Sunday, March 18, 2012

WWE Exposes The Business To Avoid Taxes

To avoid various fees, WWE worked desperately for years to get pro wrestling out from under the control of various state athletic commissions.  New Jersey was the most frustrating, as they taxed proceeds brought in from any kind of broadcast of sporting events in the state.

According to the filing, "This media rights tax is imposed on a declining basis, 5% on the first $50,000, 3% on the next $100,000, 2% on the next $100,000 and 1% on amounts in excess of $250,000, with a cap of $100,000 in tax."

With WWE not being a competitive sport, they went for broke and outright admitted it in 1989 to try to get the tax removed so they could profit more from TV tapings and pay-per-view events there.  Here's how it was described in a 1990 filing:

"B. Titan Sports, Inc. and Professional Wrestling.

Wrestlemania 29 New Jersey
Titan is a Delaware corporation headquartered in Connecticut and authorized to do business in New Jersey. Titan, known popularly as the World Wrestling Federation (WWF), is engaged in the creation, production and performance of professional wrestling exhibitions throughout the world.

Titan has submitted affidavits of Linda McMahon, its executive vice president, and Gerald Morton, an expert on modern professional wrestling. These affidavits state that the struggle between the wrestlers is actually simulated, and that there is no real competition to win.

Also according to the affidavits, the wrestlers play distinct characters or personas and act out moral sagas in a form of drama that includes 'plots, subplots, characterization, theme improvisation, spectacle, acrobatic expression, critical expression, moral expression and political expression.' The board has not submitted any certification to the contrary."

When the McMahons admitted that wrestling wasn't a legitimate competitive sport, it was a pretty big news story.  It got a decent amount of time on ABC's Nightline, where Captain Lou Albano proceeded to explain that while the WWF was saying they fixed matches, he didn't believe that it was true of the NWA or AWA.
Regardless, the tax wasn't lifted until 1997 under Gov. Christine Todd Whitman.  WWE presented her with a replica belt to thank her and ran a memorable Summerslam pay-per-view that year at what is now known as the Izod Center in East Rutherford.

I thought it was worth reporting this story now because it was just recently been announced that Wrestlemania 29 will be held in New Jersey next year, and I can say for certain that if New Jersey had not lifted those taxes no WWE events, let-alone Wrestlemania, would be held there. Its funny, I still think of wrestling as a sport, and I assume all the decisions the powers that be make are always in the best interest of the fans and the wrestlers. Now I realize it is a business and nothing more. Wrestlemania will be held where the WWE can get the best finical deal and make the most money, not where the fans want it most. Just as I am sure the wrestler that plays ball backstage, will work for whatever money they want, and will do whatever they want will always rise to the top over much more talented and popular wrestlers that perhaps hold out for too much money or refuse to follow through with stupid storylines and bad scripts or perhaps don't want to lose to those other wrestlers that get the push. Its a real shame. The fans pay the money, we deserve to get to go to the shows and see the wrestlers we want to see!

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