TKO Group Holdings, Inc. (TKO) September 8, 2026 Conference Transcript

All right, great. Thanks, everyone, for taking the time to join us today. Welcome, everyone, to the Communicopia and Technology Conference. My name is Stephen Lasik, and I am the lead entertainment analyst here at Goldman Sachs. We are excited to welcome back to the conference Mark Shapiro, the president and COO of TKO Holdings. Mark, thanks for being with us.

Thanks for having me, Stephen, on the day after Labor Day.

Happy to have you. Mark, it's hard to believe it's already been three years since TKO has become a company. Over that time, you've executed against a number of opportunities you've identified at the point of the original transaction between UFC and WWE, including media rights renewals, sponsorship integrations, driving efficiencies across the cost structure. As you look ahead, what do you see as the next chapter of growth for TKO now that many of those things have been executed on? And what are the top priorities and top focus areas you as a management team are focused on?

Look, it's been a whirlwind of three years, that's for sure. And I think we clearly have benefited slash capitalized on some strong secular tailwinds. We sit squarely in the center of a growing ecosystem across sports, entertainment, and really live events. And any which way you slice it, when you look at our company, I think first from a financial profile and then from a fan composition standpoint, it's a strong profile. It's robust, in many ways bulletproof, given where the market is going and where the environment is going when it comes to content and live events. We're sitting here with strong margins. This year we'll be up 600 basis points at the midpoint of our guidance, the 39.6%, and we will get further expansion in the years to come. We have a very healthy leverage ratio. We'll be below two times by the end of the year. We're a geyser for cash, and that will just increase in the years to come. And our free cash flow conversion, normalized, is 60% plus. Real strong operating leverage, best-in-class operating teams, and we're number one in each of our sport properties, right? In professional wrestling, WWE is number one. In combat sports, UFC is by far number one. PBR, number one, albeit smaller. and bull riding across the globe, and our sports are more and more becoming globalized. We're going into new countries, new territories. We're in over 200 countries with our content, and we have almost a billion social followers. So real strong currency on that front. We're also a year of execution. We've stayed true to our word that we are going to spend this year improving our product, improving our content, improving our reach, improving our engagement, working with our new media partners with some extraordinary deals, and capitalize and execute on that. We put out a guide to 2030 for our global partnerships that will do $1.2 billion across our properties. And, of course, financial incentive packages are also another strong revenue generator for us, and we put out a guide that we'll do in the frame of $380 million to $420 million. Remember, what we do on financial incentive packages is we go territory to territory and see where it's best to bring our product, both for our brand and our audience, but also for the deal. And through in-kind and often cash, because of the economic impact we bring to those territories, cities line up to have our events there, and we're trying to capitalize on that. And then I would say, finally, that we're good stewards of capital, And we are uniquely and laser focused on returning capital to shareholders, albeit through the dividend and the way we've obviously expanded that, and, of course, by buying back stock. I mean, we are in the market every day right now buying back stock. We believe in the story, and we think among the stories and narratives in sports and entertainment, you'd be hard-pressed to find really, and I say this with all humility, a rocket ship like TKO.

It's a great setup. I want to dig into each of those parts a little bit more, maybe starting first with the meteorites. You've seen WWE now operate with new meteorites partners. You have Paramount. You have Netflix. You have ESPN. Ben, can you maybe talk a little bit about how those newer media rights partnerships have evolved over the first year or two of being together? And then as you look ahead, where are there still opportunities to improve engagement and improve monetization?

