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TKO Group Holdings

From Wikipedia - Reading time: 24 min

TKO Group Holdings, Inc.
TKO
Company typePublic
Industry
PredecessorsWorld Wrestling Entertainment, Inc.
Zuffa, LLC
FoundedSeptember 12, 2023; 14 months ago (2023-09-12)
Founders
Headquarters200 Fifth Avenue,
New York City, New York
,
U.S.
Area served
Worldwide
Key people
Products
  • Broadcasting
  • Films
  • Finance
  • Home video
  • Live events
  • Merchandise
  • Music
  • Publishing
  • Streaming network service
  • Television
ServicesLicensing
RevenueIncrease US$1.67 billion (2023)[1]
Decrease US$447 million (2023)[1]
Decrease US$176 million (2023)[1]
Total assetsIncrease US$12.7 billion (2023)[1]
Total equityIncrease US$8.84 billion (2023)[1]
OwnerEndeavor (51%)
WWE shareholders (49%)[a]
Number of employees
c. 1,250 (2023)
Subsidiaries
Websitetkogrp.com
Footnotes / references
[8]

TKO Group Holdings, Inc. (TKO) is an American media conglomerate created by Endeavor as part of a merger between World Wrestling Entertainment, Inc. (WWE) and Zuffa, the parent company of the Ultimate Fighting Championship (UFC).[9] Following the completion of the merger on September 12, 2023, both WWE and UFC operate as divisions under the banner of TKO.[10]

The merger marked the first time that WWE has not been solely and primarily majority-controlled by the McMahon family, which founded the company and owned it for over 70 years.[11] This marked the third time that the UFC has changed ownership as its parent company Zuffa had been sold to Endeavor in 2016.[12] Zuffa had previously purchased the UFC from the Semaphore Entertainment Group in 2001.

Endeavor chief executive officer (CEO) Ari Emanuel is the CEO of TKO and Mark Shapiro serves as president and chief operating officer. Nick Khan became the president of WWE post-merger and Dana White has since served as CEO of the UFC.[13][14]

As of 2024 the UFC and WWE are the two most valuable combat sports promotions according to Forbes. With the UFC being the most valued MMA promotion having a value of $11.3 billion and a revenue of $1.29 billion in 2023, and WWE being the most valued professional wrestling promotion with a value of $6.8 billion and revenue of $1.33 billion in 2023.[15]

Background

[edit]
Main articles: History of WWE and Ultimate Fighting Championship § History
Vince McMahon, a third-generation wrestling promoter and co-founder of Titan Sports, Inc., originally served as Executive Chairman of TKO Group Holdings.

Headquartered in Stamford, Connecticut, WWE was founded in 1953 as the Capitol Wrestling Corporation (CWC), a Northeastern territory of the National Wrestling Alliance (NWA).[16] The CWC was run by Vincent J. McMahon, son of boxing and wrestling promoter Jess McMahon. Following a booking dispute over CWC wrestler Buddy Rogers and the NWA World Heavyweight Championship, the CWC left the NWA and became the World Wide Wrestling Federation (WWWF) in January 1963, and, by April 25, 1963, Rogers was declared the first WWWF World Heavyweight Champion. The WWWF was renamed to the World Wrestling Federation (WWF) in 1979; the WWF made its final departure from the NWA in 1983. The current legal entity, which was originally named Titan Sports, Inc., was incorporated on February 21, 1980, in South Yarmouth, Massachusetts, but reincorporated under Delaware General Corporation Law in 1987. Titan Sports was co-founded by Vince McMahon, Vincent J.'s son, and his wife Linda. It acquired Capitol Wrestling Corporation Ltd., the holding company for the WWF, in 1982. After buying the WWF, Vince McMahon expanded the promotion by overturning the NWA's territory system and holding events around the United States and the world which were televised on a global basis. Throughout the 1980s WWF begun to capitalize on the popularity of rising star Hulk Hogan after he defeated The Iron Sheik at Madison Square Garden on January 23, 1984 to capture the WWF World Heavyweight Championship. On March 31, 1985 WWF held the first WrestleMania, which would go on to become WWF's flagship event. Initially broadcast on closed-circuit television, WrestleMania became a pay-per-view the following year,[17] as WWF expanded its pay-per-view offerings and became known as a pioneer for the relatively new distribution format.[18] In January 1993, WWF introduced its live, weekly episodic television show, Monday Night Raw.[19] WWF became a publicly traded company in August of 1999, launching an initial public offering on the New York Stock Exchange.[20] The company's status as the world's premier professional wrestling organization was cemented by its acquisition of the assets of World Championship Wrestling in 2001 following the Monday Night War. Titan Sports was renamed World Wrestling Federation Entertainment, Inc. in 1999, and then World Wrestling Entertainment, Inc. in 2002 after a legal dispute with the World Wildlife Fund. Since 2011, the company has branded itself solely with the initials WWE, though the legal name did not change at the time.[21] WWE's majority owner was its executive chairman, third-generation wrestling promoter Vince McMahon, who retained a 38.6% ownership of the company's outstanding stock and 81.1% of the voting power before the merger. The closure of the merger saw McMahon's voting power and stock ownership dramatically decrease.

