Vince McMahon, the renowned executive chairman of TKO, has made a significant move by announcing his plan to sell a quarter of his stake in the company. This decision involves offloading 8.4 million shares, which, at the current closing price of $84.90 per share, will enrich McMahon by an impressive $713 million.
This development follows a prospectus filed today with the Securities and Exchange Commission (SEC). McMahon, who held a 16.4% share in TKO since its inception in September – a result of spinning off WWE and UFC from Endeavor – is making a strategic financial move.
Variety reports that TKO is set to repurchase $100 million of McMahon's shares. Additionally, Ari Emanuel, the CEO of TKO and Endeavor, and COO Mark Shapiro have shown interest in buying shares worth up to $1.0 million and $850,000, respectively, alongside other company directors.
Despite this significant sale, McMahon's influence in the company's decision-making processes remains unaffected. Endeavor holds the controlling share, ensuring stability in the company's leadership. However, MMA Fighting speculates that this could be a precursor to McMahon's eventual departure from his executive roles in WWE and TKO, though no official announcements have been made.
TKO's first quarterly earnings report as a public entity revealed mixed results. The company saw a 32% increase in revenue to $449.1 million and a 26% rise in adjusted EBITDA to $239.7 million. However, net income dropped to $22 million from the previous year's $129.7 million.
The report also highlighted potential risks, including an antitrust case against the UFC and McMahon's board position.
McMahon's Impact on TKO
McMahon's board membership has been flagged as a risk factor for TKO. His involvement has brought negative publicity and could potentially impact the company financially and operationally.
This concern was heightened following a July 17, 2023, federal investigation involving McMahon, though no charges have been filed. Comparatively, the UFC's revenue outperformed WWE's in the recent earnings report. UFC's revenue grew by 17% to $397.5 million, while WWE saw a 6% decline to $287.3 million.
This disparity, along with WWE's licensing deal moving "Smackdown" from Fox to USA Network, has been linked to the initial decline in TKO's share price, which has stabilized in the $80-$85 range. Following the announcement of McMahon's share sale, the after-hours trading saw a dip in share price to $80, indicating investor apprehension.
As the landscape of sports entertainment evolves, McMahon's latest move marks a significant chapter in the industry's financial dynamics.