World Wrestling Entertainment, Inc. Class A Stock

All right. Great. Thanks, everyone, for taking the time to join us today. Welcome, everyone, to the Communacopia + Technology Conference. My name is Stephen Laszczyk, and I'm the lead entertainment analyst here at Goldman Sachs. We are excited to welcome back to the conference, Mark Shapiro, the President and COO of TKO Holdings. Mark, thanks for being with us.

Thanks for having me, Stephen. Day after Labor Day. Thank you.

Happy to have you. Mark, it's hard to believe it's already been 3 years since TKO has become a company. Over that time, you've executed against a number of opportunities you've identified at the point of the original transaction between UFC and WWE, including media rights renewals, sponsorship integrations, driving efficiencies across the cost structure. As you look ahead, what do you see as the next chapter of growth for TKO now that many of those things have been executed on? And what are the top priorities and top focus areas you as a management team are focused on?

Look, it's been a whirl 1 to 3 years, that's for sure. And I think we clearly have benefited, capitalized on some strong secular tailwinds. I mean we sit squarely in the center of a growing ecosystem across sports, entertainment and really live events. And any which way you slice it, when you look at our company, I think, first from a financial profile and then from a fan composition standpoint, it's a strong profile. It's robust, in many ways, bulletproof, given where the market is going and where the environment is going when it comes to content and live events.

We're sitting here with strong margins. This year, we'll be up 600 basis points at the midpoint of our guidance to 39.6%, and we will get further expansion in the years to come. We have a very healthy leverage ratio. We'll be below 2x by the end of the year. We're a geyser for cash, and that will just increase in the years to come. And our free cash flow conversion normalized is 60% plus, real strong operating leverage, best-in-class operating teams, and we're #1 in each of our sport properties, right? In professional wrestling, WWE is #1 in combat force, UFC is by far #1. PBR, #1, albeit smaller in bull riding across the globe. And our sports are more and more becoming globalized, right? We're going into new countries, new territories. We're in over 200 countries with our content, and we have almost 1 billion social followers. So real strong currency on that front.

We're also a year of execution. We've stayed true to our word that we are going to spend this year improving our product, improving our content, improving our reach, improving our engagement, working with our new media partners with some extraordinary deals. And capitalize and execute on that. We put out a guide 2030 for our global partnerships that we'll do $1.2 billion across our properties. And of course, financial incentive packages are also another strong revenue generator for us, and we put out a guide that we'll do in the frame of $380 million to $420 million. Remember, what we do on financial incentive packages is we go territory to territory and see where it's best to bring our product, both for our brand and our audience, but also for the deal. And through in-kind and often cash because of the economic impact we bring to those territories, cities line up to have our events there, and we're trying to capitalize on that.

And then I would say, finally, that we're good stewards of capital. And we are uniquely and laser-focused on returning capital to shareholders, albeit through the dividend and the way we've obviously expanded that and of course, by buying back stock. I mean we are in the market every day right now buying back stock. We believe in the story, and we think among the stories and narratives in sports and entertainment, you'd be hard-pressed to find really, and I say this with all humility, a rocket ship like TKO.

It's a great setup. I want to dig into each of those parts a little bit more. Maybe starting first with the media rights. You've seen WWE now operate with new media rights partners. You have Paramount, you have Netflix, you have ESPN. Can you maybe talk a little bit about how those newer media rights partnerships have evolved over the first year or 2 of being together? And then as you look ahead, where are there still opportunities to improve engagement and improve monetization?

Yes. Look, we're blessed with the media rights deals we have, tremendous partners across the board. USA has been with us forever. Obviously, they're part of [ Versant ] now. Netflix, Monster ad, I mean, we're top 10 in several countries every week with Raw. Of course, Paramount+ is a massive deal and growing, giving us great exposure globally and more and more launching in different territories internationally. And then, of course, ESPN or WWE and our PLEs there.

What I would say is, look, Paramount, let's start there because that's right, that's our bread and butter, if you will. First of all, they're just a terrific partner. They may be a bigger company, which we didn't plan on with more platforms in the months to come depending on how that negotiation goes. But there -- you go to their platform, you go to Paramount+ and you see we are front and center. We're not an oh, by the way. We're a focus. We're a focal point for them, lined up right next to Lioness, which is Taylor Sheridan's big hit and doing extremely well this year. So you can't miss UFC, whether it's long-form or live on Paramount+. It's been a big hit. We're driving acquisition. We're driving retention, and we're seeing terrific engagement. 25% of the viewers that watch Paramount+ also watch UFC. But our fans, the viewer for UFC is 15 years younger than the average viewer consumer that watches Paramount+ on a regular basis.

The live event, of course, we had in Washington, D.C. for our country's anniversary birthday celebration is the biggest live event ever on the platform. So that's been a real winner for us. We'll keep driving that. Of course, Paramount+ is a bigger partner. We have a PBR deal with them. We have Zuffa Boxing with them. So we're all in on them. When you look at ESPN, the PLEs are performing well, but soon to get a lot better because they've recently announced a new carriage deal with YouTube TV, which will be big for our fan base, big for our audience, big for our brand, big for our reach and will certainly increase engagement. And what I would say about both these companies is they're among the best marketers in the world when it comes to content.

We love our neighbors on Paramount+. And CBS, Masters and the NFL. And of course, ESPN, I mean, just take a look at this weekend, no better example, ESPN Unlimited was out of this world this past weekend and college football launched and you go to ESPN Unlimited, and you just have a plethora and abundance of games on top of everything else they have like the U.S. Open and of course, the NFL launches this week. So we're in a really good position, and we're working with each of those platforms every single day on storylines and building Stars.

The last thing I would say, Stephen, which I know is important to you, is on the international front. Now we don't break out international numbers specifically. And frankly, the media revenue we do internationally is tiny compared to our domestic deals. Having said that, this year alone, we've closed China, Japan, Korea, France and Canada. And the average uptake, increase on our rights fee from those 5 deals alone was a 1.7x step-up. And even though that's small, and again, you have to proportionalize that with our domestic deals, what it does is it drives the brand. It drives the audience. It ultimately supports and enhances financial incentive packages we are offered and global partnerships really drives that. This past weekend, we had a massive event in France, total sellout, sold a lot of great local partnerships across France to add to the global deals that we bring in there.

And I would also tell you, look no further than the outcome, right? We had a card that had a majority of finishes. And the main event was headlined by a first-time fighter, first time in the UFC. The guarantee was French born, but we sold out based on a fighter that was spiking for the first time in a main event. That's never happened before. So we are strong in kicking and Dana White and his team are second to none.

Maybe to touch on sponsorship for a moment. You've outlined ambitions to reach $1.2 billion of sponsorship revenue by 2030. I guess as you think back and think ahead, where have you been the most successful and the sponsorship front? And then as you look ahead, where do you still see the largest long-term opportunity across the portfolio? Is it within a particular vertical? Or is it on one side of the house, UFC versus WWE and the other?

Yes, I think strategically, we have been very transparent in terms of detailing our journey in the global partnerships front. If you recall, when we cut the new WWE deal with ESPN and the new UFC deal with Paramount+, we negotiated and ultimately received a good amount of ad inventory. So for the first time, we're selling media. We're selling 30-second spot. Now we told the investor community, hey, give us some time. We need to build the team. We need to build a programmatic platform. And we also don't want to get out in front of Paramount+."

Now we're well into the deal, and we're beginning to see real traction on the ad inventory front on the CPMs and the volume. The reach has been strong. The engagement has been strong. And frankly, it's becoming more of a call us versus us calling out. So we are going to have an Investor Day at the end of Q1, just post earnings, I would say. And at that time, if we continue tracking on this front on global partnerships and ad inventory, the way it's going, we are going to revisit that $1.2 billion by 2030.

So we're feeling really good about where that's going. And we're working well with our partners, and we're seeing all kinds of different new categories open up to us. I do want to focus on WWE for a second because to your point, where do we see the real upside? There's been a lot written about WWE and hey, are they getting the same kind of traction they're getting in UFC? Is it "decelerating". And there's nothing wrong with those questions because we haven't provided that detail. But what I would tell you is the reason why you're mostly seeing some skepticism is because our ad dollars, our partnership revenue for Q1 and Q2 were up 2% and 8%, respectively, versus last year. This is after being up almost 92% going from '24 to '25. So folks are saying, "Hey, is it slowing down? Are they not getting the traction? Is it not selling through?" couldn't be farther from the truth. The fact is we have a lot of international events in the first half of the year, and that slowed us down.

I will tell you that for the year, WWE partnership alone will be up in excess of 20% versus last year. And what that means is we're going to have a big back end of the year for WWE. And by the way, that's with having 3 fewer events in the third quarter.

Is there a particular thing that's driving that acceleration in the back half of the year, new sponsorship signings that happen midway? Is it the cadence of the slate and the mix shift in the slate?

Yes, exactly. It's all of that. It's just timing of when some of these deals actually take up. It's having more domestic events for them to kind of plow into. It's holistic packages that we're selling with ad inventory in them. And we're just -- frankly, we're scoring on the family-first message. Remember, WWE is a different audience than the UFC. And when it comes to going after families, that's our audience. And I think advertisers are starting to see that. And frankly, I'm excited for '27 because we're working with the Walt Disney Company on some special events around Disney and WWE and bringing those 2 audiences together since, of course, what do they have in common? Family.

One of the other big opportunities you've highlighted is on the live event side, the premium live events, the roughly 2 dozen or so between the WWE and the UFC. Just talk a little bit about where we are in terms of the cycle of monetizing those events, both on the SIP side of the house as well as in premium hospitality, which seems like there's no shortage of opportunity.

On Locations having a day these days. Look, all I would say on that is you have our guide, and we'll certainly get into more detail at Investor Day. But Live events are hot. I mean sports is piping hot, and it's not slowing down anytime soon. Why is that? I mean sports is real time. Sports is unpredictable. Sports is physical. So you can't turn away from it. It's appointment viewing. When you put sports on your calendar, your personal calendar, you're putting in an ink. And these are big headline events that fans line up for.

I would also tell you that live events are the infrastructure for premium in the digitized world. And then beyond that, social platforms have turned -- have really turned live events into broadcast stages for personal identity. So attendance is a social currency. And we're capturing that, and we're seeing that in our business. We're ahead of our internal forecast on live events. We're seeing volume across the board. PBR is having more sellout than it's had in the last 5 years alone. And we're getting yield. So it's really been a good story for us. Obviously, still a lot of wood to chop. And remember, we don't always bring our events to where we're going to get maximum profitability. Don't get me wrong, that might sound like a bad business strategy. But we have to balance the 2. We need to go to cities and territories where, yes, they're going to be the most profitable from a global partnerships from a live event ticket sales perspective, premium hospitality to year points, financial incentive packages.

But we also need to go to cities that we either have a strong fan base and they need to be able to touch the product or we're growing the product, the content, the fighters, the superstars in territories where we think there's real upside. And France was a real example of that with the UFC over this past weekend.

One of the areas of the world we are particularly getting questions on at the moment is the Middle East. And I think that's both for the volatility in the region as well as you look out into next year's slate, in particular on the WWE side of the house with WrestleMania moving over into the region. Could you talk a little bit about the opportunity in the Middle East, maybe how you see the cadence of events evolving over the near to medium term and then the opportunity as it relates to next year?

Yes. I mean, obviously, nothing bigger next year than WrestleMania being in Saudi Arabia, which will be one to remember and one not to miss. And of course, our partners in Saudi bring the UFC and WWE to their region because they're trying to draw attendance from not just around the globe, but certainly in the Middle East. All I would tell you is when it comes to Middle East, despite what's going on despite how much longer that may go on they're open for business.

And in fact, I would tell you they're more hungry to bring live events, not just sports, but concerts to the Middle East to show the world and tourism and fans that they're open for business, and they're not slowing down. So we've stayed on track with our events for this year. We still have 2 more events this year. We may actually announce a couple more this year. That's how much demand we're seeing. And I think that's ultimately the headline among the headlines when it comes to TKO and where we sit in the sports and entertainment ecosystem. Demand is outstripping supply.

One of the other questions we had on the live events business more on the week-to-week side of the house is around the performance of gate the past 6 or so months. Could you maybe just talk a little bit about what you're seeing at the gate side week-to-week and some of the medium-run events that you host and maybe think a little bit more broadly or talk to us about how you think a little more broadly about balancing things like pricing and volume on that front.

Yes. I mean, I think we've covered a good amount of that. I mean, at the end of the day, we're -- as I said, we're ahead of internal forecast. We have clear price elasticity. We're sellouts have been strong across all of our properties, including Zuffa Boxing, where we've staged 10 events. We mostly do them, Stephen, at the Apex in Las Vegas. But where we have taken the show on the road 3 times it's been sell-out. And that's for a new property, right? And Zuffa Boxing is just getting introduced to the average sports consumer around the globe. So we're pleased with where we sit.

And more importantly, it's not just that they want to buy tickets and that, that business is healthy. It's that the premium hospitality is so strong. Because when we talk about premium hospitality, most investors, and I think the press focus on the 1% that they just imagine the 1% wants those special goodies. And that's not what's happening. What's happening is the average sports fan who's going to go to 1 to 5 events per year wants to make those experiences count for them and whomever they're bringing, friend or family. They want front-of-the-line access. They want personalization. They want customization. And that's why On Location really sits in an enviable position. And we're coming off a very strong Milan Olympics, a very strong World Cup. And it's been a contributor to the beat and raise that we gave for the full year following Q2 earnings.

Now we would have still done that beat and raise without On Location performance at World Cup. But certainly, that was a contributor. And remember, when we went into the World Cup, all you were reading about was tickets aren't selling, hotels -- our empty, it's not living up to its promise. I think it more than delivered by the time we got to the end. Now we benefited from the big players like Argentina getting to the finals, et cetera, and the U.S. doing so well, but that's the business. I think it took the country by storm, and I think the Women's World Cup will do the same thing next year.

Talent is the lifeblood of WWE and UFC. You recently had some marquee talent retire on both sides of the house. John Cena on WWE, Conor McGregor not retired, but working through an injury. Could you talk a little bit about how you're approaching talent development on both sides of the business? And maybe even taking a step back, thinking about the financial implications of this. It's your largest expense, how you're thinking about balancing talent expense and maybe the marketing support that goes behind marketing that.

So let's talk about the pay for the superstars and our fighters first. What I would tell you is post our new deals with ESPN, WWE and with Paramount+, CBS, PSKY with UFC and even a little bit post Raw with Netflix, we did resize our fighter and superstar pay composition. And that is baked into our numbers. So there will be no further adverse impact with regard to how that plays out or divvies out. We're confident where we sit. We have 600 fighters as an example and are stable at the UFC. We do, to your point, really rely on development.

Keep in mind that when you look at the WWE, 75% of the superstars come from NXT. So they're starting in our development league and going all the way up. So pipeline is very important to our strategy. And on the UFC front, we've really capitalized on the investments of our performance centers in Mexico City in Vegas and particularly China where we're really getting real traction. So that's a big part of our strategy. It will continue to be a big part of our strategy. And we will continue to be aggressive in other monetization opportunities for both our superstars and our UFC fighters with regard to advertiser deals, marketing partnerships, bonuses through the fight card in terms of finishes and fight of the night. And what you see is you see the best of the best signing up and lining up to be a part of the UFC and to be a part of WWE. So that's something we always watch out for, and we don't -- we want to make sure that we're really spreading the opportunities, but the strategy is working. And our margins will continue to expand.

You touched on it earlier. I want to follow up On Location and the premium experience opportunity ahead of you. On Location had a big year this year with the Olympics and World Cup, as you mentioned. Could you maybe just for investors, be brief on what you learned from this past year with On Location, how you're taking those learnings into the next couple of years ahead of L.A. 2028 and ultimately, how you're feeling stepping into the L.A. 2028 cycle?

Look, first, I want to remind everyone that On Location is 5% of our business, just to be clear, because a lot gets written about on location because of the lumpiness of, oh, you have an Olympics this year and you don't have an Olympics next year. It's 5%. The engines of TKO will always remain UFC and WWE. PBR will be a contributor, On Location will be a contributor. IMG will be increasingly a contributor certainly to the platform and the strategy. And Zuffa Boxing will be strong in the years to come, and we're really excited about the potential there.

But what I would just say on this is that you look at '27, and we'll have more details on our '27 guidance at our -- in the first quarter when we do earnings and have our Investor Day. But I think '27 is going to be a lot stronger than what people think. And that's because of what I've talked about, this momentum, this traction, live events, sports, where we sit as a leader in the space. One of the reasons why there's some question is, well, next year, we won't have the Milan Olympics, like you said. We won't have the World Cup. That's the ins and outs of the business. On Location is the leader in the space. We've recently renewed long term all of our major property deals from the NFL and the Super Bowl and the NFL Draft to the NCAA in the final 4 through 2029. So we're sitting pretty with a strong portfolio. LA28 is off to the races, well ahead of plan.

And I would just say that, look, that's being driven by the success of the parents games from an Olympics standpoint and the viewership and engagement that the IOC had. And then, of course, that continued with Milan and the U.S. performance there, which was a big driver and contributor and of course, the World Cup. These U.S.'s flag events are our major calendar appointment viewing and appearance events for the sports fan. And we're going to continue to benefit from that. And just keep in mind, this is a long-term story. We're a growth story. So while you won't benefit from having Milan and World Cup in '27, we will have a pre-spend on our LA28 games, LA28 will be a monster property for us. And it's a long-term growth story, all the while we'll continue returning capital to shareholders. We'll continue really as I said, it was a cash geyser for the investor community and our shareholders. Our margins will continue expanding, and we'll continue to run a lean operation.

So it's a multiyear strategy, and that's why we believe now is the right time for Investor Day because we want to lay out a multiyear look to really get you under the hood.

Maybe not to get too ahead of the Investor Day and how you think about the long-term growth algo. But as you do look out over the next couple of years, and this is a debate point on the stock is in terms of what the drivers of growth will be post the media rights step-ups that we've seen come to effect this year. Any things to call out either on the revenue side or you mentioned margins earlier, the opportunity potentially for some operating leverage coming in, in '27 and then maybe that continuing in out years?

No, I think overall, it's a simplistic story. I mean you've got to guide for global partnerships that I mentioned we'll revisit as long as we keep tracking the way we are. You've got to guide for FIPs. You've got to believe that live events and the ticket sales and premium hospitality that follows that will remain robust for years to come that we are anti-AI. Sports is one of those areas, genres, content carriers that ultimately builds a moat in front of AI. You want to see it live, you want to be a part of it. You want to share it with your friends, you want snackable content and everyone suffers from FOMO, especially the young viewers and audiences that watch and line up to see our product.

So if you believe that's going to continue to drive, especially as AI democratizes content, and I believe, increases the scarcity of what we offer, then you're going to be sitting in a good place. We'll continue to be laser-focused on keeping our leverage nice and tight and low. We'll continue to drive margin expansion. We'll continue to deliver more free cash flow. And we'll continue, as I said, to deliver and return capital to shareholders. So it's a good story and the fact that we have Zuffa Boxing coming up the ranks that could potentially be the next WWE for us, given the history of Boxing, given the demand for boxing, given how many fans are out there globally that are looking for someone to come in and get their arms around boxing and turn it around and clean it up, that puts us in a good position.

Yes. I wanted to touch on the opportunity at Zuffa. It's been about 9 months since we got its first flight. Could you maybe talk about the key learnings in that period of time? What's worked? Where are you looking to improve? And then as you look ahead to years 2 and 3, where are you looking to take the league?

Look, we've signed up 100 fighters already. We've staged 10 events. We have media deals with PSKY and with Sky. We've come out of the gate strong, 3 sellouts, as I mentioned, when you come out of the Apex, a massive event this weekend, which is a Garcia-Benn, which is taking place in Las Vegas. And it's really a dual strategy. It's our own league with our own fighters competing for -- in various weight classes for belts in a narrative that you can easily get your arms around and understand. And ultimately, we believe, going to be better for the health of the sports and fighters overall.

At the same time, TKO is working with our partners in Saudi to stage 2 to 3 super fights per year, which is what's happening this weekend. And in those -- in that relationship, TKO is paid to negotiate media rights to promote the event with Dana White and Nick Khan doing what they do. And of course, sometimes to sell global partnerships as far to the package. And TKO is set up to do that because the platform is there. These are levers that we just flip the switch. So we'll keep riding the dual strategy, building Zuffa Boxing and building firm value with our partners in Saudi and earning into our equity and 1 day majority. And on the flip side, running major super fights that allow us to promote the Zuffa brand and often on the undercard, fighters from the Zuffa Boxing organization. So it ultimately enhances their profiles and helps us build some superstars.

I want to touch on capital allocation before we finish up here. Two themes, M&A and then also, as you mentioned, capital returns and the balance between the both. On the M&A side, premium sports valuations continue to increase. We've seen no shortage of headlines on the team front the last couple of weeks and months. Would love just to get your latest thoughts on what you're seeing out in the marketplace for sports media assets today and maybe for you specifically, what's your appetite to engage?

Sports unifies us and sports is a unicorn. And since my days at ESPN, I'm becoming an old man now, that's the most popular question I always get. Have we hit the high ceiling on sports media rights? Have we hit the ceiling on sports valuations? The answer continues to be no, as most recently evidenced by the Los Angeles Lakers deal, $12.5 billion a year after $10 billion that Mark Walter paid. It's scarcity. It's demand outstripping supply. It's strong brands, it's historical equity, it's rivalries and players that fans have cheered on or cheered against for decades.

And what I would tell you is I believe these deals are continuing to rise and will continue to rise because further, you can't get your hands on it. It's -- these are -- for some folks, they're trophy assets. For some folks, they've got money burning a hole in their pocket. And what a better way to spend their money to cheer on and build their team, maybe a part of an organization, they grew up and most likely hand it down as a family heirloom. That's not going to change anytime soon.

And as it relates to TKO and maybe your interest or the types of characteristics or the attributes that you look for in a potential target asset to acquire.

We -- that's why the value when you look at these valuations, well, then what's the valuation? Obviously, we're public, so you can figure that out. But when you have it all, you don't just have the team, you have the league. You control the teams, the league, the participants, the partners, the entire kind of holistic cycle is in your hands. And that's what we have. We are the commissioner, the league, the owner all in one. And it allows us to put on the best flights and put on the matchups you want to see and stage these events in the cities that are most hungry to have them there.

Any leagues in particular that stand out to you?

I wish. There's nothing at the moment that's out there for sale. And by the way, we're true to our word. I mean we take transparency incredibly seriously, and it's a priority in our company. We are focused on a year of execution. We're doing just that. We are not hunting for leagues. We are not hunting for properties. And our -- we're big believers in that as a management team, but also our Board is very supportive of that direction.

Just last question on free cash flow leverage and capital returns, balance sheet in a great position. You mentioned the cash conversion earlier. You're in the market buying back stock. How should investors think about that progressing over the coming quarters, coming years? And is there appetite to extend the ASR past the $2 billion that I believe is out there?

No announcements today, but clearly, one of the reasons we've been so aggressive in such a short time. And we're well ahead of what we forecasted on capital return and buybacks. And we've added and increased because we think there's a dislocation in the stock, and we're happy to buy back stock that we think is cheap.

Mark, we'll have to leave it there. Thank you very much.

Thank you so much, Steve.

Hello, everyone. Thank you for joining us, and welcome to TKO's Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Seth Zaslow, Head of Investor Relations. Seth, please go ahead.

Good afternoon, and welcome to TKO's Second Quarter 2026 Earnings Call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least 30 days. After prepared remarks from Ari Emanuel, TKO's Executive Chair and Chief Executive Officer; Mark Shapiro, TKO's President and Chief Operating Officer; and Andrew Schleimer, TKO's Chief Financial Officer, will open the call for questions. Mark and Andrew will be handling the Q&A.

The purpose of this call is to provide you with information regarding our second quarter 2026 performance. I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required.

Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website. With that, I'll now turn the call over to Ari.

Thanks, Seth. TKO's unique ability to deliver one-on-one live events and experiences was front and center in the second quarter. Nothing illustrates this better than UFC Freedom 250 held in June. This event was a roaring success for our company, the UFC brand and the sport of mixed Marshall arts, exposure, earned media audience expansion and a weekend long fan experience. TKO also played an integral role in the success of this year's record-breaking FIFA World Cup, where on location staged the largest hospitality program in the tournament's history.

Fans from 154 countries purchased more than 600,000 hospitality packages across 104 matches in 16 host cities. The qualitative feedback on our delivery bodes well for the continued growth of on location and affirmatively sets the table for what will be a historic L.A.28 Olympic Games. TKO is poised for monumental growth at a time when consumers are deliberately choosing in-person experiences. Our content can't be manufactured or automated. And as the rise of AI inevitably changes how we spend our time, live events built on scarcity, marketable IP and durable repricing power win out. Physical experiences still command the biggest share of the wallet, and we're one of the very few companies that actually lead in this space across multiple properties at scale and globally. As we look to the back half of 2026, we're raising our full year guidance with conviction in our business is stronger than ever. And with that, Mark will take you through the quarter.

Thanks, Ari. We've consistently stated that 2026 is a year of execution for TKO. The second quarter confirmed that. From WrestleMania 42 in Las Vegas in April, to WWE's Clash in Italy in May, to UFC Freedom 250 in our nation's capital in June, to crowded stadiums around North America for the FIFA World Cup to IMG's partnership with the Euro League Final Four in Athens, TKO has served and captured fans while demonstrating excellence from every corner of the business. There was no bigger headline or spotlight this quarter than UFC Freedom 250 at the White House.

The card, the production, the storytelling was a once-in-a-lifetime spectacle on the biggest stage possible and fans turned out and tuned in. The Ellipse Fanfest was attended by more than 130,000 fans over 2 days. The 7Bout Fight Card itself reached more than 34 million total viewers in reported markets, including 17 million viewers across the U.S. and Latin America on Paramount+. And this goes well beyond a single event. Since the start of the year, 20 million subscriber households have watched more than 200 million hours of UFC programming on Paramount+, delivering viewership more than 23x the average UFC pay-per-view event over the past 2 years.

That's the strength of the Paramount partnership at work in just 6 short months and proof that removing the double paywall was indeed the right decision. TKO Properties outsized impact on conversation, subscriber acquisition and retention is undeniable. Beyond the audience numbers, the event generated more than $1 billion in earned media value, The kind of exposure, only a handful of events in the world can command. It also deepened our commercial relationships, adding 25 new marketing partners to our roster, many signing multiyear or multi-event deals. Andrew will cover the events financials in more detail, but I can tell you unequivocally that our investment in this event, time, energy, focus, delivered results as designed.

While we won't hold another event in the backyard of the White House, we will continue to be bold and creative on the hunt for new audiences, new venues and new experiences that make the UFC truly singular. Looking beyond our White House event, UFC sold out arenas and secured financial incentive packages around the globe, including in Perth, Macau and Newark, New Jersey, where our return to the Prudential Center became the highest grossing event in Arena history. Similarly, in Azerbaijan, our return to Baku drew more than 10,500 fans with 40% of those fans traveling in for more than 70 countries. UFC 329 in Las Vegas last month was also a standout, becoming the highest grossing event in UFC history. The same June evening that UFC returned to Baku, WWE returned to Riyad for a successful night of champions, drawing a sold-out crowd of more than 18,000 fans.

Building on last month's successful return to Abu Dhabi, our remaining events in the Middle East are all systems go as planned for the remainder of 2026. Wrestle Mania 42 drew more than 106,000 fans and 1 of the highest all-time gates in WWE history. WWE Backlash sold out in Tampa, Saturday night's main event sold out in Fort Wayne, Indiana and WWE staged a run of successful events across Europe, spanning the U.K., Spain, France, and Portugal headlined by the aforementioned clash in Italy, WWE's first-ever premium live events in the country. Coinciding with our local launch on Netflix class sold out to RINs [indiscernible] arena and set the record for the highest grossing entertainment event ever at that arena.