Ari Emanuel, the CEO and Executive Chair of TKO Group Holdings.

The Ultimate Fighting Championship (UFC), initially under the ownership of the Semaphore Entertainment Group, was founded by American businessman Art Davie and Brazilian martial artist Rorion Gracie with their partners in WOW Promotions.[22][23] The first UFC event was held in November 12, 1993 at the McNichols Sports Arena in Denver, Colorado.[24] The purpose of the early ultimate fighting competitions was to identify the most effective martial art in a contest with minimal rules and no weight classes between competitors of different fighting disciplines. In subsequent events, more rigorous rules were created and fighters began adopting effective techniques from more than one discipline, which indirectly helped create a separate style of fighting known as present-day mixed martial arts (MMA). In April 1995, following UFC 5, Davie and Gracie sold their remaining interest in the UFC to the Semaphore Entertainment Group and disbanded WOW Promotions.[25] Six years later in 2001, Zuffa, a sports promotion company headed by Frank and Lorenzo Fertitta, purchased the UFC from the Semaphore Entertainment Group. Zuffa's ownership led to a growth period for the company and the sport of MMA in general; the UFC's global leadership in the sport led to Zuffa buying the assets of the Pride Fighting Championships in 2007 and the Strikeforce promotion in 2011 (among other MMA promotions). In 2016, Zuffa was sold to a group led by Endeavor, then known as William Morris Endeavor (WME–IMG), including Silver Lake Partners, Kohlberg Kravis Roberts and MSD Capital[26] for US$4.025 billion.[27] In 2017, WME–IMG changed its holding name to Endeavor and four years later, in 2021, Endeavor bought out Zuffa's other owners at a valuation of $1.7 billion.

History

[edit]

WWE's preparations for a sale

[edit]

On June 17, 2022, amid allegations of misconduct, Vince McMahon stepped down as the chairman and CEO of WWE, leaving the company to his daughter, Stephanie McMahon, and Nick Khan. In January 2023, Vince stated his intention to return to WWE ahead of media rights negotiations. WWE's media rights with Fox and USA Network were set to expire in 2024.[28] That same month, JPMorgan were hired to handle a possible sale of the company, with rumored suitors having included Comcast and Fox Corporation (owners of WWE's broadcast partners USA Network and Fox), The Walt Disney Company (owners of ESPN), Warner Bros. Discovery (media partners of All Elite Wrestling), Netflix, Amazon, Endeavor (WWE had an existing business relationship with its subsidiary Endeavor Streaming, which took over the technical operations of its streaming service WWE Network in 2019), Liberty Media, Creative Artists Agency, and Saudi Arabia's Public Investment Fund (WWE has a long-term agreement with Saudi Arabia's Ministry of Sport to promote events in the country).[29][30]

