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Speaker 1: Hello, Welcome to the Bloomberg Business of Sports podcast. We

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Speaker 1: explore some of the big money issues in the world

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Speaker 1: of sports. I'm Michael barn I'm Scarlett phill and a

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Speaker 1: big old issue, a big, big, big, big, big issue,

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Speaker 1: and it involves the WWE and Endeavor and this big

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Speaker 1: old deal about nine point three billion dollars worth of

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Speaker 1: deal is out there. Now. There's a lot to break

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Speaker 1: down with this, so let's talk about it. Let's talk

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Speaker 1: first with the Chair of Sports and Entertainment Practice, Steve

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Speaker 1: or Lenok, and our own Bloomberg Intelligence Technology and Media

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Speaker 1: analysts Etha ranking Na. So we've welcome you both to

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Speaker 1: the Bloomberg Business of Sports. They're glad to be here,

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Speaker 1: thanks for having me. Let's break this down. First of all,

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Speaker 1: I'm gonna start with you, Steve. This is a big

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Speaker 1: dag on deal man. Let's take it through us. And

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Speaker 1: I guess the biggest question is will Vince McMahon still

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Speaker 1: be around with this. Let's just really break this down.

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Speaker 1: We've got Vince mcmah and prolific storyteller, great deal maker.

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Speaker 1: We've got Ari Emmanuel, one of the leaders, perennial dealmaker.

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Speaker 1: We've got Nick con who was one of the heads

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Speaker 1: of CIA, great deal maker. You've got Dana White, one

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Speaker 1: of the best promoters. So if we're going to look

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Speaker 1: at this in terms of a math equation, and everyone

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Speaker 1: can say, oh, is it a buye? Did they pay

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Speaker 1: too much? Is this gonna work? Well, let's think about it.

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Speaker 1: We add up that and we're probably going to get

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Speaker 1: to the equation of visionaries dealmakers. If you're building out

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Speaker 1: your infrastructure, wouldn't you want this team in place to

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Speaker 1: help you build and really really set the stage. And

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Speaker 1: in terms of you build the ecosystem. Between Endeavor plus

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Speaker 1: the UFC plus the wwe look at what you can do.

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Speaker 1: You can create stars, you can build starts, you can

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Speaker 1: build that value, you can cross sell. So when you

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Speaker 1: start looking at all of this, you have to look

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Speaker 1: at in terms of where you are today, where you're going,

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Speaker 1: what kind of purchasing power are you going to have,

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Speaker 1: what's that M and a pipeline going to look like?

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Speaker 1: What are the integration in terms of the integration, how

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Speaker 1: you can reduce, how you can actually put forth and

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Speaker 1: actually have some of those integration and cost savings and

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Speaker 1: put that money to use. So I think in terms

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Speaker 1: of when you look at this deal of what it

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Speaker 1: is on its face, I think it's a huge opportunity.

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Speaker 1: I think the sports world of putting two legacy companies

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Speaker 1: together right now and two of the biggest and brightest

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Speaker 1: sure to answer damn right, is going to work. There's

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Speaker 1: definitely a lot of synergy, and you bring that up.

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Speaker 1: But geth I want to bring you into this conversation

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Speaker 1: as well, because and the deal was announced, you would

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Speaker 1: think that WWE shares would have rallied on the news,

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Speaker 1: but actually they declined, which suggests that there are some

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Speaker 1: concern among investors. Kita, what are the concerns with regards

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Speaker 1: to WWE being purchased by Endeavor and then repackaged into

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Speaker 1: its own entity with the other sports business. Yeah, so

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Speaker 1: I totally agree Scarlet with Steve in terms of the

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Speaker 1: strategic merit to the deals. I think, you know, it

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Speaker 1: kind of pairs two of the biggest sports entertainment brands.

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Speaker 1: And remember Wall Street does like pure Place, and what

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Speaker 1: you have here is kind of this combat sports entertainment powerhouse. Now,

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Speaker 1: I think why there was initially some negative reaction to

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Speaker 1: the deal was because it was not an all cash deal. Remember,

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Speaker 1: this is now going to be a newly formed entity.

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Speaker 1: You know, that is fifty one percent control by Endeavor,

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Speaker 1: forty nine percent control by WWE. And I think what

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Speaker 1: a lot of the ww investors were initially hoping for

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Speaker 1: was that it would be an out right sale. They're

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Speaker 1: not getting that. I think that was the reason for

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Speaker 1: the initial disappointment. But I think what you're seeing now is,

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Speaker 1: you know, once the market have had some time to

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Speaker 1: digest the deal, it's actually being received pretty well now.

