Please ensure Javascript is enabled for purposes of website accessibility

WWE Fires Its Co-Presidents, Shares Tumble

By Daniel B. Kline - Jan 31, 2020 at 9:45AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The management change was unexpected and shocked many shareholders.

WWE (WWE -1.60%) has made an effort in recent years to promote the fact that co-presidents George Barrios and Michelle Wilson had key operational roles in the company. Doing that was a clear effort to show shareholders that CEO Vince McMahon was not the only executive making decisions.

Shockingly, and without any warning, both Barrios and Wilson are departing the company. That has (and should have) unnerved investors, sending shares of the company tumbling. The departures are especially notable given that McMahon has been splitting his time between WWE and his about-to-launch XFL football league.

Seth Rollins holds up a WWE championship belt.

WWE has parted ways with its co-presidents. Image source: Getty Images.

What is WWE saying?

WWE released a statement that gave little in the way of answers. It did, however, make it clear that the separation was not voluntary.

"I would like to thank George and Michelle for their 10+ years of service and contributions to the organization," said McMahon. "I am grateful for all that was accomplished during their tenure, but the Board and I decided a change was necessary as we have different views on how best to achieve our strategic priorities moving forward."

WWE is in a challenging position, as it has achieved record revenue due to its newly signed U.S. television rights deals but is not as popular as it once was. The company is in a strong financial position for the next five years due to those TV deals, but it faces new competition from rivals including All Elite Wrestling (which airs on the TNT network).

Barrios and Wilson had been public faces of the company in a way that McMahon had generally not allowed non-family members to function. They acted as sort of the grown-ups to the charismatic but cartoonish McMahon, whose wrestling acumen has never been questioned, but whose business sense has.

Firing these two executives at a time when the company is struggling to sell tickets and when TV ratings have been shaky should unnerve investors. This move leaves the company lacking in experienced leadership, though that's clearly not how WWE wants to frame it.

"We have a deep team of talented, experienced and committed executives across the organization, and the Board and I have great confidence in our collective abilities to create compelling content, engage our global fanbase across platforms, increase revenues, and drive shareholder value," McMahon said.

What's next for WWE?

McMahon can right the ship by hiring an experienced executive or executives to fill this slot. The problem is that the right people may not be interested in these positions because working for McMahon is notoriously difficult.

WWE needs leadership beyond its CEO, especially as McMahon focuses some of his time on the relaunch of the XFL. Finding the right people to take these jobs is a major challenge.

The company needs leaders who can disagree with a boss used to getting his way. It also needs people willing to take a high-profile job that history says will end badly. That's a tall order, as few experienced, qualified people want to work for a difficult boss.

These moves are bad news for WWE shareholders. The company lost its adults in the room, and the way they were cast aside makes it hard to replace them. The stock will recover in the short term because the economics of the TV deals guarantee record revenues, but the long-term leadership questions should concern shareholders.

Daniel B. Kline owns shares of World Wrestling Entertainment. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

World Wrestling Entertainment, Inc. Stock Quote
World Wrestling Entertainment, Inc.
WWE
$70.66 (-1.60%) $-1.15

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
394%
 
S&P 500 Returns
127%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.