On January 10, 2023, Stephanie McMahon resigned as WWE's chairwoman and co-CEO, after which Vince McMahon assumed the role of executive chairman of WWE while Nick Khan became the sole CEO.[31]

Formation

[edit]

In September 2023, Endeavor Group Holdings, UFC and WWE formed a new publicly traded company, TKO Group Holdings, Inc. The new entity went public on September 12, 2023 and is listed on the New York Stock Exchange (NYSE) under the symbol "TKO".[32][33]

At the close of the deal, Endeavor held a 51% stake in TKO Group Holdings, with WWE's shareholders having a 49% stake, valuing WWE at $9.1 billion.[32][33] This marked the first time that WWE had not been majority-controlled by members of the McMahon family.[34] Endeavor CEO Ari Emanuel became CEO of TKO and Mark Shapiro became president and chief operating officer, with each maintaining their respective roles at Endeavor. UFC and WWE continued to operate as separate divisions under TKO, with Dana White as CEO of the UFC and Nick Khan serving as president of WWE post-merger.[14][35][36] WWE's head of creative Paul Levesque remained in his role.[37]

When the merger was first announced in April 2023, Emanuel stated that it would "bring together two leading pureplay sports and entertainment companies" and provide "significant operating synergies".[33] McMahon stated that "family businesses have to evolve for all the right reasons",[32] and that "given the incredible work that Ari and Endeavor have done to grow the UFC brand — nearly doubling its revenue over the past seven years — and the immense success we've already had in partnering with their team on a number of ventures, I believe that this is without a doubt the best outcome for our shareholders and other stakeholders."[33]

The merger closed on September 12, 2023;[38][33] with Vince McMahon personally owning approximately one-third of the Class A Common Stock of TKO Group Holdings, Inc.[39] Following the merger, Dana White was made CEO of UFC.[40]

In January 2024, a lawsuit was filed by Janel Grant, a former employee at WWE headquarters between 2019 and 2022 against WWE as well as TKO (by proxy of ownership). Grant alleged that the then current TKO Executive Chairman Vince McMahon, had coerced her into a sexual relationship, and, along with WWE executive John Laurinaitis and a WWE wrestler who was also a former UFC fighter,[b] sexually trafficked her and repeatedly sexually assaulted her between 2020–2021. Grant alleged that she was subjected to "extreme cruelty and degradation" by McMahon, including being defecated upon during a sexual encounter. Grant stated that McMahon had agreed to pay her $3 million in 2022 in return for a NDA, but stopped paying after only $1 million had been paid following the initial public emergence of the sexual misconduct allegations the same year.[41] Federal prosecutors have subpoenaed McMahon, and have taken up the filing in question. One day after the report – on January 26, 2024 – Vince McMahon resigned from TKO. In a statement, McMahon said the decision was made "out of respect for the WWE Universe, the extraordinary TKO business and its board members and shareholders, partners and constituents, and all of the employees".[42][43][44][45]

Further investments and acquisitions

[edit]

In July 2024, TKO Group announced an investment in EverPass Media, an NFL-backed distributor of pay television content to commercial establishments.[46][47]

On October 23, 2024, it was announced that TKO Group would acquire several businesses from Endeavor, including sports and event management firm IMG (aside from "businesses associated with the IMG brand in licensing, models, and tennis representation, nor IMG's full events portfolio"), On Location Experiences (a luxury hospitality agency focused on major sporting events), and Professional Bull Riders (PBR), for $3.25 billion in an all-stock deal expected to close in 2025. Shapiro stated that Silver Lake Partners had requested the divestment of certain Endeavor assets as part of its planned buyout of the company, and that Endeavor had approached TKO Group with an offer. He explained that TKO was interested in league ownership and "businesses that can power our current sports ecosystem", while the company stated that it would "[expand] TKO's operational footprint in the fast-growing premium sports market and enables direct participation in the upside from partner leagues and events." Under the terms of the deal, Endeavor will own 59% of TKO and the remaining shareholders will control the other 41% [48][49]

