As we’ve noted, Tuesday was a historic day for WWE as Endeavor’s WWE – UFC merger to form TKO Group Holdings was officially completed. You can find several related stories at the bottom of this post. Endeavor now holds a 51% controlling interest of the company, while WWE shareholders own the other 49%. This includes 16% held by TKO Executive Chairman Vince McMahon. The Vince McMahon Era of WWE is officially over, 41 years after he purchased the pro wrestling company from his father and built it into a global sports entertainment powerhouse.
Executives from all three companies have spent the past several months getting to know each other as they have traveled frequently between UFC HQ in Las Vegas and the new WWE HQ in Stamford.
Endeavor/TKO President & COO Mark Shapiro told Georg Szalai and Alex Weprin of THR that this was done to “communicate, ideate, and collaborate.”
“And I would say there’s very much a meeting of the minds on the opportunity that exists,” Shapiro added.
Shapiro said they were ready to “fire out of the gate” when this morning came. He believes that Endeavor and its leadership team will “now have a much stronger and firmer seat at the table,” but they do have a first mission in mind.
“Our first mission is to fully capitalize on this insatiable demand for premium content and live events,” Shapiro revealed.
The WWE – UFC merger will bring $50 million to $100 million in annual operating synergies, according to Endeavor, but THR points to how some analysts have argued that this figure may be conservative.
“We think there’s potentially more once we get into real due diligence,” Shapiro added, pointing to how there’s the potential for production synergies like satellite trucks and camera equipment.
Emanuel talked more about cutting costs to David Faber of CNBC’s “Squawk on the Street,” and said they’d be looking at $50 million to $100 million in cost-cutting savings post-merger. He said they have a range of 50-100 with “back office and costs,” and said “we are on our way to kind of doing that.” Emanuel, who oversaw $70 million in cuts from UFC’s costs in the first 18 months, added that there are cuts to be made, or savings to be had “as it relates to the production size… their production facility, our production facility at UFC.”
The current game plan is to follow the “championship example” set by Endeavor’s UFC takeover. The takeover secured $70 million in cost synergies within two years of Endeavor’s ownership. To help facilitate this, WWE will be integrated into Endeavor’s global infrastructure.
Shapiro stated earlier that TKO’s first mission is to “fully capitalize on this insatiable demand for premium content and live events,” but they are also planning to create more content, increase the number of live events, boost premium hospitality revenue and bolster sponsorship licensing.
Endeavor really touted their “Endeavor Flywheel” back in April when the deal with WWE was announced, and they are ready for WWE to take advantage of the apparatus. Endeavor has found significant success by leveraging the Flywheel since acquiring UFC in 2016. The Flywheel is a network of subsidiaries that includes top talent agency WME, hospitality business & current WWE partner OnLocation, online sports betting provider OpenBet, and the 160over90 creative agency, among others.
Endeavor is confident that the Flywheel will create multiple additional avenues for future growth with TKO. For a detailed look at what the Flywheel is and how it works, visit pages 11 through around 23 of the WWE/Endeavor press release from April at this link, or begin the audio from around the 8:20 mark on Endeavor’s April webcast at this link. Endeavor/TKO Ari Emanuel hosted a fireside chat at the Morgan Stanley Conference back in March and explained the Flywheel like this: “And so what do we do for the UFC? Endeavor streaming does their streaming services. Their sponsorship business, we do their sponsorship business. On Location does the high-end experience business. IMG does the international sales. Our government relations team does the location fees that we get when we go across the globe. And our licensing business does the licensing.”
Shapiro gave a look at areas of focus and reiterated how important the Endeavor Flywheel is to the whole process.
“We will be wringing out cost synergies, but at the same time identifying those areas that are under-monetized or where revenue synergy significantly exists,” Shapiro said. “And that’s happening across our domestic and international media rights, our sponsorship and global partnerships, our product licensing, enhancing our live events, through ticket yield, venue fees and premium experiences, and then just overall expanding internationally, all of these businesses and doing it with a halo of the Endeavor Flywheel, which cannot be underestimated the influence and impact that will bring.”
