Vince McMahon may need to reappropriate the funds he recently saved by releasing and furloughing employees over to his legal team.
WWE’s dealings in Saudi Arabia have caused a recent legal backlash. I get it, someone probably sat in the board room a few years ago pitching to Vince that “we need to expand our marketing focus on a more GLOBAL scale.” We all know there is nothing a rich corporate leader likes to hear more than that he can turn his mountain of money into two mountains of money. Good news for WWE, the oil rich country Saudi Arabia is conveniently loaded with wrestling fans.
Copious amounts of cash seemingly make it easy for a company that heavily marketed the Women’s Evolution pay-per-view and the rise of women in wrestling to accept a deal in Saudi Araba. Saudi Arabia is a country that notoriously violates women’s rights, requiring them to have consent from male guardians for basic tasks. So aside from turning a blind eye on basic human rights, maybe the Saudi deal wasn’t such a great financial decision either, because at least three legal claims have been filed against WWE:
In Q1 of 2019, WWE reported a revenue decline primarily in live events and consumer products. The company’s share price continued to fall through February 2020, for a variety of reasons publicly cited by WWE. The Securities Class Action filed on Behalf of WWE Investors claims WWE’s public statements were false, and WWE failed to disclose to investors that there were rising tensions with the Saudi government and a breakdown in negotiations over a broadcasting deal. Investors were unaware that the Saudi government failed to make millions of dollars in payments to WWE, or that the Orbit Showcase Network (OSN) terminated the broadcast of WWE programming in Q1 2019, and OSN refused to restart broadcasting WWE. Without these details, investors were unaware that WWE likely did not have the ability to expand its operations in the Middle East or within Saudi Arabia.
On April 24, 2020, WWE shareholders Ryan Merholz and Melvyn Klein filed a lawsuit against Vince McMahon, Stephanie McMahon, Triple H, and WWE executives. The full complaint is 44 pages, but it essentially claims that WWE made false statements, misled investors and failed to disclose adverse facts known about the company, including information about the deal in Saudi Arabia.
The company is also accused of inflating WWE securities prices and permitting certain senior executives of WWE to sell more than $282 million worth of their personally held shares of Company stock at inflated prices.
Others named in the lawsuit are Interim CFO, Frank Riddick, III and a slew of WWE Board of Directors members including: Stuart Goldfarb (Co-founder at Melo7 Tech Partners), Laureen Ong (Principal at Laureen Ong Media and Management), Robyn Peterson (Chief Technology Officer and Senior Vice President at CNN), Man Jit Sing (formerly President at Sony Pictures), Jeffrey Speed (formerly Executive Vice President and CFO at Six Flags and VP at Disney), Alan Wexler (formerly Chairman at Publicis Sapient), and George Barrios (former WWE Co-President).
The complaint alleges that World Wrestling Entertainment, Inc. violated federal securities laws by issuing materially false and/or misleading information and/or failing to disclose material information.