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Two weeks ago, Vince McMahon, World Wrestling Entertainment's (NYSE: WWE) CEO, faked his own death. This week, Chris Benoit killed his wife and mentally retarded 7-year-old son. I think it may be time for a change at the top of WWE.
In response to an earlier post, I discussed this yesterday with CNBC. A risk noted in WWE's financial statements is that if CEO Vince McMahon left, it could hurt the company. And since McMahon faked his death, the stock has lost 11% of its value. I realize that these kinds of stunts are part of the entertainment. But as an investor, I would be concerned that WWE lacks the depth of management to replace McMahon.
Meanwhile, speculation continues as to what drove Benoit. Here are three possibilities:
- His wife has filed for divorce from him in 2003 citing "cruel treatment" and tensions continued
- He was stressed by his wife's demands to spend more time at home taking care of their son
- Steroids were found at the scene which are known to cause paranoia and rage.
It's too early to tell what happened with Benoit. But in the absence of a deeper management bench, the best thing preserving WWE's future is the possibility that a bigger media outlet might acquire it.
Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in WWE.
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Reader Comments (Page 1 of 1)
6-29-2007 @ 11:30AM
Jeff Leskiw said...
Is it time for WWE to change management?
Being an aficionado of the WWE who is constantly researching and studying the inner working of the business, I feel a change in management would be a rather harsh, not to mention dangerous move from a business stand point. For those who may be unaware, the WWE is now being run by a 3rd generation. It began with Vince McMahon's grandfather, then his father and now him. To amass a fortune some say exceed a billion dollars is testimony to the abilities and talent required to lead a company into that economic status. In other words, they clearly know what they're doing. However, there is some merit to the question at hand. The powers that be at WWE that "create" what you see on television can be listed like a chain of command with Vince McMahon at the helm. Next in line would be the creative department (such as the lead writers), then the writers themselves, then it goes back to McMahon for the final stamp of approval or recommendations for certain changes. WWE having gone public with investors worldwide was most likely a satisfactory business decision. However, being a public entity means that you must now answer to and explain your actions to a very large group of essentially strangers. With McMahon as the chairman of the company, I think it would be ridiculous to expect every single stamp of approval he puts on an idea to be successful. Yes, the angle of McMahon faking his death was indeed simply bad taste. I knew it the moment I saw it. I also knew it would hurt the company and thus, the investors. I'm quite sure that the storyline was implemented with the best of intentions to serve as a unique segment of the entertainment value provided by a typical WWE show. But sometimes an idea that looks good on paper doesn't translate well when actually put into action.
Currently WWE is in a very difficult position, and have been even prior to the Benoit tragedy. They are working with a skeleton crew due to the amount of top level performers that are currently on the injured list. The performers who draw the most people and revenue simply cannot do their job due to their injury. This unfortunately is a trend in pro wrestling that seems to come in waves. Like the old saying, "When it rains, it pours". So the level of frustration and concern on those responsible for making the show work now have an even greater load to carry on their shoulders. This is where you'll find the birth of bad business decisions, ie: Vince McMahon's alleged death. Minds are not clear and focused due to the pressure in place to produce a quality product. But the story doesn't end there. Before the injuries, before the Benoit incident, the story lines were weak and lacking creativity...greatly. It would appear that the finger of blame is leaning towards the writers. Perhaps it's a case of getting too comfortable in one's job and letting their level of productivity slip. Case in point, you could sum up the WWE's success for the entire year of 2006 based on the reunion of Degeneration X. This injected WWE with a new found life force. But, it was all based on the 2 men involved. How can you write weekly story lines with the highest priority based on just 2 guys (Shawn Michaels & Triple H)?
My suggestion for the WWE to get back on track is as follows:
- If necessary, change writers
- Allow creative input from other sources (WWE refuses to accept story line ideas from fans for example. Who knows? What if some kid Provo Utah has an awesome angle that would fly like a dream?)
- Cut house shows in half! 300 days a year in the road and nightly physicality is INSANE!
- Cut Pay Per View events down to the original 4: Royal Rumble, Wrestlemania, Summerslam & Survivor Series.
- Ban the high risk-high flying moves that are just simply unnecessary.
By following just these suggestions, injuries would decline exponentially and wrestlers would not have to consistently strive to reach higher and higher heights as the risk bar is raised.
That's my 2 cents.