Good afternoon. Thank you for joining today's first quarter TKO 2024 Earnings Call. My name is Tamia, and I will be your moderator. I would now like to pass the conference over to your host, Seth Zaslow, Head of Investor Relations. You may proceed.

Welcome to TKO's First Quarter 2024 Earnings Call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least 30 days. Joining me on today's call are Ari Emanuel, TKO's Executive Chair and Chief Executive Officer; Mark Shapiro, our President and COO; and Andrew Schleimer, our CFO. After our prepared remarks from Ari and Andrew, we'll open the call for questions. The purpose of this call is to provide you with information regarding our first quarter 2024 performance. I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties, and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website. With that, I'll now turn the call over to Ari.

Thanks, Seth. TKO is off to a solid start in 2024 with strong performance across both UFC and WWE. Coming off a record 2023 for both businesses in terms of revenue and profitability, we've continued to deliver through the first quarter. We had record attendance and gates across our live events portfolio in the quarter. We secured a landmark global deal for WWE with Netflix and renewed UFC rights in multiple international markets. We landed groundbreaking brand partnerships, including a first-ever in-ring sponsor for WWE. We settled all claims in the UFC antitrust lawsuits, bringing that matter to a close without introducing any further changes to our existing business operations. In April, WrestleMania 40 drew its largest ever viewership and set a WWE gate record with 145,000 fans over 2 days at Philadelphia's Lincoln Financial Field. In the following weekend, UFC 300 became one of the highest-grossing events in UFC history. Based on Q1 performance and business momentum, today, we are raising our full year guidance for revenue and adjusted EBITDA. Andrew will share more detail on our financials shortly, but first, I will touch on recent highlights that underscore our conviction. First, as our record-setting events demonstrate, the experience economy is alive and well, especially for premium content and experiences like ours. For UFC, during Q1, we sold out all 5 events with live audiences, setting numerous arena gate records. These included UFC 297 in Toronto, UFC's highest-grossing arena event in Canada, UFC 298 in Anaheim, the highest-grossing MMA event ever in California, and UFC 299 in Miami, setting the arena record and ranking among the highest-grossing UFC events of all time. UFC also returned to Mexico City with a fight night that became our highest-grossing event in the country and coincided with the launch of our Performance Institute there. The Mexico City facility, our third Performance Institute worldwide, will accelerate our efforts to develop and support MMA athletes across Latin America, an important growth market and source of some of UFC's top talent. We're equally excited about several big upcoming fights, including Conor McGregor's highly anticipated return to the Octagon at UFC 303 on June 29 and UFC's planned debut at the Las Vegas Sphere this September. Turning to WWE, premium live events in the quarter, Royal Rumble and Elimination Chamber delivered record gross revenue and viewership. Royal Rumble broke the all-time attendance record for Tropicana Field in St. Petersburg, Florida, while Elimination Chamber in Perth, Australia brought out more than 52,000 fans to mark WWE's first Australian event since 2018, as part of an agreement with Tourism Western Australia. Throughout the quarter, WWE's events also benefited from momentum leading up to WrestleMania with 17 consecutive sellouts for televised events. This sellout streak is the longest for televised events in WWE history. In total, WWE events in Q1 set 54 individual market records for both gross and paid tickets across all event types. These attendance records speak to the broader economic benefits we bring to host cities, and we are focused on partnering with local governments and maximizing revenue opportunities from site fees. As one recent example, during the quarter, Tourism Western Australia entered a multiyear partnership for UFC to return to Perth with at least 2 events, including the UFC 305 pay-per-view in August and one additional Fight Night in subsequent years. These initiatives all follow WWE's own successful partnership with the Western Australian government. Next, we are well positioned to continue growing our brand partnerships. At the beginning of the year, we merged the global partnership teams of UFC and WWE to go to market in a unified way and enable more brands to engage with our fans. Right out of the gate, our team has delivered significant wins, expanding both businesses' brand relationships across new categories, territories, and assets. UFC's record-setting partnership with Anheuser-Busch is off to a successful start and we've added multiple first-time partners across the beverage, health and beauty, vocational training, healthcare, and medical equipment categories. For WWE, we announced a first-ever brand partner to appear center mat at premium live events, as well as multiple premium brands, including Wheatley Vodka, Amazon Studios, and Coca-Cola. All told, we're encouraged by this fast start and remain confident in our ability to grow global partnerships revenue, particularly on the WWE side as our team has done for UFC. Finally, our premium sports and entertainment content remains in demand. This is clearly demonstrated by the global $5-plus billion Netflix deal WWE announced early in the quarter. We're incredibly excited about the potential we see with Netflix and for our fans around the world. Well ahead of the 2025 launch, the partnership is already getting off to a promising start. WrestleMania 40 streamed live on Netflix in New Zealand last month through a one-time arrangement. Despite no marketing push, WWE fans tuned in in full force, propelling the event's spot in Netflix's local programming lineup over a 4-day span. In addition to Netflix, we remain focused on our upcoming media renewals. During the quarter, we secured a short-term agreement with USA Network to extend Raw through the fourth quarter of 2024. We also continued to secure rights agreements and renewals for UFC in international territories at healthy average annual increases. In closing, across each of our lines of business, we believe TKO is well positioned to capitalize on its strength to drive continued growth and profitability. We remain focused on generating cost and revenue synergies, executing our strategy, and delivering sustainable long-term value for shareholders. With that, I'll turn the call over to Andrew.

