TKO Group Holdings Financial Model
Media Company Financials Example (Free Excel Download)
TKO Group Holdings is a premium sports and entertainment company formed by the 2023 merger of the Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE), controlled by Endeavor Group Holdings.
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About this model
This model provides a comprehensive three-statement forecast and sum-of-the-parts equity valuation for TKO Group Holdings, enabling an analyst to evaluate the cash flow impact of upcoming media rights renewals and the integration of the recently acquired IMG, On Location, and Professional Bull Riders businesses.
- TKO Group Holdings is a premium sports and entertainment company formed by the 2023 merger of the Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE), controlled by Endeavor Group Holdings.
- Business Segments: WWE (approximately 36% of FY2025 revenue), UFC (approximately 32%), and IMG (approximately 32%).
- Key Geographies: Global broadcast reach, but heavily weighted towards North America for live event ticket sales, site fees, and domestic media rights contracts.
- Business Model: Asset-light, intellectual property-heavy media and live entertainment model with highly recurring, contracted media rights revenue.
- Competitive Position: De facto monopoly in premium mixed martial arts (UFC) and professional wrestling (WWE), alongside a dominant position in premium sports hospitality via On Location.
- Recent Major Events: In February 2025, TKO acquired IMG, On Location, and Professional Bull Riders (PBR) from Endeavor in a $3.25 billion all-equity transaction. This was treated as a common control acquisition, meaning historical financials were retrospectively recast.
The downloadable TKO Group Holdings financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
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Historicals & AssumptionsTKO Group Holdings financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $1.03B | $2.67B | $3.22B | $4.88B | $4.74B |
| Selling, general and administrative expenses | $242.0M | $210.1M | $549.1M | $1.23B | $1.51B |
| Operating income | $391.1M | $532.9M | $375.8M | $30.9M | $835.0M |
| Net income | $273.6M | $0 | $175.7M | $6.4M | $546.3M |
How to build a detailed financial model for TKO Group Holdings
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
UFC Segment
- Segment Name: UFC
- Revenue Driver Formula: (Base Contractual Media Rights) + (Number of Pay-Per-View Events x Average Buys x Price x Revenue Share) + (Live Events x Average Ticket Price x Attendance) + Site Fees
- Historical Growth Rate: 8-12% CAGR.
- Key Growth Levers and Headwinds: Domestic media rights renewals (ESPN contract), expansion into the Middle East for lucrative site fees, and fighter pay disputes.
- Pricing Dynamics: Contractual escalators for media rights; dynamic pricing for live event tickets based on fight card strength.
- Revenue Recognition Notes: Media rights recognized over the term of the contract as events are delivered; live event revenue recognized upon event completion.
- Seasonality: Relatively smooth, though quarters with major international Pay-Per-View events or Middle East site fees show spikes.
WWE Segment
- Segment Name: WWE
- Revenue Driver Formula: (Media Rights Fees for Raw/SmackDown/PLEs) + (Number of Live Events x Average Ticket Price x Attendance) + Consumer Product Royalties
- Historical Growth Rate: 10-15% CAGR.
- Key Growth Levers and Headwinds: The transition of Raw to Netflix, international Premium Live Event (PLE) site fees, and talent retention.
- Pricing Dynamics: Highly contractual media rights; strong pricing power for stadium-scale PLEs (e.g., WrestleMania).
- Revenue Recognition Notes: Upfront site fees are deferred and recognized when the event occurs.
- Seasonality: Q2 is historically the strongest quarter due to WrestleMania ticket sales, site fees, and associated sponsorships.
IMG Segment
- Segment Name: IMG
- Revenue Driver Formula: (Hospitality Packages Sold x Average Price per Package) + (Media Distribution Fees) + (Production Retainers)
- Historical Growth Rate: Highly variable due to event cyclicality.
- Key Growth Levers and Headwinds: Securing exclusive hospitality rights for mega-events (Super Bowl, Olympics, FIFA World Cup).
- Pricing Dynamics: Premium pricing for high-demand, scarce inventory (e.g., On Location Olympic packages).
