WWE, UFC Merger Is Official: New TKO Group Unveils Growth Strategy, Board, As Stock Set To Hit NYSE

09/12/2023

UFC, the mixed martial arts powerhouse, has officially tied the knot with Vince McMahon’s professional wresting juggernaut WWE, creating a new company called TKO Group that starts trading on the New York Stock Exchange today.

Execs from both sides will be ringing the NYSE opening bell to celebrate “a new premium sports and entertainment company serving more than one billion young and diverse fans, reaching viewers in 180 countries, and producing more than 350 annual live events,” according to UFC parent Endeavor, which is banking on new content, international expansion and an easy-to-understand investment thesis for Wall Street.

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It’s an epic moment as McMahon, who built the company his father founded into a powehouse and has been the face of WWE for decades, as well as its biggest shareholder, cedes control. Endeavor will own 51% of TKO (technical knockout, in wrestling parlance), with WWE shareholders holding 49%. As reported, Endeavor CEO Ari Emanuel becomes TKO’s chief executive. McMahon is executive chairman.

Endeavor president and COO Mark Shapiro has the same role at TKO.

Dana White remains CEO of UFC, Lawrence Epstein COO. Nick Khan is president of WWE (Raw, SmackDown).

Other execs include Endeavor chief legal officer Seth Krauss, who heads legal at the new company. WWE CFO Andrew Schleimer is chief financial officer. Lawrence Epstein remains COO of UFC.

The board of 11 brings members from Endeavor and WWE plus some new directors like Nancy Tellem, executive chair and chief media officer of Eko (formerly Interlude) and former president of CBS, and Jonathan Kraft, president of the New England Patriots and the Kraft Group investment firm.

Ari Emanuel, Mark Shapiro, Vince McMahon, Nick Khan and Egon Durban of Silver Lake, Endeavor’s largest investor, are also joined on the board by Atlanta Hawks CEO Steven R. Koonin; Peter C.B. Bynoe, senior advisor at global law firm DLA Piper; Sonya E. Medina, CEO of community service nonprofit Reach Resilience; and Carrie Wheeler, chief of online real estate firm Opendoor Technologies.

The new company, with an enterprise value of $21 billion, will have about $2.5 billion in annual revenue and over $1 billion in ebita (earnings before interest, taxes, depreciation and amortization). Endeavor will consolidate the results in its Owned Sports Properties segment – one of four – which also includes Professional Bull Riding and a stake in the EuroLeague basketball.

The plan is for TKO to leverage Endeavor’s expertise in domestic and international media rights, live events, global partnerships, licensing and premium hospitality, COO Shapiro told Deadline. Growth “will be powered by Endeavor and the flywheel that we have.”

Live sports are coveted programming and both brands have a devoted following with “a lot less overlap than you’d think,” he said, callin WWE “family centric” in the sense that “it kind of indexes more entertainment. Versus MMA, which indexes extremely diverse, very international, and kind of college age.” WWE has 1.2 billion followers on social media. UFC has 700 million.

Endeavor’s other three divisions are Representation led by WME, and currently being pummeled by ongoing Hollywood strikes; Events, Experiences & Rights; and Sports Data & Technology.

Rights renewals have been of major interest to Wall Street. UFC’s deal with ESPN expires in 2025. WWE’s linear contracts with Fox and Comcast/NBCU are up in October of 2024 and, “We’re in conversations now with multiple players on either renewing with incumbents or moving to another partner,” Shapiro said. WWE’s exclusive U.S. streaming deal with Peacock ends in 2026.

There’s been speculation of rolling the leagues together but that won’t happen domestically, at least for a while. “Internationally, there is a lot of opportunity for that. But currently [in the U.S.] we’ll be negotiating UFC and WWE individually, just by [virtue] of the fact that they’re in different renewal cycles.”

Endeavor’s IMG, which negotiates and distributes content globally, “is out there every day in these countries on the ground, selling these properties, and thus far we’ve had great pickup at the notion of selling these together.”

The combined company plans to expand its content offerings.

“Going forward, new negotiations bring new opportunities for us to explore new content from both a linear and streaming perspective,” he said, including “films and documentaries, more fights, short form content, social distribution.” Already, “both ESPN and Comcast have shown the willingness to allow us to produce more proprietary programs for other outlets in an attempt to better market the sport.”

Endeavor is also hoping the new company will give its stock a bump.

“It’s going to be highly profitable out of the gates, with very low leverage — we will be less than three times — easily scalable, with healthy free cash flow,” said Shapiro. “Certainly part of the strategy is… bringing more clarity and transparency to the assets,” he said.

Endeavor would be valued at a much higher multiple in the private market, he believes noting French billionaire François-Henri Pinault’s purchase last week of a majority stake in CAA for $7 billion.

McMahon called the deal “the culmination of a decades-long partnership between Endeavor and WWE across strategic initiatives including talent representation and media rights…Our focus remains on delivering for our fans across the globe as we take the business to the next level alongside UFC and Endeavor.”

“The creation of TKO marks an exciting new chapter for UFC and WWE as leaders in global sports and entertainment,” said CEO Emanuel. “Given their continued connectivity to the Endeavor network, we are confident in our ability to accelerate their respective growth and unlock long-term sustainable value for shareholders.”

TKO will begin trading today on the New York Stock Exchange under the ticker symbol TKO.

WWE, UFC Merger Is Official: New TKO Group Unveils Growth Strategy, Board, As Stock Set To Hit NYSE

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