I'll start with an update on integration and then shift to our financial results before discussing our capital structure and outlook for the remainder of 2024. As Ari highlighted, we continue to make significant progress with the integration of our businesses. Both are delivering strong results and are well-positioned for continued success. We remain focused on realizing the revenue and cost synergies that underpin the strategic and financial rationale for the transaction. In addition to the major wins that Ari discussed, this past weekend, we announced that Las Vegas will host WrestleMania 41 at Allegiant Stadium on April 25 in partnership with the Las Vegas Convention and Visitors Authority. As we've stressed, site fees are a key area of focus for us, and this event includes a meaningful payment as well as other cash and non-cash incentives. Further to our plans to integrate our operations, last month we announced that NXT Battleground, one of our NXT PLEs, will be staged at UFC Apex on June 9. This marks the first-ever WWE event to be hosted at UFC's state-of-the-art event and production facility. In partnership with On Location, we'll offer fans premium experience packages for this event. On the cost side, we continue to make progress as we look to further optimize our cost structure. We're firmly on track to achieve the upper end of the previously communicated range of $50 million to $100 million in annualized net savings this year. As we discussed on our last earnings call, we're now primarily focused on seeking deeper business integration that will yield efficiencies across our business. Before I turn to our financial results, I want to take a moment to discuss the agreement that we reached in March to settle all claims asserted in both UFC antitrust lawsuits. We're pleased to have this matter resolved without introducing any further changes to UFC's existing business operations. The long-form settlement agreement is expected to be filed shortly with the court for approval. As previously disclosed, the aggregate settlement is $335 million. We recorded a charge for this full amount in the first quarter, which will be paid in 3 installments: $100 million this quarter, $100 million in Q4, and the final $135 million in the second quarter of 2025. The settlement is anticipated to be deductible for tax purposes as and when paid. As a result, we expect our tax distributions to members, as required under our tax structure, to be meaningfully reduced, such that we won't realize an adverse dollar-for-dollar impact to cash on hand. Turning now to our financial results. First quarter 2024 reported results include 3 months of activity for both UFC and WWE. WWE activity is not included in the reported results for the first quarter of 2023. To assist with comparability, we presented supplemental financial information in our press release and IR website that includes WWE activity and a portion of the WWE related to the corporate group for the first quarter of '23, as well as each quarterly period from January 1, '22, through September 11, '23. For the first quarter of '24, TKO generated revenue of $630 million. Net loss was $250 million, driven by the $335 million charge related to our legal settlement. Adjusted EBITDA was $282 million and our adjusted EBITDA margin was 45%. Including WWE activities for January 1 through March 31, '23, combined revenue for the first quarter of '23 was $604 million, combined adjusted EBITDA was $257 million, and our combined adjusted EBITDA margin was 42%. Inclusive of these amounts, revenue increased 4%, adjusted EBITDA increased 10%, and adjusted EBITDA margin increased 3 percentage points. Now I'll walk you through our segments. Our UFC segment generated revenue of $313 million in the quarter, an increase of 2% or $6 million. Adjusted EBITDA was $195 million, an increase of 5% or $9 million; UFC's adjusted EBITDA margin was 62%, up from 61% in the prior year period. Revenue growth was led by partnerships, as sponsorship revenue increased 28% to $49 million. The increase was driven by new partners, including Anheuser-Busch, which launched in January, as well as increases in fees from renewals. Live Events revenue increased 12% to $35 million. Despite one less numbered event, 3 in Q1 compared to 4 in the prior year, ticket sales increased as a result of the mix of event territories and venues. UFC had 11 total events, including 5 events with live audiences in the first quarter of this year, as compared to 10 total events, including 6 with live audiences in the prior year. Media rights and content revenue decreased 4% to $215 million. The decrease was primarily driven by one less numbered event, which carries a higher allocation of fixed media revenue. This impact more than offset the benefit of 2 additional Fight Nights in the quarter. Adjusted EBITDA reflected the increase in revenue and a decrease in expenses. The decrease in expenses reflected lower direct operating costs, primarily due to a decrease in production, marketing, and athlete costs, as well as a decline in direct cost of revenue due to one fewer numbered event. SG&A decreased, primarily driven by lower travel expenses from one less numbered event and one less international event versus the prior year. Turning to WWE, our WWE segment generated revenue of $317 million in the quarter. Adjusted EBITDA was $140 million, and adjusted EBITDA margin was 44%. The following commentary on the first quarter includes comparisons to activities for the period from January 1 through March 31, 2023. In the first quarter of '23, revenue was $298 million, adjusted EBITDA was $117 million, and adjusted EBITDA margin was 39%. Revenue increased 6% or $19 million, adjusted EBITDA increased 20% or $23 million, and adjusted EBITDA margin increased 5 percentage points. Revenue growth was led by continued strong performance for live events. Live Events revenue increased 58% to $50 million. The increase was primarily related to an increase in ticket sales and site fees, including a meaningful payment for Elimination Chamber in Perth, Australia, our largest for an international territory outside of the Middle East. Media rights and content revenue increased 5% to $221 million. The increase was principally related to the contractual escalation of media rights fees for our flagship weekly programming, Raw and SmackDown, as well as premium live events. Sponsorship revenue decreased $3 million to $14 million, primarily due to timing and the mix of events. As expected, Consumer Products revenue declined $8 million to $32 million. The decrease was primarily due to the absence of revenue recorded in the first quarter of '23 related to the early termination of an agreement for licensed collectibles, as well as the previously disclosed accounting related to the transition of our venue merchandise business to Fanatics in May of '23. Adjusted EBITDA reflected the increase in revenue and a decrease in expenses. The decrease in expenses reflected lower personnel costs and other direct costs related to our planned cost reduction initiatives implemented following the formation of TKO, partially offset by an increase in production costs as well as travel and entertainment. Turning to corporate. Corporate reflects the general and administrative operations supporting both of our segments, including finance, legal, HR, and the executive team. Corporate also includes the fees paid by TKO to Endeavor under its services agreement. Corporate expenses were $53 million for the first quarter of 2024. On a combined basis, corporate expenses were $47 million for the first quarter of '23. The increase was primarily due to higher personnel costs, including executive compensation and other G&A expenses, including public company costs following the formation of TKO in September of last year. As a reminder, in mid-March, WWE began a services fee to Endeavor in addition to the fee being paid by UFC.

