WWE News: Two Lawsuits Filed Over WWE's Disappointing Financials, Inflated Stocks, And Saudi Arabia Deal

Two new class-action lawsuits have been filed against World Wrestling Entertainment (WWE) by shareholders displeased with Vince McMahon and other executives. The lawsuits are the latest in what has been a chaotic few weeks for the company that has reeled from mass layoffs, the XFL folding, and employees' accusations of being forced to continue working despite coronavirus concerns.

The first of the two new lawsuits was filed on April 24 by two shareholders identified as Ryan Merholz and Melvyn Klein against Vince McMahon, Stephanie McMahon, Paul “Triple H” Levesque, and eight other executives or former executives. Merholz and Klein filed a 44-page suit alleging WWE executives were involved in several actions that weren’t in the best interest of shareholders.

Heel by Nature said the suit’s complaints against WWE included breach of fiduciary duties, waste of corporate assets, unjust enrichment, making false statements, artificially inflating WWE stock prices, and allowing executives to sell over $282 million in personal shares at inflated prices.

“In a single stock sale on March 27, 2019, WWE’s Chief Executive Officer (“CEO”) and Chairman of the Board, Defendant V. McMahon, sold more than 3.2 million WWE shares for over $261 million in proceeds,” the suit said.

It also cites WWE’s deal with Saudi Arabia and alleged tensions between McMahon and the Saudi government as a contributor to WWE’s disappointing financials.

“By at least early 2019, tensions in the relationship between the Company and the Saudi government had reached a breaking point," the suit reads. "The Saudi government had refused to make millions of dollars in payments owed to the Company. Further, OSN was contemplating the early termination of its obligations under its broadcasting agreement and had rebuffed the Company’s efforts to renew the agreement."

The second lawsuit was filed by law firm Kessler Topaz Meltzer & Check, LLP, and also takes direct aim at WWE’s relationship with Saudi Arabia. It alleges that disappointing financials and growing tensions harmed shareholders who purchased stock in WWE between Feb. 7, 2019, and Feb. 5, 2020.

"On April 25, 2019, WWE reported disappointing first quarter 2019 financial results and lower than expected guidance for the second quarter, revealing that revenues had fallen year over year on notable declines in the live events and consumer products segments," the lawsuit reads. "Several analysts tied the disappointing results and guidance to potential delays in scheduling a live Saudi event."

The lawsuit goes on to say that tensions reached a boiling point between WWE and the Saudi government after WWE Crown Jewel on Oct. 31, 2019.

"After the event ended, news reports surfaced claiming that the Saudi government was effectively holding a number of WWE wrestlers 'hostage' in retaliation for WWE’s decision to delay a live broadcast of Crown Jewel until the Saudis made tens of millions of dollars in past due payments. Estimates for the amount outstanding ranged from $60 million to $500 million," the lawsuit reads.

The problems with Saudi Arabia, along with a lack of renewed broadcast deals, contributed to WWE shares plummeting 16% on Oct. 31, 2019.

As of Wednesday, 3:16 p.m. ET, shares of WWE were trading at $45.22, a gain of 1.92% on the day.