Yeah, look, we're blessed with the media rights deals we have. Tremendous partners across the board. USA has been with us forever. Obviously, they're part of Versin now. Netflix, monster ad. I mean, we're top 10 in several countries every week with Raw. Of course, Paramount Plus is a massive deal and growing, giving us great exposure globally, and they're more and more launching in different territories internationally. And then, of course, ESPN or WWE and our PLEs there. What I would say is, look, Paramount, let's start there because that's our bread and butter, if you will. First of all, they're just a terrific partner. They may be a bigger company, which we didn't plan on, with more platforms in the months to come, depending on how that negotiation goes. But you go to their platform, you go to Paramount+, and you see we are front and center. We're not an O, by the way. We're a focus. We're a focal point for them, lined up right next to Lioness, which is Taylor Sheridan's big hit and doing extremely well this year. So you can't miss UFC, whether it's long form or live, on Paramount+. It's been a big hit. We're driving acquisition, we're driving retention, and we're seeing terrific engagement. 25% of the viewers that watch Paramount Plus also watch UFC. But our fans, the viewer for UFC, is 15 years younger than the average viewer, consumer, that watches Paramount Plus on a regular basis. The live event, of course, we had in Washington, D.C. for our country's anniversary birthday celebration is the biggest live event ever on the platform.

So that's been a real winner for us.

We'll keep driving that. Of course, Paramount Plus is a bigger partner. We have a PBR deal with them. We have Zufa Boxing with them. So we're all in on them. When you look at ESPN, the PLEs are performing well, but soon to get a lot better because they've recently announced a new carriage deal with YouTube TV, which will be big for our fan base, big for our audience, big for our brand, big for our reach, and will certainly increase engagement. And what I would say about both these companies, they're among the best marketers in the world when it comes to content. We love our neighbors on Paramount Plus and CBS, Masters and the NFL, and, of course, ESPN. I mean, just take a look at this weekend. No better example. ESPN Unlimited was out of this world this past weekend. College football launched, and you go to ESPN Unlimited, and you just have a plethora and abundance of games on top of everything else they have, like the U.S. Open and, of course, the NFL launches this week. So we're in a really good position, and we're working with each of those platforms every single day on storylines and building stars. The last thing I would say, Stephen, which I know is important to you, is on the international front. Now, we don't break out international numbers specifically, and frankly, the media revenue we do internationally is tiny compared to our domestic deals. Having said that, this year alone, we've closed China, Japan, Korea, France, and Canada. And the average uptake increase on our rice feed from those five deals alone was a 1.7 step them and even though that's small and again you have to proportionalize that with with our domestic deal deals it what it does is it drives the brand it drives the audience it ultimately supports and enhances financial incentive packages we are offered and global partnerships really drives that this past weekend we had a massive event in france total sellout sold a lot of great local partnerships across france to add so the global deals that we bring in there and i would also tell you look no further than the outcome right we had a card that had a majority of finishes and the main event was headlined by a first time fighter first time in the ufc now granted he was french born but we sold out based on a fighter that was fighting for the first time in a main event. That's never happened before. So we are strong in kicking, and Dana White and his team are second to none.

Maybe to touch on sponsorship for a moment, you've outlined ambitions to reach $1.2 billion of sponsorship revenue by 2030. I guess as you both think back and think ahead, where have you been the most successful in the sponsorship front? And then as you look ahead, where do you still see the largest long-term opportunity across the portfolio? Is it within a particular vertical, or is it on one side of the house, UFC versus WWE? I think even the other.

Yeah, I think strategically, you know, we have been very transparent in terms of detailing our journey in the global partnerships front. If you recall, when we cut the new WWE deal with ESPN and the new UFC deal with Paramount Plus, we negotiated and ultimately received a good amount of ad inventory. So for the first time, we're selling media. We're selling 30-second spots. Now, we told the investor community, hey, give us some time. We need to build a team. We need to build a programmatic platform. And we also don't want to get out in front of Paramount+. Now we're well into the deal, and we're beginning to see real traction on the ad inventory front, on the CPMs and the volume. The reach has been strong. The engagement has been strong. And frankly, it's becoming more of a call us versus us calling out. So we are going to have an investor day at the end of Q1, just post-earnings, I would say. And at that time, if we continue tracking on this front, on global partnerships and ad inventory, the way it's going, we are going to revisit that $1.2 billion by 2030. so we're feeling we're feeling really good about about where that's going and uh we're working well with our partners and we're seeing you know all kinds of different new categories open up to us i do want to focus on wwe for a second because to your point where do we see the real upside there's been a lot written about wwe and hey are they getting the same kind of traction they're getting in the ufc is it decelerating quote unquote and there's nothing wrong with those questions because we haven't we haven't provided that detail but what i would tell you is the reason why you're mostly seeing some skepticism is because our ad dollars our partnership revenue for q1 and q2 were up two percent and eight percent respectively versus last year this is after being up almost 92 percent going from 24 to 25 so folks are saying hey is it slowing down are they not getting the traction is it not selling through couldn't be farther from the truth, the fact is we have a lot of international events in the first half of the year and that slowed us down. I will tell you that for the year WWE partnership alone will be up in excess of 20% versus last year and what that means is we're going to have a big back end of the year for WWE. And by the way that's with having three fewer events in the third quarter.

