wrestling / Columns

The Hamilton Ave Journal 03.15.08: Volume 1 – Issue 25

March 15, 2008 | Posted by JP Prag

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 1 – Issue 25

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 Hamilton Ave Journal

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: WrestleMania marketing-blitz takes world by storm

In an effort to beat the 1.2 million worldwide buys the WWE received last year for WrestleMania, the WWE has engaged in a huge marketing campaign unlike any others in the past. Although some elements like the Floyd Mayweather vs. Big Show contest are well known, the WWE has been working in many subtle and in-your-face ways to make people remember that March 30th is WrestleMania.

According to MultiChannel News, via WWE Executive Vice President of Marketing Geof Rochester (MultiChannel quote in italic, Hamilton Ave in regular):

Affiliates including DirecTV, Dish Network, Comcast, Time Warner Cable, Charter Communications, Cox Communications and Cablevision Systems have signed up for a promotional campaign that will result in one viewer winning a custom-built WWE motorcycle from Orange County Choppers.

The biggest piece of this is not the giveaway, but that so many large providers will be mentioning WrestleMania for basically free to be a part of the giveaway.

Subscribers in participating systems will be targeted with 2 million direct-mail pieces. Rochester called that a 30% increase in mail over last year.

The effectiveness of direct mail is questionable at best, but it is probably now higher than e-mail with all of the spam filters out there.

Guides and bill ads will reach 9 million homes; cross-channel spots will air in 10 million homes. The effort will be supported in 30 markets with radio promotions.

Again, the guides and bill ads are questionable as they will just be filtered out as junk. The radio and television spots will be much more effective because people here the words and process them, even if subconsciously. Studies have shown that the average American needs to hear a advertisement 5-8 times before the information is retained because there is so much other “noise” in our society.

Charter and Comcast will boost visibility in some of their markets by participating in WWE’s Community Champions, where cause-related activists will be nominated for a chance for a trip to Orlando for the wrestling event.

Recently, the WWE honored ten students who were top readers. Although the payback on these is not high, the WWE continues to do well spreading the message that they are benevolent corporation.

The market around the Citrus Bowl will be especially saturated. DirecTV’s new blimp will hover over three NASCAR races this month, showing 2-minute clips, six times per hour. Also, local affiliate Bright House Networks helped WWE gain access to 70,000 local hotel rooms to offer three-minute promotions for the event.

Since this reporter spends so much time in hotel rooms, let it be known that hotel room advertisement is rarely watched. Blimps may get some attention, though.

The partners also worked together to rent a patch of land near the Orlando airport so arriving planes will see the WWE logo depicted on the plot, Rochester said.

This reporter looks forward to seeing it when he lands.

In all, WWE will try 40 to 50 tactics to spread the word.

That is a lot of marketing. It would be interesting to get some dollar figures and if the WWE can trace back what caused people to buy for the least money. Obviously, if it cost them more than $32.50 per person to get one buy (the net revenue of the PPV purchase before expenses), than it was not worth it. As pointed out many times here in Journal: it is not about maximizing sales, but about maximizing profit.

When news of this investment broke out, some people thought the best may to gain additional buys would be to lower the price. Lowering the price will gain some buys, but perhaps not enough to make a different. It is a simple supply and demand model:

  • If the WWE can sell 1.3 million buys at $65 ($32.5), they will have $42.3 million in net revenue.
  • If the WWE can sell 1.5 million buys at $50 ($25.0), they will have $37.5 million in net revenue.
  • If the WWE can sell 0.9 million buys at $80 ($40.0), they will have $36.0 million in net revenue.

    Therefore, the way to maximize buys while maintaining a higher net revenue margin is to have a medium-to-market price point (how much are people willing to spend before they give up) that forgoes some customers to get extra money out of the rest.

    This is a simplified model as there are many other factors to consider—marketing costs especially—but shows that the WWE has planned to loose some viewers in order to reap the benefits off the rest. So long as the market is willing to pay, the WWE will not change their mind on the decision.

