Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Insanity

Independent Wrestling is not Dead is that a Problem for WWE

The death of independent wrestling in the United States has been greatly exaggerated.

All 10,000 tickets to All In; an Indie show with a partially undetermined card, sold out in 29 minutes nearly four months in advance, The Chicago Tribune reported. Promoter Cody Rhodes put the tickets on sale on May 13, 2018, 29 minutes later he tweeted that they had all been sold out.

All In is the biggest non-WWE wrestling event held in the United States in nearly 25 years. The last time American fans bought that many tickets to a wrestling show that was not sponsored by World Wrestling Entertainment (NYSE: WWE); or its’ long-dead rival the WCW, was in 1993 for a lucha libre show in Los Angeles.

This means Rhodes’ event has outsold everything held by the ECW, or TNA, and its successor Impact. What is more incredible is that Rhodes achieved that with no corporate backing and little help from the big media. Instead, all Cody needed was a little leveraging of digital technology and some shrewd guerrilla marketing.

Cody Rhodes is now the Number Two Wrestling Promoter in America

Rhodes’ promotion efforts consisted of a self-produced YouTube show and a social media feud with wrestling blogger Dave Meltzer. Last year, Meltzer tweeted that he did not think Ring of Honor; the independent cooperative promotion Rhodes and his costars the Young Bucks work with, could sell 10,000 tickets to a show. Cody took the bet and won.

Cody Rhodes with his legendary father the late great Dusty Rhodes and brother Dustin “Golddust” Rhodes

Rhodes contacted superstar tag team the Young Bucks and started putting together a card on 16 May 2017. Less than a year later, Rhodes has a venue, the Sears Center in the Chicago suburb of Hoffman Estates, and a pretty impressive card of wrestlers.

Big names Cody has signed include New Japan Pro Wrestling superstar and IWGP Heavyweight Champ Kazuchika Okada, Canadian star Kenny Omega, and former WWE champ Rey Mysterio Jr. The truly impressive aspect of All In is that the card is not even complete and it is sold out.

Cody Rhodes’ Success Spells Trouble for WWE

That means Rhodes; the son of wrestling legend Dusty “the American Dream” Rhodes, is now the number two professional-wrestling promoter in the United States. That is incredibly problematic for Vincent K. McMahon Jr. because Cody did it with none of the WWE’s resources.

Rhodes lacks a digital network, several hours of prime-time cable television each week, and all the big-media hype, McMahon can generate with his New York media contacts. All he had was social media, a strong reputation with wrestling fans and some buzz.

Codie’s All In success contrasts sharply with comparable WWE events, Raw and Smackdown tapings which have been suffering from low attendance for at least three years. The situation has been made worse by social media which has been full of pictures of half-empty arenas at Raw and Smackdown tapings.

Cody and the Young Bucks

Is there too Much WWE wrestling?

Both those pictures and the wide-angle shots of large crowds on Raw and Smackdown are disingenuous, Forbes contributor Alfred Konuwa pointed out. The real cause of the empty seats at WWE TV shows is the company’s habit of booking large arenas with many more seats than it can sell.

A greater dilemma is the WWE’s commitment to offering several hours of live television each week. That means it is churning out more wrestling than the market is demanding. A related problem is that the WWE has to put on shows at times when there is plenty of competition.

During the fall, WWE has to compete with Major League Baseball, NASCAR, Formula One, NBA, NFL, NHL, New Japan, Canadian League football, Premier League Football, and college football just to name sports. That does not include all the stuff on Netflix, Hulu, Amazon, and Cable TV and video games.

A strong case can be made that there is simply too much WWE wrestling right now. Fans might be suffering from overload or plain old-fashioned boredom. An even stronger case can be made that WWE’s product is not in the place fans want it; namely streaming video.

How Cody Rhodes is Changing Wrestling

A shrewd promoter like Cody can take advantage of this with strategic timing and positioning of his shows. Unlike Stephanie and Shane McMahon, Rhodes has the luxury of staging only a few shows a year, holding them at the best times, and staging them in areas where he can draw the biggest crowds.

All-In is being held in Hoffman Estates, Illinois; a Chicago suburb,; Chicagoland has a population of 9.5 million people. That does not include all the people who can easily drive or fly in from nearby areas such as Milwaukee, Madison, Cleveland, Green Bay, Toledo, St. Louis, Indianapolis, and Detroit.

To be fair, WWE’s biggest rival, New Japan Pro Wrestling has been doing something similar for quite a while with its shows in Long Beach, California. Cody has wrestled in a few of those events, so he’s not as original as some people think.

Another marketing tactic Rhodes is employing is to deliberately hold his shows in arenas that are slightly too small. That means they get sold out; which generates media and internet buzz and controversy. Cody generates lots of free publicity that he can use to peddle his shows to streaming video platforms like Amazon and Hulu.

Rhodes’ is also treating wrestling fans like fans. Instead of a traditional wrestling show, All In is more like Comicon. It is being held in conjunction with the Starrcast convention which will feature panel discussions and autograph sessions with all manner of wrestling celebrities.