Is there a particular thing that's driving that acceleration in the back half of the year, new sponsorship? signings that happen midway? Is it the cadence of the slate and the mix of the slate?

Exactly. It's all of that. It's just timing of when some of these deals actually take up. It's having more domestic events for them to kind of plow into. It's holistic packages that we're selling with ad inventory in them. And we're just, frankly, we're scoring on the family-first message. Remember, WWE is a different audience than the UFC. And when it comes to going after families, that's our audience. And I think advertisers are starting to see that. And frankly, I'm excited for 27 because we're working with the Walt Disney Company on some special events around Disney and WWE and bringing those two audiences together since, of course, what do they have in common? Family.

One of the other big opportunities you've highlighted is on the live event side, the premium live events, the roughly two dozen or so between the WWE and the UFC. You should talk a little bit about where we are in terms of the cycle of monetizing those events, both on the FIP side of the house, as well as in premium hospitality, which seems like there's no shortage of opportunity on that.

On location is having a day these days. Look, all I would say on that, you have our guide, and we'll certainly get into more detail at Investor Day, but live events are hot. Sports is piping hot, and it's not slowing down anytime soon. Why is that? Sports is real-time. Sports is unpredictable. Sports is physical. So you can't turn away from it. It's appointment viewing. When you put sports on your calendar, your personal calendar, you're putting it in ink. And these are big headline events that fans line up for. I would also tell you that live events are the infrastructure for premium in a digitized world. And then beyond that, social platforms have really turned live events into broadcast stages for personal identity. So attendance is a social currency. And we're capturing that and we're seeing that in our business. We're ahead of our internal forecasts on live events. We're seeing volume across the board. PBR is having more sellouts than it's had in the last five years alone. And we're getting yield. So it's really been a good story for us. Obviously, still a lot of wood to chop. And remember, we don't always bring our events to where we're going to get maximum profitability. Don't get me wrong. That might sound like a bad business strategy. But we have to balance the two. We need to go to cities and territories where, yes, they're going to be the most profitable from a global partnerships, from a live event, ticket sales perspective, premium hospitality, year points, financial incentive packages. But we also need to go to cities that we either have a strong fan base and they need to be able to touch the product, or we're growing the product, the content, the fighters, the superstars in territories where we think there's real upside. And France was a real example of that with the UFC this past weekend.

One of the areas of the world we are particularly getting questions on at the moment is the Middle East, and I think that's both for the volatility in the region as well as, as you look out into next year's slate, in particular on the WWE side of the house with WrestleMania moving over into the region. Could you talk a little bit about the opportunity in the Middle East, maybe how you see the cadence of events evolving over the near to medium term and then the opportunity as it relates to next year?

Yeah, obviously nothing bigger next year than WrestleMania being in Saudi Arabia, which will be one to remember and one not to miss. And, of course, our partners in Saudi bring the UFC and WWE to their region because they're trying to draw attendance from not just around the globe, but certainly in the Middle East. All I would tell you is when it comes to the Middle East, despite what's going on, despite how much longer that may go on, they're open for business. And, Frank, in fact, I would tell you they're more hungry to bring live events, not just sports, but concerts to the Middle East to show the world and tourism and fans that they're open for business and they're not slowing down. So, you know, we've stayed on track with our events for this year. We still have two more events this year. We may actually announce a couple more this year. That's how much demand we're seeing. And I think that's ultimately the headline among the headlines when it comes to TKO and where we sit in the sports entertainment ecosystem. Demand is outstripping supply.

