had been split.

International Wrestling Association – This Puerto Rican organization started in 1994 and has been in continuous operations since, actually doing better without the WWE.

Memphis Championship Wrestling – After the WWE cut relations in 2001, this territory shut down completely within weeks. They had no talent outside of the contracted WWE development talent and had no funds to operate without their parent.

As can be seen above, OVW seems to have a 50% chance of survival without the WWE, at least at their current level. It is most likely that OVW will severely scale back in order to survive like HWA. To their benefit, the television deals are made with OVW and not the WWE, and therefore OVW will continue to have an outlet for the immediate future.


TNA may be planning live events, move to Thursday/Friday

Earlier this week, rumors began swirling that TNA was looking to move their television tapings to a live Thursday show with a Friday taping every other week beginning with the Thursday/Friday before WrestleMania 24 in Orlando, FL. TNA has used a similar model in the past. During the PPV-era, TNA had a live show every other week with a taping immediately after that show or the next day.

Still, this will be a significant cost increase as a live show required immediate satellite link hookups and transmission during peek time (Thursday primetime) goes at a high price. Additionally, there is talk of switching over to HD at this time, much to the preference of SpikeTV. The WWE recently released figured that they spent $20 million on the conversion to HD over the course of a year. It remains to be seen how TNA plans to switch over to HD in such a short time without incurring significant cost increases. Spike would have to cover much of this cost, though they may be more willing with the slight ratings gains that are covered in the Marketplace below.

An issue lies also with the talent. Most TNA wrestlers make $500 per show and supplement their income with independent bookings. Those bookings tend to be on Friday nights, so talent would lose that income. Also, many organizations may be less inclined to fly talent in on a Saturday (when it is more expensive) for one show (instead of having the talent travel between two federations).

TNA is already facing moral issues and growing pains, as well as bottom line that is not closing in. Although going live does provide some "prestige" and can make it easier to pull off surprises, it may be too much for TNA right now. Not to say TNA cannot go live in the future, but too much is happening around now.

A company can generally handle about 2-3 major changes a year. TNA currently has over a dozen going on right now. This is one of those times where TNA needs to control growth by not making the jump too soon. It is worthwhile to be patient and make a move when it is most logical to the company, not when it becomes available.


Newsbites

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

The WWE raised the PPV price for WrestleMania this year to US$54.95. With an expected 650,000-700,000 domestic buys and PPV companies taking about 50% of the gross revenue, the WWE looks to be have between $17.8 million to $19.2 million in domestic PPV along. This number does not include the expected 300,000+ non-domestic buys as well the gate, merchandise, and post-WrestleMania DVD sales.

Some WWE DVD sales numbers to date were released. With an average price of $20 per unit:

John Cena: My Life – 55,470 units ($1.1 million)
Rey Mysterio: Biggest Little Man – 33,093 ($0.7 million)
The Triumph and Tragedy of World Class – 16,504 ($0.3 million)

In comparison, using the same numbers for TNA DVDs:

TNA Year One - 6,557 units ($0.13 million)
TNA Bound for Glory 2007 - 6,557 units ($0.13 million)
TNA Genesis 2007 - 1,715 units ($0.03 million)

Midway released screen shots of TNA's first video game. The game has been updated to include Booker T. Although no release date has been announced, Midway said that is should be available "soon".


MARKETPLACE

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. Please note that gaps in the chart below are due to data not being released/available.

For the week ending Thursday February 7, 2008, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.6
Open (Last Week's Rating): 3.9
Percentage Change: ▼ 7.7%
52-Week High: 4.3
52-Week Low: 2.5
All Time High: 8.1
All Time Low: 1.8

SmackDown!*
Close (This Week's Rating): 2.8
Open (Last Week's Rating): 2.7
Percentage Change: ▲ 3.7%
52-Week High: 3.3
52-Week Low: 2.2
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): 1.3
Open (Last Week's Rating): 1.3
Percentage Change: ▼ 2.3%
52-Week High: 2.3
52-Week Low: 0.6
All Time High: 2.3
All Time Low: 0.6

TNA iMPACT**
Close (This Week's Rating): 1.2
Open (Last Week's Rating): 1.2
Percentage Change: ▲ 0.8%
52-Week High: 1.2
52-Week Low: 0.6
All Time High: 1.2
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

Analysis:

After a quick pop last week, RAW gave back almost everything it gained. Of interesting note is that for the past two weeks RAW has actually lost viewers instead of gaining them. Traditionally, the second hour of RAW does 5-10% better than the first, but that has not been the case recently.

