WWE said its board’s investigation into alleged misconduct by ex-CEO and chairman Vince McMahon is “substantially complete.” The company restated earnings going back to 2019 to account for personal payments McMahon made during his tenure, including $14.6 million allegedly to women in return for their silence about affairs and other misconduct.
However, the McMahon investigation may continue to have a financial impact, WWE said in regulatory filings.
“While we currently anticipate spending approximately $10 million during the remainder of the year related to this investigation, the related costs could exceed this estimate,” the wrestling entertainment company said in its 10-Q filing for the second quarter of 2022. As previously disclosed, WWE also has “received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters,” the company said.
In addition, WWE said, “Although we believe that no significant business has been lost to date, it is possible that a change in the perceptions of our business partners could occur as a result of the investigation.”
WWE also noted that until McMahon resigned from the company on July 22, he had led the creative team that develops the storylines and the characters for its programming. Taking over as co-CEOs were Stephanie McMahon, previously chief brand officer, and Nick Khan, previously president and chief revenue officer. WWE’s creative is now led by Paul “Triple H” Levesque, EVP of talent relations and creative and Ms. McMahon’s husband.
“Although Mr. Levesque has extensive practical experience with many of our revenue streams and, with Ms. McMahon, has been critically involved in our business transformation over the past several years as well as our continuing brand development, these collective changes at the top of our organization are extensive and recent, and it is therefore possible that the loss of services of Mr. McMahon could have a material adverse effect on our ability to create popular characters and creative storylines or could otherwise adversely affect our operations and/or financial performance,” WWE said in its amended 10-K filing for 2021.
The company on Tuesday announced Q2 earnings. Revenue for the period was $328.2 million, up 24%, and net income was $49.0 million, an increase of 68% year over year. Adjusted operating income before depreciation and amortization (OIBDA), which excludes stock-based compensation, increased 34% to $91.5 million.
Based on “outperformance” in the first half of 2022, as well as WWE’s current expectations for the second half of the year, the company raised its guidance for full-year 2022 adjusted OIBDA to $370 million-$385 million (up from $360 million-$375 million previously).
On the earnings call, Levesque said WWE set a record for first-day ticket sales for WrestleMania 39, to be held at L.A.’s SoFi Stadium in April 2023, with more than 90,000 tickets purchased in the first 24 hours after they went on sale Aug. 12 — more than any event in WWE history and a 42% increase over first-day sales for WrestleMania 38.
As a result of accounting for the McMahon personal payments, WWE said its previously reported operating income and net income for 2021 fiscal year were overstated by $3 million. The company’s previously reported beginning accumulated deficit as of Jan. 1, 2019, was overstated by $16.6 million as a result of McMahon’s personal payments between fiscal years 2006 and 2018.
As of March 31, 2022, the amount that remained payable by McMahon was $4.4 million, representing an understatement by WWE of total liabilities for the quarter.
Last week, WWE disclosed that it had subsequently identified two additional payments totaling $5 million, unrelated to the alleged misconduct by McMahon that led to the board’s investigation, which he made in 2007 and 2009.
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