Endeavor-owned TKO Group Holdings, the company formed from the merger last year of the UFC and the WWE, reported a 29% rise in UFC revenue in the second quarter.
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Adjusted EBITDA, a gauge of profitability, increased 23% at UFC in the quarter ended June 30 to reach $231.9 million.
For the entire company, revenue hit $851.2 million and EBITDA was $420.9 million.
Year-to-year comparisons are difficult for TKO given the timing of the merger in September 2023.
The UFC’s revenue uptick to $394.4 million was mainly driven by a gain in media rights and content revenue, along with higher live events revenue thanks to an additional event occurring in the quarter. Sponsorship proceeds also improved in the period.
Revenue at WWE was $456.8 million, up 11%.
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In recent months, Endeavor decided to go private after three years as a public company and let TKO be its sole publicly traded operation. Its initial 51% stake in TKO has now hit 53.6%.
The UFC is getting set for what is expected to be a lucrative negotiation of U.S. media rights currently held by Disney-ESPN. That $1.5 billion agreement is set to expire in 2025, and the WWE’s $1 billion streaming pact with NBCUniversal’s Peacock comes due in 2026. After the NBA and NFL set decade-long extensions, along with major college conferences, Formula 1 and other leagues, TKO’s rights are expected to be the most valuable ones still on the market. Earlier this year, Netflix grabbed rights to the WWE’s Raw franchise in a landmark deal worth $5 billion over 10 years, showing the appetite for ring sports (and sports entertainment) properties.
On the downside for TKO, a judge last month nixed a $335 million settlement it had reached with UFC fighters in a class-action lawsuit, setting a trial date. If the case does proceed to trial, it could potentially cost the company several times that settlement amount.
On the bottom line, the increase in revenue was partially offset by an increase in expenses. Direct expenses increased primarily due to higher production, marketing and athlete costs as well as an increase in direct costs of revenue due to one additional event compared to the year-ago quarter. Selling, general and administrative expenses were essentially flat as compared to the prior year period, the company said.
“TKO generated strong financial results in the quarter, highlighted by record quarterly revenue and
Adjusted EBITDA,” TKO CEO Ariel Emanuel (who also heads Endeavor) said in the earnings release. “In light of this continued momentum, we are raising our full-year 2024 guidance for the second quarter in a row. The strength in our underlying business continues to give us great conviction in TKO’s ability to deliver sustainable long-term value for shareholders.”
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