WWE Needs to Return Money to Shareholders

Lost in scandals that forced long-time CEO and controlling shareholder Vince McMahon to step down from his position is that World Wrestling Entertainment Inc. (NYSE: WWE) is extremely successful financially. It makes large profits and has hundreds of millions of dollars of cash on its balance sheet it does not need. It is time that cash be returned to shareholders, which includes money that would go to McMahon and his family.

CNBC pointed out that the WWE shares trade at a 52-week high, which is nearly impossible in this market. According to the report: “The stock’s strong performance this year occurred when WWE’s live wrestling-events business came roaring back after months of Covid restrictions and the company increasingly became the subject of sale talks.”

WWE shares trade at almost $77. That is up 52% this year.

WWE posted strong numbers in the most recently reported quarter and said the near-term future would be just as strong. Revenue rose 24% from a year ago to $328 million. Operating income rose 50% to $69 million. WWE management likes to use adjusted operating income before depreciation and amortization (OIBDA) as the milestone of its success. It is a non-GAAP yardstick for the bottom line. This figure rose 34% to $92 million.
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WWE added that “Based on outperformance through the first six months of the year as well as management’s current expectations for the second half of the year, the Company is raising its guidance and now expects full-year 2022 Adjusted OIBDA within a range of $370 – $385 million.”
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WWE has over $440 million in cash and short-term investments on its balance sheet. It is hard to argue that it needs most of this money. WWE currently has a dividend of $0.12, a payout of less than $20 million a quarter.
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McMahon and his family have made huge amounts in compensation. It is time for them to share the wealth with shareholders. The headlines about McMahon may be the most visible part of the company’s operation but have nothing to do with the payout issue.