The Hamilton Ave Journal 09.27.08: Volume 1 – Issue 53

Posted by JP Prag on 09.27.2008

The Journal revisits the rating projections made four months ago, the WWE and OVW look to be rekindling their relationship, the WWE makes large overtures to Latin America, Eric Bischoff may be starting a wrestling promotion with CMT, and CM Punk manages to hold on to a spot in the Top Ten.

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 1 – Issue 53

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: Ratings Projections Revisited

With so many ratings woes in the past few weeks, the Journal thought it would be the best time revisit the projections made in Issue #37 on June 6, 2008.

Just as a reminder: to come up with a credible projection, the Journal developed an analysis of average monthly ratings for the entire existence of all of the shows. The years were then bucketed into averages of 3-year curves, 5-year curves, and all-time curves. These curves were then given a weighted average of 65%, 25%, and 10% respectively. So a show like RAW will be more swayed by recent ratings but still take into account it's entire history to some extent while ECW will only be affected by its entire existence because it is all within 3 years (none of ECW on TNN was included).

With this equation, the results came up as follows. First RAW:



RAW started off by making a slight jump above ratings but it has been all down hill since then. Now trending below original projects, RAW will struggle the rest of the year before taking its two week break in December. As has been noted several times in the Journal, RAW has not been consistent in direction or message to grow viewers. The number are coming in far less than seen in the past few years and the show has been hitting ten year lows. With competition from all other forms of entertainment growing, RAW has lost its edge as destination programming and will need two year to properly recover.

Next up, SmackDown:



While RAW has been losing viewers, SmackDown has seen a slight gain to cause an upward projection and end the year about where it came in. With the move to MyNetworkTV, this may hamper these plans a bit, but MyNetworkTV is actually available in more homes than the CW. Although some markets are lost, SmackDown has the possibility of outperforming RAW on several nights through the rest of the year.

The newbie, ECW:



ECW saw a surprising bump in ratings during the Mark Henry reign, but in the came in exactly in line with projections. Because of this, the revision is only up slightly, though not statistically so. ECW will basically stay where it is before going into the December lull when the show is up for renewal. It is again only a quarter of a year away from ECW's contract expiring and no word on if SciFi plans to renew. But considering the show just got a new timeslot, it is most likely that SciFi will continue to run one of its highest rated programs.

Last but not least, TNA iMPACT:



After slipping horribly at the beginning of the year and trending far below historical averages, TNA has actually turned their worst time of year into an upswing. This may be more because TNA's audience has changed radically more than anything else, but given the strong number going into Bound for Glory, TNA should be able to maintain a continual 1.0 to 1.2 for the rest of the year, though it would be quite shocking if it managed to go above there.

All-in-all, iMPACT and SmackDown stand the most chance of weathering the storm and actually gaining viewers to their recent highs (though in SmackDown's case no where near their historical highs). RAW is struggling the most and the only show that trended downward. So while others have managed to find a semblance of direction and audience, RAW's loose cannon has not worked in their favor.


WWE and OVW reuniting?

In WWE.com's industry news section, the WWE admitted that Senior Vice President of Talent Relations John Laurinaitis went to OVW to scout talent and make evaluations. The WWE formally broke off relations with OVW earlier this year in a attempt to make FCW the sole developmental territory of the WWE. All WWE contracted talent was pulled form OVW and sent to FCW (or released from their contracts). Through that time, FCW has failed to secure a television deal for the show they are now taping weekly, took several months to even install bathrooms, and wrestlers have had several run-ins with the law and Wellness.

Going back to OVW shows the WWE may be reconsidering their position of a one-territory training program, a move panned by many critics, including the Journal. According to the article, it appears that the WWE may have realized that too:

WWE has not forgotten both the quantity and quality of stars who earned their way to the top by first passing through the doors of Davis Arena, and Laurinaitis expressed that he believed that OVW is still one of the premiere places in the world in which to receive an education in professional wrestling.

Secondly, WWE will be taking a much more active role in recruiting OVW developed talent. Officials from WWE will be paying a visit to Louisville, Ky., on a regular basis to evaluate and recruit talent from OVW's roster. This, combined with OVW's unique approach to the training and development of talent will provide anyone who is looking to make a name for themselves unlimited opportunities to succeed.

