WrestleMania 38 takes place this weekend in Dallas. The event represents the end of the WWE booking calendar, just as the Super Bowl marks the end of the NFL season, making it an opportune time to take stock of the business (see: Roger Goodell’s annual state of the league address).
Back in February, the company issued updated guidance indicating it expects to post “record revenue and an adjusted OIBDA range of $360–$375 million [in 2022], which would [also] be an all-time record.” (OIBDA stands for operating income before depreciation and amortization, and is the company’s preferred metric.) That estimate may have been conservative. While WWE will not report Q1 ’22 earnings until May 5, some industry insiders believe the company’s revamped approach to premium live events and success signing new content and licensing deals has it outpacing expectations.
JWS’ Take: Despite COVID-19 limiting (or eliminating) ticketed audiences during the first half of the year, WWE set records in 2021. The publicly traded global sports entertainment company posted all-time highs in both revenue ($1.1 billion) and profitability ($327.1 million in adjusted OIBDA).
The decision to license WWE Network to Peacock was among the catalysts for last year’s growth (revenue +12%, adjusted OIBDA +14%). The pact, reportedly worth $1 billion over 5 years, padded the top line and significantly increased the number of fans watching company content. As a standalone, direct-to-consumer, over-the-top streaming service WWE Network had 1.1 million subscribers. Since licensing its content to Peacock, more than 3.5 million subscribers have watched WWE programming on the platform and viewership of tent-pole events (like WrestleMania) has risen 42%. The increase in fans tuning in subsequently enabled the company to grow attendance (+35%) and revenue per event (+64%) over pre-pandemic levels (compared July-Dec. ’21 to FY19).
Because the Peacock deal did not begin until the end of the Q1 ’21, WWE received a prorated licensing fee for WWE Network content last year. So with the company set to receive the full boat this year and venues back at full capacity, it was not a surprise that WWE projected ’22 would be another record year. But a new premium live events strategy, which has both gate receipts and sell-through rates up, and some newly signed content and licensing deals may have the company in an even better position than expected.
While WWE will hold the same number of premium live events this year as it did last, more of them will take place in NFL stadiums (five vs. two). The logic is simple: A typical SummerSlam held in an NBA or NHL arena might result in a ~$1.5 million gate. Last summer’s edition at Allegiant Stadium in Las Vegas brought in $5.5 million. WWE is expecting almost 200,000 fans on hand over the two nights of WrestleMania this weekend.
The company has also taken a more thoughtful approach to selecting host cities and event dates for premium live events under its revamped strategy. For example, WWE chose to host its Day One event in Atlanta on Jan. 1 because local event organizers told the company 400,000 people would be converging on the city for New Year’s Eve, and save for the Sugar Bowl, it was a slow evening on the sports calendar. The decision appears to have paid off. The company sold 44,340 tickets to the show and drew 60% more viewers than any December premium live event in WWE history (Day One now replaces the company’s old mid-December event).
Four weeks later on Jan. 29, WWE held its annual Royal Rumble at The Dome at America’s Center in St. Louis. The company scheduled the show on a Saturday evening, so that it would not be forced to compete with the NFL’s conference championship games the next day. Historically speaking, WWE has held its biggest shows on Sunday evenings. Again, the decision looks to have paid off: 44,390 fans bought tickets, and viewership was up 45% over the pre-pandemic Rumble of 2020. It does need to be noted that the first night of WrestleMania 38 will go head-to-head with the NCAA men’s Final Four.
WWE will return to Allegiant Stadium in ‘22. But not for SummerSlam. The NFL venue will host an event called Money in the Bank on July 2. The company figured with local organizers expecting 500,000 people to travel to the city for the holiday weekend, it would have little trouble increasing ticket prices and selling additional seats (it will pare back the production footprint to do so). Last summer’s SummerSlam was technically a sellout.
SummerSlam 2022 will take place at Nissan Stadium in August. WWE found a weekend when school was out of session to bring a premium live event to Nashville so it could be in town at a time when young fans from nearby college towns would be migrating towards the city.
The back end of the WWE’s premium event schedule for ‘22 follows a similar thought process. The company’s September show (set to take place Labor Day weekend) will occur before the start of the NFL season. More sports properties should take the NFL into consideration when constructing their respective schedules.
Meanwhile, WWE has continued its success inking content and licensing pacts. In January, the company announced a new deal with Disney+ Hotstar that will make WWE Network accessible to fans in the Asia-Pacific region, and just last week it finalized a TV and streaming deal with MBC Group to bring company programming to the Middle East and North Africa (MENA) region. At the start of March, the company also added a large domestic programming deal (130 hours) with A&E.
Not everyone is convinced WWE is on pace to beat expectations. Brandon Thurston’s most recent estimate has the company tracking to do $365 million in adjusted OIBDA for the year, and the Wrestlenomics analyst doesn’t see a strong reason to raise that figure. The additional stadium shows are already baked into the estimate, and he remains “skeptical [that targeting dates] incrementally changes WWE’s financial outlook.”
As for the content and licensing deals, Thurston remains in wait-and-see mode. The company has yet to declare when the A&E content will premier. “If it premieres in 2022, WWE will recognize the related revenue at that time [and it will] likely represent an incremental increase in their revenues,” he said.
Similarly, the value of the Disney+ Hotstar deal remains unknown. While Thurston acknowledges it “could be significant” (the company has 46 million subs), with no incumbent in the region to outbid them that is not a certainty.
And there remains some confusion around what the deal in MENA actually entails and how much incremental revenue is included. “The press release made it sound like this was a linear TV and streaming agreement,” Thurston said. “Yet people in the region tell me MBC ACTION (free-to-air) was already broadcasting the one-hour highlight versions of Raw the press release refers to, although Smackdown would be new in at least some regions. I’m still wait-and-see about the value of the MENA deal…[Bottom line], it’s questionable whether all of this news means an additional $10 million of adjusted OIBDA, which would be needed to push my estimate past the high-range of their guidance.”