Corporate governance

[edit]

The board of directors of TKO Group Holdings consists of thirteen members, six representing WWE and seven representing Endeavor. On January 23, 2024, the TKO board of directors would be increased from 11 members to 13 members.[50] Following this, WWE underwent some changes, which included broadcast deals with different partners (including Netflix) and giving up ownership of Dwayne Johnson's trademarked name "The Rock" to Johnson, who would also join TKO's board of directors.[51][50] There is currently one vacancy due to former Executive Chairman Vince McMahon’s resignation on January 26, 2024 following sex trafficking and sexual assault allegations involving a former WWE employee.[52][50][53]

Board of Directors
Name Representative Role
Ari Emanuel Endeavor CEO and Executive Chairman of TKO Group Holdings
Egon Durban Endeavor Co-CEO of Silver Lake Management
Nick Khan WWE President of WWE
Steve Koonin WWE Lead Independent Director
CEO of Atlanta Hawks
Jonathan Kraft Endeavor President of the Kraft Group and the New England Patriots
Sonya Medina Williams Endeavor President and Executive Director for Reach Resilience
Mark Shapiro Endeavor President and COO of TKO Group Holdings
Carrie A. Wheeler WWE CEO of Opendoor
Nancy Tellem Endeavor Chief Media Officer of Eko
Peter Bynoe WWE Senior Advisor of DLA Piper
Dwayne Johnson WWE Co-owner of United Football League
Part-time WWE wrestler
Brad Keywell Endeavor Executive Chairman of Uptake Technologies

Assets

[edit]

Notes

[edit]
  1. ^ At the close of the deal, WWE's shareholders owned 49% of the company. Vince McMahon owns 9.941% of the company, with a 4.7% voting interest.[2][3][4][5][6][7]
  2. ^ The WWE/UFC talent in question was not named in the lawsuit, but was believed to be by The Wall Street Journal as Brock Lesnar.

