Linda McMahon Helped Kill Small Business In Pro Wrestling
Donald Trump's pick to head the Small Business Administration, Linda McMahon, is no friend to small business
As if we needed more proof that reality has become the WWE Films cinematic universe, President-elect Donald Trump announced last Wednesday that Linda McMahon—one of the WWE’s most powerful figures for 29 years next to her husband, company chairman and CEO Vince McMahon—is his choice to head the Small Business Administration. Mrs. McMahon left the WWE in 2009 to run as a Republican for Connecticut’s US Senate seat in 2010 and 2012 but lost both elections despite investing some $97 million of her personal fortune into those campaigns, a blow that many expected to be the end of her political career.
However, the quid pro quo world of politics has smiled upon the McMahon family’s largesse. Vince and Linda McMahon donated $4 million to the Trump Foundation in 2007, a year that saw the Trump foundation with under $5,000 in the bank at one point. Further, FEC filings show Linda gave $7 million to pro-Trump super PACs this year. All told, not a bad return on investment, as Linda will now control an administration with offices in every state in the union and the power to extend loans and federal contracts to businesses in those states.
“Once you’re his friend, he is loyal to the end,” McMahon said of Trump in an interview with the AP in September. “He’s an incredibly loyal, loyal friend.” Apparently so.
It must be noted, though, that there is a palpable irony in McMahon’s posting to the Small Business Administration given her experience with her own altogether massive business, World Wrestling Entertainment. McMahon acted in a variety of top ranking roles for WWE from 1980 through 2009, three decades in which the company worked ruthlessly to eliminate regulations, exploit workers, and perhaps most notably given her upcoming public service appointment, kill any semblance of competition in the marketplace.
Linda McMahon’s first job out of college was working for the corporate law firm Covington & Burling, where she trained as a paralegal. She used her knowledge of intellectual property law picked up there in her role with WWE, helping establish lines of action figures and negotiate TV deals with giants like Viacom.
“I didn’t really start out thinking that I was part of a man’s business,” McMahon told Sports Illustrated in June. “I was just really working with Vince, helping him at what he was trying to do. Each of us has different strengths, and mine were detail, organization, administration and the financial picture.”
That combination of organizational ability and intellectual property knowledge proved critical as the WWE, then the WWF, expanded under the McMahons from a regional company serving the New York area to the singular American wrestling company, serving the entire nation. Rather than be a part of the National Wrestling Alliance, the group of promoters who ran wrestling shows across the country, the McMahons worked to eliminate the competition.
A major piece of their strategy was the use of the burgeoning television markets of the 1980s—cable and pay-per-view—to push into new territories and establish the WWF brand as number one above any and all local companies.
Thanks to the rise of the WWF’s USA network cable show and the WrestleMania pay-per-view event, which began in 1985, the company had grown into a truly national outfit by the mid-1980s. As the first to enter the national market, they enjoyed a monopoly, one they were determined to protect, as the McMahons showed when they were faced with a challenge to WrestleMania from NWA President Jim Crockett’s eponymous company in 1987, as Wrestling Observer Newsletter editor Dave Meltzer recalls.
When Crockett announced a pay-per-view event, Starrcade, for Thanksgiving of 1987, the WWF immediately responded by scheduling his own pay-per-view event live from Cleveland, the original Survivor Series, which has run annually ever since. The WWF then threatened cable carriers, declaring that any who ran Crockett’s event would be barred from running WrestleMania the next summer.
“By 1987, WrestleMania was a huge success on pay-per-view,” Meltzer says. “Basically, almost everybody who promised Crockett they would run had pulled out. I think he had five systems in the entire country that didn’t back down to McMahon, everyone else did. Crockett had spent all this money and still did the pay-per-view. Out of five systems, there’s hardly any money coming in. Originally, they probably would have had a couple hundred thousand buys. Even at those prices it would have been over a million dollars for sure, a million to two million dollars easily that he would have made on that show.”
That would prove the end for Crockett in the wrestling business. In 1988, with Jim Crockett Promotions on the verge of bankruptcy, he sold to Ted Turner for $9 million. “When [Crockett] went out of business, I’m sure that million or two million dollars would have been pretty important. It wasn’t the only reason they went out of business, but on the list of reasons it was up there.”
The revenue stream from television was critical to the McMahons’ ability to grow the company from a regional firm into a national empire. They needed every bit of that added revenue to raid their former NWA partners for talent, including Hulk Hogan, Rowdy Roddy Piper, The Iron Sheik, and others.
By ravaging the old NWA—signing the stars they wanted and leaving the rest in the dust—the McMahons created a world in which the WWE became American wrestling. Vince told Sports Illustrated in 1991, “In the old days, there were wrestling fiefdoms all over the country, each with its own little lord in charge. No takeovers or raids were allowed. There were maybe 30 of these tiny kingdoms in the U.S. and if I hadn’t bought out my dad, there would still be 30 of them, fragmented and struggling. I, of course, had no allegiance to those little lords.”
The framework provided by the NWA made it easy for the McMahons to make their monopoly—they simply bought out most of their old NWA competitors. By the 1990s, it was down to the WWF and Ted Turner’s WCW, which eventually merged with the WWE by 2001 after the Monday Night Wars, which saw both companies engage in progressively more absurd behavior in efforts to win in the ratings.
Since then, WWE has been the only major professional wrestling company in the country. Independent ventures like Ring of Honor and TNA fill a market niche, but they don’t operate on anywhere near the scale of WWE and are always a talent raid away from losing their biggest stars.
As ever, the bedrock of wrestling’s profitability is its low production costs. Promoters like the McMahons pay for arenas, they pay for television production, and they pay for the wrestlers themselves. One of Linda McMahon’s primary missions throughout her time with WWE was to lower the cost of that last category by systematically removing regulations on wrestling performers, like those that forced wrestlers to be licensed by an athletic commission like boxers, or those that would require wrestlers to be considered employees rather than independent contractors.
The first wave of states to agree with the WWE’s contention that its workers were entertainers, not athletes, covered every geographic region and included some of the nation’s largest states, ranging from New Jersey to Michigan to Florida to Texas to California.
The votes were often overwhelming—including a 96-0 margin in the Michigan State House, and a 37-1 margin in the New Jersey State Senate. These votes were obtained by parading WWE spokespeople and wrestlers in front of legislative bodies and exposing wrestling’s big lie: it’s all fake.
Specifically, the WWE asked for legislation defining professional wrestling as, “an activity in which participants struggle hand-in-hand primarily for the purpose of providing entertainment to spectators rather than conducting a bona fide athletic contest.” That was more than enough to convince legislators to eliminate the pesky licensing fees and physical examinations previously required of wrestlers—lawmakers could say they reduced taxes and made wrestling more accessible, all in a day’s work.
McMahon has been clear in the past about her economic position, favoring tax cuts, eliminating financial reforms, and cutting social programs—including the SBA, which she suggested was expendable in 2012.
That should give you some idea of how much she cares about the common people looking to start a family business, people whom the programs of the SBA are supposed to help. No, McMahon’s appointment to the SBA should be expected to mirror the stances she held during her time with WWE: against competition, against regulation, and against workers.