The Hamilton Ave Journal 03.01.08: Volume 1 – Issue 23

Posted by JP Prag on 03.01.2008

SmackDown! gets a new home, iMPACT goes live, Mayweather makes money, SmackDown! and ECW make new ratings “highs”, Easter takes over the WWE’s Top Ten, TNA releases an official Top Ten of their own, and under-marketed wrestlers get a chance in the editorials.

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 1 – Issue 23

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: SmackDown! lands a new home

Several weeks ago, negotiations between the CW Network and the WWE broke down and the two past a period where the CW Network had the first right of refusal. The CW wanted to keep SmackDown!, but they wanted to pay less for the programming and advertise it less since the programming did not fit the network image, even through it was superior to most of the network's ratings.

The WWE decided that the CW was not longer a viable partner for them and opted to show SmackDown! around to several network. After much speculation, the WWE sent out a press release on Tuesday announcing their new partnership with MyNetworkTV (MyTV).

MyNetworkTV is a wholly owned subsidiary of NewsCorp, which also owns the Fox Network. The two networks operate completely independent of each other and therefore have different staff and different goals. MyTV is trying to establish itself and has had trouble finding a consistent message that will bring in viewers. Most recently, they have aimed at males much like SpikeTV, thought that has not turned the tide for the network.

Some have speculated that due to MyTV's lower stature, this is actually a step backwards for the WWE. Many also believe that MyTV is less available than the CW. On the contrary, MyTV has 167 affiliated stations (only Mobile, AL is a major market without an affiliate) and is in 96% of households in America reaching 106 million homes. This actually gives MyTV is slightly larger reach than the CW's 95% of households. Also, it should not be forgotten that CW's predecessor UPN did not even have the reach of the CW. As recently as 2005, UPN only covered 86% of the United States and still had gaps in the Top 30 markets.

With MyTV, the WWE has the chance to once again become the cornerstone of the network, just like the were for Spike, UPN, and USA the first time around. MyTV obviously wants the WWE and is more appreciative of the product. MyTV is also lacking on original programming and needs a way to draw viewers to the network.

On the other hand, UPN and CW have already noted that viewers who came from SmackDown! did not translate into viewers of other programming on the network. Quite the opposite, viewers came in for SmackDown! and nothing else. The same could happen to MyTV.

The terms of the deal have not been released, but expect at least a three if not five year commitment. The WWE most likely is keeping the fee structure the same with MyTV paying a straight amount for programming and then selling the advertising space. There may be incentives based on ratings gains for SmackDown! and for the network as a whole.

Currently, MyTV airs movies on Thursday and Friday nights, leaving much speculation that SmackDown may return to its Thursday night timeslot when the show premiers in September. Of course, that could throw a crimp in the plan of our next subject.


TNA iMPACT goes LIVE!

After much hemming and hawing, TNA announced yesterday via their audience coordinator Dennine Neal that TNA iMPACT will move to live every other week starting WrestleMania weekend March 27 (Thursday). At this time, it appears that March 27 will be a live show, March 28 will be a taped show for the following week, and another event will be held on Saturday.

The Journal would once again point this out as a questionable decision at best. TNA has yet to get their production completely in order. Although they have live PPVs on a monthly basis, they have not proven that they can do that every week. Even during the weekly PPV era TNA had production and timing issues. Meanwhile, there are debatable additional costs associated with going live. On top of that, with a Friday taping schedule their wrestlers will have less independent dates to work and therefore will make less money, unless TNA plans to increase salaries or weekday house shows. Also, TNA is planning a conversion to HD, another major change to production that they may not be totally ready for.

The timing of this change is questionable as well. Most, even within TNA, seem to believe that will capitalize on the 60,000 additional WWE fans that will be in town for WrestleMania. But the iMPACT Zone can barely hold 900 people and is filled with the local Orlando fans for the most part every week. The chances of getting out-of-towners who happen to be at Universal Studios and happen to be there for WrestleMania is quite low. That also means that TNA and ROH will holding shows while the WWE is holding events, not to mention the local promotions also putting on shows. There is just too much going on and not enough interested and available audience.

Now, the other issue is that SmackDown may be moving to Thursday nights. If that happens, TNA needs to seriously consider if they want to directly compete with the WWE. Although TNA has shown they can compete with ECW (scoring a 1.1 to a 0.6), that is a far cry from going up against SmackDown!. TNA has made themselves a lot less flexible with being able to move the show with a change in taping schedules.

Also, many talent are already booked out up to three months in advance. This decision comes with just a month of warning. Many of the talent may not be available (out of the country even) and TNA may find they have a limited talent pool. As of this moment, the talent may not even be aware of the decision. TNA's own website is still listing the tapings for Monday and Tuesday, not Thursday and Friday.