This is a long way of saying that demand for WWE events is insatiable, and we're in the position of being at the controls of creating this demand. We have full autonomy over where we bring every event and we can be surgical in our approach to growing our fan base for the long term. Our decision-making is deliberate. SummerSlam is a prime example. Following last year's record 2-day event at MetLife Stadium, we decided to take this premium live event to Minneapolis this summer for our first-ever stadium show in the city, backed by a meaningful financial incentive package. The 2-day show was extraordinary. The sold-out corresponding WWE Fanfest delivered strong engagement metrics. Across TKO, we prioritized both the fan experience and improving profitability. They are not mutually exclusive, and they are not always in that order, which brings me to a recent chatter around WWE viewership.

On Netflix, WWE Raw was a global top 10 title every single week of the second quarter. And beyond our expansion with Netflix into Italy, we recently launched premium live events with the streamer in Germany, Austria and Switzerland as markets continue to come online. With ESPN in the United States, WrestleMania and Knight One is the #1 program on ESPN2 this year, while Backlash and Clash in Italy, both had strong viewership. Meanwhile, SmackDown on USA Network was a top 3 Friday cable show in the United States among adults 18 to 49 in 9 of 13 weeks in the quarter with 3 #1 finishes. These numbers tell the real story. And I would add that TKO properties like UFC, WWE, PBR and increasingly [indiscernible] boxing are purpose-built for our current social media environment.

Social media amplifies our events. Shared highlights and content don't substitute for the event itself. They market the next one. Our financial incentive packages strategy is also gaining meaningful traction. Our properties deliver real economic impact in cultural connection for cities. And that value increasingly shows up in the deals we strike with tourism boards states and local municipalities and private partners. We're still early and the runway to scale this in more markets and cities across all our properties and for bigger commitments is significant. Our strategy is working and our target of $380 million to $420 million by the year 2030 is on plan. To that point, in May, we signed a landmark 3-year 7 event agreement with the Arizona Sports & Events Alliance, spanning UFC, WWE, PBR and Zopa boxing, 1 of the broadest multiproperty financial incentive package deals we put together to date.

And next week, UFC 330 brings a championship bout back to the city of brotherly love, Philadelphia. For the first time in 15 years as part of the city's America 250th celebration, another market investing in TKO to drive economic impact. The value of our live events is undeniable, and it's only going to grow from here. As already mentioned, while AI makes content cheaper and easier to produce, what can't be manufactured becomes scarcer and more valuable. That is live communal events that people crave and organize their calendars to travel to and from. And there's no bigger example of that than the FIFA World Cup 2026.

For on location, the numbers speak for themselves. World Cup hospitality sales surpassed $2 billion from more than 568,000 packages sold through the second quarter. And that's before accounting to 25 matches in July. Demand remained exceptionally strong, straight from the group stage through to the final with significant last-minute purchasing activity across every sales channel. And this isn't only a World Cup story. On locations portfolio of events is seeing similar anticipation and appetite, most notably the LA '28 Olympics, which, while still 2 years away, has already generated orders from more than $280 million on over 20,000 bookings. The success of our hospitality and experiential program doesn't merely speak to a trend. But instead, what is quickly becoming the norm. Front-of-the-line access and the consumers' increasing desire to pay more for a personalized, customized offering.

Meanwhile, the IMG business continues to partner with some of the most iconic sporting events globally. Recently, we drove sponsorship and broadcast coverage for the most watched Wimbledon since 2019 and for the Open Championship at Royal Birkdale, where IMG produced the live broadcast of every shot seen around the world across 217 territories. The range of this business is a true differentiator and these invaluable relationships deliver real commercial outcomes that compound over time across the entire TKO portfolio. At PBR, the business had an extraordinary quarter. Our space cowboys event at the U.S. Air Force Academy sold out and drew nearly 31,000 fans.

It also aired on Fox Nation and was supported by a significant financial incentive package. This was a strong cultural moment as part of America's 250th celebration. PBR Team series is currently in full swing, and we are in active discussions with several potential investors for new franchises. Finally, turning to boxing, where we're building international scale and strengthening our roster. Zopa Boxing staged our first international event in Bournemouth U.K., activating our new Sky Sports media partnership. Zopa Boxing also made its New York City debut last week at Madison Square Garden's Infosys Theater. We are signing world-class talent, most notably Shakur Stevenson, 1 of the biggest names in American boxing.

And on September 12, we will return with TKO's next Super fight, featuring Ryan Garcia versus Conor Ben at T-Mobile Arena in Las Vegas, airing on Paramount Plus globally and on [indiscernible] in the U.K. and Ireland. The growth of this asset is comfortably ahead of schedule. Altogether, the second quarter was another period of disciplined, high-quality execution. Sports has become the anchor of premium media, commanding unrivaled live audiences and cultural relevance. TKO offers leverage to secular growth in live sports and entertainment, and in many ways, TKO has defensive business model characteristics to AI disruption risk. Demand for live entertainment shows no signs of slowing, and owners of differentiated IP that offer differentiated live experiences like TKO does, will be first in line to benefit.

Our strategy is tight and fit for the time. Demand for live events and premium IP in the experience economy, growth in global partnerships, significant step-ups from our media deals delivering high-margin returns, momentum in financial incentive packages, over 70% of long-term contracted revenue at UFC and WWE, providing visibility and predictability, the development of Zuffa Boxing is our next significant combat sports asset and on locations, total beat down Victory Lap with the World Cup Hospitality program, not to mention the fact that the stage is well set for the L.A. Olympic Games. These are the catalysts for TKO. As I turn it over to Andrew, who will review our second quarter financial results, I would be remiss not to reiterate our commitment of returning capital to shareholders through dividends and share repurchases.

Given the recent volatility and trading levels of our stock, we intend to commence an additional buyback in the near term as previously authorized by the Board. With that, Andrew?

Good afternoon. We delivered strong operating and financial results across our businesses in Q2, and we continue to execute at the highest levels on the world's biggest stages. Given our performance to date and our visibility into the remainder of the year, we have raised our full year outlook. Before getting into the numbers, I want to remind you of 2 items that had an impact on results this quarter, specifically UFC Freedom 250 and the FIFA World Cup. First, with regards to UFC Freedom 250, we incurred significantly higher-than-normal costs, which we partially offset with sold out global partnerships inventory. As a reminder, we did not sell tickets and therefore, did not record any live events revenue. Given the events financial profile, which as anticipated, resulted in approximately $30 million loss, our margins at UFC as well as on a consolidated basis, were meaningfully impacted.

Second, revenue and adjusted EBITDA for the FIFA World Cup are recognized based on the volume of matches delivered and as such, will benefit both Q2 and Q3. In the second quarter, we recorded approximately $45 million of adjusted EBITDA at the IMG segment. Given the scale and complexity of this event, we're still in the process of closing out our books to determine the final financial results, but we now expect to exceed our estimate of approximately $75 million in adjusted EBITDA for the full year. Moving to our consolidated results for the second quarter. We generated revenue of $1.547 billion and adjusted EBITDA was $650 million.

Our adjusted EBITDA margin was 42%. Revenue increased 18%, adjusted EBITDA increased 23% and adjusted EBITDA margin increased approximately 180 basis points as compared to the prior year. Removing the impact of UFC Freedom 250, we would have seen significantly higher total company margin expansion. In the quarter, UFC generated revenue of $536 million, an increase of 29% or $120 million. Adjusted EBITDA was $280 million, an increase of 15% or $36 million. UFC's adjusted EBITDA margin was 52%, down from 59% in the prior year period. Removing the impact of UFC Freedom 250, UFC margins would have increased meaningfully year-over-year. As previewed on our last call, UFC's event mix had a notable impact on Q2 results.

UFC held 12 total events in the period, 2 number events and 9 fight nights plus UFC Freedom 250 compared to 11 total events in the prior period, comprised of 4 numbered events and 7 fight nights. Media Rights production and content revenue increased 25% to $325 million, driven by a step-up in media rights fees related to the Paramount deal that began in January and would have been even higher if it were not for the fact we held 1 fewer number event compared to 2 additional fight nights, which had an unfavorable net impact in the quarter. Partnerships and marketing revenue increased 69% to $145 million, driven by the addition of new partners and higher renewals from existing partners, largely related to UFC Freedom 250. We successfully leveraged this unique event to strengthen our relationships with existing partners, including Ram and crypto.com and create a point of entry for new categories and partners, including Exodus, [indiscernible] Super Shore and StarLink.

Consumer Products Licensing was a bright spot, with revenue increasing 61% to $18 million. We're seeing improved royalties from our main licensees, a direct correlation to the strength of the UFC brand. We also released EA Sports, UFC 6 on June 19, delivering by far our strongest launch in franchise history across all financial and engagement metrics. As expected, Live Events and Hospitality revenue decreased 18% to $48 million due to the mix of events and venues, most notably the absence of ticket sales for UFC Freedom 250 and 1 fewer numbered event. Despite the decline in the quarter, we continue to see strong demand for our recent events, including record gates for both UFC 328 at the Prudential Center in Newark, and UFC 329 at T-Mobile arena in Las Vegas.

With respect to financial incentive packages, we are successfully executing on our strategy. We are leaning in and laser-focused on generating more value for our brands from a mix of public and private funding sources domestically and abroad. The economic growth, community connection and global attention we deliver for our partners, combined with the range of UFC, WWE, PBR and Zufa-Boxing events and offerings across our portfolio, is fueling a significant increase in inbound interest, driving higher renewal rates and forging new relationships in more markets. We are pairing that inbound demand with a targeted outbound effort leveraging our reach and relationships as well as IMG and on locations global networks to open doors in key growth markets.

In the days leading up to UFC Freedom 250, we met with dozens of existing and new contacts in Washington, D.C. a clear example of how our access and the attractiveness of our events can translate into opportunity. At UFC, financial incentive packages almost doubled year-over-year. We returned to Newark in Baku, 2 locations with FIPs in the prior year quarter, where we were able to increase revenue for 2026. UFC 327 was the first time we received a significant FIP in connection with an event in Miami. Our Fight Nite event in Macau was the first under a new multi-event relationship that includes a meaningful FIP, and our event in Perth included a package under a multiyear agreement. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses.

Direct operating expenses primarily reflected an increase in athlete, production and other event-related costs, most notably driven by UFC Freedom 250. SG&A increased primarily due to higher personnel and travel costs compared to the prior period. Our WWE segment generated revenue of $621 million in the quarter, an increase of 12% or $65 million. Adjusted EBITDA was $368 million, an increase of 12% or $39 million. Adjusted EBITDA margin was 59% on par with the prior year period. As with UFC, WWE's event mix impacted results in Q2. We held 22 international events in the period, including a European tour and the Class Italy PLE intern compared to 2 international events in the prior year period.

Going into the year, we scheduled additional international events overall and staged significantly more in Q2 as part of a strategy to deepen and broaden our global fan base, grow international partnership revenue that has historically lagged our domestic events and strengthen our pipeline of financial incentive packages outside the U.S. On partnerships, we believe there's immediate opportunity to grow WWE's international portfolio. The next leg up will be a function of, amongst other things, us leaning in further with Netflix, where all our content sits internationally, leveraging our collective expertise, inventory and relationships to maximize value from fully integrated broadcast in venue packages. We are opening doors for each other and with the support of IMG's global network, expanding our pipeline of prospective partners around the world.

Although international events currently come with a higher cost profile, we view that spend as a strategic investment with attractive long-term potential. Media Rights production and content revenue increased 29% to $360 million primarily reflecting higher media rights fees related to the ESPN agreement that began last September. Consumer Products Licensing and other revenue increased 38% to $46 million, driven by higher royalties for trading cards and other collectibles compared to the prior year period. While a relatively modest portion of our overall business, we continue to make progress in this growing area at both UFC and WWE and in no small part due to our recent multi-property deal with Fanatics. Partnerships and marketing revenue increased 8% to $63 million, driven by new partnerships and renewals across multiple categories.

The most notable driver of these results, WrestleMania 42, featured a record 32 partners, including Snickers, 2K, Riyad season, Ram and DoorDash, among others. As we saw in Q1, this growth came despite the additional international events. Live Events and Hospitality revenue decreased 18% to $152 million, almost exclusively related to a decrease in ticket sales for WrestleMania 42 compared to the prior year period. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses increased primarily due to higher talent, production and other event-related costs and SG&A increased primarily due to higher travel costs. Both of these increases were a result of the additional international events.

Despite the incremental spend, we expect WWE margins will increase meaningfully for the full year. Shifting now to our IMG segment. We generated revenue of $355 million, an increase of 16% or $48 million. Adjusted EBITDA was $79 million, an increase of 171% or $50 million. Adjusted EBITDA margin was 22%, up from 9% in the prior year period. As we previewed on our last call, the increase in revenue primarily related to the favorable impact of World Cup hospitality sales at on location. Revenue at the IMG business decreased slightly over the prior year period due to the expiration of certain deals, most notably a contract for Italy's premier professional cycling event.

The decrease was partially offset by increased demand for Starz on ICE, the Touring figure skating show, which benefited from heightened consumer enthusiasm coming off the Milan Cortina Olympics and growth in SPORT24, our owned live sports channel for airlines and cruise ships. Adjusted EBITDA primarily reflected the increase in revenue as expenses were essentially flat compared to the prior year. Corporate and Other generated revenue of $49 million, an increase of 9%. And adjusted EBITDA was negative $77 million, essentially flat with the prior year period. The increase in revenue was primarily driven by higher management fees related to our boxing initiatives. As well as higher live events and partnerships revenue at PBR, driven by our Space Cowboy event held at the U.S. Air Force Academy, which included a sizable FIP.

Adjusted EBITDA reflected the increase in revenue, offset by an increase in expenses, primarily due to higher personnel and other operating costs. Now moving on to our capital structure. In the second quarter, we generated $350 million of free cash flow. Our free cash flow conversion of adjusted EBITDA was 54%. Free cash flow included the favorable impact of $22 million of net collections related to on location for the FIFA World Cup. Free cash flow also included the unfavorable working capital impact of UFC's new media rights deal with Paramount. Turning to capital allocation. As Mark noted, maintaining a robust and sustained capital return program remains a top priority. Year-to-date, we've returned in excess of $1.3 billion of capital to equity holders through our dividends and share repurchases.

On June 30, we made our Q2 cash dividend payment from TKO Opco of approximately $150 million or $0.79 per share. We intend to continue to fund quarterly cash dividends with cash flow from operations or cash on hand. Regarding share repurchases, as we previously disclosed, on June 30, we completed our most recent ASR agreement to repurchase $800 million or approximately 4.2 million shares of our Class A common stock. In May, we commenced repurchases under a 10b5-1 trading plan for up to $200 million of our Class A common stock. We completed the program in July and in the aggregate, we purchased an additional 1 million shares under the plan.

Currently, we have just over $1 billion available under our previously authorized repurchase program. As disclosed in our earnings release, we intend to commence additional buybacks under our existing program in the near future. Given the strength of our balance sheet and what we believe to be a dislocation in our stock price relative to its intrinsic value, we continue to view this as a highly value-accretive opportunity. We ended the quarter with $4.659 billion in debt and $593 million in cash and cash equivalents in addition to $960 million of restricted cash. As of the end of Q2, Net leverage was 2.2x based on net debt of $4.067 billion and LTM adjusted EBITDA of $1.841 billion. Now turning to our outlook. As you've heard us say on prior earnings calls, we manage the business with a focus on full year performance. Therefore, we believe the results are best evaluated on a full year basis, given the quarterly fluctuations that are inherent in our operations, most notably related to the timing of our live events and the mix of locations, venues in cards.

As announced in our press release, we are raising our full year 2026 guidance for revenue and adjusted EBITDA. We are now targeting revenue of $5.775 billion, to $5.825 billion and adjusted EBITDA of $2.275 billion to $2.305 billion, representing an increase of $75 million and $25 million, respectively, at the midpoint of the ranges as compared to the prior guidance issued in February. The increase is based on strong operating performance across our businesses for the first 6 months of the year and our anticipated performance for the remainder of the year. Regarding our event calendar and cadence, we continue to closely monitor developments in and around the Middle East with regard to potential implications on our business.

Year-to-date, we've successfully staged every event we originally planned, including 2 events on June 27, WWE Net of Champions in Saudi Arabia and a UFC Fight Nite in Azerbaijan as well as a UFC Fight Night in Abu Dhabi just 9 days ago on July 25. And as Mark noted, we're moving forward with our remaining events in the region, including a WWE PLE and a UFC numbered event. With respect to UFC, the Paramount era has allowed us to level set and benchmark our Atle pay without diluting our margins. Having said that, our business catalysts, media rights, global partnerships, live events and FIPs and consumer products licensing, all significantly high-growth, high-margin contributing verticals have and will enable us to absorb the incremental costs while still meaningfully enhancing our margin profile in 2026 and beyond.

Consistent with our prior calls, while we are not providing quarterly guidance, we want to highlight a few notable items as we look to the third quarter. At UFC, media rights revenue will continue to reflect the step-up from the Paramount rights deal. The mix of live events in the quarter will also favorably impact results. We expect the stage 12 events in Q3 '26 and 3 numbered events in 9 Fight Nights. This compares to 10 events in the prior period, which included 2 numbered events and 8 Fight Nights. With respect to FIPs, the Fight Night held in Abu Dhabi carried a meaningful incentive package, as did a similar event we hosted in the market in Q3 of last year.

The Fight Night held this past weekend in Belgrade and UFC 330, which will take place in Philadelphia on August 15, also carry significant FIPs. At WWE, the timing of live events in the quarter will negatively impact our results. Q3 has one premium live event, Summer Slam compared to 4 in the prior period. Media rights will continue to reflect the step-up for the ESPN rights deal, but the decrease in total nights of PLE programming will impact results. Live Events and Partnerships revenue will also reflect the decrease in events as well production costs and other event-related expenses.

At the IMG segment, we expect results will reflect the continued benefit of allocations World Cup hospitality program as well as the positive impact of a number of IMG's signature tennis and golf events, including the U.S. Open, Wimbledon and the British Open. These benefits will be partially offset by continued spend in support of our ongoing sales efforts for LA 28. At Corporate and Other, we expect our results to reflect the contribution from the Garcia Ben boxing match on September 12. As a reminder, we provided services for the Canela Crawford match in the prior year period. so we expect the impact of our boxing initiatives to be relatively comparable.

In terms of free cash flow, while we have not given formal guidance, we continue to target a free cash flow conversion rate in excess of 60% and normalizing for the impact of net payments related to the World Cup and UFC's rights deal with Paramount. In conclusion, we generated strong results in the first half of the year, underscoring the momentum across our businesses. As we turn to the second half, we remain focused on disciplined execution and continuing our robust capital return program. Our confidence in the path ahead is grounded in the fundamentals of this business, world-class IP deeply engaged global audiences, diverse and recurring revenue streams and significant runway for growth. With that, I'll turn it back to Seth.

Thanks, Andrew. Operator, we're ready to open the call for questions.

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Brandon Ross with LightShed.

I hate to lead off talking about other companies, but there's a few things that have seemed to pop into investor focus recently. On the first one, PSL hasn't really materialized into any kind of threat following the hoopla around the Saudi investment a few years ago. But now they're joining with Jake Paul and MVP and I guess the relationship they have with Netflix, how do you believe that combo can impact your business? And how seriously do you take them as a competitor?

Thanks, Brandon. Look, I would say that clearly, on an individual stand-alone basis, these promotions, both MVP and PFL were not necessarily sustainable. Now they've come together and we'll see what they can counter up. What we know is, the competition's always made us stronger and a rising tide lifts all boats.

Okay. And I know you keep saying that 2026 has been the year of execution for you, and you've continuously pointed out you don't anticipate any major M&A, but potential deals like a combo with Formula 1 have come into investor dialogue once again and probably impacted both your stock prices. Are you open to bigger M&A as you turn the page to 2027? Or do investors just have this wrong?

Look, as we said in our prepared remarks, as we've said quarter after quarter, as you just said, we are 100% focused on execution. And if we continue doing just that effectively TKO will remain abeat and raise story. We are not hunting for M&A of any kind. There are absolutely no conversations with F1, anybody else for that matter. And there's absolutely nothing on the horizon that would take our eye off the ball from our execution story. Anyone spreading that is just flat out lying. and anyone speculating that is just flat out seeing ghost.

Your next question comes from the line of Stephen Laszczyk with Goldman Sachs.

Mark, you spoke a lot to the strong engagement trends you saw in the quarter from the USC and WWE. I would be curious if you could speak a little bit more looking ahead to how you keep engagement from here, how you're thinking about things like balancing international engagement versus protecting the engagement in your core markets? And then ultimately, if anywhere across the league, do you think there might be an opportunity to make investments to realize some of these engagement goals?

Yes. Look, Stephen, I would just tell you that we are as focused on engagement as we are on reach. And that's the name of the game. I mean, that is the equation, if you will, right? The catalyst for our company is Andrew and I both laid out are simple. They're identifiable, they're easier to model than most. There are no hidden recipes when it comes to TKO. We're about event ticket sales and optimization. We've got a strong guide on global partnerships, $1.2 billion by 2030. We've got a strong guide on financial incentive packages $380 million to $420 million by 2030. Both of those are on good solid ground with some strong secular tailwinds behind them. Our media deals are locked in at approximately $15 billion of aggregate value for the next 5 to 7 years.

Our next major combat sports asset, Zufa Boxing is not just underway. It's ahead of plan. I'm sure you're reading each and every day about different fighters that are signing up under the Zufa boxing banner. We're prudent when it comes to M&A. And as you just heard me say, there's nothing on the horizon, and we're not hunting for anything. We're highly cash flow generative, and we have a management team and a board that's laser-focused on returning capital to shareholders. So when you're focusing on the business at hand, you are constantly looking at how you improve the overall fan experience. how you best position your brand for domestic and international growth, to your point. You focus on audience growth and how you bring more people under the tent with singular big eye-catching events that generate significant conversation.

And at the same time, you also look at what's best from an investment standpoint for our shareholders. That's what we do. And I would tell you that we believe our value proposition is second to none. And if we keep doing our jobs right, that balance is going to that -- pendulum is going to swing a little bit, whereby -- let's take SummerSlam as an example this past weekend in Minneapolis. And I know it's not in the quarter, but I think it's an Apropoint here. Look, we could have done SummerSlam on 1 night and likely had a higher ticket per cap. But in looking at that event, we chose 2 days because we thought it would be an overall better fan experience. We thought it would be a better viewing experience on ESPN, we thought we would get more marketing for our brand on ESPN. We thought it was important to go back to the Midwest that outside of elimination chamber last year in Chicago, we really haven't been doing enough of our PLEs in the Midwest.

So as I said in my prepared remarks, it's not always about the actual bottom line, right? We prioritize the fan experience and improving profitability. They're not mutually exclusive, and they're not always in that order. And if we get the equation right, we're growing globally, which is certainly important to us and to Netflix, and if we get that right, we're driving viewership and global partnerships and financial incentive packages here domestically at home.

And then if I could, just on the guidance increase for Andrew, I'd be curious if there was any more detail you could provide around the drivers of that increase. It sounds like the World Cup performed better than expected so far in the second quarter. But as you look out, any other parts of the business that are either performing better or worse than expected?

Yes. Look, I think the increase is not necessarily a result of any 1 specific item. So I don't want to over index on the World Cup, even though we had a strong contribution in Q2. Obviously, there'll be Q3 contribution, and it will be above our prior announced expectations for the World Cup. But it really reflects the overall strength in our business especially UFC, which is firing on all cylinders now and a number of moving pieces. So nothing in particular to call out, but I do want to make sure that it's not an over-index on World Cup. Stephen, I would also just add, our location is just like IMG, such an important part of the overall life cycle we have there in the equation. We talked about it in the prepared remarks, but you're just seeing so many more personalized experiences, customized experiences, front-of-the-line access, parents wanting it from their kids individuals wanting to go out with their friends.

These communal events experiencing them in different unique ways. And while that margin, although we benefited from it this quarter, isn't up to speed or up to snuff with where WWE or UFC sits, it's still such an important element for the growth of those 2 leagues let alone as a stand-alone business in our location itself.

Your next question comes from the line of David Karnovsky with JPMorgan.

Mark, it'd be great to get your latest read in the sports rights landscape. I know you're intercycle but there's a lot in the pipeline for now. until 2 years out when you barring Smack down or NXT to the market. So just how are you thinking about things? And is there any optionality on your end to accelerate discussions?

We have no plans to accelerate any conversations on our end. We were very well positioned with long-term deals, recurring revenue, locked in escalators and very motivated marketing partners. So we're grateful to be there. And we're, of course, paying attention to all that's on the horizon, whether that's World Cup or Major League soccer or the NFL, obviously, the NHL. I mean there's a lot in the queue, and we will we are kind of there to support and drive as it relates to the IMG business, and they're seeing that business quite frothy at the moment.

And I think it does come back to the fact that sports or just in a category, all to itself right now. I mean it truly is live experiences unpredictable outcomes, passionate fan bases, historically strong, passionate fan bases and terrific engagement even in games that aren't always so close. And once again, the World Cup was front and center demonstrating all of that just an unqualified success for FIFA. Obviously, we played a small part in that with on location. And I think the women's World Cup is going to be just as strong from a attention setting standpoint.

So we're sitting in a good place right now across all fronts, Nova boxing and PBR included, and we will continue to drive the market as it relates to our leadership position globally with IMG.

And then maybe just one on WWE International. You know it's scheduling more tours there. The opportunity with event sponsorship, especially as Netflix rolls to more regions I guess, Andrew called out small sets though, with cost and domestic sponsorship. So maybe can you just speak a bit about the opportunity and kind of how you consider the mix of factors.

Look, we're a global brand. And we're not going to shy away of bringing our product internationally because it doesn't have the most accretive near-term financial impact. We're going to make investments for the long term. And in doing so, we're going to take our properties, whether it be UFC, WWE, PBR or any IP in our portfolio to strategic locations to set and position ourselves up for long-term growth. Look, as it relates to partnerships at WWE, we do believe, as I said, there is a leg-up opportunity internationally as we get deeper with Netflix who as you know, has a license to all of our content internationally, where they have media and they're rolling out dynamic ad insertion, but also value sort of coveted in venue and Interia inventory.

So our ability to go to market together, us opening up our Rolodex, them opening up their Rolodex, that doesn't happen overnight, but it's certainly something that we're bullish about later this year into 2027.

Your next call comes from the line of Ryan Gravette with UBS.

Andrew, I appreciate the detail on the EBITDA impact from Freedom -- the Freedom 250 event this quarter. But curious how you see the opportunity on translating some of the onetime uplift you saw on the partnership revenue side in the quarter into broader and more comprehensive deals going forward. And then not looking for guidance at this point, but is there anything you would flag to us on free cash flow conversion in 2027, particularly as it relates to on location or the UFC rights deals?

Look, on UFC Freedom 250, I will reiterate, we came in exactly as anticipated or close enough for government work. with a loss of approximately $30 million. And we've held true to what that level of overall loss/investment was going to be. Hats off to our global partnership team, who utilize this one-of-one event as an entry point for new partners to level up existing partners and to introduce folks to the power of our IP and what we can do from an execution perspective. There are a significant amount of new partners that impact not only 2026. We did do, I think Mark alluded to in his prepared remarks, as did I, meaningful multiyear deals. So this just wasn't just by USD Freedom 250 and get the spectacle. We did use this to leverage this event and its value to sign up partners that impact '26, '27 and in some cases, '28 and beyond. So we feel really good about our positioning going into next year.

As it relates to free cash flow conversion, all I'll say at this point in time, we don't give forward year guidance. We do anticipate being in excess of 60% on a normalized basis for those normalizing factors I called out in my prepared remarks. And we do believe there is meaningful room for a step up in free cash flow conversion in '27 and '28 and beyond.

Your next call comes from the line of Brent Navon with Bank of America.

Just wanted to go to WWE Live Events. It seems like this quarter was impacted by WrestleMania in particular. Can you just help maybe distinguish or quantify the factors that were specific to this year's event versus what you're seeing in the broader Live Events business? And does this outcome possibly make you reevaluate the elements of your live event strategy going forward?

