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Vince McMahon is about to be $713 million richer
Vince McMahon, the executive chairman of TKO, just announced his intention to sell 25% of his holdings in the company. The 78-year-old is expected to get $713 million for the 8.4 million shares in question based on today’s $84.90 closing share price. This is all per a prospectus filed today with the Securities and Exchange Commission (SEC).
McMahon owned 16.4% of the company when TKO was formed by spinning off the WWE and UFC from Endeavor in September.
According to Variety, TKO plans to buy back $100 million worth of McMahon’s shares. Additionally TKO (and Endeavor) CEO Ari Emanuel and COO Mark Shapiro both “indicated an interest in purchasing up to $1.0 million” and “certain other of the company’s directors” intend to purchase $850,000 in shares.
McMahon’s decision to sell some of his holdings won’t impact the decision-making at the company as Endeavor owns a controlling share in the company. MMA Fighting speculated that, “It’s possible McMahon selling off a huge part of his stock holdings could signal an eventual exit from WWE, as well as his role as executive chairman at TKO. But nothing has been announced or decided yet on that front.”
Just yesterday, TKO made its first quarterly earnings report as a publicly held company. Those results were described as mixed: “The company reported revenue of $449.1 million, up 32% from the year-ago quarter, and adjusted earnings before interest, taxes, depreciation and amortization up 26% to $239.7 million. Net income fell to $22 million, from $129.7 million.”
Additionally, the company warned that two factors presented “risks” to the business: the looming antitrust case against the UFC and Vince McMahon’s “position on the board.”
Vince McMahon’s risky business
As TKO reported, “Mr. McMahon’s membership on our Board could expose us to negative publicity and/or have other adverse financial and operational impacts on our business. His membership also may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.
“On July 17, 2023, federal law enforcement agents executed a search warrant and served a federal grand jury subpoena on Mr. McMahon. No charges have been brought in these investigations. WWE has received voluntary and compulsory legal demands for documents, including from federal law enforcement and regulatory agencies, concerning the investigation and related subject matters.”
The trouble came to light when the WWE launched an investigation into what The Wall Street Journal called “a secret $3 million settlement that longtime chief executive Vince McMahon agreed to pay to a departing employee with whom he allegedly had an affair, according to documents and people familiar with the board inquiry.”
WWE underperforming UFC?
McMahon may also have been stung by the WWE’s relatively weak performance compared to the UFC in the earnings report. Where the UFC’s revenue grew 17% to $397.5 million the WWE’s fell by 6% to $287.3 million.
The WWE’s underperformance has also been blamed for the initial fall in TKO shares which initially traded in the $100-$105 range but fell only a week later to the $80 to $85 range where it has traded ever since.
According to Variety, “investors were underwhelmed by the licensing deal that WWE struck to move one of its signature year-round series, “Smackdown,” from Fox to USA Network.”
Based on after-hours trading following the announcement of McMahon’s share dump, investors are not bullish on this latest news either, dropping the per share price to $80 in after hours trading.
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