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The Economics of WrestleMania

Liam DunneMarch 24th, 2017NewsComments Off on The Economics of WrestleMania

By J. Patel

With the approach of Wrestlemania 33, we see, once again, the transformation of a sleepy city into WWE-Ville. As I’m sure you all know, this year’s lucky candidate is Camping World Stadium of Orlando, Florida.

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(Source: WWE)

Think ‘Whooville’ at Christmas, and I’m the Grinch. I’ll be honest with you- wrestling is not my ‘thing’. I’m not a religious follower, I know no storylines, but I can tell you one thing that I do know; WWE’s extravagant events do not come cheap. So, as a humble economics student, I seek to answer only this: ‘How does Wrestlemania impact the local economy?’

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According to the official earnings information given by WWE, in 2016 the company saw a ‘revenue[s] of $729M – [the] highest in WWE history with record performance across multiple business segments; International revenue +11% to a record $189M.’ They also boast that ‘subscribers watched 294M hours of content […] representing an average of 194 hours per household.’ So, all in all, that’s a lot earned by the company for all your viewing hours. As I’ve been informed, Wrestlemania (WM) is the climax of the WWE’s programming; in essence, it seems all roads lead to WM. Whilst WWE are reluctant (and not required) to release figures for the costs of production for their events, one may be able to summate the approximate costs using the quarterly financials.

Looking back to quarter two of 2016, their official reports show that the approximate revenue gained for the production of WM-32 was $29.5 million, but was so expensive to produce that it reported $21.5 million of production and talent costs associated with the event, and actually has a reduction in operating profit of $0.2 million from the previous quarter. The company noted within it’s reports that they did notice a significant fall in the number of pay per view subscriptions, which has been particularly poignant since the introduction of the network, with WM32 seeing a $0.9 million fall from WM 31’s PPV revenues.

The introduction of the network has come with it’s own challenges; in 2016, the costs of running were $123 million last year, and whilst prior to the existence of the network, PPV revenues were $82.5 million, which have now increased to $180 million, inclusive of the Network revenues. However, subscriber bases are still well below projections; previous projections were looking to see a base of 3-4 million subscribers by this point, a far cry from the 1.4 million they have presently. However, this was reflected in the revised figures quoted in the WWE Investor’s Report.

The point I’m trying to get at here, is really that the work put in by WWE to stage their events, and the running of their stage, is clearly an expensive business. However, every year, stadiums across the globe hope to be able to able to host the phenom that is Wrestlemania.

So the real question is, how did the extravaganza that is WM 32 impact ‎the City‎ of ‎Arlington, Texas? Well, according to official reports, WrestleMania realised record breaking attendance, ticket sales and viewership – with 101,000 fans in attendance and WWE Network reaching 1.8M total subscribers (April 4, 2016).
WWE also announced in November 2016 that they generated a ‘record breaking $170 million for the Dallas/Arlington region’ in the run up to, during, and immediately after WM. Their economists and statisticians estimate that WM32 alone generated approximately $23.8M in federal, state and local taxes, with over 101 thousand fans from across the country and globe attending ‘WWE’s pop-culture extravaganza.’ It is currently being billed as the highest grossing and best attended event yet. Their official study quotes the following figures;

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Being the nerd that I am, I decided to do some maths…

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So, assuming that the first three are a factor in the figure quoted to us of $170.4 million by WWE, that leaves us with an unaccounted $113.2 million, and adding in the approximated revenues I looked at earlier for WM for the company itself, we’re looking at an approximate total of almost $200 million. Putting this into percentages, we see the largest part is still unaccounted for… but I thought, I’d make a pretty pie chart with these lovely figures.

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Pretty easily, you can see that the majority of the revenue sources are undisclosed; I would guess at nightlife, pre-events, shops and so on. However, all other sales are less than the amount of revenue that WWE themselves gained from the event.

If you’ve scrolled to the end without really knowing what on Earth I’m talking about (understandably, I talk a lot of nerd), I’ll give you a quick summary.

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(Source: WWE)

Whilst this isn’t the entire picture of costs and profits associated with Wrestlemania, it’s an interesting insight to the fundamentals, and how well compensated host regions are for supporting hoards in their thousands. What do you think?

Thanks for reading,

Jainni.

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