WWE events, again, was almost exclusively impacted as I stated in my prepared remarks, by WrestleMania 42 versus WrestleMania 41. We did, however, in the quarter as well, stage more events, more international events as well, 22 versus 2 in the prior year quarter. Again, this is an investment, as I articulated in the last answer, in WWE and broadening and growing its fan base. So this is deliberate. Just like going back to Vegas for a second year for Wrestlemania was deliberate. WrestleMania's live event revenue for '26 despite being lower than '25, was still 1 of the largest box offices in the history of WWE, and we earned a meaningful financial incentive package to go back to the state of Nevada. So those economics comparable to the prior year or lesser to the prior year, but still extraordinarily beneficial to the company.

Look, we increasingly view our events not just as live events, but as media events that drive viewership and fan engagement across social and help us monetize our most valuable assets. So as long as we believe going to a certain location is going to check those boxes, we're going to make those strategic investments in the long term.

And just maybe as a follow-up. I mean, it seems like historically, some of your highest profile events, whether Freedom250, the Sphere event a few years ago or even bringing back Conor, you've generated a lot of interest and engagement around the UFC product. I guess, why not be more aggressive in investing behind these tentpole events if it drives that audience growth engagement and ultimately longer-term value and possibly even expanding that to the WWE ecosystem as well.

Look, I think you heard us saying in the prepared comments that we will be hunting for new opportunities, unique experiences, seminal venues in various regions of the world that help us garner that same kind of buzz and attention. So it's not that we're not doing it. It's that -- they take a while to put together, and there's a lot of parties and negotiations and calendars and dates and venue deals not to mention clients from all walks, meaning global partners versus obviously the platforms in which we air. I mean, there's a lot of factors that go into putting the calendar together. But yes, I would remind you that when we did the spear, everyone was afraid that this once a lifetime spectacle was going to be a financial loser for us. It wasn't.

Then when we did UFC Freedom 250, we -- despite telling everyone we were going to lose $30 million and do record-setting numbers in terms of earned media. Nonetheless, I kept reading about the fact that they're probably going to lose more than they say and we did it. Conor was just a 329. I mean that's just a number of event. That wasn't anything different from what we do week-to-week albeit that he hadn't thought in such a long time, so there was great demand in having a chance to see him come back to the stage.

Look, we say what we mean and we mean what we say. And we are in the business of putting on the best of the best live events and experiences. And we're sitting in a marketplace that whether it's FIFA World Cup or Bruno Mars back on tour or Odyssey or Spiderman experiences show no sign of slowing down. It's a permanent way of the world, and TKO today sits front and center with WW UFC PVR and on location. And we will continue to take those secular tailwinds and milk them for everything they are.

Let's take 1 last question, please.

Your final question comes from the line of Vikram Kesavabhotla with Baird.

I wanted to ask about Zufa boxing. You mentioned in your remarks that the progress has been comfortably ahead of your schedule. As we look ahead, can you talk about your biggest priorities for this business throughout the rest of this year and what we should be looking for in monitoring your progress? And you also referenced the recent events in the U.K. and New York City. What is the initial reception been like as you've started to expand outside of Nevada? And how do you plan to manage the mix of locations for that going forward?

Yes. Look, I would tell you that Andrew can remind everybody of the financial arrangement we have with the JV in just a second. But overall, it's a lot of rinse and repeat. In terms of what we're doing with our other assets and properties across TKO, right? We're taking it out to London and New York City because we're trying to -- we're efforting to bring more awareness to what it is that we've launched, namely the fighters. And we're on the hunt to create more one-of-a-kind experiences that also feel the added benefit of bringing in more global partnerships, more marketing from our current media partner, more financial incentive packages that we can tie into multi-event, meaning multi-property type deals with various cities and regions.

And of course, ultimately, that will trigger consumer products and licensing as Zuffa for boxing growth. But look, it's early days. Right now, it's about signing up more fighters, expanding our dug out, creating more opportunities and incentives for the fighters themselves and staging best-in-class fights and best-in-class fight cards. And if that continues to garner traction and momentum in the way that it has in such an accelerated way, we'll be well on our way to creating that next massive combat sports asset for TKO and our shareholders.

Financially, of course, it's -- it's already a winning proposition for both the fighters and also the business. But of course, we don't consolidate. I'll allow Andrew to -- or ask Andrew, not just to allow you actually to remind everybody the JV that we have.

I accept. Look, Vik, you've heard us say this on numerous calls. We like the structure of the JV. We take calculated and intelligent risks. This is low risk, but allows us to have our fingerprints on a third combat sports vertical with a path for meaningful equity ownership that will ultimately enhance our firm value. We're here to build something, but we have no funding obligations, and we don't take financial risk. It's really opportunity cost of timing materials. And what you see so far is a product that's ahead of schedule and that energy and focus is paying off. As I said, the JV allows us to earn equity ownership, and I can't stress this enough, participate in future value creation. And that's the JV.

Now somewhat tethered and associated to the JV is our ability to participate in stage work with promote, sell the media rights for super fights which we get paid a fee, depending upon the level of services that we build and we provide. So that is implicit in our guide. You'll hear Mark talk about the Garcia event that's happening on the 12th of September and other events that were associated with that would get a fee that appears in our corporate line item outside of the nonconsolidating joint venture. So a lot of ways to win here, but it's early days.

And look, our reputation is that we know how to stage big events. We know how to build properties and assets like this. We know how to create attention and set the stage for these fighters, and Dana White has a reputation of always putting fighters and fans first. So one of the reasons our plan has accelerated the way it has is because fighters want to fight underneath a business being run by Dana White.

At this time, thank you, everyone, for joining us on today's call. Operator, you can conclude the call.

Thank you. This concludes today's call. Thank you for attending. You may now disconnect.

All right. We'll get started. Happy to have back at the conference from TKO Group, Mark Shapiro, President and COO, Mark, thanks so much for being back here.

Thanks for having me, David.

Okay. So Mark, earlier this year, you termed 2026 as a year of execution. So in that context, can you speak to where your highest priorities are at the moment?

Yes. I think just consistent with what we've said on our earnings and our forecast and guidance coming into the year, this is a high-quality execution story. We are singularly focused on operational execution. And we've got a full play, not too much, but we have certainly a full menu of offerings that we are uniquely focused on as we head into the midpoint of our year.

First and foremost is, of course, our distribution deals. I think as most know, we have a new -- our second year of our deal with Raw with Netflix. We have our WWE PLEs now with ESPN. And obviously, we've kicked off a successful partnership, initially successful with UFC and Zuffa Boxing with Paramount+ and the myriad of offerings across the CBS Peace Guy platforms. So distribution, making sure that, that's hitting on all cylinders, production quality, the marketing behind that, the earned media that we gain from the potpourri of platforms that Peace Guy has, engagement making sure the cards are up to standard and getting the draws that we would hope they would, the marketing power ESPN brings to the table, making certain we're maximizing that.

And then you go to global partnerships next. I think we've given guidance to 2030 that we would do $1.2 billion. By the way, a contributor to that is some of the ad inventory we will soon be selling related to the Peace Guy deal. So -- and other offerings. But specifically, that will be a big bellwether for us. And we're feeling good about that, trying to surround ourselves with the right brands and the right earned media vis-a-vis the marketing power those brands bring to the table. Third would be live events. And I'll tell you, David, even at earnings time, a lot of question rightly so, but a lot of question given what's going on in the Middle East and just around the world at would we see a fall off? Would we see a tick back, if you will. And we're seeing no consumer pullback whatsoever.

In fact, just post our earnings, our UFC 328, which was in New Jersey, not only sold out, but this was the third straight year. So it wasn't like it was new to the party. It wasn't a big new glitzy event. The third year we had a UFC numbered event in New Jersey, and we set the record at the gate. So that just gives you an idea of how strong and robust it has been, and we're thrilled to see that. And that dovetails with our FIP strategy, our financial incentive package strategy, which, again, on the guidance, we've said we'll do $380 million to $420 million by 2030.

Now this year, we're doing a little over $300 million, but we have three WWE events. So normalized, it would be $240 million, but all systems go on that front, and we can talk about that strategy certainly later. And then as you move around the rest of the business, TKO, Zuffa Boxing is a big growth opportunity for us, an organic growth opportunity. We're in line with our plan. We're in line with our forecast. It's already profitable, albeit we don't consolidate, but largely because we've done two big media deals, one with Paramount for the boxing and then, of course, with Sky as well. So boxing is off and running and Dana White is signing a whole bunch of fighters.

And then on the allocation front, the experiential business is still very strong right now. We've got the World Cup just about upon us here. And despite what's going on overseas and a little bit of anti-American sentiment, we're ahead of plan there. We've already guided to approximately $75 million in EBITDA for that -- our World Cup event, and we're on track for that.

And I would tell you, the L.A. Olympics, I mean, these are -- this will be his going out party, meaning President Trump, but they are -- we're really bullish about the opportunity there. I mean we're over $250 million right now at this point already in hospitality, experiential hospitality sales and we're 2 years away. And then finally, UFC 250, June 14 at the White House, all eyes upon that. And really everybody we have across the board is working on putting that together.

Mark, that was a great overview. We're going to get into a lot of that. Maybe I'll start with this. I asked you a version of this question a year ago. When you look at WWE and UFC at the current moment, how do you gauge the properties on factors like fan engagement, star power, cultural resonance? And how much higher do you see the ceiling for their popularity, both in the U.S. and abroad?

Yes. Good question because engagement is very much the name of the game for -- certainly for us, but I would argue for any content property out there. And of course, it's a clouded environment, and it's very fragmented. Look, for us, we sit squarely at the center of sports and entertainment and that overall ecosystem. That's where we are. And we stand out because we're year-round.

We happen to own the league. You're not going through a lot of webs to get decisions made or to innovate. We're scalable. We're global, we're young, we're diverse. We have high engagement, which builds over the course of the night across our cards. And we're always building. We don't rest on our laurels. We don't rely on past champions. We're always building new stars. In fact, in the WWE, we've actually added some cards for NXT because we think we have a couple of stars that are about to pop, and we want to give them more stage time, if you will. I would also tell you that at TKO, we institutionalize events. built on scarcity and durable repricing power.

And then I would say, finally, when you just overall look at where content is, experiences, events and folks that are lining up, consumers that are lining up to see them, AI is here and now, right? And as the adoption of AI further increases, what you will see initially is a real boost in digital, I would say, solo digital consumption. And as that progresses, ultimately, that will strengthen the need and strengthen the demand for physical aggregation, which is consumers, families, fans that want to get out. They're inside the room all day. They're on a screen. They're working. They're also more efficient.

And when they have that opportunity to now get out into what is an extended weekend, they're going to jump on it. And that's why you see today, even in this economy with the affordability crunch and what's going on from a geopolitical perspective, retail sales are strong. And not just with us, you saw with Live Nation and -- the Walt Disney Company, no consumer pullback.

Just staying on that macro backdrop, interesting moment, right? On the one hand, you have the conflict in the Middle East, that's lifting energy prices, it's complicating events in the region. Other hand, right, all the beneficial kind of long-term trends you talked about driving the demand for experiences. So how do you kind of account for those cross currents in your outlook?

Yes. Look, we're -- we have six events, six events in the second half of the year across Zuffa Boxing and UFC and WWE that are in that Middle East region that you're talking about. And I would just tell you, where all systems go.

In fact, we announced a UFC Fight night just this morning that we're adding to Abu Dhabi. And what's happening is we have -- as we have our virtual meetings with our partners in Saudi and our partners in Abu Dhabi specifically, they want more events. This whole Fiasco isn't over yet. And nobody can really prognosticate when it's going to be over, if it's going to be over, I look how long the Ukraine-Russia saga has dragged on much longer than anybody thinks.

But that region, in particular, is very focused on showing the world they're still open for business, right? They might not be able to get a vessel out of the Strait, but they are open for business. And they want more events, they want music, they want comedy and of course, headline by they want more sports. So they're bullish to put them on. Our Royal Rumble in January, albeit that was before the whole saga and the Iran conflict, big sellout show. We already have meaningful fan bases there, David, and they're passionate fan bases, and they've signaled to their governments that they want more, and we're first in line for many of these countries.

Great. So let's get into UFC. So with Paramount's guidance, you made a big change to your domestic distribution, removing the transactional paywall for your biggest events for certain fights. You've also extended distribution into broadcast with CBS. So Mark, what's the impact of this wider reach to date, both with fans and then your various stakeholders?

We're checking all the boxes as it relates to Paramount. They have been really a superb partner, which says even more when you realize that ESPN was the greatest of great partners. And Paramount has picked up on that, and they have built off of that. You saw, obviously, the Paramount earnings call and David Ellison talk about the success they're having with the UFC, not just in terms of subscriber sign-ups, acquisition, also on the retention side.

And I would say most meaningfully in the ancillary program where millions of minutes are being watched vis-a-vis the UFC, and it's our storytelling, right? It's a lot of our long-form programming, not just the fights themselves. So that's a harbinger of what's to come. There we're much younger than anything they put on there. We're certainly much younger than CBS. We've benefited from the fact that they're using all of their platforms, not just to market us, but if you look at CBS and the way we've popped when we've had a few of our prelims or undercard fights on the CBS platform as a simulcast.

So that's been a good story as well. And I will tell you, I'm really excited, I should say, we're really excited by what is ahead and that is when they close, when and if they close their Warner Bros. deal, which at this point, everything looks thumbs up, and I think it should happen, by the way. We're going to benefit from that. We have opportunity to have UFC and Zuffa Boxing not just on the Paramount Networks, as you know them now, but TNT, which is known as a sports network, CBS, which is known as a sports network. HBO, which has historically been a big boxing network, and then you throw bleacher report there. Not to mention if you really pay attention to what they're doing from a marketing standpoint and the way they're distributing content, they have all kinds of partnerships with YouTube. And we will benefit from that as well.

Maybe following up on the numbered fights. Has there been any concern from you or Dana that removing what was previously an $80 pay-per-view fee, essentially making the price of those fights equal to the price of a fight night, -- does that remove any signal to the fan about the uniqueness of those cards?

Absolutely not. It's -- like keep in mind, when we have our -- what is normally a monthly numbered event, and we have 13 a year of them, so I'd say roughly every month, these cards have championship fights on the card. The fight nights don't have championship cards. So that alone signals it's something different. Also, when you look at the marketing spend and the power, the number of GRPs that they put behind marketing those numbered events, you can tell this is something different. This is a must-see event.

So not concerned about that at all. And I will just tell you that getting out of the pay-per-view business, there's a time and place for it, and it's how the UFC was built and it made a lot of sense, and it was a big winner for many, many years, but we're past that. And we want our content to be accessible to the broadest audience possible. and not having that big pay-per-view price allows us the opportunity to do just that. They see the promotion. They feel the weight of the marketing. They see the matchups. Hopefully, they have a rooting interest or they're just a casual fan that wants to sample. They know where to go and they can get it at a very affordable price even in this economy.

Maybe just staying on distribution. So in any given year, you have a number of your UFC international media rights coming due. Can you speak broadly to the market opportunity there and kind of how you approach selling the fight nights and the number of events abroad?

Yes. International also is strong. I would tell you that we signed China earlier this year with Migu. We actually, in the fourth quarter, we re-signed in Australia and New Zealand. And we're getting healthy increases, albeit much smaller dollars, David, than what we get on our domestic -- and right now, we're just about finalizing Spain, Belgium, Netherlands and Scandinavia with Canada on the horizon. And we're seeing 40% to 50% increases in the AAV on these deals. Again, smaller dollars, much smaller dollars. But nonetheless, it's a good trend.

Are you finding any particular distribution in those markets? Or it's all market-by-market basis?

It is market by market. And by the way, some -- it's not only some markets are linear still and some are linear and digital simulcast and some are just digital only, streaming is what I mean to say there. But at the same time, on some of these markets, we're just selling the numbered events. And in some of these markets, we're just selling the fight nights and the library or it could be a mismatched combination. So different strokes for different folks, different checkbooks out there, different appetites. And again, we're a young sport. We're not -- we haven't been around 100 years like Major League Baseball. We are still very much in the fan base building mode.

So you touched upon this earlier, but when TKO reached agreements with UFC on Paramount, and I think this applies to WWE on ESPN, but a highlighted key negotiated benefit was advertising inventory for the company on live streams. Maybe can you just speak to how you're executing against that to date.

Yes. We're in the process. We're actually in the latter stages of hiring adding on, bolting on to our team experts that sell media. It's a different sell than selling sponsorship, global partnerships, even really than selling digital. So we're -- we've built up our team, frankly, a lot of names from my past at ESPN, and I think some of the best-in-class that are out there today from a streaming perspective. And we will begin to start offering packages of inventory that have, of course, signage and have, of course, integration, have broadcast integration, very different in arena, outside the arena, retail marks et cetera, but also include actual media.

Now we don't want to get in the way of Paramount, right? They paid a lot of money, made a big investment in the UFC, and they're out there selling those packages. So we're not going to compete with them, but we're working, I would say, in tandem on various categories of where we're going to sell or where they're going to sell or where we can play kind of the B train to their A locomotive.

Maybe just staying on partnerships and marketing. So TCO, as you noted, has provided a goal of $1.2 billion in revenue by 2030. You ended 2025 at $475 million around there. Maybe just help bridge those two figures, how you think about the biggest opportunities, including items like new inventory, new sponsors, new categories.

Yes, it's a mix. It will always be that. We have categories that peel off year by year that we renew at big increases given where we are versus where we were. Keep in mind, just on the UFC alone, we're in 170 countries. So there's global opportunities as well.

But then we also have new categories that we're finding all the time and kind of beating our chest about our creativity in finding those categories. And then we're also, as I mentioned with the media, we have more inventory. We have really a diverse portfolio of inventory to sell. So you have some advertisers coming to the table that are just looking for digital media buys. You have some that are still looking for linear broadcast. You have some that really want that experiential activation and some are all of the above. And I think we're benefiting on all fronts. Obviously, this is an ambitious guide to get to the $1.2 billion in 2030, but we feel great about it. And to your point, we did approximately $475 million last year just on the UFC and WWE. Remember, the $1.2 billion is for all the TKO. $75 million just on UFC and WWE, and that was ahead of our $450 million plan that we had stated publicly.

Okay. So you highlighted earlier, UFC Freedom 250 that event less than 4 weeks away now. I guess, besides the incredible image of an Octagon placed on the White House Lawn, what should we all be looking forward to from the weekend?

Yes. I will tell you, as I mentioned on the earnings call, we will be meaningfully higher on the spend for Q2, which is where, of course, the June 14 event takes place. And that's really due to the fact that the -- it's just blown up, right? It's -- the festival that's going to be happening adjacent on the Ellipse has gotten bigger. Zach Brown is playing there. The whole festivalization of the events, we've added a fight to put 7 on the card, up from 6.

So we'll still have what we guided to, which was a $30 million loss, which is just a onetime, but the expenses will be up meaningfully. But it's going to be a show, right? It's Flag Day. It's the President's birthday. He's one of the biggest -- not just, by the way, UFC fans, he's a major WWE fan. He's in the hall of fame actually at the WWE. So he's very much behind this. We're working hand in glove with the administration. We're 2 weeks away from being basically on site to get the build up in time for the June 14 event.

And we're having all kinds of client events and dinners and activations. And as you can imagine, all of our global partners want to come to the event, and we aim to please. So this is an international event. I mean this is the true event where we're going to be having news outlets cover the event, not just the sports media. So it should be very exciting. About 4,000 people will be there. 1,100 will be military guests, friends and family. And then between us and the White House, which mainly means the White House, there will be another 2,900 guests.

For WWE and UFC, you noted earlier financial incentive payments as a growing revenue line target of around $400 million by 2030. Maybe just expand on how you plan to develop the model and then how you weigh the offsets to the FIPs like sometimes doing events in small regions?

Yes. Look, it's -- frankly, there's not a lot of science to the weight part of the question. So keep this in mind. I mean, look, you're always balancing in this business, even what cities we choose to go to, even if there wasn't financial incentive packages, you're always balancing what's best for the brand, what's best to serve our current audience, what's best to grow our future audience and expand our audience.

And then, of course, who's at the table with what kind of financial incentive package. I think as part of this, it's important to understand the thesis behind our financial incentive package strategy, which is pretty clear cut. We have premium content that is in demand. And as such, there needs to be government and private financial incentives that reflect the economic and cultural impact we bring to these cities and regions. And that's where the rubber meets the road. That's where the conversations take place.

I would tell you that it's very robust right now in the marketplace. Every time we do a big deal, we announce it. You saw we announced a big deal in Arizona, where we'll be bringing seven events over the course, multiyear, multi-events. We also have Philadelphia, which we just announced with Governor Josh Shapiro. And that's -- we haven't been to Philadelphia in a while, and that's a good deal for us.

And then, of course, we just announced our Baku, Azerbaijan. So you see the stretch from Philly to Baku. And the line is long and even our current partners as evidenced by our announcement this morning. I mean, Abu Dhabi already has a lot of UFC, but here they are looking for more. Saudi already has a lot of WWE, and here they are looking for more. So it's a robust marketplace. Our premium content is in demand. We have a number of different geographies that want to play. We are not out there maximizing the market in terms of dollars, that will never be the case. We will do always what's best for the product, what's best for the brand and at the same time, try to balance the economic impact we'd like to have on our balance sheet.

With WWE, I think Backlash was your seventh PLE on ESPN Unlimited. Can you just speak to the evolution of the product since you launched with WrestlePalooza and what it's meant to have WWE integrated with that ESPN brand that I know you know very well.

Yes. I think the marketing that ESPN has put behind the WWE is beyond anyone's imagination. And that's certainly where we stand. I mean, to sit there on a Friday, even a Thursday and see all the promotion, all the content, all the interviews across First Take, which is the show was hosted by Stephen A. Smith, highly rated, Get Up, which is hosted by Mike Greenberg, highly rated. The Pat McAfee show, he goes on for 2 hours. Obviously, he's a commentator on WWE events. So it makes a lot of sense. It's very authentic. It's very seamless. And then he goes and does another hour on YouTube. -- it's just incredible.

The amount of weight they're putting behind this. And obviously, we are a major tenant and anchor of their ESP and unlimited strategy. They have now closed many of their deals with their platform providers. I think we're waiting on YouTube TV, which is an important one because a lot of Gen Z is watching through YouTube TV. I know certainly, my sons are. So I'd like to see that deal get done and I think they're going to get it done fairly soon and make a big announcement out of it, and that will just play to our favor.

Then they'll have all their deals done and then it just becomes an education process and how easy it is to sign up for ESPN Unlimited. especially if you already have a deal with the satellite provider or a cable provider where you can just authenticate and not have to pay any more money incremental. So that's going to be a great story for us and ESPN is going to get take up because the roster, meaning their portfolio of content is so extraordinary. And now they have MLB.TV on there as well. So if you want all your regional games from an MLB perspective, you get it all at ESPN. I mean it's really a great value play. It's just going to take some time to get the kind of take-up that they would expect and we would expect.

Before we pivot, I want to ask about the domestic media rights market, a lot of eyes on the NFL, whether they enter the market early, there's a significant implication for properties coming after MLB, NHL, you go further down the line, NXT SmackDown. So this is my really early question about how you're thinking about the rights landscape.

Well, look, we've got $15 billion of deals that are contracted for the next 5 to 7 years. So recurring high-margin revenue that is locked in place. So we're sitting in a good place. There's all kinds of opportunities, ancillary programming or maybe you're adding fights or different events to any of those sides, not to mention some of the other TKO stuff like Zuffa Boxing or like PBR, which is a winner for us as well. So you're always looking to be creative on that front. But we're locked and loaded.

Nonetheless, we pay attention to it, especially as budgets get constrained or get expanded in the case of Netflix, ever since they got out of the WBD pursuit. And we look to take advantage of that marketplace. If the NFL, which is the best sports and entertainment property in the entire world, goes out there and takes -- and ends up renewing their deals across the board, surely, that's going to take some money out of the system. But I believe that would probably affect other Tier B or Tier C properties. The premium inventory, the premium content that draws the big eyeballs that gets the major engagement. If you keep investing in that and those kind of properties, I mean, from an investor standpoint and as a content creator, us, meaning TKO investing in those properties, not taking it for granted that we already have deals locked up, then you're going to be in good shape.

Okay. Maybe just one last one on UFC WWE before we pivot. But this last weekend, we saw on Netflix, they staged a fight between Ronda Rousey, Gina Carano. I think it was reported that, that was pitched to UFC. Just maybe kind of help us understand why ultimately, that wasn't the right fit for you.

Yes. That's a good question and obviously a timely question. Look, it was pitched to us beforehand and we did turn it down. That's to take nothing away from Netflix. First of all, they're a great partner, and clearly, they know what they're doing across the board in every genre right now. That's -- you don't get to 300 million or 350 million subs for nothing. Their content offering is unique and really, really distinct and kind of has something for everyone. They're in the big event business. They've been very clear about that.

They're not looking necessarily to buy out leagues. That's why they did the Major League Baseball opener. That's why they do the Home Run Derby. That's why they just did a 5-game package with the NFL. They want big spectacle events, and they saw this as a big spectacle event. We're in the true MMA business on a meaningful consistent basis. And when we looked at this potential match up, keep in mind that there is a real art and skill to matchmaking, right?

When you ask Hunter Campbell and Dana White, what they think about that match up prior to the fight happening, the answers we got back, and I mean, Ariel Emmanuel and myself was that fight will be over in 20 seconds. They were off by a few seconds. And I don't believe that a fight like that, just the way it played out is really good for MMA because -- especially because it's Netflix and they have such an incredible global audience, and it's a massive audience. It's a highly engaged audience that is going through sample, depending on what comes up on the front page with Netflix, for them to then go to that fight and then think that's what MMA is, I don't believe is good for the sport long term.

And we saw it that way and decided to pass on it, taking nothing away from the legend obviously that Ronda Rousey is and the win that she got. And I guarantee incredible viewership numbers that Netflix will soon report. But for us, it was more of a stunt then a meaningful MMA event.

Got it. Maybe pivoting. So Zuffa Boxing launched earlier this year. It has distribution on Paramount+. Starting a league is never easy. We saw that recently you've been with LIV Golf, Mark, you've seen a number of start-up leagues come and go over the years, right? So what kind of gives you confidence in Zuffa?

Well, look, we're -- as I mentioned earlier, we're ahead of our internal forecast. It's already profitable. We have tremendous partners in Saudi that are very aggressive. I mean, they would like to see us -- we reported we'll do 16 or 17 events. They would like to see us ramp that up. And of course, you've seen how active they've been in the super fight space, which is like Canelo Crawford, which we put on. We did the media deal, and we worked on sponsorship with them, and we also produced the event, and we also promoted the event.

So they like to see more of those matchups and they want to use those matchups to drive Zuffa Boxing. But we're just in a good place. We've already signed over 100 fighters. As I mentioned, we have our deal with Peace Guy, which is multiyear. We have our deal with Sky. And of course, U.K. is a huge market for boxing. And we're in the space of building firm value.

And we're in the space of building firm value. And as we hit certain milestones, we earn into more equity, and we're just about to earn into our second tranche of equity. So boxing is right for this. I mean, it just -- it's really right for this opportunity. It's been just too scattered, too messed up, too much corruption, too many promoters, too many sanctioning bodies. Just hard as a fan, and I begrudge no one, their livelihood. But too hard for the fan to be able to follow and make sense of it, not to mention to actually create superstars and household names like dating myself growing up a Sugar Ray Leonard, we need more of that.

And that's what Dana White and Nick Khan are setting out to do at Zuffa Boxing. And we have a ready willing and aim partner to stay behind them. So really optimistic about this opportunity, especially because we're in a place, even though we remind the street that this is a year of execution, we're in a place where we're constantly being asked what's next. What are you going to buy? What are you going to acquire? What else is out there? And we're not hunting for anything. Instead, we haven't right here homegrown in boxing, Zuffa Boxing.

