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Endeavor Group Holdings and sports entertainment powerhouse WWE made things official on Monday, unveiling a definitive agreement to form a new, publicly listed company consisting of two “iconic, complementary” global sports and entertainment brands: UFC and WWE. Endeavor will hold a 51 percent controlling interest in the new company, with existing WWE shareholders owning a 49 percent interest.
The new company will be led by Endeavor CEO Ari Emanuel as CEO, who will also continue in the same role at the remaining Endeavor business, which includes talent agency WME and the likes of IMG. WWE executive chairman and majority shareholder Vince McMahon will serve as executive chairman of the newly created firm, while Mark Shapiro will be president and chief operating officer of both Endeavor and the new company. Dana White will continue in his role as president of UFC, with WWE CEO Nick Khan holding the same president title as White but at WWE. The board of directors of the new firm will consist of 11 members who will be appointed at a later date, with six to be named by Endeavor and five designated by WWE.
Since going public in 2021, Endeavor has looked to build out its sporting events business, mostly through UFC and to a lesser degree via PBR.
The deal is expected to close in the second half of the year. “Together, UFC and WWE will have global reach, impressive scale and omnichannel distribution,” the companies said. “On a combined 2022 fiscal year-end basis, UFC and WWE achieved revenue of $2.4 billion and a 10 percent annual revenue growth rate since 2019.”
“We see significant operating synergies throughout the ecosystem,” Endeavor CFO Jason Lublin told an investors presentation that was webcast Monday morning. He pointed to a combined $1 billion cost base, excluding direct operating expenditures, “half of which we believe are addressable.”
Endeavor, which also owns WME-IMG, saw its top execs keen to argue purchasing the UFC in 2016 for $4 billion as part of an aggressive push into content ownership had paid off well and investors could expect the same as WWE was now absorbed into the mix.
Lublin predicted the UFC and WWE merger will secure $50 million to $100 million in annual operating synergies, in part by following the earlier acquisition model for UFC, which delivered $70 million in cost synergies and similarly integrating WWE into Endeavor’s global infrastructure.
Endeavor also expects significant growth across a host of revenue areas, including from domestic and international media rights for UFC and WWE that are up for renewal just as streaming platforms increasingly show interest in sports rights.
Most of the WWE revenue still comes from media rights, and UFC’s exclusive media rights deal with ESPN was signed in 2019 and will be renegotiated in two years time. “The UFC and WWE both have valuable media rights through our world class IP. We have a track record of success in media rights opportunities and we have upcoming media rights renewals at both companies on the horizon,” Endeavor’s Shapiro told the investors presentation.
Ahead of those media rights renewal talks, Endeavor will create more content for UFC and WWE, increase the number of live events and bolster sponsorship licensing. “We also are exploring unique direct-to-consumer, go-to market possibilities,” Shapiro said.
The newly combined UFC and WWE entity is also expected to grow its profitability by increasing sponsorship licensing and premium hospitality revenues by leveraging Endeavor’s sports and media infrastructure, which includes the WME talent agency.
The new publicly traded company’s ticker symbol will be TKO, which is short for “technical knockout” in combat sports.
“This is a once-in-a-lifetime opportunity to bring together two leading pureplay sports and entertainment companies that operate in the most attractive parts of the media ecosystem,” Emanuel said during the investor presentation. He pointed to McMahon and his team’s track record of innovation and shareholder value creation, as Endeavor had represented WWE for 23 years.
“We know this business and are confident in what Endeavor can deliver to unlock even more growth and profitability. This transaction is a natural evolution of the strategy we’ve been refining and successfully executing for the past decade, a rare and compelling opportunity to grow our global business,” he added about bringing UFC and WWE together.
Added McMahon in a statement that accompanied the announcement of the transaction: “Given the incredible work that Ari and Endeavor have done to grow the UFC brand — nearly doubling its revenue over the past seven years — and the immense success we’ve already had in partnering with their team on a number of ventures, I believe that this is without a doubt the best outcome for our shareholders and other stakeholders.”
He also highlighted: “Together, we will be a $21-plus billion live sports and entertainment powerhouse with a collective fan base of more than a billion people and an exciting growth opportunity. The new company will be well-positioned to maximize the value of our combined media rights, enhance sponsorship monetization, develop new forms of content, and pursue other strategic mergers and acquisitions to further bolster our strong stable of brands.”
McMahon returned to the sports entertainment company early this year, with WWE unveiling that it would explore a sale. In June of 2022, he had “voluntarily stepped back” from the firm amid a misconduct investigation by its board. The probe focused on allegations that McMahon had sexual relationships with employees at the company and subsequently paid the women millions of dollars in severance packages, along with nondisclosure agreements. The company said in November that the investigation had concluded.
The price tags underlying the UFC-WWE deal will also draw investor attention. It puts an enterprise value of $12.1 billion on UFC and $9.3 billion on WWE, thereby getting into the “$21 billion-plus” territory. The transaction also puts a price of approximately $106 per share on WWE, before any post-closing dividend.
UFC and WWE will each contribute cash to the new company so that it holds approximately $150 million. Both sports and entertainment companies will then distribute the remaining cash on their balance sheets to Endeavor and WWE’s existing shareholders, respectively.
The transaction has been unanimously approved by both companies’ boards of directors. The deal is still subject to the satisfaction of customary closing conditions, including regulatory approvals.
Endeavor shares were unchanged in premarket activity as of 8 a.m. ET, while WWE’s stock was down 6 percent.
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