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The business world thinks that WWE’s transformative pay-per-view deal is dead

Back in February, Vince McMahon shocked the wrestling world on an investors’ call when he said that WWE was considering “strategic alternatives” to WWE Network. It was clear that McMahon was considering the idea of selling some of WWE’s pay-per-views to other streaming services. On that call, McMahon himself set a deadline for such an announcement by the end of the first quarter. The implication was that if such a significant deal was going to happen, it would have to be finished in time to be in place for WrestleMania 36.

Well here we are with WrestleMania 36 right around the corner, and no such deal has been announced. Not only is there no deal, but WrestleMania 36 has now been moved from a massive stadium to an empty venue, as a result of the coronavirus pandemic.

As a consequence of this situation, as well as the uncertainty surrounding Vince McMahon’s motivation to suddenly sell a bunch of his stock yesterday, the business world is not so fond of WWE right now. Here’s a summary of the response from Yahoo! Finance.

“McMahon, during the company’s last earnings call, said the pro-wrestling giant was weighing options for its WWE Network streaming service. And ‘it now looks like a transformative deal is not occurring,’ Alan Gould, an analyst at Loop Capital, told clients in a downgrade note to sell from hold. Gould slashed his price target by $13 to a Street-low of $30 per share.

With McMahon at the helm, WWE has rattled investor confidence to its core after ousting two of its top executives and wiping out more than $2 billion of the company’s market value since the beginning of the year.”

Dave Meltzer offered his thoughts on the situation on Wrestling Observer Radio:

“Their belief is the deal is dead. Alan Gould said that the transformative deal that they were looking to sell does not look like it’s going to happen.”

“The word that I had is that they were far apart on money, but not that it was dead by any means.”

“Him saying that, and enough that it downgrades the stock, and WWE not coming out and disagreeing, that’s saying something.”

Meltzer also expressed some consternation regarding McMahon’s stock transaction from yesterday, given that the current state of the market and WWE’s guaranteed television deals for huge money make it a strange time to sell:

“He got the money for 2.26 million shares. Essentially he got 86 million dollars for what is worth about 117 million, but he would get the cash now. The actual trade takes place in four years, which is really weird and scary and I don’t understand it...why he needed 86 million dollars in cash now, and to make that kind of a deal now, I don’t have the answer.”

“If you have cash on hand, why would you want to sell this week? There’s something missing in this story, and I don’t know what it is.”

“If UFC had done this I would understand because UFC is cash poor. [WWE is] not cash poor.”

What it boils down to is this: McMahon fired two of his most important executives earlier this year with only a vague explanation to support the decision, but he maintained a rosy business outlook by putting forth this idea of a transformative business deal. That deal is not going to happen, and it’s less clear that Vince made a sound business decision in firing George Barrios and Michelle Wilson. When that is combined with Vince’s stock decision from yesterday, the business world is not responding well to WWE right now.

What do you think is going on here, Cagesiders?

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