By: Mai Rubin

World Wrestling Entertainment (“WWE”) and its creative team are once again under the control of Vince McMahon, majority shareholder and Executive Chairman of the Board.^[1] This comes after a whirlwind of scandals surrounding McMahon, where Mr. McMahon retired in disgrace before returning to power six months later. In July 2022, Mr. McMahon was accused of paying over $12 million in company funds to silence employees who Mr. McMahon had sexually harassed or assaulted.^[2] When the press broke the scandal, Mr. McMahon retired after serving as CEO for almost forty years, implying however, that his age was the reason for stepping down.^[3]

Nick Khan and McMahon’s daughter, Stephanie McMahon, were named co-CEOs while McMahon’s son-in-law, Paul Levesque, assumed control of the creative team.[4] McMahon had controlled creative for decades, and his style of storytelling was growing unpopular at the time of his retirement.^[5] Levesque’s writing was seen as revitalizing WWE storytelling, contributing to a surge in critical acclaim and ratings.^[6] These gains satisfied the Board, leading them to name Levesque Chief Content Officer in September.^[7]

Despite Mr. McMahon’s retirement, he remained the company’s controlling shareholder.[8]  In January, Mr. McMahon leveraged his shareholder power to return to the Board as its Executive Chairman to facilitate its upcoming sale.^[9] While the Board initially objected to reinstating the former CEO, Mr. McMahon threatened to use his majority voting power to veto any potential sale of the company unless he was reinstated.^[10] Upon Mr. McMahon’s return, Stephanie McMahon stepped down as co-CEO, and Mr. McMahon assumed a managerial role in company business.^[11] This sparked significant fears backstage, as WWE wrestlers preferred working under the Levesque-led creative team.[12] Despite the roster’s fears, Mr. McMahon claimed that would retain creative control.[13]

Those fears may well have come to fruition after Endeavor purchased WWE for $9.3 billion.^[14] Mr. McMahon once again took charge of WWE creative, asserting control over storylines despite claiming he would not.^[15] The future of WWE’s creative team and storylines has thus become highly uncertain, leading to substantial decreases in backstage morale.[16] Backstage personnel reportedly disapprove of Mr. McMahon’s creative style, which involves a bevy of last minute changes right before or during shows.^[17]

Perhaps the most significant implication of Mr. McMahon’s return to power is pending government investigations against him and WWE. Due to Mr. McMahon’s alleged embezzlement, the SEC and the U.S. Attorney’s Office have been investigating WWE since the misconduct scandal broke in July.^[18] If the investigation develops into legal action, the reinstatement of Mr. McMahon may create liability concerns for the Board.^[19] In a leaked Board letter advising Mr. McMahon to retire in December, the Board stated that Mr. McMahon’s return “while government investigations into [Mr. McMahon’s] conduct . . . are still pending would not be prudent from a shareholder value perspective.”^[20] The same letter also alluded to non-public information which would be subject to increased scrutiny if Mr. McMahon returned.^[21] Mr. McMahon has already reimbursed the Board for over $17 million in connection with the investigation.[22]

Mr. McMahon’s return has pushed the world’s largest professional wrestling company into multiple levels of uncertainty. On the shareholder level, Mr. McMahon’s return could escalate pending government investigations within the company and jeopardize shareholder value as legal action develops.[23] On the creative level, WWE’s storylines face an unclear future which puts television ratings and talent retention at risk.[24] For better or worse, Mr. McMahon’s return is a seismic shock to the professional wrestling industry with effects that will be seen for years to come.

^[1] Alfred Konuwa, WWE Sells to Endeavor, Creating a $21 Billion Powerhouse: a Timeline of Events, Forbes (Apr. 3, 2023, 9:37 AM), https://www.forbes.com/sites/alfredkonuwa/2023/04/03/wwe-sells-to-endeavor-creating-a-21-billion-powerhouse-a-timeline-of-events/?sh=3e292ff75d20.

^[2] Alfred Konuwa, Vince McMahon Retires: A Timeline of Events amid 2022 Probe of Sexual Misconduct, Forbes (July 23, 2022, 12:48 PM), https://www.forbes.com/sites/alfredkonuwa/2022/07/23/vince-mcmahon-retires-a-timeline-of-events-amid-2022-probe-of-sexual-misconduct/?sh=7911d465115c; Lauren Thomas, Vince McMahon Returns to WWE, Wall St. J. (Jan. 6, 2023, 12:45 PM), https://www.wsj.com/articles/vince-mcmahon-plots-return-to-wwe-11672952709.

^[3] Id.

[4] Todd Spangler, Triple H Named WWE’s Chief Content Officer, Gets Salary Bump Along With Three Other Top Execs in Wake of Vince McMahon Exit, Variety (Sep. 2, 2022, 10:29 PM), https://variety.com/2022/tv/news/triple-h-wwe-chief-content-officer-salary-1235358941/.

^[5] Brandon Thurston, Yes, WWE Fan Interest Really Did Improve During the Triple H Era, Wrestlenomics (Apr. 6, 2023), https://wrestlenomics.com/2023/04/06/yes-wwe-fan-interest-really-did-improve-during-the-triple-h-era/; Thomas, supra note 2.

^[6] Id.

^[7] Spangler, supra note 4.

[8] Id.

^[9] Konuwa, supra note 1.

^[10] Id.; Thomas, supra note 2.

^[11] Konuwa, supra note 1.

[12] Thurston, supra note 5.

[13] Erik Beaston, Backstage WWE and AEW Rumors: Latest on Low Morale, LWO and More, Bleacher Report (Apr. 6, 2023), https://bleacherreport.com/articles/10071415-backstage-wwe-and-aew-rumors-latest-on-low-morale-lwo-and-more.

^[14] Sarah Fischer & Tom Baysinger, UFC Owner Endeavor to Acquire WWE in $9.3 Billion Deal, Axios (Apr. 3, 2023), https://www.axios.com/2023/04/03/endeavor-acquires-wwe-9b-combine-ufc.

^[15] Beaston, supra note 13.

[16] Id.

^[17] Id.

^[18] Alex Weprin, Vince McMahon Paid WWE $17.4M for Costs Tied to Misconduct Investigation,  Hollywood Reporter (Mar. 24, 2023, 3:01 PM), https://www.hollywoodreporter.com/business/business-news/wwe-chairman-vince-mcmahon-pays-misconduct-investigation-1235360439/.

^[19] Id.

^[20] Id.

^[21] Id.

[22] Id.

[23] Id.

[24] See Beaston, supra note 13; see also Thurston, supra note 5.