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Just A Thought... - Hard Times
Date Added: February 24, 2008
Story By: Stuart Black
Hi all, welcome to my first offering of 2008. Today is going to be a slightly unusual column because this is not going to be about a specific concept or incident within just the wrestling industry. Conversely, I am going to look at something bigger and then discuss what this will mean for promoters, wrestlers and of course us fans.
The title is a nod to the late Ray “Big Boss Man” Traylor and his entrance theme from the early nineties. However sadly much like I believe when Vince McMahon talked about everyone seeing his ass in HD a few weeks back on Raw he meant “Horrific Detail” as opposed to the traditional “High Definition”, sadly this column is not about the much loved former corrections officer and much like McMahon’s use of “HD” the title is merely a reference point for something else altogether.
The question for this column however is how (if at all) could an economic recession affect the wrestling business? Depending on who you listen to, we are all destined for some “Hard Times” for the foreseeable future. The much talked about credit crunch in the United States has hit worldwide economies hard and has been a major contributor to fears of a global recession. Whether we are as yet in a recession or just a slowdown is still open to debate, and rescue packages and measures are being taken to try and soften the blow, but ultimately things are not as rosy as they used to be.
For those of you who have already got a headache from this offering so far, don’t worry, that last paragraph will be the most jargon filled part of the whole column!
The first issue I should probably address for those of you who do not understand much about economics is what a recession actually is. In its most basic terms, money is generally a little tight all round. Both ordinary people and businesses will have less money to spend on what they need. People who own their own homes might have to contribute more towards their mortgages because interest rates have gone up, or because the price of groceries have gone up a lot lately due to inflation, they have less to spend on other more fun things. For businesses, this may mean that they will make less money because their potential customers cut back and so in turn they have less money to spend. Businesses might then choose to counter this by cutting their own costs, maybe even releasing people they currently employ. But this in turn means those who lose their jobs no longer have an income and so don’t spend as much themselves, which in turn hurts businesses, who cut more costs and the whole thing can continue in a vicious cycle.
The thing is economies tend to be cyclical, much like the wrestling industry. You will get periods where everything is great and arenas easily sell out (like boom periods) and then you will get times when attendances and TV ratings are down (like recessions). Right now, whilst the WWE are enjoying record profits due to their continued global expansion, their American television audience appears to be at a continued low compared to the last ten years or so. The last few months have seen things stabilise and perhaps even go back up a little on the whole, but they are still pretty low. Pay per view buy rates in their home country are also suffering and it is only buoyed by purchases from foreign markets. Meanwhile, their nearest rivals (using that term loosely) are still mired in debt and whilst making some progress in making the world aware of their presence, are yet to make any big improvements in terms of getting people to watch their TV or PPV shows. So the industry itself appears to be in a bit of a recession of its own.
But going back to the economy for a minute, let’s assume that either we are in a recession or at the very least we will be hit with one soon. This in effect puts the companies in a “double recession”, which of course means double trouble. Whilst there is access to a global audience, the relative number of customers they have from that market is lower than it might have been had they expanded a few years before. On top of that, money is going to get tighter, so people may be inclined to spend less on watching wrestling, regardless of whether the product is any good or not.
Will this be enough to cause any of the major player’s problems? I doubt that very much. I think for the most part it will be business as usual for the WWE as they continue to make money. They are simply so big now and have such a large global fan base that it would take something truly catastrophic to do them any real damage. They have WWE Films which is growing steadily, a very good merchandising branch and no shortage of demand on foreign tours. It will never be a case of “if” the WWE turn a profit over a year, simply a question of “how much”.
But with all that in mind, there is one move that has been muted recently that I don’t like the sound of. Over the last few weeks there have been rumours of an increase in PPV purchase prices to some $45 a pop. I understand this is apparently to bring them in line with the rates charged by UFC events. Now if this were a couple of years ago, I might have suggested this wasn’t a bad idea, but the way things are at the moment my thoughts are now the opposite.
I get the logic of not wanting to be seen as “inferior” to the UFC because you have to pay more to watch a UFC show (implying that it offers superior content). But the sad truth is the facts speak for themselves. UFC buy rates in the last 12 months have topped 1 million a show. WWE Pay Per Views are knocking around the 200,000 mark, just a fifth of the figure. The numbers are conclusive – the UFC is more popular right now. I don’t even see this year’s WrestleMania doing that sort of number.
With people struggling to save pennies as it is, perhaps they are better off keeping the price frozen for a bit or even better yet offering more for it? Cutting the price would probably be a bad move because it risks diminishing returns, but what about more complimentary merchandise with it? Maybe additional free prize draws for all purchasers?
Perhaps during current “Hard Times”, the WWE need to swallow their pride (no pun intended…) and with hard earned cash becoming scarce simply give people more alternative reasons to choose them over UFC. Suppose you are a fan of both but next month realise you can only afford one event, what do you go for? The always loaded UFC card at $45, or the not bad but not brilliant WWE card at $40, which comes with a free DVD, a new Jeff Hardy pendent, a hot new Maria poster, a chance to get front row tickets at Summerslam AND you save 5 dollars? Who knows? Perhaps that will be enough to sway a lot of people in that position over the coming months. Will people forgo the apparently “superior” show on the grounds they get better value with the WWE? It’s the sort of tactic that when potential customers are short of money allows them to make such a decision more easily.
But what about other wrestling federations? What could they be in store for? They do not have the sort of money that the WWE have, nor will they have the international following. I guess it really depends on what they offer. Ultimately, smaller groups have a set market. Ring Of Honour for example cater for pure wrestling fans and so whilst the number of customers they have is relatively small, they are also pretty dedicated to following their beloved brand. If any company is going to be in any trouble during a recession, I think it is most likely to be TNA. Whilst it could probably function at a smaller scale with its current sized following, the amount of money it is spending on talent, production and promotion in a bid to break through into the big time could turn around and really cripple them over the next couple of years if income from customers starts to dry up as a result of them cutting their own spending. It’s on an aggressive expansion plan, which is a high risk strategy as it is, and this risk will only get bigger as money gets scarcer.
But regardless of whether they make it or not, if any company sees a need to cut costs, one of the easiest places to do it is in the talent roster, be it releasing wrestlers, or cutting the wages of a significant number of them. Talent’s fees are a sizeable chunk of any promotion’s costs so it seems like the obvious answer. But this in turn may bring up a long term question of its own. With all the talk of talent not having the depth that it did a generation ago, if major organisations start reducing their rosters further to cut costs now, it may deplete the talent pool even more and filter down to other federations, ultimately providing fewer chances for newcomers to break into the business and make a living from it. What impact could this have on creating the Superstars of tomorrow? I’d be inclined to think that could be pretty serious and not ideal when wrestling might need all the talents they can get to kick start another up swing.
I suppose overall if the economy were to suddenly crash tomorrow, ultimately it would be an annoyance, but certainly no unmitigated disaster for the wrestling industry now. But it does make me wonder what small steps they take just to keep things rosy tomorrow which might lead to serious problems later. Like the butterfly’s wings to the Chaos Theory, whilst things might be alright now the smallest, seemingly insignificant move could lead to some “Hard Times” for us all, as of course if anything bad happens to the wrestlers and their promotions, we suffer too.
Just a thought…
If you have any thoughts on the above, feel free to share them with me at stuart_black@hotmail.com. Finally, I now have a Myspace page where you can read all my columns to date (currently under construction), feel free to pay me a visit at www.myspace.com/stuartblack
