It's a Tuesday night in Madison Square Garden. A crowd of about 16,000 people boos and hisses the barrel-chested chairman of the World Wrestling Federation as he raves at a very large man named Mick Foley, the so-called commissioner of the WWF. Vince McMahon is screaming at Foley for pitting six of the WWF's top grapplers against one another in a Lucite box- Hell in a Cell, in the vernacular. Foley calls out for the WWF CEO to settle the fight.
Dressed in a navy blue business suit, Linda McMahon strides down a long ramp toward the ring, her arms characteristically close to her sides. She greets Foley; kisses her husband, the chairman; and takes the wireless microphone.
"I absolutely respect your opinion in this Hell in a Cell
match," she calmly tells Vince. "But I also respect Mick's."
Satisfied, Foley, formerly known as Mankind, soon struts from the ring. Eyes bulging and neck veins popping, Vince grabs the mike and rants at Linda for supporting Foley. "To hell with my family. To hell with my marriage. ... I WANT A DIVORCE!!!" he roars. "Get out of my ring! Get out of my life! You were never good enough for me anyway. I'm VINCE MCMAHON!"
Shaken, Linda hurries out of the arena, the backstage cameras recording her sobbing flight to a waiting limousine.
Ten hours later, a poised and confident Linda McMahon reels off WWF statistics to a ballroom full of Wall Street analysts at the UBS Warburg's 28th Annual Media Conference. Revenues, ratings, pay-per-view buys and ticket sales are all up from last year, she says before launching into a smooth, articulate pitch for the WWF's new football league, the XFL, beginning next month, where the idea is, at least tacitly, to play a meaner game.
Jilted, beleaguered wife or $1.6 million-a-year corporate head of an expanding empire: Will the real Linda McMahon please stand up?
"I am not
divorced," she says with a grin, relaxing in her Stamford, Conn., office three days after Vince's rant at the Garden. The real Linda McMahon, about 5 feet 5 inches tall, has a powerful handshake, an easygoing manner, arresting sky-blue eyes and the composure of a combat veteran.
"Maybe I shouldn't tell you this," she says. "If I were doing that performance with an actor or a stranger, I would have burst out laughing. He was so over the top; I had to look to the side of him."
The McMahon's 34-year marriage is as sound as ever. Their high jinks in the ring are just part of the ongoing soap opera that pulls in some 50 million people each week to televised and live events. Capitalizing on America's insatiable appetite for white-trash spectacle and the knuckles-of-knowledge school of problem solving, the McMahons have emerged the national champs of professional wrestling.
After going $6.5 million in the hole in 1997, the WWF cleared $59 million on revenues of $379 million in fiscal 2000. Its main competitor, Ted Turner's World Championship Wrestling, is on track to lose roughly $60 million this year after a two-year ratings spiral. Revenues at the WWF are expected to reach $450 million in fiscal 2001, although profit will dip slightly to approximately $55 million as the company sinks money into its latest venture, the XFL.
Over the past 14 months, the company went public, created a football league and switched distributors (to Viacom) after 18 years with USA Networks, all the while doing more than 200 live shows around the country and producing five hours of television each week. And, at Vince's urging, Linda came out of the shadows as the real muscle behind the company.
"There's no question about who runs the business," says Tom Freston, the chairman and CEO of MTV Networks, who helped hammer out Viacom's deal with the WWF. "She was the primary negotiator and deal-maker. We had one conceptual meeting with Vince up in Stamford. The rest were with Linda. She takes strong positions on things she really knows about, but she has a wonderful temperament. She's quite at odds with what every man feels happens at the WWF."
Long before her debut in the ring and on Wall Street, Linda worked behind the scenes at the WWF, turning her husband's creative fomentations into businesses. Using the pseudonym Linda Kelly, she wrote and produced the early WWF magazines. She later negotiated the first licensing deal in the wrestling industry for the manufacture of WWF action figures.
"Linda has acted as the business manager of that company for as long as I've known about it, and we started dealing with them in 1982," says Kay Koplovitz, former president of USA Networks, now CEO of Working Woman Network. She observes that, where Vince shoots from the hip, Linda takes a thoughtful approach. "She's a more pragmatic negotiator."
Dick Ebersol, the head of NBC Sports who has known the McMahons since the early 1980s, remembers that, in 1988, it was Linda who deflected the flak over whether wrestling should be regulated as a sport.
"It wasn't Vince; it was Linda who went before the New Jersey State Legislature to say it wasn't a sport, it was entertainment," he recalls.
Bret Hart, a 14-year veteran of the WWF and one of its most vociferous critics, also remembers Linda as the brains behind the brawn.
Hart fell out with the company two years ago over pay and job-security issues. (And last year, Hart's brother Owen was killed in a mishap during a WWF event in Kansas City.)
Despite the bad blood, Hart says, "I don't know why, but I always think of Margaret Thatcher. I got the impression she was very, very sharp."