The most of interesting of these will include a debate about the Monday night wrestling war of the 1990s between former WCW boss Eric Bischoff and Bruce Prichard. There are also autograph sessions with almost every retired and active wrestling star in the universe.

What Cody is trying to create is the Comicon of wrestling. If he succeeds Rhodes will have an event he can recreate all over the world and make money. Among other things he gets other sources of revenue to tap; such as booth fees and a cut of the merchandising.

How Bored Fans and Social Media are Slowly Destroying WWE

Rhodes also understands the importance of scarcity. Instead of giant events every week, he can hold a few shows a year, making his wrestling a special treat that fans have to go out of their way to see.

Finally, Cody offers a very different wrestling product than the formula the McMahons are selling. Rhodes is filling his card with strong-style artists from Japan, costumed performers, and the two-biggest acts outside the WWE right now; The Young Bucks and Kenny Omega.

In recent months the WWE has been mindlessly repeating the same series of matches with the same stars. The most glaring examples of this are A.J. Styles and Shinsuke Nakamura (a recycled New Japan event), and Roman Reigns and Brock Lesner. Social media reports indicate that fans were actually booing Brock and Roman at the last Wrestlemania.

Rhodes is taking advantage of the boredom with such matches, and the buzz generated by the Bullet Club and New Japan Pro Wrestling to mount a serious challenge to WWE. That challenge is working, and it exposes the whole problem facing old media dependent entertainment venues in today’s world.

The WWE’s real Competitor is the Bullet Club

The WWE has found that its’ biggest competitor in today’s world is not a giant well-financed promotion with corporate backing, but the Bullet Club. The Bullet Club is as a loosely organized band of indie wrestlers that started in New Japan. The Club seems to have no leader and no defined membership, yet it has become a serious headache for the WWE front office.

The McMahons tried to squelch the Club; like they did a similar frenzy over the Hardy Boyz’ Universe, last year by co-opting it. The WWE hired club members AJ Styles, Finn Ballard, and Gallows and Anderson. That did not work; Bullet Club wrestlers in boring WWE events, are well boring. To make matters worse the WWE transformed the edgy and exciting Prince Devitt into a goofy hipster with a ridiculous beard.

All that happened was that Rhodes, a WWE wrestler upset with the McMahon’s management, joined the Club and revitalized it. A likely scenario here is that a batch of WWE superstars will jump ship and join Cody and company. If guys like Jindar Mahal, Roman Reigns, Braun Strowman, and Kevin Owens are smart they will quit WWE and join the Club. That might give them a paycheck in the future.

A major threat that Vince will have to watch for is Cody signing a streaming video deal with Amazon (NASDAQ: AMZN), Hulu or Netflix (NASDAQ: NFLX). That would give Cody the cash he needs to hold more events and take Starrcast on the road to other major cities and countries. A really smart move for Rhodes would be to hold Starrcast 2.0 and All in One 2 in Birmingham to tap the UK market.

Other media operators need to take note because it is likely that other performers will copy the Bullet Club formula with loose cooperatives built around a brand promoted through social media. Music and comedy are two fields ripe for disruption along such lines.

Is WWE Losing Money?

The WWE is very vulnerable to the kind of disruption that Cody Rhodes is attempting.

Its revenues shrank in 1st Quarter dropping by .38% Stockrow data indicates. The company’s resources are also very limited; it had an operating income of just $21.75 million and a net income of only $14.84 million for the same period.

That led to a negative free cash flow of -$1.83 million which indicates the WWE is close to losing money. The real reason why the WWE went to Saudi Arabia for The Greatest Royal Rumble might have been for the cash. The company might need money to save off total collapse. Desperation forced the McMahons to scramble for oil money.

WWE had only $105.58 million in cash and short-term investments and $404.17 million in assets on March 31, 2018, Stockrow reported. All it might take to sink WWE right now is a few months of money-losing pay-per-views.

The smartest move for the WWE right now would be to seriously cut back on the number of shows it holds and the amount of television it produces. Moves like scrapping the WWE Network, canceling Raw or Smackdown, and transforming some of the pay-per-views that can be distributed through Hulu, Amazon, and Netflix should be considered.

Changing the card and allowing somebody besides Brock, Roman, Shinskae, and A.J. to wrestle for the belts would be a change welcomed by fans. Getting rid of the utterly pointless Universal belt; which seems only to exist for Brock Lesner’s convenience, would also make a lot of fans happy. Another smart strategy would be to turn Wrestlmania and Royal Rumble into Comicon style conventions and beat Cody at his own game.

There is one certainty here; investors need to avoid WWE stock at $50.17 a share it was ridiculously overvalued on 17 May 2018. Cody Rhodes is ably demonstrating that WWE’s business may have no value and little future.

One has to wonder if Shane McMahon and Cody Rhodes will be debating the “death of WWE” in a panel discussion at Starrcast 2028.