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WWE looking to boost sponsorship revenue as live events return, media deal expires

WWE looking to boost sponsorship revenue as live events return, media deal expires

Chief Brand Officer and WWE Television Personality, Stephanie McMahon delivers her keynote speech at the opening of Sports Matters in conjunction with All That Matters 2016 in Singapore on September 14, 2016.

Roslan Rahman | AFP | Getty Images

WWE and industry analysts agree: the professional wrestling and media company can earn more revenue from sponsorship deals.

The company relies on the intellectual property built around performers such as superstar personalities like The Undertaker, John Cena, Dwayne “The Rock” Johnson, Roman Reigns and Bianca Belair. Revenue from its live events, which are returning as Covid restrictions ease, and media deals are fueled in part by sponsorship dollars.

WWE is aiming to fill football stadiums and expand its programming this year, according to WWE Chief Financial Officer Frank Riddick. Riddick, who took over in November, said after last week’s earnings release that the company was making sponsorship a priority this year.

In 2021, WWE earned approximately $72 million combined for advertising and sponsorships across its media and live events businesses.

WWE earned more than $10 million in sponsorship fees just for last month’s Wrestlemania 38 marquee, executive Stephanie McMahon said last week. It was a record for the two-day event held at AT&T Stadium in Dallas. WWE sponsorship partners include Toyota, DoorDash, Rocket Mortgage and Rihanna’s Fenty Beauty cosmetics line, said McMahon, who is also the daughter of longtime CEO Vince McMahon.

Analysts suggest that WWE is undervalued when it comes to sponsorship revenue, estimating that the company brings in around $35 million annually from sponsorships alone. That’s less than combat sports company UFC, which brings in more than $100 million a year, according to a Guggenheim Partners memo to clients last month.

While WWE trails the UFC in overall popularity, its fans are most likely to take notice of sponsors, according to sponsorship consultancy IEG. Sixty-seven percent of WWE fans are more likely to consume brands associated with the company, according to research by IEG, which used data from polling firm YouGov. That’s ahead of the 55% average for the group of 11 biggest sports leagues, including the NFL, which is by far the most popular sports organization in the United States.

“All of this just expresses potential and opportunity,” said Peter Laatz, global managing director of IEG. He said he believes WWE can generate over $100 million in annual sponsorship revenue.

But he also noted that WWE may not be “the right fit for the more affluent categories or the top brands.”

WWE did not return a CNBC request to discuss its sponsorships.

WWE’s place in the world of streaming

WWE derives the bulk of its revenue from its media business, accounting for $278.1 million of its $333.4 million in overall revenue in the quarter ended March 31. Advertising and sponsorship revenue in the media segment increased 27% to $19.8 million from the prior year.

The company is bracing for key media deals amid an “increasingly crowded streaming market,” WWE Chairman Nick Khan said during last week’s earnings call. Hulu’s deal for Day 2 rights to WWE’s weekly “Raw” program expires this year.

Day 2 rights allow subscribers to watch “Raw” and “Smackdown,” another weekly show, 24 hours after they first aired. Raw airs live on USA Network and Smackdown airs on Fox. After 30 days, subscribers to NBCUniversal’s Peacock service can watch the shows. (In 2021, WWE struck a five-year deal with NBCUniversal for $1 billion to license its library and broadcast major events live on Peacock.)

Khan also suggested that a new player could enter the sports streaming game.

“It’s only a matter of time before Netflix goes live,” Khan said. He added that live events generate the highest consumer impressions for networks and streaming companies.

Netflix is ​​indeed looking to rebound as its results suffer as viewers shed pandemic restrictions and return to the world. In April, Netflix reported a decline in subscribers and warned of millions more losses in the coming months. Co-CEO Ted Sarandos said at the time that he didn’t see a profitable way for the streamer to get into the sport, although his “Formula 1: Drive to Survive” series was a smash hit.

Netflix probably wouldn’t be interested in WWE, anyway, according to longtime media rights adviser Lee Berke, since the wrestling company is already tied to Peacock. He said it would make more sense for the NBCUniversal service to add more WWE rights.

“It’s a major relationship for them, and there’s a lot they can do to build on it,” said Berke, CEO of LHB Sports, which advises the sports entertainment industry. “But if [Netflix] going to make a move for WWE, I see them being aggressive for all their content or big live events.”

WWE is also considering overseas expansion, particularly in India, home to a billion people and a growing middle class. WWE estimates that its content is broadcast in over 180 countries. The company said it drew 25 million viewers for an exclusive event featuring American WWE wrestlers competing against Indian-born performers. Wrestlemania drew over 50 million viewers last month in India.

Khan, the WWE Chairman, called India a “tremendously important market”. But, he added, WWE is waiting for the networks to finish bidding on the rights to cricket – the country’s most popular sport – before the company determines its future media market there.

Disclosure: Peacock’s owner, NBCUniversal, is also CNBC’s parent company.

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