In early April 2023, a sports industry headline made more noise than Conor McGregor in a press conference: UFC-parent company Endeavor announced its acquisition of WWE to create a new publicly listed company. Endeavor will own 51% of it while existing WWE shareholders will control the remaining 49%. Beyond the benefits that both WWE and UFC will seek by merging, which moves can we expect from this new company shortly?
A $21B deal between two entertainment giants dominating their market
Spearheaded by the McMahon family since the 1980s, WWE became a global entertainment empire.
Its portfolio comprises brands such as Wrestlemania and popular ambassadors such as Triple H or Dwayne Johnson. Financially speaking, WWE generated $1.29B in 2022. That's ten times more than its competitor All Elite Wrestling, which reported 101M for 2022.
This superiority also translates to the digital sphere: the Connecticut-based giant boasts more than 235M followers online. This number drops to almost 9M for All Elite Wrestling.
Founded in 1993, UFC now stands as the MMA world’s leading organization.
In 2022, it reported a revenue of $1.226B, which represents a 45% increase from 2018. Its main competitor - Bellator - generated an estimated $132M in the same year.
UFC also crushes its rivals on social media, gathering more than 120M subscribers worldwide - almost 110M more than Bellator. Dana White’s business reached new heights through the acquisition of smaller leagues - namely Strikeforce in the US or PRIDE in Japan - before being bought out by Endeavor in 2021.
In 2023, which benefits for both companies?
Seeing those two entertainment powerhouses merge could seem natural as previous links already existed between both organizations.
The first connection relates to the core assets of their businesses - athletes. It’s become quite common to see martial artists becoming wrestlers. UFC’s most iconic female champion Ronda Rousey for instance joined WWE in 2018. Conversely, Brock Lesnar and CM Punk both made their MMA debut after successful wrestling careers.
Outside of the ring - or the octagon - both companies happened to collaborate with similar companies, such as Monster Energy or Modelo. The latest example is WWE’s superstar Logan Paul inking a sponsorship deal with UFC for his Prime sports drinks brand.
However, this merger brings a lot of unprecedented opportunities for both the UFC and the WWE.
Hosting events implies renting large and expensive venues, such as The T-Mobile Arena (20,000 seats), in Las Vegas: through the merger, the new entity could benefit from economies of scale by setting up a WWE event the day before a UFC Fight Night.
Such events are promoted through social media: combined, both companies boast 355M subscribers on socials. This is more than the NBA (201M), the NFL (96M), and the MLB (40M) put together. However, 40% of the WWE’s subscribers come from Youtube. When it comes to Instagram, the UFC has 31% of its followers on the platform: taking advantage of various social platforms means reaching consumers from different age groups.
With MMA perceived as inappropriate for children, wrestling remains a privileged point of contact for younger audiences to engage in combat sports. The merger increases their consumers’ average lifespan.
Perhaps the most interesting collaborations to come relate to broadcasting and streaming deals
Regarding TV rights, UFC currently airs on ESPN whereas WWE is broadcasted on FOX and NBC. Combined, both linear deals reach slightly more than $3B. According to Nick Khan, who will serve as the new company’s WWE president, the wrestling entity and the UFC won’t combine forces for the renewal of their linear TV rights.
Yet, the latter mentioned an opportunity to carry out a joint streaming deal.
Both will have more negotiation power, on top of taking advantage of the existing deals’ upcoming terminations: ESPN’s exclusive deal to stream the UFC will end in 2025. A year later - in 2026 - the WWE’s contract with NBCUniversal’s Peacock will expire.
So far, WWE’s OTT strategy started with the launch of its own service - WWE Network - which gathered almost 1.2M subscribers at Q121. This service is now only available in the US through Peacock, which signed an exclusivity agreement with the wrestling promotion. Peacock subscribers can enjoy WWE Network without any extra subscription. Abroad, both Foxtel in Australia and Showmax in SSA partnered with WWE to become the exclusive home of WWE Network in their respective territories. Regarding UFC, we predict that its OTT service (UFC Fight Pass, launched in 2013) will reach almost 690K US subscribers in 2027. However, the future of both the exclusivity deals and the OTT services remains unclear. Indeed, the new entity will be likely to develop its own service to bundle wrestling and MMA content, especially given Endeavor’s existing assets in the streaming industry (Endeavor Streaming).
The 3B of the new company’s next moves: Boxing, betting, buying-out
Knowing the ambitions of its parent-company Endeavor, what initiatives can we expect from the UFC-WWE joint in the coming months?
First, UFC’s president Dana White recently talked about his plans to create a new boxing promotion. Looking back at the revenues generated by the bout between UFC champion’s Connor MCGregor & boxing legend Floyd Mayweather in 2017 (approximately $600M), the noble art seems like a rational investment option. Especially with the opportunity to set cross-fights between MMA athletes and boxers. Francis Ngannou, former UFC heavyweight champion, has for instance expressed his willingness to switch to a boxing career.
Then, both companies recently stepped into the gambling industry. In Q322, Endeavor purchased OpenBet, a batting platform, for $800M. Surprisingly, WWE held talks with regulators to authorize betting on wrestling games too, despite the shows’ being scripted in advance.
Eventually, as UFC did in the past, buying out smaller leagues will allow the new company to strengthen its presence worldwide and to hatch new talents in satellite organizations.
In conclusion, both companies can expect from this merger benefits related to their core business
Indeed, the live event production, the broadcasting fees, and the athlete management remain central assets for both the UFC and the WWE. Thanks to social media, the new company will be able to deepen its dominance over Bellator or AEW. It seems unlikely that such competitors close the gap anytime soon given the ambitious investments that both organizations planned, namely in the gambling and boxing industry.
| Analyst at Dataxis
This research highlight is based on our data coverage of Sports, TV distribution and OTT and Video in North America. Discover CTV AD Days New York, the event dealing with CTV, FAST, AVOD, hybrid SVOD/ad-supported, addressable and programmatic advertising in North America.