WWE, UFC Close Merger

Endeavor Group Holdings and World Wrestling Entertainment (WWE) have closed a deal to form a new, publicly listed company consisting of the global sports entertainment brands, Ultimate Fighting Championship (UFC) and WWE. The newly formed company will be called TKO Group, and through the deal, Endeavor will hold a 51% controlling interest and existing WWE shareholders will hold a 49% interest.   

Through this combination, TKO will leverage Endeavor’s expertise in areas, including domestic and international media rights, ticket sales and yield optimization, event operations, global partnerships, licensing and premium hospitality to drive revenue growth. 

“This is the culmination of a decades-long partnership between Endeavor and WWE across strategic initiatives, including talent representation and media rights,” says Vince McMahon, executive chairman, TKO. “Given our collaborative, trusted relationship and Endeavor’s incredible track record of success growing UFC, we believe WWE is optimally positioned for future growth and success as part of TKO. Our focus remains on delivering for our fans across the globe as we take the business to the next level alongside UFC and Endeavor.” 

At the core of its strategy, the new company will combine the global reach, scale and omnichannel distribution of both sport and entertainment brands, which achieved a $2.4 billion revenue at the close of FY2022 with 10% annual revenue growth rates since 2019.   

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“The creation of TKO marks an exciting new chapter for UFC and WWE as leaders in global sports and entertainment,” says Ariel Emanuel, chief executive officer, Endeavor and TKO. “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. With UFC and WWE under one roof, we will provide unrivaled experiences for more than a billion passionate fans worldwide.” 

With this deal, it begs the question of how licensing and merchandising for the two brands will continue. It seems most likely that TKO will become a third, separate brand that continuously partners WWE and UFC superstars on merchandise. Due to WWE and UFC brand recognition, it seems unlikely that the two brands will cease to exist in the licensing space. Both brands boast hundreds of licensing deals and there are fans of WWE who don’t watch UFC fights and vice-versa. With a third TKO brand, executives and shareholders are able to have a continuous partnership between UFC and WWE in merchandise while still raking in revenue from the separate brands that have proven to be so valuable. 

So valuable, in fact, that the transaction values UFC at an enterprise value of $12.1 billion and WWE at an enterprise value of $9.3 billion. UFC and WWE each contributed cash to the new company so that it holds roughly $150 million.    

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 and is now listed on the New York Stock Exchange under the ticker symbol, “TKO.”