Endeavor’s UFC to merge with WWE in $21bn all-stock deal

Ari Emanuel’s Endeavor Group has agreed to merge its Ultimate Fighting Championship (UFC) with World Wrestling Entertainment (WWE), forming a new listed entity with an enterprise value of $21.4 billion (€19.6 billion).

Under the all-stock deal, Endeavor will own 51 per cent of a new business that will house UFC and WWE, the companies announced on Monday. WWE shareholders will retain the remaining 49 per cent.

The deal, expected to close in the second half of this year, gives WWE an enterprise value of $9.3 billion, including debt, and puts a value on UFC of $12.1 billion. Endeavor and WWE said they expected to deliver cost synergies of $50-$100 million.

“This is a rare opportunity to create a global live sports and entertainment pureplay built for where the industry is headed,” said Ariel Emanuel, chief executive of Endeavor.

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Emanuel will serve as chief executive of the new company, while WWE founder and controlling shareholder Vince McMahon will be its executive chair. Dana White will continue as president of UFC.

WWE blends the worlds of sport and entertainment, scripting bouts and writing storylines based on larger-than-life personalities such as Roman Reigns and Charlotte Flair.

Whereas WWE matches are scripted, mixed martial art series UFC organises real fights. However, there may be opportunities for crossover. WWE superstar Brock Lesnar famously switched to UFC and later returned to wrestling, while Ronda Rousey is among the MMA competitors to have switched to wrestling. Both companies use drama outside of the wrestling ring and the UFC octagon to lure in fans.

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WWE makes most of its money by selling the TV rights to broadcasters such as Comcast and Fox. Its flagship event is WrestleMania, which took place last weekend in Los Angeles.

WWE’s annual revenues rose 18 per cent to almost $1.3 billion in 2022, with net profit increasing to $195 million from $177 million. The group made 80 per cent of its net revenues from media rights, including broadcast deals, with the remainder coming from live events and the sale of merchandise.

Endeavor’s “owned sports properties” division, which includes UFC, made revenues of more than $1.3 billion in 2022, up from $1.1 billion the previous year.

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Mr McMahon (77) returned to the company as executive chair in January after stepping down in July last year following allegations of misconduct.

An investigation by WWE’s independent board members found that “certain payments” in previous years had not been “appropriately recorded as expenses” in the company’s financial statements. WWE said Mr McMahon was paying for the expenses.

Since founding Endeavor in 1995 as a Hollywood talent agency, Mr Emanuel has expanded the scope of the company through a series of deals. The company has acquired rival William Morris Agency and sports agency IMG. – Copyright The Financial Times Limited 2023