Shareholders of World Wrestling Entertainment (NYSE:WWE) have had little to get excited about recently. That may change, however, thanks to professional wrestling's growing popularity abroad.

Since pro wrestling hit its peak in 2001, WWE's stock has been stuck in the doldrums. Even exciting new ventures such as WWE Films can't overcome declining pay-per-view sales and weak attendance at live events -- two major sources of revenue.

Fortunately, these poor results are limited to North American operations. WWE has enjoyed surprising success in bringing its smash-mouth, adrenaline-driven product to Europe, Asia, and Australia. Like a popular wrestler rushing from backstage to rescue a friend from a serious beatdown, international sales could save WWE until it gets its house in order.

First, let's take a peek at numbers from the last four fiscal years and see how North American operations match up against their international counterparts. (From now on, I promise to keep the gratuitous wrestling analogies to a minimum.)

WWE North American Revenue (millions of dollars)





Number of Live Events





Live Event Revenue





Total North American Revenue





We can see that the number of live events in North America has increased, but revenue has fallen dramatically from $70 million in FY 2002 to just $46 million in FY 2005. This is attributable to lower attendance -- there just isn't as much interest in the WWE today as there was four years ago. The lower attendance is accompanied by slumping revenue from WWE merchandise sales and mediocre pay-per-view buys, which drag down total North American revenue. While the TV ratings for WWE's flagship program RAW remain strong (it's consistently among cable's top-rated shows), North American fans just aren't willing to spend extra money to see WWE superstars.

Now let's get the weigh-in on operations abroad.

WWE International Revenue (millions of dollars)





Number of Live Events





Live Event Revenue





Total International Revenue





% of Total WWE Revenue





Revenues from international events have grown consistently over the last four years because of very strong demand. International events have an average attendance of 9,100 (compared with 4,100 in North America) and the average ticket price is almost double the price in North America. Doing some quick math, the average international live event is bringing in about $670,000, compared to only $170,000 in North America.

Vince McMahon and company clearly realize the benefits of international expansion; they've scheduled even more events abroad next year. International operations generated 24% of total revenue in 2005, and I wouldn't be surprised to see that number keep increasing over the next few years. Deals are already in place to bring PPV programming, DVDs, and WWE merchandise to more territories. With the general malaise at home, international markets are going to be key for WWE to leverage its brand of superstars.

Future outlook
In all honesty, the domestic market looks bleak. When did watching pretend fights between overgrown men in bathing suits stop being cool? I'll never know. But there are some developments on the horizon that I think will help North American fans get back in touch with their wrasslin' roots.

For one, Viacom's (NYSE:VIA) Spike TV will start carrying Total Nonstop Action's (TNA) one-hour wrestling program in the fall. TNA's innovative, high-flying brand of wrestling should generate some new interest in sports entertainment and may even force WWE to adapt its programming to a new generation of wrestling fans.

A little healthy competition could give WWE the shot in the arm that it needs. If General Electric's (NYSE:GE) NBC Universal can capitalize on this new interest with a strategic marketing campaign for the WWE's return to the USA network, we might see a revitalization in the wrestling industry.

In addition, WWE's Thursday night program Smackdown! will be moving to Friday nights on UPN. WWE officials believe that they'll be able to tap into a younger audience on Friday nights while avoiding tough Thursday night competition from the major networks. While I'm not crazy about this move, I think that building a loyal base of young viewers will be important in the long term.

Although professional wrestling is in flux right now, international opportunities look promising. It's just a question of whether WWE can get domestic operations on the right course.

Can you smell what the Fool is cooking?:

  • Check out the WWE's fourth-quarter results.
  • WWE goes to back to USA Network.
  • The WWE looks for value in its legends.

Fool financial editor Joseph Khattab is a longtime wrestling fan. He owns shares of WWE. The Fool has a disclosure policy.