Vince McMahon vs. Uncle Sam Round 2

Uncle Sam wants a rematch.

During WWE’s most recent quarterly conference call, it was revealed that Vince McMahon, who underwent spinal surgery last month, was served with a search warrant, as well as a subpoena from a federal grand jury, just days prior to the procedure that put him on extended medical leave.

It was a rather surprising headline, as many thought that McMahon’s sexual misconduct scandal, which saw reports that he paid millions of dollars to women to sign non-disclosure agreements to keep his affairs from going public, was resolved, especially since he strong-armed his way back onto the WWE Boards of Directors after a brief “retirement” from the company that he bought from his father more than four decades ago.

The allegations, which included many consensual affairs, also involved very serious claims of coercion against female talent for affairs in exchange for job security, brought a wave of negative press for the publicly-traded corporation.

In true carny fashion, the scandal was more or less sweep under the rug by the end of last year when Vince put himself back on the WWE board and then the massive Endeavor merger, which will put the sports entertainment organization and the Ultimate Fighting Championship under the same banner, took over the headlines when it was announced this past April. Just this past week, the new corporation revealed it will be named TKO Group Holdings and is expected to go public on the stock market later this year, with the initial value of the newly-formed company estimated to be around $21 billion.

I wrote at the time of the original announcement that the historic deal will more or less cement WWE’s standing as the king of sports entertainment, as no group now or in the future could realistically challenge that type of media muscle. Without rehashing every detail, in an era when content is such a key factor in rights fees contracts, and advertisers look to spend big money to get their products in front of the right demographic to sift through the clogged media landscape, the TKO group will be a conglomerate that will have all the bases covered. The softer WWE product of the more modern era will cater to the younger and older demographics, while the UFC can draw the valuable 18-34 demographic. If one organization hits a skid, the other can pick up the slack until things are even again. Furthermore, as the streaming business compresses after it was flooded with options, the Endeavor merger is in a position to secure itself a decent piece of the pie, as well as maintain solid profits for its next TV deal, albeit at possibly a lower rate based on the climate of the industry. Keep in mind, networks are still willing to pay a premium for live programming since it’s considered more DVR proof than other shows so advertisers are willing to spend more cash to market their product.

However, could this latest round of legal grappling against McMahon impact the potential merger?

There’s a lot of legal jargon around all of this, but the bottom line is, the Securities and Exchange Commission is a government agency that is basically tasked with protecting stockholders and investors from misleading or false business practices. In short, if someone buys stock in a company, the SEC makes sure that all relevant information is available and accurate so that the potential shareholder knows what they are putting their money into when they decide to invest in an organization. That’s why the quarterly conference calls are such an important part of the WWE business model because it lets the current stockholders know the status of the corporation so they can decide if they want to retain their stock in the future, as well as a way to introduce new investors to the company when the successful numbers are touted with record-setting profits.

As mentioned, why this search warrant and subpoena were served now is the biggest part of this story, along with the possible ramifications. Federal investigations are expensive and given that the current political climate resembles a Royal Rumble, an agency isn’t going to spend that type of money unless they are reasonably confident that it will uncover something that they can prosecute in court. It’s a safe bet that the SEC thinks Vince is responsible for some type of wrongdoing if they are going to spend the tax dollars to continue to investigate it, especially after it looked like the story faded from the headlines.

But, this isn’t the first time that the emperor of sports entertainment squared off with the United States legal system.

As we know, the infamous steroid scandal of the ealry-90s led to the 1994 trial where Vince beat the distribution charges, and in retrospect, many cite that the government’s case was rather flimsy. Sure, McMahon knew that the vast majority of his roster used steroids, but he was too smart to ever be directly involved in anything. The government’s claim that wrestlers could more or less walk into Vince’s office to get their supply of steroids with a cup of coffee was almost laughable.

The rematch thirty years later might be a different story.

Keep in mind, despite being a billionaire for most of the past twenty years, McMahon paid for the settlements with the women that accused him of misconduct with company money. Vince has since paid back almost $17 million to the company after the Wall Street Journal published the story last year, which prompted an investigation from the WWE Board of Directors. Ironically, the business move that made him a billionaire, putting the WWE on the stock market, might also be the biggest hurdle for him in this entire scenario. As sleazy as the affairs were and Vince using cash to keep them quiet, if the WWE was still a private company, how the boss uses the money is moot. The non-disclosure agreements would simply be private transactions between him and the females he was involved with at the time. Assuming there were consensual affairs or someone was willing to take a payoff to sign a non-disclosure agreement that would prevent any legal responsibility, the misconduct scandal would only be negative publicity for Vince’s personal actions.

The fact that the company is public makes it a completely different situation. Vince is responsible to the stockholders, and given that he paid for his personal affairs with company money that was based off of the stakeholders investment in the organization, it’s very possible that there could be an SEC violation for misuse of WWE funds. Furthermore, the case might be made that McMahon mislead investors when he paid off accusers since his actions as the chairman might’ve impacted a stockholder’s decision to invest in the company, especially if the negative PR from his actions could’ve theoretically impacted the revenue of the organization.

Thankfully, for WWE brass, they can more or less put the company on autopilot in terms of the on-screen presentation. While the pandemic era eroded a portion of the audience, the core fan base will continue to spend money on the product and tune into the show. That consistency has value, especially given the previously mentioned climate of the TV business. Roman Reigns is the top guy and has at least another seven or eight years left in his career. The company is stocked with solid talent for the rest of the card that is a draw with the WWE audience so as long as management follows the standard formula, there will continue to be stable business.

Reportedly, Fox declined the most recent offer to re-sign for the rights to WWE Smackdown since the network has lost money on the hefty deal that was originally inked in 2019. With the merger on the horizon, there shouldn’t be too much concern when the current TV deals expire next year, as Endeavor will have the leverage to offer both WWE and UFC programming to networks. If the current McMahon investigate stalls the merger, it could cause a major problem for the sports entertainment group when they attempt to secure a new TV deal.

The biggest question mark will be if any potential SEC violations prevent the merger or McMahon’s role in it. Don’t expect to see Vince wearing the orange jump suit since he’d probably buy the Supreme Court before that happens, but it’s possible that he could be disqualified from any further involvement with the merger. Granted, he will still make millions of dollars since he’s still the majority shareholder of stock, but he clearly wanted the power to run the company, not just the cash, which is why he forced his way back onto the WWE Board of Directors before the merger was announced in April.

Again, there’s a reason that a search warrant and a subpoena were sent to Vince. This isn’t the early-90s where the government was looking to get some good PR with the attempted take down of the wrestling industry. The facts of the current scenario aren’t a part of the debate, McMahon used company money to attempt to cover up his personal affairs. If that violated SEC regulations remains to be seen, but the commission might have a legitimate case against McMahon.

Uncle Sam was booked like Dennis Stamp in 1994, but it might be Vince that looks like Barry Horowitz for the rematch in 2024.

What do you think? Share your thoughts, opinions, feedback, and anything else that was raised on Twitter @PWMania and

Until next week
-Jim LaMotta

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