USA Today – September 5, 2001
By Jim Hopkins
LOS ANGELES — They are the king and queen of smackdown, but have they met their match?
Vince and Linda McMahon founded World Wrestling Federation Entertainment 20 years ago, turning a small-fry business into cable TV’s No. 1 draw. More than 20 million people worldwide watch the company’s shows weekly at packed stadiums and on TV.
But the McMahons are more than a couple of gray suits. They’ve joined their own parade of pumped-up wrestling superstars as caricatures of themselves — boosting attendance and their public personas.
Red-faced, Vince screams during one show: “To hell with my marriage. … I want a divorce! … You were never good enough for me, anyway. I’m Vince McMahon!”
At yet another show, fans gleefully hose Vince with obscenities. “I don’t appreciate the way you’re disrespecting a man of my distinction,” he sneers.
But who needs respect? WWFE raked in $456 million last year — catapulting the McMahons into the entertainment industry’s elite and making them billionaire residents of posh Greenwich, Conn.
Yet now their company is in a headlock. Attendance is flat at live shows. TV ad revenue is off 17% from a year ago. Sales growth of T-shirts, action dolls and other merchandise, a $120 million annual business, is sputtering. McMahon’s attempt to launch the controversial XFL pro football league this year bombed.
The league, disparaged by sports announcer Bob Costas as “low-rent” TV, folded in the spring after just one season. And WWFE stock, which traded at $22 last winter, tanked with the XFL. It closed Wednesday at $11.79.
The McMahons say they aren’t down for the count. “We understand live events. We understand television. We do all of that. We’re wide open in terms of opportunities,” says Vince, as barrel-chested as any of his stars.
His bravado is unabashed. He’s even gone so far as to call wrestling “one of America’s greatest exports.”
It certainly has been great for the McMahons. Vince, 56, is chairman of WWFE. He owns virtually all of the company’s 56 million class B shares — a stake worth close to $700 million, down from more than $1 billion last winter. As chairman, he made $1.9 million last year. Linda, 52, is the company’s buttoned-down CEO. She was paid $1.4 million.
The high school sweethearts from tiny North Carolina towns married 35 years ago. Vince’s father and grandfather were wrestling promoters when the industry was made up of only little companies.
Vince, who didn’t meet his father, Vincent, until he was 12, was raised by his mother and a series of stepfathers. He fell in love with the business as a teenager while hanging out with his dad at Madison Square Garden wrestling matches.
After college, Vince wrestled into the company by expanding its TV deals to 30 stations. That paved the way for pro wrestling to become national entertainment. In 1982, the McMahons bought the company for $1 million in a deal financed by his father.
The McMahons are credited with making pro wrestling the entertainment blockbuster that it is today. Discarding the notion that pro-wrestling is a sport, WWFE shows feature stars such as Dwayne “The Rock” Johnson and Steve Williams, better known as “Stone Cold Steve Austin.”
Last year, the company published autobiographies of Johnson and another star, Mick “Mankind” Foley, that each hit No. 1 on the New York Times best-seller list. Showing growing crossover appeal, Johnson appeared in Universal’s The Mummy Returns and stars in next year’s The Scorpion King.
The word “smackdown,” the name of one of the most popular shows by WWFE, has even entered popular language to describe big, public fights.
The WWFE shows follow a 16-page script packed with corporate intrigue, wrestler rivalries and the fictional domestic woes of the McMahons.
Off-camera, Vince is not nearly as bellicose as he is on stage — although there’s no doubt he has the brasher personality of the McMahons. During interviews, Linda, soft-spoken and more polished, often defers to him. Her petite frame almost disappears next to his. Seated next to each other in separate chairs, they don’t touch or fawn. Instead, they’re like business associates: respectful and easy-going.
He’s on the road 3 days a week at wrestling matches. She stays home, but they eat dinner together at least 4 nights a week. They spent their 35th wedding anniversary on the road.
In the business, Vince is more showman and idea guy; she’s the one who executes. “I’ve seen myself on TV,” Linda says with a grimace.
For Vince, putting on an act looks like a natural. His deep voice deepens. The slight North Carolina drawl recedes as he screams. His athletic frame paces around the ring, microphone in hand, veins in his neck bulging.
