Testicular Fortitude
By Aree Jones [ areejones@yahoo.com ]

Well, so much for the whole "three weeks between columns" thing, huh?

I tried, I failed, and I'm sure there's a message in there somewhere. In my defence, life has moved in some very strange directions for me in the past three months. For one thing, I very oddly decided that I missed academic life and on a whim I enrolled in a Masters of International Relations. So twice a week I leave home at 7:00am, go to work for nine hours and then go straight to class, where I spend two hours learning about obscure topics such as ethnopolitical movements (if you can define an ethnopolitical movement you should email me and you might win a prize. This week's prize is three butter menthols and some nasty celery which is currently in the vegetable drawer of my fridge) and Russian foreign policy. Poor little Aree. Actually, I like my classes. The guy who teaches me Russian foreign policy is actually Russian and it's really quite fascinating to hear history from a Russian point of view. Plus, if I ever get bored in class I can daydream that I'm the female equivalent of James Bond and I'm talking to a Russian spy about foreign policy. Don't laugh, that tactic has gotten me through a few boring classes.

In addition to being crazy enough to return to higher education, I've started a new job and I've been organising relocating for four months to a different country for a job opportunity that's simply too good to miss. I've also been busy turning myself into a gourmet cook. I'm really very good, but I don't do dishes. I do the cooking and I figure that's enough.

What does all this have to do with Testicular Fortitude I hear you ask? Absolutely nothing. I guess I just feel that I owe some sort of explanation to the readers who forgive my frequent and lengthy absences from the column writing scene. Every time I thought "I'll write my column" I realized that I should really be reading through column submissions or putting together the mailbag, both of which seem more important than writing my column. That also speaks volumes for my feelings toward column writing at this point in time.

However, I'm here now and I've apologized, at least as much as you can apologize without actually saying that you're sorry and begging for the forgiveness of the unwashed masses. So without further ado (and further long winded explanations for prolonged absences), let us begin.

The WWE Quarterly Report for March 2003 - A Quick and Dirty Analysis

If you've been a part of the internet wrestling scene for a while, you're probably familiar with the fact that the WWE release a report every two and a half months creatively entitled "The WWE Quarterly Report". More than likely you ignore newsboard links to the report or perhaps you decided to take a look but after thirty seconds of reading you decide either a) It's boring or b) You have no clue what they're talking about or c) You just don't care about all that stuff.

Well, the purpose of today's column is to take you through the March 2003 WWE Quarterly Report and translate it into English. Why, I hear you ask? The report is actually a very useful tool for understanding what is really going on in the WWE. We all know that the professional wrestling industry has been in "bust" (as opposed to "boom") mode ever since Vince made the fateful decision to buy WCW. We all know the XFL was a complete disaster and that that the WWF are suffering bad ratings. What the report tells us is exactly how bad things are for the WWE and more importantly, what their plans are to turn that frown upside down.

Going "Soft"

In the second paragraph of the report the WWE admit to "average" television ratings and lower attendance at live events. They also state that PPV buys remain "soft". That's a weird expression. If PPV buys were really good, would they be saying that PPV buys were "hard"? Why is "soft" used in a negative context? Perhaps these are terms thought up by men who think too much about what's in their pants. Or maybe it's me being completely irrelevant and thinking too much about what's in a man's pants. Either way I'm digressing quite badly here.

I guess the WWE believe in admitting to the bad stuff right up front. Ratings, live event attendance and PPV buys have been, well, crappy for quite some time. The WWE don't delve into the reasons for this crappiness in the report, probably because they really don't know.

Of course after imparting this bad news in a bland sort of tone that suggests it really isn't the WWE's fault, the report states positively that Raw and Smackdown! remain several of the highest rated shows on their respective channels. That's a good thing.

Global Domination WWE Style

The WWE took a while to fully exploit the popularity of wrestling outside of North America. With recent tours of India, Australia and several other far flung nations, the WWE have finally realized that there is money to be made outside of the US. Truth be told, they've probably always known, but why would they leave the USA to make money when they could stay at home and rake in the profits? It was only when things got bad on the domestic front that they decide to explore international avenues. According to the report, 30 international events are planned for 2003, which is double the number of such events last year. That's quite an increase.

The Panda Pantomime

I'm really sorry about this heading. I simply couldn't resist. How often does one get to write the phrase "Panda Pantomime"? Hardly ever. I am of course referring to the WWE's problems with the World Wide Fund (who have a panda as their logo.get it? Oh well, I thought it was cute). An English Court ruled that Vinnie Mac and Co had breached an agreement with the World Wide Fund in relation to the use of the "WWF" trademark and as such, all World Wrestling Federation material that used the trademark would have to be re-packaged or destroyed. This is the reason that the old WWF trademark is blurred out of "flashback" and archival footage that the WWE show from time to time on current programming. They would be contravening the court order if they showed the "WWF" trademark, but according to the report, there is the possibility of "moderation or clarification" of the ruling, which is perhaps wishful thinking. The WWE are obviously trying to remain positive because the ruling may adversely affect the future use or repackaging of their historical video library to the extent it contains the former logo and verbal references to WWF. This really is a complete mess. It's bad enough that they have to blur the logo out in the footage - imagine if they had to "beep" out every mention of the WWF as well!

