Friday, June 21, 2024

Vince McMahon’s animal spirits: North Carolina’s raw billionaire

This report is authored by Peter Coclanis, a professor of economic and business history at UNC Chapel Hill, and his son, Alex Coclanis, who is a UNC Chapel Hill MBA graduate who works for Infosys in New York. Professor Coclanis has written on wrestling in the past for scholarly journals such as Southern Cultures.


North Carolina has produced more than its share of business greats over the centuries, with legendary figures particularly well represented in the fields of banking and finance, textiles and apparel, tobacco, and furniture.  Some of the state’s business greats came from other fields, though.  New Bern pharmacist Caleb Davis Bradham, the inventor of Pepsi Cola, and Wilber Hardee, the founder of the restaurant chain, come to mind in this regard. So does transport entrepreneur Malcom McLean of Maxton, who pioneered containerization in shipping and what has become known as the intermodal revolution in logistics.

Here, we call attention to another Tar Heel business great, who is more controversial than most: Vince McMahon, who was born in Pinehurst in 1945, raised in south central and eastern North Carolina, and took a degree in business from East Carolina in 1968.

It’s been a challenging year for the legendary “sports entertainment” impresario.  It was disclosed in July 8 that he had paid $12 million in “hush money” over the past 12 years to four women for sexual misconduct, McMahon abruptly stepped down as CEO and Chairman of the WWE, the Stamford, Conn.-based public company he guided to spectacular success. On July 22, he formally retired, while his daughter, Stephanie McMahon, is now co-CEO with President Nick Khan.

(McMahon owns 93% of WWE’s Class B shares, while his wife and daughter have the remaining shares, according to the company proxy. His net worth is $2.4 billion, Forbes estimated on June 30.)

Some readers will undoubtedly proclaim that it’s about time. This is the Barnum-esque figure who over the years conned millions into spending good money to watch steroid-addled palookas go at it in raunchy, heavily scripted and choreographed “bouts.”  His ver-the-top organization hosted a memorable “pay-per-view” at Kemper Arena in Kansas City, Missouri in 1999 during which a wrestler, Owen Hart, was killed when his harness broke while being dropped into the “squared circle” from the rafters of the arena before a match.

McMahon gave the go-ahead to proceed with the evening’s program even after announcer Jim Ross told the PPV audience that Hart had died at a KC hospital.

To his many critics, McMahon’s close relationship with Donald Trump was also bothersome. Trump was  inducted into the WWE Hall of Fame in 2013.

Critics should hold their water. Against the admittedly tawdry evidence above one must weigh counterevidence suggesting that McMahon is one of the most creative and entrepreneurial sports business figures of his time, a man with an unusual background who found ways to seize and leverage whatever opportunities came his way.

McMahon was the second son of Vincent James and Victoria McMahon. His parents split up shortly after his birth and McMahon spent much of his youth living with his mother and an abusive stepfather in a trailer in Havelock. At age 12 he re-established contact with his father, a successful wrestling promoter based in the Northeast, and not long after graduating from ECU, McMahon joined his father’s promotion, which became the World Wrestling Federation (WWF). Serving first as an announcer for live matches, McMahon later bought the business from his father in 1982.

The younger McMahon, along with his New Bern-born wife Linda – a formidable entrepreneur in her own right – worked to rationalize, consolidate, and modernize the wrestling industry. It had long been a hodgepodge of local and regional promotions controlled in a titular sense by an entity known as the National Wrestling Alliance.

In 1983 the McMahons withdrew from the NWA and began taking his promotion national, in so doing, moving into territories outside the WWF’s former bounds, poaching wrestlers from other organizations. The WWF grew rapidly, aided by McMahon’s recruitment of stars such as Hulk Hogan and Andre the Giant, glitzy promotion, clever storylines, crowd-pleasing commentators and announcers such as Bobby Heenan and Gene Okerlund (as well as McMahon himself). They also incorporated rock music and rockers into the events.

The WWF and its stable of wrestlers began to matter in pop culture, particularly after the launch in 1985 of the annual WrestleMania event, which from the start was available for viewing for a fee on closed-circuit television.

As the WWF’s popularity grew, McMahon went global, helping make his flock of outsized and outlandish wrestlers increasingly popular all over the world in the 1990s. McMahon shrewdly made plot lines easy to understand even by those who didn’t speak much English, whether they were in Latin America, Asia, or the Middle East. We doubt that McMahon ever read the work of the high-brow French cultural theorist Roland Barthes when developing his internationalization strategy, but in his emphasis on “the spectacle of excess,” exaggeration, grandiloquence, and “hidden symbolic aspects,” McMahon seems to have been channeling Barthes’ esoteric essay “Le monde où l’on catche” (“The World of Wrestling”) published in the 1950s.