References

[edit]
  1. ^ a b c d e "TKO Reports Full Year 2023 Results" (PDF). TKO Group Holdings, Inc. February 27, 2024. Retrieved February 27, 2024.
  2. ^ "SCHEDULE 14C INFORMATION". NASDAQ. August 22, 2023. p. 248. Retrieved August 25, 2023. Mr. McMahon is expected to have beneficial ownership of approximately 28,752,105 shares of New PubCo Class A common stock representing approximately... 17% of the voting power...and approximately 34% of the economic interests...
  3. ^ "STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES" (PDF). United States Securities and Exchange Commission. November 9, 2023. Retrieved November 9, 2023.
  4. ^ "STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES" (PDF). United States Securities and Exchange Commission. March 7, 2024. Retrieved March 7, 2024.
  5. ^ "STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP" (PDF). United States Securities and Exchange Commission. March 28, 2024. Retrieved March 28, 2024.
  6. ^ "STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP" (PDF). United States Securities and Exchange Commission. April 9, 2024. Retrieved April 9, 2024.
  7. ^ "TKO Group Holdings, Inc.: Shareholders Board Members Managers and Company Profile | US87256C1018 | MarketScreener". www.marketscreener.com. Retrieved July 25, 2024.
  8. ^ "2023 Annual Report (Form 10-K)". U.S. Securities and Exchange Commission. February 27, 2024.
  9. ^ "SEC-Show". otp.tools.investis.com. Retrieved June 12, 2023.
  10. ^ "Endeavor and WWE® Deal to Create TKO Group Holdings Expected to Close September 12". Business Wire. September 7, 2023. Archived from the original on September 7, 2023. Retrieved September 7, 2023.
  11. ^ Sherman, Alex (April 2, 2023). "WWE near deal to be sold to UFC parent Endeavor, sources say". CNBC. Archived from the original on April 2, 2023. Retrieved April 2, 2023.
  12. ^ "U.F.C. Sells Itself for $4 Billion". The New York Times. July 11, 2016. Retrieved July 11, 2016.
  13. ^ Mullin, Benjamin (April 3, 2023). "Endeavor and W.W.E. Join Forces to Create Live-Combat Tag Team". The New York Times. Retrieved April 3, 2023.
  14. ^ a b Group, T. K. O. (September 5, 2023). "Endeavor Announces Close of UFC® And WWE® Transaction to Create TKO Group Holdings, a Premier Sports and Entertainment Company". TKO Group Holdings, Inc. {{cite web}}: |last= has generic name (help)
  15. ^ Teitelbaum, Justin. "The Most Valuable Combat Sports Promotions 2024". Forbes. Retrieved October 1, 2024.
  16. ^ "New WWE Stamford headquarters opening scheduled for early 2023". Retrieved May 7, 2024.
  17. ^ "A Look at WWE Pay-Per-View Changes". Bleacher Report. Retrieved May 14, 2024.
  18. ^ "Pro Wrestling a Pioneer in Pay-Per-View Game". Chicago Tribune. Retrieved May 14, 2024.
  19. ^ "The WWE Universe Creates Wild Fan Films To Honor 30 Years of Monday Night RAW". USA Network. Retrieved May 14, 2024.
  20. ^ "WWF pins IPO". CNN. Retrieved May 14, 2024.
  21. ^ Sacco, Justine; Weitz, Michael (April 7, 2011). "The New WWE" (Press release). Connecticut: WWE. Archived from the original on May 3, 2018. Retrieved November 25, 2021.
  22. ^ Gentry III, Clyde, No Holds Barred: Evolution, Archon Publishing, 2001, 1st ed., ISBN 0-9711479-0-6, pages 24–29.
  23. ^ "Royce Gracie's Legacy, BJJ's Relevance on the Decline in Modern MMA". Bleacher Report. April 27, 2012. Archived from the original on October 18, 2021. Retrieved November 19, 2012.
  24. ^ Stefano, Dan (June 25, 2009). "Former UFC champ helps promote Pittsburgh event". Pittsburgh Tribune-Review. Archived from the original on July 1, 2009. Retrieved June 27, 2009.
  25. ^ Bare Knuckle News (August 21, 2019). Art Davie on His Decision to Sell His Stake in the UFC – via YouTube.
  26. ^ de la Merced, Michael (July 11, 2016). "U.F.C. Sells Itself for $4 Billion". The New York Times. Retrieved October 8, 2019.
  27. ^ Rooney, Kyle (September 30, 2016). "UFC sold to WME-IMG". HNHH. Archived from the original on October 18, 2021. Retrieved October 1, 2016.
