WWE is continuing to deal with fallout from sexual-abuse allegations facing its former longtime chief Vince McMahon, with shares in parent TKO Group Holdings slipping Monday as investors weigh the potential downside.
Shares in TKO fell 4.4% today on nearly twice their normal trading volume, closing at $82.73. The stock is well below the level where it began trading last September after the merger of WWE with the UFC in a newly public entity controlled by Endeavor Group Holdings. One prominent Wall Street firm earlier Monday flagged “brand and legal risk” to TKO from the lawsuit filed against McMahon and former WWE talent chief John Laurinaitis by former employee Janel Grant, who offered graphic details in laying out accusations of sex trafficking, battery and rape.
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McMahon, who in 2022 disclosed paying more than $12 million to multiple women to resolve other sexual misconduct complaints, has denied Grant’s claims.
Speaking with reporters after WWE’s Royal Rumble event, Chief Content Officer Paul Levesque, a former wrestler known as “Triple H,” raised a few eyebrows by seemingly brushing off the controversy. “Yes, there’s a negative,” the exec conceded in a press conference Saturday night, but “I choose to focus on the positive.” A long-term Netflix deal, Dwayne Johnson’s appointment to TKO’s board of directors and a sellout crowd in Florida for the Royal Rumble all added up to “an amazing week,” Leveque said. “I don’t even want to get bogged down in the negatives of it. I just want to focus on the positives and where we’re going. We’re at the most exciting time of the year for us. We’re at the most exciting point for me, business-wise, that we’ve ever had.”
Asked by a reporter if he had read Grant’s legal complaint, Leveque said he had not. Asked by a different reporter what was being done at WWE to ensure that employees will not be taken advantage of by their managers, Leveque replied, “I’ll give you the most generalized answer I can: everything possible. That is a very important thing to us, a very important topic to us.”
McMahon isn’t just any executive, of course. He essentially created the modern WWE, leading it for decades both in and out of the ring and building it from fringe regional attraction to global media power. That stature and his still-mostly-favorable image among WWE fans, has made him a difficult figure to cut out of the company’s fabric.
He also is the largest individual shareholder of TKO, as Wall Street analyst Robert Fishman of research firm MoffettNathanson noted. Fishman issued a report Monday initiating coverage of TKO with a rating of “neutral” on its shares. The analyst sees the lawsuit posing “incremental brand and legal risks” to TKO.
“His long-term intentions with his economic interests in TKO must be a consideration as a shareholder,” Fishman wrote. Under last year’s merger of WWE and the UFC, McMahon wound up with about 35% of TKO’s Class A shares and 15% of the total economic interests of the company. Late last year, he sold about $700 million in stock, reducing his Class A stake to about 25% and his share of the company’s total interest to 10%. McMahon’s need to mount a legal defense could mean tapping more equity. “Continued chunk sales by McMahon could put downward pressure on TKO stock,” Fishman wrote, pointing to the 6% drop in TKO’s share price after McMahon’s recent share sale.
The company also has acknowledged the potential liability it incurred by choosing to welcome back McMahon, who stepped down as WWE’s chairman and CEO after the prior payouts to women were disclosed. His status as a TKO board member “could have adverse financial and operational impacts on our business,” the company warned in an SEC filing last fall. “Mr. McMahon’s membership on our board could expose us to negative publicity,” the filing continued, and “may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.”
Dave Meltzer, publisher of the Wrestling Observer Newsletter and a figure of note in wrestling circles, expressed criticism Monday of Levesque’s Royal Rumble comments. He noted that the exec is married to Stephanie McMahon, herself a former member of WWE’s management team and also the daughter of Vince McMahon. “Your father-in-law was just accused of sex trafficking and rape,” Meltzer wrote on X, formerly Twitter. “Everyone knows how much I personally like Paul, but this was bad. The most powerful man in the history of the business was just removed in disgrace. This was really bad.”
Stephanie McMahon took a leave of absence from her duties as WWE Chief Brand Officer in May 2022, returning to the company as co-CEO after her father resigned, and then exiting again a few months later. The recent upheaval over Vince McMahon has reactivated chatter in the pro wrestling world that Stephanie McMahon could possibly return to the company.
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