To recap, we generated $28 million of free cash flow in the first quarter. This includes $32 million of capital expenditures, approximately $20 million of which related to WWE's new headquarters. We expect a similar level of spending in the second quarter on the new HQ but nothing meaningful beyond that as the project has reached completion. First quarter free cash flow was also impacted by various normal course working capital items, specifically the timing of annual bonus payments as well as customer collections and payments related to events such as WrestleMania and UFC 300 that occurred in early April. We ended the quarter with $2.752 billion in debt and $246 million in cash and cash equivalents. As we previously discussed, we expect to have significant financial capacity over time as we grow adjusted EBITDA and generate cash. As such, we'll continue to consider a wide spectrum of opportunities to increase shareholder value, including organic investment at positive ROI, reducing our net debt position, returning capital to shareholders in the form of share repurchases and/or dividends, and M&A, should a unique and compelling opportunity present itself. In April, we repurchased approximately 1.9 million shares for $165 million. Since the formation of TKO in September of '23, we've repurchased a total of approximately 3.2 million shares for $265 million. As publicly reported, we also looked at MotoGP. This was an asset that we thought would complement our existing portfolio and create long-term value for shareholders under our operational control. Going forward, we expect to explore opportunities to increase value and enhance our growth profile through M&A but intend to do so in a selective and disciplined manner.