- Revenue Recognition Notes: Hospitality revenue is deferred until the event takes place.
- Seasonality: Extreme cyclicality. Even years with Summer Olympics (e.g., Paris 2024) generate massive revenue spikes in Q3, creating tough year-over-year comparisons for odd years.
Cost Structure
Variable Costs / COGS
- Line-by-line breakdown: Direct operating costs include athlete and talent compensation (UFC fighter purses, WWE talent contracts), event production costs, venue rental, security, and marketing commissions.
- Gross Margin Range: 55-60% (FY2025 gross margin was approximately 59.6%).
- Key Input Costs: Talent compensation is the largest variable cost.
- How COGS scales: Step-function. Adding a new live event incurs fixed venue and production costs, but media rights revenue drops almost entirely to the bottom line.
Operating Expenses
- R&D: Not applicable or material for this company.
- SG&A: Includes corporate personnel costs, travel, professional fees, and specific service fees paid to Endeavor for back-office support.
- Depreciation & Amortisation: Extremely high (often exceeding 15% of revenue) due to the amortisation of intangible assets (IP, trade names, media rights relationships) recognised during the UFC/WWE merger and the IMG acquisition.
- Stock-Based Compensation: Moderate, typically 2-4% of revenue, used for executive and key management retention.
- Restructuring / one-time charges: Frequent in recent years due to severance and integration costs following the 2023 merger and 2025 asset acquisition.
Margin Profile
- Gross Margin: 55-60%.
- Adjusted EBITDA Margin: Consolidated margin of 33-35%.
- Operating Margin: Artificially depressed (often near breakeven or negative) due to massive non-cash intangible amortisation.
- Segment-Level Margins: UFC (53%), WWE (46%), IMG (11-12%).
Balance Sheet Structure
- Total Assets: Approximately $15-18 billion.
- Key Asset Categories: The balance sheet is dominated by Goodwill and Intangible Assets resulting from purchase price accounting.
- Goodwill & Intangibles: Represents over 80% of total assets.
- Working Capital Profile:
- Days Sales Outstanding (DSO): 25-30 days (media partners pay on predictable, contracted schedules).
- Days Inventory Outstanding (DIO): 4-6 days (minimal physical inventory, mostly event merchandise).
- Days Payable Outstanding (DPO): 20-25 days.
- Net working capital as % of revenue: Typically negative.
- Working Capital Advantage: The company operates with negative net working capital because it collects cash upfront for live event tickets and sponsorships (recorded as deferred revenue) before paying venues and talent.
- PP&E: Minimal. Consists of corporate offices, the WWE Performance Center, and the UFC Apex facility.
- Right-of-use assets: Moderate, primarily related to office and facility leases.
Capital Expenditure & Investment
- Capex as % of revenue: 1.0-2.0% (highly asset-light).
- Maintenance vs. Growth: Almost entirely maintenance capex for broadcasting equipment, facility upkeep, and IT infrastructure.
- Major Capex Programmes: No major capital-intensive programmes; growth is driven by IP monetization, not physical assets.
- Capitalised Software: Minimal.
- M&A Pattern: Transformational acquirer. The company was formed via a mega-merger and recently doubled its operational footprint by acquiring IMG, On Location, and PBR.
- Typical Acquisition Multiple: Historically 15-20x EBITDA for premium sports IP.
Debt & Capital Structure
- Total Debt: $3.783 billion gross debt as of December 31, 2025.
- Debt/EBITDA Ratio: Approximately 1.8x net leverage based on FY2025 Adjusted EBITDA.
- Credit Rating: BB- / Ba3 (non-investment grade, typical for highly leveraged sponsor-backed media roll-ups).
- Key Debt Instruments: First lien term loans and a revolving credit facility.
- Maturity Profile: Long-dated maturities following refinancing during the 2023 merger.
- Interest Rate Profile: Mix of fixed and floating, often hedged via interest rate swaps.
- Covenants: Standard maximum first lien leverage ratios.
