WWE seeks to increase sponsorship revenue with the return of live events and the expiration of the media deal

On September 14, 2016, WWE Chief Brand Officer and TV personality Stephanie McMahon delivered her speech at the opening of Sports Matters to coincide with All That Matters 2016 in Singapore.

Roslan Rahman | AFP | Getty Images

WWE And industry analysts agree: The professional wrestling and media company can squeeze more revenue from sponsorship deals.

The company is based on intellectual property built around artists 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 with the easing of Covid restrictions, and media offerings are fueled in part by sponsorship dollars.

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

In 2021, WWE reports approximately $ 72 million combined for advertising and sponsorship in its media activities and live events.

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

Analysts suggest WWE is underestimated when it comes to sponsorship revenue, estimating that the company draws around $ 35 million annually from sponsorship alone. It’s less than the combat sports company UFC, which attracts more than $ 100 million annually, according to a note from Guggenheim Partners to clients last month.

Although WWE lags the UFC in terms of overall popularity, its fans are more likely to notice 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 from IEG, which used data from the YouGov survey group. This is ahead of the 55% average for the group of 11 largest sports leagues, including the NFL, which is by far the most popular sports organization in the United States.

“All it does is express potential and opportunity,” said Peter Laatz, IEG’s global CEO. He said he thinks WWE could write off over $ 100 million in annual sponsorship revenue.

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

WWE has not returned a request from CNBC to discuss its sponsorships.

WWE’s place in the world of streaming

WWE gets the majority of its revenue from its media business, amounting to $ 278.1 million of its $ 333.4 million in aggregate revenue in the quarter ended March 31. Advertising and sponsorship revenues in the media segment grew 27% to $ 19.8 million over the period a year ago.

The company is gearing up for key media deals in an “increasingly messy streaming market,” WWE President Nick Khan said during last week’s earnings call. Hulu’s 2-day rights deal on WWE’s “Raw” weekly program expires this year.

The second day rights allow subscribers to watch “Raw” and “Smackdown”, another weekly program, 24 hours after first airing. Raw airs live on USA Network and Smackdown is shown on Fox. After 30 days, subscribers to NBCUniversal’s Peacock service can watch the shows. (In 2021, WWE entered a five-year deal with NBC Universal for a reported $ 1 billion to license its library and show major live events on Peacock.)

Khan also hinted that a new player might enter the sports streaming game.

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

Netflix is ​​truly trying to bounce back as its results suffer as viewers shake off restrictions on the pandemic and return to the world. In April, Netflix a decline in subscribers was reported 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 indulge in the sport, although his “Formula 1: Drive to Survive” series was a huge success.

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

“This is an important relationship for them and there is a lot they can do to build on that,” said Berke, CEO of LHB Sports, which advises the sports entertainment industry. “But if [Netflix] will make a move for WWE, I see them aggressive for all their content or major live events. “

WWE is also looking at overseas expansion, particularly in India, home to a billion people and a growing middle class. WWE estimates that its content is shown in more than 180 countries. The company said it attracted 25 million spectators for an exclusive event that featured US WWE wrestlers competing against Indian-born artists. Wrestlemania attracted more than 50 million viewers last month in India.

Khan, the president of WWE, called India an “extremely 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: The owner of Peacock NBCUniversal is also the parent company of CNBC.