UFC and WWE Join Forces to Create TKO Group, a Global Sports Entertainment Powerhouse

Endeavor Group Holdings and World Wrestling Entertainment (WWE) have finalized an agreement to establish a new publicly traded entity encompassing the renowned global sports entertainment entities, Ultimate Fighting Championship (UFC) and WWE. The newly formed company will operate under the name TKO Group, with Endeavor retaining a 51 percent controlling stake while existing WWE shareholders will hold a 49 percent interest.

Through this strategic alliance, TKO will harness Endeavor's expertise across various domains, including domestic and international media rights, ticket sales and optimization, event management, global partnerships, licensing, and premium hospitality, with the aim of driving revenue growth.

Vince McMahon, Executive Chairman of TKO, remarked, "This marks the culmination of a decades-long collaboration between Endeavor and WWE across strategic initiatives, including talent representation and media rights. Given our collaborative and trusted relationship, along with Endeavor's remarkable track record in growing UFC, we believe that WWE is ideally positioned for future growth and success as part of TKO. Our primary focus remains on delivering for our global fan base as we elevate the business to new heights alongside UFC and Endeavor."

At the heart of its strategy, the new entity will amalgamate the global reach, scale, and omnichannel distribution of both sports and entertainment brands, which achieved a revenue of $2.4 billion at the close of FY2022, with consistent annual revenue growth rates of 10 percent since 2019.

Ariel Emanuel, CEO of Endeavor and TKO, commented, "The formation of TKO heralds an exciting new chapter for UFC and WWE, two leaders in global sports and entertainment. With their continued connection to the Endeavor network, we are confident in our ability to accelerate their respective growth trajectories and unlock sustainable long-term value for shareholders. With UFC and WWE under one umbrella, we will offer unparalleled experiences to over a billion passionate fans worldwide."

With this merger, questions arose regarding the licensing and merchandising strategies for the two brands. It appears likely that TKO will emerge as a distinct third brand, facilitating ongoing partnerships between WWE and UFC superstars for merchandise. Given the strong brand recognition of both WWE and UFC, it is improbable that these two brands will cease to exist in the licensing realm. Both brands boast numerous licensing agreements, and there are dedicated WWE fans who do not follow UFC, and vice versa. By introducing a third brand, TKO allows executives and shareholders to maintain continuous collaboration between UFC and WWE in the merchandise sector while continuing to generate revenue from these valuable separate brands.

In fact, this transaction underscores the significant value of the two entities, valuing UFC at an enterprise value of $12.1 billion and WWE at an enterprise value of $9.3 billion. Both UFC and WWE have contributed approximately $150 million in cash to the new company.

Under the transaction terms, existing WWE shareholders will roll their equity holdings into the new entity, which will serve as the parent company for UFC and WWE. This new entity is now listed on the New York Stock Exchange under the ticker symbol "TKO.