The day after Wrestlemania, Endeavor acquired WWE making it the second biggest purchase this year. The plan was to have WWE and UFC combine to make one new company, TKO Holdings. The deal gave WWE an enterprise value of $9.3 billion. Endeavor would own 51% and WWE owned the remaining 49%.
From our writeup in April 2023:
The powerpoint presentation accompanying the announcement reveals some interesting financial tidbits about the WWE and UFC business. The first is that the UFC business model has seen positive financial increases since its purchase by Endeavor. Obviously, Endeavor touting its accomplishments on the heels of announcing this acquisition makes sense for investors. But, UFC’s sponsorship percentage is higher than WWE’s sponsorship percentage. Based on the number of lucrative partnerships WWE has had in the past and just looking at the multiple brands at Wrestlemania this weekend, you would think that WWE would have more a robust portfolio in comparison to the UFC. This is just the percentage of its revenues so WWE does earn more when it comes to media rights but the UFC has been more profitable since 2017 according to the powerpoint.
From a business standpoint, the acquisition reflects a growth period for Endeavor and it will be fascinating to see what direction NewCo will go in terms of acquisition and strategy. In my opinion, combining the two companies is a move toward expanding its reach to a new generation of consumers that will be early adopters to technology and new ways to consume content. Gone are the days of just focusing on linear television and focusing on working on just media and licensing rights. Now, the strategy seems to be sole ownership of content and non-traditional ways of consuming content via social, online, streaming, etc.
Stock prices for WWE and EDR showed modest losses in stock trading on Monday morning but I do not think we’d see wide swings in stock price with Endeavor’s purchase. But, the acquisition is a big move for both companies as WWE, EDR and the UFC look to the future.
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