Logo: source
There have been rumors for quite some time that that World Wrestling Entertainment, Inc. is for sale. Especially since Vince McMahon came back from his time-out.
That it would be the parent company of the UFC was a big surprise. The first trustworthy source to bring it to my attention was a post on bloodyelbow.com (WWE sale worth as much as $9 billion closing in with UFC parent company Endeavor).
Ultimate Fighting X Pro Wrestling
Timelines of the involved parties in their current form (all of them have longer histories):
- 1982 Vince McMahon bought the WWE from his father for $ 1 million.
- 2001 the Fertitta brothers and Dana White bought the UFC from the previous owners for $2 million.
- 2009 the Endeavor Group Holdings was founded with the merger of William Morris Agency and Endeavor Talent Agency. It is deeply involved in the entertainment industry as representatives of artists, creators and even sports leagues.
- 2016 the UFC was acquired by Endeavor for $4,1 billion, which translates to an annualized increase (CAGR) of enterprise value (EV) of 66% p.a. since 2001
- 2023
- the value of the UFC under ownership of Endeavor increased from $4,1 billion to $12,1 billion at an annualized rate of 16% p.a.
- with the acquisition of the WWE by Endeavor, its value will have increased by 25% p.a. since 1982.
Merger Valuation
Pro forma breakdown with numbers from 2022 - Investor presentation pages 6,17,30:
| UFC | WWE | Combined Company | |
| Enterprise Value | 12’100 | 9’300 | 21’400 |
| Equity Value | 9’400 | 9’000 | 18’400 |
| Revenue | 1’100 | 1’300 | 2’400 |
| Net income | 389 | 195,6 | 584,6 |
| Adj. EBITDA | 628,7 | 384,6 | 1013,3 |
| Free Cash Flow | 489,3 | 125,7 | 615 |
| Net income margin | 34,1% | 15,1% | 24% |
| Adj. EBITDA margin | 55,1% | 29,8% | 41,7% |
| Adj. EBITDA/EV | 0,052 | 0,041 | 0,047 |
| Rev/EV | 0,091 | 0,140 | 0,112 |
Numbers in $ Millions
Real Fight + Fake Fight = Real Deal or Real Fake?
What could the future hold? On page 18 of the investor presentation, there are annual growth projections for different metrics for their industry, like global live sports revenue, global sports media revenue and global sports sponsorship revenue, which range from 8% to 9% per year from 2022 until 2025.
Let’s assume for the combined company to at least achieve a 10% revenue CAGR and retain margins:
| Combined Company 2022 | Combined Company 2025 | |
| Revenue | 2’400 | 3’194 |
| Net income margin | 24% | 24% |
| Adj. EBITDA margin | 42% | 42% |
| Net income | 585 | 767 |
| Adj. EBITDA | 1’013 | 1’342 |
Numbers in $ Millions
If minimum assumptions of 10% revenue growth, 24% net income margin and 42% adj. EBITDA margin until 2025 come true, net income should be at $767 million and adj. EBITDA at $1342 million.
Media deals for the WWE with NBC Peacock will be up for renegotiation in 2026. The UFC deal with ESPN expires in 2025. This could give a massive boost to future revenue and earnings numbers.
There is wording in the announcement about combining media rights. Could that even mean setting up their own streaming service?
Ownership Structure
Equity stake in the UFC was only possible by buying stock in Endeavor. After the merger it will be possible to own a more focused stake around the themes of fighting, entertainment and live events by directly investing in a company that only contains two premier brands in their sectors.
The deal is slated to be closed at the end of 2023.
Conor McGregor loves it
🇮🇪 @wwe, @ufc, @TheMacLife 🇺🇸 #itsinevitable pic.twitter.com/4m75uwZr23
— Conor McGregor (@TheNotoriousMMA) April 2, 2023
Source: Twitter
Source: Endeavor Investor Deck
Endeavor press release: Endeavor Announces UFC® and WWE® to Form a $21+ Billion Global Live Sports and Entertainment Company
YouTube: Ariel Helwani Reacts To Endeavor Owning UFC, WWE | The MMA Hour