    Hamilton Ave to receive a $12 million upgrade

    The most powerful place in the wrestling world—Hamilton Ave in Stamford, CT—is about to receive a major overhaul. Hamilton Ave is home to the WWE’s production facilities; here is where many shows are tapes, specials put together, DVDs created, segments made, and a plethora of other activities that make wrestling happen.

    The WWE has hired Thompson to change the entire facility from a manually catalogued standard definition archive to a fully digital, 100% server-based, High Definition complex. Through a series of upgrades over time, Thompson will be changing out all of the SD equipment with modern HD equipment to match the WWE’s $20 million investment in their road show. At the same time, Nesbit Systems will be installing a “media asset management” (MAM) system to create a multiple-cross database of all of the WWE’s new footage. Once the system is up and running, all 100,000 hours of WWE-owned archived footage will then be made digital and catalogued in the system.

    Although an expensive investment, this combined system will be very important to the WWE as they expand uses for their owned footage. DVDs, WWE 24/7, and WWE Online can all benefit from having direct access to all of the footage and being able to easily cross link content. Instead of being dependent upon memories and written documentation, WWE production associates will be able to query back results.

    As an additional benefit, now during live shows the WWE will be able to pull content from any time in the past almost immediately. They will also not have to pre-prepare copies to bring with them as all can be accessed through a central server.

    Of course, there are pitfalls of having a central server in case the system goes down, but for a $12 million price tag, one would expect an off-site backup server.

    WWE reaches Galaxy 25

    Globecast is a North American provider of satellite content that operates on the Galaxy 25 satellite and is the only company in North America to carry Al Jazeera English. This past week, the WWE and Globecast came together on a deal to have Globecast be the satellite distributer of WWE PPVs to all of the WWE’s local cable, fiber-optic, and national satellite providers. The company will be responsible for pre-event testing, coordinating with different locations, and managing the signal of the HD and SD feeds. Although few details of the deal have been announced, Globecast says that it will have a dedicated project management team to support the WWE in these efforts.

    Newsbites

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

  • The Great Khali has a role in the upcoming Bollywood feature “Ramaa – The Savior”. The Bollywood area is the second largest producer and grosser of movies after American Hollywood. India, home to 1 billion people, is an extremely important growth region for the WWE. The Great Khali already has a strong following out there, and this movie role will help strengthen that growth for him and the company.
  • The WWE has joined with “Second Wind Dreams”, an organization much like “Make a Wish”, except for senior citizens.
  • WWE CEO Linda McMahon was on Mad Money with Jim Cramer this week. Cramer continued to tout the positives of the WWE corporate empire the undervaluing of their stock. Cramer especially noted the company’s high dividend yield. Shares closed higher by 4% at $18.16 and reached an after-hours peek of $18.50.
  • OVW continues its restructuring after being let go of being a WWE developmental territory. The WWE sent crews to their facilities to remove several rings (presumably to move them to FCW). Meanwhile, OVW began to offering their shows online through a $2 podcast.
  • Ticket sales for the WWE shows in the UK have been selling strong, with all shows being sold out in the highest price bracket and half of all tickets completely sold. This is a positive sign for TNA who has had to cancel shows in Israel and Mexico this year due to low ticket sales.

    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 March 13, 2008, here are the current standings of our shows:

    Ratings

    RAW
    Close (This Week’s Rating): 3.6
    Open (Last Week’s Rating): 3.5
    Percentage Change: ▲ 3.7%
    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): 2.6
    Open (Last Week’s Rating): 2.6
    Percentage Change: UNCH
    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): 1.2
    Open (Last Week’s Rating): 1.2
    Percentage Change: UNCH
    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): 1.2
    Open (Last Week’s Rating): 1.1
    Percentage Change: ▲ 9.1%
    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:

    Just a note: RAW was a three hour program this week. During the normal two hour timeslot, the show did a 4.0 rating, putting it in line with other highly promoted two hors RAW in recent memory. Word is that USA network was very happy with the number; but again, RAW has not done anything to sustain or grow a higher rating but instead is pulling out tricks and gimmicks to pop a rating here and there. Meanwhile, it seems like ECW and SmackDown! have plateaued for the end of the season. The interesting piece is that it now appears that iMPACT is within striking distance of overtaking ECW, but not because iMPACT has significantly grown. Once again, it is because ECW has shed its audience at a faster take than TNA has grown theirs.