Although at some point it makes sense for TNA to go live, now many not be the time. The company has yet to hit its stride and show a clearly defined brand and message, a consistently produced product, or a profitable franchise. A company can handle two to three major changes a year, tops, and TNA is once again going into 2008 already having done that and more. The company would do well to spend some time working on core competencies before making rash reactionary decisions.


The cost of Mayweather

Coming off of the heels of the WrestleMania press conference, it was announced that Floyd Mayweather will be paid $20 million for his appearance. This number is highly suspect and many believe it is a marketing number where Mayweather is most likely receiver $5-6 million. Even still, some have started to do the math. If WrestleMania costs $64.95 per buy and the WWE receives 50% of that ($32.48), That would mean they would need an additional 154,000 additional buys to cover the low-end costs (reasonable) or 616,000 to cover the high-end (unlikely). Now, what both of these figures fail to account for is WrestleMania's marketing budget.

The WWE pulls out all the stops for WrestleMania and does more advertising and appearances for it than for most of the rest of non-Big Four combined. Mayweather's salary is actually part of the marketing budget moreso than the event salary budget as his job is to bring in outside and mainstream interest. Several weeks ago, a reader asked the Journal what the WWE would do for marketing this year with WrestleMania, and it looks as if Mayweather is the answer. Now, how much could the WWE possibly spend on advertising? Let's break it down:

WrestleMania did 1.2 million buys last year. At the same equation above, that would translate into about $39 million in revenue.

Event Sponsor ($2 million)

Ticket Sales ($4 million, WrestlaMania 23 did $5 million but held 20,000 more people)

Merchandise ($1.5 million)

DVD Sales: the WWE shipped 310,000 units of WrestleMania 23 by August. Assuming the ship about the same, and the WWE receives about $10 per DVD, then that is another $3 million.

So in total, we are looking at less than $50 million in revenue. Knowing that the highest cost is talent and that Bobby Lashley made $250,000 for his appearance, let us assume that this is the average amount a performer makes. About 35 people performed on the show, so that is $8.8 million ($9 million for math's sake). Next are production costs, which is about $2 million. That now leaves $39 million. SG&A, other people traveling with the wrestlers, and all the other costs is about another $1 million. Still, that leaves $38 million of Gross Profit.

With those figures, the next amount to take out is advertising. If we say normal advertising is $8 million, that will leave the WWE with $30 million left over. Therefore, it is plausible that the WWE would pay someone $20 million and not take a hit because they would still be profitable, although it unlikely they will do so. Instead, if the WWE spent $5 million and received at least 154,000 buys from it, then it would be well worth it.

Time will tell when the WWE's Q1 and Q2 reports come out what really happened. For now, though, the math is available here.

Editor's side note: rumors began circulating last year that the WWE (attributed to Geof Rochester, the Vice President of Marketing) was going to spend $70 million in advertising last year. Judging just by the PPV revenue along above, this number would make no sense and these rumors are inherently false. This may be similar to how the Mayweather rumor got started and the WWE decided to just roll with it.


Newsbites

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

On the tales of WrestleMania 23, the WWE is suing last year's sponsor 360 OTC for failing to pay last year's fees amounting to just under $1.2 million. The company recently changed names, but does it admit that it owes payment. The question seems to be around when payment is due and how much in total is to spent.

Chris Sabin and Alex Shelley will be training a "young gay man" on MTV's Made to be a wrestler. This is a unique opportunity for TNA to get their name out to the MTV audience, which nowadays skews to young girls (though that is not officially the company's demographic). It will also be a rare chance to show wrestling has grown as homophobia has been a major part of many wresting characters since Gorgeous George.

The United States Congress and Vince McMahon got in a spat when Vince did not show up as requested to a hearing because his lawyer was not available. McMahon and the WWE have released documents showing that Congress gave him the right not to show up if his council was not available and that the WWE has sent over 3000 documents and provided untold hours for this endeavor. Vince McMahon also said he would be available for a future date as well. This did not seem to be enough for Congressman Lee Terry (R-NE) who said the excuse was "hollow" and that Vince McMahon "flipped the bird" at Congress and that Vince McMahon has plenty of other lawyers he could have brought with him.


