The Rise and Fall of TNA: Vol. 3 - For Sale #1
After suffering from its own financial problems due to an on-going investigation against them for accounting irregularities, Health-South Corporation pulled out as a financial backer of NWA TNA Wrestling in August of 2002.
The fact is, the company was bleeding money. The weekly PPV model was innovative, but costly, and the company just wasn't pulling in enough buys to make it a success.
From the first PPV in June of 2002, to August, just 3 months later, so much doom occurred. Lets run down some of the highlights from behind the scenes.
To make matter worst, they filed a fraud and breach of contract lawsuit against the company that handled their marketing and consulting services. Basically, the TNA buyrates for their PPV's were very low, as in the 10,000 to 25,000 range. Jerry Jarrett claimed that the firm they hired falsely claimed that numbers for the first show were in the 80,000 range, and as a result the company spent way more money than they could afford on the next several shows. Once they found out that the claims were hugely inflated, they were forced to make all the cost-cutting measures in order to stay in business.
Slap yourself if you believe that shit.
Jeff Jarrett knew the marketing company from his time working in WCW, so he contracted them and paid a six-figure annual salary to set up a pay-per-view marketing plan. They were to get clearance for the shows with InDemand, DirectTV and Dish Network, then get advertising copy and such to them so the shows could be promoted well in advance of the first episode.
Jarrett talked before the first show about how TNA was going to receive unprecedented support from the PPV industry, yet it seemed from day one that they were getting almost no support at all. Many fans tried to order the shows but were told by their cable company that it wasn’t being carried. All the major cable TV magazines, such as the DirecTV monthly guide, made either very little or no mention whatsoever of the programs. Apparently, this lack of support led to Jarrett thinking something was up.
After the first show, Jarrett claimed that the company sent him a letter on InDemand stationary claiming that projections for the first show were in the 80,000 range. Which was why Jarrett and company set the budget with a break-even of 50,000 buys per week. Jarrett apparently trusted these figures completely and continued running shows with the original budget.
Numbers from independent sources, including WWE, soon began trickling in, and indications were that TNA absolutely did not do even 50,000 buys. Jarrett continued to insist that they wouldn’t get accurate numbers for some time. Meanwhile, he continued to run on the original budget.
Finally, after being repeatedly told by friends and acquaintances that ordering the shows was impossible in their area, Jarrett finally began questioning InDemand about the numbers.
The bottom line is that things were looking bad for TNA, and somebody had to be a scapegoat.
There was still no evidence that 50,000 fans were willing to pay $10 per week for a WWE alternative. The belief that these fans existed is based on the fact that during the height of the wrestling wars, over ten million people were watching wrestling every Monday night. The number that currently watch Raw today is more than half of that. However, none of the alternatives that have sprung up since the death of WCW have done 50,000 buys.
The fact is, TNA appealed to a niche group of very hardcore wrestling fans. Casual fans have no interest in paying $10 to see an alternative to WWE. Only the hardcore fans do, and no matter what is said about the poor TNA marketing, the fact is that every hardcore fan on the Internet knew about the shows, and they were not buying them by the masses either.
There are also other factors that have negatively affected business that have nothing to do with PPV marketing. Ticket sales sucked too. The reason sales were not through the roof is because, as noted, the product appeals to hardcore wrestling fans, and there are not enough of them to sell out the building TNA was running at every week.
TNA was in a no-win situation. Realistically, they should have set the budget with the expectation that they’d do 10,000 buys, and then increased the budget once accurate numbers came in. Of course, had they done so, the shows would have looked low-rent from day one. The other option was to set the budget higher and put on a more quality production, hoping that buys would be huge right out of the gate. As it turns out, that’s what they did, and now they’re paying for it and looking for a scapegoat.
After this news broke, things started free falling quickly. The mood was bleak backstage at the shows and talent were scared the doors could close i any day. Publicly, the company was claiming to have gotten the budget down to between $75,000 and $100,000 per week, which would mean they could survive on 15,000 or so buys per show.
However, guys were getting pay cuts, and and certain high end legends like Ricky Steamboat were axed from the plans. Many seemed to be under the impression that the end was near. This was their ninth show, and it was imperative that they run at least thirteen so as not to incur serious financial penalties from InDemand. If they didn’t run thirteen shows, they wouldn't have gotten one dime of the buyrate money collected, which would have been a disaster of Biblical proportions for Jerry Jarrett. So they had to survive four more weeks, then possibly lick their wounds and cut bait.
Then all of a sudden, the company started taping a lot of shows in advance, instead of going live every week, which on the surface could not have been a good sign. They claimed it was due to scheduling issues. But in reality, this was all done to slash the budget for the time being, since running a taped show is far cheaper than running a live event.
Then, In September 2002, as the company was on the verge of going bankrupt, Jeff Jarrett met with TNA employee Dixie Carter to discuss a possible sale of the promotion to her father’s company, Panda Energy.
The Dallas, Texas-based energy company, purchased a controlling interest of 72% of TNA Wrestling, from founder and CEO Jerry Jarrett along with co-founder and TNA President Jeff Jarrett for $250,000. All interests owned by Health-South Corporation were also swept up by Panda Energy in the sale. The now former “J Sports and Entertainment” that was founded by Jerry and Jeff Jarrett is renamed “TNA Entertainment” by Panda Energy. The Jarrett’s now owned the remaining 28% of the company they founded.
Join us next time as we discuss the Dixie Carter era.