Analysis – WWE Sale to Endeavor

Following Endeavor’s early-morning announcement (US time) that it had purchased WWE, it has also released a presentation from Endeavor CEO Ariel Emmanual, COO Mark Shapiro and CFO Jason Lublin explaining the benefits of the sale.

Disclaimer: I’m not an economist! I just listened to the presentation so you don’t have to, and wanted to provide some initial answers.

What does the “sale” mean?

Endeavor has agreed terms to purchase WWE and will create a new company – the creatively titled NewCo – that will merge UFC and WWE.

Note that this isn’t a merger between Endeavor and WWE. 

Endeavor went to great lengths during its presentation to explain its structure, which includes NewCo as one part of it’s “Owned Sports Properties” division, which is one of four broader divisions of Endeavor, with the others being Events, Experiences and Rights (such as tennis tournaments it owns and operates; this division also includes IMG), Representation (WME and business that build relationships with talent) and its new Sports Data and Technology Division.

Endeavor will own 51% of NewCo, with WWE shareholders’ stock rolling into the new company, making up 49% of ownership. Endeavor will retain a majority on the 11-seat board.

Of course, the United States allows weird company structures where the McMahon family, particularly Vince McMahon, has retained the majority of the voting power while floating a publicly traded company, so the sale can proceed under today’s terms without any shareholder vote.

Why has Endeavor bought WWE?

They strongly believe that they can make money, and utilised the UFC example of company growth. More than anything today’s Endeavor presentation was about demonstrating how they are going to replicate that success. The points they have emphasised include:

• Upcoming media rights renewals for UFC and WWE and the potential for massive growth
• Endeavor’s ability to maximise sponsorship, so don’t expect product placement like Mountain Dew matches to disappear any time soon! They also discuss opportunities to increase licensing and premium opportunities.
• Accelerate brand and talent placement (presumably across UFC and WWE)
• Development of new content such as “Ultimate Fighter”, which is interesting considering the amount of content that WWE has created for its network
• Cuts. Of course, they don’t call it cuts, they call it “synergies” and “operational efficiencies” – but what it generally means is merging as many “back-house” functions as possible and cutting staff.

Is Roman Reigns about to get fed to Jon Jones in the way that Yuji Nagata was fed to Fedor and CroCop?

No, there doesn’t appear to be plans for any on-screen crossover between UFC and WWE, apart from promotional and sponsorship opportunities.

Is the sale final?

No, Endeavor say they expect the sale to close in the final quarter of 2023.

Will this impact Raw tomorrow?

No, in the short-to-medium term it’s unlikely to have much impact at all, other than some potential talent releases going forward if they need to cut costs. With the sale not due to close until the end of the year, the elements that are contingent on Endeavor/NewCo making money are going to be television rights and “operational efficiencies.”

A formerly independently-run behemoth wrestling company becoming one cog in a giant machine… haven’t we seen this before?

Yep. And this will be the interesting part going forward. WWE will have to operate as a division of a much larger company. It will be given a strict budget, its president (Nick Khan) and its operating team will need to adhere to strict KPIs, and if Endeavor are ultimately unsuccessful in maximising tv deals, sponsorship, licensing et al, they won’t blame themselves, and they probably won’t even blame the NewCo board – they’ll blame those running WWE (as a television show/company.)

Can that result in a revolving door of management? Hopefully Endeavor and NewCo have better management than TimeWarner did 25 years ago.

Will this impact on creative going forward?

I think so. As noted previously, they will now have to adhere to strict operating budgets and KPIs, which might result in more short term thinking.

Additionally, like companies that went before it, the need to maximise growth means that we, as fans, are no longer the primary consideration going forward – sponsors and broadcasters are. You could argue that’s been the case for a decade already, but don’t go thinking that storylines might get more “Attitude-esque” under risque new owners who are invested in shoot fighting – while I’m not an expert in economics, one thing I can guarantee is that, if anything, WWE will become more sanitised for its sponsors. One of the first things that Endeavour did upon purchasing UFC was regulating it as much as possible to make it as acceptable to sponsors as possible.

Will this have any impact on Australian fans?

The tv rights are locked in, with the Binge/Foxtel/WWE Network deal being relatively new. So I wouldn’t expect any changes to that in the short to medium term.

Australia is obviously a regular market for WWE tours already. Endeavor explained the growth of UFC under their stewardship, and mentioned Melbourne and Perth among their international markets with whom they have partnerships. 

So for Perth fans, I could see WWE tours becoming more regular as part of their Australian tours. Regarding that Wrestlemania story? I thought Perth was a 0% chance of hosting Wrestlemania before the sale – given the outrageous success of UFC’s recent event in Perth, maybe it’s now a 0.1% chance.

For other states/cities, I don’t see Australia being a big enough growth market for them to want to massively expand WWE’s presence here, but I could see them looking for “synergies” between WWE and UFC in terms of promotion (ie. the timing of tours). The benefit could end up being for UFC fans who might see a slight increase in tours given WWE provides a great platform in Australia to promote them.