Building an Empire with Risk, Rage & 200 Phone Calls A Day | Ari Emanuel, WME & TKO

Right. This is like a caged tiger. No story, having a conversation, because I'd rather just have a conversation than like...

Let me back this up. We were just talking. The funniest story anybody's told on the podcast so far is Dana White, and he goes, 'Let me tell you about this guy named Philipe Duman.' He goes, 'His name is Phil Doom and he's from Jersey.' And then you're like, 'That was a funny meeting.' Here's the thing: the UFC has taken off on Spike, right? Our term is up. This is when we had the reality show and had some fight notes. And so we call a meeting. I'm now representing them. It's Dana, Lorenzo, Fertitta, myself, the head of Spike at the time, and Phil, and I think one other person, his other co-CEO, whatever. And we're pitching that you've got to consider it a sport. It's not a reality show, etc. He goes...

I knew this was bad. He goes, 'We made you. If you leave, you know, we'll get somebody else and we'll replace you.' And Dana, you know, and Lorenzo — I just saw, knowing them at that point for about three years, they were just like ready to explode. And it was really getting heated. And you don't insult somebody from what they created as if you can just recreate Dana White. Impossible. And what Lorenzo put into their heart and soul that they put into it. So the meeting ends and I call him like, 'What are you doing?' Like, this is an easy ask we asked for. It was like we're doubling it. It is a sport. It was like their highest-rated thing. I represented WWE. We had moved it back to USA coming off of that. That's when the lawsuit happened with Barry Diller when we moved it off USA. And he didn't get mad, but he was boiling. And I know Dana boils. It's like, 'Oh, you want to get competitive with me on a sport that I know and what we've done? You think somebody can replace me?' And that's what the offensive thing was. This guy had no idea what he was. He couldn't start anything. He destroyed that company. Destroyed it. He let everything go that was of value and just bought bad stock and bought it back from, I think, $80 all the way down. He made a lot of money. So yeah, we just made the deal at Fox. Incredible deal at the time. The funny thing is, after we made the Fox deal and that deal was coming up, and then the world — which is in the book — the world blew up. We thought Fox had to make the deal just because they own these things, the RSN, the local station group, and how much play the UFC had on it and what it was doing for the network. They were going to have to make a deal. Look, you know, Rupert then sells that business to Disney. There's no need economically. They're on pause until that deal goes through. President Trump slows down the AT&T deal, so that went away. Comcast didn't want it. They had all the sports they wanted.

This is like four years after we moved the UFC.

We buy IMG for 2.4 billion. And the thing about my life is I love puzzles. And my phone is a way to kind of put the pieces in place. I'm going to go way back if you don't mind.

So I start this company, Rain, with Joe Ravage and Jeff Sign, this merchant bank. I'm raising money for them. I fly to Abu Dhabi. I get $100 million out of my friends in the UAE. I read this article from Marc Andreessen. This is going to be way back. He comes to see me. We just, you know, it's just creating serendipity. What you do in your life and people that are successful, I think they do. They just have relationships and they figure out how they fit into your life in a good way. I ask him in that first meeting — I meet him, one, what he does, but two, I'd like him to put money into Rain. We're raising a fund in the merchant. He says, 'I'll do it. I'll do it with this guy Egon Durban and Nikesh, who was working at the time at Google.'

He's fantastic. And through that I meet Egon Durban. He buys a company that he sells to Microsoft — Skype — for, he buys it, I don't know, from whatever. And that was one of his first big deals. Incredible. But in that conversation, he realized the value of content in a distribution platform. We were talking about creating animation, and he was really creative. Cut to lunches and dinners. Teddy Forstmann, who at the time had bought IMG — Forstmann Little bought IMG — had gotten sick and was dying and passed away of a brain tumor. Horrible. Egon flies down and says, 'Can I have lunch with you?' And we had now a great relationship because of the introduction that I made. And he goes, 'I want to buy a piece of you and I want to go after IMG.' I was trying to raise money around him. Mike Batista flew down to Brazil. Martin Sorrell at WPP. I was trying to put the pieces together to raise the money. I thought it was going to be about $2 billion. He says, 'I want to do this and I want to go after them.' I said, 'You're a PE firm. No chance you're going to be able to figure this out.' He goes, 'Give me your numbers. Give me three weeks. I'll come back.' And we now have William Morris. That's a whole other story. So Patrick and I meet with him. He brings his team down. We explain our economics, TV packaging, everything we do. Three weeks later he comes down, makes me an offer that we could have signed as is. We do the deal after a little — I could not not negotiate, right? It's in my nature. And we then go after IMG. So we then got a global footprint, US sport. We got movies, television, music, theater, books — exactly what we wanted. And then we added events, sports, production, licensing. It was one of Egon's vision. Incredible. I mean, we had the idea too. We just were trying to figure out money and the perfect partner, long-term, cares about what you're doing when he gets involved in the company, learns everything about the company, brings incredible ideas to it. He's an incredible investor, an incredible partner. Once we had that, we came to him with this guy, Brent Richards, Mark Shapiro, and myself, and we said, 'This is the representation business. In addition to that, because we have all the pieces that you need, we negotiate with all the networks globally for sports rights and for movie and television rights, we should put a piece of ownership on top, something we own in sports, because here's where the world's going with Netflix, etc.'

