TKO TKO Group Holdings
Scarce live combat IP with locked-in rights escalators; fair to modestly undervalued, governance is the catch.
The story
TKO combines UFC and WWE, plus PBR and newer assets like Zuffa Boxing, into a sports-entertainment platform. It owns IP that is scarce and that fans watch live, and it monetizes that IP through big media-rights deals (Paramount for UFC, Netflix and ESPN for WWE), live events, and sponsorships. The moat is real: content is year-round, the company controls its own schedule, and it has no player unions or league partners taking revenue shares. The business is in an early mature phase. The rights renewals are being booked now, so growth from here comes from pricing escalators and new formats rather than from more deal-making.
Year-one growth of 12% reflects the step-up from the new UFC/Paramount and WWE/ESPN rights deals. A 30% target margin is about where adjusted EBITDA less D&A lands once merger costs and IB-asset amortization roll off, and it stays below the old standalone UFC peak. The low sales-to-capital ratio reflects acquisition-heavy invested capital, and a 10-year horizon fits a durable IP franchise whose rights reset roughly every 5-7 years.
Value drivers
| Revenue growth (Y1) | 12.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 10y |
| Target operating margin | 30.0% |
| Years to target margin | 5 |
| Sales-to-capital | 0.80 |
| Beta | 1.05 |
| Failure probability | 2.0% |
| Cost of capital (WACC) | 9.7% |
| Terminal WACC | 9.5% |
Valuation bridge
| PV of explicit FCFF | 7.91B |
| PV of terminal value | 13.52B |
| Equity value | 12.72B |
| ÷ shares → per share | $173.97 |
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 5.94B | 12.0% | 21.0% | 1.10B | 795.28M | 300.65M | 274.17M |
| 2 | 6.59B | 11.0% | 23.3% | 1.35B | 816.49M | 530.10M | 440.84M |
| 3 | 7.25B | 10.0% | 25.5% | 1.62B | 823.91M | 800.46M | 607.04M |
| 4 | 7.90B | 9.0% | 27.8% | 1.93B | 815.67M | 1.11B | 768.27M |
| 5 | 8.54B | 8.0% | 30.0% | 2.25B | 790.29M | 1.46B | 920.07M |
| 6 | 9.13B | 7.0% | 30.0% | 2.41B | 746.83M | 1.66B | 954.58M |
| 7 | 9.68B | 6.0% | 30.0% | 2.55B | 684.95M | 1.87B | 978.69M |
| 8 | 10.16B | 5.0% | 30.0% | 2.68B | 605.04M | 2.07B | 991.72M |
| 9 | 10.57B | 4.0% | 30.0% | 2.79B | 508.23M | 2.28B | 993.33M |
| 10 | 10.89B | 3.0% | 30.0% | 2.87B | 396.42M | 2.47B | 983.56M |
Key risks
- Media-rights renewal risk: at the next reset, streamers might pay less for live combat sports
- Legal and reputational exposure (UFC antitrust settlements, WWE governance issues)
- Endeavor/Silver Lake controls the company, which brings conflicts over related-party asset injections and capital allocation
Catalysts
- Paramount UFC deal ramps up from 2026, alongside the ESPN WWE premium live events deal
- Zuffa Boxing launch and live-event site fees, with large buybacks and dividends