Costs and Benefits in the World of Wrestling

In case you missed it or forgot about it already, John Oliver did a pretty scathing piece on how the WWE treats it wrestlers in regards to healthcare, retirement benefits and classifying the wrestlers as independent contractors instead of employees. After further review I’m not a big fan of the piece. Why? Because while he did not make anything up a lot of what he presented relied had old quotes from before the changes in policy there, a gratuitous drudging up of CM Punk to get a certain segment of wrestling fans riled up (I got nothing for the guy, especially after he admitted in court that he was never diagnosed with MRSA and sent back out on the road as he’d been claiming for so long), and generally framing what was essentially an infotainment package as if he were revealing the Pentagon Papers. I don’t watch cable news much at all anymore because the lines between informing and entertaining or triggering emotional responses are so blurred if they exist at all. Which means you end up with something that may have some good larger points (yes, wrestlers do need to be treated better by their employers even after all the changes that have been made over the last 10 years), but can be easily shot full of holes by someone who so desires.

But what I’d rather do is talk about this stuff on a level of solving the problems and not just railing about them for a bit then moving on, because that doesn’t really help matters at all. Getting mad at Vince McMahon alone when there are other wrestling companies that are acting the same way while providing less support than he does (while having just as much money available if not more) is not a way to address this stuff with any meaning. If you fire away at Vince but you got nothing to say to the Khan family what are we doing here? The Khan family is six times richer and is starting from ground zero with AEW, which means that they can create a company structure such that you can bake healthcare and retirement benefits into the cake and figure out how to operate with them included from jump as opposed to having to add those costs into an already existing structure without bringing the whole ship down. Sinclair Broadcasting which owns Ring of Honor also has more money to play with than WWE and can better absorb the shock to the system of adding those things to an existing framework. This sounds cold and callous for sure but healthcare and retirement benefits are huge financial liabilities to add to a company’s balance sheet and making the wrong choice can literally kill your entire operation so it’s best to ask those with real room to fail there to go first and then if WWE can’t keep up then you have some real competition in the market for wrestlers to choose between. Expecting the one company with the least room for failure to take the risk of trying and then just throwing your hands up if it flops isn’t a solution at all.

So what I’m going to do here is take a look at all of these things based on what I know from my own day job dealing with pensions, a few conversations I had with a former indie wrestler and a guy whose run some indie shows, and other information I was able to find through my own research. I don’t profess to be an expert on any of this stuff but I did my best to get a clearer picture of it all and am going to try and lay things out in a way that gives you a choice of what to conclude and not just try to get you all fired up with no direction. First up, the whole independent contractor thing. Oliver made the case that what they’re doing is illegal and not just immoral. As to the legality, well……..

From my understanding it’s ‘illegal’ in the sense that any lawyer who looked at it would likely tell you that. But WWE was audited by the state of Connecticut in 2009 over a two year period and their independent contractor language was found to be in compliance with the law. They and FedEx were both taken to court over it; the suit against WWE was thrown out but the judge ruled in favor of FedEx. So regardless of what you or I think, until a judge rules otherwise or regulators find them to be out of compliance or the laws themselves are changed then it’s on the up and up.

So what about retirement benefits? That happens to be the one piece of all this that I can speak about with confidence. Well, there are a few questions to ask here.

How’s it getting funded?

There are a few different ways to pay for a pension plan. One is for the company to foot the entire bill, and the other is for you and the company to share the costs by contributing to it. In 2019 pension plans funded entirely by the companies have gone the way of the dinosaurs; the few that remain are falling off one at a time and are being taken over by the federal government so the likelihood of someone like WWE starting one up that way is pretty much zero because they ultimately cost the company too much over time. So that leaves some kind of plan where both parties put something in, most likely some kind of 401k plan. That’s probably doable, but there’s a big problem it does not address…

What about wrestlers who’ve already retired?

This is where things get complicated. Most of the energy behind saying that the WWE should provide retirement benefits comes from the stories and imagery of older wrestlers having health issues and no money to deal with them. No matter what kind of plan you do, anyone who has come and gone before it starts won’t be included because pension plans don’t work that way. That’s the cold, hard reality of the situation; unless you create some kind of fund for men and women who already stopped being active then there’s nothing for them. So what if they do just that, set up some kind of fund; how would it work? Would people get checks every month or would it be on a as needed basis? I can’t see sending people checks every month because then you have to decide who’s eligible. Would it be the really older guys like Pat Patterson, or do the kinda older guys like Mick Foley get some, too? What about people who aren’t that old but just aren’t coming back like Ted DiBiase, Jr or Layla? There’s no fair cutoff point to be honest.

Well just set up a fund then, right? Sure, but does the company alone put money into that or do the current roster members put in, too? After all, guys like Mick Foley did help get WWE back into a financial footing where they could build towards being able to pay more money to people like AJ Styles and even Curt Hawkins; it’s not crazy to look to them to help out here. However you do it, the whole pension discussion is going on because guys like Mick Foley are fundraising for surgeries so any solution that doesn’t address guys like him isn’t really dealing with the issue. But barring Vince or someone else just reaching in their pocket and giving them the money straight up, which he has done, then there probably isn’t an answer here that’s going to satisfy everyone. Now getting back to the men and women currently working there, I have one final question….

Do they even want one?

Seems like yes would be the no brainer answer, because who doesn’t want a pension? Well……I’d be willing to bet that a lot of them don’t want something set up through the company. Why? Because that money as to come from somewhere and that is likely from out of their paycheck. If they did a 401K type of deal then they have to contribute and an entirely company funded plan would more than likely mean lower paychecks for everyone currently active. And from experience giving up money today to for a promise of a pension later is a risky proposition. Yes the federal government would insure the plan and take it over if need be but then there’s a chance you won’t get all your money due to limitations on you can get if the plan’s being administered by the government. So given all of that don’t be surprised if a lot of them would just rather get the money on the front end every two weeks and handle it themselves.

So what to do?

If I was in the driver’s seat I would set up a voluntary 401k plan, something that they can do if they so choose, along with a voluntary contribution fund to help the already retired men and women. That way no one has is forced into forgoing salary if they don’t want to and anyone who wants to chip in to help others can do that directly. It allows who want to give more to throw in as much as they want and doesn’t stick people making NXT salaries with a mandatory deduction that might make a difference in how they’re living. Now this doesn’t guarantee anything for the older folks but from where I’m sitting it’s probably the only way to do it that’s sustainable over the long haul and won’t stick the company with potentially huge long term financial obligations. That sounds cold, but if the company can’t fund it to keep it going then all the goodwill doesn’t matter anyway.

It’s important to look at this kind of stuff from a viewpoint of how to make it work and not just moral outrage. Whether it’s retirement benefits or healthcare this stuff is going to cost a lot and fundamentally alter the way every major company does business. It’s going to affect who they sign and how long they keep them. As with healthcare, potential retirement costs will mean that riskier prospects (in this case older guys and gals who are close to retirement age or whose bodies may be on their last legs) may not get signed at all because now washouts or people that get there and can’t go like they used to aren’t just costing you paychecks, they may be on your books for years afterwards. Actuarial tables and people whose bodies render them unable to work often before the age of 50 are not a good mix if you’re running a company be it WWE, or any other manual labor kind of job. Our retirement system in the United States just wasn’t set up for people to stop working before they hit 50 and then living to 80. So just as with providing healthcare to the wrestlers be careful what you wish for because it’s probably not going to go like you think.

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