Being actively involved in OVW like this makes OVW now a defacto Development territory. It seems only a matter of time before the WWE and OVW officially reunite their relationship and the WWE is again supplying OVW with wrestlers, trainers, and money. Concludes the article:

OVW will continue to supply the future of WWE, and professional wrestling as a whole, with talent that is trained at a level which can be achieved nowhere else in the world. John Laurinaitis put it best when he expressed that OVW is still the place to be if you desire an education in the art and the sport of professional wrestling.


Overseas Mayhem

In the continual confusion over the WWE's direction in the rest of the world, a new deal was reached in Mexico this week to also allow Monday Night RAW to air live on TVC Deportes. How this deal was able to be signed when a deal with Televisa's channel Galavision was made just a week ago is unclear. Here, though, it appears that the WWE will not be relegated to Sunday afternoons nor will it have to compete with big soccer matches. Out of all of the deals made in Mexico in the past three weeks, this one appears to have the most room for growth and benefit to the WWE. The WWE will now have programming on almost every day of the week (when including replays) in Mexico, so it looks like they are trying to take over the market.

They do face heavy domestic competition in AAA, CMLL, and other organizations. The WWE style and the Lucha Libre style are quite different. It will be interesting to see how the WWE tailors their product besides having Latino stars on their shows.

Also taking place in Latin America, the WWE signed a three-year exclusive distribution deal with Mississauga, Ontario based Synergex. Synergex will distribute WWE's home entertainment products in Brazil, Chile, Peru, Columbia, and Argentina. Says Joel Satin, Vice President of Home Entertainment & Books for the WWE:

"We are pleased to welcome Synergex to our growing list of international home video licensees and partners. This agreement supports WWE's international expansion push into Latin America, and gives us local expertise to distribute our DVDs and increase our retail presence".

The deal begins in Q4 2008 and is expected to included at least 25 products in each territory per year. Synergex will be responsible for localization of the product look and advertising, as well as using its connections in supply chains and stores for distribution.


Newsbites

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

On the heels of Hulk Hogan's Celebrity Championship Wrestling getting set to premier on CMT starting October 18, 2008 at 8pm, word is that Eric Bischoff is negotiating with CMT for a new wrestling organization of his own. Mr. Bischoff—a good friend of Mr. Hogan's, an executive producer on his show, and the co-proprietor of the show's owner—has been rumored to be negotiating around the promotion that would build to a Hogan vs. Goldberg rematch. Other than that, the promotion would focus heavily on new talent. No word yet on how Bischoff-Hervey Entertainment plans on funding this venture if it would be picked up, what talent they could sign that is not already guaranteed to WWE, TNA, or ROH, or how the shows would be run.

This is not the first time Mr. Bischoff has been involved with a wrestling promotion since the demise of WCW. Outside of being an on-air character in the WWE, Mr. Bischoff was also one of the main purveyors of "Ring Rats", a show that was designed to train young teenagers in the art of wrestling. The wrestlers would "win" based on points for style, charisma, etc… instead of actual pinfalls.

The WWE has gotten into another squabble, this time with UK based Fighting Spirit Magazine. The WWE sent out a memo to the magazine and many other media outlets that for the upcoming SmackDown vs. RAW 2009 video game they were not to show images of blood, were not to call performers "wrestlers" (instead "superstars"), and that Triple H was not to ever be shown in a prone position. In response, the magazine published the memo, making the WWE send a reprimand. Instead of recanting, the magazine posted an image of a wrestler that looks like Triple H being hovered over by someone who looks like Kane.

As the WWE's strength in the marketplace and popular culture has diminished, they have less and less control over how their product is being displayed. Here was another example of a media outlet that did not fear losing connections to the WWE and is fine with being on their banned media list. 411Mania.com is also on the WWE's banned media list and is rarely granted media requests, though this website does 3 to 10 times the traffic of the nearest competitors. Fighting Spirit will most likely be fine without the WWE's input.



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 September 25, 2008, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.1
Open (Last Week's Rating): 2.6
Percentage Change: ▲ 19.2%
52-Week High: 4.1
52-Week Low: 2.5
All Time High: 8.1
All Time Low: 1.8

SmackDown*
Close (This Week's Rating): 2.3
Open (Last Week's Rating): 2.5
Percentage Change: ▼ 8.0%
52-Week High: 2.9
52-Week Low: 1.6
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: 1.6
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: UNCH
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:

The ratings have been covered quite enough this week in the Journal. Nothing shown here changes anything listed above.