One of the other questions we had on the live events business, more on the week-to-week side of the house, is around the performance of GATE the past six or so months. Could you maybe just talk a little bit about what you're seeing at the gate side week to week and some of the medium-rung events that you host and maybe think a little bit more broadly or talk to us about how you think a little bit more broadly about balancing things like pricing and volume on that front?

Yeah, I mean, I think we've covered a good amount of that. I mean, at the end of the day, as I said, we're ahead of internal forecasts. where we have clear price elasticity. Sellouts have been strong across all of our properties, including Zufa Boxing, where we've staged 10 events. We mostly do them, Stephen, at the Apex in Las Vegas. But where we have taken the show on the road three times, it's been sellouts. And that's for a new property, right? Zupa boxing is just getting introduced to the average sports consumer around the globe. So we're pleased with where we sit.

And more importantly, it's not just that they want to buy tickets and that that business is healthy.

It's that the premium hospitality is so strong. Because when we talk about premium hospitality, most investors and I think press focus on the 1% that they just imagine, oh, the 1% wants those special goodies. And that's not what's happening. What's happening is the average sports fan who's going to go to one to five events per year wants to make those experiences count for them and whomever they're bringing, friend or family. They want front-of-the-line access. They want personalization. They want customization. And that's why On Location really sits in an enviable position. And we're coming off a very strong Milan Olympics, a very strong World Cup, and it's been a contributor to the beaten raise that we gave for the full year following Q2 earnings. Now, we would have still done that beaten raise without Ant Location's performance at World Cup, but certainly that was a contributor. And remember, when we went into the World Cup, all you were reading about was tickets aren't selling, hotels are empty, you know, it's not living up to its promise. I think it more than delivered by the time we got to the end. Now, we benefited from the big players like Argentina getting to the finals, et cetera, and the U.S. doing so well. But, you know, that's the business. I think it took the country by storm, and I think the Women's World Cup will do the same thing next year.

Talent's the lifeblood of WWE and UFC. You recently had some marquee talent retire on both sides of the house. John Cena on WWE, you know, Conor McGregor not retire, but working through an injury, could you talk a little bit about how you're approaching talent development on both sides of the business and maybe even taking a step back, thinking about the financial implications of this as your largest expense, how you're thinking about balancing talent expense and maybe the marketing support that goes behind marketing the talent. Let's talk about the pay for the superstars and our fighters first.

What I would tell you is post our new deals with ESPN, on WWE, Paramount+, CBS, Peace Guy with UFC, and even a little bit post-Raw with Netflix, we did resize our fighter and superstar pay composition. And that is baked into our numbers. So there will be no further adverse impact with regard to how that plays out or divvies out. We're confident where we sit. We have 600 fighters, as an example, and are stable at the UFC. We do, to your point, really rely on development. Keep in mind that when you look at the WWE, 75% of the superstars come from NXT. So they're starting in our development league and going all the way up. So pipeline is very important to our strategy. And on the UFC front, we've really capitalized on the investments of our performance centers in Mexico City, in Vegas, and particularly China. We're really getting real traction. So that's a big part of our strategy. It will continue to be a big part of our strategy. And we will continue to be aggressive in other monetization opportunities for both our superstars and our UFC fighters with regard to advertiser deals, marketing partnerships, bonuses through the fight card in terms of finishes and fight of the night. And what you see is you see the best of the best signing up and lining up to be a part of the UFC and to be a part of WWE. So that's something we always watch out for, and we want to make sure that we're really spreading the opportunities, but the strategy is working. And our margins will continue to expand.