Got it. You talked earlier about the World Cup and on location. Maybe just with that event a month away, speak to how demand is shaping up and the learnings you've gotten from that and Milan as you ILA in 2028?

Yes. Milan was a terrific event. Look, I wish that they had all their facilities built a little earlier because I think they could have done even better on ticket sales in experiential hospitality. But nonetheless, it was an extraordinary Olympics, extraordinary performance from the United States as well, and that always helps because Americans travel to Olympic games consistently.

And when they're there, they spend in a big way. So Milan was a tremendous event. Milan itself was incredible. Cortina and the village and what they offered there was a site to see. And that bodes well for what's to come in L.A. always good to get it back on U.S. soil, and that will be a real win for us. And the World Cup itself, I mean, you can't get better. Mexico, North America, crazy volume of actual soccer of football fans, and we will take full advantage of it. And all the trends are there.

And David, if you can have these kinds of trends with the geopolitical issues we're seeing from a macro perspective, that just gives you great enthusiasm and confidence for what's to come with L.A. And we're out of the gate strong and much more to come because, as you know, L.A. '28, they've just been teasing some ticket sales is what I'd call it, right? They haven't put big allotments out there yet. So the big stuff is still way in front of us.

Got it. We have about a minute, but your guidance for the year includes 600 basis points of margin expansion. Mark, you get this one off in, but as you execute across these growth initiatives, how do you think about managing that expense base long term?

Yes. Look, we are -- I mean highly focused from the start to finish from the top of the house to the bottom of the house on margin accretion. And to your point, at the midpoint of our guidance has us up 600 basis points to 40% margin. And at the same time, we're very focused on those FIPs. Build value, make the product better, more great storylines, good rivalries, good stars, and you're going to be able to sell those FIPs.

And keep in mind, the TAM is 500 events a year. It's not just the number of events at UFC or the PLDs at WWE. It's the fight nights, it's the PBR, it's Zuffa Boxing, it's Raw, it's SmackDown, it's NXT. So there's a lot to sell. So we think there is ample opportunity for more margin accretion specifically in the next 2 to 3 years. And at the same time, we're very lean on the cost structure. But you have to balance being lean with investing in your product. We will always invest in our product. We are doing just that. And as it relates to fighter pay or it relates to superstar pay, we are uniquely, I would say, uniquely focused on it and looking at every opportunity to provide more capital for those investments and also from an ancillary perspective, seeing that our partners, global partners and some of our geographic partners are focused on our fighter pay and our superstars as well.

That's a good note to end on. Thanks, Mark.

Thank you, David.

Hello, everyone. Thank you for joining us, and welcome to TKO's First Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the call over to Seth Zaslow, Head of Investor Relations.

Good afternoon, and welcome to TKO's First Quarter 2026 Earnings Call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least 30 days. After prepared remarks from Ariel Emanuel, TKO's Executive Chair and Chief Executive Officer, Mark Shapiro, TkO's President and Chief Operating Officer; and Andrew Schweimer, TKO's Chief Financial Officer, will open the call for questions. Mark and Andrew will be handling the Q&A. The purpose of this call is to provide you with information regarding our first quarter 2026 performance. I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties and assumptions.

Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website.

With that, I'll now turn the call over to Ari.

Thanks, Seth. 2026 is off to a formidable start, especially considering the macro environment. The key growth drivers we outlined in February, media rights, live events and experiences global partnerships and financial incentive packages, all delivered as planned in the first quarter, in line with our guidance. We are introducing our live events and experiences to new markets around the world while capitalizing on all the revenue generators inside our machine and our newer properties, most notably Zufa-Boxing, are on accelerated growth tracks.

TKO sits squarely at the center of a growing sports and entertainment ecosystem. As AI transforms how content is created and consumed, the value of our IP and properties increases. Our content is live, it's communal, it's scarce, and no algorithm can replicate it. Reflecting our conviction in TKO and its long-term value, we've announced an incremental $1 billion share repurchase authorization, complementing the existing program, which we expect will be largely complete in the near term. We firmly believe TKO is built for what's ahead. Mark will take you through the quarter in greater detail.

Thanks, Ari. As we said on our last earnings call, 2026, is a year of execution. Q1 performance has now validated that focus. We're activating our new media rights deals. Our Live Events box office business has continued momentum and as such, our financial incentive packages pipeline is growing. Q1 results reflect the uplift from new rights deals, demand in the experienced economy and progress toward year-over-year EBITDA growth in excess of 40%. Before I get into highlights from the first quarter, I want to address activity in the Middle East and neighboring markets.

First and foremost, we are firmly moving ahead with our scheduled events. Building on a successful debut in 2025, UFC returns to [indiscernible] with UFC Fight Night Baku on June 27. That same night, WWE host Knight of Champions from Riyad, Saudi Arabia. This historic TKO doubleheader reflects a commitment by us and our respective partners to bring world-class events to fans across the region, even and despite a challenging environment. I would add that following the news of PIF withdrawing its funding in Live Golf, our partners in Saudi Arabia have confirmed that will not be the case with TKO. Their commitment to our properties in 2026 and beyond is unwavering. As such, after these 2 events, we expect the remainder of our 2026 slate in the Middle East comprised of 6 events inclusive of UFC WWE and Zopa boxing to take place as planned. The demand is real.

Our partners are committed and we are leaning in TKO benefits from having defensive model business characteristics. Now an update on our growth drivers, beginning with media rights. UFC's Paramount Plus debut on January 24, set the bar reaching more homes than any UFC events in nearly a decade, but it was our number of events in March that showed the real power and potential of this partnership. Our first CBS simulcast, UFC 326 was the most watched live UFC event since 2016. The CBS audience alone was more than 270% above last year's UFC average on linear before accounting Paramount+ streaming. That's the sampling engine at work.

New fans are discovering UFC on CBS and Paramount+ and they are staying. Equally important, our content is now more accessible than ever for our fans. Both dynamics are real, and both are showing up in the numbers. At WWE, our ESPN partnership is gaining traction. Elimination chamber at the end of February drew a meaningful year-over-year viewership increase on ESPN Unlimited, which is still building its sub count and distribution. Just a few weeks ago, WrestleMania 42 had strong ratings across both ESPN and ESPN2, including day 1, Saturday's broadcast, marking ESPN2's most viewed telecast of the year. Our existing media rights partnerships continue to expand in scope as well. When we announced the ESPN deal last August, we noted that we had retained several content categories for further monetization, including the WWE archive and NXT PLEs. We've now turned both into incremental revenue gains.

Early in Q1, Netflix became the official U.S. home of WWE's archive, which comprises decades of WrestleMania, SummerSlam and Royal Rumble content. Netflix confirmed this deal actually in direct response to early success they've had with WWE's premium content, not to mention the traction they are witnessing with the second season of Unreal, our WWE series. Just last week, we announced the [indiscernible] already the home of NXT's weekly Tuesday night programming will become the exclusive home of all NXT PLEs, adding some 20 live broadcast to a partnership that has made NXT the network's top-rated program among key demos. Suffice to say, strong secular tailwinds persist in the sports media ecosystem.

Now turning to live events, where demand across our portfolio continues to build. At UFC, live events sold out in the first quarter from Las Vegas to London and Sydney to Seattle where we recorded our highest ever fight night date in North America. We anticipate the momentum will carry into the second quarter with all eyes on UFC FREEDOM 250 at the White House, a once-in-a-lifetime spectacle on June 14. Ram trucks and Crypto.com, are signed as co-presenting partners of FREEDOM 250 and the limited marketing inventory available for this singular event is now sold out.

I mentioned on our last call that we anticipated losing $30 million on UFC Freedom 250, and that's still the case. Despite meaningfully increased costs associated with an expanded Fight card and the 2-day festivilization of this event on the Ellipse, which is adjacent to the White House. The UFC calendar keeps building beyond that with financial incentive package backed events taking place in Philadelphia and Serbia later this summer, further expanding our footprint into new markets with growing fan bases. On that note, at WWE, we successfully staged our first ever Royal Rumble outside North America, and elimination chamber in Chicago became the second highest arena gates in company history. Meanwhile, across our WWE main roster touring schedule, live events from Lubbock, which was on Valentine's Day, to Laredo, which took place just over a week ago sold out, 2 months and just a 500-mile distance between the 2 cities both sellouts. The underlying demand for our live events is indeed resilient and durable.

Last month's WrestleMania 42 was a highly successful and profitable event. In fact, more than 106,000 fans showed up over 2 nights in Las Vegas. And financial incentive package economics were meaningfully ahead of last year. Now separately, we fielded some investor questions in WWE demand and the state of creative, driven by online commentary and the year-over-year WrestleMania ticket sales performance. Let me say that we are not concerned about the ticket performance whatsoever as it was unrealistic to expect year 2 growth in Las Vegas. And even with that, WrestleMania 42 was still 1 of the highest gates in WWE history and easily outperformed anywhere else we could have staged it.

As it relates to the creative, there will always be periodic fan dissatisfaction around creative execution, commercial load and celebrity usage. We listen to all the feedback. We do not turn a deaf ear, but these are not new criticisms. Lastly, both our global partnerships and financial incentive package targets are tracking as planned. Our pipeline is vibrant for our multiyear calendar of events and inventory, putting us in line with the guidance we have previously communicated. Pivoting to the balance of our portfolio, on location successfully delivered the Milano Cortina Olympic experiential hospitality program for more than 100,000 guests and closed the first quarter with meaningful LA 28 Olympic sales. For FIFA World Cup 2026, experiential hospitality sales ended the quarter at over 2x any previous World Cup program in history, and are firmly on track to meet or even exceed expectations.

At IMG, we are powering Apple's debut season as the U.S. broadcaster of Formula One, integrating every feed to their platform and producing content from our Stockley Park headquarters in the U.K. We have also agreed to a long-term strategic partnership with World Rugby ahead of the 2031 and 2033 Rugby World Cups in North America. I would also underscore IMG's success in the global distribution of our boxing super fights right on strategy. These signature developments our illustrative of IMG's industry-leading expertise across advisory appointments on media rights negotiations, production, brand partnerships and event management. IMG is truly 1 of one.

Next up, PBR. Professional Bull Riders opened the year with record performance in 7 markets, including its debut Boston's TD Garden and its largest ever attendance at Madison Square Garden in January. PVR's team series has also approved a 2 franchise expansion expected to grow from 10 teams to 12 teams for the 2027 season. Now when we launched the league 5 years ago, teams sold for roughly $3 million each increasing to just over $22 million in the first expansion round in 2024. Now just 2 years later, we expect new ownership groups to pay multiples of that.

Finally, turning to Zopa boxing, where our progress is exceeding our internal growth plan and time line. We've already signed more than 100 finders. We've staged 5 events with solid viewership on Paramount Plus and we've secured a multiyear deal with Sky Sports for the U.K. and Ireland, 2 of the most pivotal and important boxing markets in the world. We've also signed media rights deals and more than 15 additional territories, spanning EMEA and APAC. This is the IMG thesis and strategy at work, IMG responsible for all the deals across all the territories. And now with events about to depart the Meta Apex in Las Vegas and go out on the road, the next phase of our growth plan is underway.

In summary, Q1 at TKO was as we anticipated. And the growth drivers I just walked you through are not just performing they're compounding. And engagement metrics across viewership and ratings, social media clicks and views, global brand partnership demand and the aforementioned live attendance remain rock solid. Andrew will now take you through the financial results and outlook.

Good afternoon. As Ari and Mark highlighted, 2026 is off to a strong start. We delivered positive operating and financial performance across our businesses, and as such, are reaffirming our full year outlook. Before I get into more detail on our financial results, I want to comment on our events calendar as well as trends we're seeing in consumer demand as we know these are topics on investors' minds. We're closely monitoring the developments in the Middle East and the potential implications on our business. We're in close contact with our partners in and around the region, and we're actively tracking government advisories and security assessments.

For the avoidance of doubt and as previously announced, we're planning for and moving forward with the events that we have scheduled in the region on the same dates we anticipated when we set our plan for the start of the year. We have 2 events scheduled for the last Saturday in June, a WWE PLE Night of Champions in Riyadh and a UFC Fight Night in Baku, Azerbaijan. The balance of our planned activity includes an event in Abu Dhabi in late July and several events in the fourth quarter.

With respect to consumer behavior, as Mark discussed, we continue to see healthy demand for premium live events across our portfolio as TKO was firmly situated in the center of this ecosystem. Our business benefits from a high percentage of contracted revenue, including media rights, global partnerships, FIPs and consumer products licensing anchored by multiyear high-margin fixed fee agreements with annual escalators that provide attractive visibility, predictability and cash flow generation. This provides us with a unique, durable platform to drive modernization.

Moving to our consolidated results for the first quarter. We generated revenue of $1.597 billion. Adjusted EBITDA was $550 million. Our adjusted EBITDA margin was 34%. Revenue increased 26%, adjusted EBITDA increased 32% and adjusted EBITDA margin increased approximately 150 basis points as compared to the prior year. UFC generated revenue of $401 million in the quarter, an increase of 12% or $41 million. Adjusted EBITDA was $255 million, an increase of 12% or $27 million. UFC's adjusted EBITDA margin was 63%, on par with the prior year period. UFC had 9 total events in the first quarter of '26 compared to 11 total events in first quarter of 2025. Event mix shifted slightly with both the first quarter of this year and last having 3 numbered events.

However, as we previewed on our last call, Q1 '26 included only 6 fight nights compared to 8 in the prior year period. Q1 2025 also benefited from a fight night in Saudi Arabia that carried a meaningful financial incentive package. Later this year, we anticipate hosting a similar event that will also carry a significant FIP. Media Rights production and content revenue increased 23% to $275 million. The increase was driven by a step-up in media rights fees related to the Paramount deal that began in January, partially offset by lower media rights revenue recognition as there were 2 fewer fight nights in the quarter.

Partnerships and marketing revenue increased 4% to $67 million. Despite 2 fewer events, we still managed to deliver an increase driven by the addition of new partners and renewals of existing partners at higher rates. We continue to make significant progress adding new categories and growing existing ones, including the recently announced deals with BET 365 as well as free nicotine and SuperShure, which span multiple TKO properties.

As expected, Live Events and Hospitality revenue decreased 17% to $49 million. The decrease was due to lower revenue from financial incentive packages, driven by the aforementioned Saudi Arabia event, partially offset by an increase in ticket sales. As Mark highlighted, in Q1, we continue to see strong demand for our events, including sellouts for all 3 number events and several arena records. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses primarily reflected an increase in athlete production and other event-related costs driven by UFC 324, our first event under the Paramount rights deal.

SG&A increased primarily due to higher personnel and travel costs compared to the prior period. While normally, we don't focus on the timing of revenue and expense recognition, both are important to note this quarter because adjusted EBITDA margins were on par with the prior year despite the step-up from the Paramount rights deal. There are 3 items worth mentioning. First, we held 2 fewer fight nights, which carry sizable revenue allocations from our various media rights and partnership agreements. These are high flow-through revenue streams that will lead to incremental margin when those events occur in future quarters. Second, prior year margins benefited from the FIP related to the Fight Night and Riyad, which we anticipate to be held later this year. And finally, we incurred higher-than-normal costs related to UFC324 to ensure a strong start to our Poweramount relationship.

For the full year, we expect UFC margins will meaningfully outpace 2025 exactly as our guidance suggests. Our WWE segment generated revenue of $476 million in the quarter, an increase of 22% or $84 million. Adjusted EBITDA was $256 million, an increase of 32% or $62 million. Adjusted EBITDA margin was 54%, up from 50% in the prior year period. Live Events and Hospitality revenue increased 62% to $123 million. Results reflected an increase in revenue from financial incentive packages related to the favorable impact of Royal Rumble in Saudi Arabia in Q1. Media Rights production and content revenue increased 12% to $282 million, primarily reflecting higher media rights fees related to the agreements with ESPN and Netflix.

Partnerships and marketing revenue increased 2% to $26 million, driven by new partnerships and renewals across multiple categories. This growth came even with additional international events, including a 12-day European tour in January as well as Royal Rumble, which cater to and serve to grow our global fan base. Though it occurred in April, RustlMania 42 was emblematic of the momentum we're seeing in this area. The event featured a record 32 total partners, including Snickers, 2K, Riyadh season, Ram trucks, DoorDash and MiniMed, among many others. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses.

Direct operating expenses increased primarily due to higher talent and production costs, most notably related to holding Royal Rumble and Saudi, which, of course, carries a higher cost structure versus other POEs. SG&A increased primarily due to higher travel costs, driven by an increase in the number of international events in the quarter. Adjusted EBITDA margin improved by 4 percentage points. The increase would have been even higher except for several timing-related items. We made a strategic decision to increase the number of NXT non-televised events. The goal of this strategy is based on a desire to get younger talent, more experience in front of live audiences.

We believe this will accelerate their development and readiness to join our main roster. The aforementioned European tour also resulted in an increase in international events compared to the prior year. While our international shows tend to have lower margin profiles due to increased travel and logistical costs, we believe they serve to increase fan engagement and overall monetization. As with UFC, for the full year, we expect WWE margins will meaningfully increase compared to 2025.

Shifting now to our IMG segment. We generated revenue of $655 million, an increase of 38% or $179 million. Adjusted EBITDA was $97 million, an increase of 32% or $24 million. Adjusted EBITDA margin was 15% on par with the prior year period. As we previewed on our last call, the increase in revenue primarily related to the favorable impact of the Milan Cortina Winter Olympics around location, which was on plan and in line with our guidance. Revenue at the IMG business increased slightly over the prior year period, as new production agreements and boxing commissions were offset by the absence of the Arabian Gulf cup, which is a biannual event.

Adjusted EBITDA primarily reflected the increase in revenue, partially offset by an increase in expenses. Expenses reflected costs related to the Milan Cortina Olympics as well as continued meaningful planned prespend for LA 28, namely to support increased sales efforts, which Mark highlighted are off to a strong start. Corporate & Other generated revenue of $74 million, an increase of 36%. Adjusted EBITDA was negative $58 million, an improvement of $19 million compared to the prior year period. The increase in revenue is primarily driven by higher media rights and partnerships revenue at PBR as well as higher management fees for services related to our boxing initiatives. Adjusted EBITDA primarily reflected the increase in revenue and a $22 million decrease in costs related to the absence of allocations of Endeavor corporate expenses under its ownership of IMG on location and PBR.

As we discussed on prior calls, from the close of the acquisition on February 28, 2025 forward, there are no endeavor corporate expense allocations included in our financial results. These improvements were offset by costs incurred to replicate the services previously provided by Andeavor as well as an increase in personnel and other operational expenses.

Now moving on to our capital structure. In the first 3 months of the year, we generated $675 million of free cash flow. Our free cash flow conversion of adjusted EBITDA was 123%. Free cash flow included the favorable impact of $582 million of net collections related to on location for the FIFA World Cup. Free cash flow also included the unfavorable working capital impact of UFC's new media rights deal with Paramount. As with prior years, first quarter cash flow was also impacted by annual bonus payments as well as negative working capital related to the seasonality of our businesses. As already conveyed, maintaining a robust and sustained capital return program remains a top priority for us.

In the first quarter alone, we returned approximately $1 billion of capital to equity holders through our dividend and share repurchases. On March 31, we made our quarterly cash dividend payment from TKO OpCo of approximately $150 million or $0.78 per share. We intend to continue to fund quarterly cash dividends with cash flow from operations or cash on hand. Regarding share repurchases, as we disclosed in our earnings release, our Board of Directors has approved up to an additional $1 billion of share repurchases in addition to our previous authorization of $2 billion.

Given the strength of our balance sheet and what we believe to be a dislocation in our stock price relative to its intrinsic value, we are positioned to continue deploying capital towards what we view as a highly value-accretive opportunity. In the quarter, we repurchased $38 million of shares under a 10b5-1 trading plan that we entered into in September 2025, which expired on February 26. In March, we entered into an ASR agreement to repurchase $800 million of our Class A common stock. We received an initial delivery of approximately 3.1 million shares and expect to complete the ASR in short order. We also entered into a 10b5-1 trading plan for the repurchase of up to $200 million of Class A common stock.

Repurchases contemplated under this 10b5-1 plan are to commence immediately once the ASR agreement is completed. Share repurchases under the ASR and 10b5-1 plan are being funded with proceeds from the $900 million term loan add-on that we closed on March 10, as well as from cash on hand. We ended the quarter with $4.671 billion in debt and $789 million in cash and cash equivalents, in addition to $937 million of restricted cash. As of Q1 2026, net leverage was 2.3x based on net debt of $3.82 billion and LTM adjusted EBITDA of $1.718 billion.

Now turning to our outlook. As we say consistently, we managed the business with a focus on full year performance. Therefore, we believe results are best evaluated on a full year basis, given the quarterly fluctuations that are inherent in our operations, most notably related to the timing of our live events and the mix of locations, venues and cards. As noted in our press release, based on our performance for the first 3 months of the year and our anticipated performance for the remainder of the year, we are reaffirming our expectations. For full year 2026, we continue to target revenue of $5.675 billion to $5.775 billion and adjusted EBITDA of $2.24 billion to $2.29 billion.

As articulated on our Q4 earnings call, this outlook reflects anticipated revenue growth of 21%, adjusted EBITDA growth of 43% and margin expansion of approximately 600 basis points to 39.6% at the midpoint of our guidance. This performance is expected to be driven by robust growth across media rights, live events, including FIP and partnership revenue. Consistent with our prior calls, while we're not providing quarterly guidance, we want to highlight a few notable items as we look to the second quarter.

At UFC, Media Rights revenue will continue to reflect the step-up from the Paramount Rights feel. The mix of live events in the quarter will also impact results. We expect the Stage 11 events in Q2, UFC Freedom 250 at the White House in June as well as 2 numbered events and 8 fight nights. This compares to 11 events in Q2 '25, which included 4 number of events and 7 fight nights. As Mark discussed, UFC Freedom 250 is a once-in-a-lifetime event that will highlight the brand on the biggest stage possible. That comes with a unique financial profile, where our expenses will meaningfully exceed the limited partnership inventory we have sold and we expect to lose approximately $30 million on this event.

With respect to Live Events revenue, the Fight Night schedule to take place in Baku Azerbaijan carries a meaningful financial incentive package, part of a multiyear renewal at a higher per event fee than we realized in the same market in Q2 of last year. At WWE, given the timing and mix of our event calendar, including WrestleMania as well as a premium live event in Saudi Arabia, we expect the second quarter to be by far the highest revenue and adjusted EBITDA quarter of the year in terms of absolute dollars. Media rights will continue to benefit from the step-up of our agreement with ESPN.

With respect to Live Events revenue, the Saudi PLE carries a meaningful FIP, but as a reminder, we held a similar event in the second quarter of 2025. At the IMG segment, we expect results will be driven by on location with the World Cup starting on June 11, as well as notable events in the quarter like the Final 4 and fell draft. It's also a big quarter for our IMG business with many of the largest soccer leagues in the final month of their season, the start of Wimbledon and the first full quarter of the MLS season. While the World Cup is anticipated to have a positive impact on adjusted EBITDA, our sales efforts, as mentioned for LA 28, will have ongoing costs that are expected to partially offset such impact.

In terms of free cash flow, while we have not given formal guidance, we continue to target a free cash flow conversion rate in excess of 60%, normalizing for 2 notable items. The impact of net payments related to the World Cup and UFC's rights deal with Paramount. We generated strong first quarter results that reflect continued momentum across our businesses. As we look ahead, we remain focused on operational execution, as well as maintaining our robust capital return program. Anchored by our premium content, live experiential and insulated from AI disruption, we remain extremely well positioned within the sports and entertainment ecosystem to deliver incremental value for shareholders.

With that, I'll turn it back to Seth.

Thanks, Andrew. Operator, we're ready to open the call for questions.

[Operator Instructions] Your first question comes from the line of Brandon Ross with LightShed Partners.

You guys have unlocked a ton of monetization at both USC and WWE over the last several years. But as you noted in your prepared, there's been some vocal fan criticism calling out things like sponsorship and ticket pricing as being excessive. How do you think about balancing fan facing monetization and the fan experience going forward? And do you think those vocal critics are reflective of the larger overall fan base?

Thanks, Brandon. The second part, I can't speculate on what percentage of that social chatter reflects our entire global fan base. But I'll take the first part of it because it is a priority topic for us, and that's why we covered in the prepared remarks. Look, first off, we take any and all feedback, especially from our core fan base, extremely serious, high priority. We listen, we learn, at the same time, balancing the fan experience, I would say, with the business of sports is never easy.

Whether you're talking ticket prices, or commercial integration. It is all this time. And frankly, it crosses genres, right? It's no different than Hollywood when you go to the movie theater and you see the prices rising for admission and popcorn and candy, not to mention the 30 minutes of commercials and trailers prior to the film that's been also excessively talked about. Look, change takes getting used to.

Back at ESPN, when I recall when we took our national ad windows in Sports Center from 1 minute to 2 minutes, there was significant backlash that went on for months. When the NBA as an example, even thought about putting a patch, a sponsorship patch on their jersey, fans cried out. Now there's digital boards and NBA games on the baseline, the courts themselves have sponsors. I mean, look at Major League Baseball, the Dodgers just put a naming rights partner on the field at historic Dodger Stadium. And criticism for the commercial breaks in the final for and college football and the NFL that's something that all those sports have had to manage.

The WWE in particular is truly new to commercial integration and sponsorship and change will be more glaring for some as we inevitably commercially integrate. But I would tell you that, candidly, there's no -- there's really no magic formula brand. And there's no serum for this. There's going to be some trial and error over time. we have experimented, we pushed some boundaries with various events we've leaned in with others, we pulled back. What I can tell you unequivocally, and this is what's most important as it relates to what [indiscernible] Dana do with the UFC and what Nick and Paul do at the WWE and Leshan Gleason does a PBR, our product comes first. And marketers around the world recognize that our product, especially at WWE is strong, and our audience there is particularly unique. It's young, it's diverse, it's hard to reach. It's super passionate and they want access to our IP, those marketers want access to our IP.

And we're working to give them that access while maintaining the balance. And by the way, as we commercially integrate that revenue allows us to be more creative with our product and with our superstars. I would just say, finally, really just remember this that our audience is resilient. We don't take it for granted. It doesn't mean we can do whatever we want to do. Absolutely not. Quite the contrary, but it is resilient. And currently, we are experiencing record attendance, record viewership, and record engagement.

All right. While we're on the topic of...

Your next question is from Sean Diffley with Morgan Stanley.

Mark, I think you mentioned financial incentive packages growing, and you guys referenced Azerbaijan as a good example. I was curious if you could elaborate on some color and texture on what new deals are looking like and conversations are looking like? And is there any impact from the Middle East there on a go-forward basis? And then curious as PG and WBD potentially combine what that could mean for UFC and Zopa in terms of HBO plus Paramount Plus and a combat sports super app.

Yes. First off, Sean, let me just say it sounded like we cut off branded. So Brandon, if you're listening or still on or maybe you got disconnected, just hit back and we'll come back around to you. Sean, you had a bunch of questions there, and we'll, of course, cover the board. Look, we're excited about this Paramount WBD combination. I can't really comment on who's going to carry us, who's not, who's going to promote us, who's not, who's going to market us, who's not, how much when and where, but the idea of all of these assets, platforms and reach devices being in the hands of David Ellison and his team, just given what we've seen already from this partnership, we are ecstatic and frankly, anxious for them to close this deal and for us to get to the table and start brainstorming what we can do with all their platforms. And that's not just for the USC, that's also for Zopa boxing because there's real growth potential there.

And the idea of just having more eyeballs, bigger audiences, higher engagement, amazing content around us, similar to what we have with Paramount Plus that is something that I can tell you this team is really excited about. And just in terms of Middle East and demand, if you will, and I'll let Andrew chime in as well. I would just want to make it very clear similar to what you've heard on the earnings calls with Live Nation and the Walt Disney Company. We have seen no consumer pullback whatsoever, and I'm speaking from a global perspective. So a lot in front of us in terms of the year. We're, of course, taking nothing for granted. We don't know where this is all going to end up. It feels like every other day, we're hearing that it's just about over and President Trump as a deal only for it not to be, but there were seem to be some good news this morning.