Also this week, for the first time ever TNA scored a 1.2+ rating for three weeks in a row. Not only that, but this past week's rating was the highest in the company's history with a 1.22. As would be expected, many within TNA have been happy with the slight rise in ratings and the growth of house show attendance. That said, there has been little growth in PPV buys, PPV conversation rate, and additional merchandise sales. TNA still needs to spend more time looking at the interconnectivity between these business segments and work hard to take advantage of their existing audience.


MONEY AND INVESTING

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. D Generation X Anytime Anywhere T-Shirt
2. Hardys Purple Logo Pendant
3. WWE Black Gift Bag
4. Hardys Illustrated T-Shirt
5. PREORDER: Triple H King of Kings DVD/Retro T-Shirt Package
6. Stone Cold Steve Austin Legacy of Austin DVD/T-Shirt Package
7. Triple H The Conqueror T-Shirt
8. John Cena Beware of Dog Package
9. Shawn Michaels Creation T-Shirt
10. Randy Orton Oblivion T-Shirt

Surprisingly, this week John Cena did not add another item nor did he jump spots; instead he fell two places. Meanwhile, another Jeff Hardy item (with Matt gone, all Hardy items are considered "Jeff" items) found its way to the list making Jeff Hardy almost in line with Triple H. The bigger winner, though, is the aforementioned Triple H with 2.5 items in the Top Ten (the DX shift being split between him and Shawn Michaels). Additionally the Christmas favorite WWE Black Gift Bag has returned in time for Valentine's Day.

TNA requires a little bit more research. Their website does not release Top Ten lists, so the Journal does a general search for a space on "featured products" and sorts by most popular. They came up in order as:

1. TNA Meltdown CD Vol. 2
2. The History of TNA: Year 1 DVD
3. TNA Fleece Jacket
4. James Storm "Sorry Bout Your Damn Luck" T-Shirt
5. NEW TNA Hoodie
6. TNA Bound for Glory 2007 DVD
7. 2008 Wall Calendar
8. TNA Fleece Blanket (B)
9. Long Sleeve TNA Logo T-shirt (Navy)
10. Booker T T-shirt

Once again, the only movement was James Storm jumping another spot to number four. The Journal has gone into considerable detail concerning this, so there is no need to elaborate. Just below the Top Ten is the $79.99 Against All Odds PPV which comes with a plethora of items that are too long to list. The important note is that only 150 quantity of this item is available. Considering that it has not sold out and is coming in at number 11, it gives us a better idea of the volume of sales TNA does.


PERSONAL JOURNAL

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
10 (Feb) TNA Against All Odds Greenville, SC RAW Live Seoul, South Korea SmackDown!/ECW Live Guadalajara, Mexico	11 RAW Ariake, Japan TNA iMPACT Tapings Orlando, FL	12 RAW Live Tokyo, Japan SmackDown!/ECW Live Quito, Ecuador TNA iMPACT Tapings Orlando, FL	13 SmackDown!/ECW Live Santiago, Chile	14 SmackDown!/ECW Live Santiago, Chile	15 RAW Live Fresno, CA	16 RAW Live Los Angeles, CA
17 WWE No Way Out Las Vegas, NV	18 RAW Anaheim, CA	19 SmackDown!/ECW San Diego, CA	20	21 TNA Live New York City, NY	22 TNA Live Westbury, NY ROH Live Deer Park, NY	23 TNA Live Elmira, NY ROH Live New York City, NY

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.

