The idea that WWE could end up going in a sale to the Saudi Arabia Public Investment Fund first came up last week as what if? speculation on the pro wrestling interwebs.
It wasn’t even smoke at that stage, but it then quickly became fire with reports on Tuesday that Vince McMahon’s dramatic return was all about him having a deal already in place with the Saudis that would allow him to retain control over the day-to-day operations.
Now that talk is being walked back amid intense public backlash, but I don’t assume with the walkback that the reports were wrong, or that we’re done with this part of the story.
Simply because, it makes too much sense for the Saudis, and too much sense for Vince McMahon, for the two to partner in a sale.
First, to McMahon’s side. He wants to broker a sale to the highest bidder, like any good executive chairman, and while he won’t be short on suitors for WWE – the company’s broadcast partners, Comcast (which owns NBCUniversal) and Fox, for starters, plus Disney (which owns ESPN), another just off the top – I’d assume the Saudis would jump at the chance to massively overpay for an American icon institution like WWE.
They already overpay, to the tune of $50 million per year, for two live shows that WWE brings to Saudi Arabia, and we’ve all heard about how the PIF has been throwing money left, right and otherwise at pro golfers in the effort to build a competitor to the PGA Tour.
Buying WWE wouldn’t be trying to build a competitor, like with LIV Golf – it would be akin to buying the PGA Tour.
And I assume that the investment that would be required – WWE has a market cap, at this writing, at $6.6 billion – would be a drop in the bucket for the Saudis.
That’s the starting point in the negotiations, if you’re McMahon, with the hedge being, he’s going to want to stay on.
Now, if you’re Comcast, if you’re Fox, if you’re Disney, there’s no way you’re keeping McMahon on, even at a discount, with the reputational damage done following the reports that he paid millions of dollars to quietly settle a raft of sexual misconduct claims.
The Saudis aren’t going to care about McMahon’s reputation.
The one thing that they might care about is the value of their investment, and this is why I think this week’s news leak was a trial balloon, to test the waters.
The push to find a buyer for WWE is coinciding with the company entering the window for a new media-rights deal for its “Raw” and “Smackdown” weekly TV shows.
As it is currently, NBCUniversal has the rights to “Raw,” Fox the rights to “Smackdown,” and both pay upwards of $200 million annually.
It’s a good question to ask, how the media landscape would look in 2024 for WWE, if it were owned by the Saudis, with McMahon back in charge.
It’s one thing to throw millions at golfers to start a pro tour without having a TV deal in place, assuming that one will come, and in the meantime, getting the free publicity just from having the golfers in the stable, and another to throw billions at a sports entertainment company that would barely exist even in a vacuum if it wasn’t on TV.
I don’t have a sense of what we learned from this trial balloon, other than, yes, it would be highly controversial, which you would have already expected.
Still, it won’t surprise me if this is the deal that ends up getting done, given what I assume are McMahon’s expectations, and the Saudis’ interests in making another big splash.
The only reason we’re being told the cart got ahead of the horse is the due diligence on the TV side of things, which I assume could come down to, at the worst, the Saudis simply buying an off-brand cable TV network and making WWE its flagship programming.
My assumption here is that the Saudis wouldn’t be interested in WWE because they want to turn a profit.
The interest, as with LIV Golf, is sportswashing – the concept of using sports to build goodwill that could provide a cover to their domestic human-rights atrocities.
And then, back to McMahon, his interest is in getting maximum dollar for his WWE, and in being able to maintain day-to-day control.
It would shock me if this isn’t the way things end up going.
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Chris Graham
