WWE says internal Vince McMahon investigation is 'substantially complete', estimates cost

WWE says internal Vince McMahon investigation is ‘substantially complete’, estimates cost

Ahead of their full second quarter 2022 earnings report, last night (Aug. 15) WWE released its 10-Q filing to the Securities & Exchange Commission related to those numbers.

The filing included its Q2 revenues: $328.1 million, which is an increase of more than $63 million from Q2 2021. The return to touring and a successful WrestleMania event without COVID-capacity limits were the big reasons for the jump.

  • Live events $41.0 million in revenue, up from $9.2 million in the same quarter last year.
  • Consumer products revenue doubled from Q2 last year, from $22 million to $44 million. That included a big increase in merchandise sales fueled by WrestleMania, and $5.6 million in licensing revenue from the release of WWE 2K22.

The 10-Q also has new details about the investigation into unrecorded payments made by Vince McMahon in the past and his subsequent resignation. WWE’s spent $1.7 million on the investigation to date, and expects upwards of five times that amount before the end of the year:

As previously announced, a Special Committee of independent members of the Company’s Board of Directors was formed to investigate alleged misconduct by the Company’s former Chairman and Chief Executive Officer, Vincent K. McMahon. The Special Committee investigation is substantially complete. Mr. McMahon resigned from all positions held with the Company on July 22, 2022 but remains a stockholder with a controlling interest. While we currently anticipate spending approximately $10 million during the remainder of the year related to this investigation, the related costs could exceed this estimate.

There are also a number of statements regarding the impact of McMahon’s exit from his roles as Chairman, CEO & head of creative. Documenting risk factors is standard for investor communications (Brandon Thurston of Wrestlenomics notes that even in more stable times, “WWE’s filings have a tone that sounds this foreboding”), but can sound alarming and/or outlandish to wrestling fans:

The resignation of Vincent K. McMahon could adversely affect our ability to create popular characters and creative storylines or could otherwise adversely affect our operating results.

Until he resigned from all positions held with the Company on July 22, 2022, in addition to serving as Chairman of our Board of Directors and Chief Executive Officer, Mr. McMahon led the creative team that develops the storylines and the characters for our programming (including our television, WWE Network and other programming) and live events. On July 22, 2022, the Board appointed Stephanie McMahon, at that time Chief Brand Officer, interim Chief Executive Officer, interim Chairwoman and a director of the Company, and Nick Khan, at that time President, Chief Revenue Officer and a director of the Company, to serve as the Company’s co-Chief Executive Officers. The Board has also appointed Stephanie McMahon to serve as the Company’s Chairwoman. Furthermore, in the wake of Mr. McMahon’s departure, our creative effort will be led by Paul Levesque, the Company’s Executive Vice President, Talent Relations and Creative and Ms. McMahon’s husband, who has decades of experience in our Company and has been an important player in all aspects of our creative process, including television, talent and live events. Although Mr. Levesque has extensive practical experience with many of our revenue streams and, with Ms. McMahon, has been critically involved in our business transformation over the past several years as well as our continuing brand development, these collective changes at the top of our organization are extensive and recent, and it is therefore possible that the loss of services of Mr. McMahon could have a material adverse effect on our ability to create popular characters and creative storylines or could otherwise adversely affect our operations and/or financial performance.

More soon.

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