Investment banks stand to earn more than $100 million in fees for advising World Wrestling Entertainment Inc. on its proposed acquisition by Endeavor Group Holdings Inc. unit Zuffa LLC.
The Raine Group LLC, which invests in and represents clients in the media, technology and sports sectors, could make $63 million from its advisory role for WWE when the proposed deal is completed in the second half of the year.
J.P. Morgan Securities LLC and Moelis & Co. LLC also stand to make $25 million apiece for advising WWE. Each of the three advisers received $2.5 million, credited against their total fees, for rendering fairness opinions. Fees for buy-side advisers Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC were not disclosed.
Endeavor's portfolio includes the top mixed martial arts circuit, the Ultimate Fighting Championship. Under the $9.78 billion deal, announced April 3, Endeavor will form a new parent entity with Vince McMahon's WWE and list on the New York Stock Exchange as TKO. Endeavor and WWE shareholders will hold respective stakes of 51% and 49% in the new company.
Soccer assists
While Endeavor's expanded media and mat action will unfold in the octagon and ring, Raine has also been busy on the soccer pitch.
Since its enlistment in November 2022 by the Glazer family, Raine has been trying to secure a buyer for Manchester United, one of the traditional powers in the Premier League, the UK's top-flight soccer circuit.
Interest in the club — which qualified for Europe's leading club tournament, the Champion League, in the 2023-24 season — has narrowed to two candidates: British billionaire Jim Ratcliffe, the founder of chemical company INEOS, and a Qatari group led by Sheikh Jassim bin Hamad J.J. Al Thani.
After working with the Premier League's Chelsea FC for years, Raine helped guide its May 2022 sale by Russian billionaire Roman Abramovich to a consortium led by US billionaire Todd Boehly — who is a part owner of MLB's Los Angeles Dodgers and the NBA's Los Angeles Lakers — and private equity firm Clearlake Capital.
The sale, valued at about $3.09 billion, was triggered by Russia's invasion of Ukraine in February 2022, after which the team's former owner Abramovich faced sanctions from the UK government.
Raine also served in 2022 as the lead adviser to Eagle Football's acquisition of Lyon, which plays in France's top-tier Ligue 1. London-based Eagle was founded by digital entrepreneur John Textor and also has interests in the Premier League's Crystal Palace, Brazil Serie A Club, Botafogo de Futebol e Regatas and Belgium's RWD Molenbeek.
Raine's investment portfolio includes DraftKings; Spanish-language programmer and distributor TelevisaUnivision; and Imagine, Ron Howard and Brian Grazer's TV and film production company.
Ringing up new deals
On a combined 2022 fiscal year-end basis, UFC and WWE generated $2.4 billion in revenue. Endeavor projects UFC and WWE would benefit from annualized run-rate cost synergies of $50 million to $100 million by tapping its back-office infrastructure, among other things. Endeavor expects significant revenue growth from ticket sales, event operations, sponsorship, licensing and premium hospitality streams, and domestic and international media rights.
In the US, expanded rights fees could manifest relatively quickly, both linearly and digitally. WWE's current five-year contracts for two major programs expire in 2024: "Monday Night Raw," which airs on USA (US); and "Smackdown," the programming anchor for FOX (US) on Friday nights. Over the terms of the contracts, Comcast Corp.'s content arm NBCUniversal LLC is paying some $1.33 billion for "Raw" rights, while Fox Corp. is allocating over $1 billion for "Smackdown."
On the streaming front, NBCU's Peacock presents the grappling circuit's pay-per-view events and controls its library content in the US via a five-year pact through 2026 worth a reported $1 billion.
Meanwhile, Walt Disney Co.'s ESPN (US) holds US rights to UFC through a five-year, $1.5 billion deal encompassing shoulder programming and 30 full events annually across ESPN linear outlets and streaming service, ESPN+. A dozen pay-per-view events are available annually through ESPN+. Disney's rights deal with UFC expires in 2025.
In addition to the incumbents, some reports suggest that Warner Bros. Discovery Inc., which presents an All Elite Wrestling promotion on TNT (US), might be interested in WWE programming, especially if the network owner fails to renew its long-running NBA rights, set to expire after the 2024-25 season. UFC competitions also may draw interest from Amazon and Apple.