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. WrestleMania 25 Collage T-Shirt ($20, on sale $9.98)
2. D Generation X Anytime Anywhere Sweatshirt ($40, on sale $12.98)
3. Shawn Michaels Creation Sweatshirt ($40, on sale $12.98)
4. WWE Ultimate Rivals Trading Cards ($2)
5. Undertaker Smoke Sweatshirt ($40, on sale $12.98)
6. Jeff Hardy 2008 YOUTH Halloween Package ($84.49, on sale $43.99)
7. WWE Black Gift Bag ($3)
8. Hardys Purple Logo Pendant ($10)
9. CM Punk Fists T-Shirt ($25)
10. Triple H Hammer T-Shirt ($25)

Looks like it is never too early to shop for WrestleMania paraphernalia, especially when it is half off. AS has been the case with much of the Top Ten the past few weeks, 50% of the Top Ten is discounted items, heavily cutting in to the WWE's margins and bottom line. The usual big sellers in Jeff Hardy and Triple H both managed to hold on to full-priced items this week. But the big surprise winner is CM Punk, maintaining a position with a full-priced item for a second week. Although the WWE looks to be more and more affected by the troubling economy, CM Punk looks to be breaking through to a consistent money driver. Perhaps that will allow him to get back into the main spotlight again in the near future. Then again, Jeff Hardy has sold well for a very long time and has yet to have the spotlight consistently put on him, even before he had major Wellness related issues.

TNA releases a list of Top Ten selling items, but the list has not been updated to current products in quite some time. Until TNA updates the list, the Journal will be take the list of featured products and sorting by most popular. When done so, the list comes up as:

1. TNA Global iMPACT DVD ($19.99 – OUT OF STOCK)
2. Bound for Glory 2008 FanFest Tickets ($40)
3. Post Yard Sale T-shirt Special ($39.99)
4. AJ Styles "Unim Phenomenous" T-Shirt ($19.99)
5. Complete 100 Card Set ($24.99)
6. Nash "Big Sexy Tour" T-shirt ($19.99)
7. Post Yard Sale DVD Special ($29.99)
8. Sting "Logo" T-Shirt ($19.99)
9. Samoa Joe "Drastic Times, Drastic Measures" T-Shirt ($19.99)
10. Blaster Pack ($24.99)

Not much change on TNA's list this week as the two Yard Sale items move up a few more spots. TNA, too, is seeing discounting as a way to keep sales going, but at the cost of margins. Since these are mostly old items anyway, TNA is better off getting rid of the inventory than sitting on it. But they have to be careful because if people spend all of their money on discounted items they won't have anything left over for full priced ones.


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
28 (Sep) TNA Live (Lakeland, FL)	29 RAW (Minneapolis, MN) SmackDown / ECW Live (Stevens Points, WI) TNA iMPACT (Orlando, FL)	30 SmackDown / ECW (Green Bay, WI) TNA iMPACT (Orlando, FL)	1 (Oct)	2	3 TNA Live (Lowell, MA)	4 TNA Live (Glenn Falls, NY)
5 WWE No Mercy (Portland, OR) TNA Live (Plattsburg, NY)	6 RAW (Seattle, WA)	7 SmackDown / ECW (Spokane, WA)	8	9	10 TNA Live (Davenport, IA) ROH Live (Coral Springs, FL)	11 RAW Live (Reno, NV) TNA FanFest (Chicago, IL) 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.

From the commentary section last week, Guest#2496 knew a bit more about the Quicken Loans Arena:

Survivor Series 2004 in the same building did 7,500, yet WWE has sold out the building at times, too. It's a pretty hot or cold town for WWE, it seems.

It really is. That building has thoroughly sold out simple house shows yet could not get half filled for a major PPV. Perhaps the market was burned out, perhaps the advertising was not good, perhaps there were too many things going on that day already, or perhaps it was a combination of all of the above. Although half filling an arena of that size would be considered a major coup for TNA, for WWE it is nothing but disappointment. And it is not just ticket sales numbers: the WWE can average out merchandise sales per head and having less heads means less money on that end too. Basically, for live events this show did about half of projected revenue but cost just as much to put on. So while it was most likely profitable, it was not by any huge margin the WWE is used to.