You touched on it earlier. I want to follow up on On Location and the premium experience opportunity ahead of you. On Location had a big year this year with the Olympics and World Cup, as you mentioned. And could you maybe, just for investors, debrief on what you learned from this past year with On Location, how you're taking those learnings into the next couple of years ahead of L.A. 2028, and ultimately how you're feeling stepping into the L.A. 2028 cycle?

Look, first, I want to remind everyone that On Location is 5% of our business, just to be clear, because a lot gets written about On Location because of the lumpiness of, oh, you have an Olympics this year and you don't have an Olympics next year. It's 5%. The engines of TKO will always remain UFC and WWE. PBR will be a contributor. On Location will be a contributor. IMG will be increasingly a contributor, certainly to the platform and the strategy. And Zufa boxing will be strong in the years to come, and we're really excited about the potential there. But what I would just say on this is that you look at 27, and we'll have more details on a 27 guidance in the first quarter when we do earnings and have our investor day. But I think 27 is going to be a lot stronger than what people think. And that's because of what I've talked about, this momentum, this traction, live events, sports, where we sit as a leader in the space. One of the reasons why there's some question is, well, next year we won't have the Milan Olympics, like you said. We won't have the World Cup.

That's the ins and outs of the business.

On location is the leader in the space. We've recently renewed long-term all of our major property deals from the NFL and the Super Bowl and the NFL draft to the NCAA in the Final Four through 2029. So we're sitting pretty with a strong portfolio. LA 28 is off to the races, well ahead of plan. And I would just say, look, that's being driven by the success of the parents' games from an Olympic standpoint and the viewership and engagement that the IOC had. And then, of course, that continued with Milan and the U.S.'s performance there, which was a big driver and contributor, and, of course, the World Cup. These U.S. flag events are major calendar appointment viewing and appearance events for the sports fans. And we're going to continue to benefit from that.

And just keep in mind, this is a long-term story. We're a growth story.

So while you won't benefit from having Milan and World Cup in 27, and we'll have a pre-spend on our LA28 games, LA28 will be a monster property for us. And it's a long-term growth story. And all the while, we'll continue returning capital shareholders. We'll continue really, as I said, as a cash geyser for the investor community and our shareholders. Our margins will continue expanding, and we'll continue to run a lean operation. So it's a multi-year strategy, and that's why we believe now is the right time for an investor day, because we want to lay out a multi-year look to really get you under the hood.

Maybe not to get too ahead of the investor day in how you think about the long-term growth algo, but as you do look out over the next couple of years, and this is a debate point on the stock, is in terms of what the drivers of growth will be post the meteorite step-ups that we've seen come into effect this year, any things to call out either on the revenue side or you mentioned margins earlier, the opportunity potentially for some operating leverage coming in in 27 and then maybe that continuing in out years? No, I think overall it's a simplistic story.

I mean, you've got a guide for global partnerships that I mentioned we'll revisit as long as we keep tracking the way we are. You've got a guide for FIPs. You've got to believe that live events and the ticket sales and premium hospitality that follows that will remain robust for years to come, that we are anti-AI. I mean, sports is one of those areas, genres, content carriers that ultimately builds moat in front of AI. You want to see it live. You want to be a part of it. You want to share it with your friends. You want snackable content. And everyone suffers from FOMO, especially the young viewers and audiences that watch and line up to see our product. So if you believe that's going to continue to drive, especially as AI democratizes content and, I believe, increases the scarcity of what we offer, then you're going to be sitting in a good place. We'll continue to be laser-focused on keeping our leverage nice and tight and low. We'll continue to drive margin expansion. We'll continue to deliver more free cash flow. And we'll continue, as I said, to deliver and return capital to shareholders. So it's a good story in the fact that we have Zupa boxing coming up the ranks that could potentially be the next WWE for us, given the history of boxing, given the demand for boxing, given how many fans are out there globally that are looking for someone to come in and get their arms around boxing and turn it around and clean it up, it puts us in a good position.