Well, I knew they had a Netflix business, right, where you buy a subscription to Netflix, Hulu — it started. They were eventually going to go to AVOD, which is advertising-based. And one of the things that keeps people engaged was sports. So we needed to own, we needed to be in the sports space. I don't know if it was a year or two later, they had danced with it, Frank and Lorenzo, about selling the business. About two years later, they came back and sold it. We're opening it up again. We heard about it and so we started getting into it.

He would not. And listen, Lorenzo and Frank Fertitta are incredible negotiators, coolest customers of all time, tough.

Right. Exactly. Which is — I just needed the framing.

No, because I had been involved with the company for 20 years. I knew where the network business is. I knew how much Fox needed it. I didn't know what was going to happen. And in my mind I just did math about what the license fee would go to. I asked Egon if it gets to this, and we start running our numbers, what we needed to get to. So we're in that negotiation, and our biggest competitor was the Chinese. Actually, I thought it was going to be Warner Brothers and Jeff Bewkes, and I think a lot of people at TNT wanted it. And Egon said, 'No, it's Fox because it's already on Fox, an easy transaction.' I didn't think Fox, but I did think TNT was going to possibly do it. But Jeff Bewkes was downsizing to sell the business, so he didn't want to do that right now. So we got into it, and I think Dana at one point turns to them and says, 'Please.' He had an unbelievable relationship with me for 20 years. I want to be with a guy that knows the business and loves the business, and he knew I did. So we got it for a little cheaper than they did, but it was 4.2 billion at that point. But pull back. The hardest thing for Egon and myself at that point — and this is where I learned, I mean, he taught me everything here — we had Brexit happen. All the banking system fell apart. And the great thing about it is he stayed as steady as it could be because he believed in where distribution was going, the value of sports. And we pieced it all together with Michael Dell doing the preferred. I mean, the PE, and I learned so much. And he took my hand and walked me through everything here. It was incredible. It was just brutal. Right. Cut to — this is where I got sick. Actually, physically sick because it was so much stress. We had put clients into it. We put all the chips in the middle of the table. $4.2 billion. People were saying it was the most expensive deal in the history of sports. We're crazy for doing this deal. Egon separately put money in KKR. Henry and George were incredible, the founders of KKR, for backing Egon and me in this situation. The world blows up. Rupert sells to Disney. AT&T — and I thought I had a deal on the backside if they weren't going to pay what we wanted them to pay at Fox, that AT&T was going to make.

Television rights after the deal closes. And there's no place to go. There's no place to sell to because Netflix wasn't in sports. Nobody else had really gotten to the level. We almost had a deal with Jeff Bezos and Jeff Blackburn that was like 260 million or something like that. Then they pulled it. Well, we had negotiated for four months and they said, 'Oh, it's got to go to this committee. No big deal. It's a rubber stamp.' This was on a Saturday. We had our fight in Boston. And by Monday it comes in at like 1:40. I'm like — I went crazy.

Jeff was at one of our parties. Laurene answers — his wife now says, 'Come meet Jeff.' I said, 'He took money out of your pocket, man. You're not feeding your kids.' Here's what happened. You know, it's a huge bet. He didn't know anything about it. Jeff Blackburn — this is my conclusion. I think I'm completely right. Like, they just made a bad estimate. The people beneath him were above the key. And even though he realized — Jeff Bezos — that yes, all the facts we had told him were true, he wasn't going to override his team. And I understood that as a leader.

Well, they just didn't think we had the economics. Well, they started doing math on our fight nights and our pay-per-views. I don't know what happened. We have nothing. We're pitching ESPN. Kevin Mayer's there and John Skipper, and we're pitching. Fox is now official. No. Mark Shapiro tells me, 'You're lying to yourself. You're not listening to them. They have passed.' And I am pitching my heart out. So we pitched Disney. John Skipper was just shining us on because we had so many clients booked as broadcasters and rights. We sold them from IMG, but he didn't like the UFC.

Yeah. Yeah. But that was like 16 years old, 16 years before we are in the story or so. And even this was like, 'No, this is like a dirty business,' was like, you know, and he's shining us on.