The Cash

WWE net revenues for the three months ending January 24th were $95.6 million. This was down from the same time last year, when the figure was $100.2. This is a decrease of five percent, which isn't really all that bad. I think the problem is that the WWE's profits have been decreasing for the past three years or so, and that's enough to make the money people slightly nervous. Apparently the lost revenue is from live and televised events (eg. lower fan attendance at live events and smaller PPV buys) and from merchandise. Those two areas are the key areas of WWE business, so basically what they're saying is that business is down overall.

Advertising revenues have dropped $3.9 million, which the report says is caused by lower ratings and lack of sponsorship avenues. My guess is that because the WWE product has gone cold, sponsors aren't as interested. I sincerely doubt that groups like the PTC and hard core bible bashers (as opposed to your general religious disapprovers) have had any impact on advertising. The WWE's target audience is the male demographic in the 15 - 25 age bracket. A lot of advertisers LOVE that target audience, especially if they're white. They're the guys who go to the dumb ass action movies, buy the $300 Nike shoes (which cost $2.20 to make in some sweat shop in Burma), buy all the silly Playstation and PC Games (I play the Lara Croft games, but that's different), buy the crappy WWE merchandise and eat the junk food. If the WWE was getting the ratings the advertisers would stick with them, even if their product was controversial and in poor taste. Advertisers are like parasites. If they see a better host, they detach their suckers and leech on to the Next Big Thing.

Let's just take a moment to recap that last paragraph. In one paragraph I have potentially offended the following people:

1. The PTC
2. Bible Bashers (or as Homer Simpson calls them, "those Religious Types")
3. Any white male aged 15 - 25.what the hell, make that 10 - 35 and males of any race or color. Never let it be said that I went about anything in a half assed way
4. Nike
5. Playstation users
6. WWE merchandise makers
7. Action movie lovers
8. Advertisers

That has to be some kind of record. It's a demented kind of genius, you know. To offend so many, so thoroughly in such a short space is truly a sign of genius. And genius is only a step away from insanity.

Price Hikes

The WWE's report states that lower PPV buys have resulted in an increase in the price of PPV's from $29.95 to $34.95. Also, the amount of revenue the WWE got from attendance at live shows actually INCREASED due to an increase in ticket prices, despite attendance figures being lower overall. It's an interesting mind screw, isn't it? Less people are watching WWE programming, attending WWE events and buying WWE merchandise so the WWE "reward" their hard core fan base by increasing prices.

It sort of makes you feel all warm and fuzzy inside doesn't it?

Why the WWE let The Rock Pretend he's a Movie Star

Revenues for WWE television rights increased by $3.2 million, which was largely due to the "executive producer" fee that Vince McMahon charged for letting The Rock perform in "Helldorado". A lot of people write into the mailbag asking why the WWE let The Rock film movies for months on end and shirk his wrestling responsibilities and the answer is very simple - a whole pile of dead presidents can make a very convincing argument.

The only other thing worth mentioning in that $3.2 million was "increased revenues for Tough Enough from MTV". Now that MTV have dumped TE, the WWE can kiss that little money maker goodbye for the foreseeable future.

The End of "The World"

Probably the WWE's most head scratching investment (the XFL aside), has been WWE New York aka "The World". I visited The World on my last trip to NYC and several things struck me about the place. Firstly, it's very expensive. Everywhere in Manhattan is expensive, but for what it was and the kind of food they were selling, it was ridiculous. I refuse to pay $17.50 for a hamburger. Secondly, it was pretty much empty which doesn't say much for fan traffic. I think The World did its best business on Monday and Thursday nights and on PPV Sunday's. Those times aside, it was a ghost town.

I've had some trouble trying to work out exactly what happened with the The World and why the WWE chose to shut it down. The report states that revenue from The World was down by $1.1 million because of "decreased consumer traffic". So okay, less people are going there which is a symptom of the wider drop in the WWE fan base. The WWE recorded a charge of $32.9 million (!) as a result of an impairment test which was done to determine goodwill and other "long lived assets" at The World. The only thing I can decipher that as meaning is that the WWE decided to offload The World location in Times Square and due to business (and possibly tax) regulations they had to show why they were offloading the place. To do this they paid over 30 million to have someone assess the long term value of the property and agree that the money making prospects for the place were pretty bad. This report means that the WWE have some kind of "permission" to offload the asset. Interestingly, the report indicated that The World lost $7.7 million last year and was well on track to losing $7.3 million this year. I highly doubt that the WWE expected The World to be such a cash drain and as such, they cut their losses and closed the restaurant and the store in February and April respectively.