Bottom line is we're on track, you heard in my prepared remarks, our partners are on track. They want us their third to have us there. I think they're, frankly, thirsty to tell the world, they are not just open for business. they are hungry for business and events. And Royal Rumble was a huge hit for us earlier this year in Saudi Arabia, highest grossing gate Royal Rumble, of course, we don't take in that revenue, we get an FIP, but it was just a massive turnout and a massive sellout for Saudi and our partners there, and they want more. And we have more coming. We have 6 more events through the course of the year between Zopa boxing and WWE and UFC in the region, and most of those are in the fourth quarter. So we have some time, and we have 0 doubt that those are going to go off. And the demand for FIP is still strong. Our guidance is where it is. We've communicated that in the past. We stand by that.

Andrew, on the guidance?

Yes. Look, I would say FIP is a major growth strategy for us, and momentum continues. We have not seen a slowdown. We've recently announced a couple of deals most notably in Philadelphia, where we announced USC 330 will be at Xfinity Mobile Arena in August. That's within FIP. So domestic demand for high premium intellectual property. We talked about Baku and Backup is unique because we're going back there after sort of the Hess deal in that market last year with a multi year deal at a higher rate than we received in 2025. We've announced our debut event in Belgrade, Serbia, which will be a fight night in early August as well.

So really no corner of the globe untouched, and we're fairly bullish that this strategy continues to take hold.

Operator, if you can, let's go back to Brandon Ross, I think you got cut off.

Yes. Brandon Ross from Lightshed Partners.

Thank you. Not sure what happened there. The question I was going to ask is there's also been a lot of noise about weaker UFC cards lately. In your view, what's going on? And what are you guys doing to improve?

Well, that's the journalist in you there. I get it now. Look, Brandon, let me leave no stone on term with the direct question. Look, bottom line is we don't buy it. Let's just start with this premise, right? The product is great at the UFC. The brand has never been stronger. Our reach has never been greater. So the foundational elements of UFC are in concrete. Anyone that came to our last numbered fight in Miami, which was UFC327, was flat out blown away or anyone that went to our last fight night which happened to be last weekend in Perth, Australia, a sellout or even watched it witnessed an extraordinary sport.

Look, we are always building at the UFC. We're in the building phase at all times. We find the best up-and-coming talent around the world, and we match them continually in the best fights. There's a huge movement right now with all these young fighters coming up in the ranks. Many of them are taking over slots in the top 10 from guys that have been named in the rankings for years, strong personalities that are busting just now, Joshua van, Brazilian Carlos Preis, under feeder Michael Morais, the next generation or look at the White House card, which we've put out there is a strong card. We've actually added a card to it.

The UFC Freedom 250 which is it's stacked top to bottom, and we're using that opportunity to feature 1 of our most promising stars in Elia Toporia. Dana White and his team have been doing this for 25 years and look, the real truth of it is that we don't get to determine who wins. It doesn't work like that. You take these great personalities who hail from every corner of the world with exciting fighting styles. And if they win, you've caught lightning in a bottle. That's what we do. That's what Dana White does. And there's no better matchmakers in any sport than we have with Dana's team of Hunter Campbell, Sean Shelby, and Mick Maynard. And then I would just say, I'd remind you finally that with any sport, there's just natural ebbs and flows, right? It's all very cyclical.

Again, kind of harkening back to the ESPN days, the MBA was on fire with Michael Jordan. And then he left and there was a bit of a dip. And then all of a sudden, it was Shack and Coby. And as long as Shack and Coby where in the NBA finals, the MBA was in good shape. But the year they weren't there. And or they were playing the next or the San Antonio Spurs were there, there was a falloff and they needed more stars. And everybody talked about it, and earned and cried commented. There was no social back then, but there was still a lot of noise, and now they're uber-rich when it comes to sports personalities and teams that are playing well as evidenced by the homegrown New York next year.

Your next question is from Stephen Laszcyzk with Goldman Sachs.

Mark, you called out the strong engagement momentum you're seeing with your new distribution deals at ESPN and Paramount. I was curious if you could expand on that a little bit and maybe state us on perhaps to what extent you're seeing increases in engagement translate to other parts of the business, like live events or sponsorship revenue, how some of those conversations progress? And to what extent the benefits you think could in the P&L this year and what we've seen so far play out and what's still to come?

Yes. Look, Stephen, just across the board, we're just -- as evidenced by our report today, I mean we're hitting and firing on all cylinders, right? We just -- we have demand and fans, consumers frankly, they're in dire need or thirst for live experiences. And we're right at the top. If they can be there, fantastic. If they can't be there, the next best thing is watching it live. We're the definition of that theory. I mean WrestleMania was -- it hit the top 10 in 33 countries, which is above last year's. That was just for Saturday. The Sunday event hit the top 10 in 24 countries. So they want the unpredictability.

And at the end of the day, given, again, the fan base, the use the demos, the diversity, the engagement. You heard David Ellison on his on the [indiscernible] Sky earnings call talk about the level of engagement they're seeing with UFC, that ultimately is going to translate in big upside, global partnerships upside, financial incentive package upside, folks buying more merchandise because they want to be closer to the brand, right? Just overall, the experience being in the middle of that and then being able to talk about that. So we're clearly bullish given what we're seeing, and we don't see a slowdown. And we're focused on the execution, right? I mean Andrew talked about in his prepared remarks, the jump we're going to see in our EBITDA margin, the guidance we've put out there on the global partnerships and the FIPs.

The traction there, and as it relates to the UFC, we couldn't be more excited about the White House event because it's an opportunity to get more sampling, to get more awareness, and ultimately, that's just going to expand our audience, which is always, always good for business.

Great. And then maybe just on the partnership and marketing front, maybe for Andrew. I think decelerated in the first quarter quite a bit. I was just curious if you could talk a little bit more about the puts and takes of the first quarter revenue growth. dynamic? And then how we should expect growth in this line item to progress as we be looking to the balance of the year across both the UFC and WWE.

Yes. So on UFC partnership and Mark revenue for the quarter increased 4%. And that's largely attributable to timing, if not exclusively attributable to timing. We're bullish. Partnerships and marketing is core to our thesis and we really see no slowdown at UC or WWE for that matter. We had 2 fewer events in the quarter, 2 fewer fight nights and we do allocate and recognize revenue on a per event basis. So nothing to be through on that side. As we look at WWE, partnerships and marketing revenue was impacted by geography. We did have 12 events internationally which historically have been a bit harder to monetize than our domestic events. We did have an event in Riyadh, which had some restrictions that caused a bit of slowdown versus the prior year quarter. But candidly, there's nothing read through or read into, given the fact that we're well on our way to massive year-over-year growth in partnerships.

And we don't -- when we don't -- Stephen, when we don't monetize to the fullest on global partnerships for these international events like we do domestic, we still do well, but we don't do what we do domestically, we make it up and then some of the financial incentive packages. So just to underscore Andrew's point, not to read into it, you've got events international here in the first quarter. This is a timing situation. Our pipeline is robust, and we are closing deals right and left as evidenced by some of the new categories we're finding. And I think there is some conversation continuing about how many categories can be on earth, and we would just tell you that we're chock-full right now. A lot more to come.

Your next question comes from Peter Supino with Wolfe Research.

I wanted to ask about the segmentation of demand. If you guys could share any color on how you see consumers at various price points acting across and UFC and how that informs your strategy going forward in terms of trying to maximize your revenue at a given night, and then you also would talk about the success of UFC on Paramount Plus. Obviously, that bigger stage is great for the brand, and I wondered how you expect that to show up across the business over the next few years.

Yes. I mean it's a little more of the same, Peter, in terms of how it's going to show up across the business. Look, they'll use all the bells and whistles and platforms they have at their disposal and what's to come with Warner Brother Discovery to ultimately get our content to a larger audience. And as that audience converts, and it will do that. I mean that's MMA, right? I think of where it was 20 years ago versus where it is today. Our fan base will grow and as the fan base grows, it just ultimately fuels all these revenue-generating opportunities and pipelines that we have. So we're bullish on that partnership. And frankly, we're bullish on the marketing power of their platforms.

In particular, and while we're just getting a little bit of taste of CBS here and there, that has proved to be a very powerful platform for us. And as you heard on the Peace call, or the age, the average age of our audience is significantly younger than the average Paramount Plus viewer, which helps them. The engagement has been strong, and we're talking millions of minutes that they're watching. And I would say, importantly, they're not just watching the fights, they're watching the ancillary program similar to what's happening with Unreal on Netflix as it relates to the WWE and the success they're having there with frac. So look, wider audience wider reach ultimately equals a larger fan base and a larger fan base ultimately is something that we will work with our partners to monetize.

On the ticket front, look, we're not going to get into specifically how we break out our yield monetization strategy or the AI dynamic pricing tools that we use. But suffice to say, we like what we're seeing. Our gates are strong, and we're more focused on making sure we deliver on the experience that folks are coming out to see. And we believe that coming out to see, as I've already said, is going to continue to really substantially increase. When you have a 4-day work week becoming a standard in the office, I'm talking about, as it has with many countries across the globe, leisure demand stops being concentrated into a Saturday night. It starts spreading into shoulder days. People crave physical aggregation and that plays right into our strategy.

Your next question is from Ryan Gravatt with UBS.

Two questions for me. I guess, first on the PBR. I guess coming off the new rights deals you signed last year and the expansion of the Team series planned for next year. How should we think about the opportunity for growth at that property and the level of EBITDA contribution that it could drive for the company. And then Andrew, I think it was about a year or 2 ago when you first talked about your comfort in operating the business at up to 3x leverage. I'm just wondering if your thoughts around leverage have changed at all now that you have, although media rights deals locked in to the end of the decade.

Yes. So I'll hit the PBR and [indiscernible] I'll take the entire question, Ryan. As I reported, our Corporate and Other segment where PBR sits generated revenue of $74 million in the quarter, which is up 36% over the prior year period. A couple of factors that drove that very impressive growth. Box obviously, is in there as well, but PBR and PBR media rights and just traction in that business is something that we're very, very excited about driving year-over-year increases. We anticipate there to be continued growth at PBR, which will be reflected in that segment. And it is high margin analysis to what you see in both the WWE and UFC segments.

Look, we have an extraordinary financial position. Our balance sheet is strong. We're highly free cash flow generative, we are looking to continue to commit to deploy and return capital to shareholders. As you saw today, as in our press release and our prepared remarks, our board has authorized another $1 billion of share repurchase for us to be opportunistic to the extent we continue to believe there to be a dislocation from geopolitical uncertainty in our stock price. We are just about complete with our ASR, which will then shift to a $200 million 10b5-1 plan when that's all said and done, we now have $1 billion in our toolkit to put to work as authorized by our Board. So how we finance that is TBD. I'm comfortable with our leverage level. I'm comfortable at a higher leverage level because we will naturally delever over time by virtue of the robust growth characteristics of this company.

So you can just pull it forward to 2.3x that we are today at the midpoint of our guidance range, assuming no incremental debt will be well below 2x. And that obviously is an extraordinarily comfortable place to be. And that's not to say we wouldn't look to add more given the natural deleveraging characteristics.

Operator, why don't we take 1 last question, please?

Your last question will be from Brett Navan from Bank of America.

So just 1 for me on. There's been several instances of high-profile one-off fighting events that are just really validating the fan interest in common sports. But I guess the flip side is, this demand could also make good demand for some of your fighters even stronger. So are you finding that it's becoming more competitive to retain top buyers and anything you could share on how Finder comp is tracking this year relative to prior years?

Look, we are data points that I can share Brent is the one that we've said previously, where we -- out of the gate, when we did the Paramount deal, we doubled fighter bonuses at UFC, which is 8-figure investment now is inclusive in our full year guidance. fiber compensation continues to grow at a meaningful clip and we know what our core assets are, and we would never turn a blind eye to our most meaningful investment. So we believe that we made strategic and targeted investments in our athletes and our talent at WWE, not something that's keeping us up at night. It's baked in, Brent.

And at the same time, in terms of competition, absolutely. We have competition everywhere, always have. UFC has more and more competition. MMA, Combat sports, boxing, you see some of the new entrants getting into it, and you know some of the current players across the board. This is a highly competitive space, and we have to be at our best every day with our story lines, with our matchups with who's on our roster. And from Dana to AAA, it's something they think about when they wake up and it's on their mind when they go to bed period. And that's on both sports. I mean we see it really across the board with wrestling and/or with the UFC.

But as long as we're doing our job, right, as long as we're putting the product out in front of us first, and that's our top priority, and it's our top focus. We're listening to the fans. We're serving upgrade experiences around our events. We're driving viewership with our partners, partnerships and our holistic marketing plans Well, then we should stay out in front, but we don't take it for granted, and we never will.

This concludes today's call. Thank you for attending, and you may now disconnect.

Good morning, everybody. Welcome to Morgan Stanley's TMT Conference. I'm Ben Swinburne, quick disclosure. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep.

And I'm really excited to welcome -- kick us off here day 1, Slot 1, President and COO of TKO Holdings, Mark Shapiro. Mark, thanks for being here.

Always. Good to see you, Ben. Last few days. I didn't know if I was going to walk in and get Sean or not. Soon to come.

Soon to come. Soon to come. So last week, you reported your fourth quarter results. You provided 2026 guidance to the market. Maybe just to level set the audience here, talk about the outlook for next -- for this year and kind of the strategic priorities for the company as you look ahead.

Look, I think that we are barring everything else, we're a high-quality execution story, as we talked about on the earnings call with really multiple avenues and levers of outperformance. I think it starts with media rights. In our first couple of years being public here was what's going to happen with WWE renewal? What's going to happen with UFC renewals? Are you going to split it up? How many platforms? I mean, I would tell you that was probably the most popular question of any interview we did.

And we came out of the shoot and we've done an aggregate of $15 billion of media deals across all of our properties over the next 5 to 7 years. So it's strong visibility, recurring, contractual and easy to model when you have that as driving the entire ship. Then you've got our partnerships, right, which we recently said where we had a guide out there or I should say, a target really that was $1 billion by 2030. And now we've raised that to $1.2 billion. And again, mostly contractual, recurring, high visibility, high margin.

On the live events side, despite what's going on in the world, and I'm sure we'll talk about that, we're seeing this big pickup for our events, right? The experience economy is alive and kicking, and we have elasticity on pricing, especially at the WWE, which has been a good story for us. And we've announced a real target for our financial incentive packages, which are fees that are paid to us from local governments and municipalities to bring our show to town, sometimes hard cash, sometimes value in kind, sometimes just subsidies. But we put a target out there of about $380 million to $420 million by 2030.

And at the same time, keep in mind, on a run rate right now, we're at $240 million -- $300 million, but take away some of the one-timers, we're at $240 million. So $240 million to $380 million is going to be a good story for us. I think you flip over to some of the smaller businesses that certainly round out the wheel and sort of our platform strategy, but aren't as high margin, you've got on location where Milan, I was there for the better part of the Olympics, just a sensational story.

I think for sports overall, for culture, for the world, a nice peaceful time for a couple of weeks, which is the way it's supposed to be.

And Milan was a big winner in LA28, I had a meeting with Casey Wasserman last week. They've got 7 million presale sign-ups for the Olympics, not tickets that have been bought, just folks saying, put me in line to buy tickets. That's triple what we had for Paris. So that's going to be a really strong story. IMG, of course, is in the media rights business. There's nothing bigger, more popular, more in demand than sports rights, and that's their business. So that's very strong and robust.

And then, of course, on the new growth side, we're going to build boxing into a version of what the UFC is and get out the corruption, get out the confusion and make sure the best fighters are fighting the best fighters and being paid as they should to fight the best fighters. And then outside of that, we've got the White House event. So I think in totality, in summary, you've got a story here 3 ways. You've got high-quality execution. We're laser-focused on that. You've got new events, new growth, new initiatives like boxing, and we'll talk about that. And then, of course, you've got our capital return program, which we're really proud of because we're way ahead of schedule on that. And we've been very clear with our investor base that returning cash to shareholders is a priority.

That's a great setup. We'll talk about all those businesses. One thing I wanted to ask you about, Mark, I think you bought UFC, what, maybe a decade ago, something like that on the Endeavor side, WWE a couple of years ago. We've watched you guys run these businesses and even relative to the forecast, I think that you guys laid out, WWE is ahead of plan. So question is, is there like a sort of a reusable playbook in the Endeavor, TKO management team and that maybe allows you guys to do this across multiple premium live event assets as you think about allocating capital and deploying the management team in the future?

Yes, that's a very insightful question. I would say, first of all, it starts with having best-in-class operators. And I started my career at ESPN, so I've been kind of knee-deep and steep in sports for decades now, I hate to admit. But we have a good feel, a good grasp with best-in-class operators, and we really spare no expense in getting them on our team. And those that aren't performing are quickly off the team. We just -- we're running a mile a minute here. These are properties that are year-round across the board, right? UFCs year-round, WWEs year-round, PBRs year-round, and then IMG is selling sports rights, year-round, on location has an event, year-round. I mean there's no Christmas holiday when it comes to TKO.

So we need best-in-class operators that are strong, insightful, intelligent killers, if you will, and really just work a hall, I hate to say it. But we do promote work-life balance. But course, that's hard to do.

Everyone who knows...

That's how you get to 40% margins, by the way. You work really hard. And I would say what we look for is we do look for properties that are year-round. It starts there. Strong high-quality IP that we can leverage, that's scalable, that's global. We look for businesses that give us a lot of operating leverage, very, very important. And you add all that up, and it's just a rinse and repeat cycle. That's how we play it out. And those are hard to find, right? They're not, some of these bigger leagues, some of the majors that we compete with, Major League Baseball and the NBA and NFL, they're not for sale. Teams are for sale, but not leagues. So if you can identify one of them and you see the upside of kind of putting it into our machine, you pounce.

Yes. All right. Last big picture question. The #1 focus in the space has been the Warner Bros. Discovery process now for some time. It appears to be at least coming to an end from an agreement perspective with Paramount announcing and discussing their acquisition this morning. From a TKO point of view, obviously, you have a new relationship with Paramount in a number of markets. But how would you -- when you look at this combination, assuming it goes through, what does it mean, if anything, for your business?

Super upside, frankly. And by the way, I would have listed several pros had Netflix in the winner here. And as you said, it has not yet closed. But I very much enjoyed their conversation this morning because what did it tell you more than anything else? They're going to take HBO and they're going to take P+ and they're going to merge them into one strong competitive platform. And that's only good for us. That's where it starts for me. When I look at the whole [ WBDD ] portfolio, there are 2 brands that are steep in sports tradition and have been appointment for many sports fans. And that's TNT, CBS as well, but TNT and HBO, especially in the boxing space.

And now their portfolio of sports is second to none. I mean, I would say that it rivals ESPN, if not is better than ESPN. So they've got strong brands. They've got strong reach, strong engagement, a big sub base CBS still as a bellwether or a megaphone to grow sports and grow audience, and that will help us certainly starting with UFC, but potentially soon to be boxing. And they know how to work with great IP. We have a great relationship with them. We came out of the gate very, very strong, 7 million viewers for our first event. And this Saturday will be the first time that we have CBS simulcasting in a couple of hours of our UFC fight, which will bode well for new sign-ups in terms of subscribers for Paramount+.

So we're really, really excited. David Berson runs CBS Sports. He came from ESPN and I worked with him, quite closely for many years. Like he gets it. He knows how to build sports. He knows how to promote sports. They clearly have shown they know how to market sports with those commercials they were running around the clock, tying in, right, the movie clips and scenes along with the UFC. So we're in a great position. Our house just got bigger.

Let's talk more about the UFC, and let's start with the CBS, Paramount relationship. So when the deal was announced, there was some discussion about clearly, Paramount+ benefits from UFC content. And if it's exclusive, it really benefits -- you guys benefit on the CBS side from all the reach. How do you -- now that you're into it, sort of how do we think about that balance between maximizing reach on CBS, which with what I'm sure Paramount's goals are, which is to grow Paramount+.

Look, they're paying us a hefty rights fee. So they're going to do what's best for their platform. But to their credit, they do it in concert with us, open conversations, not weekly meetings, daily meetings across each of the business verticals. And I mean content, but then also we're both out there selling ads and experiential and activation and social, and we're marketing together. So we have to work hand in glove. And I think David sets the tone at the top, and that's how they're working across the board, like they got the message, and they've made us a major priority, and we're always going to be a priority just by the sheer fact of how much they're paying to have UFC on the platform.

They've been a super collaborator, terrific communicator. It's not any kind of attitude or not invented here or you don't understand our business, like UFC is new to them. So they're learning, combat sports are largely new to them. They're learning, they're asking questions, and we're finding the best ways to work together. As I mentioned, our first event was huge for them for sign-ups, I believe also strong for retention. And on top of that, keep in mind, whatever was reported in terms of their new subs is not even close to what they ultimately had in terms of new subscribers because you had -- you have C fans signing up for Paramount+ weeks in advance from that fight. So it wasn't just about that night.

So I think we're bringing new eyeballs to their platform. They mentioned that their programming has been sort of symbiotic with UFC fans. They're finding a lot of UFC fans watching landman, driving viewership there and vice versa. So I think we've really tapped into something, and it's only going to grow when you add HBO content, premium content like that onto the platform and then you add all the other sports from TNT and CBS. I mean, really across the year from the Masters, the NCA Final 4 and reunifying that and of course, the NFL, we're sitting in a really enviable position.

Is the White House event on CBS or Paramount+ or TBD?

TBD on that. I know Dana had mentioned he thought CBS might have a role to play there. Look, I think from a news perspective, CBS should be there, right? This is a news event. This is a cultural event. This is going to be something, right? Right there on the South lawn, we're still putting our fight card together, but the President is and has always been a huge UFC fan, and we're excited to be part of the 250th America celebration.

Do you want to touch on sort of the financial piece of that event since we're on that topic?

Yes. We talked about that on our earnings call that where we're sitting today is we'll roughly spend $60 million on the event. That is inclusive of the fees we pay to the fighters. However, we're not done there yet because the card is not done. So I see that $60 million probably inching forward. But we expect today to capture $30 million, roughly half of the $60 million in inventory packages that we're selling to corporate sponsors. But we're doing that in full communication, obviously, with the White House. And if we inch above the $60 million, the revenue will come up commensurately. So we should be in a good position.

And by the way, whatever we lose $30 million at this point on the event, are we really losing? I mean other properties would kill to have the opportunity we're going to have, and we're grateful to the President for wanting to do this and putting us front and center in our -- in the birthday celebration, if you will. This is going to be enormous in terms of attention, in terms of earned media, in terms of our fans being happy, the fight card is going to be off the charts, exceptional, fight to fight, not leading up to the championship fight. Each fight will be all-star caliber. And I would just say from a sampling perspective, given the promotion and press and the attention we're going to get the publicity, you're going to have so many viewers, content viewers, entertainment viewers, sports viewers that are just surfing and tuning in to see what this spectacle is all about.

So we are going to fully capitalize on the stage that is the White House, but we're not going to capitalize on America. We will not profit from this event no matter what. We will not be making money on this event or exploiting the birthday of our country in any way, shape or form, it's going to be a massive celebration.

Mark, earlier, you mentioned site fees, which I think you're now describing as financial incentive payments.

Thank you. financial incentive packages. FIPs, created by my CFO, Andrew Schleimer, sitting right over there.

This has been an area that like -- I mean, I think 5, 10 years ago didn't even really exist. I mean there were some sports that were able to benefit.

Speaker 3.

F1 was great. F1 still is great.

They sort of led the way. But can you talk a little bit what's happening among the customer base here, which I think are municipalities, venue operators, private public partnerships. And why all of a sudden is this -- maybe not all of a sudden, but a rapidly growing multi-hundred million dollar opportunity that years ago was not even the same, that's happening in the business structurally.

Yes. I just think overall, right, we're -- I'm just a big believer in the experience economy, right? The events win out. Your time is -- they're fighting for your time, right? Marketers are fighting for your time. Content is fighting for your time. Discretionary time around the weekends. It's just folks are looking for something to do, especially in this K-shaped economy where you have those that are struggling with affordability, looking for something to do to occupy time, to share time, to share experiences, largely driven by youth that share content socially, that live and die by FOMO. And they want to be a part of it. They want to be mixed. They want to feel it up and close. The #1 question that I got after spending a lot of time at the Olympics was, were you with the gold medal game, the men's gold medal game, right? Like you want to be there. It's something special. It's something unique. It's often dynamic, and you just can't replace it. And it's not just sports. Sports leads the way, but music, food festivals, fashion shows, book fairs. I mean you can go on and on. People -- we're social animals, right?

We want those community, those communal events. And we are profiting and prospering from that and serving it in a fully enriched way. And I don't think that's going away anytime soon, right? And by and large, it's a good bang for your buck. So we're excited to be front and center, and we're constantly looking, to your point earlier, for those properties that would fit right into our platform strategy of supersizing content experiences for the consumer, all walks of life, right? You're not necessarily going to be able to get a ticket to the White House event, but you can certainly see the UFC in any city weekend after weekend or the WWE several times a week.

Yes. Maybe last question. I want to tie the UFC to your margin guidance. You gave margin guidance for '26 last week. One of the big focus areas, as you know, has been fighter pay and sort of how much you guys think you'll be investing back into particularly talent with all these big media rights step-ups. So maybe now that you're into '26 and you're starting to look at the year and you've got a budget, can you talk a little bit about how you thought about investing in fighter talent, et cetera, with the margin expansion?

Yes. I would start picking up a little bit before you left off on the financial incentive packages, right? Given all this demand for these events and everybody -- every city/country wants events that are going to bring massive audiences, they're willing to pay. And pay doesn't just mean cash, write me the biggest check. We make a decision on where we're going to go based on, yes, what the financial incentive package might be, and it might be no cash. It might be value in kind. But we also are trying to serve our thirsty fans that want to taste and want to touch our properties. It's really important to us because it's not just about the check. We have to grow the brand. We have to expand our audience.

And as it relates to fighter pay or superstar pay on the WWE side, our margins last year were on adjusted EBITDA, 33.5%. We've announced at the midpoint of our guidance, we're going to be roughly 39.6%, so 40%. And that margin is inclusive of increase in fighter and superstar pay. And we take that very seriously. Right out of the gate after our CBS, Paramount deal, Dana White doubled the performance bonuses for fighters, and we're talking 8 figure. And one by one, we'll be looking at this, and we are focused on really all the ingredients that make our events as great as they are. And that starts with fighters and superstars. But whatever increases we have and we will have increases, they are inclusive of the margin guidance we have targeted.

Let's talk about WWE then. Moving from Peacock to ESPN on the premium live events front in the U.S. How is that relationship evolving? What does ESPN do for WWE? And maybe you can fold in, Mark, their new unlimited tier and how you think that might impact, if at all, WWE's reach and popularity?

Well, it definitely impacts us. I will tell you this. Just think of it this way. When the WWE first went to Peacock, the same questions were asked. Are you worried about it disappearing? Are you worried about their subs because their sub base was a lot less than it is today. Are you worried you get lost? Are you worried people have a hard time finding you? Are you worried they'll take up the sub price too high, so the cost of entry will be prohibitive and Peacock ended up being a total success long term, and we play the long game for WWE, and that's what we're doing here with ESPN. It's kind of like starting over.

I'll remind you, when we took the UFC to ESPN+, ESPN+ was in 3 million homes. That's it. And by the time we were done, it was in 25 million homes, and we are proud to play a part in that growth. It's the same thing here. ESPN Unlimited is a phenomenal package. It really is. It's worth every penny if you're a sports fan. And if you're watching ESPN, you are some level of a sports fan, if not a Die-Hard sports fan. We've got some work to do here. Look, things will immediately get better once they strike their deal with Comcast, YouTube and DISH, specifically those 3 that allows viewers to authenticate. So I'm at home. I have DIRECTV as an example. And because I have DIRECTV, I authenticate on ESPN Unlimited. It's a very easy process, and it costs me 0 bupkis to get ESPN Unlimited.

