WWE 2009 Business Breakdown

Here is a rundown of WWE’s business performance in 2009 following the release of the company’s annual 10K report.

Live attendance held up from 2008 due to an increased number of events (342 instead of 319). North American shows, which includes Puerto Rico but not Mexico, averaged 6,500 for $245,000. In 2008 the average was 6,400 for $262,000, which was before WWE began to offer low-end ticket prices. International events averaged at 8,500 for $562,000, which is down from 2008 levels (8,500 for $671,000) due to devaluation of foreign currency. The actual total attendance figures for 2009 were 2.4 million, with 1.7 million from North America, which was up from 2.2 million with 1.5 million in North America in 2008.

Live event merchandise sales increased from $18.5m to $19.8m. The average merchandise purchases per ticket buyer decreased from $10.35 to $9.58 per event, so the gross revenue increase stemmed from running more live events.

Total PPV buys decreased 11% worldwide. The final number of buys was 2.8m (North American) and 1.7m (rest of the world), which was down from 2008 levels of 3.3m and 1.7m. North American buys decreased by 15% but international only by 3%, although many new international markets, such as Mexico, were opened up in 2009.

PPV income profit margins increased due to a significant cutback in production costs and decreased talent salaries. WWE acquired $8.3m in taxes from government business incentives in addition to saving $3.2m from lower TV production costs.

WWE received $72.8m in TV revenue from USA, MyNetwork, Syfy and WGN and $39.1m in international rights fees. Both are up from $63.5m and $37.2m in 2008, which was before the WGN deal.

TV advertising fees increased from $7.4 to $7.7m. Most of this came from Canada, where WWE still maintains the rights to sell advertising time.

WWE Classics on Demand lost subscribers, particularly in the last six months of 2009, hence revenue decreased from $6.3m to $5.4m. Budget cutbacks, however, from $1.8m to $800,000, kept profit margins up.

Licensing revenue fell from $60.5m to $44.7m. Toy sales were hit hard, falling from $12.8m to $8.2m, although WWE anticipates a huge increase this year through the new Mattel partnership. Video game revenue dropped from $25.3m to $19.6m, although WWE also received a $13.2m signing bonus from THQ as part of a new 8 year contract that also gives WWE a higher gross revenue percentage. If video games decrease their revenue may well still increase in the next year. The 2008 numbers also included a $6.8m publishing advance from the new book deal with Simon & Schusters.

Magazine revenue fell from $15.4m to $13.5m, with sales dropping by 14%. Again, decreased production costs offset this decline.

Video sales decreased from $58.5m to $39.4m.

WWE.com revenue increased from $16.3m to $16.8m even though traffic declined. Advertising levels were up slightly from $10.6m to $10.8m. Lower expenses, a $1.1m government incentive and increased sales of content to other sites all helped increase the profit margins.

WWE shop revenue fell from $18.5m to $16m, with 9% decreases in orders placed and 5% decreases in average order price.

WWE Movies made $3.8m profit this year. Royalties from existing movies and a $4.3m government production incentive helped. They spent $19.7m on 12 Rounds, which is expected to become profitable, and just over $2m each on Marine 2 and Behind Enemy Lines: Columbia.

Here is a breakdown of each division’s profitability in millions of dollars and percentages:

Division 2009 % 2008 %

Live event ticket sales $34.2 15.0% $31.4 13.8%

Arena merchandise $8.7 3.8% $7.3 3.2%

PPV $47.5 20.8% $41.6 18.3%

Television production $46.2 20.2% $24.9 11.0%

TV advertising $6.8 3.0% $6.6 2.9%

WWE Classics on Demand $4.6 2.0% $4.5 2.0%

Licensing $33.7 14.7% $46.9 20.7%

Magazine publishing $2.4 1.0% $2.1 0.9%

Home video $21.7 9.5% $34.3 15.1%

WWE.com $9.9 4.3% $7.5 3.3%

WWE shop $4.4 1.9% $4.4 1.9%

WWE Studios $3.8 1.7% $8.9 3.9%

Other $5.0 2.2% $6.5 2.9%

Cost savings in TV production was a major factor in maintaining profitability for that division, e.g. taping two Smackdowns at a time early in 2009. Overall decreases in the production budget and adding more overseas distribution, plus Superstars, also helped. Similar tactics were used on PPVs, which cost an average of $2.3m instead of $3.6m in 2008. WrestleMania in particular proved more profitable on account of not running an outdoor show and not paying extra talent costs, such as the $5m budgeted for Floyd Mayweather in 2008. Over the past year the break-even buyrate hit 135,000, which is down from 200,000 in 2008.

In terms of overall profit the key streams are house shows (19%), PPV (21%), TV (20%) and merchandise (15%).

AVERAGE LIVE ATTENDANCE PER SHOW (North American house shows and television tapings, PPV shows not included): 1992 – 4,250; 1993 – 3,540; 1994 – 2,880; 1995 – 3,039; 1996 – 4,881; 1997 – 5,826; 1998 – 10,006; 1999 – 12,017; 2000 – 11,460; 2001 – 9,200; 2002 – 5,625; 2003 – 4,537; 2004 – 3,862; 2005 – 4,354; 2006 – 5,175; 2007 – 5,998; 2008 – 5,973; 2009 – 6,226 (+4.2%)

AVERAGE RAW RATING: 2005 – 3.82; 2006 – 3.88; 2007 – 3.65; 2008 – 3.28; 2009 – 3.56 (+8.5%)

AVERAGE SMACKDOWN RATING: 2005 – 3.05; 2006 – 2.47; 2007 – 2.65; 2008 – 2.33; 2009 – 1.94 (-16.7%)

AVERAGE ECW RATING: 2006 – 1.88; 2007 – 1.44; 2008 – 1.25; 2009 – 1.14 (-8.8%)

TNA AVERAGE LIVE ATTENDANCE PER SHOW: 2008 – 1,214; 2009 – 1,008 (-17.0%)

IMPACT AVERAGE RATING: 2007 – 1.06; 2008 – 1.05; 2009 – 1.14 (+8.6%)

Raw increased from 2008. It was the best year for house shows since 2001. PPV has declined each year since 2001. There are consistent annual declines in ratings for each of the three main shows, which in a combined ratings scale go from 8.23 (2006) to 7.74 (2007) to 6.86 (2008) to 6.64 (2009).

Credit: Wrestling Observer

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