Some Good News

The WWE recorded higher sales in video games and "book publishing", which actually means WWE books (autobiographies, cook books etc) and magazines.

Live event revenues actually increased by $7 million, but at a cost. The WWE held a massive 94 more events in the past 9 months that it did in the nine months ending in January 2002. Surely that's putting some severe strain on their talent and contributing towards saturation of the key market.

WWE home video sales got a shot in the arm from the introduction of DVDs which sell for about $5 more than video tapes. This resulted in an 8% increase in video and DVD sales.

Some Bad News

PPV revenues decreased by $12 million.

Advertising revenues decreased by $7.9 million.

Average attendance creased from 8,500 per event to 5,800.

Licensing revenues decreased by $1.4 million due to lower sales in the toy and apparel categories.

Net Revenues

For the nine months ending January 24 2003 the WWE's net revenue was $209.5 million. For the nine months previous to that, they took home $218.5 million. Sounds impressive, doesn't it? But when you start taking out all their expenses, I think the WWE would be lucky to be seeing $20 million of that money. That's not a whole lot of money in the grand scheme of the company and it would certainly be ringing alarm bells in more than a few heads.

Wrestler In Ring Injuries

The WWE noted in their report that their annual insurance costs have gone up by $2.5 million. The WWE have also had a change in policy whereby if participants in their events are injured, the WWE has to pay the first $10 million before the insurance company will step it. Previous to this year, the WWE paid nothing.

I guess the insurance company decided that they were forking out WAY to much to the WWE for medical treatment of superstars injured in the ring so not only did they up the costs in general, they slapped the $10 million dollar deductible on there. That isn't good news because every time a WWE wrestler has an injury in the ring, like Triple H, Austin, Angle, they will have to pay at least $10 million before the insurance company will contribute anything. That could explain why the WWE are suddenly so concerned with getting their employees to take fewer risks in the ring.

In Conclusion

The WWE end their report with a list of possible occurrences that could change the picture that the report presents for the next year or so.

1. They admit that failure on their part to develop creative and entertaining programs could result in a "decline of popularity in our entertainment brand", which is probably something that is already taking place.
2. They somewhat oddly state that the loss of Vincent K McMahon could adversely affect their ability to create popular characters and storylines. This is possibly linked to a point dropped in casually at the very end of the report which states that the key shareholder (who I'm almost positive is Vince McMahon and family) is about to sell off a huge chunk of his shares and this could affect share price as the market will be momentarily "flooded" with additional WWE shares and may take some time to stabilize in price. If they are referring to Vinnie Mac selling off some stock, the next question to ask is why he's selling off his stock. By selling his stock he's selling off his controlling interest and that could be dangerous in the future.
3. They state that they may not be able to compete with other companies providing other forms of entertainment as these other companies have more financial resources than they do. I'm not sure exactly what they're referring to here. Certainly not TNA NWA.
4. They acknowledge that a change in "our brand of sports entertainment" could adversely affect the business. Well, duh.
5. They also state that any other business they invest in outside of their core business could adversely impact on their sports entertainment business. Pay attention to this one - this is what the XFL taught Vince McMahon. The XFL was mentioned a few times in this current report. It seems the WWE are still paying off that particular debt to the tune of more than $60 million dollars. An expensive, but useful lesson.

All in all, I enjoyed pulling apart the report and digging for the deeper meaning. There's a lot to be learned from the WWE Quarterly Reports so maybe next time you see the link of the newsboard you'll actually click on it and check it out. It's not the easiest report to decipher but it gives you the inside track on the running of World Wrestling Entertainment in general.

For those who are interested, I've yet to finish with the columnist applications but they're coming along well. I have about 50 more to read then I have to go through the 50 or so who are in the "good" file and put 20 or so in the "great" file for Rajah to pick. I have to say that the quality of writing out there is incredibly good and I've no doubt that out of the columns I've read so far we could easily have ten new amazing columnists. Perhaps to fill the shoes of one very old columnist who seems to lack the ability to write with any kind of consistency...

Final word goes to my wonderful friend Rhianna who kindly leant me her fiancé to accompany me to a screening of Wrestlemania at a local cinema. There aren't many women out there who will let you take the man they intend to marry out on a "date" to see wrestling, but Rhianna is one in a million.

I've also had a change in email address, mainly because I'm very tired of spam emails offering me bigger breasts (unnecessary) and a bigger penis (ridiculous). My new email address is very simply areejones@yahoo.com. Feel free to use the new email address to make comments, or congratulations or even to abuse me for taking three months to write a column. Whatever floats your boat.

So I'm done. Stick a fork in me and take it out very slowly.