One of the old tropes of pro wrestling philosophy is, “if you want to get a million dollars in the wrestling business, start with two million.” It might be a cliche, but it’s still true.
Similar to any live entertainment venture, particularly those that will broadcast on television, it’s an expensive project to pursue. Granted, when business is doing well, there’s a healthy profit margin that can be made, but one of the barriers to entry for sports entertainment on a national level is simply the amount of capital a company needs to have available just to get started.
Several years ago, when WWE was in the stale phase of the forced Roman Reigns baby face super push, and Brock Lesnar was rarely on television for the shows to have a centerpiece to book around for championship storylines, I mentioned that the WWE would stay king of the hill. TNA at the time was aired on Destination America to a very minimal audience with ice fishing as its lead-in programming. I explained that unless Mark Cuban wanted to start a pro wrestling promotion, the dynamics of the industry weren’t going to change from the dominate market share that WWE obtained, even with its stagnant product. If the causal fan was going to watch wrestling, they were going to watch WWE.
I had the right concept, just the wrong billionaire.
As we know, Tony Khan is from a billionaire family so they had the capital and the connections in the television industry through the various sports franchises they own to launch a pro wrestling group. Granted, Tony’s only qualifications to run a pro wrestling company are that he was a big fan during his youth and is from a family that has the disposable income to fund the concept, but the fact remained that it was probably the best chance that the industry had at a true alternative since WCW folded two decades earlier. There was a list of alphabet soup organizations that tried to get off the ground on a national level, or promoters that had delusions of grandeur that proved just how difficult it was to truly yield success in the wrestling business. At least Herb Abrams got to pose with the UWF championship belt.
Tony Khan, a longtime subscriber to The Wrestling Observer newsletter, and amateur booker for E-feds on the internet before he became an actual promoter, wanted to start All Elite Wrestling as a passion project. That’s commendable, considering that Tony doesn’t need AEW to obtain personal financial security, and quite frankly, it would be a lot easier for him to buy an island to drink ice tea while sitting on the beach than to take the stressful job as the owner of a sports entertainment group.
That said, there’s a very fine line between a passion project and a vanity project. Plus, the bottom line counts, even for a billionaire.
That’s why Brandon Thurston’s Wrestlenomics report about this year’s AEW financials tells the complex story of the company in 2023. Let’s keep in mind, revenue and profit are the true barometers of success, not star ratings. Dave Meltzer could give a match 108 stars, but if nobody was willing to pay to see it then it was a flop from a business perspective. Hence, the delicate balance of the art form and the business side of the sport.
Remember, All Elite Wrestling is a privately-owned company so these are only estimates from Thurston, but he’s generally considered an accurate source for the numbers he reports for the sport. The numbers that matter most are the revenue, which he claimed was $154 million, and the expenses that he calculated to be $188 million, putting the company $34 million in the red for the year. On the surface, that’s a major negative for the organization, and it’s certainly not great news, but there are layers to this story. The net revenue of $154 million was an increase from $100 million last year so that was a 30% increase of the money that the company was able to generate. When you consider that with the CM Punk drama, the fact that trying to sell the twice the amount of tickets with the addition of Collision to the weekly line-up was a struggle, and that the ratings have been rather stagnant, a 30% increase in revenue is still an accomplishment.
Thurston added that All Elite made $67 million from their television contract with Warner Brothers Discovery, a deal that they’re hoping to get an increase for next year, and $19 million garnered from pay-per-view after the various distribution organizations get their piece of the pie. Thurston went in-depth on smaller amounts of cash that are made from the TV distribution in different countries, but those amounts are rather moot in the grand scheme of things. He also reported a break down of arena and production costs of specific events, but all of that was included in the $188 million that was mentioned earlier for the expenses of the company.
Wrestlenomics also reported that a staggering $85 million was contract money to sign wrestlers to the AEW roster. Granted, you have to have major league talent to compete on a national level, and from an individual perspective, pro wrestlers should try to get the best deal they can, especially because as independent contractors, there’s no retirement fund when they hang up their boots. At the same time, the amount of wrestlers that Tony Khan signs is almost comical, and just because a performer has the talent to land a major contract, it doesn’t automatically mean that Tony should offer them a deal. The reason being, there are only so many spots realistically available at any given time so not everyone can get an All Elite offer, but that’s why there are different organizations that provide options for the talent. If there isn’t a spot for a certain talent in 2023, maybe they can work for New Japan for a few years and then when there’s a better opportunity for them, they can eventually debut for AEW. What’s the point of signing a talented performer to a contract if there isn’t a spot for them? There are a lot of wrestlers that are getting paid to sit at home or hang out in catering backstage. It’s not necessarily fair to the talent either if they are stuck in a spot with little to no exposure for some of the prime years of their career if they could have a better chance to be showcased elsewhere.
This is where the fact that money is no object for Tony Khan becomes a major problem. It doesn’t matter if he signs ten more wrestlers to contracts so they can work in the obscurity of the Ring Of Honor brand because his family has billions of dollars, but it can create a domino effect that might make even Shaq Khan consider the chances of long-term success for AEW. In a similar fashion, the company reportedly put a lot of money into the development of the Fight Forever video game that was delayed several times before it was actually released. The game wasn’t the major success that the organization hoped it would be so that should be a lesson in making wiser investments in the future.
Listen, a company losing $34 million, particularly after four years in business isn’t a good news and those that might try to spin it as such are just trying to push an agenda. However, when you take into account that the company had a 30% boost in revenue is the other side of the coin that proves that the losses of 2023 aren’t an indication that the company will fold. The increase in overall revenue for a year that saw sluggish ratings and a decline in ticket sales proves that the company can still generate significant revenue. The question is, will the company be smart enough to manage its expenses to allow for an eventual profit?
It might sound trivial, but something as simple as running smaller arenas would be a huge benefit across the board. If they can only sell a few thousand tickets in certain markets for a television taping than scheduling a mostly full 5,000 seat building is better than booking a mostly empty 12,000 seat venue. The biggest takeaway from all of this is that 2024 is probably a key year in terms of the overall projections for where All Elite Wrestling can go in the future. If there’s another $30 million in losses next year then that would tell a very different story compared to a situation that would see another substantially increase in revenue in 2024.
Make no mistake about it, All Elite Wrestling will continue to exist as long as The Khan family wants to fund it, but if it will be more than just a vanity project will probably be determined from the path the company takes next year so there are definitely some key decisions that have to be made, including their next TV deal, for the organization.
What do you think? Share your thoughts, opinions, feedback, and anything else that was raised on Twitter @PWMania and Facebook.com/PWMania.
Until next week
-Jim LaMotta
E mail [email protected] | You can follow me on Instagram, Facebook, & Threads @jimlamotta89
