The Hamilton Ave Journal 03.19.09: Volume 2 – Issue 78

Posted by JP Prag on 03.19.2009

Will lower buyrates and ticket prices lead to the WWE dropping PPVs? What does the SyFy network mean for the WWE? Is the press fairly looking at the death of Andrew “Test” Martin? Will Jesse Ventura join Raven in his quest to gain employee status? How much did ratings sink this week? How many people downloaded the last couple of Wrestling PPVs instead of ordering them? All this and more is answered in this week’s edition of the Hamilton Ave Journal!

THE HAMILTON AVE JOURNAL
By JP Prag

Volume 2 – Issue 78

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 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 falters, changes plans

The year 2008 was a rough one for the WWE, even before the economy started to turn on them. Though they were able to expand internationally, add events, and sell more products, costs were up across the board. They covered this up with all sorts of creative accounting, but eventually the market caught on and their stock took a tumble halfway through the year. Once the economy also started to give way, the WWE offered the market a $20 million cost reduction, one they have been successful in implementing.

But the tide of the current economic landscape may have made that move too little compared to what is happening. Early numbers indicate that Royal Rumble had 445,000 worldwide buys this year compared to 575,000 the year before, a drop of roughly 23%. The three PPVs before this also saw year-over-year drops, meaning the WWE is now also getting less revenue in their more expensive cost structure.

The good news for the WWE is that they are not highly dependent on one revenue stream like PPV. While PPV can account for up to 20-25% of the revenue, even a 25% drop in buyrates for the year overall would only be a 5% revenue drop at most. The WWE has done a tremendous job diversifying their product base so that if one thing starts to turn they have other wells to dip in to.

At the same time, the WWE has noticed that their average attendance has been dropping. Even right now the Hall of Fame, WrestleMania, and Backlash are not sold out. In response to this, the WWE is lowering the cost of their house show tickets to the $20-25 range, trying to make it more affordable family entertainment. How that will stack up to Monster Mini-golf remains to be seen, but this is the first price cut the WWE has done in more than 12 years.

Many people speculate if this will lead to fewer PPVs or a price drop there. While the Journal would not expect such a thing to happen as the WWE will want to have those in place for an economic recovery, nothing is off the table. If the WWE analysts find they can increase sales and profits with a price drop, they will. But if demand is so low that even a price drop won't add much revenue and profit, than things will stay where they are. The situation is most likely the latter, so do not expect WWE PPVs to go back to $30 any time soon.

The WWE was also greeted by another bit of good news this week as the "SciFi" channel is changing their name to "SyFy". Says SyFy Network President David Howe:

"We love being sci fi and we're still embracing that… But we're more than just space and aliens and the future – the three things most people think of when they think of 'sci fi.' What this does is hopefully give us the best of both worlds. You keep the heritage, but also open up to a broader range of content."

In other words, the SciFi network will keep the theme to some extent, but will also embrace other programs so they are not painted into a corner. This is similar to the Cartoon Network showing non-cartoon shows. Whether this is a smart move to leave a specialization in favor of generalization is debatable since there are already so many generalized networks, but this is beneficial to the WWE.

Since ECW premiered on the SciFi network, it's place has been completely questionable. How did ECW fit into the overall theme of science fiction? Now that that is not the network's theme, they should have no qualms to continue to air the show, especially since it is consistently one of SyFy's top rated programs. At the same time, should MyNetworkTV completely shutter its doors (unlikely in the next year, though possible), the WWE has another option of where they can go. Since SyFy is under the NBC/Universal umbrella, the WWE can move their programming to the network with little repercussion.

If the new SyFy channel would embrace more wrestling remains to be seen. For now, though, Mr. Howe and his associates are more free to consider the idea.


EDITORIAL: Associated "Press" picks up on Test's Death

As has been covered in detail, Andrew "Test" Martin was found dead on Friday March 13, 2009 at the age of 33. While toxicology reports are still waiting to come back for a final determination of death, that has not stopped the mainstream media from cashing in on the story with loosely gathered "facts". Here is the article from the Associated Press that most newspapers re-run as is:

Ex-WWE champ, Andrew Martin, found dead in Fla.

