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WWE Event In Saudi Arabia Is All About The Bottom Line

WWE Event In Saudi Arabia Is All About The Bottom Line

Ever since Vince McMahon assumed control of his father's wrestling promotion in the early 1980s right through to the present day WWE, he and his organisation have craved mainstream media attention. They have actively pursued it through the use of celebrity cross-overs, working relationships with the likes of MTV and ESPN,  and more recently by producing reality shows for the E! network.

This tactic has at times been highly successful and helped transform the company from a regional promotion to the publicly traded global juggernaut it has become. The flip side has been brought to light this week as the company faces mounting criticism for its continuing relationship with the Saudi Arabian Royal Family, despite the international media storm surrounding the murder of journalist Jamal Khashoggi. An official statement today confirmed that they will proceed with their 'Crown Jewel' pay per view event in Riyadh next week:

WWE has operated in the Middle East for nearly 20 years and has developed a sizable and dedicated fan base. Considering the heinous crime committed at the Saudi consulate in Istanbul, the company faced a very difficult decision as it relates to its event scheduled for November 2 in Riyadh. Similar to other US based companies who plan to continue operations in Saudi Arabia, the company has decided to uphold its contractual obligations to the General Sports Authority and stage the event as scheduled.

While this type of media attention is not exactly what WWE would have sought, their motivation for opting to proceed with the event in Saudi Arabia is quite obvious when reviewing the details of their third quarter earnings report that was released to shareholders today. Perhaps most tellingly, the report referenced the financial impact that cancelling this show would have had for the company.

If the event were to be cancelled, there could be material adverse impact on 2018 Adjusted OIBDA guidance. While not anticipated, it is possible that a cancellation could also impact expected results beyond 2018.

Crown Jewel will be WWE's second event in Saudi Arabia this year, following the 'Greatest Royal Rumble' which took place there in April. This is part of a proposed ten year relationship with the Saudi Government which involves WWE running big events there and promoting the country's 'Vision 2030' campaign, which aims to improve the perception of Saudi Arabia internationally. This campaign has drawn criticism in some areas due to the alleged human rights issues in the region. The Greatest Royal Rumble event featured a number of promo videos celebrating Saudi culture, with commentator Michael Cole referring to the host capital as a "vibrant, progressive city."

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Speculation had mounted in recent days that WWE were considering cancelling the event due to mounting public pressure and some US senators who had spoken out against it, with reports also suggesting that a number of performers were apprehensive or even refusing to appear at the event, including John Cena and Daniel Bryan who are currently booked in top matches on the card. This prompted former WWE champion John 'Bradshaw' Layfield to speak out in defence of the decision to perform in Riyadh.

In recent weeks WWE have continued to promote Crown Jewel on their TV broadcasts, yet noticeably they stopped referring to its location or Saudi Arabia directly since the Jamal Khashoggi story broke. Having finally confirmed publicly that the event will go ahead, CEO Vince McMahon refused to elaborate further on the decision beyond the company statement on the Q3 conference call. When comparing the figures listed on the Q2 and Q3 financial returns, a difference of almost $50 million gives an indication of the potential benefits of running more shows from Saudi Arabia.

A large corporation opting to make a morally questionable decision in favor of financial gain is not something that is unique to WWE, so it is hardly surprising. Yet it still registers as a grim reminder that despite a number of positive initiatives the company has undertaken in recent years relating to charity sponsoring, performer welfare and gender equality, ultimately the bottom line will take precedence over any concerns that both fans and performers have about the direction of the product. The irony of all of this is that WWE is currently promoting their first ever all-female pay per view event 'Evolution' which takes place in New York this Sunday. This is less than a week before their entire female roster will be banned from taking part at Crown Jewel, where Hulk Hogan is expected to make his on-screen return to the company three years after being removed from the WWE Hall of Fame due to a widely publicized racism scandal.

The media spotlight is likely to intensify over the coming days as McMahon and his superstars head for the Middle East.

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Emmet Bradshaw

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