Dusseldorf Some stories are too good to be true. This also applies to the sale of the wrestling group WWE to the Saudi Arabian state fund PFI. Several US media recently reported that the deal has already been completed. Company insiders have since denied this. Alone: it would not have surprised anyone.
Publicly traded but family-run entertainment company World Wrestling Entertainment (WWE) is having a wild day. The group earns its money with acrobatic show fights that are embedded in narrative strands like something out of a soap opera. They’re designed for polarization, good versus evil. The up to 80,000 fans at live events should cheer or boo – but everything is calculated. The group makes about 1.2 billion dollars in annual sales.
Things are now just as melodramatic as in the ring in the company itself. At the beginning of January it was announced that Vince McMahon, major shareholder with around 80 percent of the voting rights and patriarch of the owner family, was surprisingly returning to the operative business after six months of retirement.
WWE: Vince McMahon was under internal investigation
Shortly thereafter, his daughter Stephanie vacated her position as CEO. Other members of the Executive Board and Board of Directors also resigned – sometimes more, sometimes less voluntarily.
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Vince McMahon has been Chairman of the Board again for a few days. The 77-year-old’s mission grows more complex every day. According to media reports, McMahon did not trust his family or the board to sell the WWE in the best possible way. The company has not yet responded to inquiries about it.
The then CEO only retired in July 2022 because of internal investigations into allegations of sexual harassment, abuse of power and payments of hush money. According to reports by the Wall Street Journal, payments of over $12 million were made from company funds to cover up misconduct and extramarital affairs.
The investigations ended in November, and the result has not yet been communicated. In the wake of the departures, the responsible WWE board also resigned. Meanwhile, there are reports of further allegations. According to the financial service Bloomberg, shareholders are suing McMahon’s actions. He is accused of abuse of power and circumventing the supervisory authorities.
All of this moves the company’s stock – and upwards. This year, the papers have already increased by around 30 percent, the course is at a three-year high. The largest shareholders are the financial investors Lindsell Train, Vanguard and Blackrock, who hold large parts of the capital due to peculiarities in US stock corporation law, but enjoy fewer voting rights.
Disney, Netflix and Amazon are considered potential buyers
The stock is driven by speculation about the sale of the company. The WWE offers interested parties two successful live shows on channels of the US media groups NBC Universal and Fox. There is also an archive of several decades of show material that is marketed via streaming services.
Disney, Comcast – on whose service Peacock the WWE shows are currently being streamed – but also Netflix or Amazon are considered to be potential interested parties. And Saudi Arabia. The question is who dares to integrate the desert environment of the wrestling circus without losing their own image.
It’s not just about the business itself, which the group describes as “sports entertainment”. This is largely based on the show values of the concerted fights of well-trained men and women. The sexualization of women in particular, which was unconcealed a few years ago, has decreased noticeably.
As part of the largest WWE event, the patriarch also invites you to a presentation of the business figures – including a motivational speech to the business partners.
(Photo: IMAGO/USA TODAY Network)
Vince McMahon himself is scandalous. His style is considered authoritarian, also because he shaped the wrestling business in its current form almost single-handedly.
The promoter, who once took over the company from his father and turned it into an internationally successful corporation, is not above the role in front of the camera. Among other things, he had his hair shaved off by Donald Trump and his bare bottom kissed by employees in the ring. Athletes like Dwayne “The Rock” Johnson, Hulk Hogan, Dave Bautista and John Cena owe their careers as world stars to him.
But the days when competing leagues could simply be bought are over. WWE is still the biggest brand in the business today, but it’s far from the only one. The TV ratings were correct recently, but faced strong competition from the AEW wrestling league.
Corporate governance expert sees fundamental problems
“McMahon’s role is comparable to that of the corporate patriarch of an unlisted company, but with the addition of scandals and compliance problems,” says Andreas Hecker, corporate governance expert at the law firm Hoffmann Liebs.
Investors have known this structure for years and have factored it into their investment decisions for WWE, particularly with a view to ongoing dividends or potential sales proceeds. In other words, as long as WWE thrives, investors will overlook deficiencies in corporate governance.
“From a governance and compliance perspective, the structure and the current development of the company must be viewed critically,” says Hecker. The decisive aspect is the lack of independence in operational management and supervision and thus also a vacuum in the processing of breaches of duty and compliance violations.
>> Read also: Saudis take over German e-sports organizer for a billion dollarsright
Anyone who knows McMahon’s speeches to sales partners and shareholders, however, understands how the businessman inspires others. The group is geared towards him at the top. The entrepreneur is considered an intimate of ex-President Donald Trump, whom he regularly offered a TV stage. Wife Linda, a rather unsuccessful Republican local politician, was allowed to head the agency for small and medium-sized businesses under Trump.
According to media reports, Vince McMahon now sees himself as a decisive factor in the sales plans. They’ve been fermenting for months, most recently the US bank JP Morgan was commissioned to explore options.
“One can therefore say for the current time that the personnel has not harmed the company economically so far,” says Hecker. Conversely, even a potential buyer could have an interest in “having by far the strongest shareholder – at least on the way to the transaction and during the transaction – at his side”.
Saudi Arabia also discovers “sportswashing”
After McMahon’s raid-like return, an equally rapid sale would have fitted very well into the soap opera plot. Saudi Arabia is still in the running as a buyer, the denials from insiders expressly only refer to the current point in time. This is supported by the fact that the sovereign wealth fund has recently imitated the “sportswashing” model known from Qatar – image polishing through large-scale events with large audiences. This has been criticized by organizations such as Human Rights Watch and Amnesty International.
>> Read also: Saudi Arabia is pushing into world sport – And next is the World Cup?
McMahon himself had developed and sold his own major event for Saudi Arabia. The eight issues to date have reportedly generated $400 million in sales. But even here it was not without personal drama. In 2019, dozens of wrestlers were stranded after the show in the country, the athletes spoke of a “hostage situation”. McMahon escaped the situation thanks to his private jet.
The dispute was reportedly sparked by an outburst by the patriarch over allegedly being transferred by Saudi Crown Prince Mohammed bin Salman. It is questionable whether this will promote the current sales talks.
More: The return of the wrestling villain.