- Share Repurchase Programme: Highly active. A $2.0 billion programme was launched in October 2024, with $1.096 billion remaining as of February 2026.
- Dividend Policy: Quarterly dividend of $0.78 per share (approximately $150 million aggregate distribution per quarter across all unit holders).
Cash Flow Characteristics
- Operating Cash Flow Conversion: Exceptional. OCF was $1.286 billion in FY2025, representing over 80% conversion from Adjusted EBITDA.
- Free Cash Flow Margin: Approximately 24% ($1.159 billion FCF on $4.735 billion revenue in FY2025).
- Major Non-Cash Items: Massive depreciation and amortisation add-backs bridge the gap between GAAP net income (which is often near zero) and robust operating cash flow.
- Working Capital Cash Flow Impact: Deferred revenue provides a working capital benefit as the company scales live events.
- Capex Intensity: Extremely low.
- Cash Tax Rate: Complex due to the Up-C structure. TKO Operating Company is a partnership and pays no federal income tax; it makes tax distributions to its members (including TKO Group Holdings and Endeavor) to cover their respective tax liabilities.
Sheet Structure
- Assumptions: Hardcoded drivers, macro rates, segment growth rates, margin targets, and tax assumptions.
- Segments_UFC: Revenue build (Media rights, Live events, Sponsorship, Consumer products) and Direct Operating Costs.
- Segments_WWE: Revenue build (Media rights, Live events, Sponsorship, Consumer products) and Direct Operating Costs.
- Segments_IMG: Revenue build (Media rights, Live events and hospitality, Production) and Direct Operating Costs.
- Consolidated_IS: Roll-up of segments, unallocated corporate SG&A, D&A, Interest Expense, Tax Provision, and Net Income Attributable to Non-Controlling Interests.
- Balance_Sheet: Assets, Liabilities, and Equity (explicitly split between Class A controlling interest and Class B non-controlling interest).
- Cash_Flow: Indirect method, capturing the high D&A add-back, working capital changes, and OpCo tax distributions.
- Debt_Schedule: Tranches of term loans, revolving credit facility balance, and interest expense calculations.
- UpC_NCI_Schedule: Tracks TKO OpCo units, ownership percentages, and the attribution of net income and dividends between TKO Group Holdings and Endeavor.
- DCF_Valuation: Unlevered free cash flow build, WACC calculation, and sum-of-the-parts terminal multiples.
Key Financial Relationships
- `UFC Media Rights Revenue = Base Contractual Rights + (Number of PPV Events x Average Buys per Event x PPV Price x TKO Revenue Share %)`
- `WWE Live Events Revenue = (Number of Premium Live Events x Average Attendance x Average Ticket Price) + Host City Site Fees`
- `Consolidated Direct Operating Costs = UFC Direct Costs + WWE Direct Costs + IMG Direct Costs`
- `Segment Adjusted EBITDA = Segment Revenue - Segment Direct Operating Costs - Segment Allocated SG&A`
- `Consolidated Adjusted EBITDA = Sum of Segment Adjusted EBITDA - Corporate Unallocated Expenses`
- `Net Income Attributable to NCI = (Consolidated Net Income before NCI) x (Endeavor / NCI Ownership % of TKO OpCo)`
- `Free Cash Flow = Operating Cash Flow - Capital Expenditures`
- `Interest Expense = (Beginning Term Loan Balance x Term Loan Rate) + (Beginning RCF Balance x RCF Rate)`
- `Tax Provision = (Income Before Tax - NCI Share of Pre-Tax Income) x TKO Corp Effective Tax Rate`
- `Dividends Paid = (Class A Shares Outstanding x Dividend per Share) + (Class B/OpCo Units Outstanding x Equivalent Distribution per Unit)`
Cross-Sheet Dependencies
- The Segments sheets feed Revenue and Direct Costs to the Consolidated_IS.
- The Consolidated_IS generates Net Income, which feeds the UpC_NCI_Schedule to split income between controlling and non-controlling interests.
