A new report details the effect allegations against Vince McMahon could have on WWE stock prices and the effect on its shareholders.
News broke on July 15th via the Wall Street Journal that Vince McMahon was being investigated by the WWE Board of Directors amid claims he paid $3 million to an employee with whom he allegedly had an affair.
The Journal’s report continues to say that the board’s investigation has also unearthed older non-disclosure agreements that surround claims of misconduct made by other former female WWE employees that involve both Vince McMahon and WWE’s Head of Talent Relations, John Laurinaitis. However, it is not known how many of these claims are being looked into but payments made in relation to them are said to run into the millions of dollars.
Speaking on Wrestling Observer Radio, Dave Meltzer noted that the news broke after the stock market had closed in the US, so the prices haven’t yet seen any drastic change.
“The big thing is, and this broke today; it broke after the stock market closed today. How the stock market reacts… and this story was huge, I mean it was not just ‘some wrestling story,’ I mean it was covered by every major outlet almost immediately, all the big business outlets. It broke on the business side, so it will be interesting.”
Dave Meltzer continued, noting that WWE stock has been doing very well, and that revenue from the company is guaranteed, so it has been seen as a very low risk stock.
“I mean the WWE stock had been doing very very well, for reasons we talked about, you know, in the Newsletter for the last couple weeks in the sense of the very uncertain economic times which we are in, very uncertain.
“Their money is all guaranteed, and their profit margin is all guaranteed, which is not the case with most companies these days, where you know, cutbacks and consumer spending can hurt the revenues and profits of a lot of companies, and with WWE, I suppose a company could default but essentially, their revenues are guaranteed for the next several years.
“So it’s a very safe investment and is a guarantee that, there’s no way this company won’t be super super super profitable, both WWE and UFC are guaranteed incredible profits for years and years and years to come.”
Continuing, Meltzer speculated on the effect the allegations against Vince McMahon could have on WWE’s business as his removal would cause a lot of uncertainty about the company’s future.
“But if the stock, if there’s a reaction to the stock being one of the things, obviously there’s going to be uncertainty about the future of Vince McMahon number one. There may be pressure from the outside whether it’s sponsors or whatever regarding Vince.
The loss of Vince, whether this is good or bad in our eyes, running the company, the reality is that in the business world, Vince has a certain reputation of being you know, ‘the guy’ and everything. And the feeling is that if there was no Vince, there would be great uncertainty of the stock.”
However, Dave Meltzer says that the uncertainty wouldn’t have nearly the catastrophic effect that it might have had in years prior due to the company’s guaranteed revenue.
“It certainly would not be as bad as it would have been; the fear of losing Vince would have been catastrophic to the stock a couple of years ago. Now it wouldn’t be as catastrophic, because as we said, whether there’s a Vince or there’s no Vince, the revenue is guaranteed.
“So it’s not like before where this idea that you know, Vince is this genius that built this business, and nobody else can do the business, and if Vince is gone, what the hell happens? Because the reality is that Vince can be gone and all of these revenues are guaranteed for years. So it’s not as catastrophic, he’s still the face of the company.”
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