If you don't have ESPN -- or excuse me, DIRECTV or you have Comcast and ESPN hasn't closed out their deal yet, well, then you have to pay $29.99. And that is, I believe, somewhat prohibitive, especially in today's economy and the struggles that certainly middle-income and low-income earners are having with affordability. So they have to get those deals done. And until they do, that will affect our audience. But I believe they're going to get them done. Jimmy Pitaro has promised us they're on the heels of getting them done. And when they do, ESPN Unlimited will be the same appointment viewership destination that it is today on the mothership.

So we're excited about that ultimately getting done. And I should tell you this, very important here, Ben. We had a massive event in Chicago this weekend, Elimination Chamber, one of our big premium live events, PLEs as we call it. And we saw a significant increase in audience from the first event we did last year with ESPN, which was Wrestlepalooza. So they're already making strides. Are they where Netflix was last year? Not yet. Are they where Peacock was after all those years? Not yet. But inching closer, and I was optimistic -- I am optimistic, and I was super encouraged by the numbers that Nick Khan was sending me by the hour this past week. Nick Khan, of course, is the President of WWE.

You mentioned partnership revenues before and your long-term ambitions. When you bought WWE, that was not a big business for them, and you ramped that quickly. But what's the opportunity still ahead for that property? And how do you think about going to market combined versus sort of selling stand-alone inventory?

I would say, first off, unless it's a new category for the WWE, meaning UFC already has the category and WWE doesn't, then we might just go in with WWE or Professional Bull Riders. But if it's a category where it's not taken yet, we always go in with the triple, always. And it's no different really than my days at ESPN. If you want to buy Sports Center, which everyone wants to buy, you have to buy outdoor programming on Saturday morning, fishing because otherwise, we have a tough time selling fishing and hunting. And that package serves as leverage and proved to be a successful equation and model. And that's really what we do here. We go in with a boat load of value for a certain advertiser or marketer that ties to all 3 properties that keeps them going year-round with disparate and endemic audiences and hopefully run the table in a way that creates value for our partner and at the same time, helps our growth on the partnerships front from a dollar perspective, but once again, straddles the fence of growing the brand, marketing.

Some of these deals, I mean, they are chock full of marketing opportunities in aisles or grocery stores or institutional inventory or just simple marketing materials that many of these brands send out to their consumers on a daily basis digitally and socially. We want to be tied to that. We need to grow our audience, and we still need more sampling across each of our sports. Some of our sports, of course, are nascent sports. So that's really important to us. And I think on this front, we're out there. There's still more categories we can sell. And we're also benefiting from the fact that some of these deals are lapsing and we're renewing them for higher prices, but also that gives us an opportunity to bring in one of the other properties. So it's the UFC category that they've had for years, but the deal is up in the renewal, we'll bring WWE into. Some fit, some don't. But to your point, there's a great deal of upside on the WWE and the PBR front, and we have put out a target as I said, by 2030, this will be a $1.2 billion bucket for us, high margin.

Yes. Okay. I want to make sure we touch on a couple of other things before we run out of time. So on location, part of the Endeavor portfolio brought into TKO last year. Can you talk a little bit -- I don't know if you have the numbers yet, but Milan's performance versus plan and anything you learned now that you've had Paris, Milan going into L.A. on the Olympic front, just to make sure you maximize that opportunity as well.

With 7 minutes and 45 seconds, I could never tell you all that we learned because both Paris and Milan have been massive learning lessons, leading up to what will be -- what I believe the greatest Olympics of a generation and certainly in my lifetime. It's going to be just extraordinary. And I'll remind you, this will be the last event barring all rules and laws are obliged that the President touches before he leaves office. So this will very much be President Trump's Olympics, and he's been a phenomenal partner, if you will.

So we are leading up through it, tons of learnings. Milan was, I would say, a little behind plan, not much, but a little behind plan. And that literally was driven only by the fact that, unfortunately, the consumer couldn't be sure there were even going to be hockey games. I mean we're talking about an arena that wasn't finished, what, 48, 72 hours beforehand. And if you walked around the arena, like I did, you're in hallways where they don't even have carpeting in yet. I mean they literally did what they needed to do to pass inspection and then they put on glorious games. And I'm just grateful they got it done and that the water was running because we're selling suites and 72 hours beforehand, there was no plumbing. So this was tough. There was a lot of bad press on that and bad press on facilities not being ready ultimately is a sales prevention for selling tickets.

And by the way, once they finish, the news got out that basically everything was done, except for the gondolas that never did finish in terms of fans getting up the mountain to enjoy the event in a premium experience way, experiential way. Our ticket sales went through the roof. I mean those last few days were insane in terms of the packages we were selling. So we almost got to our target. We were just off. But nonetheless, we will hit our guidance, which was $130 million of adjusted EBITDA between the 2 Milan and the Los Angeles games. So we're on target for that and excited about being able to focus on that once we finish the World Cup.

Right, right. Anything you want to highlight on the World Cup other than the plumbing being ready to go?

First of all, one of the learnings, I'll give you the biggest learning is really tough to do international events. I mean we'll do them here and there. But by and large, we would like on location to stick with U.S. soil events. And the World Cup is showing that. We're ahead of plan. The demand has been insane, and they haven't even really started marketing it in a big way. And we expect to stick with our -- stick and hit our guidance, which is $75 million of adjusted EBITDA on the World Cup.

Okay. Let's talk boxing. This is sort of, I guess, the next project for the company to sort of build something kind of from scratch with partners. What's the thesis here for putting capital to work behind boxing...

Look, I'm proud of this one, because when things -- after we finished the Paramount deal and the ESPN deal for WWE, we had a lot of questions from our investors, okay, you've got great momentum and now you're going to execute. Like what's -- where is the growth beyond that, right? It's never enough. That's how we all have to operate. What have you done for me lately? And now we have something specifically to point to. Boxing is a massive opportunity. It's not like we have to go out and buy it. I mean, certainly, we have to sign up fighters and we have to pay fighters. But this is ripe with opportunity. For years, confusion in the marketplace, fights that cost too much money from a pay-per-view perspective, knee-deep and corruption. #1 doesn't fight #2, Champion doesn't fight #1 rank. Like it's really -- I'm surprised it's gone on for this long. Too many promoters, backroom deals.

We are cleaning that up, and we are going to create a real league here where we can market the personalities. We can create the next Sugar Ray Leonard. Nobody better to do it than Dana White and Nick Khan, who know boxing backwards and forward and grew up fight fans before there was ever a WWE or a UFC. And of course, Lawrence Epstein, the President of UFC, plays a big role in there as well. So we're -- like we are ready for battle. And we're signing some big stars as evidenced by recently signing up Conor Benn to a big super fight, and we hope to get him exclusively in the Zuffa League, which is Zuffa Boxing, that's the name of the league. And we'll cut media deals and we'll cut partnership deals, and we'll get them into our financial incentive packages, and we'll have consumer products and licensing, and we'll take the show outside of the U.S. Even in the first year, we'll likely go to the U.K. for a couple of fights.

So we're coming out gangbusters, guns of blazing. And this is a huge opportunity. And if we can just build boxing in the next 5 years -- 5 to 10 years, excuse me, into half of what the UFC is or WWE, well, then we're a growth story that you want to jump into.

Got it. Okay. Maybe in the time we have left, Mark, you guys announced buyback plans for the year. You have a ton of cash flow. You've got leverage -- a leverage framework. Maybe you could just talk a little bit about how the company balances turning capital, delevering the business, investing organically when you think about your capital allocation priorities?

We're very comfortable with our leverage position and certainly can expand that depending on timing and desire. What I would say is just look at what we've done. I mean it's all about putting your money where your mouth is. We launched a dividend in, what, Q1 of last year. We doubled it in Q3. And there's more work to do there. And I would be excited to see us move the ball further on that front in the next 12 months. Not committing to anything, but would like to see it progress in that fashion. On the same token, we announced our intention to launch a share repurchase to the tune of $2 billion over the next 3 to 4 years in October of '24. We then commenced that at the end of last year, leading into our earnings and got to approximately the [ first $1 billion ] and then came right back on our earnings and announced we're moving on the [ second $1 billion ].

So we are committed. I mean there's no other way to say it. We're not drunken sailors. We're not going to go acquire and buy things for the sake of buying them. We're ruthless when it comes to costs and expenses and our margins. We want to be one of the best-run businesses that an investor could ever find, and we're going to stick on that track. So we have room, and we expect to move on the [ second $1 billion ], if you will, that share repurchase fast. And we will stay committed to this, whether it's share repurchases or dividends, we will stay committed to that over the next few years.

And where does M&A fit or not fit in, Mark, into the capital allocation framework that you guys have? You talked a little bit about that last week...

Look, there's a reason why we put a comment on M&A right at the top of Ari's prepared comments on our earnings call because we get this question often. We want to be prudent. We want to be responsible. We have a history at Endeavor of just buying a lot of stuff that I think made the story, the narrative, the model confusing to investors, and that's not going to happen here. So we will always explore. We will always evaluate, but we will be prudent. And if there's something that we can be opportunistic about, we will do such a thing. But right now, it's execute, high-quality execution, focus on the operations. It is boxing new growth, and it is capital return.

Great. Well, we are out of time. Mark, thanks so much for coming. Great to see you.

Thank you so much, and thanks to you.

Good afternoon. Thank you for attending the TKO Fourth Quarter and Full Year 2025 Earnings Call. My name is Cameron, and I'll be your moderator for today. [Operator Instructions] And I would now like to pass the conference over to your host, Seth Zaslow, Head of Investor Relations. Please proceed.

Good afternoon, and welcome to TKO's Fourth Quarter and Full Year 2025 Earnings Call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least 30 days. After prepared remarks from Ari Emanuel, TKO's Executive Chair and Chief Executive Officer; Mark Shapiro, TKO's President and Chief Operating Officer; and Andrew Schleimer, TKO's Chief Financial Officer, will open the call for questions.

Mark and Andrew will be handling the Q&A. The purpose of this call is to provide you with information regarding our fourth quarter and full year 2025 performance. I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties and assumptions. Please see our filings with the Securities and Exchange Commission for further detail.

If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends.

These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website. With that, I'll now turn the call over to Ari.

Thanks, Seth. 2025 was a catalytic year for TKO as we established meaningful momentum across both UFC and WWE in particular. TKO sits squarely at the center of a robust sports and entertainment ecosystem. Our properties command attention with must-see content and no off-season, capturing a coveted young, diverse audience and reaching more than 1 billion households globally.

In 2025, we signed 2 historic U.S. media rights deals for our marquee assets, UFC's $7.7 billion deal with Paramount, where it joins the NFL, NCAA Final Four, UEFA Champions League and the Masters and WWE's $1.6 billion deal with ESPN to become the exclusive home of all premium live events, including WrestleMania. While still early innings, we're thrilled to partner with Paramount and ESPN to expand our fan bases and drive growth for our premium IP.

While delivering these transformational deals, we launched a capital return program, first initiating and then doubling our quarterly cash dividend. We have also nearly completed $1 billion of share repurchases and today announced our intent to repurchase up to $1 billion of additional shares. Our accomplishments in 2025 validate the industrial logic of TKO and ensure we are well positioned for 2026 and beyond.

We remain extremely optimistic about our position in the content marketplace, and our conviction in TKO has never been stronger. In closing, I know that our M&A intentions are always a topic of interest, so I thought I would address that formally. While we will always be opportunistic, I want to reiterate past commentary that 2026 is a year of execution for us. We are an execution story. With that, I will have Mark get into the detail.

Thanks, Ari. 2025 was indeed a landmark year for TKO. We secured media rights deals in excess of Street expectations, delivered innovative global partnerships, record-setting live events and premium experiences, integrated IMG, On Location, and PBR into our portfolio, prepared for the launch of Zuffa Boxing and returned meaningful capital to shareholders.

Today, we will dive deeper on why these achievements further strengthened our foundation in 2025 and how they inform our roadmap for driving continued growth in the years ahead. First, I'd like to highlight our media rights deals. Including those deals signed in 2025, we now have more than $15 billion of long-term media rights agreements secured across UFC, WWE, PBR and Zuffa Boxing with leading streaming and linear platforms.

Importantly, this is high-margin revenue with annual escalators that provide visibility and predictability. We launched WWE on Netflix in January 2025. Over the course of the first year of this 10-year deal, viewers streamed 525 million hours of content with Raw becoming a mainstay on the platform's weekly top 10 in the U.S. and in more than 30 other countries worldwide.

That level of engagement reinforces the staying power of WWE and expands our opportunity to unlock value from a growing global fan base, particularly as we bring our premium live events and tours to existing and new international markets. In September, we brought WWE PLEs to ESPN, kicking off the 5-year partnership with the first-ever Wrestlepalooza live from Indianapolis. We are thrilled with this deal, which represents a 1.8x increase and includes expanded monetizable rights for TKO.

Beyond that, this deal is about what we can build with ESPN, a long-time partner that sports fans across the country consider their first-stop destination for premium sports content. As we move into our first full year together, we believe ESPN will drive greater awareness for WWE, resulting in an expanded audience, deeper engagement and ultimately allow us to unlock new partnership opportunities that will fuel revenue growth.

Additionally, our 7-year agreement for UFC with Paramount ushers in a new era, making UFC's 43 annual events available to all Paramount+ subscribers in the U.S. Our goal was to grow our fan base by making UFC content more accessible and by removing the double paywall, which previously existed with ESPN+, that strategy is playing out as intended.

UFC 324's debut on Paramount+ drew nearly 5 million streaming views and became the largest exclusive live event in Paramount+ history with the broadest reach for a UFC event in nearly a decade. The TKO and Paramount teams are working hand in glove, and we're looking forward to the debut of our first CBS simulcast with UFC 326 on March 7.

With these media rights agreements in place, TKO is rapidly evolving into one of the most durable and monetizable global sports rights platforms with a business mix further shifting toward a more recurring contractual revenue profile. We are now squarely focused on execution and revenue generation across each of our primary business drivers, beginning with global partnerships.

In 2025, we exceeded well over $450 million of our stated global partnerships revenue target through a healthy combination of expanded renewals with market-leading brands like Monster Energy and innovative new category alliances with Meta, IBM, Polymarket, DoorDash and Ram. Double-digit growth in partnerships and live events is achievable in 2026 as engagement in sports broadens out and premium activations become more coveted by large brands across a wide range of categories.

With these positive tailwinds firmly at our backs over the coming 12 to 24 months and the addition of new broadcast commercial inventory, we recently raised our 2030 partnerships revenue target across the TKO portfolio from $1 billion to $1.2 billion. We have the right strategy, and we have the right team to hit this mark. Pivoting to live events, I would say the experience economy is alive and kicking.

In Q4 alone, UFC sold out 6 events and WWE delivered its highest grossing arena record of all time at John Cena's final match in Washington, D.C. We still have pricing elasticity, especially with several markets thirsty, sometimes years thirsty for our premium content. By example, 2026 started off strong with sold-out UFC events in Las Vegas and Sydney and WWE Royal Rumble's debut in Saudi Arabia. That momentum is scripted to continue as we build up to the spectacle at the White House on June 14.

To be clear, we see this once-in-a-lifetime stage as a strategic investment to drive subscriber acquisition at Paramount+, massive audience sampling for the UFC overall and Super Bowl-like earned media across the globe. The event will cost us upwards of $60 million. However, we are working to secure sellable inventory in and around the weekend of events that should cover approximately half that cost.

As you've heard us discuss, site fees are a high-margin lever in our live event economics and a key driver of our growth strategy. Now we recognize this is a topic of interest for investors, so we wanted to provide greater clarity and transparency on how we're thinking about the opportunity today. First off, in refining our approach, we believe the term site fees doesn't capture the full scope of these deals as agreements often include a combination of cash, noncash subsidies and value-in-kind support.

As such, going forward, we'll be referring to these site fees more broadly as financial incentive packages or as we like to call them, FIPs. In 2025, approximately half of our marquee UFC and WWE events were supported by meaningful financial incentive packages. Our multiyear plan calls for us to achieve FIPs for each of our roughly 25 marquee events in addition to other calendar attractive UFC fight nights, WWE main roster events, PBR majors and Zuffa Boxing cards.

In 2026, across TKO, we expect to realize over $300 million in aggregate value from these packages, roughly double what we were receiving when we formed TKO initially in 2023. Now keep in mind, the $300 million forecasted for 2026 includes some one-timers that when normalized, puts the total around $240 million. That in mind, we expect to achieve a range of $380 million to $420 million by the year 2030. The thesis of our FIP strategy is plain and simple.

Our premium content is in high demand and governmental and private financial incentives should reflect the economic and cultural impact we deliver. 2025 was also an important year for activating IMG and On Location inside TKO, integrating their capabilities, fueling growth in our core IP and reinforcing our position at the intersection of sports and entertainment.

In addition to advising on UFC and WWE's media rights renewals and Zuffa Boxing's new domestic and international deals, IMG delivered meaningful multiyear deals for CONMEBOL, EuroLeague Basketball, the WTA, The R&A and the Saudi Pro League. IMG also expanded its relationships with the USTA, MLS and NWSL to include domestic and international media rights representation, media production and archive rights management, respectively.

On Location capitalized on fan enthusiasm for UFC and WWE, delivering premium hospitality at more than 65 total events in 2025, and we renewed our relationship with leading sports properties, including a significant contract extension with the NFL across the Super Bowl, Pro Bowl, NFL Draft and their ever-expanding international slate of games.

Building on that momentum, On Location takes center stage this year for 2 of the world's biggest events, the Milano Cortina Olympics, which just concluded on Sunday and this summer's FIFA World Cup. Finally, let's talk about Zuffa Boxing. All I can say is look out. Our aim is to build this into a juggernaut. We're encouraged by our initial progress in 2025, securing a media rights deal with Paramount+ across the U.S., Canada and Latin America.

We have a handful of other territories in negotiation, and we only launched roughly a month ago. We are signing a strong portfolio of boxers to our roster and already planning to schedule a 2026 calendar of fight cards that takes us outside the United States. As we enter 2026, we are chock-full of optimism. We have high visibility into revenue and EBITDA growth given the long-term structure of TKO's deals across segments.

We are insulated from AI disruption. We have strong free cash flow conversion that will expand significantly over the next 5 years, and we are seizing now on the opportunity to further return capital to shareholders via share repurchases. As we said in our press release, TKO is a high-quality execution story with multiple avenues for outperformance. With that, I will turn it over to our CFO, Mr. Andrew Schleimer.

Good afternoon. As Ari and Mark highlighted, 2025 was a very strong year for us. We delivered solid operating and financial performance across our businesses, and we expect the positive momentum to continue. Last year, we generated revenue of $4.735 billion and adjusted EBITDA of $1.585 billion, both of which exceeded the upper end of the revised guidance range we provided on our last earnings call.

Our adjusted EBITDA margin was 33.5%. In 2024, revenue was $4.884 billion and adjusted EBITDA was $1.082 billion, and our adjusted EBITDA margin was just over 22%. On a reported basis, revenue decreased 3%, adjusted EBITDA increased 47% and adjusted EBITDA margin increased over 11 percentage points. Our year-over-year results reflected strength at UFC and WWE. In particular, margins continued to expand at WWE, delivering over 50% for the first time in 2025.

We've come a long way in a short time, growing WWE's margins from less than 40% just a few years ago. That said, and as noted on our Q3 call, the impact of the 2024 Paris Olympics led to the decrease in revenue and contributed meaningfully to the increase in adjusted EBITDA and adjusted EBITDA margin as the event was loss-making. Moving to our consolidated results for the fourth quarter. We generated revenue of $1.038 billion. Adjusted EBITDA was $281 million. Our adjusted EBITDA margin was 27%.

Revenue increased 12%, adjusted EBITDA increased 30% and adjusted EBITDA margin increased approximately 4 percentage points as compared to the prior year. Now turning to our UFC segment. UFC had 10 total events, including 4 numbered events in both the fourth quarter of 2025 and 2024. Event location mix shifted slightly as 4 events were held internationally in the quarter compared to 3 in the prior year period. UFC generated $401 million of revenue in the quarter, an increase of 17% or $58 million.

Adjusted EBITDA was $213 million, an increase of 20% or $35 million. UFC's adjusted EBITDA margin was 53%, an increase from 52% in the prior year period. Partnerships and marketing revenue increased 39% to $93 million. The increase was driven by the addition of new partners and renewals of existing partners at higher rates.

As Mark discussed, we continue to make significant progress, adding new categories and growing existing ones, including recently announced deals with Ram Trucks, Polymarket and DoorDash. Media rights production and content revenue increased 12% to $223 million. The increase was driven by the contractual escalation of media rights fees. Live events and hospitality revenue increased 12% to $72 million.

The increase was due to higher revenue from financial incentive packages driven by the timing and mix of international events. UFC held the numbered event in Abu Dhabi in both periods as well as its first event in Qatar in the current period. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses primarily reflected an increase in marketing, production and other event-related costs, all related to mix, partially offset by a decrease in athlete costs.

SG&A increased primarily due to higher personnel and travel costs compared to the prior year period. Our WWE segment generated revenue of $360 million in the quarter, an increase of 21% or $61 million. Adjusted EBITDA was $165 million, an increase of 44% or $51 million. Adjusted EBITDA margin was 46%, up from 38% in the prior year period. As expected, results reflected the favorable impact of the Raw domestic rights deal.

As a reminder, the fourth quarter of this year included revenues from our long-term agreement with Netflix compared to the short-term domestic rights deal that was in place with USA Network in the prior year period. This had a favorable impact of approximately $50 million on both revenue and adjusted EBITDA as compared to Q4 2024. As we previewed on our Q3 call, the timing of the calendar significantly offset the aforementioned benefit.

WWE held 2 nights of main roster PLE programming in the fourth quarter compared to 3 nights in the prior year. Most notably, Q4 2024 had 1 PLE in Saudi Arabia, but there was no comparable event in Q4 2025, given its shift to January 2026. Media rights production and content revenue increased 42% to $221 million. The increase was primarily related to the Raw rights deal I mentioned a moment ago as well as an increase in media rights fees related to the new domestic PLE agreement with ESPN.

Partnerships and marketing revenue increased 57% to $36 million due to new partnerships and renewals across multiple categories, including deals with Riyadh Season, Minute Maid, Comcast and Seagram's, among others. Live events and hospitality revenue decreased 27% to $68 million. Results reflected a decrease in revenue from financial incentive packages related to the shift in timing of the Saudi PLE, partially offset by an increase in ticket revenue.

We continue to see strong underlying trends for WWE Live events. Results in the current period benefited from the mix of venues and cards, including John Cena's farewell tour and a record gate for Survivor Series, which was held for the first time in a higher capacity stadium venue. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses.

Direct operating expenses increased primarily due to higher talent costs, partially offset by a decrease in production costs, most notably related to the absence of the Saudi PLE, which, of course, carries a higher cost structure. SG&A increased primarily due to higher travel and personnel costs. Our IMG segment generated revenue of $248 million, a decrease of 9%. Adjusted EBITDA was a loss of $4 million, a decrease of $20 million. Adjusted EBITDA margin was negative 2%, down from 6% in the prior year period.

As we previewed on our last call, the anticipated decline in revenue primarily related to the absence of the Arabian Gulf Cup at the IMG business, which is a biennial event. This decline was partially offset by an increase in studio revenue. Revenue at On Location was essentially flat over the prior year period. As expected, adjusted EBITDA primarily reflected the decrease in revenue, partially offset by a decrease in expenses.

Expenses reflected a decrease in direct operating expenses, partially offset by an increase in SG&A. Corporate and Other generated revenue of $37 million, an increase of $14 million. Adjusted EBITDA was negative $93 million, flat with the prior year period. The increase in revenue was primarily driven by higher media rights revenue at PBR from new distribution deals we announced in 2025 with Paramount, Fox Nation and the CW as well as higher management and promotional fees for services related to Zuffa Boxing.

Adjusted EBITDA primarily reflected the increase in revenue and a $27 million decrease in costs related to the absence of allocations of Endeavor corporate expenses under their ownership of IMG, On Location and PBR. As we discussed on prior calls, from the close of the acquisition on February 28 of this year forward, there are no Endeavor corporate expense allocations included in our financial results.

These improvements were offset by costs incurred to replicate services previously provided by Endeavor as well as an increase in personnel and travel costs. Now moving on to our capital structure. In 2025, we generated $1.159 billion of free cash flow. Our free cash flow conversion of adjusted EBITDA was 73%. Free cash flow included the favorable impact of $297 million of net collections related to On Location for the 2026 FIFA World Cup.

Free cash flow also included the unfavorable impact of approximately $300 million, consisting of $250 million in payments related to the UFC antitrust lawsuit settlement as well as payments for professional fees related to the acquisition of IMG, On Location and PBR. Normalizing for these non-recurring items, free cash flow conversion of adjusted EBITDA remained ahead of our stated target of in excess of 60%.

For the fourth quarter, we generated $249 million of free cash flow. As we saw in 2024, free cash flow for both fourth quarter and full year 2025 was positively impacted by the timing of cash receipts and payments, most notably the collection of customer payments in 2025 that were not contractually due until 2026 as well as a delay into Q1 of '26 of the transfer of a portion of the proceeds to Sela related to the Canelo versus Crawford event held in September 2025.

We ended the year with $3.783 billion in debt and $831 million in cash and cash equivalents in addition to $355 million of restricted cash. Year-end 2025 net leverage was 1.9x based on net debt of $2.952 billion and adjusted EBITDA of $1.585 billion. As both Ari and Mark have conveyed, maintaining a robust and sustained capital return program remains a top priority for us.

On December 30, we paid a quarterly cash dividend payment from TKO OpCo of approximately $150 million or $0.78 per share. For the full year, we made approximately $452 million in cash dividend payments. We intend to continue to fund quarterly cash dividends with cash flow from operations or cash on hand.

Regarding our share repurchase program, during 2025, we repurchased approximately $867 million of our Class A common stock through a combination of an $800 million ASR agreement, $26 million through a privately negotiated transaction and $41 million under the 10b5-1 plan that commenced last November and expires tomorrow.

From January 1 through yesterday, we repurchased an additional $37 million of our Class A common stock under the 10b5-1 plan and as such, have retired approximately $900 million of Class A common stock available under the $2 billion program authorized by our Board in October 2024. As we disclosed in our earnings release, by mid-March, we intend to commence the repurchase of up to an additional $1 billion of our Class A common stock.

We expect to fund the repurchases with cash on hand as well as proceeds from incremental term loan borrowings. The timing and amounts are subject to market conditions and related factors. Now turning to our outlook. As we say consistently, we manage the business with a focus on full-year performance.

Therefore, we believe results are best evaluated on a full year basis, given the quarterly fluctuations that are inherent in our operations, most notably related to the timing of our live events and the mix of locations, venues and cards. For full year 2026, we are targeting revenue of $5.675 billion to $5.775 billion and adjusted EBITDA of $2.24 billion to $2.29 billion. This outlook reflects a step function change in revenue and profitability, primarily related to our recently completed media rights agreements.

We are anticipating revenue growth of 21%, adjusted EBITDA growth of 43% and margin expansion of approximately 600 basis points to 39.6% at the midpoint of our guidance range. There are 6 notable drivers of this outlook that are important to underscore.

Number one, media rights. As we've previously discussed, our 2026 financials will include significant step-ups in connection with the UFC rights deals with Paramount as well as the WWE agreement with ESPN DTC. As Mark highlighted, these agreements, along with other recently completed long-term agreements, total more than $15 billion in value and provide attractive visibility, predictability and stability into a high-margin contractual revenue stream with annual escalators for years to come.

Number two, global partnerships. We continue to make meaningful progress, adding new partners and categories while also growing existing deals. We expect to see significant growth in high-margin revenue as we work toward achieving our previously communicated target of $1.2 billion in total company partnerships revenue by 2030.

Number three, live events. As Mark discussed, we see a significant opportunity with respect to financial incentive packages or FIPs. This is a high-margin lever in our live event economics and a key driver of our overall growth strategy. We expect to realize over $300 million in aggregate value from these packages this year. Most notably, our outlook includes the favorable impact of 3 WWE PLEs in Saudi Arabia as well as further traction in the strategy Mark articulated.