With so much ratings talk last week and this week, Guest#9678 wanted to bring his thoughts in about when the WWE last had a 4-week average rating for RAW below a 3.0:

In late-Decmeber 1997, WWE announced it had signed Mike Tyson for several appearances, for which he was paid 7-figures. Hasn't WWE's financial condition at that time been exaggerated?

To which Pat responded:

He earned that. Tyson's appearance created a LOT of media buzz. The day after the RAW he shoved Austin, that was on all the sports reels.

The WWE's financial condition was not exaggerated. That was the very beginning of the turn around and they were desperate. Why else would they have tried such a media stunt unless they had to take the risk? The WWE has shown—especially in the past six months—that when financially secure they are extremely conservative with the presentation of the product. Getting Tyson was one of a pool of last ditch efforts to bring the company back to prosperity. And you know what? It worked to a T. Combine that with the rise of Austin, the Rock, DX, and an MTV buzz around the WWE and the company was booming. Though it was successful in the end, that move could have put the WWE out of business for the amount of cash they had to outlay.

On the subject of Employer vs. Independent Contractor status, Mina showed that she has not read the last six weeks of the Journal:

What I'd keep in mind regarding the contractor vs. employee issue is that most entertainers are contractors. Actors, writers, and athletes tend to fall in that category. I'm pretty sure a good majority of the folks that are behind the camera also work on a contract sort of basis. I'm not saying there isn't a case for trying to establish an employee status, but that there are other considerations too.

Iron Knee chimed in with the Journal's response:

Most American professional athletes are employees with retirement packages and all the usual benefits. The four major sports have CBAs and treat the athletes as employees. Why shouldn't the WWE be held to the same standard?

Absolutely. Let's go over some facts here, just to summarize:

Professional athletes are employees of the teams they are on. They have contract, but being an independent contractor is a lot different from having an employment contractor.

Actors, writers, and independent wrestlers control where and when they work. They are not at the whim of any schedule save to the ones they agree to. Because of that, they are a true definition of independent contractors and can be thusly classified.

Wrestlers for the WWE and TNA do not have control over their schedule, look, wrestling style, and off-time.

During a sexual harassment lawsuit against the WWE, Nichole Bass was deemed by the counts to be an employee of the WWE. The case did not go to trial so the term did not stick.

Now, for the rest of the argument about whether this case has anything to do with pay, Iron Knee continued:

Forget Kanyon and Levy. What about the curtain jerkers from the Seventies and Eighties? I doubt that they made a great deal of cash and we know the Vinces didn't create any sort of health insurance plan or pension. The government needs to step-in and make sure the WWE acts as a responsible corporate citizen.

That may be harder because in the 70's and 80's the laws were quite different and most wrestlers (prior to 1984 and especially 1994) did not have contracts that remotely resembled anything like today. Also, the Scott Levy, et al. lawsuit only goes back 10 years, so it would not cover them anyway unless the IRS chose to pursue it.

On a similar subject, Guest#1215 says:

How much money you make is completely irrelevant to whether or not you're an employee or contractor.

Right, this is not a case about a specific monetary gain. The courts could decide that Scott Levy, et al. are not owed any payment for any pain caused from being incorrectly classified. From an objective perspective, this is going to be about how much taxes the WWE is going to pay and what benefits former alleged employees are owed. The people leading the case are irrelevant because in their own suit they name "any similarly such suited person"; meaning they are suing for hundreds of people. If Mr. Levy gets nothing out of this except workman's compensation then that is his situation. The bigger issue is how will the WWE deal with the change in status and taxes they have to pay? How will that reshape the "employment" of people in the industry?

Outside of these topics, an interesting debate was going on about how long-term storylines, new wrestlers, surprises, and credible champions works into creating sustained ratings growth. This reporter has long promoted the idea that the WWE and TNA are at their best when they are aware of pop culture trends and follow suit. Right now, those are still sports (so the companies should act serious and not have cartoon antics), multi-layered storytelling, long-term plots, and believable motivation. Simple storytelling can go a long way. But at this point, it is nothing but an uphill climb. Ratings will not recover in a week or a month. This is 1997 again and it is a two year battle to get back to a decent ratings for wrestling again.


Plenty more was written, so be sure to take a look. And of course, a week would not be complete without a good dose of JP Prag's own HIDDEN HIGHLIGHTS!!


CLOSING BELL

This concludes Issue #53 (Volume 1) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!