Big Dave hat das ganze im Aktuellen Wrestling Observer Newsletter mal zusammengefasst:
Very quietly, WWE settled a multitude of different lawsuits regarding Securities Fraud and Insider trading related to Saudi Arabia, the Middle East TV deal and the October 31, 2019, Crown Jewel show and the alleged hostage situation for $39 million on 11/18.
It would be the largest lawsuit settlement in the history of the pro wrestling industry, more than doubling the prior $18 million record set in the settlement of Martha Hart’s wrongful death lawsuit against the company over the death of Owen Hart.
The City of Warren Police and Fire Retirement System, who owned stock in WWE, were one of a number of parties who filed what were essentially identical copycat lawsuits against WWE, Vince McMahon, George Barrios and Michelle Wilson, the latter who were the co-Presidents of the company at the time when they claimed were deceptive statements being made. Both Barrios and Wilson sold a large amount of WWE stock after saying an imminent television deal would be reached in the Middle East with the government of Saudi Arabia. Such a deal today, more than a year later, has not been finalized.
The company expects that the entire $39 million settlement will be paid by its insurance carriers.
In a release to investors, WWE wrote, “The company believes that resolving the matter is the right business decision and that it is prudent to end the protracted and uncertain class action process.”
The City of Warren as well as other law firms representing other stockholders filed a variety of suits starting in June. WWE attempted to have the lawsuits dismissed in August through pleadings by Jerry McDevitt.
However, in August, Judge Jed Rakoff of U.S. District Court in the Southern District of New York wrote sternly in response to McDevitt’s claim to throw out the suit, “Ultimately, none of defendants’ (WWE, McMahon, Wilson and Barrios) numerous arguments succeeds. Basically, this is because the complaint, while not a model of clarity, adequately alleges an overall claim of securities fraud that is not only plausible, but also complies with the relevant heightened pleading requirements applicable to this kind of action. While defendants have trotted out a virtual herd of objections to the (lawsuit), on close inspection, none is a winner.”
The key is the claim by in the lawsuit that WWE misled investors by claiming a new Middle East television deal was close and forthcoming. The other regarded the large amount of stock sales shortly after that statement came out from key executives, most notably Barrios and Wilson.
When Rakoff kept the case going, most with knowledge of the lawsuit and one person with knowledge of the judge felt a settlement had to happen. There was no way to risk allowing a jury to hear evidence, plus it would create a situation where name wrestlers would have to testify against the company related to the situation in Saudi Arabia and what really happened with the grounded flight.
According to one witness, WWE was asking for $80 million for Middle East television rights. He claimed that WWE told the station that the show would bring them 100 million over-the top-subscribers. Keep in mind that in the rest of the world combined WWE’s own over the top service generally is in the 1.5 to 1.6 million range, and usually hovering around 400,000 outside the U.S.
The witness said that his research indicated based on the number of fans in their coverage area, that the number would be 6.5 million, which based on existing numbers still sounds preposterous. He then later said that in negotiations with WWE he upped his projections to 10 million and then 15 million, saying not that he believed them, but because he was trying to reach a compromise to work out a deal. He said that WWE eventually lowered its asking price to $50 million and MBC upped its offer to $14.5 million per year when talks fell apart because the sides were not close on those numbers.
The suit noted that WWE’s previous deal in the Middle East with OSN was ended before expiration in December 2018 and known well before that it was not going to be renewed. The suit stated that Carlo Nohra, at the time the Vice President and General Manager of WWE Middle East that in September WWE had sent OSN a note because they were behind in payments and OSN in November sent WWE a letter saying they were contemplating future funding for their business and hoped to respond about the missed payments at the next board meeting.
Later that month, OSN told WWE they were exiting the sports business and the sides reached a settlement agreement on December 18, 2018, that OSN would pay WWE through March 31, 2019 and then the contract would end prematurely. This was not a WWE specific station decision, as OSN made the decision at the time to drop all of its sports channels.
The claim is WWE talked about renewing their Middle East rights fees after this fact when they knew that there were no renewal negotiations that were going to take place.
The lawsuit noted at the April investors call when asked about new television deals (this was about a number of deals that were expiring and not specifically the Middle East deal) Barrios said the company was in the middle of discussions and he would stay away from commenting on them. So the point they are arguing is that they believe WWE should have said the Middle East deal had fallen through and misled the market.
The Barrios statement was a broad general term about a number of deals, most of which were being negotiated and were markets where new deals ended up being signed, although in the U.K. the renewal ended up with BT Sports and not Sky and was for a significantly lesser amount of money.
The lawsuit claims that at that time WWE turned to the government of Saudi Arabia and MBC, for a new broadcast deal in the market but claimed that it wasn’t until the July conference call that they said the OSN deal had been terminated and they were trying to get a new deal.
A former WWE active wrestler who is listed as Confidential Witness No. 2, or CW-2, was one of the wrestlers who performed on the October 31, 2019 Crown Jewel event.
The aftermath was the subject of much controversy regarding the wrestlers being stranded in Saudi Arabia. WWE had to redo Smackdown in Buffalo the next night at the last minute using NXT talent and the few guys who didn’t go on that trip, and it actually turned into a positive as it led to significant increases in both Smackdown and NXT ratings over the next month.
