Endeavor UFC, WWE to merge; Vince McMahon Appointed CEO – The Hollywood Reporter

Endeavor Holdings and sports-entertainment powerhouse WWE made things official on Monday, unveiling a definitive agreement to form a new publicly traded company consisting of two “creative, complementary” global sports and entertainment brands: the UFC and WWE. Endeavor will own a 51 percent controlling stake in the new company, with existing WWE shareholders owning a 49 percent stake.

The new company will be led by Endeavor CEO Ari Emanuel as CEO, and he will also continue in the same role in Endeavor’s remaining businesses, which include talent agency WME and the likes of IMG. WWE CEO and majority shareholder Vince McMahon will serve as CEO of the newly created company, 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 the UFC, with WWE CEO Nick Khan holding the same title of president as White but in WWE. The new company’s board of directors will consist of 11 later-appointed members, six of whom will be named by Endeavor and five by WWE.

Since going public in 2021, Endeavor has sought to build its business in sporting events, predominantly through the UFC and to a lesser extent via the PBR.

The deal is expected to close in the second half of the year. “Together, the UFC and WWE will have global reach, impressive scope, and multi-channel distribution,” the companies said. “Based on a combined 2022 fiscal year end, the UFC and WWE generated $2.4 billion in revenue and a 10 percent annual revenue growth rate since 2019.”

“We see significant operational synergies across the ecosystem,” Endeavor’s chief financial officer, Jason Lublin, said in a presentation to investors that streamed online Monday morning. He pointed to a combined cost base of $1 billion, excluding direct operating expenses, “we think about half of which is addressable.”

Lublin expected the merger of the UFC and WWE to secure between $50 million and $100 million in annual operating synergies, in part by following the model of a previous UFC acquisition that provided $70 million in cost synergies and similarly integrating WWE into Endeavor’s global infrastructure.

Endeavor also expects significant growth across a range of revenue areas, including from domestic and international media rights for the UFC and WWE which are under renewal just as streaming platforms show increased interest in sports rights.

Most of WWE’s revenue still comes from media rights, and the UFC’s exclusive media rights agreement was signed with ESPN in 2019 and will be renegotiated in two years. “Both the UFC and WWE enjoy valuable media rights through our world-class IP. We have a proven track record of success in media rights opportunities and have upcoming media rights renewals for both companies in the pipeline,” Mark Shapiro, President of Endeavor, told the investor presentation. horizon”.

Prior to these media rights renewal talks, Endeavor will create more content for the UFC and WWE, increase the number of live events, and strengthen licensing sponsorship. “We’re also exploring unique direct-to-consumer, go-to-market capabilities,” said Shapiro.

The newly merged UFC and WWE entity is also expected to increase its profitability by increasing sponsorship licenses and premium hospitality revenues by leveraging Endeavor’s sports and media infrastructure, which includes talent agency WME.

The company’s new publicly traded ticker symbol will be TKO, short for “Technical Knockout” in Combat Sports.

“This is a once-in-a-lifetime opportunity to bring together two leading sports and entertainment companies operating in the most attractive parts of the media ecosystem,” Emanuel said during the investor presentation. He noted Vince McMahon and his team’s record of innovation and shareholder value creation, as Endeavor represented WWE for 23 years.

“We know the business and are confident in what Endeavor can offer to unlock further growth and profitability. This transaction is a natural progression of the strategy we have refined and successfully executed over the past decade, and is a rare and compelling opportunity to grow our global business.”

McMahon added in a statement that accompanied the announcement of the deal: “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 tremendous success we have already achieved in partnering with their team on a number of projects, I think this is undoubtedly the best result for our shareholders and other stakeholders.

He also highlighted: “Together we will be a $21 billion sports and entertainment powerhouse with a collective fan base of more than 1 billion people and an exciting growth opportunity. The new company will be well-positioned to maximize the value of our syndicated media rights, enhance sponsorship monetization, and develop forms of new content and pursue other strategic mergers and acquisitions to enhance our strong brand stability.

McMahon returned to the sports entertainment company early this year, with WWE revealing it would be exploring a sale. In June of 2022, he had “voluntarily ‘retired’ from the company amid an investigation into misconduct by its board of directors. The investigation focused on allegations that McMahon had sexual relations with employees of the company and later paid the women millions of dollars in severance packages, along with Non-disclosure agreements The company said in November that the investigation had ended.

The price tags behind the UFC-WWE deal will also catch the attention of investors. The value of the project puts $12.1 billion on the UFC and $9.3 billion on the WWE, thus getting into “$21 billion” territory. The deal also puts a price of roughly $106 per share in WWE, before any post-closing dividend.

The UFC and WWE will each contribute cash to the new company, which will own approximately $150 million. Both sports and entertainment companies would then distribute the remaining funds on their balance sheets to existing shareholders of Endeavor and WWE, respectively.

The transaction was approved unanimously by the boards of directors of both companies. The transaction remains subject to the fulfillment of customary closing conditions, including regulatory approvals.

Shares of Endeavor were unchanged in pre-market activity as of 8 a.m. ET, while WWE stock was down 6 percent.