WWE’s Merger with UFC Creates Potential Heavyweight Entertainment Company

On Monday morning, World Wrestling Entertainment (WWE) agreed to merge with Ultimate Fighting Championship (UFC) to form a new publicly-traded company that will be listed on the New York Stock Exchange as “TKO.” Endeavor Group will control a 51% stake in the newly formed combat sports and entertainment company, while WWE shareholders will retain the other 49%. The deal values WWE at $9.3 billion and UFC, which is owned by Endeavor, at $12.1 billion (a combined value of $21.4 billion).[1]

The transaction is expected to be completed in the second half of 2023. Endeavor CEO Ari Emanuel will continue to serve in that role, along with becoming the CEO of the brand-new, unnamed company. Dana White will also continue to serve as the president of the UFC. Meanwhile, Nick Khan will transition from CEO to president of the WWE. Vince McMahon, who purchased what was then known as WWF in 1982 from his father for approximately $1 million, will become executive chairman of the 11-member board of directors. The board will consist of six individuals appointed by Endeavor and five by WWE.[2]

The announcement regarding a merger of the two biggest global brands in combat sports came less than one day after WWE delivered its annual marquee event, WrestleMania, at SoFi Stadium in Los Angeles. The 39^th WrestleMania generated over $21.6 million in ticket sales, which eclipsed the previous record by 27%. The event’s first night broke WWE’s global viewership record by 28%. The second night also surpassed the record by 33%. Moreover, WrestleMania 39 shattered sponsorship and merchandise records. Coming off its first billion-dollar revenue year, WWE will now join forces with fellow media powerhouse, UFC.[3]

In an interview with ESPN, Nick Khan referred to the potential benefits of McMahon and White coming together to focus their efforts. Khan called them the “two greatest promoters of the last 30 to 40 years.” While WWE features scripted matches and dramatic storylines, UFC showcases artful yet brutal mixed martial arts fighting. Despite these notable differences, the two organizations share similarities in content and culture. Several stars have already successfully crisscrossed disciplines throughout their careers. Fighters who have appeared in both promotions include Ken Shamrock, CM Punk, Ronda Rousey, and Brock Lesnar.[4]

It is not anticipated that either product will change significantly, if at all. Any adjustments made will probably occur behind the scenes. Fans should not expect Jon Jones to face Roman Reigns for the UFC heavyweight title (at least in the near future). The companies are more likely to pool their resources together toward enhanced live event experiences, stronger alliances, key sponsorships, and integrated marketing strategies. One example is YouTube and WWE personality Logan Paul’s Prime energy drink being promoted across both UFC and WWE.[5]

ESPN insiders do not believe that the merger will drastically impact pay for athletes performing for either brand. When Endeavor purchased UFC in 2016 for over $4 billion, the percentage of revenue going to the fighters did not increase. Instead, Endeavor concentrated on cost-cutting measures in order to free itself of the massive debt incurred by the acquisition. However, experts are interested to see whether WWE will shell out the millions of dollars needed to keep talent from leaving for All Elite Wrestling (AEW). UFC has far weaker competition in the MMA space (i.e. Bellator, One Championship, and PFL). Thus, it does not have to worry as much about losing athletes to larger deals from other leagues.[6]

Media rights seem to be one of the biggest drivers of this merger. Consider the timing of the impending transaction. WWE’s television deal with Fox for Friday Night Smackdown expires in the fall of 2024. The same goes for WWE’s television contract with USA Network for Monday Night Raw. Additionally, WWE has a deal with Comcast for the promotion’s content library and monthly “premium live events” (i.e. WrestleMania, Royal Rumble, SummerSlam, etc.) to be available on Peacock through 2025. That is the same year when UFC’s deal with ESPN ends. In an interview with Axios, Khan mentioned the possibility of a media rights deal with a major company that encompasses UFC and WWE under the same broadcasting platform. While the UFC has succeeded with its ESPN+ pay-per-view shows, WWE is leaving a sizeable amount of money on the table by not charging extra for its highlight events.[7]

There are other synergies that UFC could capitalize on as well. Even though UFC already provides a sensational live-event experience, there’s arguably nothing that compares to WWE’s show production. Wrestler walkouts include pyrotechnics, personalized music, flamboyant movements, and sometimes vehicles or special guests. The entrance is a spectacle that contributes to some of the sport’s most iconic moments. WWE’s influence on UFC stars’ behavior leading up to a fight is evident in the approach of outspoken competitors such as Connor McGregor and Israel Adesanya.[8]

So, What About Boxing? Signs Indicate that Boxing could be in the New Company’s Plans.