I wanted to touch on the opportunity at Zufa. It's been about nine months since the league got its first fight. Could you maybe talk about the key learnings in that period of time? What's worked? Where are you looking to improve? And then as you look ahead to years two and three, where are you looking to take the league?

Look, we've signed up 100 fighters already. we've staged 10 events we have media deals with peace guy and with sky uh when we've come out of the gate strong three sellouts as i mentioned when you when you come out of the apex massive event this weekend which is a garcia bend which is taking place in las vegas and it's really a dual strategy it's our own league with our own fighters competing for very in various weight classes for belts in a narrative that you can easily get your arms around and understand. And ultimately, we believe going to be better for the health of the sport and fighters overall. At the same time, TKO is working with our partners in Saudi to stage two to three super fights per year, which is what's happening this weekend. And in that relationship, TKO is paid to negotiate media rights, to promote the event with Dana White and Nick Kahn doing what they do. And of course sometimes to sell global partnerships as part of the package. And TKO is set up to do that because the platform is there. These are levers that we just flip the switch.

So we'll keep riding the dual strategy.

Building Zufa boxing and building firm value with our partners in Saudi and earning into our equity and one day majority. And on the flip side running these major super fights that allow us to promote the Zufa brand and often on the undercard fighters from the Zufa boxing organization so it ultimately enhances their profiles and helps us build some superstars.

I want to touch on capital allocation before we finish up here two themes M&A and then also as you mentioned capital returns and the balance between the both on the M&A side premium sports valuations continue to increase. We've seen no shortage of headlines on the team front the last couple of weeks and months. We'd love just to get your latest thoughts on what you're seeing out in the marketplace for sports media assets today, and maybe for you specifically, what's your appetite to engage?

Sports unifies us, and sports is a unicorn. And, you know, since my days at ESPN, I'm becoming an old man now, that's the most popular question I always get? Have we hit the ceiling on sports media rights? Have we hit the ceiling on sports valuations? The answer continues to be no, as most recently evidenced by the Los Angeles Lakers deal. $12.5 billion, a year after $10 billion that Mark Walter paid? It's scarcity. It's demand outstripping supply. It's strong brands. It's historical equity. It's rivalries and players that fans have cheered on or cheered against for decades. And what I would tell you is I believe these deals are continuing to rise and will continue to rise because further, you can't get your hands on them. For some folks, they're trophy assets. For some folks, they've got money burning a hole in their pocket. And what a better way to spend their money, to cheer on and build their team, maybe part of an organization they grew up in, and most likely hand it down as a family heirloom. That's not going to change anytime soon. And as it relates to TKO and maybe your interest or the types of characteristics or the attributes that you look for in a potential target asset to go and acquire. we can you know can that's why the value when you look at these valuations well then what's the valuation obviously we're public so you can figure that out for when you have it all you don't just have the team you have the league you control the teams the league the participants the partners you're the the entire kind of holistic cycle is is in your hands and that's what we have we are the commissioner the league the owner all in one and it allows us to put on the best fights and put on the matchups you want to see and stage these events in the cities that are most hungry to have them there. Any leagues in particular that stand out to you? There's nothing at the moment that's out there for sale. And by the way, we're true to our word. I mean, we take transparency incredibly seriously, and it's a priority in our company. We are focused on a year of execution. We're doing just that. We are not hunting for leagues. We are not hunting for properties. And we're big believers in that as a management team, but also our board is very supportive of that direction.

Last question on free cash flow, leverage, and capital returns. Balance sheet in a great position. You mentioned the cash conversion earlier. You're in the market buying back stock. Cash investors think about that progressing over the coming quarters, coming years. And is there an appetite to extend the ASR past the $2 billion that I believe is out there?

No announcements today, but clearly, you know, one of the reasons we've been so aggressive in such a short time, and we're well ahead of what we forecasted on capital return and buybacks, and we've added an increase because we think there's a dislocation in the stock, and we're happy to buy back stock that we think is cheap.

Mark, we'll have to leave it there. Thank you very much.

Thank you so much, Stephen.