Recently, a very interesting article concerning the WWE popped up on the investment research site, Seeking Alpha. The article discusses the notion of the potential sale of the World Wrestling Entertainment. This discussion came into play after MMA giant, The Ultimate Fighting Championship was sold for $4 billion, changing hands from previous owners Lorenzo and Frank Fertitta III to the entertainment empire, William Morris Endeavour, also known as WME-IMG. Wells Fargo analyst Eric Katz said that there were several bidders for the UFC, including companies like Dalian Wanda Group and China Media Capital.
The UFC, though belonging to the category of Combat-Sports is sort of similar to WWE when it comes to their working.
While years ago the idea that WWE might get sold off was unthinkable, a lot has changed, with WWE CEO Vince McMahon turning seventy-one, and sale of UFC. The annual revenue of WWE is more than the UFC at this point ($658,768,000 to $601 million) although UFC is more profitable ($157,806,000 to $24,144,000). Economists after studying UFC’s sales price have said that if UFC can go for $4 billion then WWE can go for $3 billion to $3.4 billion.
UFC’s valuation came from twenty times EBITDA of $200 million. WWE’s OIBDA though not the same, but similar was $68.7 million, so by using the same form of valuation you’d get a worth of $1.37 billion, or just under the current stock market value of the company.
Analyst Eric Katz also mentions that due to the live viewership, content in sports industry has a substantial value — and WWE’s weekly shows are predominantly viewed live.
So, what are your thoughts regarding this idea? Please, let us know by writing in the comments below.
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