- The UpC_NCI_Schedule feeds the NCI line on the Balance_Sheet and the NCI distributions on the Cash_Flow sheet.
- The Debt_Schedule calculates interest expense, feeding the Consolidated_IS, which impacts Net Income and flows to the Cash_Flow sheet.
- The Cash_Flow sheet calculates ending cash and debt paydown, feeding the Balance_Sheet and Debt_Schedule (creating a circularity risk on interest expense and cash balances).
Sign Convention
- Revenue and Assets: Positive.
- Expenses and Capital Expenditures: Negative in cash flow and income statement builds, but positive when expressed as margin percentages in the assumptions sheet.
- Liabilities and Equity: Positive.
- Cash Flow: Inflows are positive; outflows (dividends, capex, debt repayment) are negative.
Things Most Likely to Go Wrong
- Up-C Structure Accounting: Failing to accurately split Net Income between TKO Group Holdings (Class A) and Endeavor (Class B/OpCo units) will result in incorrect EPS and equity values.
- Tax Modelling: TKO OpCo is a pass-through entity. Taxes are only paid at the TKO Group Holdings level on its proportionate share of income. Applying a standard 21% corporate tax rate to consolidated pre-tax income will massively overstate tax expense.
- IMG Recasting: The February 2025 acquisition of IMG/On Location was a common control transaction. Historical financials were retrospectively recast. The model must use the recast FY2024/FY2025 numbers, not the originally reported standalone TKO numbers.
- D&A vs. Capex Disconnect: D&A is artificially high due to purchase price accounting (intangible amortisation), while Capex is very low. Linking D&A to Capex or PP&E balances will break the model.
- Olympics Seasonality: IMG's On Location business generated massive revenue in Q3 2024 due to the Paris Olympics. Straight-lining IMG growth will fail to account for the lack of Olympics in 2025 and 2026.
- Endeavor Service Fees: TKO pays Endeavor for back-office services. These must be modelled as a distinct SG&A line item, not lumped into generic corporate overhead.
- Share Count: The fully diluted share count must include both Class A shares and the Class B OpCo units, as they are economically equivalent for valuation purposes.
- Site Fees: Live event revenue is no longer just ticket sales; host cities pay massive site fees to secure UFC and WWE events. This must be modelled as a distinct driver to capture margin expansion.
Validation Checks
- `Consolidated Adjusted EBITDA Margin` should be in the 32-35% range based on recent recast financials.
- `UFC Adjusted EBITDA Margin` must remain above 50%; flag if it drops below this threshold.
- `Capex as % of Revenue` should not exceed 2.0% due to the asset-light nature of the business.
- `Free Cash Flow Conversion` (FCF / Adj. EBITDA) should be greater than 70%.
- `Balance Sheet Check`: Total Assets = Total Liabilities + Total Equity (including NCI) must equal 0 in every period.
- `Effective Tax Rate` on consolidated pre-tax income should appear unusually low (typically under 10%) due to the Up-C partnership structure.
- `Gross Debt` should match the $3.783 billion reported for FY2025.
- `Dividend Payout`: Total distributions (dividends plus OpCo distributions) should match the $0.78 per quarter run-rate across all Class A and Class B units.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| UFC Segment Revenue Growth | 8.0 | % | Reflects contractual media rights escalators and steady live event pricing power. |
| WWE Segment Revenue Growth | 10.0 | % | Driven by the new Netflix deal for Raw and expanded international PLE site fees. |
| IMG Segment Revenue Growth | 3.0 | % | Slower growth, adjusting for the cyclicality of mega-events like the Olympics. |
| UFC Adj. EBITDA Margin | 53.0 | % | FY2025 actual reported margin. |
| WWE Adj. EBITDA Margin | 46.0 | % | FY2025 actual reported margin. |
| IMG Adj. EBITDA Margin | 11.7 | % | FY2025 actual margin ($160M EBITDA on $1.367B Revenue). |
| Capex as % of Revenue | 1.5 | % | Asset-light business model; historical average. |
| DSO (Days Sales Outstanding) | 28 | Days | Based on historical receivables collection from media partners. |
| DPO (Days Payable Outstanding) | 25 | Days | Based on historical payment cycles to talent and vendors. |
| Gross Debt | 3,783 | $M | FY2025 actual reported gross debt. |
| Cash Balance | 831.1 | $M | FY2025 actual reported cash on hand. |
| Quarterly Dividend per Share | 0.78 | $ | FY2025 actual declared quarterly dividend. |
| TKO Corp Effective Tax Rate | 24.0 | % | Applied ONLY to TKO Group Holdings' share of OpCo income. |
| WACC | 8.5 | % | Standard cost of capital for large-cap, highly cash-generative media/entertainment. |
| Terminal Growth Rate | 2.5 | % | Long-term inflation and GDP growth proxy. |
Data Sources & Benchmarks
- Filings: SEC EDGAR (TKO Form 10-K for FY2025, filed February 2026; Form 8-K for recast historicals filed November 2025).