Let's not go into his trouble. It's in the book. It's in the book. He gets in trouble. He's out. Kevin Mayer is in place. They're going direct to consumer. He calls us. We want the deal. The first offer was for — Mark and I work a weekend, and Kevin and I know each other for a long time. We work on a letter. We send him what we think it's worth, why we think it's worth. They then come up not exactly where we want, and we're negotiating right back and forth. He's saying stuff. We're giving him stuff. Back and forth. We're still pitching other places. We go in to see Bob Bakish, who's at Viacom now, and we're pitching him. Let's reinvent Spike, where we originally started, and make it into a sports channel. Exactly what AT&T wanted to do with TNT. That's what the conversation was with AT&T if they could have closed that deal. As we're pitching, I'm here. Mark Shapiro's there. Bob Bakish is there. I get a WhatsApp from Kevin Mayer that says, 'The price we want. You have a deal.'

Yeah. I slide the phone over to Shapiro as he's pitching his heart out. I'm pitching my heart out. He was at this point — he was pitching. He looks down. He's still pitching. I'm like, 'Meeting over. We got to go.'

Yeah. Get into the car. Because I had the deal I wanted, which was an incredible deal. Okay. Yeah, like it hit the number that was in our pro forma. Okay. We had four months left until it was going to be a nightmare. We get in the car, they're in the plane — Iger, Kevin — and we're negotiating. We're going back and forth, and over WhatsApp we're negotiating deals. It was eight episodes on ESPN, the rest behind the wall on ESPN Plus. They were just launching the ESPN Plus, etc. Cut to — we get back to the office. We call Dana. You know, we're all sweating bullets, you know, not healthy. And we say it's eight episodes. Dana goes, 'No, I'm not doing that. I love him so much and he has pushed me so hard and made me better, Dana.' I go, 'What are you talking about?' He goes, 'I'm not doing it unless we have 10.' And I said to him, 'We have nobody else right now.' He goes, 'I don't care.' Like, 'I don't care.' Like, 'What are you talking about?' Cut to — I had no move. No move. I get Kevin on the phone. I go crazy on them.

Well, I said, 'You — I need 10 episodes. I can't do this. You got to break stars. You're going to want stars. You need stars to put it behind the paywall so that people buy the paywall. You need it to be on ESPN so they understand the sport.' And I just gave him this whole story, which was actually true. Slam — I think he turned as white as this chair, right? And I said — and he's like, 'We have nothing. What are you doing? Calm down. They're not going to blow this deal. They want the deal. We're making one move. If we can't get it, we'll call Dana. We'll figure it out.' To Kevin and to Bob Iger's credit, who was, you know, he started out in boxing — you know, he actually loves combat sports. Bob Iger.

It was ABC. Yeah. Way back in the day. Yeah. And unbeknownst to Mark and I at the time, Bob kind of told us later. He says to Jimmy Pitaro — yeah, so Jimmy was on the plane too — 'Just give him the 10. Figure it out on the schedule.' I didn't know that. Kevin calls back. We have the 10. Dana's happy. Boom. We're off to the races. And you know, luck has it. Skipper got in trouble. But and then we go in.

Then we go in for the celebration with Kevin and Bob, who were incredible partners. Like, fantastic. They have been — ESPN's incredible partners. They're incredible.

Yeah. It's a — it's a — I don't know — Seinfeld episode. Mary the regifting, and we bring it in. It's 75 lbs or 100 lb, and we're bringing the book in.

Exactly. Cut to — we're just sweating bullets as they're going through the book. It wasn't — in two seconds the assistant did a good job. We're in the meeting. It's a great meeting. And I go, 'Fuck you guys, right?' What? You're going to make Mark and I go pitch our pay-per-views when you're putting some behind the wall? You guys are — like that. Bob, who didn't know — 'Kevin, did you know we could buy the pay-per-views too?' Ha. Haba haba. And Kevin's a really smart guy, but you know, we got like — getting everybody over the hump on one. He goes, 'Baby, incredible.' Goes, 'We'll get back to you on Monday.' Monday comes, they buy the pay-per-views. Incredible. Seven-year deal. Incredible. They did incredible with it. We did incredible with it. It was like a home run for both. But this is why I wanted to start with the story because everybody says these guys are idiots. They're overpaying for buying UFC. This one deal valuation is almost — I think a seven-year deal was like almost $4 billion, almost the purchase price of UFC.

Well, it wasn't — it was a stamp of where direct-to-consumer was going. Everything that Mark Shapiro, myself, Egon Durban had thought through was happening. We just had to get through some consolidation and deal flow to get to it.

No. So we were coming to the end. We were putting Fox off because we thought they were definitely on the table. We just wanted to see what else was happening. And then to Iger's credit, he went after Fox, understandably, for direct-to-consumer and what he wanted Disney Plus and Hulu to be. He comes over. Fox was there early, but then they sold. And then it was about the beginning conversation to the end — three and a half months, I think, with Disney and ESPN.