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Speaker 1: And again you have, you know, a pure play sports

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Speaker 1: media giant with a lot of potential upside. Remember both

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Speaker 1: of these companies, WWE as well as UFC are going

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Speaker 1: into their new media rights renewal cycle. So again we've

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Speaker 1: seen all recent sports deals come in, you know about

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Speaker 1: average increases and rights fees have been about fifty to

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Speaker 1: seventy percent. So you kind of take that, yeah, and

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Speaker 1: then you kind of take that in and then you

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Speaker 1: look at, you know, all the other monetization opportunities, and

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Speaker 1: Steve kind of talked about this a little bit, you know,

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Speaker 1: whether it's sponsorship, whether it's licensing, whether it's you know,

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Speaker 1: cross promotional opportunities, better event operations or even sports betting.

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Speaker 1: You know, there's just huge untapped potential from this new entity.

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Speaker 1: So I want to ask about that, and you brought

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Speaker 1: it up how there's talk about trying to get sports

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Speaker 1: betting into wrestling, and I'm just wondering, how can I

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Speaker 1: put this nice? How in the heck is this going

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Speaker 1: to happen? Let's put it that way. Yeah, So again,

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Speaker 1: this is something that so that this is something that

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Speaker 1: Endeavor actually has a little bit of, you know, experience

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Speaker 1: with their own open bet um and so it's going

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Speaker 1: to be interesting. I know, you know, WW obviously scripted entertainment,

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Speaker 1: but it's going to be interesting to see how, you know,

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Speaker 1: they can use their expertise in so many different um areas,

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Speaker 1: you know, whether it's sports betting, whether it's media rights,

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Speaker 1: whether it's live events. They've already done that, They've already

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Speaker 1: done that playbook with the UFC, They've you know, doubled

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Speaker 1: revenue from six hundred million to almost one point three

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Speaker 1: billion last year. So it's they're going to kind of

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Speaker 1: run that same playbook. They have a lot of experience,

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Speaker 1: they have a fantastic track record. I'm not exactly sure

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Speaker 1: how exactly the sports betting piece of it is going

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Speaker 1: to work, But it's definitely a huge opportunity right now

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Speaker 1: within the sports world, within the media world. You know,

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Speaker 1: we're seeing rumblings across even you know, established properties like ESPN,

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Speaker 1: you know, potential um sports betting optunities. It's going to

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Speaker 1: It's gonna take a while obviously as as legalization kind

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Speaker 1: of plays out. Yeah, but I think there's definitely some

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Speaker 1: upside potential there. I got my money on Snoop Dogg,

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Speaker 1: but that's another story. Did you see him? Yes? Did

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Speaker 1: you see that? Oh? Man, you dropped the people's elbow,

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Speaker 1: save the day, got the message from the rock and

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Speaker 1: saved it. Was like anybody does know what we're talking about.

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Speaker 1: By the way, there was Snoop brought in, uh, you know,

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Speaker 1: to get the thing going with McMahon and everybody in

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Speaker 1: and they were going to have a with the miss

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Speaker 1: and they were going to have a mix it up

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Speaker 1: a bit. But I think the man tore the quad,

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Speaker 1: did he Yeah, I think he took Did that happen?

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Speaker 1: That's what happen. Happened, So they had to take him out.

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Speaker 1: So wow, that's why Snoop was in there. Wow. Yeah,

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Speaker 1: at so far and that's how that all happened. So

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Speaker 1: did this become a meme on the internet? Oh? Man,

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Speaker 1: this this was big. Yeah, of course it was. In fact,

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Speaker 1: I had to even talk about it on The Business

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Speaker 1: sports Man during the weeks. Wow, well you know what,

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Speaker 1: you know what happened? The Rock actually got hurt. I

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Speaker 1: think he was wrestling, was it John Cena? Yeah? I

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Speaker 1: think his quad actually went as well during the match.

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Speaker 1: If I'm not mistaken, Yeah, that was and I felt bad.

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Speaker 1: I'm like, oh man, it's like, but I'm sorry. I'm sorry, Scarlett, No, no, no,

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Speaker 1: I thank you for bringing in that context. Steve, what

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Speaker 1: do you make of the possibility of sports betting with WWE,

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Speaker 1: which is not exactly live sports? Yeah, no, definitely. I

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Speaker 1: mean I think it's something that obviously is on the table.