- Investor Relations: investor.tkogrp.com (Earnings releases, supplemental financial information, and investor presentations).
- Key Peers for Benchmarking: Liberty Media (FWONA), Live Nation Entertainment (LYV), Walt Disney (DIS), and Netflix (NFLX).
- Industry Data Sources: Sports Business Journal (for media rights comparables) and Pollstar (for live event attendance and ticket pricing benchmarks).
- Consensus Estimates: Visible Alpha or Bloomberg for validation of segment-level revenue and EBITDA outputs.
Sources
- TKO Group Holdings Q4 and Full Year 2025 Earnings Release (February 25, 2026): https://investor.tkogrp.com
- TKO Group Holdings SEC Form 10-K for the fiscal year ended December 31, 2025: https://www.sec.gov/edgar/browse/?CIK=1973266
- TKO Group Holdings SEC Form 8-K (Historical Financial Information Recast for IMG Acquisition, November 2025): https://www.sec.gov/edgar/browse/?CIK=1973266
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Frequently asked
What is TKO Group Holdings and what businesses does it operate?+
TKO Group Holdings is a premium sports and entertainment company formed by the 2023 merger of Ultimate Fighting Championship (UFC) and World Wrestling Entertainment (WWE). It recently expanded its operations by acquiring IMG, On Location, and Professional Bull Riders (PBR) from Endeavor, making it a dominant player in mixed martial arts, professional wrestling, and premium sports hospitality.
How does TKO Group Holdings generate its revenue?+
TKO Group Holdings primarily generates revenue through highly recurring, contracted media rights, which form the core of its asset-light, intellectual property-heavy business model. Additional revenue streams include live event ticket sales, site fees, and sponsorships, with a significant portion of these revenues originating from North America.
What is the capital expenditure profile for TKO Group Holdings?+
TKO Group Holdings operates with a highly asset-light model, resulting in minimal capital expenditure, typically ranging from 1.0-2.0% of revenue. This capex is almost entirely for maintenance, covering broadcasting equipment, facility upkeep, and IT infrastructure, as growth is driven by IP monetization rather than physical assets.
How does TKO Group Holdings manage its working capital?+
TKO Group Holdings typically operates with negative net working capital, which provides a significant operational advantage. This is due to the company collecting cash upfront for live event tickets and sponsorships, recorded as deferred revenue, before it pays venues and talent.
What are the critical inputs for a financial model or DCF valuation of TKO Group Holdings?+
Critical inputs for a financial model or DCF valuation of TKO Group Holdings include the projected cash flow impact from upcoming media rights renewals and the successful integration of its recently acquired IMG, On Location, and PBR businesses. Analysts should also consider the company's asset-light model with minimal capex and its significant intangible assets, which dominate its balance sheet.
What is the competitive position of TKO Group Holdings in the entertainment industry?+
TKO Group Holdings holds a de facto monopoly in premium mixed martial arts (UFC) and professional wrestling (WWE), giving it a strong competitive moat. Furthermore, it maintains a dominant position in premium sports hospitality through its On Location business, enhancing its overall market standing.
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