Felix Upton on September 12, 2023
WWE and UFC kicked off their big merger, and the New York Stock Exchange was chanting “TKO” when they rang the opening bell as TKO Holdings Group. Now, it looks like that stock could pump with the new momentum, adding even more money in the pockets for that new Board of Directors.
There is a lot going on right now, and Nick Khan has already sent out an email to employees to let them know that WWE business will carry on as usual. That being said, there is a lot to talk about when it comes to the company’s corporate dealings.
While speaking on CNBC’s Squawk on the Street, Endeavor CEO Ari Emanuel commented on the news and highlighted the costs involved and the reach of both WWE and UFC. There are a lot of big numbers going around, and that is exactly what they want to see in this merger.
“We had a range of 50 to 100 with regard to back office and costs. We’re on our way to kind of doing that. We did that with the UFC. We’re on our way here. There’s also savings as it relates to on the production side because of their production facility, our production facility at the UFC. This is a pure sports play. There’s nothing more important than sports content and live events.”
“We do 350 live events with production. We have a billion in fanbase. The global reach of both is incredible, and you can’t underestimate the value of TV rights domestically and internationally, and also the sponsorship. I think the other thing that this does, in addition to just cost-saving, it enables us to kind of have a pure play and people look at EDR properly, where we have some datapoints last week, investing in CAA at 13,15 times. Formula1 buying Quint for 15 times, which is an experiential company. Without UFC inside EDR, everything’s valued at a little less. I think it’ll give everybody a pure play there also. Both companies have about less than three times leverage.”
Endeavor’s President and COO, Mark Shapiro, shared his perspective when questioned about Endeavor’s status as a company generating free cash flow. He highlighted that both WWE and UFC are poised to excel in this regard, emphasizing particular statistics related to cash flow conversion and leverage.
“Both companies will be a juggernaut in that respect. Free cash flow conversion to TKO will be about 61%, and of course Endeavor will be strong. Remember, when this thing started, we were just about eight times levered. Now we’re below a three, so healthy balance sheet, scale, growth, profitability.”
In response to inquiries about Endeavor’s capital return plans and the possibility of substantial dividends over time, Shapiro mentioned that the company has already disclosed its capital return initiative and indicated that further developments can be anticipated in the future.
“We’ve already announced our capital return initiative, as you know, a stock buyback program to the tune of $300 million on the Endeavor side, and of course our first dividend, so look for more of that in the years to come.”
We also covered that Mark Shapiro stated that TKO Holdings Group is ready to go with full fire out the gate. It remains to be seen exactly what they are going to do in the future. Obviously, big things are on the horizon for everyone who owns a piece of that situation.
What’s your take on WWE and UFC’s merger? Sound off in the comments to let us know what you think!
September 12, 2023 12:19 pm
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