WWE Chairman and Chief Executive Vincent Kennedy McMahon has long been known as the financially viable brains behind World Wrestling Entertainment. But a recent major WWE stock drop has now labeled him as the man who was once known as a top billionaire on the Forbes list. Here’s everything you need to know about Mr. McMahon’s million dollar loss and how it came to be.
1. Mr. McMahon Lost $350 Million After WWE Stock Market Shares Closed on May 16, 2014
Vince McMahon reportedly lost a total of $350 million at the end of the public WWE stock market close on May 16, 2014. Forbes.com reported that the WWE stock “took a severe beating from investors” and “was down more than 40-percent since the market open.” On May 15, 2014, the WWE stock closed just below $20 and opened down at a value below $11. In total, WWE’s stock dropped over 40-percent.
After the news broke, Mr. McMahon released a follow up statement to NASDAQ.com:
There should be no confusion on Wall Street as it is extraordinary to have reached more than 660,000 WWE Network subscribers only 42 days after launch, putting us on track to reach 1 million subscribers by the end of the year. We feel good about nearly doubling the value of our four largest TV deals around the world.
2. WWE’s Stock Fall Was a Result of the Company’s TV Deal with NBC Universal
The result of WWE’s Wall Market stock market fall after the news surrounding the company’s new television deal with NBC Universal. The LA Times reported that PAA Research analyst Brad Safalow stated that NBC Universal was paying around $90-million a year for the rights to air WWE programs RAW, Smackdown and E!’s Total Divas. WWE’s new TV agreement deal with NBC Universal now comes in at a value of $150-million annually.
While this may sound like great news to casual and hardcore WWE followers, investors in the company weren’t exactly thrilled with the announcement. The public feeling from investors was that they expected the WWE to get a 50-percent pay raise over its previous TV deal (they expected WWE to get paid double or triple the amount of its previous NBC Universal deal).
3. WWE’s Stock Loss Also Came as a Result of Investors’ Lack of Confidence in the WWE Network
The second reason that the WWE and Vince McMahon lost so much money is due to their investors lacking any faith in the new WWE Network. NewsOK.com stated that the WWE network has only picked up a subscriber base of 700,000 subscribers since officially launching. The WWE itself stated that they’re expecting its new streaming network to lose between $45-million and $52-million in 2014.
4. Mr. McMahon Was Disappointed in the WWE’s New TV Deal
During a conference call hosted by the WWE, Vince McMahon admitted his disappointment in the final TV deal his company took from NBC Universal. 411Mania.com/wrestling was a part of the conference call and reported on what Mr. McMahon said himself:
Vince said there was a “somewhat favorable outcome” in television deals. He admitted they were a bit disappointed in their NBCU deal, but they were able to nearly double their overall television rights revenue. “A good deal, not what we wanted,” Vince said regarding the NBCU deal.
5. WWE is Now Being Investigated for Stock Fraud
Along with the bad news surrounding WWE’s stock market drop, another bit of troubling news made the rounds. The WWE is all of a sudden being investigated for possible stock fraud.
Law firm Ademi & O’Reilly, LLP put out an official press release statement on their investigation into the matter:
We are investigating possible securities fraud claims against World Wrestling Entertainment Inc. resulting from inaccurate statements WWE made regarding its business practices, financial statements and prospects.
Our investigation focuses on the extent to which WWE issued false and misleading statements regarding its business practices, financial statements, past and future business performance and prospects. Specifically, WWE’s statements that it would double the value of its domestic contracts for its two most popular shows, Monday Night Raw and Friday Night Smackdown, and that the prospects for its recently launched streaming video network were strong were false and misleading.
It also turns out that the Law Firm of Levi & Korsinsky, LLP are also looking into WWE’s recent business decisions and claims of stock fraud. You can take a look at the press release at the following LINK.