WWE Earnings Woes, Stock Drop Overshadow Return Of Vince McMahon’s XFL

Dade Hayes
·4 min read

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UPDATED with closing stock price. Saturday’s return of the XFL — an upstart pro football league being resurrected by pro wrestling impresario Vince McMahon — is being overshadowed by trouble at McMahon’s main company, the WWE.

The wrestling and entertainment concern reported spotty fourth-quarter results Thursday, with earnings per share of 78 cents beating Wall Street estimates but revenue of $322.8 million falling short. The company had already been under the microscope after the abrupt dismissal of two top executives last week as the company lowered its financial guidance.

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WWE shares dropped more than 9% in the wake of the earnings announcement, closing at a 21-month low of $44.51.

More than any of the numbers, management warnings about “considerable uncertainty” in the company’s business outlook rattled Wall Street.

“Investors are much more focused on 2020 and the long-term growth trajectory of the business, which for right now seems much cloudier than in recent months,” wrote MKM Partners analyst Eric Handler in a note to clients.

Handler, who has a “buy” rating on the stock. expressed concern about the WWE’s forecast for TV rights fees to climb by $185 million in 2020, an amount he called “very disappointing.” MKM had expected at least a $250 million gain and Handler concluded “UK, Latin America and China deals are down.”

Fox paid $1 billion in a five-year deal to acquire WWE Smackdown, a weekly showcase that previously aired on USA, with the price indicating demand is still healthy in the U.S. (WarnerMedia, though, has taken aim at the WWE by airing the matches of an upstart rival circuit, All Elite Wrestling, recently renewing the AEW for a second season.)

The XFL was a notorious industry and pop-culture fiasco when it launched as a partnership between NBC and McMahon in 2001. The league’s brief initial splash as a summer alternative to re-runs in those pre-streaming days was followed by a swift downfall. Bereft of top college draft picks or a consistently high caliber of play, the experiment of offering an alternative to the NFL wound up providing a first-year MBA seminar’s worth of business lessons (and fodder for an ESPN 30 for 30 installment).

In resurrecting the XFL, McMahon — who owns it through his company, Alpha Entertainment — has stressed his vision of the new league as not just an NFL wannabe but rather a “re-imagined” version of pro football.

The rules are aimed to encourage more kickoff and punt returns. Instead of kicking extra points, teams will follow touchdowns by choosing to go for a 1-point play from the 2-yard line, a 2-point play from the 5-yard line or a 3-point play from the 10-yard line. Live, on-camera interviews — verboten on NFL sidelines — will be conducted on the sidelines during the action. TV networks will also tap into the teams’ communications systems and listen to conversations between coaches and players wearing microphones.

ABC, ESPN and Fox Sports will broadcast the initial 10-week season, which features games on Saturdays and Sundays among the league’s eight teams. Saturday’s kickoff features the Seattle Dragons and DC Defenders on ABC, followed at 5 p.m. ET/2 PT by the Los Angeles Wildcats at the Houston Roughnecks on Fox.

Roughly 100 million households in 200 countries and territories will get XFL broadcasts. After an NFL season that saw a 5% uptick in regular-season ratings, and with off-season events like the NFL Draft drawing record audiences McMahon and his football troops are hoping some of the viewer interest carries over to the new league.

Despite the anticipation for his new venture, McMahon sought to emphasize the separation between it and the WWE during the fourth-quarter earnings call. The XFL, with 400 employees, “is a separate entity completely” from the WWE, he said.

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