WWE Chief Executive Officer Nick Khan addressed a host of issues in a recent interview following the announcement of the Endeavor-led merger with the UFC.
Khan, who will become WWE President upon completion of the merger, was speaking with Brandon Ross and Rich Greenfield of media investment research company LightShed Partners.
The interview on ‘LightShed Live’ (subscription content) took place on April 5th, just two days after the announcement of the merger deal.
Khan addressed a series of issues, including the use of sponsorship logos on the ring canvas, cost synergies, who is in charge of creative, upcoming media rights deals, and wrestlers’ pay.
Khan spoke about what the UFC had achieved in income through sponsorships and added that WWE ring real estate could be up for grabs.
Look at what Endeavor has done with the UFC. I believe the UFC, pre-acquisition, their sales and sponsorship was around $35 million.
It’s my understanding that that’s now borderline $200 million a year, which is far in advance of us.
If you think about it, UFC, an amazing sport, is a far grittier sport than WWE.
So the fact that their sponsorship dollars far exceed us, that comes down in our opinion to Endeavor, obviously working in conjunction with the UFC to maximize those dollars.
It’s what we want for our company.
We’re open for business. Ring mat, ring apron, the turnbuckles, everything that can be sold, we want to explore selling it.
Obviously, it needs to be the right product. It can’t be too distracting, but if it is the right relationship and the right company, we’re ready to go.
On cost synergies/savings
Khan was asked how the reported figure of $50 million to $100 million in cost synergies was arrived at.
If you look at what Endeavor was able to take out cost-wise from UFC in 2016 or shortly after that deal was done, we have the same expectation here.
We think 50 [million dollars a year] is a really, really conservative number.
We have integration teams that are being formed now. We’re gonna get those in shape.
I think we’ll have a better sense of it in a month or two, but we’re gonna be pretty aggressive with them to make sure that for our shareholders, for our company, our organization is as lean and mean as possible.
And we’re gonna rely on that Endeavor flywheel to make up the rest.
When asked if he expected “headcount cuts”, Khan said:
There’s other costs.
What we want to always be protective of, our creative team, our production team, keep in mind none of us have anything to sell and the company would not have been transacted at this sort of price point if the product wasn’t great.
So the most important thing is to leave the product untouched.
Untouched, meaning if Triple H and Kevin Dunn, our longtime executive producer, want to evolve it, great.
But in terms of cutbacks there, that’s not what we’re looking to do.
So other efficiencies all around the company, we’re getting in the middle of, and let’s see how it shakes out.
On wrestlers’ and UFC fighters’ pay
Jake Paul tweeted when the merger was announced, “UFC + WWE makes too much sense. Great path to increasing fighter pay.”
Khan was asked about this and whether he expected pay to become an issue in the new merged company. He responded:
Well, look, in terms of the UFC’s business, that’s their business to manage.
Vince, myself, Triple H, the other WWE senior management have seen what Dana White and the Fertittas did in terms of creating an entire empire.
We’ve then subsequently seen what Dana white and his team and Endeavor did. So, you know, that goes untouched by us.
We’re not getting involved in any of that stuff.
In terms of our performers. We think a lot of them are well compensated. Certainly, all talent wants to be paid more. Management wants to try to manage those costs.
Each individual deal is unique in and of itself. We’re confident with our position in the marketplace in terms of our WWE superstars.
And depending on what the rights fee increases on the media rights, we expect a lot of that to drop to the bottom line.
On control of WWE creative
When asked for confirmation that Paul Levesque would remain in charge of WWE creative, Khan said:
When this deal was officially announced, Monday morning, Vince sent out a company-wide email to our thousand or so employees, including myself.
And in the email, he laid out the structure of the NewCo, which certainly you guys have read about and are familiar with.
In addition to Vince being the Executive Chairman, Ari Emanuel being the CEO, Mark Shapiro being the President, Dana White continuing as President of UFC, and me at WWE — specifically Vince articulated that Paul Levesque remains the sole chief creative officer. Sole.
So, how does it work? Does that mean because I’m technically in charge of the business side of the business that I don’t seek input from other people? Or I wouldn’t seek input from Vince McMahon, who created this entire empire?
That would be a mistake on my behalf.
Paul and Vince, have a family relationship, a relationship that stands back to the mid-90s. Paul’s in charge of creative. If he wants input from Vince or Vince has ideas then he and Paul are gonna communicate, that’s always gonna be the case.
We’re lucky to have Vince. We’re lucky to have Paul in control of creative.
On charges for PLEs
After giving a short history of Vince McMahon taking the pay-per-view concept from CCTV to direct-to-consumer streaming, Khan commented:
We didn’t like traditional pay-per-view because 50% or so of the dollars go to in-demand dish and direct just for plugging it in, which is absurd, absurd.
So getting out of that, going direct to consumer got around that.
You see, even with the UFC’s ESPN+ deal, there’s no in-demand dish and direct. That money, however, UFC and Disney carve it up. It goes to them. They have their split, but there’s no middle person taking 50%.
So might we consider going back to digital pay-per-view if it was accessible to our fan base and if it was price right? Of course we consider it.
On upcoming TV deals
Khan was asked for an update on WWE’s deals with linear television partners.
We love our relationship with NBCU. We’re entering the exclusive negotiating window with them now. In terms of the FOX platform, their broadcast channel has been tremendous in terms of WWE growth.
So we always look at our incumbent partners first. Obviously we want the best size deal possible. They want to manage those costs. We’ve got to figure it out.
We’re all interested in doing that together and we hope it’s with NBC and Fox.
If we get out of the window, we think the marketplace is going to be robust.
There’s many more buyers now than there were four or five years ago when we did the current deal.
Amazon was testing tennis in the UK at that time. They hadn’t taken a significant step into the US, they’ve obviously done so now.
Apple had done nothing in terms of live at that time. We’ve seen what they’ve done with the MLS.
We think with the numbers of buyers in the marketplace, with the relevancy of the product, with the ratings, we’d like to think we’re going to be in good shape.
On Saudi Arabia shows
It was pointed out that Endeavor historically has not done business in Saudi Arabia, and Khan was asked whether WWE’s Saudi relationship would create any issues:
No, no issues. We have a show coming up there May 27th, so in a month and a half. We’re excited about it. We’ll be there.
We’ve been there outside of COVID twice a year for the last, I believe, four or five years.
Look for a second show this year. We don’t have the exact date yet. We usually end up going early November, but that’s Memorial Day weekend, May 27.
So it’ll be daytime in the US on a Saturday, Saturday night, big night in Saudi. We’re excited about it.
He was then asked whether the merger could create a path for UFC to do something with the Saudis.
I don’t know the particulars of their Fight Island, Abu Dhabi deal.
I know it worked out quite well for them, but as we get into this, I think we’re gonna look across the board, you know, with Dana, with Ari, with Mark, with Vince, with myself, with others, to see, “Hey, where do we monetize both of these products the best while respecting the existing relationships?”
So for us with Saudi, they’ve been good to us. We like to think they’ve been good to them.
I don’t know to the extent what the Abu Dhabi relationship is. I know it’s been good. I don’t know how long it is. If there’s an opportunity to expand it, of course everyone’s gonna be open to that conversation.