It was all good just a week ago. Last Wednesday, pro-wrestling giant WWE had a market cap just above $5 billion. Since then, when news came out about its board investigating longtime Chairman and CEO Vince McMahon paying millions of dollars in hush money to an ex-employee with whom he allegedly had an affair, WWE has lost $500 million in valuation. At this writing, shares in the publicly traded WWE were down 10 percent in the last week.
Not all of WWE’s key metrics are in decline. On the flip side are the company’s TV ratings: Both Friday’s “SmackDown” (which aired live mere hours after McMahon announced he would step aside while the board investigates the matter) and Monday’s “Raw” jumped in viewership, according to Nielsen.
This creates a curious point of tension: WWE fans love McMahon. They might even love him a little extra for his creation of a rubbernecking trainwreck. However, as much as the WWE board values that audience (aka the ratings they provide), they value their stockholders even more.
Both episodes of WWE’s weekly flagship wrestling shows featured brief televised appearances by McMahon. Friday’s appearance, in which McMahon plugged his unity-centric tagline for WWE, was previously announced; Monday’s meme-creating moment was not.
Friday’s “SmackDown” episode on the Fox broadcast network also featured the surprise return of wrestling superstar Brock Lesnar for (yet another) match with the company’s unified men’s champion Roman Reigns — this one for July 30’s SummerSlam. That episode earned 2.290 million total viewers, with 750,000 of those aged 18-49. Those numbers were up 20 percent and 32 percent, respectively, from the prior week, reaching their highest points since the April 1 pre-WrestleMania episode.
On June 20, USA Network’s “Raw” (which is three hours vs. “SmackDown’s” two) posted 1.986 million total viewers; 711,000 came from the key demo. Those tallies were up 17 percent and 27 percent, respectively, vs. the previous Monday and were the show’s best since April 4’s post-WrestleMania “Raw.”
WrestleMania is the top event in all of professional wrestling. It is considered the sport’s Super Bowl. The bookending episodes of “SmackDown” and “Raw” typically peak in ratings at that time of year.
In January 2021, WWE Network accepted a billion-dollar deal to stream its content on NBCUniversal’s Peacock. In June 2018, Fox paid a similar amount for “SmackDown” rights. Both agreements span five years (“SmackDown” did not move from its former USA home to Fox until October 2019). At the time, WWE and NBCU extended their existing USA Network deal for “Raw” for, you guessed it, five years.
There is big money at stake here. And while loyal professional wrestling fans may love the drama (so much of it personally scripted by McMahon over the decades), WWE’s board of directors wants nothing to do with such a scandal. Its fiduciary duty to deliver value for shareholders goes far beyond beating “Blue Bloods” in the key ratings demo each Friday and its corporate responsibility goes even further.
Mainstream television executives and WWE’s many sponsors don’t need the potential headache from a partner, especially one with the specific optics of a powerful man potentially mistreating female employees. The whole thing feels like a bad storyline from WWE’s so-called Attitude Era, when sex was a key element to the wrestling league’s televised presentation and McMahon, who played a villain on TV, was a central figure in a (real life) steroid trial.
WWE moved on from profane programming in order to sell merchandise to families and to sell advertising time to Snickers (for example). But McMahon’s defiant TV appearances this past week have spoken volumes to some critics about just how seriously the accusations are being taken at the executive suites of WWE’s Stamford, Connecticut headquarters. To hijack a common WWE Universe live-event chant, “This is not awesome.”
The 76-year-old McMahon purchased the company from his father in 1982 and owns 80 percent of WWE’s voting shares. His 45-year-old daughter Stephanie McMahon, the company’s chief brand officer who announced a leave of absence the month after the hush-money probe began (but before the news of the investigation became public), has stepped in as interim chairwoman and interim CEO.
Stephanie had said her leave of absence was “to focus on my family.” Her husband, former champion wrestler, Paul “Triple H” Levesque, suffered a cardiac event in the fall. He underwent successful heart surgery. Levesque is also a top WWE executive; he, Stephanie McMahon, and Vince McMahon are all members of WWE’s 12-person board.
On Friday, WWE and its board of directors announced that a special committee is investigating “alleged misconduct” by Vince McMahon and WWE’s head of talent relations John Laurinaitis. Though McMahon has stepped back from his executive roles, he continues to oversee the company’s creative.
“WWE and its board of directors take all allegations of misconduct very seriously. The independent directors of the board engaged independent legal counsel to assist them with an independent review. In addition, the special committee and WWE will work with an independent third-party to conduct a comprehensive review of the company’s compliance program, HR function and overall culture,” the board said in a statement. “The company and the board do not expect to have further comment until the investigation is concluded.”
“I love this company and am committed to working with the independent directors to strengthen our culture and our company; it is extremely important to me that we have a safe and collaborative workplace,” Stephanie McMahon said last week. “I have committed to doing everything in my power to help the special committee complete its work, including marshaling the cooperation of the entire company to assist in the completion of the investigation and to implement its findings.”
“I have pledged my complete cooperation to the investigation by the special committee, and I will do everything possible to support the investigation,” Vince McMahon stated. “I have also pledged to accept the findings and outcome of the investigation, whatever they are.”
Vince McMahon’s net worth is estimated by Forbes at $2.3 billion. In 2021 he made $5.051 million as a WWE executive, according to a filing with the SEC. Of that sum, $1.4 million was salary; the remainder was a cash bonus and the valuation of stock awards. McMahon’s 2022 salary is set at $2 million.
The news of the WWE investigation was first reported by the Wall Street Journal. In addition to uncovering the $3 million payoff to a former WWE paralegal and her signed NDA, the Journal says the WWE board has also discovered “other, older nondisclosure agreements involving claims by former female WWE employees of misconduct by Mr. McMahon and one of his top executives, John Laurinaitis.”
There are multiple claims against both men and crossover in the case of the former WWE paralegal. Hired in 2019, the former employee was moved from the WWE legal department in 2021 to become Laurinaitis’ assistant. The board learned of the $3 million payoff “in a series of anonymous emails they received from someone who said the former WWE paralegal was a friend,” according to the Wall Street Journal. One email said the paralegal was given to Laurinaitis “like a toy.”
“The former employee, 41 years old, had fallen on hard times before joining the company and spoke of needing extra money,” the newspaper wrote. “She said she had a law degree but had never taken the bar exam, telling colleagues that her career got sidetracked while she tended to a sick parent.”