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 28, 2008, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.5
Open (Last Week's Rating): 4.0
Percentage Change: ▼ 12.5%
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): 2.7
Open (Last Week's Rating): 2.8
Percentage Change: ▼ 3.6%
52-Week High: 2.9
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): 1.4
Percentage Change: ▼ 7.1%
52-Week High: 1.8
52-Week Low: 0.6
All Time High: 2.3
All Time Low: 0.6

TNA iMPACT**
Close (This Week's Rating): 1.1
Open (Last Week's Rating): 1.1
Percentage Change: ▲ 3.8%
52-Week High: 1.2
52-Week Low: 0.9
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 the 17.6% gain for RAW last week, the program dropped 12.5% to a 3.5 rating. Once again, this shows that there are single week ways to pop ratings, but the WWE has not made all the steps necessary for long term growth and stable upward mobility. Unfortunately, USA is coming down hard on the WWE in order to get them quickly grow ratings so the WWE has been reacting to their needs instead of being proactive in their own understanding of the industry. Although the WWE is in no danger of going out of business and is highly cash positive, this reactionary nature is similar to WCW at the end instead of when the WWE was putting them out of business.

Also this week, two interesting things happened: both ECW and SmackDown! set new 52-Week "Highs". SmackDown! dropped from a 3.3 to a 2.9 and ECW dropped from a 2.3 to a 1.8. That means that both of these shows have officially entered a period of recession where their new highs are set during a lower time. On the other side, SmackDown! and ECW have generally been rating in a much more predictable range while RAW is much more volatile. This means that SmackDown! and ECW have much more controllable ratings while RAW's are more out of the hands of those who make the show.

Please note that last week TNA set a new "High" of 0.9 compared to the old one of 0.6. That means that of all of these shows, TNA has actually shown the most growth over a year, despite their range not moving much at all in the past six months.


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. John Cena 8-Bit T-Shirt
2. WrestleMania 24 White T-Shirt
3. Hardys Purple Logo Pendant
4. Hardys 2008 Youth T-Shirt Easter Basket Package
5. John Cena Youth T-Shirt Easter Basket Package
6. WWE Black Gift Bag
7. Rey Mysterio 2008 Youth T-Shirt Easter Basket
8. Triple H The Conqueror T-Shirt
9. D Generation X Anytime Anywhere T-Shirt
10. WrestleMania 24 Limited Edition Beanie Bear

John Cena continues to dominate the list taking number one with his new shirt from last week and number five with a special kid's Easter package released this week. Not to be outdone, Jeff Hardy maintained the pennant and also added an Easter package that actually out sold John Cena's. Rey Mysterio also joined the list this week with a similar package premiering at number eight. Although these items have no lasting sales volume, they are a nice bump in the short term leading up to WrestleMania. On the subject of WrestleMania, the event itself premiered two items this week, a positive sign for buyrates to come.

TNA releases a list of Top Ten selling items, but in no order. Using the function to sort by most popular, they came up in order as:

1. Christian Cage "Instant Classic" T-Shirt
2. Motor City Machineguns T-Shirt
3. AJ Styles "Blue Roots" T-Shirt
4. TNA Meltdown Vol. s2
5. TNA "Crest" Logo T-shirt
6. Tomko "Tattoo" T-Shirt
7. "University of Angle" T-shirt
8. Motor City Machine Guns Skull Cap
9. ODB "Not Just Another Pretty Face" Men's T-shirt
10. ODB "Not Just Another Pretty Face" Women's T-shirt

Thanks to reader Matt for pointing out that TNA now releases a Top Ten list. When the Journal first checked this list on Sunday it was different than the one seen here from Friday, but it still provides a more accurate picture of what has been selling in TNA. On Sunday, James Storm was on the list, but things have changed already. Two things are readily apparent. First, the Motor City Machine Guns are top sellers, which may be contributing to alleged attitude problems. TNA will be hurting themselves by not giving them some spotlight, so they have to be careful with this punishment. Second, ODB is a top selling item for Men and her shirt for Women is actually outselling the majority of men's merchandise. Knowing this, ODB is doing a tremendous job of bringing in female viewers, an area of the market generally ignored that TNA could own.

As for the rest of the new lineup, it makes a lot more sense than has been seen in recent weeks. The list is dominated by the Coalition and Alliance members and storylines, which of course are the top of card. Suspicious by his absence is Samoa Joe. Will a sustained push and the possibility of the company rallying around him increase sales? Time will tell.


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
2 (Mar) RAW Live Danville, IL SmackDown!/ECW Muncie, IN	3 RAW Indianapolis, IN	4 SmackDown!/ECW Cleveland, OH	5	6	7	8 RAW Live Madison, WI SmackDown!/ECW Live Dubuque, IA
9 TNA Destination X Norfolk, VA RAW Live Green Bay, WI SmackDown!/ECW Live Dubuque, IA	10 RAW Milwaukee, WI TNA iMPACT Orlando, FL	11 SmackDown!/ECW Chicago, IL TNA iMPACT Orlando, FL	12 TNA Live Aiken, SC	13 TNA Live Salem, VA	14 RAW Waco, TX TNA Live Pikeville, KY ROH Live Dover, NJ	15 RAW Live Tyler, TX SmackDown!/ECW Live Alexandria, LA ROH Live Dover, NJ

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.