TAMPA, Fla. (AP) — Authorities say former professional wrestler Andrew Martin, who was known as "Test" and "The Punisher" to fans, has died at his Tampa home. He was 33.

The former World Wrestling Entertainment champion was found dead at his apartment Friday night. Police say a neighbor reported that she could see into his apartment window and that Martin appeared motionless for several hours.

Police say there was no indication of foul play. A cause of death will be determined after an autopsy.

During his time with Stamford, Conn.-based World Wrestling Entertainment, Martin held the Intercontinental, European and Hardcore belts. He was also a tag-team champion.

Martin most recently worked for TNA Wrestling under the name "The Punisher."

In how many ways can the Associated Press be wrong and try to tantalize the subject in just a few seconds? What would it take for them to do a bit of research. Calling Martin an "Ex-WWE Champ" in the title suggests that he was a main event player that was the center stage of the organization. Non-fans of professional wrestling are going to see that headline and assume the worst. At the same time, their first two paragraphs do nothing to clear up the situation, nor do they delve into when Martin worked for the WWE, how he was let go from the WWE for drug related issues, and how the WWE was paying for his rehab.

Nor does it go the other way and point out that Mr. Martin was one of the only people to ever be let go by the WWE while at home recovering from an injury. The WWE had a long standing policy against doing such a thing and often lambasted WCW and Eric Bischoff for letting Steve Austin go when he was out with an injury. Yet they were quite culpable of the same.

This story is a sad one for Mr. Martin and his friends and family who have to deal with an early death and the potential consequences of the reasons for that death. The situation does not need to be exasperated by the so-called media who refuse to do one iota of actual research.

The Journal will always try to do the research and present the facts as is. But shoddy "journalism" that has been seen by the Associated Press and others is a disgrace to our profession.


Newsbites

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

Former Minnesota Governor Jesse Ventura recently sat down with CYInterview.com and had this to say about the WWE:

"It's one of the things that if I would run for the senate I was going to do a senatorial investigation on the WWE. And you know for concerning what? What's even a bigger importance is the fact that today they are still called independent contractors by the government, which is absurd. They tell you when you wrestle. They tell you who you wrestle. They tell whether you win or lose. They tell you where you're going to wrestle. They are your boss as much as any job in the universe. Yet McMahon is able to get away with calling all the wrestlers even today when he has them signed to exclusive contracts he still is allowed to call them independent contractors where they have to pay their own social security and he doesn't have to pay a penny."

It seems that the former governor and wrestler is on the side of Scott Levy, et al. in their suit against the WWE. Yet despite the bravado, he has not stepped up for testimony nor to join the cause.

On the same note as the case, Mr. Levy's lawyers were to file a motion for reconsideration on March 10, 2009. No word yet on if that motion was filed, but the Sun UK did a brief synopsis of the case being analyzed on Fox News:

Fox News yesterday with Megyn Kelly covered the Scott Levy lawsuit against WWE. The segment was really poorly researched by Fox. Attorney David Whohl said he thinks if the case went to court a jury wouldn't side with WWE. Legal analyst Mercedes Colwin disagreed, saying the wrestlers knew what they were getting into and probably had their legal reps look over the contracts. She claimed wrestlers make hundreds of thousands of dollars a year. She said it was the same as actors signing up to do movies but they aren't classified employees. They made no mention of the six-year statute of limitations expiring on the suit.




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.