Well, no. Like, if you're making a writer deal in television, which I started my business with, and you're staffing a show, you're in — you know, from when it used to be upfronts and you'd go to New York and you'd be in upfronts on May 28th-ish until staffing, it was like a three-week race to put as many writers on TV shows that have been picked up for networks. The UFC deal and the IMG deal were probably six months to a year, each one of them. And then the merger — there's a merger that took that to me.

Professor Nittton, incredible. Actually, I think he's on the board with Josh Kushner at Thrive. Yes, Thrive just reached out to me to see if I want to talk to him. Do you think that that'd be interesting to do? But I just love what he told you. He's like, 'There's such a thing as a merger. Like, there's an alpha, there's a beta, there's a conqueror, there's a conquered.' In fact, you mentioned Egon Durban. So Michael Dell has been like a huge influence on me. He's like become a friend. I just had dinner with him like two weeks ago. I met at one of Dell's events this guy named Hock Tan.

Yeah. The CEO of Broadcom.

Patrick and I were stealing clients, weakening them. We were stealing agents, weakening them, and just listening to the street like there was problems over there. A lot of dissension. And then the moment came — I mean, I screwed up the first meeting so badly, and Patrick was perfect in the first meeting. Whether we had — where I went crazy. Going crazy doesn't always work. No, no. It pushed out the merger for four years. I played a horrible game of chess there. Just horrible. I'm at a Jewish holiday at an event to kind of break the fast. And one of their most important agents comes up to me, says, 'It's time to kind of get back into this.' And I meet with him. I meet with this woman, Jennifer Walsh, who ran their book division. And we reignited. And then it moved pretty fast. It was about six months because we realized they needed it. And it was really a lot of disruption happening in there. A lot of dissent. And that dissent enabled Patrick and I to be the conquerors in that situation. And then Egon coming into our company enabled Patrick and I to kind of economically incentivize everybody and then take control.

Yeah, we're talking about the merger. Sorry.

Fucked up is — be gentle. That was a gentle statement.

So here's what happened. The deal closes, meaning William Morris votes to say yes. Endeavor votes to say yes. Which, you know, doesn't exist already, right? And Patrick and I had done — you know, constantly talked to Nittton, who kind of helped us think through it. And even in them closing, a lot of their senior members that were equity holders were calling us and saying this is not going to work. Cut to — the deals are approved but were not closed, and we realized, okay, we cannot go forward, mainly their side. One, there's guys that make so much money. Peter Guralnick in their music department, one of the biggest divisions, Mark Gitkin in their non-scripted business, not on the board, not really paid attention to. We have to keep them to make the merger work. I go have separate meetings with both of them and let them into the plan because they hated leadership.

We had brought them on to our side of the fence.

This is where Patrick was great. You know, I was so nervous about this. Like, this is going to be a nightmare if he's sitting there. And he had sent a memo out: 'I have to be on all head-of-studio calls.' I didn't even understand what that meant. Like, I'm on a call with a studio head. I've been running this company with Patrick for X amount of years and you want to be on my call? Like, no. I realized — and Patrick said when we're probably going to enter in after 2003, it's four years later, we're really going for it. And I got really cold feet. And Patrick just — in the third-floor conference room, not physically, but slapped me in my face, saying, 'What? You don't think you can take this guy out?' And so it kind of woke me up, cold water on the face. And we get to it. And then everybody realizes on their side, Jim cannot be part of this. And we negotiated very clear terms of majorities, supermajorities, what happens for the board. They had five votes. We had four and a quarter votes for each one of us. And Jennifer Walsh and Patrick go to Jim Wyatt's counsel and say, 'Not going to work.' It's 2008, 2009. The world is — we don't remember, but the world was coming to an end. My brother was in the White House, financial crisis, almost depression.

Buy one guy. You got to buy out another one too. Yeah. So he takes the deal. He takes the $24 million. They convince him. He says yes. Check written. Irv Win thinks he's getting the job once Jimmy's off. And I call him up. Patrick's on the phone. I said, 'You don't have the votes because you need two-thirds and you don't have two-thirds. Board doesn't want you.' That was a little bit of a tussle. I won't get into the details, but he finally realized, 'No, go.' We write him a check for $20 million. So we're out $44 million in '09. We lose a lawsuit on the building that they bought because you're going to have to be sharing a garage with your direct competitor. An agency like right there. Who the would do that? I don't know. That's — and then they were — 35. So now we're at 75. Yes. No, that's $80 million. Then we have to pay out bonuses either between 20 and $40 million. We were — and you know, getting a loan from a bank in the middle of '08-'09. I mean, and that's when Russell Goldsmith, who was part of City National, always had backed us when we needed a million dollars with no collateral. And I just...

When we left ICM.