Sunday, January 20, 2019

Thoughts on All Elite Wrestling

So I’m trying to do something different here. Let’s see how all this works out.


 Here I am thinking of about All Elite Wrestling. The funny thing is like a few people I am happy about AEW. But like other people I am trepidacious about AEW. See my point of contention is I’m looking at this from the perspective of someone who’s been watching wrestling for a lot of years now. My view is that this is going to fail because of two things. It will fail because of the same reasons other projects like this have failed. The two points being leadership and math. 

First a little history lesson here. For those of you who know and for those of you who don’t know there was this big company called WCW. Later there was this little company called TNA. The similarities between these two companies came down so two things leadership and math. One company went out of business because of these factors while the other is hanging on for dear life. I’m going to point out why these two things affected both WCW and TNA and will more than likely affect All Elite Wrestling. 
Years back TNA wrestling was partnered and then eventually completely bought out by the Carter family. The Carters gave control of TNA wrestling to their daughter Dixie Carter. She was regarded as a nice lady apparently but she was mostly a fan who decided to get into the pro wrestling business. While this seemed like a good idea for TNA wrestling it was not a good idea for the Carter family, I’ll get into that later. Before that there was a fellow by the name of Ted Turner. Turner decided he wanted to get into the “rasslin” business and take on the biggest company in the business at the time the World Wrestling Federation. Both the Carter’s and Turner learned one important thing one thing that the Khan family will learn the hard way. It’s this very simple fact the pro wrestling business, the business is about money. 


I’m going to go by what the rumor says that the Khan family has invested $100 million into this project. Now I’m going to hope for their sake that they did this over a ten-year period. For the sake of this discussion let’s just go with five years as our timetable. This is where the math comes in first okay. That would mean that every year for five years All Elite Wrestling would be expecting to spend $20 million per year. That’s a lot of money obviously but for the sake of my argument let’s just go with that for now.

If you’re a new company and you’re having $20 million set aside every year for this company how much do you think you have to make at the end of the five-year period to make a profit? Here’s where everything goes wrong. At the end of the five-year period that you spent $100 million on you would have had to make $300 million to make a profit. Yes, that’s three times what you initially invested into the company just to make a profit. Now I know what you’re saying to yourself, this guys talking a bunch of BS. No, follow my logic here.


In the first year of the company after the five-year period. You’re going to have to make an assessment of your profits and losses. The reason you do this is because you want to see if you can make the same investment that you initially made into the company five years ago to keep the company going for another five years at the same amount that you invested in or less. So let’s just say that with All Elite Wrestling the initial investment is $100 million and in five years it makes $100 million. How much profit did the Khan family make on their initial investment of $100 million into All Elite Wrestling? The answer is zero dollars. 

 See what a lot of you don’t understand is that initial investment of $100 million you want to make that money back first before you think about continuing the company for another five years. The company has to make back that money for you and then you think about going forward with keeping the company alive. So if the company is to continue for another five years the company has to make back that $100 million for you. After that you think about going forward with keeping the company alive. So if the company is invested started with $100 million it can’t just make $100 million back and be considered successful. If that’s all it does then the company was a failure. The reason is there was zero profits made for the company to keep going. For the investor all the company did was break even on it's initial investment. That would be reason enough to not keep the company going for an additional five years. 

If the company starts with an initial investment of $100 million, to keep itself going for another five years you have to make an extra $100 million for the company itself to keep going. Meaning the Khan family would have to make $200 million of this investment just for the company to keep going. The $200 million would be divided in $100 million goes back to the Khan family on the initial investment. The other $100 million would go back into All Elite Wrestling for another five years. All that happened at that point is All Elite Wrestling is still not profitable for the Khan family. The reasoning is all it’s done is break even. So if the Khan family want to make profit off of this it would have to make at least $300 million for this to be considered profitable.

You have to keep in mind for the Khans family if they spend $100 million on this company they want that money back. That’s the first $100 million that they spent for the company. The next $100 million is not for them it’s for the company. That is if they want the company to continue for another five years. It’s in that last $100 million that they get their profits from. It’s not in the first or the second, it’s the last $100 million. It's money that’s just for their profits, they don’t have to give it to anyone it’s only for themselves. That’s the goal of making a profit in AEW if you’re going to invest $100 million into this for at minimum five years. Now I don’t think it’s five years I’m just using that as a minimum example. I hope it’s over a ten-year period because that’s a lot more sensible if you’re trying to make a profit and keep the company going for an additional 10 years afterwards.

I doubt that the Khan family would try to make back that level of investment in a company like this in just five years that’s just silly I would hope that these guys would look at it with a 10 year plan. But the problem is in this business you can’t look that far unless you are the WWE. Even if they try to keep things within 5 years though. 

The reason I say this is going back to the $20 million a year mark. If you’re going to spend $20 million per year then you’re going to have to make at least $20 million per year just to consider it a break even for the initial investment. That has to to a hard set goal for the company. I don’t know what TV deal they’re going to be able to get that will help them get half of that. We are talking about a brand new company with a lot of unproven talent. So what network will you partner with that can help you make at least $10 million per year? But that’s just on the TV rights deal. The next question is where do you make the rest of the $10 million from? Now going forward if you know you have to make at least three times as much to make a profit where’s the rest of the money come from the rest of the money going to come from? And that’s just on the per year basis.

