The Wrestling Doctor 02.10.09: TNA PPV

Posted by W.S. Thomason on 02.10.2009

The Wrestling Doctor looks at how TNA could weather the current recession while building its audience – and does a lot of math, too.

THE WRESTLING DOCTOR

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THIS WEEK'S PATIENT: TNA PAY-PER-VIEW

TNA's Against All Odds pay-per-view came and went on Sunday and – just like the Grammys – nobody cared. The card was abysmally weak, topped by a four-way main event between two allies-teasing-tension and two long-time partners who have no real standing in contending for the TNA World Title. The undercard was essentially an expanded episode of Impact, featuring a referee-turned-wrestler against a top heel; repeat bouts involving the tag team titles, the Knockouts title, and Scott Steiner-Petey Williams; an open challenge that was no different from what is offered on free TV; and an X-Division Title match that served as a placeholder until the next pay-per-view. Oh - and Abyss vs. Matt Morgan. The show was not horrendous in its delivery, but the line up was certainly not the type that makes wrestling fans open their wallets in between The Royal Rumble and No Way Out during a recession. Against All Odds 2009 fits into TNA's game plan over the last few years of delivering only two or three quality PPVS a year while filling the space with several mediocre and a couple of abysmal shows. The company has been expanding over the last two years, so this approach seems to be working for them.

The new challenge for TNA is that the strategies and approaches that worked in 2007 and 2008 will not cut it in 2009. This reality is true for companies across the spectrum, not just wrestling or entertainment. Circuit City and Linens and Things are already gone, and major chains like Blockbuster, Starbucks, Krispy Kreme, and Applebees are in serious trouble. If coffee and doughnuts cannot get Americans to pull the wallets from their oversized expandable waist pants, then what can? Industries across the board are being forced to quickly change their business plans and approaches in order to survive, and wrestling is no different. The WWE has already made substantial cuts amongst its wrestlers entertainers and office staff, but more importantly they have closed their international offices in a move that signals a major shift in their recent business strategy.

The story for wrestling companies is the same for all business. If wrestling companies have cash reserves on hand for hard times, then they have a great chance of weathering the storm. If they have amassed substantial debt over the last few years in order to grow, then things may fall apart fast. Refinancing loans is realistically out of the question, and creditors will be hesitant to extend more money to a company that is not taking in large amounts of revenue. TNA is doing okay, but they are not hauling in sacks of money from stagnate PPV buy rates, modest house show attendance, and zero gates at TV tapings. They do, however, have large contracts to pay to big name stars like Kurt Angle, Sting, Booker T., and Mick Foley. Spike TV may be helping them out with some of these deals, but the drain on their pocketbook is still very real. There are also, of course, production and travel costs to cover.

Consumers are cutting costs, and for wrestling fans that probably means buying fewer of the 26 pay-per-views offered by the WWE and TNA each year. My cable system charges $39.99 for standard WWE PPVs (Wrestlemania is usually $59.99) and TNA events cost $29.99. Using these prices as a guide, it would cost a fan $579.86 a year to buy every WWE PPV and $359.88 for every TNA PPV. It would run $939.74 to see them all in a given year. It is not hard to imagine that fans will be happy to cut several hundred dollars to a grand from their entertainment budgets in order to save some much-needed coin.

Pay-per-view is TNA's bread and butter. They cannot afford a radical dip in their PPV buys. A drop in buys will wound the WWE but not kill it, provided the downturn does not last for too many years, as the WWE has substantial cash reserves to fall back on. TNA does not enjoy that advantage, so they need to find new ways to entice fans to purchase their pay-per-view shows right now.

It was recently revealed that TNA is adopting a strategy of focusing on four major PPVs a year, using their other shows as building blocks. This approach may look good on paper, but is not wise in today's economy. Fans need an incentive to buy those other eight PPVs; if they do not, TNA is dead in the water. The type of show that TNA offered for Against All Odds is certainly not going to entice anyone beyond the hardest core fans. As the original ECW proved, a loyal but small base of rabid fans is not enough to sustain a promotion long-term on a national level.

TNA's new PPV strategy may not be a bad idea, however, if they tweak it a bit and adopt the approach that many businesses are taking now: price reduction. TNA could retain the $29.99 price on the pay-per-views it wants to build its year around – such as Lockdown, Slammiversary, and Bound for Glory – but lower the price on some others. To keep this plan fiscally feasible, TNA could adopt an In Your House strategy and reduce the lesser PPVs to two hours, thus reducing production costs.

Two hour PPVs may seem stupid, as Impact is also two hours, but the difference between a two hour TV show and PPV is a matter of booking. A major problem with the current TNA PPV product is that they overload every show with as much talent as possible, resulting in meaningless matches that have an Impact feel. TNA's pay-per-view matches over the last year averaged 11:33 (as compared to about ten minutes for WWE PPV) but often the matches have little build or long-term impact. The two hour PPVs could focus on five matches, giving fans high quality bouts that have meaning and build towards the bigger PPVs. TNA could even up their "big" three-hour PPVs to six, alternating every month with the shorter ones to create a product that may be attractive in economically difficult times.

A PPV costing $29.99 at 500,000 buys equals a net of $14,995,000. But a PPV costing $24.99 at 700,000 buys equals a net of $17,493,000 and 800,000 buys bumps it up to $19,992,000. Lower the price to $20.99 and 700,000 buys produces a net of $14,693,000 while 800,000 equals $16,792,000. The problem with price reduction is that if many more units have to be sold in order for the price to be profitable, but the goal of most sales is to get people into places of retail so that they will buy additional non-sale items or become loyal customers. The latter is the goal for TNA. If fans feel that they will get a good value for the money with the reduced price PPVs, they will be more likely to purchase the bigger shows at full price. House show attendance and merchandise sales wil both rise as an indirect result.

The TNA PPV schedule could break down like this:

2 hour "mini" PPVs at $20.99
Genesis (January); Destination X (March); Sacrifice (May); Victory Road (July); No Surrender (September); Turning Point (November)

3 hour "big" PPVs at $29.99
Against All Odds (February); Lockdown (April); Slammiversary (June); Hard Justice (August); Bound For Glory (October); Final Resolution (December)

Reducing the overall number of pay-per-views would be the best solution from a quality standpoint, but TNA cannot afford to take such a step. Reducing the price of some of their offerings – at least for a few years – would be a smart way for TNA to build their loyal fan base while surviving in an economy that is bound to take a lot of high profile victims.