For the week ending Wednesday March 18, 2009, here are the current standings of our shows:





RAW
Close (This Week's Rating): 3.6
Open (Last Week's Rating): 3.7
Percentage Change: ▼ 1.4%
52-Week High: 4.1
52-Week Low: 2.6
All Time High: 8.1
All Time Low: 1.8

SmackDown*
Close (This Week's Rating): 1.9
Open (Last Week's Rating): 2.0
Percentage Change: ▼ 5.0%
52-Week High: 2.7
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): UNAV
Open (Last Week's Rating): 1.3
Percentage Change: N/A
52-Week High: 1.5
52-Week Low: 1.0
All Time High: 2.3
All Time Low: 0.6

TNA iMPACT**
Close (This Week's Rating): 1.2
Open (Last Week's Rating): 1.3
Percentage Change: ▼ 9.1%
52-Week High: 1.3
52-Week Low: 0.9
All Time High: 1.3
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:

This has not been a good ratings week for the WWE, especially in the final push to WrestleMania 25. After a large peek a few weeks back that saw the best number in over a year, the WWE's ratings for all three of their shows have been on a steady decline. In just a month they add another show to the lineup, and it will be hard to justify adding a new show when the existing ones cannot maintain their audiences during the biggest time of year for the company.

The WWE is still the dominating force on the networks they are on, but advertisers already do not want to deal with their product. Faltering ratings, no matter how much higher they are than everything else on the network, will only erode the WWE's bargaining position when any of their shows come up for renewal. Luckily for the WWE they have until he end of 2010 and 2012 to worry about that.




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. WWE Encyclopedia Hardcover Book ($45, on sale $39)
2. Triple H Eversoris T-Shirt ($28)
3. Jeff Hardy 3 Armband Package ($60, on sale $20)
4. Jeff Hardy Immune to Fear T-Shirt ($25)
5. John Cena HLR Academy T-Shirt ($25)
6. Hardys Green Pendant ($10)
7. WWE Heritage IV Trading Cards ($2)
8. John Cena Ruthless Aggression #38 Action Figure ($14.99, on sale $11.99)
9. WrestleMania 25th Anniversary Blowout Magazine ($9.99)
10. WWE White Gift Bag ($3)

What is this? The "White Gift Bag"? For the better part of a year the "Black Gift Bag" was consistently in the Top Ten with the occasional co-appearance by the "Red Gift Bag". Never before this, though, has the "White Gift Bag" appearance, especially after so many months without any gift bags.

Besides gift bags, the real story is that Randy Orton has left the Top Ten after so many weeks near the top. Has Randy Orton already reached market saturation, or is this just one off week and he'll make his return next week?

TNA sometimes releases a list of top selling items on ShopTNA.com. According to the site the top selling items were:

1. 2006 Complete Year PPV DVD Set ($69.99)
2. 2007 Complete Year PPV DVD Set ($69.99)
3. TNA Logo T-Shirt Special ($24.99)
4. Christian Cage: The Instant Classic DVD ($19.99, on sale $10)
5. Main Event Mafia – Black T-shirt ($19.99)
6. Autographed Sting Baseball Bat ($149)
7. Frontline T-Shirt ($19.99)
8. Cross The Line Triple Pack ($24.99)

Did you know that Christian Cage is actually on the cover of the Cross the Line Triple Pack? Not to mention he is also on a number of the 2006 and 2007 DVD covers. All-and-all, TNA has been doing an excellent job for two months advertising the ECW Superstar.




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
22 (Mar) RAW / ECW Live Wichita, Kansas) SmackDown Live (West Plaines, MO)	23 RAW (Kansas City, MO)	24	25	26 TNA Live (Brookings, SD)	27 TNA Live (Rochester, NY)	28 RAW/ECW Live (Laredo, TX) SmackDown Live (Amarillo, TX) TNA Live (Spencer, IA)
29 RAW / ECW Live (Hidalgo, TX) SmackDown Live (Wichita Falls, TX)	30 WWE SuperShow (Dallas, TX) TNA iMPACT (Orlando, FL)	31 TNA iMPACT (Orlando, FL)	1 (Apr)	2	3 TNA Live (Thibodaux, LA) ROH Live (Houston, TX) Booker T Legends of Wrestling Fanfest (Houston, TX)	4 WWE Hall of Fame (Houston, TX) TNA Live (New Orleans, LA) ROH Live (Houston, TX)

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.