Number four, the mix of events, particularly at UFC. As has been widely reported, on June 14, we're planning to hold an event at the White House in celebration of America's 250th anniversary. We expect this to be a once-in-a-lifetime event that will showcase our brand on an unmatched scale. While it is expected to generate tremendous awareness and earned media for us, the financial profile is unique. We expect the event to cost upwards of $60 million. However, as Mark highlighted, we're working to secure sellable inventory in and around the weekend of events that should cover roughly half of that amount.

Number five, the World Cup and Olympics and On Location. We're extremely excited about the prospects for the FIFA 2026 World Cup, and our plan includes a contribution of approximately $75 million of adjusted EBITDA. As for the Olympics, despite the well-publicized challenges with the readiness of infrastructure, we're pleased with the outcome from Milano Cortina. While we're still finalizing the financial results, our outlook includes approximately $170 million of revenue related to the games. With respect to the adjusted EBITDA contribution, given the meaningful ramp in pre-spend required for LA28, namely to support our increasing sales efforts, we anticipate a negative impact to On Location adjusted EBITDA related to our Olympics properties.

Number six, boxing. To even further emphasize, this is an important strategic and operational priority for us, one that we expect will create meaningful value over time. As mentioned on prior calls, we account for our interest in Zuffa Boxing under the equity method and hence, do not consolidate results. We receive a management fee for services that we provide the JV, and our forecast includes a full year of such management fees as opposed to the partial year that we recorded in 2025. Also, in 2025, we earned into 25% of our total expected equity interest.

Based on our expected performance, we assume we will earn into the next tranche upon the achievement of certain financial targets. Separate from the JV, we expect to continue to work with our partner, Sela, to bring large-scale fights to fans, generally 2 to 4 per year. The next fight will be in April featuring Tyson Fury for which we've secured the global media distribution rights with Netflix.

In addition to these 6 items, we continue to focus on realizing incremental revenue and cost efficiencies, which could be additive to our plan. Through 2025 and into early 2026, we have made meaningful investment in our procurement function to further streamline costs across our portfolio of companies. Consistent with our prior calls, while we are not providing quarterly guidance, we want to highlight a few notable items as we look to the first quarter.

At UFC, media rights revenue will reflect the commencement of the Paramount rights deal. The mix of live events in the quarter will also impact results. We expect to stage 9 events as compared to 11 in the prior year period. Within these 9, 3 will be numbered events, which is comparable to the prior year. However, Q1 2025 included a Fight Night in Saudi Arabia that carried a meaningful financial incentive package, Q1 2026 will not.

At WWE, results will also be driven by the timing and mix of live events, most notably the favorable impact of Royal Rumble being held in Saudi Arabia. The first quarter will also benefit from the financial profile of our new domestic rights agreement with ESPN. At the IMG segment, we expect first quarter results will include the Milano Olympics as well as the seasonally favorable impact of the Super Bowl and college bowl games.

In terms of free cash flow, as Mark noted, we expect free cash flow conversion to expand significantly over the next 5 years. In 2026, free cash flow is expected to reflect the impact of 2 notable items. The first is net payments related to the World Cup. These payments will reflect the distribution of net collections realized in prior periods. Following the tournament and prior to the end of the year, we expect substantially all of the cash collected to be distributed to FIFA and other partners.

In addition, as we disclosed in August, the payment schedule for UFC's new rights deal with Paramount is weighted more toward the back end of the deal. As a result, we expect a negative working capital impact in 2026. Excluding these 2 items, our targeted free cash flow conversion rate would be in excess of 60%.

Furthermore, we are expecting a meaningful year-over-year increase in taxable net income, primarily due to the significant increase in adjusted EBITDA as well as the absence of the tax deductibility benefit realized in 2025 related to the UFC antitrust settlement payments. This increase in taxable income is expected to result in both a significant increase in cash tax payments at TKO PubCo as well as mandatory cash tax distributions from TKO OpCo to its owners.

Similar to prior periods, we plan to disclose information related to these distributions in our 10-Q and 10-K filings. In conclusion, as we look ahead, we remain focused on operational execution across all of our businesses and maintaining our robust capital return program. Anchored by our premium content, TKO is extremely well positioned within the sports and entertainment ecosystem to build on our momentum and deliver incremental value for all of our shareholders. With that, I'll turn it back to Seth.

Thanks, Andrew. Operator, we're ready to open the call for questions.

[Operator Instructions] The first question comes from the line of Brandon Ross with LightShed Partners.

I have a couple. Paramount has their earnings tonight, so we know they're not listening. We could talk about them. Two of your partners are bidding for WBD. Are there any advantages to one of them winning versus the other in your mind?

I'm not getting pulled into that trap. Look, we're just -- Brandon, we're just an observer like everybody else.

It was more of a joke. It's...

Yes, we do meaningful business, as you know, with both Paramount and Netflix across TKO. We have great working relationships with teams at both companies, including hand-to-hand with David Ellison and Ted Sarandos. We obviously have no input or control on what happens. That is ultimately for the Warner Bros. shareholders to decide. And we're just watching as it runs its course. I will say we see pros for TKO with either side winning.

Okay. Now my real questions. On Zuffa, what does the $15 million Conor Benn deal signal about Zuffa's strategy? And obviously, that deal upset some UFC fighters and competition. Obviously, Eddie Hearn was a little upset. How should investors assess any risk or potential repercussions of giving out those types of deals right now?

Well, first off, I would say this story, to your point, has taken on a life of its own. And that's largely because Eddie Hearn is stirring the pot in a very fictional way. So as you know, our partner in Zuffa Boxing is Sela. They're the financial backer of the entity.

Beyond the year-long series of Fight Cards, that will appear exclusively on Paramount+, we've described again and again on these calls and at conferences that we also plan to stage approximately 2 to 4 super fights per year, Canelo-Crawford being an example, some of which TKO will promote and/or sell the media rights for, of course, incremental fees.

We at TKO with Sela collectively identified Conor Benn as someone we wanted to sign for one of those super fights in 2026. That's it. One fight in 2026. Conor was a free agent. Dana White and Nick Khan in that order went out and signed Conor. Now let me be clear. We signed him for just one fight. That's all we're talking about here. Now of course, we hope eventually, he'll fight in our Zuffa boxing series exclusively on Paramount+.

But for now, this is just one fight, no different than what we did with Canelo and Crawford. No different than other super fights we're currently planning with Sela. I would add that the reported purse, I believe, was around $15 million, but the reported purse, I'm not confirming or denying that Conor will be paid for this super fight in 2026 is not TKO going out of pocket. Sela, led by our great partner, Turki Alalshikh, is covering the purse. Once again, no different than exactly what he did with the Canelo-Crawford fight.

Okay. And finally, just more of a housekeeping. I'm double checking on Andrew's comments on the White House. Did you [ say ] a $30 million loss on that event and you're doing it for visibility? Or should we otherwise think about the ROI of that event?

No, that's a great question, and it is important to many of our shareholders. So it's good that we talk about it in more detail. Look, at the moment, the UFC event at the White House is slated to cost upwards of $60 million. I think by the time we get done -- all is said and done with the event and the -- what we pay the fighters and the fan fest we're going to have, that could move north. It's definitely not moving south.

It could move north. Bottom line is it's still a moving target. We are working to determine on a parallel track a package of inventory in and around the weekend of events that we can monetize primarily with corporate partners, B2B players, which will offset half of the spend. Even if that $60 million goes up or rides up on us, we believe we can offset half of the spend.

Today, we see it at $60 million, offsetting $30 million, now I would mention we have several current and prospective partners that are pursuing multiyear partnerships with TKO assets that likely will be inclusive of the White House event. We have a lot of current and prospective partners that would like to be involved and are inquiring about inventory as part of their greater partnership deals they already -- they either already have or are negotiating with us for the future.

But I want to be clear about something. We will not profit from the White House event independently. We will not be making money on America's 250th anniversary. This is an investment for the long term. This is about earned media. This is about sampling, new fans, casual viewers, a spectacle on a stage that will ultimately expand our audience, our viewership and our success on Paramount+.

The next question comes from the line of Stephen Laszczyk with Goldman Sachs.

Maybe starting first for Mark and Andrew, just on the '26 guide. I'm curious if you would be willing to unpack that in a little bit more detail for us, perhaps in terms of what you would expect to see from revenue and adjusted EBITDA growth across the core UFC and WWE businesses and how that compares to the performance you expect out of IMG this year, given some of the one-time items you called out in your prepared remarks.

Look, we're not going to get into much detail on each of the segments. But what I can tell you and kind of reiterating what I mentioned in my prepared remarks, at the midpoint of our guide, we're up 21% on revenue and 43% on adjusted EBITDA. We're growing our adjusted EBITDA margins to just under 40% or 600 basis points to 39.6% at the midpoint.

As it relates to the contribution of both the Olympics properties, which we have Milan revenue recognition and EBITDA contribution, and we have L.A. pre-spend, which we're ramping up significantly this year in advance of the games. I articulated on the call that we have roughly $170 million for Milan on the top line and then the aggregate Milan EBITDA contribution, which was positive, offset by the L.A. pre-spend will be a drag on IMG/On Location's adjusted EBITDA.

As it relates to the World Cup, we're expecting a contribution of $75 million of adjusted EBITDA. So we feel very comfortable and confident that that's reasonably achievable and perhaps something that there could be some upside against and not in our plan.

So we feel strongly about the growth in UFC and WWE, largely attributable to the step-up in media rights at both those segments and then just continued tailwinds for global partnerships, as Mark articulated in his prepared remarks as well as the new site fee/PIF -- excuse me, FIP definition, financial incentive packages.

And I know we articulated in Mark's prepared remarks the long-term growth prospects for that business. So we're fairly bullish there, which the most notable increases this year at WWE, where we'll have 3 events in Saudi Arabia versus 1 last year.

That's helpful. Maybe just to dig in a bit on the partnership growth opportunity. Any key points or key drivers that you would encourage investors to keep in mind just as they think about 2026? I think you have some broadcast inventory come in this year. It seems like there was some nice momentum on the signings front, exiting '25 into '26. Anything to point out or help you can give us on just thinking about the drivers and white space to go after on the partnership front?

Yes, look, I would just tell you that it seems that -- I would even say over time, folks have underestimated the growth potential of this division despite the fact that we're well ahead of plan, right? We put out a target for '25, and we well exceeded the $450 million. We put out a target for 2030 of $1 billion, and we announced last quarter that we're taking that to $1.2 billion. There's always a fear we're running out of categories and then we pull out DUDE Wipes.

I mean there's just -- there's no end to the opportunity here. Our -- we own men with the sports, by and large. We have healthy female audiences, which is terrific, especially at WWE, where we're at about 40%. But we have -- this is back to my ESPN days; this is like you knew you had young men 18 to 34 that made ESPN an appointment and a destination. And we feel real strong that those hard-to-reach young men are sitting right here at TKO for marketers.

And fortunately, marketers are seeing that again and again, getting the ROI and coming back for healthy increases. So we're off to a really strong start this year on hitting our target and growing to that $1.2 billion and that's baked into our guidance. But obviously, our margin jumping from end of year 2025 of 33.5% to almost 40% margins for 2026 at the midpoint of our guidance. That's being fueled and sparked by the success of our Global Partnerships division.

The next question comes from the line of Ben Swinburne with Morgan Stanley.

I couldn't help but notice Ari seemed to make in his prepared remarks a point to talk about this year as a year of execution and I think, tried to make effectively a comment around M&A this year. I just figured I'd ask you if you can maybe flesh that out. Is there a message there? Are you trying to signal something to the market about sort of inorganic versus organic?

And then, Andrew, I just wanted to understand for sure on the financial incentive numbers you threw out this year and long term, are those revenues from a revenue recognition point of view in terms of how we forecast the business? Or is there some accounting thing you want us to be thinking about relative to those dollar numbers you provided?

Why don't you start?

Yes, I think we -- the lion's share of that growth comes from what we would otherwise recognize as revenue. Some of these packages in the aggregate do have cost savings, tax incentives or otherwise. But the way to think about those packages and the guide are the revenue impact and almost entirely flow through to the cost side.

There's arguably a case to be made, although not in these numbers that the cost incentives that would not be noncash or sort of other value-in-kind would be incremental on the EBITDA flow-through. So we're talking about revenues here and almost entire flow-through to EBITDA.

And then Ben, on your second question, yes, that was purposeful. It's an often-asked popular inquiry that we get in meetings and TKO's name gets bandied about in the press with regard to rumors of NASCAR or F1 or any number really of small and large sports properties. And we just want to make sure that our investors and the marketplace knows that we're not hunting. We will always be opportunistic.

At the same time, we will always be prudent. But this is a year of execution. This is a year of battening down the hatches and operating the business so that we can reach that near 40% EBITDA -- adjusted EBITDA margin. And I like that Ari really underscored that to make sure the marketplace understood we were not going to be distracted by rumors.

The next question comes from the line of David Karnovsky with JPMorgan.

Maybe following up on Zuffa, it would be great to hear more on the promotion so far in terms of fan engagement, viewers or anything else we should be looking at. And Mark, you had mentioned at a conference getting the 50-50 ownership over some period. Maybe you could just speak a bit more to the milestones to get there and any kind of financial disclosures investors could expect in the interim?

Yes. Look, it's early. It's early on our PLEs with ESPN. It's early on UFC with Paramount+. So it's definitely early, a little premature on Zuffa Boxing. We're just out of the gate. We're initiating our plan. We're executing on our plan, might be as many as 16 fights this year. We're looking, as I mentioned in the prepared remarks, to go outside the U.S. We're signing boxers left and right.

And by the way, lot of incoming calls to Dana and Nick. That's been a great story for us. It's -- we're out there looking and talking and negotiating, but a lot of these are inbound calls. People excited that we're building an asset under the same strategy that we built the UFC. So it's a terrific opportunity for us. So just a few fights in.

We're fighting at the Apex in Las Vegas. No viewership numbers yet to share, but we're really optimistic and bullish about adding Zuffa Boxing to the opportunity slate that is FIPs, financial incentive packages, global partnerships and international media deals, which will have some on the horizon -- some announcements on the horizon. That's where we are, and we're really putting a lot of effort behind it because UFC has a long-term media rights deal.

WWE has long-term media rights deals. PBR has long-term media rights deals. This is one that could really turn into something for us. And hence, why we've got Nick and Dana splitting time on it, of course, Lawrence Epstein also playing a big role in what we're doing there. So as I said in the prepared remarks, look out, we're coming, and there's a lot of opportunity and a lot of fight fans that are excited to see us coming this way.

And on the equity, we've disclosed previously that the first gate to vest into our equity interest was signing a media rights deal. I did articulate in my prepared remarks that we anticipate based on 2026 financial performance that we will vest into the next tranche of equity. So things are moving well towards our stated goal of getting to our equity interest.

Okay. I just have one more. On Royal Rumble in Riyadh, I think that was the first international tentpole PLE you've done abroad. So I was just interested in what the operational or commercial lessons learned were and how does this kind of inform your plans to host WrestleMania 2027 there? And I don't know, Andrew, if there's anything you could say about the FIP kind of relative to a normal Saudi Arabia event.

I'll take that part first. So Andrew will answer the FIP and then Nick Khan is sitting here with us, and we'll let him talk about Royal Rumble, WrestleMania and our partners in Saudi.

So as we articulated in and throughout '25 and now on our conversation today, we did have one shift, one Saudi event shift from 2025 into 2026, such that we had 1 last year, we'll have 3 this year, all which carry the same revenue recognition and cost profile despite one being branded as it was in January.

Just to add on the learning side from Royal Rumble, Royal Rumble in Riyadh was the first event at that venue ever. So when you're the first event ever, there's a lot of things to be learned, not only for the operator, but for the venue. When you look at WrestleMania 2027 in 14 months from now, that will be coming off of the Asia Cup, which will be held at the same venue WrestleMania 2027 will be held at.

So that's 3.5 weeks of international football/soccer action, which there'll be a lot of learnings coming out of that in terms of the look of the venue, the feel of the venue, how to light it properly and how to get all of those nuances down. So assume our team will be there for the entirety of that soccer tournament, and we'll be ready to go for WrestleMania 2027.

I should also mention that IMG produces the Saudi League soccer. So we have some institutional knowledge of the arena and the atmosphere there.

The next question comes from the line of Peter Supino with Wolfe Research.

I'll mimic my colleagues here and ask you 5 questions. I wanted to ask you first about the White House and the Sphere events. They're really great evidence of the growth opportunity of the UFC and the ability to spend money to develop that brand and that audience. I'm wondering if we should think about these big events as something that you would love to keep doing.

And assuming that there are opportunities out there, just treat them as a normal cost of doing business and model that accordingly rather than sort of adding them back to the expense structure every year. And then a question on capital allocation. Obviously, you have been a massive buyer of your own stock, and it's been a great stock.

You can return capital with recurring dividends, special dividends, buybacks. And today, your stock trades at a premium to a lot of other businesses. I'm wondering if you kind of have a point of view on what the right way to return capital going forward and whether you look at your stock relatively or absolutely in terms of its opportunity as something to buy back.

Take the last one first.

So yes, I think, Peter, you hit the nail on the head. I mean we have announced today our intent for now to increase -- excuse me, to repurchase another $1 billion under the $2 billion of previously authorized share repurchase in October of 2024. Over the last 12 months, as I stated, we've repurchased approximately $900 million. So with this $1 billion, we'll have all but satisfied our prior authorization.

We will obviously look at what makes the most sense for our company and all of its constituents and at what point based upon how we envision the shares performing, repurchasing stock may no longer be accretive. So we're still within the band of where this is beneficial for the company and its shareholders.

And also, I'd note that we did return in calendar 2025, approximately $1.3 billion to shareholders, which is inclusive of our dividend, which we had doubled in Q3 from $75 million a quarter to $150 million a quarter. So look, we're laser-focused on this. And just given the cash flow profile of this company, nothing is off the table.

Yes, look, we are laser-focused is right. I mean we said we were committing to capital allocation in the tune -- to the tune of putting our shareholders first and returning cash to our shareholders, and we meant it. 3 to 4 years was the initial authorization, and we're going to finish the entire authorization in the space of 2 years, while -- all the while doubling the dividend. So more to come on that front.

Obviously, we are highly cash flow -- free cash flow generative. We're normalized free cash flow conversion about 60%. And over the next 5 years, going to materially increase. So we will have a lot of optionality, and we'll weigh all of that with our Board. As far as these big-time events, look, we were lucky in the sense that we were the first one at the Sphere and that was a big win for us.

We'll be the first one and maybe the only one ever on the South Lawn of the White House. I can't tell you that we have any events coming up at the Kremlin, but we will definitely be looking for more one-time events, but nothing you should necessarily model, right? We'll lose in the neighborhood of $30 million on this event at the White House in June, and it's a one-timer, and that's it. It's not indicative of anything long term that you should put into the plan.

The next question comes from the line of Ryan Gravett with UBS.

I just wanted to follow up on what you're seeing now in terms of demand for live events across the portfolio, particularly with the World Cup at -- On Location coming up in a few months. And you had some very nice momentum last year at the WWE with the premium events and Cena's farewell tour. I just want to confirm if you think underlying gate revenues can continue to grow in 2026 at the WWE.

Yes. Look, we're continuing to see strong growth in ticket yield. And financial incentive packages. As you know, today, we underscored again, put out a real transparent target of $380 million to $420 million by 2030 for those financial incentive packages. And we feel just as strong about live events. I mean it's -- when I look at the success of the men's and women's hockey gold medal games at different hours for the U.S., right?

I mean this is like the highest viewership of a major sporting event in the neighborhood of what we saw before 9:00 a.m. in the U.S. ever, like ever on record. Sports drives audience. Sports brings people together. It is appointment viewing. And our live events benefit from all of that, from age and demos, social diversity, geographic region, short clips, snackable content, but they don't -- they can't consume enough of it, and they want to be able to say they were there.

And we're seeing -- not just are we not seeing a slowdown, I mean we're seeing an uptick. So we still feel very bullish about the elasticity across the WWE and it ultimately coming in line with the success we've had at the UFC. So a real good story for us. And I think just overall, and I know I was pretty optimistic and energized in my prepared remarks, but I would just underscore when asked like what kind of company are we?

We are a model growth story and we're seeing strong momentum across the entire businesses. Our media rights deals are locked in across the board, high margin, high visibility for investors. Our global partnerships absolutely on fire with a great target by 2030 of $1.2 billion. We've talked about the live events and being able to take these shows on the road and see economic contribution because of the demand our fans have for those events coming to their towns.

And then we have a transformative opportunity with Zuffa Boxing. We have a capital allocation plan that is in full speed mode. We'll continue to be a significant free cash flow generator. Our margins are quite attractive. We've got a White House event that is kind of one in a million.

You can't pay enough to have the kind of stage we're going to have, and we're focused on the operation and not hunting for M&A. So really pleased with our management team, truly, and their ability to understand the key metrics of this business and shape strategy to deliver on those metrics that are most important to our investor base.

Great. I think that's probably a good place to wrap the call. Thank you, everyone, for joining and for your interest in TKO. Operator, you can now conclude the call.

Thank you. That concludes today's call. Thank you for your participation and enjoy the rest of your day.

All right. We'll get started. Hi, everyone. I'm Ryan Gravett from the Communications and Media research team here at UBS. For our next speaker, we have Mark Shapiro, President and Chief Operating Officer at TKO. Thanks for joining us, Mark.

Of course, good to see you, Ryan.

So it was a big year for TKO, new rights deals at UFC and WWE. You also laid a lot of the groundwork for your venture into boxing. But as we look ahead, what are the top priorities for the company as we get into the new year?

Yes. I would just say from an overview perspective, we're thrilled that the industrial logic of bringing these 2 core IP properties like WWE and UFC together, really, that industrial logic has been validated. In fact, we are a year ahead of schedule on our pro forma that we put together for the analysis of bringing these 2 together. And there's a real duality at play. We have a management team that is very focused on short-term priorities, but at the same time, setting the table for long-term growth and very focused on that. And we benefit from the fact that we are living in an experienced economy unlike no other. So that inerts to our benefit across the board with ticket revenue, with high-margin site fees, with premium hospitality.

So you find yourself in a situation -- a fortunate situation where when you look at WWE and UFC, you're talking about businesses that are 50% margin businesses. And that doesn't include the margin accretion we're going to have when you start to factor in our new media deals next year that we've cut for WWE, of course, with the PLEs and ESPN and UFC and our deal with Paramount+. And so when you look at those deals, it's really in totality, $15 billion of deals, a $2 billion AAV. This is high margin. This is multiyear. This is very predictable, clearly high visibility and all have escalators. So we're sitting in a good position. And now it's all about executing on these deals and our business overall.

Mark, let's start off with one of those new deals on the UFC side with Paramount Skydance, who certainly making some bold moves of late, but...

I hadn't seen that.

Maybe you could discuss the decision to...

More bold moves.

Yes, exactly. Maybe you could talk to the decision to go with them as your new rights partner and how you think this deal positions the UFC for not just next year, but over the totality of the agreement.

I would tell you, we're thrilled and actually pleasantly surprised in the sense that when we were with ESPN, Ryan, it was ESPN such a great marketing machine, such a great destination for fans, and they were driving a lot of noise to our fights, a lot of attention, a lot of awareness, and they were growing our audience in a really significant way and most importantly, growing engagement. What we've seen so far with PSKY is, this isn't just about PSKY, I mean, meaning just Paramount+. This is about all of PSKY. I mean this is a priority handed down from David Ellison and Jeff Shell that the entire company is going to get around how they can support the UFC.

Now of course, it makes sense from their perspective, they're paying a lot of money. So they want to monetize those rights. But we've been -- we're clearly the beneficiary. And we've had already several meetings with synergy heads across the company on how nontraditional areas of business are going to put a spotlight on UFC. So we're really optimistic about what this could be. We launched on January 24. And of course, the reason for going here beyond, obviously, the terrific rights fee, which is a 2x step-up, was that they're bold. They're dynamic. They're going to make moves, and you've seen that with TikTok. You've seen that with the way they're chasing Warner Bros.

But for us, we're out of the Pay-Per-View business. That's the beauty. We're out of the double paywall. And remember, if you wanted to watch our premium content on ESPN, you would have to pay roughly $100 a month, sign up for ESPN+ and then sign up for $80 and growing for the Pay-Per-View. That's all gone now. You pay $7.99. That's what it is today, even if that goes up at some point a little bit, you're materially less, right? You're talking about -- you've got popular means out there showing $1,200 versus $150. So our fans, it's -- they're going to be able to get this content clear and clean and the feed the way it's supposed to be, not ripped off, not pirated. It's very, very fan-friendly. And it's going to allow us, especially when you look at the neighborhood of content that we now sit in, all the Taylor Sheridan shows, et cetera, it's going to allow us to grow our audience, expand our audience. It gives us broad reach. And that's what we're most excited about.

And I'll just tell you, I don't know how this Netflix thing is going to play out. When I say Netflix, I mean the Chase, Netflix seems to be in the lead for now with Warner Bros. But if Paramount -- if PSKY is able to get that asset, I like a world in which we could potentially live on HBO. I like a world where we could potentially live on TNT because historically, institutionally, these are sports destinations, right? They've had their years of carrying premium sports, and they've shown not only that they can attract an audience for sports, but that they can convert an audience to sports.

Got you. In terms of the broader reach and the removal of the double paywall whether that's CBS or if it ends up on HBO, who knows. But what can that do to other parts of the business? How should investors think about the benefits that it can provide?

Well, I would tell you, it's just -- it goes into the thesis of why we chose going to PSKY, right? You're looking at, of course, the dollars and the step-up, but you're looking at reach and you're looking about what's good for your brand. And they will be drivers of all 3. And to your point on CBS, I should mention, I mean this deal calls for us to simulcast some of our premium content, either partially or in its entirety on CBS. So I think you could roughly expect half of our premium events, which is -- which are 12, one every month, if you include Abu Dhabi, there's 13 to have some semblance of CBS carrying our product, our properties, our IP, our fighters, Dana White to over 100 million homes, which should be really exciting and good for growth. And that's what we're trying to do.

We're still a nascent sport. We haven't been around for 100 years like Major League Baseball or the NFL, right? We are 30 years old plus. So we still have a lot of educating to do when it comes to the sports fan on MMA, what that means, how the fights work, how you win, how you win a belt, what the BMF award belt means, if you will. And we believe that given that we have 700 million fans strong globally, that it will draw more attention. And then once you get a little taste to UFC, you're hooked, especially if you go to the event live and in person.

A large portion of that fan base is international outside of the U.S., a global sport, if you look at the athletes that are commuting. Where do you see the most opportunity to improve monetization outside the U.S.? And how should we think about international TV rights going forward?

Really excited about that. I mean, right. My CFO, Andrew Schleimer, myself, Adam Kelly, obviously, who runs IMG for us. We see this as a real opportunity going forward. We're going to make noise. The brand is going to grow. Engagement is going to increase. And that's going to bode well internationally for us. Keep in mind that we have fighters in totality that hail from 75 countries around the world. So there's already a built-in base around the world. We take about 11 to 13 fights a year on the road internationally.

And we see real opportunity in Australia, in MENA, in LatAm, obviously, in Europe and China. I would say those are our 5 priorities. And what we're finding in all of these regions is there is budding streaming platforms that are popping up every day, looking to sort of take the same model as ESPN+, which is get an anchor tenant, make noise, make a name, quickly become a sports destination and then buy up other sports rights. So we're feeling pretty bullish about what we can do internationally. And it should be noted that generally, we have about 1/3 of our deals around the world coming up annually for renewal. So real opportunity with more competitors, but also real opportunities because some of these deals are significantly underpriced because they were cut years ago.

Lastly, on the UFC, there's a big event planned next year at the White House. Any early preview on what we should expect?