JBBTHWK wrote in a couple of weeks back with:

What Superstar do you think in TNA & WWE has untapped Marketing potential that would do well in their fanbase?

By your question, the assumption is that you are talking about the existing WWE and TNA fanbases, not the fanbases of the wrestlers that the companies have not capitalized on. If we look at TNA's fanbase as slightly southern skewed audience that is mostly smarks with a sprinkling of pure marks, he Journal would have to go with Hernandez. LAX has sold well in the past, but we have not seen everything they can do. Hernandez has a strong indie reputation and can pull off high impact and fast moves that the smarks like, but he also has the size and potential for mic skills that make the marks happy. Also, Latino culture is the fastest growing in America and is becoming an integral part of white suburban youth culture, who tend to be the ones to spend the most money embracing other styles and idea.

WWE's audience tends to be more mainstream, skews to a mix of older audiences and children, and tends to be northern and east-coast centric. There are many notable candidates for this that we know well, like MVP (sky is the limit for this T.O. imitation), CM Punk (has an instant audience connection a la RVD), Matt Hardy (can have singles success like and beyond his brother), and Elijah Burke (a perfect heel that never gets a push). But when it comes to the WWE, you are looking for a character that is larger than life and seems like they could become bigger than the sport itself or have an instant connection with kids who will want to buy everything related to them (a la Rey Mysterio). That is why the Journal is going to pick John Morrison. Although he does not have the size the WWE generally looks for, he has skill-sets that far make up for it. His charisma alone makes you believe any character he plays, and his looks are able to get a reaction out of the audience. Most of his matches are crisp which wins over much of the audience, even in a subtle way. Since joining the WWE, Morrison has been a heel, even when he was with Eric Bischoff. How many people have been in the WWE for four years have been a consistent heel/face? We have not begun to see what Morrison has to offer, and an eventual face run may make him a huge seller. With good looks he brings in ladies like Jeff Hardy, with flash he brings in the kids, and his style meshes well with the WWE since he was trained by them. All-and-all, there is too much more for Morrison to do.

Are there any other wrestlers that you readers feel are not reaching their market potential? Drop a line in the commentary section below or shoot an e-mail over. The Journal would like to know!

From the commentary section last week, we have several items to highlight.

Brett wrote in with some merchandise ideas for Cena:

I always noticed that people say WWE is smart for leaving Cena face because his detractors still want to see him lose and his fans don't want him to be a bad guy (duh!).

Obviously his Merch does sell well, but I was thinking. John Cena is not liked by his detractors in the same way people hated the Patriots. Have you seen the 18-1 T-shirts? Well, they should try something similar with Cena, a "Cena Sucks" T-Shirt or something like that would sell pretty well I think. I think some people's hate for Cena is larger than their love of other superstars, which is why I think the shirt would work for him.

Makes absolutely perfect sense; why not capitalize on the audience that dislikes Cena? Many have already noted that some of the audience pays to Cena lose, while other pay to see him win. Why not try to take the market for all it is worth. Although you have hit close to home with Patriots hate, here in New England "Yankees Suck" shirts sell well all year long. If money can be made off of dislike as much as like, it only makes sense to do so. Although no numbers have been release, it is most likely those "Angle Sucks" shirts did very well back in the day.

On a different subject about violent behavior being caused by wrestling, Davy says:

Of course violent kids are more likely to watch wrestling, angry violent people are more likely to watch more angry violent programming. Cause and Effect, wrestling can only make violent kids worse, but I don't think it turns peaceful rational kids violent. People watch stuff they agree with, not the other way around. Bill O'Rielly doesn't make people conservative!

The Journal agrees. Organizations like the PTC often try to tout out that wrestling contributes to the downgrade of society by the way that storylines are portrayed. Instead, the question should be why did storylines about beating up one's boss make so many people gravitate to wrestling? Entertainment only reflects the society around it, entertainment does not define the society.

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

Michael Weyer takes us back in time to show what a politicking backstabber Ric Flair was and how he almost destroyed the NWA. Personally, there are many more examples that I think he glossed over that could have been much more damning.

Nitro wins in the ratings again in Larry Csonka's Monday Night Wars. Of course, being a WCW mark and a WWF hater, I would have rated the segments completely the opposite of enjoyment as he did.

Andy Clark tries to do the history of the World Heavyweight Championship although I liked it better when it was called…

In Defense Of… The World Heavyweight Championship (Part 1 of 1), written by JP Prag on March 22, 2006.

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


CLOSING BELL

This concludes Issue #23 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!