@Vince McMahon
WWE and its parent company, Endeavor Group Holdings have signed an agreement to form a new, publicly listed company that will merge the sports entertainment powerhouse with UFC. Endeavor will hold a 51 percent controlling interest in the new company, with existing WWE shareholders owning a 49 percent interest, according to The Hollywood Reporter.
The new company will be led by Endeavor CEO Ari Emanuel, who will continue in the same role at the company’s remaining businesses, which includes talent agency WME and sports and talent management company IMG. WWE executive chairman and majority shareholder Vince McMahon will serve as executive chairman of the newly created firm.
Meanwhile, 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, and WWE CEO Nick Khan will continue to hold his same president title at WWE.
The board of directors of the new firm will consist of 11 members who will be appointed at a later date. Six directors will be named by Endeavor, and the remaining five will be designated by WWE.
Since going public in 2021, Endeavor has been working to build its sporting events business, mostly through UFC.
The deal is expected to close in the second half of this year. “Together, UFC and WWE will have global reach, impressive scale and omnichannel distribution,” the companies said about the deal. “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.”
While speaking about the deal during an investors presentation that was webcast this morning, Endeavor CFO Jason Lublin noted: “We see significant operating synergies throughout the ecosystem.” He also pointed to a combined $1 billion cost base, excluding direct operating expenditures, “half of which we believe are addressable.”
Top executives at Endeavor, which also owns WME-IMG, previously contemplated the benefits of purchasing UFC in 2016 for $4 billion. The deal was part of an aggressive push into content ownership, which paid off well. Investors can expect the same as WWE is now being absorbed into the company.
Lublin predicted the UFC and WWE merger will secure $50 million to $100 million in annual operating synergies. The projected profits will follow the earlier acquisition model for UFC, which delivered million in cost synergies.
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. Streaming platforms are also increasingly showing interest in sports rights.
Most of the WWE revenue still comes from media rights, and UFC’s revenue comes from its exclusive media rights deal with ESPN, which was signed in 2019. “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,” Shapiro told the investors presentation.
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,” the company’s president said.
The newly combined UFC and WWE entity is also expected to grow its profitability by increasing sponsorship licensing. The company will also garner premium hospitality revenues by leveraging Endeavor’s sports and media infrastructure, which includes WME.
“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,” Endeavor’s CEO added about merging UFC and WWE together.
McMahon also released a statement that accompanied the announcement of the merger. “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.”
The new firm’s executive chairman also added: “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, when WWE revealed 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, which concluded in November.
The deal between UFC-WWE will also draw investor attention.
It puts an enterprise value of $12.1 billion on UFC and $9.3 billion on WWE. 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.