I would hope that they have a very good deal that would pay them more than that. But what about for the next years after that. You have to look at it like this you have to make that kind of money as an average. That average needs to be consistent every single year in a business known for inconsistency. Meaning that if you make $20 million one year, $20 million the next year, $20 million in year three but year four you make $15 million, your year five is going to be a problem. In year five you’re going to have to make $25 million in order to make up for the loss in year four. Going forward you’ll have to expect these kind of issues to pop up every few years or so. That’s why I say I hope they didn’t plan this just for five years I’m believing they did it for 10 years because five years would just be too much pressure on the performers and on the company to be profitable.

There’s only so much expectation you can have for a brand new company entering into a business as volatile as pro wrestling. The financial expectations has to exceed the financial risks of the business in order for it to survive. More importantly in order for the investors to make a profit on it. That’s why this business of pro wrestling is all about one thing and one thing only, Money. All of that falls under the math part of this whole thing. Believe it or not that’s actually the easy part of all of this. The hard part of the whole thing is actually the leadership. 

I say that because look at what happened with Turner and Carter’s. Ted Turner was a billionaire television mogul who had no issue finding a place for his wrestling product on television. He simply said, I’m going to put my wrestling product here and that was that. The problem was everything else that came after that. After buying the company and placing it on whatever network he wanted he handed off control of the company to other people. Those other people ran the company how they believe the company should be run. Not the way Ted Turner wanted the company to be run. That’s where the failure of leadership came in. Eventually that failure of leadership is what ruined WCW. All of the other external and internals factors started because that key component was not where it should have been. It was not doing what it's supposed to be doing regardless of the opinion of others.


You had a similar thing with TNA wrestling in that Dixie Carter did not know what she was doing but listened to those who she thought knew what they were doing. They were only trying to fulfill their own agendas not the agendas of the company or of the owners of the company. That conflict between the leader of the company and the subordinates of the company is a big part of what caused the problems of TNA wrestling. I foresee a similar problem happening with All Elite Wrestling. The principal leader of All Elite Wrestling, Tony Kanaan will probably not be the one singular voice in charge of his own company. His subordinates like Cody and the Young Bucks may try to supplant his leadership for their own ideas and agendas. That disconnect will cause more problems for the company then any other problems that might arise. 

It becomes the case of Tony Khan wanting things done one way but his subordinates saying they want things done their way. But at the end of the day it’s the person spending the money and making the money that gets to have the deciding vote. You’re the person that has the only vote whenever you feel a decision needs to be made no matter how important. Why, because your invested in a much bigger picture then everyone else.

I already see a clash of egos happening between Cody, the Young Bucks and Tony Khan. The thing is the owner has to be the one who wins these clashes more often than not. The reason goes back to the math. It’s his money, it’s his family‘s money, the other guys are not as invested into this company as he is. This also goes back to leadership. The reason is the Khan family has to understand if you’re invested in this you’re invested in this for life. Or at least until you run out of patience because you’re not making the profits that you were expecting to make. That's when you get out and try to make back what can of your losses.


That’s the other part of this whole thing, I don’t think the Khans are “All In“ with All Elite Wrestling. My concern is that the Khan are going to be like Turner was. They’ll hand off the power to a few people that they trust on the business side but on the wrestling side they’ll do the same thing. That’s another spot where problems are going to arise. By not being there all day, every day, they’re going to let little things slip through the cracks. Those little things will then become big things and eventually those big things will ruin the company.


Remember this, in both WCW and TNA giant egos ruined those companies. Giant egos of stars who were past their prime or not as valuable as they believed they were. Without the steady hand of one voice guiding that company with the authority needed to make all parties happy within the company and outside the company there’s gonna be a lot of problems. So you have to understand that the buck is going to have to stop and start with one person. If that one person is spending most of their time in London dealing with the other companies in the family’s portfolio that’s gonna be a problem. Those problems are eventually going to affect the employees of the company and the future employees of the company.


So to recap I don’t think All Elite Wrestling in five years or ten years will make enough money justify the investment that was made into it by the Khan family. Whether it’s $50 million or $100 million I don’t think they’re going to make enough money to justify the cost of running a pro wrestling company with a bunch of unproven independent wrestling talent. Don’t be fooled this is just another indie company. It’s a well financed indie company but it’s still just an indie company. On the other side I don’t think they have the talent or the leadership to sustain this more than 10 years. They could be like TNA and eventually realized they’re just an indie company so they present themselves like an indie. I just don't think the egos involved in this will believe so. But hey, what the hell do they care, their going to get paid more than they deserve and certainly more than they’re worth. If the company is not around in 10 years, Oh Well. They started something new, they started something different, they started a “Revolution“. Just remember this key concept that a company called ECW highlighted, all revolutions have a start but all revolutions are temporary. In the pro wrestling business if you look at the success of the WWE they realize that if you’re in that business you’re in that business all day, every day, 4 Life. That’s the minimum requirements to be successful in the pro wrestling business. The parties involved in All Elite Wrestling have not shown that level of dedication to the new venture.

So in the end I believe that like TNA, which apparently is still up for sale. Like WCW, which went out of business. Like ECW, which also went out of business. If you’re not willing to give this venture every single ounce of your attention all the time I don’t see how it’s going to work. That’s just my view on this whole thing. I hope it lasts many years, really. But considering that the Young Bucks are only signed for five years. I’m going to assume that the rest of the members of The Elite are also in it for five years. Other names will be in at different periods of time. The thing is are the con family also in it just for Five years, 10 years, 20 years, or 50 years. The McMahon family has been in this business for over 50 years now. Does anyone believe the Khans will be in this for that long? We are all going to find out in time. 


www.jimcornette.com
www.whatculture.com

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