I'm joined now by Ari Emanuel, the executive chair and CEO of TKO Group Holdings, and Mark Shapiro, the company's president and chief operating officer. We're back where we always are.
You guys are always together.
Yeah, it's very nice. It's very sweet. But you wrote a book. You're promoting the book. Why do you need him?
Well, I'm the fact checker.
Yeah. And I can't believe when I walked in, he took the leash off. So, I appreciate that.
Um, well, we're going to talk a bit about TKO as well, which is one reason why, of course, we want Mark here, but uh, you know, I have I I'm not fully through the book, but uh, it's a really good read, and I wouldn't say it if it wasn't true. Um, but why why do it?
Well, I would say there's two reasons. One, being a parent of dyslexic kids, understanding the anxiety that brings and having seeing my mother go through it with me because I'm dyslexic and coming out on the other side of that. I think it's important for parents to read it, understand what it takes to help your kids, the anxiety you have, but coming out of it, I think if you do the right things, uh, your kids can be incredible and free thinkers and have emotional endurance. And then for kids just generally starting out in business, hopefully I was really honest and I hope you you see that that it's not easy and uh this is their Thomas guide or ways if you're speaking now cuz I had a Thomas guide when I was in the mail room and it's very tough but if you have agency for yourself it's an incredible ride and I go through all the ups and downs of what it takes to be successful and it is difficult but it is really satisfying.
Yeah, I haven't gotten to the I mean I've been on the up part. I know there's also some down parts to come for of course now you're at the hype. I mean sitting here with me really nothing gets better than this.
I completely agree the moment. I'm sorry it's not going to be in the book.
And you're not surprised how raw and candid it is direct, right? I mean you expected that.
I did and in fact it would have if you hadn't if you toned it down it wouldn't have been you. The writer Jr. who wrote Tender Bar, who wrote the Agassi book, Phil Knight, is one of the incredible writers, incredible human beings. So, he did an incredible job with me.
Yeah. I mean, you seem I don't know now. I haven't seen you take I haven't gotten to a part where you really take somebody apart. Nobody, you know, you've sort of talked about everybody's foibles, but you seem to have treated Oitz okay so far. This guy Haber who you worked for who seemed to have taught you a lot as well. Well, I don't know. Mike, is there something later in the book where you just But I would say,
You know, Mike Mike is, you know, he's on Mount Rushmore. Um, that being said, we had a nice interchange and we got together afterwards and I I I think you'll enjoy all the ups and downs, me personally, and and people.
Shapiro wanted to interrupt there, but it's not his book. I this is the one thing that's not you know several times and there's been he's been working on this for years. What I was going to say for you is not not to interrupt him was the Oitz stories, the anecdote of him almost throwing a chair at Oitz, wrecking his entire office as he's quitting and leaving for another agency is is is one of the classic that's one of my ways if the damn book had gotten delivered on time I would have been finished with it. But I'm going to finish it this weekend cuz it really is actually a really a great read. I don't know. A lot of people write books though when they're kind of done. Are you done with your career?
Well, I would say the following since we just Mark and I started WME together. Um I'm far from done. I think we've accomplished a lot now at TKO. We have a lot more to do which maybe we'll get into now. So, um we're I'm still uh kicking until Shapiro kicks me out.
He's got a life of luxury. I would assume so.
And does any would you think anything less? Especially if after you finish roll the calls, you'll say to yourself, 'How is this guy ever taking the exit door? That's not going to happen. You're not you're not going to stop, right? That's yeah, you won't ever stop.'
Well, I would say the following. Would you like to have a a life of meaning or a life of pleasure? I think if you have a life of meaning, it is pleasurable. Most people think, 'Oh, I just want pleasure.' I enjoy what I do. It gives me great meaning. It gives me great purpose. I I'm having a great time and I have a great partner.
Yeah, you guys have been partners for a long time now. They said it wasn't going to work.
Wait till you read what happened in the book and how we met.
Uh I'm looking forward to that as well. All right, let's talk a bit about that partnership. I want to get to WME, which obviously is your private effort. You two are the our partners on, but let's talk about the public effort that our viewers care about as well. Mark, we saw each other very briefly at Goldman Sachs's conference last week. you presented um and you know there was a moment I think where you pushed back a lot on this Wall Street narrative in particular around WWE UFC WWE obviously two of the key components of TKO that sponsorship momentum is decelerating um but you did say partnership revenue grew 2% in Q1 and 8% in Q2 versus the prior year it was a sharp slowdown so what's the push back?
