MR. TITO: Why Did Vince McMahon Sell 8.4 Million of his TKO Shares? Trouble with WWE?

Right now, everyone is in a PANIC because TKO Chairman and former WWE owner Vince McMahon has sold 8.4 million shares of his TKO stock. What does that mean? Is Endeavor pushing Vince McMahon out? Is Vince McMahon leaving on his own? Is this associated with the reduced Creative responsibilities? Is the RAW television deal going down in flames?

First, let’s take a deep breath… Reportedly, 8.4 million equates to around 25% of his total ownership of TKO shares. Doing the math (multiplying by 4), that equates to 33 million shares. Now, I’ve seen other reports where Vince owned around 28 million shares total. Whether he still has 20 million or 25 million (meaning he either has $1.6 billion or $2 billion worth still to cash in), he still hasn’t fully cashed out his total TKO stock.

And as far as I can see, there are no plans to reduce him as TKO’s Chairman of the Board. He’s still there…

Vince McMahon had a special arrangement where he could openly sell his his TKO stock at anytime and he’s just using that option.

Why, the last time he sold a large chunk of stock was right before he started the XFL a few years ago… Uh oh!

I think the bigger story isn’t so much about what Vince McMahon’s role in TKO is going to be, moving forward, but what does he need $700 million in cold hard cash for? What is Vince McMahon up to and what kind of side hustle will he try next?

THAT is the real question, folks…

People are completely misunderstanding Endeavor’s use of Vince McMahon with the WWE. Before the merger, Vince McMahon was a meddling President/CEO who was overstepping his WWE management staff often. The word they use is “micro-managing”, meaning “controlling every part no matter how small”. If you go to any other Corporation, usually the President/CEO is insulated with EVPs and those EVPs are insulated with SVPs and those SVPs are insulated with VPs and those VPs are insulated with Assistant VPs and Assistant VPs are insulated with Associate VPs and Associate VPs are insulated with Managers and Managers are insulated with Officers and Staff members report to the Officers… There could be a few titles missed here and there, depending on the size of your organization, but you get the point here.

Each layer of management within the Organizational Chart has their own jobs, duties, and direct reports to manage. What you don’t want is someone from the top overstepping their role. Why have EVPs or SVPs if the President/CEO wants to do their jobs? Vince McMahon repeatedly ignored Triple H & Stephanie as EVPs of Creative, their selected SVPs of Creative too, and he would meet directly with the Creative Staff. That’s absurd. Instead of delegating duties and worrying about WWE’s financials, strategy, market growth, and maximizing value for shareholders, he’s working with Creative staff members for what a midcarder would say during a promo or how a particular match should end.

What Endeavor has simply done is forced the Organizational Chart on Vince McMahon. Hence why they have let Triple H run Creative while Vince McMahon is focused on the business side of things for the WWE. Vince is very involved with the television deals and reshaping the WWE operations to be incorporated into Endeavor’s. He doesn’t need to spend days of his time rewriting RAW and Smackdown, like he foolishly used to.

That said, it’s still 8.4 million shares sold… That’s a ton for an executive to just randomly drop…

You know, randomly drop with these significant stories out there:

(1) Endeavor may be acquired by the private equity firm Silver Lake with backing from Abu Dhabi’s wealth fund.

(2) Endeavor has just over $4 billion in debt that must be refinanced or paid soon, which could be tied to point #1.

(3) RAW television deal has yet to be announced.

(4) TKO listed Vince McMahon as a “risk factor” in its recent 10-Q filings.

For point #3, NXT just brokered a deal on the CW for a reported $20 to $25 million a year for 5 years, or in other words, worth $100 million to $125 million total. That may seem cheap, but WWE wasn’t earning that much from NBC/Unversal to air it on USA Network along with previously airing it on WWE Network for free. Previously, WWE was trying to market selling RAW and NXT as a combined package but that appears to be off the table.

So where will RAW go now?

– USA Network just paid $1.4 billion for Smackdown, so thus NBC/Universal is out of the picture… Or are they? Out of all of the suitors here, they are in the best financial position thanks to Comcast being very lucrative as a company.

– ESPN or FX channels from Disney are a possibility, but that company is losing money fast thanks to its failing film division. Since 2019, they’ve taken serious baths on Marvel comics films and the Disney+ channel has been expensive for the company. Other movies like Indiana Jones have caused big losses.

– Warner Bros. Discovery just posted losses from their film division, too. Despite having Barbie rake in $1.5 billion, their other movies (Flash, for example) have caused them to report hundreds of millions in losses. This is on top of Discovery having to absorb the costs of acquiring Warner Bros. from AT&T, who was also having issues absorbing the costs of their purchase of AOL/Time Warner. If I were AEW, I’d be shaking in my boots.

– FOX is 100% out of the RAW race, as indicated by FOX’s President/CEO indicated that WWE Smackdown gave them a lower Return on Investment (ROI) than expected.

– Maybe Paramount (CBS & Viacom), but they partially own the CW Network. Maybe that’s as far as they go. Viacom’s Cable channels aren’t what they used to be.

I initially thought that RAW could get a big deal, but thanks to FOX completely crapping on the WWE and recent losses posted by these media conglomerates, I’d be surprised if RAW did anything above $1.5 million but wouldn’t be shocked if they did less.

Maybe that’s what’s up? If Vince McMahon were to cash in ALL of his TKO stock, that’s an obvious sign that something is wrong. By maybe he is going to slowly cash everything in?

