This has not been a good last seven days for Vince McMahon. Last Friday it was announced the XFL was abruptly closed after telling fans they would return in 2021. Yesterday the WWE announced massive talent releases, furloughs, and budget-cutting measures.
This all is due to the COVID-19 pandemic. Both WWE and the XFL are live event-driven businesses. Without fans at events, both business enterprises are in deep trouble.
With no vaccine in site for at least a year and fans tepid to even attend a live event anytime soon. See our ‘Nearly 3 of 4 Americans Say Won’t Attend Games Without Coronavirus Vaccine.’ McMahon is batting down the hatches for a long and uncertain road ahead.
WWE® PROVIDES COVID-19 BUSINESS UPDATE
STAMFORD, Conn., April 15, 2020 – WWE (NYSE: WWE) today provided an update on measures taken by the Company in response to the current impact of COVID-19 on the organization.
Due to COVID-19 and current government mandated impacts on WWE and the media business generally, the Company went through an extensive evaluation of its operations over the past several weeks. This analysis resulted in the implementation of various short-term cost reductions and cash flow improvement actions including:
* Reducing executive and board member compensation;
* Decreasing operating expenses;
* Cutting talent expenses, third party staffing and consulting;
* Deferring spend on the build out of the Company’s new headquarters for at least six months.
Given the uncertainty of the situation, the Company also identified headcount reductions and made the decision to furlough a portion of its workforce effective immediately. The decision to furlough versus permanently reduce headcount reflects the fact that the Company currently believes the furlough will be temporary in nature.
The Company’s reductions of employee compensation and headcount result in an estimated monthly savings of $4 million along with cash flow improvement of $140 million primarily from the deferral in spending on the Company’s new headquarters. Additionally, the Company has substantial financial resources, both available cash and debt capacity, which currently total approximately $0.5 billion, to manage the challenges ahead. Management continues to believe the fundamentals of the Company’s business remain strong and that WWE is well-positioned to take full advantage of the changing media landscape and increasing value of live sports rights over the longer term.
The Company will provide further details when it reports its first quarter 2020 results next Thursday, April 23 after the close of the market.
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