    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. Jeff Hardy Armbands
    2. John Cena 8-Bit T-Shirt
    3. Hardys Purple Logo Pendant
    4. John Cena Beware of Dog Package
    5. D Generation X Anytime Anywhere T-Shirt
    6. WWE Black Gift Bag
    7. WrestleMania 24 White T-Shirt
    8. Triple H Tumbler
    9. D Generation X Wristband Set
    10. Randy Orton Oblivion T-Shirt

    What a week to be Jeff Hardy! Not only has he matched John Cena in number of items, but he has surpassed him in sales volume. Hardy’s top item is selling more than John Cena’s and his second best item is selling more than John Cena’s second best. Not only has his suspension cost him a push and a possible championship run in the ring, but it has also cost him a significant amount of pocket change. Jeff Hardy does not have one of the highest downside guarantees, but his merchandise sales have more than been making up for that. Now he will lose that money as well for the next 60 days while the WWE decides what to do with his future. It would be hard to drop Hardy completely given his sales volume, but it would hurt the WWE a lot more if Hardy refused treatment and something were to happen to him in the future while still in their employ.

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

    1. Against All Odds 2007 DVD
    2. Sacrifice 2007 DVD
    3. Christian Cage “Instant Classic”
    4. Motor City Machineguns T-Shirt
    5. TNA Meltdown Vol. 2
    6. TNA Global Impact DVD
    7. TNA Anthology – The Epic DVD Set
    8. James Storm “Sorry About Your Damn Luck” T-shirt
    9. Turning Point 2007 DVD
    10. Shark Boy 24:7 T-Shirt

    Not much movement on the TNA list this week with just a few items swapping positions with each other. It looks like TNA has finally got their Top Ten list under control so it gives a more reasonable and logical result. The question remains: did everything stay the same because sales were equal or did everything remain the same simply cause there were not that many sales?

    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
    16 (Mar)

  • RAW Live
    Beaumont, TX
  • SmackDown!/ECW Live
    Bossier City, LA
  • ROH PPV Taping
    Philadelphia, PA
  • 17

  • RAW
    Lafayette, LA
  • 18

  • SmackDown!/ECW
    Biloxi, MS
  • 19

  • TNA Live
    Springfield, MO
  • 20

  • TNA Live
    Evansville, IN
  • 21

  • TNA Live
    St. Louis, MO
  • 22
    23 24

  • RAW
    Columbia, SC
  • 25

  • SmackDown!/ECW
    Fayetteville, NC
  • 26 27

  • TNA iMPACT
    Orlando, FL
  • 28

  • TNA iMPACT
    Orlando, FL
  • ROH Live
    Orlando, FL
  • 29

  • TNA iMPACT
    Orlando, FL
  • ROH Live
    Orlando, FL
  • 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.

    Nothing critical was written in the commentary section last week, so instead worth your read this week is:

  • JT writes about our time with the New Zeeland crew at WrestleMania 23, but neglects to mention his mom’s cooking!
  • Do you care what Randy Harrison thinks? Well too bad! He’s telling you everything he liked and didn’t like about every WrestleMania ever!
  • But if you just want to know how one match changed the show, Scott Rutherford is your man.
  • And if you just want an arbitrary list of 23 numbers, Dustin James ranks the WrestleMania’s!

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

    CLOSING BELL

    This concludes Issue #25 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

    Till then!

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