By Gary Symons
TLL Editor in Chief
Big news in sports licensing this week as UFC announced it has agreed to merge with fellow pugilistic company WWE.
The deal would see UFC parent Endeavor Group Holdings holding a 51% controlling interest in the new company, while existing WWE shareholders will own a 49% interest. It combines the world’s leading mixed martial arts league in the UFC, and the largest wrestling franchise in WWE.
Endeavor Group CEO Arie Emanuel says UFC and WWE combined will enjoy global reach and omnichannel distribution, in addition to healthy and growing revenues. In 2022 the two companies posted combined revenues of $2.4 billion, and they have enjoyed a 10% annual growth rate since fiscal 2019.
“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” Emanuel said. “For decades, Vince (McMahon) and his team have demonstrated an incredible track record of innovation and shareholder value creation, and we are confident that Endeavor can deliver significant additional value for shareholders by bringing UFC and WWE together.”
McMahon, the founder and executive chair of WWE, says the merger will see the creation of a sports and entertainment conglomerate initially valued at $21 billion. During the negotiating process, Endeavor was valued at $12.1 billion, while WWE was valued at $9.3 billion.
“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,” McMahon said. “Together, we will be a $21+ billion live sports and entertainment powerhouse with a collective fanbase 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 added.
The new company will be collectively run by Emanuel, McMahon, and Mark Shapiro. Emanuel will continue in his current role as CEO of Endeavor, and McMahon will be executive chair of the board. Shapior will be the president and COO of both Endeavor and the new company.
Additionally, Dana White will continue as president of UFC, while his counterpart Nick Khan will serve as president of WWE.
From a licensing point of view, the merger will have a major impact in the area of combat sports, as Endeavor predicts the new company will see major growth in media rights, sponsorships, and licensing.
Together, UFC and WWE expect to deliver an estimated $50 million to $100 million in annualized run rate cost synergies by leveraging, among other things, Endeavor’s back office and robust infrastructure. Endeavor also expects significant growth across revenue areas including domestic and international media rights, ticket sales and yield optimization, event operations, sponsorship, licensing and premium hospitality. Endeavor’s success at UFC, including increasing commercial opportunities that have driven more than 2x Adjusted EBITDA growth since its acquisition in late 2016, demonstrates the significant value creation opportunity and upside potential of having UFC and WWE under one roof.
Under the terms of the transaction, existing WWE shareholders will roll all existing equity into the new entity that will be the parent company of UFC and WWE. While the new company doesn’t have a name as yet, the merger details reveal the new company intends to list on the New York Stock Exchange under the ticker symbol “TKO,” which is an acronym for the martial arts term ‘Technical Knockout’.