In December of 2022, Khan and then WWE co-CEO Stephanie McMahon expressed interest in potentially entering the world of boxing. Last month, Dana White also revealed plans to launch a boxing promotion in the next couple of years. Furthermore, the Nevada Athletic Commission recently approved White as the lead promoter for the Power Slap League, which launched in January and is televised on TBS. These moves led many around the world of combat sports to wonder just how far this new company will branch out. If one thing is for certain, Dana White and Vince McMahon know how to build a successful promotion.

UFC President Dana White – Image from New Haven Register

The Controversies and Scandals Around the Sale

This sales process began in January of 2023 when WWE retained the services of multiple outside firms to “explore strategic alternatives.” Vince McMahon, age 77, retired from the company in July of 2022 following a string of revelations that he paid several women a total exceeding $12 million over many years to keep them quiet about alleged affairs and misconduct. WWE acknowledged that other entities have investigated the hush payments. McMahon’s improper acts included both consensual sex with employees and claims of alleged sexual coercion involving underlings whom he exercised power over. The Wall Street Journal even reported about federal probes into the matter. As a result, Vince’s daughter Stephanie became co-CEO alongside Nick Khan, while Paul Levesque, who’s both Stephanie’s husband and the Hall of Fame wrestler known as Triple H, took over creative duties.[9]

Vince proved he could not stay away from his beloved company for long. As mentioned previously, the elder McMahon will return to the newly-merged organization as the executive chairman of the board. However, his original request for reinstatement to WWE was denied. The company’s board voted unanimously not to restore McMahon to his previous position due to the findings of an independent investigation into the allegations. McMahon, who still controlled the majority of voting shares, used his power to replace three members of the board. Other dissenting members quit when it became clear that he was coming back no matter what. The new board members and the ones who stayed then voted unanimously to allow him to reenter the company. According to a securities filing, McMahon has successfully locked in a two-year employment contract with the new business that will put him in charge of the wrestling side of operations.[10]

Interestingly, there were rumors of McMahon possibly purchasing UFC from prior owners when it was struggling in its early days during the 1990s. In a twist of fate, UFC was sold to Lorenzo and Frank Fertitta. The Fertitta’s are billionaire casino moguls who now own the Houston Rockets. They also happen to be high school friends with Dana White. Dana, who managed UFC legends Tito Ortiz and Chuck Liddell at the time, got the Fertitta’s involved and joined the ownership group. Over the past two decades, White has helped build UFC into the global phenomenon it is today. Nevertheless, White is no stranger to scandal. A video recently emerged of White slapping his wife during a public argument at a New Year’s Eve party in Mexico.[11]

Whether and to what extent McMahon or White will face any repercussions for their actions remains unclear. Other questions surround their working relationship and the creative direction of the new company. How will the two dominant personalities mesh together? Will Vince truly stick to the WWE side and refrain from interfering with Dana’s vision for UFC? How will Emanuel manage the two industry titans? In 2011, McMahon challenged White to a UFC fight or WWE match at WrestleMania. Although White declined back then, we may be destined for this bout if the merger turns sour.

[1] https://www.cnbc.com/2023/04/03/wwe-ufc-merger-endeavor.html

[2] https://www.espn.com/wwe/story/_/id/36053219/ufc-wwe-combine-create-214b-entertainment-company

[3] Id.

[4] https://www.cnbc.com/2023/04/03/wwe-ufc-merger-endeavor.html

[5] https://www.espn.com/wwe/story/_/id/36066332/endeavor-ufc-wwe-merger-2023-explained

[6] Id.

[7] Id.

[8] https://www.bbc.com/sport/mixed-martial-arts/65176574

[9] https://www.cnbc.com/2023/04/03/wwe-ufc-merger-endeavor.html

[10] https://www.si.com/wrestling/2023/04/04/wwe-ufc-merger-twists-turns-dave-meltzer

[11] Id.

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