UFC, owned by TKO Group Holdings
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UFC and WWE parent company TKO Group Holdings (TKO) has increased its revenue target for the end of 2024 in the face of a large loss in Q1.

The conglomerate, owned by Endeavor, reported revenue of $629.7m ($306.7m), and adjusted EBITDA of $282.2m ($172.6m), an increase of 105% and 63% respectively. The firm noted that when marking year-on-year comparatives, the September 2023 merger of UFC and WWE needs to be taken into account.

Rising revenue across both brands

This group-wide revenue increase was broken down into a 2% rise in UFC revenue to $313m and the contribution of £316.7m in WWE revenue during the quarter. TKO Group began operations last September with the aforementioned combination of UFC and WWE under Endeavor’s ownership.

However, the company also reported a net loss of $249.5m. Although this represents a decrease on the prior year period loss of £337.4m from net income of $87.9m, it is still a sticking point in the otherwise positive results outlined.

TKO attributed this loss to three factors. This included a settlement of $335m related to a UFC antitrust matter, $475.6m in administrative expenses, an increase in operating costs of $111.8m and an increase in depreciation and amortisation of $91.9m.

The antitrust suit in question had been raised by former UFC fighters who claimed that the promotion was restricting fighter pay and exploiting its market leadership position to gain an unfair advantage over other promotions.

Ariel Emanuel, Executive Chair and CEO of TKO, said: “TKO is off to a strong start in 2024 with multiple record-setting live events, new brand partnerships, and media rights deals for WWE Raw.

“With our momentum in the first quarter and solid financial results, we have raised our full year 2024 guidance. We also reached an agreement to settle all claims asserted in both UFC antitrust lawsuits. 

“These positive developments, along with the strength in our underlying businesses, give us more conviction than ever in the combination of UFC and WWE, and in TKO’s ability to deliver sustainable long-term value for shareholders.” 

Clinching the right sponsor/media mix

Regarding the individual performances of its two assets TKO Group has cited several different factors. Firstly, the UFC’s 2% increase in revenue was attributed to a $10.6m increase in sponsorship revenue and a $3.9m increase in live events revenue.

Sponsorship revenue came from new sponsors and an increase in fees from renewals. Meanwhile, live events revenue was due to a rise in ticket sales, but the firm did also note a decrease in UFC media rights and content revenue due to one less ‘numbered’ UFC event being held during the quarter.

The WWE’s 6% YoY revenue rise – although as stated above, the company was not part of TKO in Q1 2023 – was attributed to increases in live events, media rights and content revenue, partially offset by a decrease in consumer products revenue.

UFC held 11 events during Q1, including five with live audiences, while WWE held 47 including two premium live events. UFC 300 in particular was a significant milestone for TKO, delivering a gate of $16.5m from 20,067 attendees at Las Vegas’ T-Mobile Arena.

Following an active Q1 from a commercial and operational standpoint, TKO expects revenue from UFC and WWE to continue soaring. Sponsorships have played a key role in the UFC’s success and the promotion has worked to build on this in Q1, signing deals with Ladbrokes Australia and Black Rifle Coffee Company (BRCC),

For the WWE, the brand’s media exposure is set to continue following a five-year renewal of its deal with NBCUniversal late last year and a new 10-year partnership with Netflix. The former will cover Friday Night SmackDown, WWE NXT and WWE Monday Night Raw, whilst the latter will cover WWE RAW.

In other sponsorship developments, during Q1 TKO revealed that the UFC and WWE sponsorship teams would merge. The combined team, spread across eight cities in five countries, will create “a sports marketing powerhouse” in the words of Andrew Schleimer, TKO Chief Financial Officer.

Concluding its results, TKO revised its guidance for year-end. The company has increased its revenue target from $2.610bn to $2.685bn. Adjusted EBITDA targets have also risen from $1.205bn to $1.185bn, and TKO expected free cash flow in excess of 40%.

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