Thanks. Operator, Mark and Andrew are ready to field the questions. As an FYI for those on the call, Ari is not joining Q&A today.

The first question comes from Ben Swinburne with Morgan Stanley.

I guess for Mark, I got to ask you about the NBA news. I guess it's not official yet, but there's been a lot of press on it. It's certainly making, I think, everyone feel better about the sports market in general and your renewal opportunity is coming up. How do you look at the NBA deal in the context of what TKO has ahead of itself, particularly given ESPN is obviously part of that process? And then Andrew, I just want to make sure I understood your comment on the dollar-for-dollar impact or no impact from the settlement. Are you saying that basically the cash tax benefits essentially fund the settlements over the course of this year and next year? Just want to make sure I totally got that.

Andrew will kick it off with the latter.

Let me take the second one first, Ben. But in terms of my commentary, the $200 million of payments that we will be making in calendar '24 are deductible for tax purposes, such that it will have a benefit when we're calculating our cash tax distributions to members and it will reduce the amount that we would otherwise have to pay to members. So the $200 million out actually will be less of an impact on our overall cash on hand given its positive impact on cash tax liability to members.

And then on your first question, Ben. I mean, frankly, I would tell you that going back to the days of running programming at ESPN, and keep in mind, I left it almost 19 years ago in 2005. I've been hearing about the decline in the value of sports rights, that we're going to be hitting a ceiling, we're getting close, folks are getting nervous, they're pricing it in. And obviously, in doing the Raw renewals and the SmackDown renewals with Nick Khan and Ari, we had a lot of pushback on that. And frankly, just everywhere you look, it says otherwise. The NCAA deal was a strong deal for all the rights, including women's sports. The NASCAR deal was a strong deal. The SmackDown deal moving to NBC is a strong deal. Netflix never getting into sports and now Raw there with sports entertainment is a strong deal. And the NBA, everyone kind of laughed when Adam said he could get 3x or if they didn't laugh, they doubted it. And I think when this is all said and done, he's going to be close to 3x. And that's what happens when you have 4 bidders at the table at a minimum and you have a premium sports property like the NBA. We look at UFC as a premium sports product with great growth ahead of it. We feel good about the potential package that we'll end up with. And we see the demand for live sports is outstripping the supply of premium sports content. And the great thing about UFC, let's not forget, it's not just a volume product. In fact, it's not really a volume product. It's a premium volume product. Sort of like the NFL used to be before Thursday Night Football. It was frankly Sunday, Monday nights; it was driven by scarcity. And I think UFC benefits the same way. We're also both a subscriber acquisition tool and a churn antidote. We're attractive to digital and linear platforms, and we're year-round. So going back to the initial point, I mean, we feel good about where we are. We're live. We're urgent. We're a shared experience, and we're optimistic about the potential package we will end up with.

The next question comes from Brandon Ross with LightShed Partners.

