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TKO Group Holdings, the new company created with merger of the UFC and WWE, officially launched on September 12th and is now trading on the New York Stock Exchange. A few days after their official debut, the company posted their S-1 with the SEC. Similar to other recent filings by Endeavor and the WWE in the lead up to this merger (which I covered on Bloody Elbow here and here) they give a breakdown of UFC finances.
Just as we have done with those others, we’ll look at whatever new information can be gleamed from this most recent filing, including how the UFC did in the first 6 months of this year. Today we’ll be going over their basic finances, and then soon after we’ll look more closely at who has benefited the most from the UFC money making apparatus.
UFC finances for first half of 2023
Revenue
UFC revenue is primarily generated by media rights and content broadcasts fee, live events (tickets or site fees), sponsorship, and licensing. For the first 6 months of 2023, the UFC saw increased revenues in each of these categories versus the same 6 month period in 2022.
Total revenues for the 6-month period that ended June 30, 2023 was $611.9 million, an increase of $84.2 million over the 6-months that ended June 30, 2022, an increase of 16%.
Media Rights and Content Broadcast rights fees was the segment of revenue that saw the largest absolute gains, seeing an almost $50 million increase from the same period in 2022. It totaled $435.8 million for the first six months of the year. This segment includes live events as well as taped television programming, both domestic and internationally, residential and commercial pay-per-views distributed through cable, satellite, and digital providers to residential and commercial establishments. The UFC also owns and operates its own subscription based over-the-top (“OTT”) platform, UFC Fight Pass.
Live events saw the largest relative gains, with revenues increasing 57% in the first six months of 2023 over 2022, growing from $40.6 million to $63.7 million. This is partly explained by the fact that the UFC ran 3 fewer events at the Apex in 2023 compared to the previous year. Live event revenues consists of ticket and VIP package sales, as well as site fees.
Sponsorship revenue includes “arena and octagon signage, digital and broadcast content, on-air announcements, special appearances by fighters and other forms of advertisement”and grew by 12% over the same period last year.
Consumer product licensing is the smallest revenue source for the UFC, making up less than 5% of their overall revenues. It also saw the smallest increase, gaining 9% over the first six months of last year. Licensing revenue is derived from the fees or royalties generated by use of the various logos, trade names, trademarks or related symbolic intellectual property owned by the company.
Operating Expense: Direct Operating Costs
Direct Operating costs are the UFC’s largest operating expenses and includes production costs, athlete costs related to live events, event specific marketing, venue expenses related to its live events, sales agent commissions, technology costs to operate UFC fight pass direct costs with third-party content affiliates and distributors, and the cost of operating the performance centers.
Direct operating costs increased $28.1 million to $171.9 million, or 19.5%, for the six months ended June 30, 2023 compared to $143.8 million for the six months ended June 30, 2022. The increase was due in large part to the increased production, marketing, and fighter costs that came with holding additional events. This includes one more pay-per-view, two more international, and 3 more live events than the same period in 2022. “Different matchups” was also credited with increasing the direct operating costs, which can be interpreted as fighter with higher payouts competed during this period.
Operating Expense: Selling, General and Administrative
Selling, general and administrative expenses primarily include UFC personnel costs as well as rent, travel, professional service costs and the management fee (of $25 million last year) paid to Endeavor
Selling, general and administrative expenses totaled $119.8 million in the six months that ended June 30, 2023, and increase of $20.6 million, or 20.8%, from the six months that endedJune 30, 2022.
Operating Expense: Depreciation and Amortization
Depreciation and amortization increased $0.2 million from the first half of 2022 to first half of 2023, totaling $30.2 million. The increase was credited mostly to higher property, buildings and equipment. This comes on the heels of years of decreasing amortization as certain intangible assets have now become fully amortized.
Interest Expenses
The UFC will also be bringing with them to TKO a debt of several billion dollars. As of June 30, 2023, they still had an outstanding debt on their term loan of around $2.7 billion and another $32.7 million in secured loans which was entered into in October 2018 in order to finance the purchase of their headquarters and surrounding lands in Las Vegas…
Read the rest of this breakdown of UFC finances, including in-depth details on UFC somehow having lower income in 2023, over at our Substack page.
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