As previously reported, Vincent Kennedy McMahon is looking at a return to the helm of WWE. So what is prompting his sudden return?
Wrestling Observer’s Dave Meltzer shared some specific details in the latest edition of the Wrestling Observer Newsletter (subscription required):
A potential deal to sell WWE will be torpedoed
The first reason prompting McMahon’s return is preventing the sale of the company. WWE has been looking for potential suitors to buy the fledgling wrestling promotion since Nick Khan became CEO.
With the company sold, McMahon would therefore have no power to return to the helm.
The power Meltzer alludes to relates to his significant control of shares in the company as a publicly-traded corporation. However, there is one key element of power that is even more alarming. The way the shares are structured by McMahon when the company went public in 1999 ensures that he could never truly be ousted from power.
How is this exactly? As of this recent past summer, McMahon currently owns 37.6 percent of the company. However, the structuring of those shares secures 80 percent of the voting power. Another shareholder holding a similar percentage of shares in the company would only have 7.52 percent of the remaining 20 percent of outstanding shareholder votes.
Khan has been pondering potential deals with Comcast (which owns NBCUniversal, which WWE has broadcast relationships with on the USA Network) and The Walt Disney Company (which owns Fox Television, which has an ongoing broadcast partnership with WWE).
The return of McMahon to any particular position would shoot down the sale altogether.
Even with significant voting power, he cannot just walk in and take power
Considering that McMahon stepped down as chairman earlier this year amidst sexual allegations, his significant voting power does not mean he can just barge into a meeting and assume power.
For McMahon to reassume his previous role, the WWE Board of Directors would have to approve his reinstatement. The current board members were those that McMahon previously appointed himself.
The WWE Board would, most importantly, need to look out for the best interests of its shareholders, not just McMahon’s significant voting control.
For instance, if McMahon returns amidst the ongoing sexual allegation scandals involving him, it will result in a whirlwind of negativity. This would not be limited to just sponsors or television partners. This would have an adverse effect on WWE talent, management, and corporate personnel. With that kind of negative attention, the Board would be inclined not to approve the return.
The same would be true if his personal scandals would result in the decline of the company’s stock price or harms the economics of the company overall.
McMahon’s return + significant harm = litigation
The Board would also have to consider the implications of a McMahon return to power. If his return was greenlit and it resulted in a significantly lowered value of the company, WWE will be facing a number of lawsuits from shareholders as a result.
A shareholder lawsuit could have cited the allegations and scandals surrounding McMahon that resulted in his initial departure. However, it didn’t result in a business decline, no partners pulled out from their relationship with WWE, and the stock price increased since his departure.
Detailed knowledge of his scandals
Another question of speculation revolves around how the WSJ has been getting all this dirt on McMahon.
Who’s giving them all this information? Is it a member of the Board of Directors or someone close to the Board with knowledge of the situation?
Someone had knowledge of the anonymous letter from the former paralegal that McMahon previously reached a settlement with. In that situation, both McMahon and Director of Talent Relations John Laurinaitis resigned from their positions on the same day.
As far as those benefiting from a power standpoint were daughter Stephanie McMahon (advanced to co-CEO), son-in-law Paul “Triple H” Levesque (now Chief Content Officer), and former President Nick Khan (advanced to co-CEO). Stephanie McMahon is sharing control of the business side with Khan without actually having to answer to her father, or risk getting fired by her father.
Another idea of who has been blowing the whistle on Vince McMahon could be someone who had knowledge of the Chatterton lawyer letter or even the allegations from the former spa manager.
More details on this story will follow in an upcoming article.