Q&A: George Barrios
WWE CFO tackles the business side of WrestleManiaWorld Wrestling Entertainment CFO George Barrios joined the sports entertainment powerhouse, led by chairman and CEO Vince McMahon, in March 2008 after a financial career at the New York Times Co. THR business editor Georg Szalai talked to Barrios about the business side of WWE and its annual mother of all pay-per-view events, WrestleMania.
The Hollywood Reporter: You focused on improving the financials of WrestleMania after a weaker profit from the 2008 event. What was your approach?
George Barrios: Last year, we essentially doubled the profit on the event to $15 million (on virtually unchanged revenue). For WrestleMania, it's two primary sources of revenue and profits. It's the live event and the pay-per-view. Given it's our largest event, we thought not only does it need to be our largest creative event and most exciting for our audience, but it should also be equally significant financially. We essentially looked at ways to do things smarter on the production, marketing and creative side, and we were happy with the performance.
THR: Give some examples of specific measures you took to boost Mania's profitability.
Barrios: For example, on the production side, in 2008 we had it in Orlando at an arena with a great show, but the arena wasn't as easy to produce in as it was in Houston last year and Phoenix this year. The age and condition of the facility helped us to reduce the cost.
Our process of negotiating our commercial deals with the arenas has also changed. We used to treat WrestleMania as our largest event, but we'd make the deal directly with the arena like in other cases. Starting last year and continuing forward, we brought an executive on board whose role is to manage WrestleMania several years out and basically conduct an RFP (request for proposal) process where we get bids from several cities. That's another way to improve our profitability.
And on the marketing side, we leverage the assets that we already have and leverage some of our partners better.
There is no single magic bullet. But all these things make it more effective and a lot smarter.
THR: What new revenue streams or business opportunities will drive WWE's financials going forward?
Barrios: We have talked about our three-year (business) plan 2009-2012, and we thought we could deliver 15%-20% in average annual earnings growth over that period. We felt pretty comfortable that even in a moderate revenue environment we could deliver that, because our global TV contracts tend to be long-term with escalators built into them, and we have a new (toy) deal with Mattel (announced in January) that will be a real engine over the next year.
Mattel is the number one toy company in the world. They can do a lot in product development and distribution, which is broader and deeper than our previous partner, and we're also very happy with the deal itself.
We have also extended our TV deal with USA for Raw for another five years and renewed our deal with BSkyB in the U.K.
THR: You recently changed your film business model. Your stars will support well-known lead actors, and your release strategy is different and now will do without Hollywood heavyweights like Fox and Lions Gate. What are some key changes?
Barrios: We used to have a theatrical strategy ... and then also did direct-to-DVD. Our new strategy is a hybrid of that. We want to really have a theatrical release with a short window, move to DVD and essentially generate the best of both worlds -- direct-to-DVD economics, which are more stable and have a higher return on investment with the benefit of a theatrical promotional window. We feel really good about the model. And we also continue to project that our first five releases (under the old model) will generate profits -- some more than others.
THR: Any plans to change your dividend payout, which is industry-leading?
Barrios: We review the dividend with the board every quarter, and that's all we say about the dividend.