Wall Street Greets WWE-UFC Deal With a Smackdown

There’s no AI (and perhaps not too much human intelligence) involved in either World Wrestling Entertainment or Endeavor’s Ultimate Fighting Championship. But for sheer spectacle, today’s proposed merger of the two companies beats anything going on right now in tech—and we’re not talking just about what’s on the screen. Vince McMahon’s maneuvers over the past few months to take back control of WWE from his daughter, despite misconduct allegations, could have been lifted from a script of HBO’s “Succession.” For those not paying attention, McMahon unilaterally kicked several directors off the board as he reasserted power on Jan. 5 (for the “Succession” equivalent of boardroom firings, you have to go back to the first season).

And as in the fictional Logan Roy saga, the drama has ended in a sale of the company, at a valuation that looks rich. Endeavor claims the combined company will have an enterprise value of $21.4 billion, based on its assessment that UFC is worth $12.1 billion and WWE $9.3 billion. As the merger will be consummated through an exchange of shares and UFC isn’t a stand-alone public company, Endeavor executives can basically put any number on the UFC business that they feel like. And those valuations are as believable as an episode of WWE’s weekly show “Monday Night Raw.” Wall Street certainly didn’t seem to be buying the numbers. Endeavor shares fell 6% today, a smackdown that gave the parent of UFC an enterprise value of $16.2 billion. If Endeavor’s valuation of UFC is correct, then UFC is 75% of the value of Endeavor even though it contributes only around half the profits. Either Endeavor stock is too cheap or Endeavor is too optimistic about UFC’s worth. You can guess which is more likely.