Andrew, in the prepared remarks, you brought up your bid for MotoGP, which was reportedly even higher than Formula One. It leads to the question, I guess, about how you see the future of TKO? Specifically, how strong is the desire to expand outside of UFC and WWE through acquisitions? And do you see a quantity of opportunities out there? Or was this acquisition attempt closer to a one-off? And then in addition to expanding through acquisition, are there other sports where you see an opportunity to build organically out of what you have?

Yes. So Brandon, it's Mark. Let me take that. First of all, dating back to the Endeavor days, MotoGP has been of great interest to Ari and me, and we've engaged with them over the years. The Media division at IMG handles the global distribution of the Dorna MotoGP product, so we are well-acquainted with it. We know the investors involved, some of whom are part of our Endeavor network as a public company. Additionally, MotoGP aligns with WWE and UFC, sharing similar growth drivers, operating as a year-round sport primarily supported by sponsorship, ticketing, premium hospitality, and site fees. It aligns well with our business model, even though it has limited following in the U.S., which seems to present an opportunity for us. We were aware that Liberty was involved and understood why they might pursue MotoGP, considering it has potential as the motorcycle equivalent of Formula One. We approached the situation carefully and non-bindingly, but ultimately, as we anticipated, they decided to go with Liberty. Looking at our financial results today, they are strong for Q1. We have raised our annual revenue and adjusted EBITDA guidance. Our adjusted EBITDA margin is healthy at 45% for the quarter, and we are maintaining strong free cash flow conversion for the year, projecting it to be over 40% and likely exceeding 50% in 2025. WWE and UFC, under TKO, operate as a low capital expenditure business. We expect to generate substantial free cash flow annually, which will enhance our financial capacity. We plan to be thoughtful and opportunistic in how we deploy capital, always focusing on maximizing shareholder value. Potential uses of this capital could involve organic investments in high-return projects, reducing our net debt—something we regularly review with Andrew and the Board—returning capital to shareholders through share repurchases or dividends, and pursuing attractive M&A opportunities strictly within premium sports content and live events. There is no segment in the content landscape as dynamic as sports. As the President of two companies, including Endeavor, which is centered around Hollywood music, I recognize the high demand for sports experiences in all formats. However, we will be disciplined in our approach to any acquisitions. Deals must be accretive and present significant long-term growth potential with multiple avenues for growth, similar to what we see in UFC and WWE.

Great. And then very quickly, over the past couple of days, there have been some press reports and quotes out of Saudi about you expanding your relationship there. I guess for both UFC and WWE, can you tell us what you think the opportunity is there? And how many events you could stage across WWE and UFC? And would these be in addition to your current premium events or replace them?

Thank you, Brandon. I want to emphasize that we maintain a strong and healthy relationship with the Kingdom through WWE with two annual events each year. To clarify, those agreements were primarily connected to Vince McMahon. There was speculation about whether Vince's departure would negatively affect our relationship, but I believe Nick Khan has developed and maintained a robust relationship that transitioned smoothly from Vince. There is significant trust between them, and they have successfully executed those events. While we could potentially consider adding more events in the future, nothing is scheduled beyond the current two events at this time. We will continue to explore ways to enhance or expand those WWE events. From a UFC standpoint, Dana was open to trying our first event in June, but he didn't want to make any further commitments until we see how that initial event goes. Interestingly, many assumed their investment in PFL would mean live UFC events, but that is not the case. Dana has also built a strong relationship with Nick, leading to a commitment for another event next year. As of now, there are no plans beyond the single event for this year and next year. However, with our Sphere event scheduled for September, they are set to invest in sponsorship for that event. Additionally, while this is not an Endeavor call, we have a long history with them in tennis, and PIF is investing in our tennis events. Overall, relationships are strong across the board, with positive interactions at the executive level, and we aim to build on this foundation moving forward. Andrew?

The only point I want to mention, Brandon, is that we haven't specifically discussed whether this will lead to increased output or if it pertains to one of our existing events. However, we can confirm that there is a significant site fee associated with the additional event in Saudi Arabia in 2025. So stay tuned as we progress through the year and begin discussing 2025. I won't comment on incremental output at this time, although those opportunities are indeed available to us.

