The cold economics of professional wrestling

Is Linda McMahon, co-owner of the World Wrestling Entertainment empire a villain, or is she an American corporate success story?

By , Guest blogger

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    In this December 1999 file photo, professional wrestler Hollywood (formerly Hulk) Hogan signs autographs for fans in Stuart, Fl.
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Linda E. McMahon is running for a Seat in the U.S Senate. Her main claim to fame is the Professional Wrestling empire she helped to build up and discussed here . The article hints at the old Marxian "exploitation" of workers (i.e wrestlers). Using legal loopholes, the WWF wrestlers were not paid health insurance and do not have a retirement pension. Many of them did suffer long term injuries and the article hints that the wrestlers didn't know they would face this risk ex-ante.

But, the article does make clear that there is a "Superstar Tournament" taking place. If Matthew Kahn is a young wrestler and if he can become the next "Andre the Giant or the Hulk" then I can become very very rich but what is the probability of that? In this sense, Professional wrestling with its risks for the new guys but superstar pay for the top dogs resembles Steve Levitt's Chicago Drug Gangs .

So, is Ms. McMahon a "villain" or is she an American success story as she produces a type of entertainment that we have exported around the world?
From the wrestlers vantage point, an economist would say that this is the old story of occupational choice (to be a wrestler or get a PHD in economics) and ex-ante uncertainty (will I become the next "Hulk" ) versus ex-post inequality --- most wrestling guys will have a low Q rating and won't become network stars. So, what did Hulk do right? Was it the blond hair? What non-cognitive charisma skills allowed him to succeed while the Mikey Rourke's of the world fail?

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