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, it was a relatively calm week even filled with some interesting praise, including this one from Andrew Barbarash:

I never give JBL much praise... but I actually think he is doing a good thing Yay for JBL!

This is, of course, in reference to JBL being the financial supporter of OVW now. One of JBL's benefits in life is that he is a self-made millionaire who married an even bigger millionaire, so he does not have to live in fear of Vince McMahon and the rest of WWE management like many other wrestlers have to. Should the day come where anyone in the company has a problem with him, JBL can just go home and not have a problem with it.

Aside from the JBL well wishes, the usual TNA banter ensued. This one by Ryushinku was well warranted, though:

"The question then, is, will these people be converted into PPV buyers?"

Absolutely, that's what I'd like to know the most. With the ratings up, have the buyrates also increased accordingly? Have they been able to improve the percentage of Impact > PPV viewers? Unless they suddenly plunge to consistent 0.6's or something Spike will be fine with the ratings, but PPV is where you can make big cash and it would be interesting to see how that is affected, or otherwise. Problem being that TNA don't officially announce their figures so we're left with a bit of guesswork...

True, getting our hands on TNA PPV buyrates has been a bit of trouble, but about once a year the Journal has been able to get some numbers. What was seen year-over-year was a slight increase in average buys from 2007 to 2008. Buried deep in Volumne 2 - Issue #67, PPV buys increased to 28,636 to 26,545, a difference of 2,091 buys. This was correlated with an increase in ratings from a 1.04 to a 1.05. Given the growth in the value of a ratings points, this actually meant a DROP in conversion rate of 0.7% to land at 1.8%.

In other words, TNA has gotten better at attracting a television audience, but in 2008 they had not been able to take that audience and make them into PPV purchasers. Can they do that to their new 2009 audience? It may be months before the Journal gets another buyrate report, so stay tuned for when that day comes.

Although why PPV numbers are down is a question that often comes up. Matthew M wants to know:

Is there any way you can research the impact of downloadable PPVs as it relates to WWE and TNA? We're all well aware that the illegal torrenting of PPVs cuts into revenue on both sides, but it would be interesting to know if an equivalent ratio of people downloading TNA/WWE product.

One of the reasons why people like downloading PPVs is that they are nearly impossible to track. Overall, we do know that Bit Torrent traffic is up because so many ISPs are trying to limit torrent bandwidth. A recent search on a Torrent site showed the Journal that the Destination X Torrent has been downloaded about 5000 times and that last year's Destination X got about 20,000 buys. If that number holds true for this year, than downloading the most recent TNA PPV would be at 1:5 ratio.

The WWE latest PPV No Way Out looks to have been downloaded about 65,000 times. Last year, No Way Out had 329,000 buys, though that was an apparition as the year before it had 218,000 buys. If No Way out does about 250,000 buys this year, than the ratio would be about 1:4.

Overall, it looks like about 20-25% of the people viewing the PPVs are doing so via downloading instead of purchasing the PPVs, though this number cannot be substantiated. The WWE and TNA would look at these numbers and say they are affecting buyrates by 20-25%, but that is not so. Of the people who are downloading, not 100% of them would be winning to pay for the event at any cost. If anything, that number is probably closer to 5% as the remainder are only downloading because it is convenient or because the show is not available in their area, not because they would ever buy if given the option. Also, some of those people who downloaded may have actually ordered the PPV and just wanted to have a copy for prosperity. What that overlap is is also improbable to track.

So yes, there is an impact on WWE and TNA buyrates by people downloading, but not to the number of people who are downloading.


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!!

*** And the Journal would like to wish a Happy Birthday today to its own intrepid reporter JP Prag. Great work again this year! We look forward to many more! ***




This concludes Issue #78 (Volume 2) of THE HAMILTON AVE JOURNAL. Join us next week as we get ready to ring the bell again.

Till then!