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Speaker 1: People are talking about it. I think one thing that

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Speaker 1: you have to I think in this Michael, kind of

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Speaker 1: because it's scripted, right, I think people are a little

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Speaker 1: bit worried and there's there's a risk. So it's having

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Speaker 1: that risk assessment. I do it obviously when we look

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Speaker 1: at all these award shows and two or three people

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Speaker 1: or five people actually know, I think there is that

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Speaker 1: slight risk where you could potentially price waterhouse people. Yeah,

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Speaker 1: exactly might be spilling the beans about something you just

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Speaker 1: don't know. I think it does. It does provide a

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Speaker 1: little bit of an enhanced risk, But I think it's

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Speaker 1: something that I'm sure right now in terms of the

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Speaker 1: integration of what they're looking at. I'm sure that's obviously

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Speaker 1: something big on the table. So Steve, let me ask

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Speaker 1: you another question, because there's also some litigation now with

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Speaker 1: regards to the sale of WWE to Endeavor. A DEMI

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Speaker 1: is a law from that specializes in shareholder litigation. Says

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Speaker 1: it's looking into whether the board of directors at WWE

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Speaker 1: obtained a fair reasonable price in the sale process. Is

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Speaker 1: this unusual or is this just people coming out of

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Speaker 1: the woodwork to say, you know what, you could have

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Speaker 1: gotten a better price. Well, I mean look in terms

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Speaker 1: of like what a law firm will look at potentially

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Speaker 1: in terms of making sure that you maximize shareholder value. Right,

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Speaker 1: But Vincent K McMahon did something brilliant. He said that

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Speaker 1: he wanted to get nine billion dollars of value out

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Speaker 1: of this deal. What exactly what was it? Yeah, yeah, yeah,

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Speaker 1: So so therefore when you get that premium and that

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Speaker 1: step up in terms of value. Um, I think it's

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Speaker 1: going to be, you know, an uphill battle. Um. But

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Speaker 1: like anything, you have to look at the facts. You

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Speaker 1: have to look at the circumstances and go from there.

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Speaker 1: I guess who has the leverage when you put a

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Speaker 1: deal like this together, which team has the leverage to

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Speaker 1: go in because you just brought it up. Vince McMahon

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Speaker 1: wanted nine billion and he got it. Is it in

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Speaker 1: or is it wwe? Well, I mean it's all in

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Speaker 1: terms of the eye of the beholder, right, right, there's

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Speaker 1: no such thing as we have to sell right. So

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Speaker 1: in terms of merging the two, in terms of coming

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Speaker 1: together and combining, right, I think it's a synergistic way

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Speaker 1: of both people wanting to work together number one. Two

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Speaker 1: executing on the plan and the foresight of the plan

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Speaker 1: and making sure that as you build out this company

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Speaker 1: and you build out the board which hopefully we'll talk

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Speaker 1: about the board, which will be interesting, be hopefully live

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Speaker 1: entertainment itself hopefully I'll you know, that in itself will

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Speaker 1: be awesome, especially if there's a disagreement, hopefully not you know.

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Speaker 1: But I think in terms of these deals, you just

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Speaker 1: have to look at what the potential opportunity on a

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Speaker 1: go forward basis of a combined company. What it looks like,

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Speaker 1: the cost savings, the pipeline, the infrastructure set in place.

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Speaker 1: You know, we highlighted the media rights deals that are

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Speaker 1: on the table for the WWE. So how do you

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Speaker 1: use that intellectual capital amongst everybody the deal making of

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Speaker 1: Nick Ari, Dana, Vincent K McMahon, and you have to

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Speaker 1: really look at that. And I think if you do,

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Speaker 1: you have a chance to do something great. And I

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Speaker 1: think the opportunity when you merge two companies together. They're

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Speaker 1: not just trying to just skid along and hopefully make

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Speaker 1: something happen. They're trying to dominate the world of sports

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Speaker 1: and entertainment. So this new company that's going to be

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Speaker 1: formed by the merger of WWE and the Ultimate Fighting

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Speaker 1: Championship GITA, will this be a publicly traded company. Yeah,

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Speaker 1: it is going to be a publicly traded company. You know.

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Speaker 1: Deal closing is expected by end of twenty twenty three.

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Speaker 1: I don't think we have a name for the company

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Speaker 1: right just yet, but it will trade under the ticker

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Speaker 1: symbol t KO over Technical Knockout. Okay, So t KO.

