Ultimate Fighting Championship and World Wrestling Entertainment complete merger

The largest and most prestigious promotion in the world of mixed martial arts (MMA), the Ultimate Fighting Championship (UFC), or rather, its parent company Endeavor, announced the completion of the merger with an equally large structure – World Wrestling Entertainment (WWE). The latter is primarily known for organizing wrestling tournaments—staged fights that are surprisingly popular in North America. The combined structure was named TKO Group Holdings. Its shares began trading on the New York Stock Exchange, and on the first day of trading, the capitalization of the new structure exceeded $24 billion.

This week, trading in shares of a new major player in the entertainment market, TKO Group Holdings, began on the New York Stock Exchange (NYSE). The market reacted favorably to their appearance. The price of TKO securities on the first day of trading added 3% and exceeded $103 per share. The company’s capitalization has already exceeded $24 billion – an astronomical figure for the sports industry. Such a noticeable daily growth for developed markets is explained by the fact that everyone had been ready for the emergence of TKO for a long time, since the new company was created as a mix of two extremely interesting projects, each of which had its own very significant value.

TKO Group Holdings was formed as a result of the merger of the world’s largest and most prestigious mixed martial arts promotion, UFC, and the largest producer of wrestling tournaments, a sport that imitates martial arts, WWE. The fact that WWE and Endeavor Group (the parent company of the UFC) entered into negotiations was reported back in the spring of this year. At the same time, the parameters of the deal being prepared were also made public. It stipulated that 51% of the combined structure would go to Endeavor, and the remaining 49% would go to WWE shareholders. In the end, that’s exactly what happened. At the same time, as expected, TKO was headed by Endeavor boss Ari Emanuel, and WWE’s controlling shareholder Vince McMahon became executive chairman. The famous Dana White, who has led the UFC for many years, retained a key post in the promotion and received the position of general director of TKO.

In itself, the merger of the Endeavor Group, whose key asset is the UFC, which puts on events in which people beat each other seriously, and the WWE, whose business is built more on circus acts with a solid acrobatic component, did not long ago seem like something of an unnatural union. Yes, there have always been enough contenders for WWE. The insane popularity of wrestling in the United States can be judged by the fact that this show gave the way to Hollywood for some blockbuster stars, such as Hulk Hogan or Dwayne Johnson. Perhaps it would be difficult for even a UFC star like Conor McGregor to compete with them. But Vince McMahon, who inherited the company from his father Vince McMahon Sr., who started his promotional business back in the 1950s, did not think of sharing the enterprise that brought him a lot of money every year. In 2022, the company, according to its own report, received revenue of $1.29 billion, and its profit was almost $200 million. For comparison, the UFC’s revenue in 2022 was $1.14 billion, but its profit exceeded $387 million. That is, the latter business is noticeably more profitable.

Everything changed in 2022, when 78-year-old McMahon was suspected of, firstly, repeatedly harassing women (with varying degrees of success), and secondly, covering up their claims by paying them significant sums from company accounts. In total, $19.6 million has been spent from WWE funds to resolve the consequences of Vince McMahon’s adventures since 2007. It got to the point that the US Department of Justice began an investigation against McMahon. Its results have not been reported, but Vince McMahon, who insists that he has never committed any “intentional violation of laws” and also expresses confidence that “the authorities’ investigation will reveal that there was no such violation at all,” was forced to temporarily leave his post as head of WWE. According to the official version, he did this because he needed time to recover from spinal surgery. However, he returned to the position in January 2023, at which time WWE announced that it was considering selling the business.

In general, the merger with the UFC (although in fact we are talking about the fact that the Endeavor Group absorbed the WWE) turned out to be an excellent way out of the current situation for Vince McMahon. In the merged company, he owns 16% of the securities (their current value is about $3.85 billion), but at the same time he is no longer the face of the company, which means he can calmly deal with claims from the authorities, if any eventually arise, without fear of harming the business. At the same time, he himself is trying to present what happened as a long-prepared deal based on “close and trusting relationships, as well as the amazing success of Endeavor in the development of the UFC.” “We are confident that WWE is now well positioned for continued growth,” said Vince McMahon.

After the merger, TKO Group developed a very serious business. According to the merged company itself, its potential global audience reaches 1 billion people living in 180 countries. At the same time, TKO Group already holds 350 events a year. TKO bosses expect that as a result of the merger, the net income generated by the new structure will increase by $100 million in the near future.

Alexander Petrov