The former Linda Edwards of New Bern, N.C., a high school honor student and the only girl in town with a jump shot, never intended to run a wrestling empire. After marrying Vince, her childhood sweetheart, at 18, she took a degree in French at East Carolina University and went to work as a receptionist for a Washington law firm. Her break there came when Ezra Pound, the controversial poet, died in France. Linda wound up interpreting the calls from France and ended up with a job in probate, where she says she got her business training.
Meanwhile, Vince worked a few sales jobs before joining the family business, Capitol Wrestling.
"When he was getting his degree [in business administration], he always said he didn't want to go into the business, but he always talked about wrestling," Linda recalls.
Once on board, in 1972, Vince moved the family to Connecticut, where he sold Capitol's programming, station by station.
In 1979, Vince and Linda struck out on their own and formed Titan Sports. They soon bought an obscure coliseum in Cape Cod and started promoting events, the first an exhibition game of the Boston Bruins. To get the team, the McMahons had to guarantee $50,000 in sales, so they created VIP tickets that came with little extras, like meatball sandwiches that Vince and Linda made at home and hauled to the coliseum.
The event sold out. The next year, the McMahons went out on a limb to buy Capitol from Vince's father, Vince Sr., for $1 million. If they missed one of their quarterly payments, they lost the business and the money. Vince and Linda did everything the old man advised against: selling T-shirts, doing a mail-order business and expanding beyond the WWF's traditional borders and into syndication. It worked. Their Capitol gamble paid off.
"In our entire history in the business, we've only lost money two years," she says.
Linda McMahon's latest corporate role at the WWF is convincing Wall Street that the company's growth is sustainable. For all the campy adoration among financial analysts (Fidelity Investment analysts in Boston came to the WWF's IPO road show in foam-rubber championship belts), the company's stock price remains about $2 below the October 1999 IPO price of $17 a share.
"Wall Street is still trying to understand," she says, estimating the true value of the stock to be between $25 and $30. "We are not a commodity. We are a media-content company."
The content, however, is based on the Santa Claus formula: a suspension of disbelief. It's not that a lot of television doesn't test the limits of credulity. And it's not that the McMahons aren't perfectly straightforward about the wrestling itself's being fake. The distinction of the WWF is the mystique of the backstories: Did Kane, a 7-footer in a leather mask, really have his face destroyed in a fire? Could Linda and Vince's daughter, Stephanie, really be married to Triple H? Is their son, Shane, really a conniving rapscallion maneuvering to overthrow his father?
What the WWF takes to the bank is what people like John and George Boubaris of New City, N.Y., provide. John Boubaris paid $100 for two ringside folding chairs at Madison Square Garden a month ago to bring his 10-year-old son, George, to the boy's first wrestling event. Early in the show, while the lesser-known wrestlers grapple, George shares his WWF expertise.
"You can tell it's fake by the sound effects," he says. "You hear that slap? They barely touch each other. It's all sound effects and training."
Just then, a vendor walks by, and George begs his dad for a big, purple sponge hand with logo for the Hardy Boyz, one of the more popular tag teams. Grinning sheepishly, John Boubaris pulls out $10.
Later, when George discovers that his ringside neighbor has gone backstage, he can't stand it. "Is Kane's face really burnt like they say?"
Kane, whose real name is Glen Jacobs, was actually backstage, still masked and squeezing mousse into his tangled main and teasing it out with hairbrush. Is he a burn victim? This is not the kind of thing the WWF powers want George to know. They zealously guard the backstage. Press photographers are rarely granted access, and, when they are, what they are allowed to shoot is highly controlled. Enemies in the ring can't be photographed joking together over sodas.
The financial world is still at odds over whether the WWF mystique can sustain the company's growth and whether offshoots like the XFL will really take off. After all, the business lost money just three years ago.
"That was when Turner came in with a big checkbook and hired a bunch of people away from the WWF, and they had to start all over again," says Marina Jacobson, an analyst with Bear Stearns. "Vince was also being investigated by the government [for possession and distribution of steroids]. So, for a while, it was hard for them to keep an eye on the ball. In the end, Vince created a much more compelling product that tapped into new talent. And it's not just the talent. It's the storylines."
All but one of the charges in the steroid rap were dropped; Vince was acquitted on the remaining charge. The legal battle took about three years. The legal bills came due in 1997. That same year, Turner offered fat contracts at the WCW. Top-tier WWF stars like Hulk Hogan walked.Today, drug tests are not mandatory at the WWF, but the company will occasionally test for cause and fire talent for steroid use. And top-tier WWF wrestlers, while they remain independent contractors, get one-, two- or three-year contracts, not the per-show deal they did before Turner raided the WWF. The company also claims as intellectual properties their characters' identities-right down to their gestures (like The Rock's famous eyebrow arch).
Because the WWF has overcome such setbacks and because it's launching new businesses, Jacobson predicts the company will be strong in 10 years, although not without cycles.
"I don't see it sustaining this kind of popularity," notes one executive at a corporate investment firm. "Add to that more advertisers waking up to the nature of the product."
