The man who became a billionaire through fake fighting

The recent Mr. McMahon documentary shed light on the complex professional and personal life of World Wrestling Entertainment (WWE) founder and billionaire Vincent K McMahon.

While McMahon’s legacy is open to debate, what is clear is that he turned a regional wrestling company into a global phenomenon worth billions.

It is up to the individual whether this is the result of immense business acumen or an inherent ruthlessness in exploiting an already powerful market position.

McMahon’s business journey started as a young adult when he bought the World Wrestling Federation (WWF), which would become the WWE in 2002, from his father, Vincent J McMahon, for $1 million.

This purchase took the form of a loan, repayable over a year. If the younger McMahon missed a payment, ownership would revert back to his father and the other business partners, and the money he had paid would not be returned.

However, the Mr. McMahon documentary does not mention that Vincent K. McMahon did not have to pay the loan back out of his own pocket. He could use the money generated by the company to repay the loan.

Therefore, the loan served primarily as a test to see if McMahon Jr. could run the company successfully and profitably.

He passed this test and gained control of the company in 1982 – leading to the beginning of McMahon’s dynasty.

When McMahon took over the WWF, it was one of many regional wrestling promotions in the US.

The US wrestling industry was almost completely run under the National Wrestling Alliance (NWA), of which the various regional promotions were members – with few exceptions.

Each NWA member was forbidden from running wrestling shows in another’s “territory,” ensuring that a multitude of promotions could thrive within their respective markets.

Within the NWA, McMahon’s WWF has the enviable position of having exclusive rights to the territory covering the New York area.

This large market was particularly attractive for important business opportunities like TV rights and sponsorships, and it gave the WWF significant financial strength compared to most of the other NWA territories.

McMahon leveraged the company’s regional advantage to get syndicated TV deals across the US, and within a year, the WWF was indisputably the largest wrestling promotion in the US.

At this point, McMahon pulled the WWF out of the NWA and set his sights on a new goal—building a national wrestling juggernaut.

With the wealth of money he was receiving from the WWF’s various TV deals and the company’s dominance of the lucrative New York market, McMahon quickly began conquering various wrestling territories.

His strategy was simple:

1. Sign a rival territory’s biggest stars to more lucrative contracts than their current promotion can afford.
2. Run shows in the territory using these big stars – establishing the WWF as more attractive to fans than the existing territory.
3. The territory loses money and is forced to either sell up or go bankrupt.

This strategy enabled McMahon to quickly turn the WWF from one of many local wrestling promotions into a national phenomenon.

The WWF’s status as a national force was sealed at the first-ever Wrestlemania show in 1985, which featured appearances from mainstream celebrities like Mr T, Cyndi Lauper, and Muhammad Ali.

From this point forward, the WWF became a money-making machine, and “WWF” and “WWE” soon became shorthand for the entire US professional wrestling industry.

McMahon is mortal

Despite his huge success with the WWF, McMahon faced numerous challenges during his time running the WWF.

This was most notable with the WWF’s biggest rival, WCW, a former NWA member, which managed to survive McMahon’s advances.

WCW was the only real national competition to the WWF in the late 1980s and 1990s. It famously achieved better TV ratings than the WWF for 83 consecutive weeks, from June 1996 until April 1998.

One of the biggest drivers behind this success was WCW’s ability to effectively beat McMahon at his own game of outspending the competition.

This was thanks to WCW being owned by billionaire media mogul Ted Turner, who owned the Turner Broadcasting Company.

He leveraged his wealth to drastically overpay for the biggest wrestling stars, much like McMahon had done in his initial national expansion.

This resulted in WCW overtaking WWF in popularity in the mid-to-late 1990s until financial mismanagement and poor creative decisions saw WCW crumble.

It did, however, show that McMahon could be beaten, particularly when others had the financial firepower to compete with him.

Business failures

McMahon also has several other major business failures to his name. He twice attempted to launch a rival American football league to the NFL, the XFL. Both times, it flopped: first in 2001 and then again in 2020.

McMahon also repeatedly tried to expand the WWE beyond wrestling, including through a film studio called WWE Studios, a WWE-themed restaurant, and much more.

However, none of these has proven to be a long-term success, and it remains true that McMahon’s “only” significant business success was growing WWE into a global wrestling giant.

McMahon eventually sold the WWE to UFC owner Endeavour at a valuation of approximately $9 billion.

While he was originally appointed to the Endeavour Board of Directors as part of the deal, he has since left the organisation entirely following numerous controversies from his personal life coming to light.

McMahon’s legacy as a businessman will always be polarising.

Was he an innovative and superb businessman who somehow turned fake fighting into a multi-billion dollar industry?

Or was he simply in the right place, at the right time, and possessing the raw ruthlessness to take advantage?

The answer may lie somewhere in the middle.