Knockout News have previously delved into UFC’s financial standings over the past six months, as disclosed in TKO’s recent S-1 filing. This article will explore the significance of UFC for the financial health of Endeavor and the monetary implications for several of its executives.
It cannot be overstated how critical UFC has been to Endeavor’s financial structure. UFC not only constitutes the majority of the Owned Sports Property segment but also, due to the MMA promotion, this segment represents the largest chunk of Endeavor’s EBITDA.
This financial backbone was especially crucial during the recent COVID-19 pandemic. Ari Emanuel reported that UFC’s contributions were pivotal for sustaining Endeavor, accounting for “about 70 percent of [their] revenue in the COVID year.”
In 2020, while Endeavor held 50.1% of UFC, the Company distributed $312.3 million, $300 million to shareholders and $12.3 million for tax distributions. After Endeavor acquired full ownership of UFC in 2021, distributions amounted to an impressive $1.096 billion, part of which resulted from a $600 million loan UFC secured to benefit Endeavor. An additional $270.3 million followed in 2022.
Over these three years, UFC provided Endeavor with distributions exceeding $1.5 billion. Without this financial influx, Endeavor, facing $650 million in losses in 2021 alone, would likely have struggled through the Pandemic.
Even post-merger with WWE, UFC continues to yield significant returns. TKO Group Holdings declared a one-time special dividend of $3.86 per share, with Endeavor holding 76,712,059 shares. However, investors have been cautioned not to anticipate further cash dividends in the near future, with any potential gains expected solely from “capital appreciation.”
Additionally, Endeavor Group Holdings and its subsidiaries profit from various services provided to UFC, including streaming, production, consulting, and commission fees totaling $2.5 million last year. Since UFC’s acquisition in 2016, Endeavor has received a $25 million management fee annually, set to increase to $35 million, a figure that WWE will also contribute starting the following year.
Ari Emanuel and Patrick Whitesell, senior partners at William Morris Endeavor, are set to profit significantly from the new TKO venture. Emanuel will retain his Endeavor position and income while serving as TKO’s CEO, receiving a separate and lucrative compensation package. His TKO salary starts at $3 million annually, with bonuses and equity awards potentially increasing his earnings substantially.
Mark Shapiro, assuming the same role in TKO as in Endeavor, will also receive generous compensation, including a base salary of $2.5 million, target annual bonus of $5.5 million, transaction bonus of $5 million, and a one-time equity award valued at $6,250,000.
Both Emanuel’s and Shapiro’s agreements include provisions for additional discretionary bonuses and benefits, illustrating the substantial financial implications of the TKO venture for Endeavor’s executives.