The nature of the product is truly crass. Stone Cold Steve Austin guzzles beer a half-dozen at a time and tosses half-full cans at opponents. Men regularly knock women around in the ring, and soliloquies are sprinkled with "sumbitch," "bastard," "asshole" and "suck it."
Pushing the etiquette envelope got the audience's attention and helped WWF down the WCW, but it also drew the ire of one L. Brent Bozell III, chairman of the Parents Television Council. When the WWF turned up the raunch on Smackdown!, its regular Thursday-night show on UPN, Bozell embarked on a crusade to get advertisers to pull ads. Some did, but the PTC also started taking credit for advertisers that had never bought wrestling in the first place, including Procter & Gamble, the nation's largest ad spender. Last month, the WWF sued Bozell and the Council for the undisclosed millions the company alleges the PTC cost it.
Bozell and his group may have scared advertisers but not fans. Live events, the bread-and-butter of the company, continue to sell out, sometimes in minutes. June's King of Ring
event in Boston sold out in less than five minutes. Attendance more than doubled since 1997 to about 2.5 million in fiscal 2000 (which ended April 30) and continues growing in fiscal 2001. Pay-per-view buys have more than tripled in the same period, to 6.8 million. Ratings for Raw Is War, the WWF's flagship show now on TNN, are averaging around a 5.2. That's softer than the mid-sixes it had on USA Network but still more than double the 1997 numbers.
Wall Street is only mildly impressed with the WWF's substantial audience because there's a nagging perception that it comprises mostly toothless hillbillies-not exactly the Lexus demo. Actually, Raw's audience is more urban than rural-37% vs. 32%. About 35% of the audience is white collar, while 13% of the households that tune in make more than $75,000 a year.
"And remember, there's very little programming that boys and dads watch together," says a researcher familiar with the programming. "Major sports has undone loyalty, with players going from team to team, whereas The Rock, they know he'll be there."
Another perceived weakness-one mentioned in the company's Securities and Exchange documents as a risk factor-is the WWF's dependence on Vince McMahon and his larger-than-life persona.
"We have talked about that," Linda says. "The goal is, if something happens, we have the talent in place and have the people to develop the talent."
Stephanie and Shane are being groomed for ascendancy. Their only requirement for joining the family business full-time was getting a degree, Linda says. Both children earned communications degrees from Boston University. On the day he graduated, Shane, a cleft-chinned reflection of his father, skipped commencement, packed his car, locked up his apartment and returned home. He's now the president of new media for WWF.
Stephanie, who plays a smart-alecky, overly made-up vamp in the ring, is actually a polite and gracious young woman whose only request when she graduated was a family vacation to Ireland. They went for a week. It was the longest that Vince and Linda had ever left the business.
Stephanie McMahon is now one of the lead writers.
For all the crotch-grabbing, cussing and one-finger salutes on the WWF, no single incident has generated the feedback stirred up by a storyline written not by Stephanie but for her and her mother. After the two exchange words in the ring, Stephanie slaps her mother, knocking her to the mat. In a later show, Linda returns the blow.
"I found it very difficult conceptually," Linda says. "Stephanie refused to do it for the longest time. A lot of parents wrote to us. The reaction was across the board. We utilized that as an object lesson."
Would Linda do it again?
"If it made sense, but not very often. We were making Stephanie into this shrew from this naive little girl. We knew the character change would come."
As is the character of the WWF itself. In her fourth-floor office above East Main Street in Stamford, Linda McMahon talks about where the WWF can grow. For a while, the company toyed with the idea of a WWF cable channel, but that's a long-term goal for when the company has more programming. Between TNN, MTV, UPN and syndication, the WWF already has seven wrestling and round-up shows on the air, with more to come. Manhunt, a comic/dramatic reality series created by Vince McMahon, is coming to UPN. Another weekly series is in development for MTV.
Linda has her eye on international expansion. Pay-per-views in the United Kingdom have tripled over the course of six events to 150,000-between 25% and 30% of the U.S. average. The WWF's magazine is the No. 1 imported title in that country, she says. The company is preparing to hire an executive vice president of international events and another executive for international licensing.
Merchandising has more potential as well. WWF peddles everything from Chris Benoit's autographed tights to a silver-metal garbage can used to smash someone over the head. For the second quarter of fiscal 2001, the WWF sold $30 million in branded merchandise. In November alone, its online ShopZone shipped $700,000 worth of merchandise.
Even the healthiest growth in those categories won't keep the doubling revenues at the WWF, what with next year's numbers being weighted down by XFL start-up costs.
"I don't expect to do 50% growth year after year after year," Linda says. "I would expect a conservative estimate of 10% to 15% growth. That's conservative."
So what exactly does Linda McMahon have to do to convince Wall Street that the WWF is here to stay?
"Time," she says. "I think that will be the only thing that shows them." Out in the hall, Stephanie McMahon is on the phone when her mother emerges from the office. When Linda is told that even the company's enemies didn't badmouth her, she points to Stephanie.
"Ask this one," she says.
"She slaps pretty hard," Stephanie says. Both women suddenly laugh and hug each other. From 2 feet away, it looks like they really mean it.