The Department of Culture and Tourism, Abu Dhabi is a strong and experienced partner of UFC. We have discussed expanding that relationship in various ways. We hold events there annually and are committed to a long-term partnership to grow UFC events in the Middle East with them. Therefore, anything we do in the Middle East is in collaboration with our friends at DCT.

The following question is from Robert Fishman with MoffettNathanson.

I have two questions for you about media rights. First, with college football playoffs secured in their exclusive deal with ESPN and the ongoing NBA negotiations with various partners, do you prefer to keep your future rights with one exclusive partner, or are you open to working with multiple partners like NASCAR has? Secondly, since ESPN will be included as a tile on Disney+, can you clarify if Disney currently holds the rights to include UFC matches, or would that require a separate negotiation for those rights?

Thanks, Robert. Regarding your second question, yes, our current deal allows them to include UFC events. As for multiple partners, we have one partner at the moment, and we'll see what happens as we approach mid-January when our three-month window opens with UFC and the Walt Disney Company. They are an excellent partner and the leading marketing force in the industry, making them the top choice for sports fans, particularly in the U.S. We're not looking to move away from them or reduce our commitments. However, we do have a window to explore options, and we'll engage in discussions to ensure we act in UFC's best interest moving forward.

Operator, let's take the next question, please.

The next question comes from Eric Handler with ROTH MKM.

Two questions. First, with regards to WrestleMania, I wondered if you could talk a little bit about the sponsorships? It looked like volume was up considerably year-over-year in terms of the number of sponsored matches. But can you talk about not just volume of sponsorship increases, but maybe how pricing went this year too?

Yes. I mean, look, we don't, Eric, get into specifics on the pricing and/or guide specifically to a global partnerships or sponsorship number. But what I can tell you is it was clearly a strong WrestleMania for us in Philadelphia by every metric and measure. I think we had a terrific release on that, that the team put together from ticket sales, our ticket yields, our sponsorships, both in volume and pricing, which were both north, overall attendance, viewership, and social hits. It was great. The biggest viewed event in Peacock history, just really extraordinary across the board. I know NBC with Comcast were really happy with the results. Obviously, we've announced Vegas is going to be next year. So WrestleMania just continues to expand in every way. And frankly, it is the jewel when it comes to WWE with regard to sponsorship. I mean we continue to grow our sponsorship; our global partnerships group is a major long-term growth lever for both of our leagues, UFC and WWE. We have a best-in-class unified team now led by Grant Norris and Lou Koskovolis; they're doing an extraordinary job and well on their way to hitting their numbers this year. Our strategy continues to be a reliance and focus on expanding our core partnerships and closing new categories with strong consumer and fan crossover for both brands. The Budweiser deal is off the charts. We talked about that in the opening comments. That's a long-term partnership on the UFC, and we see opportunities potentially to expand that, whether it's UFC or maybe into WWE long term. And of course, our prime hydration deal was our first deal of having an in-ring sponsor for the WWE right in the center of the mat. So a great story there. And finally, I would just add, we're doing a better job of selling with NBC and ESPN. They are going to market, selling cross-platform, cross-channel, and we're doing it as a partnership. So we're out there with official sponsorships and partnerships and in-store partners, if you will, from a marketing activation perspective. We're packaging in media dollars and vice versa on their front. That's going to be not only a good story for us but a good story for our partners. And that will work to our benefit long-term if our partners are happy.

Okay. That's helpful. And then secondly, as I try to understand the UFC business a little better, given how strong demand is for events, why not take some of those events at UFC Apex, which there are a good number of and take them to markets with larger arenas?

Yes. So I think what you've seen is since we have worked our way out of COVID, we have held a significant amount of events outside of UFC Apex, and those that we do hold on our campus there in Las Vegas, those numbers have gone down meaningfully. That being said, bringing events on the road is as much about growing our fan base as it is generating income, but it's also about ensuring that we maintain certain margins and profitability profile, and there's a cost-benefit analysis for us that we view opportunity costs of doing events domestically, internationally, and holding them at Apex. What we do in any budget cycle, as I'm sure you could appreciate, is determine the right mix not just to generate top line revenue but to ensure profitability. Those Apex events do carry the lowest cost structure for us to hold them in our home turf in Las Vegas. So I don't think we found the perfect mix yet, but rest assured that we're looking at the numbers and working to do so.