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Speaker 1: Let's just call it that for now. You called it

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Speaker 1: a pure play, a company for its peers. What would

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Speaker 1: be a comparable. Yeah, so this is this is going

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Speaker 1: to be you know, yes, it is a pure play.

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Speaker 1: It's somewhat um um um. I want to say it

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Speaker 1: somewhat different from you know, our typical media peers, which

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Speaker 1: kind of tend to be conglomerates owning like so many

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Speaker 1: different pieces of media operations. So in terms of peers,

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Speaker 1: it's it's a little bit all over the place. I think,

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Speaker 1: you know, Formula one definitely comes to mind. You think

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Speaker 1: of Live Nation, which is in the live events business,

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Speaker 1: that the potential pier. But when you kind of look

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Speaker 1: at the valuation of the company, and I think this

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Speaker 1: is really really important because one of the major, um

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Speaker 1: I think of things that both Endeavor and WWE wanted

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Speaker 1: to achieve was to kind of unlock value. I think

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Speaker 1: WWE did that. They you know, they as you just mentioned,

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Speaker 1: they wanted nine billion, They got nine points three billion.

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Speaker 1: You know, that's a multiple of about twenty four times forward. Ebit.

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Speaker 1: You look at the media universe right now, it trades

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Speaker 1: at about eleven to twelve times. Similarly, if you just

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Speaker 1: kind of looked at Endeavor on its own, and of

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Speaker 1: course UFC was under the Endeavor umbrella. You had Endeavor

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Speaker 1: trading at about twelve to thirteen times ebit down with

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Speaker 1: this new transaction, I think one of the things that

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Speaker 1: our Emmanuel achieves really brilliantly is he finally is able

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Speaker 1: to unlock that value for UFC because UFC is now

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Speaker 1: potentially going to be trading. You know, there's the valuation.

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Speaker 1: Of course, it's about twelve point one billion for the

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Speaker 1: UFC asset, so that implies a multiple of almost about

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Speaker 1: eighteen to nineteen times. So I think it's a win

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Speaker 1: win from a valuation perspective for both these entities. And

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Speaker 1: it's again the peers are a little bit scattered, that

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Speaker 1: are a little bit all over the place. But I

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Speaker 1: think in terms of valuation, this asset will definitely fetch

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Speaker 1: a premium multiple. Geven Steve, I know we're running out

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Speaker 1: of time. I just want to put it in perspective

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Speaker 1: for people who are as old as I am, go

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Speaker 1: back to the bobble result days of wrestling. Let me

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Speaker 1: show you how big the WWE is. My oldest son

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Speaker 1: is thirty two and and we've done this show for

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Speaker 1: several years, and I said, Mike, yeah, I gave you up. Mike. Sorry,

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Speaker 1: I said, you know, hey, I talked to Steve Young.

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Speaker 1: He's like, oh that's nice. Yes, yes, yes, him whatever.

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Speaker 1: And then I mentioned he said, Dad, who'd you have

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Speaker 1: on the show? I said, Stephanie McMahon. Oh. And then

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Speaker 1: I can't tell you the words that he said, but

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Speaker 1: he was excited. It's oh my goodness. It's like, well,

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Speaker 1: I'm gonna have to listen to the show for one

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Speaker 1: shut the hell up. But I'm telling you this, it's huge, folks.

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Speaker 1: It is wwe take it from me, gray haired old

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Speaker 1: man bar You're missing out on some great entertainment. It

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Speaker 1: Check out WrestleMania. Go back because I think it was

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Speaker 1: thirty nine that just happened. Go back and check it out, folks.

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Speaker 1: It's a lot of fun. Steve Oleni, Chair of Sports

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Speaker 1: and Entertainment Practice with Mint's Law Firm and our own

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Speaker 1: Bloomberg's Geetha. Rag and Nathan, we appreciate you guys joining

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Speaker 1: us here on the Bloomberg Business of sports and as

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Speaker 1: my father used to say, guy rest his soul, let's

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Speaker 1: turn on rastling. We appreciate it. Thank you so much.

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Speaker 1: Thanks for having me. This has been the Bloomberg Business

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Speaker 1: of Sports podcast or we explore some of the big

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Speaker 1: old money issues in the world of sports at Michael Barr.

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Speaker 1: You can follow me on Twitter at Big Bar Sports

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Speaker 1: and I'm on Twitter at Scarlett Foo and Hey, guess what.

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Speaker 1: You can download this show every Monday, Wednesday and Thursday,

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Speaker 1: and you download the show wherever you get your podcast.