Additional Details On WWE – XFL Lawsuit
As previously reported, a lawsuit was filed against WWE on Thursday, Dec. 26 by a stockholder who wanted to get a look at the company’s internal records as it pertains to the revival of the XFL by Chairman Vince McMahon. The lawsuit states that there is “a credible basis to believe” that McMahon and other WWE senior officers breached their duties to WWE investors by using valuable company resources to finance the resurrection of the XFL.
Forbes reports the plaintiff is the Oklahoma Firefighters Pension and Retirement System, which owns 107 shares (worth $6,867.26 as of this writing) of WWE stock.
The following complaints are listed in the suit:
* Did Alpha Entertainment, the XFL’s parent company, which is wholly owned by Vince McMahon, pay fair market value to WWE for the intellectual property of the original XFL, which included giving WWE a percentage of the company?
* Is Alpha paying WWE fair market value for the support services that WWE is providing as part of that deal?
* Was the XFL revival announced before the deal was completed?
* In general, did McMahon and WWE, including WWE’s lawyers, act in a way that was not in WWE’s best interests?
The lawsuit goes into further detail that there hasn’t been enough oversight on Vince by company board members as he “engages in transactions that are in conflict with WWE’s interests” and wants a look at WWE’s internal records.
There is also a footnote in the complaint regarding the AAF’s potential role with the XFL. McMahon reportedly rejected a merger with the AAF in December 2018. Robert Vanech sued the AAF and Charlie Ebersol, claiming he came up with the AAF and he was entitled to 50% ownership. The lawsuit filing reveals that the original plan was for the AAF to bring back the XFL name for their new league and McMahon was offered $50 million by Ebersol for the intellectual property.
Ebersol has denied any details of these deals.
It was previously reported back in 2018 that McMahon created the entity Alpha Entertainment in order to launch the new version of the XFL in 2020. A WWE 10-Q SEC filing stated the following:
“Under these agreements, WWE received, among other things, an equity interest in Alpha without payment by or other financial obligation to WWE. The investment will be accounted for under the equity method of accounting. WWE’s equity interest in the net assets of Alpha at the transaction closing date on April 3, 2018 was insignificant. During the three months ended June 30, 2018, WWE recorded its proportionate share of Alpha’s reported losses which reduced the investment value to zero as of June 30, 2018. In addition, WWE entered into a support services agreement to provide Alpha with certain administrative support services with the costs of such services billed to Alpha on a cost-plus margin basis. Amounts billed to Alpha for the three and six months ended June 30, 2018 were not significant.”
The XFL return is slated to launch on FOX on Saturday, Feb. 8.