And Eric, if we're going to err on one side, we're going to err on the side of going on the road. Dana White built the UFC, with more on the ground being and the intent of getting out city to city, region to region, DMA to DMA, and touching the consumer, introducing a new sport to a global fan base. Being there, there's no substitute for that. We get that feedback. When we go to a city like Nashville or Columbus, we hear about it. It's been a long time since we've been here; there's a reason why the sellout is here, and you're getting the ticket yield that you're getting. We take that very seriously. If we're going to err on the road or under our own terms in Vegas, it's going to be on the road.

Maybe for Mark on live events. You called out the strength in the quarter. Curious, going forward, you're thinking about sizing the opportunity and growth for that business between pricing attendance, site fees, where you see the most opportunity for growth through the balance of the year. And then a follow-up for Andrew. Just to clarify on the free cash flow guidance, net of the settlement and the tax benefit, was there a change to underlying free cash flow for the year?

Yes. So on the second one, we changed our guidance from in excess of 50% to excess of 40%, solely due to the fact that the $200 million of cash payments that will hit operating cash flow and our free cash flow metric reconciles to the closest GAAP metric, which starts with operating cash flow. So it's solely to reflect the impact of those payments.

Okay, I think we have one more question. Let me just say that when Ari and I look at the overall TKO business, we have some final thoughts. This quarter has been outstanding for us, and we aim to maintain this momentum. You are right in pointing out that in this post-COVID world, we are experiencing a major event experience economy. It's thriving, and it highlights the competition among brands. We had a strong Q1, which has allowed us to raise our expectations for the year. Our business is performing well across the board, with strength in live events at both properties. Our ticket revenues are increasing. Regarding site fees, they are becoming standard. When we take our shows on the road, we will need subsidies or cash to bring our events to your city, and in cities where we are already receiving site fees, we are returning for a second year with those fees increasing. Demand is high, and the amount cities are willing to pay is rising with each call we make. Our global partnerships are progressing as discussed, and the timing and amount of our net cost synergies are at the high end of our guidance, likely slightly above. The UFC antitrust lawsuit has been settled. As for events, look at what we have lined up: Conor McGregor in June, UFC 303; the Sphere in September, UFC 306, which will be an expensive event that is not typical as the Sphere was not specifically designed for UFC events. That will be a unique event. Dana White has promised to make it special. We're also preparing for an event at Madison Square Garden in the fall, details of which have yet to be announced. Additionally, we have WrestleMania in Vegas next year, which promises to be major. We're extending the UFC deal in Saudi Arabia through 2025. Furthermore, we managed to secure $25 million from NBC and Comcast for a short period at the end of this year, thanks to a strong partnership. Everything is moving forward positively here.

Operator, let's take one last question, please.

The final question comes from Ryan Gravett with UBS.

Great. Just for Andrew. You mentioned that the business can operate at up to 3x leverage. What will give me confidence in operating towards the higher end of that range? Is it more related to macro conditions or interest rates, or perhaps the company successfully navigating the upcoming media rights renewals while still leaving room for potential mergers and acquisitions if opportunities arise?

I think it's much more simple. As we've articulated and demonstrated through performance and our plan, this is just a company that generates a meaningful amount of free cash flow that will continue to grow top line and accrete margins, given the contracted significant amount of contracted revenue here and our sort of bullish nature on the next round of media rights renewals for our key properties. We believe that's a reasonable and very manageable range even to the upper end. So the financial profile of this business, and really, the key underpinning to the investment thesis of this transaction is what really underpins our comfort in those numbers.

Thanks, Ryan. All right. Well, thank you, everyone, for joining us on the call today. Operator, you can conclude the call.

This concludes the first quarter TKO 2024 earnings call. Thank you for your participation. You may now disconnect your lines.