TKO executives, including those from WWE, have all expressed optimism on the media rights deals that are up for renewal, for both UFC and WWE. Endeavor expects growth in domestic and international media rights, and it’s notable that this comes as streaming platforms are actively showing more interest in sports rights.
Shapiro also discussed the WWE TV deal negotiations, confirming that the new team has already been involved in talks for RAW and SmackDown rights, which come up for renewal with NBCUniversal and FOX in October 2024. It’s believed that Emanuel and Shapiro are handling the negotiations, along with Khan and McMahon. The company is expected to ask for a big price increase for both of their shows, especially RAW, and that could go from the current value of $465 million per year total to $700 million per year total for both deals. WWE NXT and RAW will likely remain on the USA Network. While WWE is apparently open to putting SmackDown on another night, it’s been reported that Disney is interested in SmackDown on Fridays, and they would likely air the blue brand on ABC or FX. WWE may end up asking $300 million per year for the SmackDown rights, and there was a feeling that FOX won’t go for that amount.
Shapiro told THR that they are having encouraging talks with multiple “players and platforms,” and are cautiously optimistic about the outcome.
“We’re having very encouraging conversations with several players and platforms at the moment on WWE Raw and Smackdown,” Shapiro revealed. “We’re cautiously optimistic. We’re, in many ways, being valued as a unicorn because we’re year-round. WWE is a full-calendar sports and entertainment platform with significant engagement, strong reach and attractive demos. And that bodes well for these conversations, and I believe that we’ll have results that are in line with market expectations.”
Shapiro told Faber that they have been in talks with both linear and digital platforms. There was some speculation on WWE potentially linking with a streaming platform for new digital programming of sorts, but nothing confirmed.
“But keep in mind, we’re in conversations right now with WWE because those deals are up in October of next year. Both deals, SmackDown and Raw. We’re cautiously optimistic and we’re having conversations with all the platforms right now, linear and digital. As Ari mentioned, we have a lot of product and it’s a year-around product… WWE and UFC are a full calendar year…,” he said.
Emanuel added, “We feel very good about where we’re at with the WWE now as principals in that negotiation and I think we’ll be in line with what the market thinks will happen with those rights…”
Emanuel also pointed to the value of TV rights and sponsorship potential, and said you can’t underestimate them. He reiterated that they have a lot of work to do on TKO as far as cost-cutting and and sponsorships go.
Regarding the ongoing SAG-AFTRA (Screen Actors Guild – American Federation of Television and Radio Artists) and WGA (Writers Guild of America) strike in Hollywood, Emanuel said Endeavor is losing $25 million per month in revenue. He said if something isn’t agreed on in the next three weeks, he believes the strike could continue to the end of the year, but eventually a deal will be done and people will go back to work.
Emanuel also commented on the once-rumored MMA fight between Elon Musk and Mark Zuckerberg. He doesn’t think Musk will ever fight Zuckerberg, but at one point he did think a UFC-sanctioned fight between the two was going to happen. He acknowledged neck and shoulder surgeries Musk has had, and said it’s probably best that the fight does not happen.
FULL COVERAGE OF ENDEAVOR MERGING WWE AND UFC TO CREATE TKO GROUP HOLDINGS:
– TKO’s Longterm Plans for WWE and UFC, Products to Change?, UFC’s Interest In WWE, More
– Triple H and Others Receive Significant Bonus Pay Following WWE – UFC Merger
– Nick Khan on CM Punk Possibly Returning to WWE
– Dana White on Partnering with WWE, If His Daily Work Will Change with Merger
– Mood at WWE HQ Today, TKO Stock Update, Video of TKO Officials at the NYSE, New TKO Website, More
– Nick Khan’s Internal Memo to WWE Employees on TKO Launch Revealed
– Nick Khan Talks WWE TV Deals, UFC Executive on Endeavor’s Role In the Negotiations
– Big WWE – UFC Display at the New York Stock Exchange, Final WWE Stock Price
– Official Announcement on WWE and UFC Becoming TKO Under Endeavor, Vince McMahon Comments
Stay tuned to WrestlingHeadlines.com for more.
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