Can the new WWE+UFC venture by Endeavor avoid a TKO (technical knockout)?

TKO (Technical Knock Out) a knockout declared by the referee who judges one fighter unable to continue.

I got a call from Sandy Case (iSportConnect CEO) last month asking if I wanted to compile the article for their iSportConnect Sport Business Index and was immediately intrigued.

You can find the original article here on their website as well as the index.

Let’s talk about TKO, the new publicly traded combat sports and entertainment powerhouse.

?? Facts and forecasts

Endeavor owns 51% of the newly formed TKO putting together WWE and UFC. They bought UFC for $4 billion in 2016, WWE is publicly traded at $8.37 billion. The new outfit generated over $2.4 billion in revenue in 2022 with a 10% annual growth rate since 2019, according to Endeavor. Expected annual operating synergies of $50-$100 million, not unrealistic as UFC did $70 million savings in two years under Endeavor.

??? People and places

Ari Emmanuel, mighty CEO of both TKO and Endeavor, same as Mark Shapiro COO for both. Dana White is UFC CEO, and Nick Khan ex-CEO is now WWE President. Controversial enough Vince McMahion is Chairman, not sure it’s a great idea based on the many conduct issues.

Merging companies and cultures is not easy, especially as they start from different places with different vibes – Las Vegas for UFC and Stamford, Connecticut for WWE.

?? Product and growth

This deal creates the new super-destination of combat sports with a combined content IP, production strength, audience footprint and marketing power that is enviable.

Creating mega platforms around content and media seems to be a trend but also the recipe for sustainable business in this space, so TKO seems well positioned in that regard.

WWE and UFC media rights, soon to be renewed, are a clear avenue for growth, if we assume the joint proposition will be even more appealing to media companies, as well as expanding the footprint even more internationally.

The obvious challenge is about merging (to whatever extent) and like any operation of this size – and we have seen many recently – the risks are well known.

？My question is about audience growth.

Putting UFC and WWE together may cross pollinate fans and have them consume and engage more content and experiences. But will it bring new fans? Will it create a wider and more monetizable audience??

I expect TKO may have to do some soul searching to expand to new areas.?

So the question in the end is: “Can the new WWE+UFC venture by Endeavor avoid a TKO (technical knockout)?”

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iSportConnect Business Index

Link to the original article on iSportConnect iSportConnect Sport Business Index.

??Let’s talk about the index now.

• Overall a lot of red, as the macro economic scenario is not encouraging and a diverse set of global and local crisis are bringing us into a continued? volatile phase
• Hollywood authors strike creates collateral damage to media companies, even if sport continues strong
• How will Endeavor stock react to TKO? Some analysts seem positive about it
• Football clubs in various auto-induced troubles
• MSGS fell 10% after earnings lower than expected on revenues, interesting company to watch in any case with all club valuations reaching great levels
• Streaming giants keeping the value
• Draftkings is almost constantly growing since last year as betting in the US is perceived as a huge opportunity. Just had a bad week after using a 9/11 reference in a parlay which caused outrage.
• Sportradar losing ground after some positive months as the latest earnings call highlighted great revenues growth but a lower than expected earnings (break even vs $0.08 per share last year)

A question for all of you? Should we add the new stock TKO to this index?

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