Maybe Vince McMahon is PISSED OFF that he’s listed as a TKO Risk Factor, as demonstrated in TKO’s 10-Q Filing. Here is exactly what TKO posted about Vince McMahon for the public to view:

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The special committee of independent members of WWE’s Board of Directors’ investigation into allegations of misconduct by Mr. McMahon, and any further allegations and investigations may have an adverse financial and operational impact on our business performance.

On June 17, 2022, WWE and its then Board of Directors announced that a special committee of independent members of its Board of Directors (the “Special Committee”) was formed to investigate alleged misconduct by WWE’s then-Chief Executive Officer, Vincent K. McMahon. On July 22, 2022, Mr. McMahon resigned from all positions held with WWE but remained a stockholder with a controlling interest. On January 9, 2023, WWE’s Board of Directors elected Mr. McMahon as Executive Chairman thereto, and Mr. McMahon subsequently returned to WWE.

On July 25, 2022, based on the findings of the Special Committee investigation, WWE announced that it had determined that certain payments that Mr. McMahon agreed to make during the period from 2006 through 2022 (including amounts paid and payable in the future totaling $14.6 million) were not appropriately recorded as expenses in WWE’s consolidated financial statements. WWE subsequently identified two additional payments totaling $5.0 million unrelated to the alleged misconduct by Mr. McMahon that led to the Special Committee investigation, that Mr. McMahon made in 2007 and 2009 that were not appropriately recorded as expenses in the WWE’s consolidated financial statements. Together, these unrecorded expenses total $19.6 million (the “Unrecorded Expenses”). All payments underlying the Unrecorded Expenses have been or will be paid by Mr. McMahon personally. WWE determined that, while the amount of Unrecorded Expenses was not material in any individual period in which the Unrecorded Expenses arose, the aggregate amount of Unrecorded Expenses would be material if recorded entirely when identified in the second quarter of 2022. Accordingly, WWE revised its previously issued financial statements to record the Unrecorded Expenses in the applicable periods for the years ended December 31, 2019, 2020 and 2021, as well as the first quarter of 2021 and 2022. In light of the Unrecorded Expenses and related facts, WWE concluded that its internal control over financial reporting was not effective as a result of one or more material weaknesses. Although the Special Committee investigation was completed, WWE also received, and the Company may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas, demands and/or other claims and complaints arising from, related to, or in connection with these matters.

Subsequent to WWE’s restatement for the Unrecorded Expenses, WWE was informed of certain additional claims, which have been settled by Mr. McMahon. When the amounts became probable and estimable in the fourth quarter of 2022, including consideration of events that occurred subsequent to December 31, 2022, WWE recorded an additional $7.4 million of expenses. Mr. McMahon has made or will make all related payments personally.

Professional costs resulting from WWE’s Special Committee’s investigation have been significant and are expected to continue to be significant as the Company continues to incur costs arising from ongoing and/or potentially new regulatory, investigative and enforcement inquiries, subpoenas and demands and claims. We expect Mr. McMahon to reimburse the Company for reasonable expenses incurred in connection with the investigation. Although we are not aware that significant business has been lost to date, it is possible that a change in the perceptions of our business partners could occur as a result of the investigation or other matters described above. In addition, as a result of the investigation or other matters described above, certain other operational changes, including without limitation other personnel changes, have occurred and may continue to occur in the future, which may have adverse financial and operational impacts on our business. Any adverse impacts as a result of the investigation and related matters, and any further allegations or investigations, could exacerbate any of the risks described herein.

Mr. McMahon’s membership on our Board could have adverse financial and operational impacts on our business.

Mr. McMahon’s membership on our Board could expose us to negative publicity and/or have other adverse financial and operational impacts on our business. His membership also may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.

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But it’s hard to say whether Vince has a vendetta about that or not. He KNOWS what he did and this came up during their CNBC interview together with Endeavor’s CEO. Otherwise, why would Endeavor acquire WWE *and* make Vince McMahon chairman of TKO’s board if there were issues of his private behavior?

In conclusion, I would suggest this as comments or questions to consider…

(a) Vince didn’t sell all of his shares, that means something.

(b) Vince doesn’t need cash on hand, as he already has billions in his bank accounts. What is he up to?

(c) What is Endeavor up to? Are they going to be sold?

(d) And will RAW underwhelm us with its television deal?

I wouldn’t panic about Vince McMahon just yet. He knew what he was getting into by selling, as he could have just kept WWE as a standalone company. WWE was making money, hand over fist, and could have easily secured lucrative TV deals by themselves. Vince didn’t have to sell the WWE, but probably did so as a reaction to him getting cancelled from his own company during 2022. Fact is that Endeavor appointed him as Board Chairman of TKO and Vince has been a big part of that corporate spinoff’s business dealings.

But I just wonder what Vince is gonna do with $700 million. He’s the man who tried to promote boxing, bodybuilding, movies, and a football league twice. Vince has also spent a ton of money on politics, including 2 Senate runs for his wife Linda and donates lots to his old buddy Donald Trump. He’s getting friendly with Dana White now that both are under the same umbrella? Maybe a new type of combat sport will be tried, like Dana has with his slapping league?

He’s going to do something with that money… I believe that is the real question, right now, but I’d keep a very close eye on Endeavor being acquired and that RAW television deal. That stuff could be why a top executive is cashing out a large portion of his shares weeks or months before it happens. Thanks to that special contract that Vince has in place to potentially sell his shares, he should be shielded from any insider trading.

I think Vince is up to something now that WWE has been sold to another company… We’ll have to see what he does with that $700 million. That’s the real story right now, in my opinion, and we’ll just have to wait if a bigger story is waiting in the wings about Endeavor or RAW’s television deal.

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