At a show last month in Los Angeles, Linda, dressed in a conservative print dress, met with senior company executives to discuss a rollout of videos. Vince, in a sport coat, huddled in a production trailer — fine-tuning the script according to audience reaction.
Fans can be merciless. “They will nail you in a heartbeat,” Linda says.
The WWFE is also a family operation. Son Shane, 31, the fourth generation of wrestling McMahons, runs Internet operations. Stephanie McMahon-Helmsley, 24, is a writer for the shows. Both worked their way up — Shane in the warehouse, Stephanie as a receptionist.
Says Vince, in a voice as firm as his handshake: “I’m big on paying dues — every day, by the way.”
Linda oversees nuts-and-bolts issues and more than 400 employees. She also must convince Wall Street analysts that WWFE is a “blue-chip” media-entertainment firm poised for long-term growth. Wall Street is cautiously optimistic.
Pro wrestling’s popularity is cyclical, but it will always have a core audience. “It’s been around since the Romans,” says analyst Breck Wheeler of Legg Mason.
Plus, a new deal between WWFE and Sony could boost sales of videos and DVDs, analysts say. TV ratings are climbing. And WWFE is expanding overseas, where its shows air in 130 countries. Last spring, the McMahons decked their only direct rival — Ted Turner’s World Championship Wrestling — by buying it for $2.5 million.
A big unknown, says analyst Peter Swan of Pacific Growth Equities, is how the company will turn around TV ad revenue, which has tanked for most media. Still, WWFE has about $250 million in cash and little debt, which will help it weather the slow U.S. economy, Swan says.
The company’s biggest black eye was the failed XFL. The idea was to relax game rules to generate action. Players were going to wear microphones so fans could get an inside feel. There was talk of scantily clad cheerleaders being encouraged to date players. Sizzle overtook substance. XFL died in May after partner NBC said it wouldn’t broadcast next year’s season.
Vince says WWFE failed to focus on football. He says sports writers favored the National Football League and relished the XFL’s falling ratings. His resentment sits on his face for a second: “Once we slipped and fell, they didn’t let us get back up.”
The XFL debacle taught the McMahons to stick with what they know best: producing wrestling events where they have complete control. The shows are taped, then broadcast on TV domestically and abroad. WWFE also makes wildly popular DVDs and videos, including one devoted to wrestlers whacking each other with metal trash cans.
Indeed, WWFE has shown there’s little it won’t do for ratings. In its weekly shows, SmackDown! and Raw is War, pretty much anything happens in the ring — even, occasionally, wrestling.
Mixing soap-operatic plots and Jerry Springer-esque characters, the matches air twice a week on UPN, the Viacom network.
Charismatic stars such as Johnson, a towering former college football player known for his cocked right eyebrow, draw millions of fans.
The shows, produced four times a week, require a crew of 200 who haul sets and costumes in 14 mammoth trailers. Backstage seamstresses repair sequined costumes. Chiropractors treat wrestlers. Performers rehearse in the ring.
George Rodriguez of Whittier, Calif., takes his family to a dozen shows each year. At a recent show, the 40-year-old grocery executive jumps to his feet. “We know it’s fake. But it is entertainment,” he says, clutching a beer.
At a show the previous night, Rodriguez spent $700 on tickets, snacks, T-shirts and posters. Consumers like him are crucial. Merchandise sales accounted for 26% of annual revenue last year, the No. 2 source behind pay-per-view cable shows such as WrestleMania.
WWFE has been especially good at capturing an audience that advertisers covet — free-spending young men, 12 to 34 years old. They flock to the company’s Web site to buy $20 “Rock” T-shirts and $15 biographical videos of stars like Lita, one of the company’s up-and-coming female wrestlers. More women are showing up, too, attracted to the likes of Johnson. They make up 40% of viewers, Vince says.
WWFE also gets big-name fans. At a recent Los Angeles show, Arnold Schwarzenegger grinned as Johnson’s “The Rock” and Booker “Booker T” Huffman taunted each other in and out of the ring.
Huffman threatened Johnson with his “spin-er-oni” move. Johnson, cool as a cucumber, sneered: “What’s next? The dipsy doodle? The summer succotash?”
The same question could be thrown at the McMahons. Fans and investors can only watch and wait.