First pushed aside by nearly all within the wrestling community, a sale of WWE has been long teased. CEO Nick Khan even told CNBC in February that a sale of the company would happen “quick,” with speculation it could get done within three months.
Things are happening right on schedule, and it feels all too real.
Per an initial bombshell report by CNBC, the Vince McMahon-led company was sold to Endeavor Group, the parent company of the UFC. The news came just before the second night of WrestleMania 39 at SoFi Stadium in Los Angeles.
After Paul "Triple H" Levesque game a "no comment" answer when asked about it during a press conference, an official announcement regarding the merger was made on Monday, April 3. It comes right before the Raw after WrestleMania and a few days before UFC 287 in Miami. A new publicly traded company is expected to form between the UFC and WWE.
WWE WrestleMania 39: Night 1 Match Grades | Night 2 Match Grades
“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” Ariel Emanuel, CEO of Endeavor said in a release. “For decades, Vince 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.”
The news is considered a blockbuster and game-changer within the combat sports world. Here’s a breakdown of the merger, with updates provided.
WWE sale to Endeavor, explained
The CNBC report states that Endeavor will own 51% of WWE, while WWE shareholders keep 49%. A name hasn't been provided yet, but the new publicly traded company will have the ticker symbol TKO.
Ari Emanuel, the CEO of Endeavor, will be chief executive of the new company. McMahon the executive chairman, and Mark Shapiro, Endeavor’s President, will continue their roles. Khan will be the president of the wrestling side of things, while Dana White will remain President of the UFC.
Other members of the management team will be Jason Lublin as Endeavor's CFO, Andrew Schleimer as the new organizations's CFO, and Lawrence Epstein as the UFC's COO. Triple H will remain Chief Content Executive at this moment.
“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 stated in a release.
Per CNBC, the UFC has a value of over $12.1 billion, while WWE has a market value of about $9.3 billion. The new company has a net valuation of about $21 billion. WWE produced over $1.29 billion in revenue in 2022, and its shareholders will roll over equity into the new company.
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Per Endeavor's release, the UFC and WWE will "deliver an estimated $50 million to $100 million in annualized run rate cost synergies" thanks to Endeavor's infrastructure and back office. Since acquiring the UFC in 2016, commercial opportunities have driven more than 2x Adjusted EBITDA growth.
Four key goals for revenue growth for the new WWE-UFC company include:
- Maximizing media rights value
- Enhancing sponsorship opportunities
- Accelerating brand and talent placement, product licensing
- Developing new forms of content
This news comes after rumors of various organizations outside of Endeavor that put their name in the mix. That included Comcast, FOX, Disney, Warner Bros. Discovery, Netflix, Amazon, Liberty Media, the Saudi Arabia Public Investment Fund, and even the Khan family, known for wrestling promotion AEW. Emanuel suggested during an earnings call earlier this year that there was no initial interest by Endeavor to invest in WWE.
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“As it relates to WWE, it’s an unbelievable product,” Emanuel said via The Wrestling Observer. “Vince, you know, created a great business. We’ve had a longstanding relationship with them over two decades. We’re doing on location business with them, streaming business with them, his business is really valuable. But we’re not going to do anything as it relates to changing our leverage position right now.”
His thought process clearly changed. He told CNBC he was not ready for McMahon to walk away from wrestling.
WWE has a deal with Peacock to produce PPV-level events with a subscription. Its regular programming is on the USA Network and FOX. WWE programming is on the WWE Network outside of America. In January, WWE announced they have engaged with outside advisors to review strategic alternatives concerning upcoming media rights negotiations. A sale would have been before new deals for RAW (USA) and SmackDown (FOX) were locked in.
It is unknown at this moment how a deal would affect content sharing.
Reactions to WWE-Endeavor merger
What does this exactly mean for the business side of things for WWE? Per The Wrestling Observer's Dave Meltzer (with additional reporting by The Sporting News' Andreas Hale):
"It's hard to say much without knowing all the details, but Vince McMahon looks to have made out the best of anyone. While no longer in charge, he's still number two, and Ari is going to defer to him with his experience on the wrestling side. He still maintains a large ownership percentage while also cashing out. Both UFC and WWE are similar businesses. You can cut costs via employee job duplications. If the precedent set in the UFC sale goes with WWE, there will be few sacred cows in the organization and surprise releases (within the front office).
It makes Ari super powerful as he can leverage the two in business dealings and become one of the most powerful players in the television and streaming world.
Per Raj Giri of Wrestling Inc.:
"The ramifications are really big because now you have the UFC and WWE under the same umbrella. There is a lot of synergy between the two companies, so you will likely see a lot of departments being merged. There were a lot of layoffs when Endeavor purchased the UFC, whether that will happen here remains to be seen."
What is Endeavor?
Originally known as William Morris Endeavor and WME-IMG (which promoted fighters like Conor McGregor at one point), was founded in 2009 following a merger with the Endeavor Talent Agency. The organization is a talent and media agency representing athletes, TV and movie stars, and all forms of digital media.
Congrats to the @ufc now worth a cool Proper $12bn. Wow! Endeavor bout to scoop the @WWE now also. Incredible. What a powerhouse!
— Conor McGregor (@TheNotoriousMMA) April 2, 2023
Representing athletes in the NFL and NHL, Lorenzo and Frank Fertitta sold a majority stake of the UFC to Endeavor in July 2016, and the company took full ownership of the UFC in 2021. Per an SEC filing, Endeavor raised at least $1.75 billion to buy out the remainder of the UFC. That same year, it had its initial public offering.
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The UFC currently has a deal with Disney and ESPN to showcase events on Disney's major TV platforms. PPV events in the North America have reached around $79.
Vince McMahon WWE timeline
It is a major power move for Vince McMahon following his return to the company.
The Wall Street Journal reported that McMahon allegedly paid hush money to a former WWE paralegal over an affair. Later reporting said McMahon agreed to pay "more than $12 million over the past 16 years to suppress allegations of sexual misconduct and infidelity."
WWE’s Board of Directors, which included Stephanie McMahon, her husband, Paul “HHH” Levesque, and Khan at the time, hired the New York law firm Simpson Thacher & Bartlett LLP to investigate the allegations.
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McMahon stepped down as CEO but continued to hold creative control of WWE. Brandon Thurston of Wrestlenomics later reported that McMahon would no longer have creative control after he told everyone he retired from the company. Stephanie and Khan acted as co-CEOs after.
In January, Stephanie announced her resignation from the company, just as Vince unanimously was voted back in as executive chair on the Board of Directors. The news of his comeback coincided with WWE looking at options for a potential sale of the company, as well as their next TV rights deal. McMahon indicated any potential sale or rights deal couldn't get conducted without his involvement.
McMahon recently paid $17.4 million to the company to cover costs related to the investigation.
Regarding what role McMahon plays now in WWE, Khan told Stephen A. Smith that McMahon is officially in charge. When asked by CNBC if he would be involved with creative, McMahon said, "Yes and no."
"I don't want to be in the creative process again, just oversee it. I'll just be in business. I was prepared to drop everything and leave the company forever, but Ari Emanuel told me that I was not going to allow it"
The Sporting News will provide more information when available.