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An IPO for the WWF
(10/19/99)

The World Wrestling Federation, better known as the WWF, hopes to pile-drive Wall Street with an initial public offering (IPO) of company stock on October 19th. By dropping its hat into the financial ring, the muscle-bound sports entertainment monster aims to pin down $170 million.

Currently, the WWF broadcasts wrestling events to more than 150 countries in several languages. It also has a profitable merchandising business, selling anything from "Layeth the Smacketh Down" t-shirts, to the WWF Pager. Its goal, however, is to strengthen its full-Nelson on the wrestling entertainment industry.

So then, you ask, what is an IPO? And why, if the WWF is already so successful, would it want to get into the stock market, something much more unpredictable than a Royal Rumble?

You Gotta Give to Get

Simply put, in order to make money, a company must spend money. The WWF shells out a lot of cash for the sophisticated broadcasting equipment used to beam the images of "No Mercy" and "Raw is War" up to the satellites and down to your TV set. It's expensive to pay other companies to develop ads to promote the events. And the WWF opens its wallet each time Stone Cold Steve Austin slams someone to the mat.

And that's where the IPO comes in.

The 411 on the IPO

When a company decides it's going to issue stock, the first step is the initial public offering. What the IPO does, essentially, is divide the company up into millions of slices, otherwise known as shares, that will be sold to the public. The value of these shares is generally based on the amount of money the company hopes to raise.

So, for example, if a company wants to raise $100 million company issues 1 million shares, each share will be worth about $100, or $100 million divided by 1 million shares. They are traded daily at places like the Nasdaq Stock Market, and the value of the shares will generally rise and fall with the value of the company.

In selling shares to the public, the company is transferring ownership from its initial owners to the shareholders. As the company earns money, or profits, that money is passed along to the shareholders in the form of a dividend. The amount each shareholder receives is based on the number of shares he or she holds.

But the most important part of the whole process is the money the company makes from the sale of the shares.

World Wrestling shares will trade under the code WWFE on the Nasdaq Stock Market. The initial public offering of 10 million shares were priced at $17 a share.

That money, for the WWF, will likely go to develop its sales and marketing to increase its visibility amongst viewers, to develop more merchandise based on the wrestlers, and to improve the overall operation of the organization.

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