  28. ^ Coppinger, Mike (January 6, 2023). "Vince McMahon back at WWE ahead of media rights negotiations". ESPN.com. Retrieved January 6, 2023.
  29. ^ Sherman, Alex (January 7, 2023). "Vince McMahon is back at WWE to ensure a smooth sale process. Here's who might want to buy it". CNBC. Retrieved January 10, 2023.
  30. ^ Mcharthy, Michael; Perez, A.J (January 6, 2023). "Saudi Public Investment Fund Could Bid On WWE". Front Office Sports. Retrieved January 10, 2023.
  31. ^ "WWE Board of Directors unanimously elects Vince McMahon executive Chairman of the board". WWE. January 10, 2023. Retrieved January 10, 2023.
  32. ^ a b c Sherman, Alex (April 3, 2023). "WWE agrees to merge with UFC to create a new company run by Ari Emanuel and Vince McMahon". CNBC. Retrieved April 3, 2023.
  33. ^ a b c d e Szalai, Georg; Vlessing, Etan (April 3, 2023). "Endeavor's UFC, WWE to Merge; Ari Emanuel to Serve as CEO, Vince McMahon as Executive Chair". The Hollywood Reporter. Retrieved April 3, 2023.
  34. ^ Sherman, Alex (April 2, 2023). "WWE near deal to be sold to UFC parent Endeavor, sources say". CNBC. Retrieved April 2, 2023.
  35. ^ Burack, Bobby (April 3, 2023). "WWE CEO NICK KHAN TALKS WWE/UFC MERGER". OutKick. Retrieved April 5, 2023.
  36. ^ PWMania (May 3, 2023). "Nick Khan And Triple H Discuss WWE – Endeavor". PWMania. Retrieved May 3, 2023.
  37. ^ "Vince McMahon: I will remain involved in WWE creative at a 'higher level'". Wrestling Observer/Figure Four Online. April 3, 2023. Retrieved April 3, 2023.
  38. ^ "NEW WHALE INC.* WORLD WRESTLING ENTERTAINMENT, INC". U.S. Securities and Exchange Commission. Retrieved August 16, 2023.
  39. ^ "SCHEDULE 14C INFORMATION". NASDAQ. August 22, 2023. p. 248. Retrieved August 25, 2023.
  40. ^ https://www.si.com/fannation/mma/ufc-ceo-dana-white-compliments-combat-sports-art
  41. ^ Safdar, Khadeeja (January 25, 2024). "Vince McMahon Accused of Sex Trafficking by WWE Staffer He Paid to Keep Quiet". The Wall Street Journal. Archived from the original on January 25, 2024. Retrieved January 25, 2024.
  42. ^ Patten, Dominic (January 26, 2024). "Vince McMahon Resigns From Endeavor-Owned Sports Group After Horrific Rape & Sex Trafficking Claims". Deadline. Archived from the original on January 27, 2024. Retrieved January 27, 2024.
  43. ^ "Vince McMahon resigns from roles with WWE, TKO Group amid sexual assault and trafficking allegations". CBSSports.com. January 27, 2024. Retrieved February 22, 2024.
  44. ^ Draper, Kevin (January 27, 2024). "Vince McMahon Cuts W.W.E. Ties After Sex Trafficking Accusation". The New York Times. ISSN 0362-4331. Retrieved February 22, 2024.
  45. ^ "McMahon resigns from TKO following allegations". ESPN. January 27, 2024. Retrieved February 22, 2024.
  46. ^ Hayes, Dade (July 2, 2024). "UFC & WWE Parent TKO Group Invests In EverPass Media, A Distributor Of NFL Sunday Ticket And Other Sports Properties To Commercial Businesses". Deadline. Retrieved July 2, 2024.
  47. ^ Winslow, George (July 2, 2024). "EverPass Media Acquires UPshow". TVTechnology. Retrieved July 2, 2024.
  48. ^ Sherman, Alex (October 24, 2024). "TKO Group to acquire IMG, Professional Bull Riders and On Location from Endeavor for $3.25 billion". CNBC. Retrieved November 14, 2024.
  49. ^ Spangler, Todd (October 24, 2024). "TKO Group Will Acquire PBR, IMG and On Location From Majority Owner Endeavor in $3.25 Billion Deal". Variety. Retrieved November 14, 2024.
  50. ^ a b c "TKO Appoints Dwayne Johnson to Board of Directors". TKO Group Holdings. January 23, 2024. Retrieved January 23, 2024.
  51. ^ "TKO CEO Ari Emanuel: Netflix deal strengthens the WWE brand 'on a global basis'". CNBC. January 23, 2024. Retrieved January 23, 2024.
  52. ^ Thompson, Andrew (August 10, 2023). "Board members revealed for TKO Group Holdings". Post Wrestling. Retrieved August 16, 2023.
  53. ^ Patten, Dominic (January 27, 2024). "Vince McMahon Resigns From Endeavor-Owned Sports Group After Horrific Rape & Sex Trafficking Claims". Deadline. Retrieved January 27, 2024.
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