WWE shareholders have stood idly by thus far, but how long will they remain silent?
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Vince McMahon sustained another damaging blow last week as he tries desperately to maintain control of WWE.
On Friday, the Wall Street Journal reported that McMahon paid $12 million to four women over the past 16 years to silence “allegations of sexual misconduct and infidelity.” One of the nondisclosure deals involved McMahon and a former wrestler, where, according to the Journal, he “coerced her into giving him oral sex and then demoted her and ultimately declined to renew her contract after she resisted further sexual encounters.” This comes after a June 15 Journal report that McMahon paid $3 million in hush money to a woman with whom he allegedly had an affair. There is no excuse for the hideous nature of the alleged behavior, and there is a disturbing pattern with regard to the NDAs, where McMahon has repeatedly, it’s been reported, used money to cover up misconduct.
Should this cause McMahon’s demise? Yes, if the allegations are true. Will it? That answer is more complicated.
While it would appear on the surface that this is more than enough reason to have McMahon removed from a position of power, he seems to have no intention of stepping down. McMahon did relinquish his CEO title in the wake of the earlier Journal report but remains in charge of the company’s creative direction. His daughter, Stephanie McMahon, will remain WWE’s interim CEO, but Vince McMahon will still run the operation, sources have told Sports Illustrated.
Further complicating this situation is that McMahon is well positioned to protect himself. He owns the bulk of shareholding voting power. But how can the company and its board not react to the recent reports? There have been no denials from McMahon, though his PR team is already in motion. WWE has told investors that “the success of the company hinges on McMahon’s standing as its leader,” according to USA Today. That was true once upon a time, but it is no longer the case. McMahon did not build this company to die with him. WWE is a global brand turning record profits, often succeeding in spite of McMahon’s antiquated storytelling, and the mastermind behind it all is quickly becoming a public liability. To his credit, though, WWE is currently in a position where it will thrive with or without McMahon.
Ultimately, nothing will change in WWE if McMahon remains in a position of command. That is precisely what he wants: business as usual. It was the point he made, emphatically, during his recent appearances on Raw and SmackDown.
Following his June 17 appearance on SmackDown, Fightful reported that McMahon returned to the back and shouted, “F--- em!” SI confirmed the report and was told McMahon repeatedly shouted “F--- em”—then finished by stating, “Let’s put on a show.” Business as usual, right? McMahon is there to put on a show. That is his primary objective, and he’s likely going to fight at all costs to retain his position of power.
On screen and off, those appearances were a reminder that WWE begins and ends with McMahon as the alpha and omega. It was his way of showing that enough of the fan base will not turn off the show because he is running it, nor will talent leave simply because he is the one in charge. McMahon even introduced John Cena’s return to Raw on June 27, another reminder that he is the boss.
(As a brief aside, Cena’s promo sounded like a direct response to McMahon introducing him on Raw, a show celebrating Cena’s 20 years with WWE. That promo, which was masterfully crafted, highlighted how it’s never been about Cena. It was all about him and the audience—and the way that relationship developed and unfolded on live television. Cena opted not to highlight former opponents, and he never credited his success to WWE or even McMahon. Instead, Cena articulated that his association with the company was with the audience of that company. There are levels to promos, and Cena’s belongs in a higher tier.)
The situation with McMahon is a humbling reminder to never confuse morality and money. A Special Committee of the Board is conducting the ongoing investigation into the accounts of misconduct, and the only time a change would be made is after the investigation has concluded, unless McMahon decides to step down earlier. Likely the only way there will be change is if it affects the bottom line. Will sponsors drop? If the value of WWE stock plummets, there will probably be a sudden and swift movement calling for change. But the company continues to turn a profit, and investors keep making money.
If revenue is not affected, McMahon will have ammunition to stay. Nothing will change until news breaks that cannot be justified to the shareholders. At some point, what if a string of major advertisers cancels WWE by invoking a morality clause? What if a network, like Fox, did that? Suddenly, if that were the case, McMahon would be in breach of his fiduciary duties to the company. In that scenario, he could no longer justify staying on to shareholders.
So far, investors do not seem overly concerned by McMahon’s abuse of power. But McMahon does have another serious problem on his hands.
With a recent departure, there are now 11 members of WWE’s Board of Directors—and, judging by the Journal story, it appears there is a leak. Whatever the motivations of the leaker, all indications point to more stories breaking.
Even if McMahon survives this, his actions are causing his demise. It may not be immediate, but it certainly seems as though the end of his run in WWE could be approaching.
Justin Barrasso can be reached at JBarrasso@gmail.com. Follow him on Twitter @JustinBarrasso.