EDITORIALS

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, we have several items to highlight.

First up is some notes from ROH WHO:

TNA would be stupid to push James Storm to the moon cause he sold some t-shirts. It's his FIRST singles shirt, so of course it's going to do good. TNA should push James Storm, but not because his brand new shirt sold well.

For the record, the Journal is not saying that James Storm should be heavyweight champion next week, but it would be prudent to feature him more on the show and give him sustained programs with higher level talent. James Storm being a better seller than Kurt Angle, Christian Cage, and Booker T is indicative of a trend that he has connected with the audience and can generate revenue. Most first T-shirts do not do that well nowadays. Do not forget that in the past T-shirts only came out due to extreme popular demand while today it is more expected. For instance, did you even know that Abyss had a T-shirt and that it is selling poorly? James Storm's sales figures show that he should be featured more, at least as an experiment. If it does not go well, he can always be moved down. But when it comes to timing, it is hard to push someone correctly when they are hot.

oohchavo made several points, but this one is of interest to point out:

The Cena haters cannot argue that in just his first week back, he's sold more merchandise than most of the roster, with an item that's been around for a long time, and increased ratings by over 10%. In fact, the first hour of Raw drew over 4.1 - presumably because fans wanted to see his return. Love or hate him, the man makes Vince money.

Absolutely, and the same could be said in many ways from Triple H. The important question is who is drawing new viewers in order to grow the audience. Men like Triple H, Shawn Michaels, and the Undertaker do well keeping old audience members. On the other hand, Rey Mysterio and John Cena do a tremendous job bringing in new viewers, notably children and women. The WWE has to provide a mixed bag of talent and styles for different audiences, but has yet to capitalize on any to grow further in recent years.

Finally, Kevin in Chicago has some questions for the Journal:

What special marketing strategies do you see being attempted in WWE's biggest season, "Road to Wrestlemania"? I remember reading about how successful Wrestlemania 23 was last year on all of it's revenue streams from the ppv buyrate, the live gate attendance, merch, and the benefit to the local economy in Detroit.

This year, the WWE has an extremely aggressive "live appearance" schedule leading up to WrestleMania. The schedule from now until a few weeks after the show looks to be incredibly taxing for the wrestlers and the production crew. Aside from the house shows and television tapings, almost every day is filled up with appearances at malls and book stores. Also of note is that the WWE has a large number of international events just before the big one. In recent years, about 30-35% of buys have been coming from international markets as the domestic USA market continues to slide. Going on an international tour so close to WrestleMania shows that the WWE is looking to spread their name and goodwill even more in other markets in the hopes of increasing that number.

Domestically, expect trucks driving around major cities like Los Angeles and New York City with advertising on them. There will most likely also be a number of press releases of the WWE's impact on Detroit last year and what they expect to do in Orlando this year. This event is already the highest grossing and largest number of tickets sold at the Citrus Bowl.

Also, after speaking with a number of non-wrestling fans, it became apparent that WrestleMania is a "destination" event. That is, people who never watch wrestling during the year will order WrestleMania or go somewhere to watch it, much like the SuperBowl. Although not nearly as popular, the WWE would do well to just remind people of the date so that casual and non-viewers remember to watch. The core audience is in place, so that is not a worry.

There was plenty more written, so be sure to check out the rest of that section. Also worth your read this week is:

Wonder what was happening 21 years ago? Were you even alive 21 years ago? I guess Matt Adamson was.

Want more Wilcox? He has the payload. Fink's Payload, that is!

Did you know that Asish writes articles? Over the Politics Zone, no less! This time he's looking at donor contributions of the Clinton and Obama campaigns. It's amazing how much money is spent for a $200,000 a year job.

The Journal's person hero Mathew Sforcina brings you "In Defense of… The Elimination Chamber (Part 4 of 3)". In related news, I'll be suing Mathew Sforcina for copyright infringement.

And, of course, a week would not be complete without a good dose of my very own HIDDEN HIGHLIGHTS!!


CLOSING BELL

This concludes Issue #20 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!