You may have seen in
the news recently that Saudi Arabia has had a little bit of
- and by “a little bit” we mean absolutely loads of it. In
light of the apparent murder of American journalist Jamal Khashoggi in a Saudi
embassy in Turkey, eyes have been on every Government in the civilized world,
and how they respond to the tragic incident. The Germans have canceled arms
deals with the Saudis, and pressure is mounting on others to do the same.
It isn’t just world leaders who have been expected to act, either. Major
businesses and business leaders had been due to descend on Saudi Arabia for a
major conference called the Future Investment Initiative, which as well as
being a major networking event, was an opportunity for Saudi Crown Prince
Mohammed bin Salman to show off his vision for a modernized Saudi Arabia of the
future. The event was supposed to be about Saudi opening its arms to the world,
and engaging in the 21st century. In the aftermath of the Khashoggi incident, every major
sponsor pulled out
One company that went ahead
with its planned trip
to Saudi regardless, though, was Vince
McMahon’s World Wrestling Entertainment.
Too Much Invested?
Before we rush to condemn WWE, we should point out that they’re not the only
company who are continuing to do business with the Saudis in the current
environment. BlackRock, SoftBank and a whole mess of financial institutions and
investment companies have confirmed they’ll carry on trading there. US
President Donald Trump has stated that withdrawing from a lucrative arms deal
with the state would put too many US jobs at risk. Where there’s money heavily
invested in such deals, business has seemed to continue as normal - or at
least, as normal as is possible, given the situation. But WWE aren’t a bank, or
a financial institution, they’re an entertainment company.
To give proper background into the fact that the planned ‘Crown Jewel’ event
went ahead last weekend, the Saudi deal is a major boon for the company. The
Saudis are effectively paying WWE - and paying them handsomely - to come to the
state every six months for the next ten years, and stage a major event. The
first event, named the ‘Greatest Royal Rumble’, went ahead in April without a
hitch. It was an odd watch; a mixture of pro wrestling and pro-Saudi propaganda
- but it didn’t court major controversy for the company at home. This second
event saw WWE roasted on HBO by John Oliver. The eyes of the world were
watching, and WWE has been seen to commit a party foul.
A Show Of Defiance?
The company structure of WWE is unusual for a publicly traded company. Although
anyone can buy shares in the corporation, and as such it has a responsibility
to its shareholders, in real terms all of the power remains in the hands of the
man who founded it; Vince McMahon. And Vince McMahon isn’t a man who’s ever had
an issue with courting controversy.
This is the same Vince McMahon who was placed on trial in the early 1990s for
dealing steroids to his own wrestlers, although he was cleared of all charges.
Vince McMahon’s company brought the world ‘bra and panty’ matches between its
female competitors throughout the 1990s. Storylines portrayed on WWE television
have included necrophilia, miscarriage, Satanic rituals, and an octogenarian
giving birth to a hand. He’s never previously shown any concern with regard to
what other people thought of him or his conduct.
He’s also someone who likes to take a gamble. In case you’ve forgotten, Vince
McMahon also gave us the ill-fated XFL in 1999; a sport which attempted to
combine pro football with pro wrestling, and succeeded at neither. Despite that,
he’s intending to revive the league and try again in 2020. Past forays into
other fields of entertainment have included a movie production company, and a
competitive bodybuilding league. We wouldn’t be at all surprised if he spent
all of his free time playing VIP
Casino games. He likes to take risks, he likes to play high stakes
games, and he doesn’t mind losing the occasional bet so long as he wins the
next one. The question with the ‘Crown Jewel’ event is whether he’s backed a
winner in the long term.
Cash Today, None Tomorrow?
Although precise figures aren’t available because of the way WWE breaks down
its financial reporting, experts believe that the WWE-Saudi deal is worth
something in the region of $45m per year to the wrestling company. That’s $450m
over the ten year term of the deal, and certainly isn’t an amount any business
or individual would turn their back on without giving careful consideration to.
At the same time, that money isn’t as important to WWE now as it was when they
signed the deal toward the start of the year. Since that first event, WWE have
been through their latest round of TV deal negotiations, and boosted their
future revenue by an astonishing amount. They signed a five year deal with FOX
for SmackDown, one of their flagship shows, for a total value of $1bn. Their
other flagship show, RAW, will stay on the USA Network for the same length of
time, and is understood to have attracted a similar price. Basically, the Saudi
deal is a much smaller chunk of WWE’s income than it was at the time. Losing it
wouldn’t be the be-all and end-all for WWE if they walked away from it, which
makes their decision not to seem questionable.
There’s also those shareholders to think about. Although Vince McMahon may
still have ultimate control, he has investors expecting returns on their money.
WWE’s announcement that the Saudi show would continue as planned saw their
stock dive 21%. That’s no small amount. It had been riding at an all time high
prior to the announcement, so no material damage was done, but another fall of
the same value would surely set alarm bells ringing on Wall Street, which WWE
would presumably be keen to avoid.
In the cartoon world of professional wrestling, the battle against negative
media attention might be one matchup that not even Hulk Hogan, Stone Cold Steve
Austin and the Rock together would be able to win.