McMahon’s strategy worked, as illustrated in this little story. After arriving in Singapore for a conference in the 1990s, one of the authors of this story hopped into a taxi for a ride to a hotel. The driver, a Malay Muslim wearing a prayer cap, in halting English asked his passenger what he did for a living.  The passenger, an economic historian, used his “Bazaar Malay” — pidgin Malay — by saying that he studied things like the “ekonomi” and ways of making “wang” (money).

The driver was initially confused, but ultimately seemed to get the gist of things, responding with a smile: “Ah, like “Million Dollar Man.”  At the time, the “Million Dollar Man,” wrestler Ted Dibiase, was part of the WWF tag team champs, Money, Inc., along with the wrestler known as Irwin R. Schyster or IRS for short. Who knew?

Other professional sports leagues in North America were beginning to internationalize at about the same time, but the WWF—renamed the World Wrestling Entertainment (WWE) in 2002 — has always done so more self-consciously and systematically. Using what B-school types call localization, McMahon was precociously global by doing detailed market research for various regions of the world, creating content that catered to different markets, and investing early on in the development of international talent.

As the WWF was internationalizing, it was also battling for supremacy with its one major U.S. rival — World Championship Wrestling (WCW), established in 1988 by Atlanta media tycoon  Ted Turner.  The WCW, grew out of the venerable Charlotte-based wrestling organization known as Jim Crockett Promotions, a once powerful member of the NWA whose financial problems in the late ’80s necessitated the sale of a majority interest to Ted Turner’s “superstation” TBS and quick reemergence as WCW.

The fierce rivalry between the WWF and the WCW — and more to the point, between McMahon and Turner — spanned the 1990s. The WWF/McMahon emerged victorious in 2001, with the WCW tapping out.

How? McMahon’s market perceptiveness and willingness to take bold steps are attributes closely associated with entrepreneurship. Although McMahon has been described as hard-headed and even tyrannical, he was able to keep the WWF atop the wrestling world by his pragmatic ability to adapt to changing consumer tastes and new technologies. These characteristics shined brightest during his battle with Turner and the WCW.

From the time of its establishment, the WCW’s principal goal was to topple the seemingly untouchable WWF. Armed with Turner’s war chest, the WCW lured away the WWF’s biggest stars, including Hulk Hogan, Ric Flair, Randy Savage, Bret Hart, and Razor Ramon. Perhaps more importantly, the WCW eschewed the cartoonish, black-and-white characters and storylines popularized by the WWF in the 1980s in favor of an edgier spirit.

The WCW’s strategy appeared to work. From 1996-98, in the midst of the “Monday Night Wars,” when the two organizations broadcast their marque cable shows head-to-head, WCW Nitro consistently outdrew WWF Raw.

Then McMahon pivoted, doing away with the WWF’s family-friendly style and replacing it with adult-themed content, replete with profanity, sexual innuendos, and anti-heroes. It was  the ‘Attitude Era,’ widely considered to be the high-water mark of professional wrestling when a stable of young wrestlers and WCW castoffs —notably, The Rock, Stone Cold Steve Austin, and Mick Foley– emerged as megastars in the WWF.

McMahon himself got into the act (and ring), casting himself as a “heel” and central nemesis of the beer-guzzling, “hell-raising” Steve Austin, who symbolized the ethos of the era better than anyone.  The WWF steamrolled the WCW in the ratings and, ultimately, purchased its rival for pennies on the dollar in 2001.

If the “Attitude Era” and the follow-up era of “Ruthless Aggression” between about 2002 and 2008  represented the apogee of the WWE in terms of popularity and mass appeal, McMahon’s wrestling promotion has continued to find ways to bring in the bucks. One approach has been to embrace technology.  A pioneer in the pay-per-view model, McMahon, in 2014 launched the WWE Network, a streaming service based on a monthly subscription model similar to Netflix.  Many sports writers and media analysts predicted failure —the WWE Network was a risky move for a non-tech company – and the network had its ups and downs. In retrospect, the risky move paid off in spades: In 2021 McMahon licensed the rights to the WWE Network to Peacock for a cool $1 billion over five years. Other professional sports took notice and have since followed suit.

Over the years, McMahon has pushed a variety of other strategies relating to wrestling, acquiring other promotions, developing markets for WWE gear and paraphernalia, and operating for a time a wrestling themed restaurant/night club in New York City’s Times Square area.  He made unsuccessful attempts in 2001 and 2020 to launch professional football leagues.

Viewed in the context of business history, the development of brand extensions and the diversification of the product line were similar to those pursued by DuPont, Disney and other successful American companies.

The WWE is no longer creating the buzz it once did; Dana White’s Ultimate Fighting Championship is the trendsetter today. But McMahon’s organization is still making money and remains  a major player in the world of “sports entertainment.”  By boldly seizing opportunities opening up in that world via globalization and innovations in IT, McMahon vanquished his rivals, and made the WWF/WWE the dominant force in the industry for a long time, and became a billionaire.

Hats off to an entrepreneur imbued with what Keynes called “animal spirits.”  Or as Stone Cold Steve Austin might say, “Hell yeah.”


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