WWE says profits were down due to television and personnel expenses

WWE has released its financial results for the second quarter (Q2) of 2021, which covers April 1 through June 30. Their net income of $29.2 million was down compared to $43.8 million in Q2 2020. Overall, WWE’s revenue for the quarter of $265.5 million was slightly better than analyst projections. It turns out that running shows out of an empty warehouse saves a lot of money, but WWE didn’t get to do that this quarter.

Here is a summary statement from their press release about their Q2 performance. Keep in mind that Adjusted OIBDA is WWE’s preferred metric for profit.

“During the second quarter, we generated solid financial results as we continued to focus on building fan engagement,” said Vince McMahon, WWE Chairman & CEO. “With the announced return to live event touring and robust ticket demand, we believe we can further consumption across platforms, maximize new business opportunities and drive long-term growth.”

Kristina Salen, WWE Chief Financial Officer, added “In the quarter, Adjusted OIBDA results reflected an increase in television production expenses to enhance the viewing experience of WWE’s fans. Although Adjusted OIBDA declined, key performance metrics demonstrated positive trends and we continue to realize better than expected television production efficiencies, stronger sponsorship sales and heightened demand for our live events.”

Here is WWE’s explanation about television and personnel expenses bringing down their operating income compared to Q2 2020:

“...primarily driven by increased television and event-related production expense due to WWE ThunderDome and WrestleMania 37. In the prior year quarter, WWE produced all televised content, including WrestleMania 36, from its lower production cost training facility. The decrease in operating income was also driven by an increase in personnel expense, which includes $8.1 million in severance expense primarily related to the combination of WWE’s television, digital and studios teams into one organization for a more unified content strategy and more streamlined content production, as well as higher compensation expense as employees returned from furlough. The increase in operating expense was partially offset by an increase in Media segment revenue driven by the increased monetization of content and, to a lesser extent, an increase in Live Event segment revenue reflecting ticket sales from WrestleMania.”

Before you get too worried that things are headed in the wrong direction for WWE, keep in mind that these results are still incredibly profitable compared to what WWE was bringing in prior to the advent of their massive new television deals that kicked in for Q4 2019:

The red oval includes the Q2 2021 profit of $68.1 million. The green oval includes the Q4 2019 profit of 107.6 million, which is when the new television deals kicked in. Note that while the value in the red oval is smaller than many of the profit values to the right of the green oval, current profits still blow away what WWE was making to the left of the green oval. In other words, WWE remains idiot-proof and raking in the dough due to their incredibly lucrative television deals. More importantly, they remain on track to produce a profit level for the full year that is comparable to their record profits in 2020.

Uncertainties related to the ongoing COVID-19 pandemic mean that WWE is sticking to its Adjusted OIBDA projection of $270 million to $305 million for the full year in 2021. However, they did provide some details about expenses related to the construction of their new headquarters:

“...the Company anticipates spending on its new headquarters buildout as the projects re-starts in the second half of 2021. For the full year 2021, the Company estimates total capital expenditures of [$85 million to $105 million]. The increase in capital expenditures for 2021 reflects the acceleration of certain construction spend, as the overall cost of construction – net of tenant incentives, tax credits and other capital offsets - has not materially increased. The total net cost of the Company’s new headquarters through completion is estimated within a range of [$160 million to $180 million].”

WrestleMania 37 took place in this quarter. It was the only live event with paying customers in the quarter. Wrestlenomics’ Brandon Thurston did some quick math to determine that WWE made roughly $32 in merchandise per paid ticket, which was approximately 20,200 fans each night.

So WWE keeps humming along generating tons of revenue in 2021, as expected. The big change coming up in Q3 2021 will be related to WWE’s return to the road with ticketed events.