At 24 to 25 we grew 90 plus% because WWE was new to TKO and we took the playbook from UFC, we applied it to WWE and we took down the low-hanging fruit. This year, what you're seeing is 2 and 8% respectively in the first two quarters because we have so many international events this first half of the year, which don't allow us to sell as much as many global partnerships as we otherwise would, but it's backloaded. The second half, a ton of global partnerships deals take effect. many multi-year, all high margin, all recurring, and we will finish over 20% year-over-year increase on WWE partnership revenue for the year. So, it's more to come. And so, it's really the calendar to a story to tell. This is all timing.
Um, on your last call, I think your CFO also did quantify the margin hit you took from the big extravaganza for the president's birthday around the 250th anniversary of the country. 30 million bucks. Was it worth a $30 million margin hit?
That was actually in plan. We actually knew it was one of the great brand experiences of all time for us on a global basis. So, we had it in plan. So, from our perspective, it was already um pre-baked.
One of a kind. And this is a one-of-a-kind. Everyone else would kill to have something like that. That kind of stage that billion dollars you got to pay billion dollars of earned media.
Yeah. How do you how do you quantify that?
There's companies that we pay a lot of money to do this, right? I mean, at the end of the day,
You think that's a real number. billion dollar.
I think I think it's actually conservative.
And do you think that actually we're down to your benefit in the future in terms of
For sure we're growing our audience. We're growing our reach. We're growing our engagement. We're taking UFC all over the world. We're seen in over 200 countries and territories right now either live and in person to come and see the actual fight card or on on television with our new deal with Paramount Plus. And you know, we have our our kind of um site fees are up all over the place. People are calling us from all over the world wanting us to come. We're kind of regulating that as it relates to our domestic and our international both for the WWE and the UFC.
So there should again back to this idea of sort of one time that there was a segment hit margins went down at UFC. That's one time as a result of this event.
Absolutely. And we forecast that it is one time. If we could do another fight at the White House next year, we would.
This kind of exposure, David, we had news outlets covering it, not just sports. we broke out into the mainstream. That kind of awareness for the UFC is is truly unprecedented and something we'll capitalize on in terms of business growth going forward.
And when you think about it, it was in the Zeitgeist conversations here, every newscast, as he said around the world. Social was through the roof. So, yeah, it was an incredible experience, an incredible opportunity for for the brand.
I want to come back to TKO, but let's talk a bit about WME because it's gotten some attention. You guys did a very large deal certainly uh recently. You're buying Yeah. You're buying a bunch of theaters essentially.
In the regulatory review process right now.
Understood. Uh in both London and here in
That was not for you. That was for me to keep me under wraps. Okay.
Um what is it about live events? Obviously, we just talked about two WWE and and UFC. But what is it that you feel you want even more exposure and now we should say not in the public company but in your private vehicle?
Well, we we've been on this train for a long time. 2016 we saw where sports was going to go. Live entertainment and sports. I think a lot of people on a team basis is doing it that because of AI and and kind of where all the streamers were going that live sports was going to be important. We then shifted as AI and other things have been happening. We realized that live events were going to be in happening as we get a shorter work week 4 days a lot of people are saying Bernie Sanders wants to do 38 or 36 hours. So with that s with that development we have believed for the last year and a half that live is going to become even more important and more valuable and you know we're in the sports area with our tennis portfolio. We're in the collectible business with Freeze and Bearjack our car auction and other things and then another great experience is live theater and I think we got involved with one of the great um live uh theater uh companies in the world. Again, we are under review with ATG and we're very excited about it.
Yeah, just to set the table on ATG, remember, Ambassador Theater Group is what we're talking about here. We have seven They have 70 theaters that they own and operate across Germany, Spain, 10 in the West End, seven in Broadway. Theater is a premier destination. It will continue. In fact, it is back in terms of attendance and spend, it's back to pre-pandemic levels. Last year in the West End, they did over two 2 million more patrons than the Premier League did. So, it will continue to flourish. And we are coming in to be entrepreneurs. We're coming in to be long-term custodians. We want to improve the theatergoing experience for theatergoers. And we want to continue to diversify content for content creators and we're going to invest more in.
You know, you guys are wading into an interesting time though. I know a bit about it here in on Broadway because the cost of productions has gone up so much in part because theater owners are charging a lot. There's other things. The unions, so many different things involved. But to mount a major musical production these days can be 20 to 30 million bucks.
A lot of investors don't get their money back. You guys are wading into the middle of that particularly as theater owners. Do you have any ideas in terms of how everybody can benefit here?
Well, we're sitting right now. We're we're listening to a lot of people. We have met with a lot of people that are in the theater business here in the theater west end and all over the world. We're going to analyze it and be invest in the process.
