Wrestling is a multi-billion dollar industry, with the WWE making $400 million in revenues in 2014 alone. Despite this, many are predicting the end of World Wrestling Entertainment’s existence.
The WWE champions tier list has been struggling to remain relevant with millions of followers on social media such as Facebook and Twitter, but some argue that these figures are no match for the rising popularity of MMA and other sports on television.
While predictions vary as to whether or not WWE will survive the upcoming recession and emerge victorious in a few years time, current trends point towards it being an unsustainable business model.
1. The WWE’s new deal with NBC Universal may be its last
In 2011, the WWE signed a three-year deal with NBC Universal to air its Monday night wrestling program on USA Network beginning in 2012.
This contract is set to expire after WrestleMania 30 next April, and it is very unlikely that the network will renew their contract with wrestling’s largest promotion. In fact, the network has already been airing the show later at night so as not to conflict with more popular shows.
In an attempt to boost ratings, NBC Universal began broadcasting Raw live rather than on a one-hour delay in 2014.
2. The WWE’s revenue is declining
Revenue in the wrestling industry has been decreasing year after year, with revenue declining by 13.1 percent in 2012, 5.2 percent in 2011, 7.6 percent in 2010 and 3.4 percent in 2009.
In an attempt to attract a more diverse demographic, such as children and teenagers, the WWE has been producing PG-rated shows similar to those aired on TBS or TNT.
A recent TV rating survey revealed that the WWE’s ratings were only one-third of last year’s ratings on Thursdays at 9PM EST/8PM CST and averaged just 1.
3. The WWE’s schedule is exhausting its athletes
In the past few years, the WWE has increased the number of live events and house show shows they put on. The roster is often expected to participate in these events while also training rigorously with their coaches and trainers in order to remain competitive.
This practice may be what led to an injury epidemic this past year, with some superstars missing entire tours because of injuries sustained on the road.
One such superstar is Daniel Bryan, who has been sidelined for 8 months after undergoing neck surgery for a potentially career-ending injury at the hands of Kane.
Bryan recently asked for his release from the company due to his inability to perform after being cleared by doctors.
4. The WWE’s push towards young talent is backfiring
The WWE has had success in the past by signing talented young prospects who were developing wrestlers in independent promotions. In the past, CM Punk, Daniel Bryan and John Cena were signed to the company with little prior experience beyond amateur wrestling, but this method was discontinued with Punk’s departure in 2011 and Cena’s injury the following year.
Although the company has produced several promising newcomers such as Seth Rollins and Roman Reigns, both of whom have won titles on the main roster, many argue that this tactic is no longer effective or sustainable.
5. There are emerging markets that the WWE cannot effectively reach
Despite its attempt to appeal to a younger audience, the WWE has failed to effectively combat emerging competition from other sports such as MMA.
Sports streaming service UFC Fight Pass has become one of the most highly anticipated releases of the year, and their product is experienced by a larger audience than the WWE’s.
Another threat to WWE’s viewership is Bellator MMA, owned by media giant Viacom, which promises new streaming shows with fighters who compete in the UFC and other promotions for a fraction of what it costs for pay-per-views. These developments mean less money for both big business and consumers.
6. The WWE’s business model is unsustainable
Currently, the WWE charges subscribers $9.99 per month and uses an over-simplified business model that encourages cable providers to subscribe to the service so that they can bundle it with their other services. While this might seem like a good deal for most customers, it is becoming uneconomical for some companies due to the high costs of bundling services.
WWE’s exclusive contracts with its affiliates such as Comcast, Time Warner and Dish Network cost the company $6-7 billion a year in revenue, which is more than half of its total revenue.
7. The WWE’s divas division is full of outdated stereotypes
The WWE has been criticized for pushing a women’s division that is little more than eye candy. The divas are expected to wear skimpy outfits and dance provocatively during the matches, a practice frowned upon by some fans who feel it makes the women wrestlers appear to be prostitutes.
In an attempt to boost ratings for its new E! reality show Total Divas, the WWE brought in crossover star Paige from the UK to get them mainstream attention. This move backfired after she was suspended for 60 days due to violating the WWE Wellness Policy, adding further fuel to calls for gender equality in wrestling.
8. The WWE’s PG rating is hurting its image
Studies have linked the rise of PG-rated shows such as TLC to an increase in sexual crimes and violent crimes. One report by the Crime Prevention Research Center found that half of all unarmed murders in the United States were committed by criminals who watched television.
Since first airing in the USA, Raw ratings declined from 2.3 million in 2011 to 1.2 million in 2012, meaning that only about one out of every ten viewers watched the show live instead of on delay.
9. The WWE has decreased spending on talent development
The money made by professional wrestlers comes from notoriously low salaries and lucrative appearances for charities and other events.
According to Bret Hart, a two-time WWE champion, the WWE only spends about 8 percent of its revenue on wrestlers who appear in their TV shows and live events. This is actually less than the average amount spent by other professional sports at 23 percent.
10. The WWE has lost key sponsors
It is estimated that the WWE was earning an annual revenue of $480 million from sponsorships, but it has since been reduced to less than $40 million due to sponsorship deals ending prematurely or being rejected altogether.
The most prominent of these losses was a five-year deal with Mattel Toys, who severed ties with the WWE in May 2014 after several bullying and sex scandals among wrestlers tarnished the company’s image.
Conclusion:
In our opinion, the WWE will face a lot of difficulties in the next few years. The company, which is currently worth about $1.4 billion, could see its value drop considerably if it does not fix these issues soon.
TNA, or Impact Wrestling as it is also known, has had a similar history to the WWE in that it also struggled financially for a long time before selling its assets to Anthem Sports and Entertainment in 2013 under new owners Dixie Carter and Billy Corgan. The company has been around since 2002 but has seen an increase in popularity since 2013 as wrestling fans have clamored for alternatives to WWE programming.