There were a number of reports, with ours the most detailed, from hearing from a number of wrestlers who were on the trip. We spoke to both WWE and talent and there were huge discrepancies. WWE had one story, using a statement from Atlas Airlines saying it was their issue with a mechanical issue (later in other articles the story changed somewhat to the plane being grounded because it needed a part and that part it needed had to be flown to Saudi Arabia from Germany and thus the plane couldn’t take off).
A number of talents on the trip did not believe the story, stating they saw things far too suspicious, with the story going around from those high up in the company that McMahon and the Prince had gotten into an argument over money owed and that McMahon cut off the television transmission from the event. Talent was told that after McMahon did that, and the broadcast did go off the air, that the Prince created a situation that would not allow the plane the talent was on to leave, keeping them an extra day.
Luke Gallows & Karl Anderson have publicly talked about talking directly to people who heard Vince make the call.
Others were not as sure and did note that when WWE made arrangements for the second plane to take some talent to Smackdown, which didn’t arrive in time for the show, it wasn’t as if the government didn’t allow that plane to take off.
There was a meeting with talent after where company officials were mad at both talent and members of talent families tweeting under those circumstances and causing negative publicity for WWE.
At the talent meeting, pretty much nobody said anything negative. Most were quiet. A few spoke up but it was all praising the company.
According to the lawsuit, the witness substantially confirmed some of the media stories printed at that time. He said they were told first the plane needed to be pulled around and would be delayed. He said they were in the plane for 20 to 30 minutes and then taken off the plane. He said he was told by a stewardess personally that it seems someone doesn’t want us to leave the country. He said the pilot sounded distressed about the situation when he told the wrestlers that the plane would be unable to take off.
He said that they were told it was a mechanical issue but he looked outside the plane and saw a ton of guards wearing black militia outfits and armed with guns blocking the exit and staring at the wrestlers. It should be noted that this was a major discrepancy in stories because WWE in a story that came out more than a week after the event that tried to dismiss the stories here as untrue, had insisted this never happened but more than one talent claimed to have personally witnessed it when telling us the WWE’s version was not true. The witness said that it was a hostage situation, saying that term was the words used by other WWE personnel. The talent also brought up a conversation he personally had with Mark Carrano, the Senior Director of Talent Relations. He said that Carrano told him that Crown Prince Mohammed bin Salim and Vince McMahon had gotten into an argument regarding late payment for the June 7, 2019 show. Carrano also noted to him that during the show McMahon cut the live feed to Saudi Arabian television and that had made bin Salim very mad. This is key because in discovery this would all have to be explained and it would shine lights on the denials and other statements the company made publicly during the time. If it went to trial, obviously, that could be worse.
The wrestler also said when WWE put out its release to the media with the statement by Atlas Airlines that the delay was due to a mechanical failure, no talent spoke publicly afterwards, that many wrestlers were scared to speak because of the limited job opportunities in the industry at that kind of a salary level.
The wrestler in question was one of about a dozen wrestlers on the charter flight to Buffalo that didn’t get there on time for the show. The wrestler also told management he would never go to Saudi Arabia again. He claimed that he heard while on his plane that military police were holding the other wrestlers. Gallows & Anderson have confirmed that story and basically the entire story, although they said they weren’t happy not being able to leave, but joked that they saw Cain Velasquez and Randy Orton in the same position as them and felt safe, feeling the Saudis would never do anything to either Velasquez or Orton because they were such big stars, and thus, everyone, while inconvenienced, was safe. The original witness for the plaintiffs said WWE made comments regarding the story that it was a mechanical failure issue and that WWE denounced the stories that came out as laughable and conspiracies. He said he and another worker at the time went to management and said they wouldn’t go back. We also had heard there was talk about some talent trying to get people to sign a papers saying they wouldn’t go back.
It was believed nothing significant transpired from that and as far as the key stars went, on the next show, the same main people, John Cena, Daniel Bryan, Sami Zayn, Aleister Black and Kevin Owens were the only major names who didn’t go, but they all haven’t gone in some time. Of those, Zayn and Black were not allowed to go, although Zayn also said he didn’t want to go to begin with. There were a few others who refused to go to the last show, but many who said they wouldn’t ended up going as well.
WWE attorney Jerry McDevitt said the company would be working to get the lawsuit thrown out and claimed what the wrestler stated wasn’t true.
“These false allegations were originally made in two suits filed by two different law firms,” he said. “After the Court appointed a third firm to be lead counsel, WWE provided all three law firms with specific detailed facts from the persons with actual knowledge of the situation, including the phony allegation about the plane. The first two law firms then dropped their lawsuits to avoid sanction motions, but the third firm chose to ignore the specific facts they had been provided, and instead cited an unnamed disgruntled former wrestler with no knowledge of the facts. WWE is preparing its response to the lawsuit and will be moving to have it dismissed.”
Obviously when it comes to the arguments in the lawsuit, it is the television negotiations that were the key. If there was trouble after the October show, it’s been quelled since WWE has gone back and has been paid for shows they’ve done since. The lawsuit surrounds the idea that WWE misled shareholders and inflated the stock price based on statements without informing stockholders and the market that there were problems in the Middle East. While the situation from the October show was a news story at the time, the fact the deal is still ongoing means that it led to no long-term economic harm or changes in the lucrative live event deal, although there is still no television deal. A willingness to settle based on that would seem to indicate attempting to make sure actual details aren’t made public, or fear that testimony could likely lead to an even larger verdict.