What we're trying to figure out right now is what we can and can't do with that event, which is scheduled to take place on a flag day. Somebody's birthday is that day as well. And we're -- it's going to be a spectacle. I mean this is -- if we thought the Sphere was a spectacle, this is a spectacle on steroids. We're getting requests. I'm not even talking like people that want to buy tickets because that won't be available. There will be no ticket sales. That will hurt us financially. But what this will do for brand, reach, engagement, notoriety, press, earned media, advertiser interest. This is an absolute monster. We're excited about it.

Dana White and Hunter Campbell are hard at work at putting together a sensational fight card, don't know yet what the President's involvement will be, but judging from the draw day with World Cup, clearly, he's willing to get involved with those sports that he loves and take place on U.S. soil, not to mention the 250th birthday celebration in the United States. So it's going to be gangbuster, and we're just trying to understand structurally how we can do it and set it up and what we got to build in and replace the soil in the side and what we can sell from an advertiser standpoint. But the only thing we do know at this point is it is happening and there won't be ticket sales.

Got it. Okay. So Zuffa Boxing is also set to launch in early 2026. Can you frame the opportunity from a financial perspective, but also the broader plans you have around energizing the sport that is frankly quite fragmented today.

Yes, you're right. It's really twofold when you look at boxing. But I think I would start the headline for us is we're going to build a promotion similar to UFC. So you have a sport using your words, is fragmented. Others might use -- has suffered from corruption over the years or too many promoters or too many sanctioning bodies. We're not going to cast judgment on any of that. Our plan is to build a promotion where we have a stable of 200 or so fighters that we are hard at work signing up and fans see the fights they want to see, which means the best fight the best. You move up in the rankings, you fight someone else that has moved up in the rankings. That's really what we're building here with Zuffa Boxing.

We are planning to launch our first fight on January 23, which is the night before our first UFC fight on PSKY. So back-to-back, nights, big weekend for TKO to say the least. And the way that we're going to build value here is, on one hand, you've got this partnership that we have with our friends in Saudi Arabia, who, by the way, have been spectacular partners, spectacular, right? They say what they mean and they do what they say. And we're going to run it like we do the UFC, bring the whole platform in and sell tickets and sell media rights and sell partnerships and marketing and ultimately, consumer products and licensing off of our brand and our individual fighters and ultimately monetize the site fees the way we do UFC and WWE. Real opportunity there. And to do that, as you know, we're not taking any risk. We're being paid a management fee. And we're going to build firm value.

And in the space of a couple of years, after hitting some thresholds that we're well on our way to hitting, we will roughly be at about 50-50 on ownership of that JV. And when you look at UFC, which is staying with firm value, $20 billion plus and WWE, $20 billion plus. There's a real opportunity to follow that road. Now I'm not here telling you we're going to turn Zuffa Boxing overnight into another $20 billion enterprise asset. But it can be something pretty strong, Ryan, because what it has that the UFC didn't have is you need to be educated on the UFC. You need to understand how the sport works, MMA, grappling, karate, jiu jitsu, boxing, I mean, all that goes into it. Boxing, everybody gets. It's been around for 100 years. It's a gladiator sport, 1 of the 3 biggest sports as far back as the roaring 20s. And it's 2 individuals get in a ring and try to knock the other one out. It's pretty simple and everyone relates to a good grudge match like that.

So we think there is enormous upside once it's run the way it should be run, which will benefit not just fight fans, but the fighters themselves. We're excited about that. And I would just say before we leave this topic, the other opportunity is we're going to have 2 to 4 super fights a year, similar to the Canelo Crawford championship bout we had at Allegiant Stadium a few months ago in front of 70,000 fans on Netflix where they did incredible numbers. They were thrilled. They want to stay in the fight game business. And we're going to put 2 to 4 fights like that together per year for Netflix or whoever else wants to get into the bidding with our partners from Saudi Arabia and Sela, GA. And we're going to be paid to do what we do, which is sell tickets and market and put the fights together and sell media rights. And we've been telling the Street that, that roughly per fight, we make about $10 million a fight, and I think there's upside there going forward as well because we've proven the model.

Got you. And just lastly on Zuffa, the JV structure today and you referenced over time getting to a 50-50 split over the next few year -- few years, excuse me. Will there be updates along the way for -- from an investor standpoint so we can monitor the progress and how that asset is performing?

Great question. Absolutely. We're -- we'll put our guidance out in February. And Ariel Emanuel and Andrew Schleimer and myself are very, very focused on more granularity to whatever level that is, we understand and we listen to feedback from the Street. And I'm sure we're going to talk about global partnerships as well, our partnership is marketing, and we want to do the best we can, can give all the answers and show all the recipes, but we want to be able to help our investor base and attract a greater investor base through more detail for their model.

Great. That's great. Mark, you started the conversation with referencing on the WWE side, a lot of the industrial logic in terms of the deal coming together. I mean I think that -- we started to see that in the numbers this year in terms of sponsorships and live events. So I mean, how much runway do you see from here at the WWE?

Well, this one has been around a lot longer, not as long as baseball, obviously, but it's been around a couple of decades more than the UFC. But just monster runway because a lot of the revenue streams you're now seeing us create and generate just weren't tapped into years past, namely on the partnerships and marketing side. We think there's huge runway here. And we've got great partners. I mean Netflix and ESPN, I mean not to mention with the power that USA still has because it's been a destination for WWE for so long. So sports fans, sports and entertainment fans know to go there.

We just couldn't be better primed really on the media rights side, on the partnerships and marketing side, on the margin side, on the creative side, Nick Khan is doing a fantastic job running that business, growing that business, assembling a best-in-class team. And Paul Leveck is a creative force, absolute force in creating new superstars, pitting the right superstars and storylines, framing that out the way that you'd expect as a fan, constantly a surprise at every corner. So I believe we're in good shape there. And I really do. I think it's early innings as it relates to WWE. Frankly, to my surprise, I didn't grow up a WWE fan. Of course, I knew it. And of course, who didn't know Hulk Hogan. I probably knew him better as Thunderlips from Rocky 3.

But I have become a pretty strong fan, not just because you're involved and you're going to the events and you're sitting in a room and brainstorming with Nick and Paul, but because it's just good television, great characters, these superstars, the storylines, their backgrounds, where they're going, how hard -- by the way, how hard they work and the kind of athletes that they are. I mean our superstars are getting hurt every day. This is -- there's -- you can say all you want about scripted, but the athletic competition isn't so scripted when a punch lands in the way it wasn't supposed to. And I think our fans really appreciate it. I think they appreciate how genuine it is, how raw it is and how we really cater to a family-friendly audience. So we're really excited about where we can go with WWE. And let's not underestimate what ESPN is going to mean already from a credibility perspective.

But [indiscernible] is going to get that D2C platform moving fast, whether it's fans that are authenticating through their cable operator already or whatever the platform might be or fans that want to pay $29.99. I mean we saw great success with our first event, Wrestlepalooza. We anticipate Wrestlepalooza becoming an annual event, strong numbers across the board and ESPN, the marketing they brought to the table on the WWE. And I should credit the Walt Disney Company. That first event, Wrestlepalooza, they sent us a 10-page plan on how they were going to promote the launch of WWE on ESPN across the Walt Disney Networks, similar to what PSKY is doing with UFC, and we couldn't have been happier, frankly, no notes.

Great. Any updates on some of the ancillary content that wasn't included in the PLE deal this time around, the library, the premium events on the NXT side.

Right. You're referring to when we did the ESPN deal that we obviously still have the NXT PLEs to sell, and we have the WWE library. What I would tell you is we haven't gone to market yet on the NXT PLEs. We've got a lot in our plate right now, and we want to be smart and strategic about that, and we're in no rush. We need to be deliberate and thoughtful. But as it relates to the library, we're working on a nonexclusive deal at the moment and I think we'll have something to announce in Q1.

Okay. Great. Mark, a few quarters back, the sponsorship revenue line was renamed to partnerships and marketing. I think...

Thank you for that, Ryan.

You take a more holistic view, I think, of what you're doing with these clients. So -- and you've announced a couple of big deals recently, DoorDash, Polymarket, but how does the pipeline look as we get into the New Year?

Pipeline is strong. And we get questions on this all the time if we're being conservative. I mean we're not playing games. We're not sandbagging. We have a good feel of our business. But to your point, we do have strong momentum. I think on the last earnings call, I mentioned we'd announce 2 deals by the end of the year. We did sort of a new frontier new age deal with Polymarket, and then we followed up with DoorDash, which nobody saw coming as well. I think we will actually be able to announce a third deal by the end of the year. We're getting very close in a category I have personally always wanted to see us close. I'll leave the Ts there. But hopefully, we can get that in the door by December 31, and it will be a strong deal, again, multiyear escalators, highly visible. So we're in a good place.

I mean we have strong momentum across the board. I think we've told the Street that between WWE and UFC, we're roughly at $450 million for the year, which is way above our internal goal of $375 million. And when you start to contemplate a picture that is strong momentum, new categories like DoorDash that we didn't envision or Polymarket, which we didn't envision. And then on top of that, media inventory because let's remember, in our ESPN deal, we have inventory -- advertising inventory inside of our events that we can sell. And in our PSKY deal, we have ad inventory we can sell along with a lot of broadcast integration. And when you factor in that inventory we believe now we'll have more detail specifically and try to give you a number for next year specifically in February, that our goal of getting to $1 billion by 2030 for the TKO assets in partnerships and marketing will actually be $1.2 billion.

Mark, can we go through some of the building blocks to get to that $1.2 billion? I mean, in terms of -- I don't know if there's a way to frame it in terms of pricing, renewals versus bringing on new partners versus some of these other opportunities like the advertising inventory?

Yes. Look, from a numbers perspective, as I said, we'll lay that out in February as best we can. But clearly, this is a strong revenue stream for us. We have a best-in-class team led by Grant Norris-Jones, who came from the UFC and is now overseeing all of this, including opportunities across IMG and PBR and Zuffa Boxing. So he and his team have their plate full. They are now staffing up to sell ad inventory because if you think about it historically, that's not something we did. I mean, he has experience there and his senior leaders have experience there, but they've been all about activation, experiential, grocery store aisle opportunities. And now we'll be selling ad inventory. So it will take us a little while to build that team, probably a good part of the first half of the year. So you won't see any numbers trickle in probably until the second half. but we feel good about that.

And really, the way we've gone about it, Ryan, to your question specifically is that we're renewing categories that are coming up for expiration. Many of those deals, like our international media rights are significantly underpriced because they were cut years ago. They didn't have the kind of ring inventory as example -- as an example, or integration inventory that they have now. We're also finding new categories, as we mentioned. And frankly, there's a lot of demand. When I was at ESPN, I would fondly press our ad sales team like you're on the golf course too much, you're not making calls. And frankly, the reason why they weren't if they were guilty of that, and I thought they were is because there was a lot of order taking. Oh, you want to buy Sports Center. No -- I mean, Sports Center sells itself. That doesn't mean they didn't have a hard job in other categories, but those calls were coming in for Sports Center and then you work them into everything else.

And I would tell you, we're now getting a lot of calls more than we did in the past. That doesn't mean Grant's team isn't out there hunting like nobody's business and trying to unearth new opportunities and new brands and really introduce them to our properties, many of them for the first time, these advertisers and marketers. But it's good to see that specifically on the mainstream side, the phone is ringing.

Great. We can shift over to the live event side of the business. As you look across the portfolio, what are you seeing today in terms of consumer demand? Any signs of weakness along the demand curve?

We're not at the moment. We're -- as I mentioned earlier, we're taking advantage of the experience economy, right? We're post-COVID. Humans are social animals. That's just a fact. They want to be out. They want to have shared experiences. They want to share their experiences. There's a difference there. They love short-form content, snackable content. We have a host of influencers, really that Dana White has just done an extraordinary job curating influencers, social media influencers that watch the UFC, that watch WWE, that watch Slap, which is a business that he invented and created. It's not inside of TKO, but nonetheless, it's one of his businesses.

And he's curated this incredible team, and they're putting so much creator economy content out there, maximizing opportunities across YouTube and TikTok. And that's benefiting us in the sense that it's increasing engagement, it's increasing awareness. And when you do that, it's increasing our sampling pool, the TAM, our fan TAM, if you will, and they want to come out and experience it for themselves. And we're seeing it in ticket sales. We're seeing it in margins. We're seeing it in premium hospitality where they want that one-of-a-kind experience, not just a seat in the arena. We're seeing it in consumer products and licensing. And frankly, other cities and municipalities and local governments are seeing it because we're getting more calls coming in of interested parties that very much want to bring the UFC or the WWE to their city and are willing to work with us on subsidies and incentives to do just that.

Okay. There's also some big cyclical events next year at for on location, the Winter Olympics and World Cup. And if we go back to the last summer games in Paris, there were some idiosyncratic factors that impacted that. Can we expect these big events to be profitable for TKO this year or next year, excuse me?

We're cautiously optimistic, I would say. Milan is you've seen, I'm sure, reports of this, and they got a whole hockey ice issue right now, an arena issue. Let's just hope that, that gets done in time and that the NHL continues to participate. That would be a disaster for the Olympics. But we're doing well on ticket sales there. We're largely in line. It's slower than I'd like it to be, and there's been reports of that. But we're still a few months out. And as I said, cautiously optimistic. And it's small for us. The Winter Olympics are not what the Summer Olympics are and certainly not what FIFA World Cup is.

FIFA World Cup is absolutely on fire from a ticket sales perspective. We're -- I think we're way ahead of where -- certainly our pro forma, but where FIFA had us. And remember, we don't sell -- if you go down a location, you can't just buy a ticket to go to the World Cup. It's a package. It might be travel, might be an experience, might be a meet and greet, might have some swag tied to it or F&B, food and beverage, behind the gates, behind the ropes kind of experience, very high touch. That's what we're selling, and we're on an unbelievable -- we have unbelievable momentum right now. And the draw that they just had was extraordinary for us over the weekend.

We had incredible ticket sales that really materialized where folks are seeing the draw, seeing who's in it, seeing the matchups and I better get my package now. So we're really excited about that. And having so many matches just really across North America and in big cities, not to mention Mexico and Canada is something that will play well into our favor. And it will ultimately be scarcity value. You'll ultimately have some scarcity value, I should say.

We've touched on a lot of the new revenue streams coming in next year. How should investors think about the opportunity for margin expansion versus reinvestment in the business? And then along those lines, you also have a target this year for 60% free cash flow conversion on a normalized basis, what are the puts and takes for free cash flow conversion in 2026?

Yes. Look, I would just say run rate on a normalized basis, we're going to stick with our 60% free cash flow conversion normalized basis, I would underscore that. The details all around that. And then from a margin perspective, you're going to see margin accretion, right? We're 33%, 33.5%. And obviously, with the momentum we're having, you start to factor in these media deals, we believe that we'll be in excess of 35%. Again, more detail to come February when we give our guide.

Maybe just to wrap it up, the capital allocation priorities for the company here, you had an accelerated share repurchase program, doubled the dividend. But what are the priorities from here? And what's the appetite around M&A, both from perhaps smaller scale acquisitions or even larger opportunities should they present themselves.

Look, we're going to always be prudent here when it comes to acquisitions. We will certainly look. We will explore, we will talk and listen, but we are not hunting for new properties at the moment. We are focused on execution. We have only a couple of weeks left in this year. We need to hit the ground running in January. We need Netflix Raw to continue pumping the way it did in its first year. We need successful launches with Zuffa Boxing and of course, with the UFC and PSKY. So that's where we are.

Capital return in the meantime, you've seen what we've done, right? We talk about doing what you say and saying what you mean. We doubled our dividend. We're obviously well into our buyback. I think you can see more of that to come. Returning capital to shareholders in a company that puts out the kind of free cash flow we do is our priority, and we are dedicated to it.

Great. I think that's a great place to end it. Thanks, Mark.

Thank you, Ryan.

Good afternoon. Thank you for attending the TKO Q3 2025 Earnings Call. My name is Matt, and I'll be the moderator for today's call. [Operator Instructions]

I'd now like to pass the conference over to our host, Seth Zaslow, Head of Investor Relations. Seth, please go ahead.

Good afternoon, and welcome to TKO's Third Quarter 2025 Earnings Call. A short while ago, we issued a press release, which you can view on our Investor Relations website. A recording of this call will also be available via our website for at least 30 days. After prepared remarks from Ari Emanuel, TKO's Executive Chair and Chief Executive Officer; and Andrew Schleimer, TKO's Chief Financial Officer, we'll open the call for questions. Mark Shapiro, our President and Chief Operating Officer; and Andrew, will be handling the Q&A.

The purpose of this call is to provide you with information regarding our third quarter 2025 performance. I want to remind everyone that the information discussed will include forward-looking statements and/or projections that involve risks, uncertainties and assumptions. Please see our filings with the Securities and Exchange Commission for further detail. If these risks or uncertainties were to materialize or any assumptions prove incorrect, our results may differ materially from those expressed or implied on this call.

Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events, except as legally required. Our commentary today will also include non-GAAP financial measures, which we believe provide an additional tool for investors to use in evaluating ongoing operating results and trends. These measures should not be considered in isolation from or as a substitute for financial information prepared in accordance with GAAP. Reconciliations between GAAP and non-GAAP metrics can be found in our press release issued today as well as the information posted on our IR website.

With that, I'll now turn the call over to Ari.

Thanks, Seth. Q3 was a milestone quarter for TKO, securing landmark media rights deals, doubling our quarterly cash dividend and launching a $1 billion stock buyback. These achievements paired with strong quarterly results and the increased full year guidance we announced today underscore our continued momentum in the business. Our fundamentals are strong, premium sports content and experiences are in high demand, and as such, the table is set for long-term sustainable growth.

Our historic media rights agreements were the standout this quarter, locking in recurring revenues and creating new monetization opportunities for our biggest brands. UFC's 7-year $7.7 billion agreement with Paramount to bring UFC to Paramount+ and CBS in the U.S. places us squarely in the sports mainstream and doubles the AAV of our previous agreement. Starting in 2026, UFC will join the NFL, the Masters, March Madness and UEFA in Paramount's sports portfolio, expanding our reach and removing barriers to entry for fans ultimately worldwide.

WWE's 5-year premium live events partnership with ESPN in the U.S. launched ahead of schedule in Q3 with the first-ever Wrestlepalooza, a new franchise streamed exclusively on ESPN's new direct-to-consumer service. This deal delivers a greater than 1.8x step up in value and brings WWE's marquee events, including WrestleMania and SummerSlam into ESPN's unrivaled promotional ecosystem, further expanding WWE's footprint and fan base. Our Zuffa Boxing joint venture will officially launch in 2026. And with it, we announced a significant media rights agreement with Paramount in the U.S., Canada and Latin America. We ramped up our competitive position in boxing by promoting the Canelo versus Crawford fight in September, which sold out Allegiant Stadium in Las Vegas and drew more than 41 million viewers worldwide on Netflix.

Those super fights will serve as significant marketing stages for Zuffa Boxing going forward. In addition to closing these major media rights deals, our sports properties, which collectively reach more than 1 billion fans globally, created strong momentum for our live events and brand partnership segments, setting new records and adding first-ever partners. As a few examples, UFC 319 became the highest grossing event at Chicago's United Center and UFC's highly anticipated return to Mainland China sold out Shanghai's Indoor Stadium in less than 1 minute. Similarly, WWE's live events set 35 individual market records throughout the quarter and the first ever 2-night SummerSlam sold more than 100,000 tickets at MetLife Stadium.

Building on these arena records, our live events continue to attract strong interest from cities and venues worldwide. This quarter, UFC and WWE expanded their relationships with T-Mobile Arena in Las Vegas and Delta Center in Salt Lake City. We also announced a 4-year UFC partnership with Galaxy Macau and a WWE agreement with the General Entertainment Authority to bring WrestleMania 43 to Riyadh in 2027. WWE content also continues to generate impressive ratings for our media partners. SmackDown led primetime cable ratings 9 Fridays in the quarter, and Raw maintained its position on Netflix's global top 10 every single week through the quarter, extending a streak that began with the launch in January. Global brand partnerships achieved impressive results with WWE's robust double-digit growth in the quarter, powered by SummerSlam and new blue-chip brands, including Maybelline, WWE's first-ever official cosmetics partner.

And at PBR, fan engagement continued to grow. In October, a single Sunday broadcast drew an average of 2.7 million viewers on CBS, the league's largest audience since joining the network in 2012, outperforming MLB playoffs and college football ratings that day. With this momentum and building on its long-standing partnership with CBS, PBR earlier today announced a 5-year deal to bring its Unleash the Beast Series to Paramount+ beginning in 2026. Finally, IMG and On Location also demonstrated momentum in the quarter. IMG, in addition to advising on TKO's landmark media rights deals, played a pivotal role in driving global broadcast coverage for top sporting events, including Wimbledon, the US Open Tennis Championships, The Open at Royal Portrush and the Ryder Cup.

And On Location continued to capitalize on robust demand for premium experiences, selling out packages to 20,000 fans at the Ryder Cup and hosting 47,000 attendees in Dublin for the Aer Lingus Classic. Across the board, we're firing on all cylinders, but we know we're still in very early innings. With our cornerstone media rights agreements secured, we are squarely focused on preparing for UFC's Paramount debut, maximizing WWE's presence on ESPN, driving growth across live events and site fees, strengthening our global partnerships and launching Zuffa Boxing. Our priorities are clear as we finish the year and position the business for 2026, sustain strong performance across all our businesses, capitalize on new growth opportunities and maximize shareholder value.

With that, I'll turn the call over to Andrew.

Good afternoon. As Ari highlighted, we delivered solid operating and financial results in the quarter and for the third quarter in a row, have raised our expectations for performance for the full year. We've completed our most significant media rights agreements with great outcomes that provide visibility into a multiyear, high-margin contractual revenue stream with annual escalators. Over the term, these deals will drive meaningful margin expansion and significant free cash flow generation. We remain laser-focused on operational execution.

UFC and WWE remain our core drivers, and we're continuing to see significant strength at these brands. We're also making meaningful progress integrating IMG, On Location and PBR into TKO and realizing cost synergies and revenue opportunities from these businesses that are even greater than our recently raised expectations.

Now turning to our consolidated financial results for the third quarter. We generated revenue of $1.12 billion. Adjusted EBITDA was $360 million. Our adjusted EBITDA margin was 32%. As expected, our year-over-year results were impacted by the 2024 Paris Olympics, which was a key driver of the decrease in revenue as well as the increase in adjusted EBITDA and adjusted EBITDA margin as the event was loss-making. On a reported basis, revenue decreased 27%, adjusted EBITDA increased 59% and adjusted EBITDA margin increased from 15% in the prior year period.

Turning to our UFC segment. As we articulated on our Q2 call, while the underlying trends remain extremely strong, the timing and mix of the calendar meaningfully impacted results in the quarter. UFC had 10 total events in the third quarter of this year, which was comparable with the prior year period. However, in the current period, we held 2 numbered events compared to 3 in the prior period, including a seminal event, UFC 306 at Sphere in Las Vegas. UFC generated revenue of $325 million, a decrease of 8%. Adjusted EBITDA was $166 million, a decrease of 15%.

UFC's adjusted EBITDA margin was 51%, down from 55% in the prior year period, largely attributable to holding one less numbered event. Media rights production and content revenue decreased 7% to $201 million. The decrease was driven by one less numbered event, partially offset by the contractual escalation of media rights fees. Live events and hospitality revenue decreased 15% to $44 million. Strong underlying trends in pricing and attendance were more than offset by one fewer numbered event as well as the impact of UFC 306, which remains the highest grossing event in UFC history.

Partnerships and marketing revenue decreased 4% to $71 million. Tailwinds from new and renewed partnerships were more than offset by the mix of events in the quarter, most notably UFC 306, which featured our first-ever title partner sponsor, Riyadh Season. We continue to make significant progress in partnerships, adding new categories and growing existing ones, including recently announced deals with Wingstop, Prime Video and Sony Pictures, among others.

Adjusted EBITDA reflected the decrease in revenue as expenses were essentially flat. Direct operating expenses decreased due to lower production, marketing and other event-related costs, primarily due to the mix of event venues, cards and territories, most notably UFC 306, which had significantly higher-than-normal production costs. SG&A increased primarily due to higher personnel and travel costs compared to the prior year period.

Our WWE segment generated revenue of $402 million, an increase of 23%. Adjusted EBITDA was $208 million, an increase of 19%. Adjusted EBITDA margin was 52%, down from 54% in the prior year period, largely attributable to strategic investments in talent associated with the launch of new properties such as Wrestlepalooza. Performance was favorably impacted by the timing and mix of the event calendar. Most notably, WWE had 5 nights of main roster premium live event programming in the third quarter compared to 3 nights in the prior year period.

The increase related to the expansion of SummerSlam, which was held at MetLife Stadium to a 2-night event and the introduction of Wrestlepalooza, which marked the launch of WWE on the ESPN platform. Live events and hospitality revenue increased 61% to $83 million. The increase was driven by higher ticket sales revenue, reflecting an increase in average ticket price and total attendance and an increase in site fee revenue. SummerSlam, which included a meaningful site fee, was a notable contributor to the increase. Media rights production and content revenue increased 9% to $249 million.

The increase was driven by the additional PLE programming, a second night of SummerSlam and Wrestlepalooza as well as the contractual escalation of media rights fees, including our long-term global agreement with Netflix. These items more than offset the unfavorable impact of one less episode of Raw in the quarter and the previously discussed shift of SmackDown to a 2-hour format for the second half of the year. Partnerships and marketing revenue increased 84% to $40 million, driven by new partnerships and renewals across multiple categories, including travel, financial services, food and beverage, telecommunications and beauty, among others. SummerSlam, which was the highest grossing non-WrestleMania PLE in WWE history, drove much of the quarterly increase. The event featured JPMorgan Chase, which partnered with WWE for the first time as a presenting sponsor.

WWE partnership revenue at SummerSlam and overall growth in Q3 illustrated the blue-chip sponsors and new categories we are unlocking to deliver incremental revenue. We believe there's plenty of runway to continue growing this important part of the business. Adjusted EBITDA reflected the increase in revenue, partially offset by an increase in expenses. Direct operating expenses increased due to higher talent, production, marketing and other event-related costs, primarily due to the mix of events, most notably SummerSlam and Wrestlepalooza.

SG&A increased primarily due to higher travel costs compared to the prior year period. Our IMG segment generated revenue of $337 million, a decrease of 59%. Adjusted EBITDA was $61 million, an increase of $116 million. Adjusted EBITDA margin was 18%, up from negative 7% in the prior year period. The decline in revenue primarily related to the absence of revenue at On Location from the 2024 Paris Olympics. This decline was partially offset by an increase in revenue at the IMG business from new business in our Studios Group, primarily Ryder Cup and the Esports World Cup in Saudi Arabia.

Adjusted EBITDA reflected the decrease in revenue, partially offset by a decrease in expenses. The decrease in direct operating expenses principally reflected the absence of costs at On Location for the 2024 Paris Olympics, which was a loss-making event. SG&A decreased primarily due to lower Olympics-related costs at On Location as well as the impact of cost reduction initiatives in connection with the acquisition of IMG and On Location.

Corporate and other generated revenue of $63 million, an increase of 17%. Adjusted EBITDA was negative $75 million, an improvement from negative $90 million in the prior year period. The increase in revenue was primarily driven by promotional and management fees from our boxing initiatives, Zuffa Boxing, the JV we announced earlier in the year as well as the Canelo versus Crawford superfight that took place in September at Allegiant Stadium in Las Vegas. The improvement in adjusted EBITDA was primarily due to the increase in revenue and a $33 million decrease in costs related to corporate allocations of Endeavor corporate expenses under their ownership of IMG, On Location and PBR.

As we disclosed on prior calls, from the close of the acquisition on February 28 forward, there are no Endeavor corporate expense allocations. As for boxing, in September, we promoted our first superfight, Canelo Alvarez versus Terence Crawford, which was a massive success. As Ari noted, the event, which was held in front of a sold-out crowd of over 70,000, generated a gate of over $47 million, the third largest in boxing history and garnered over 41 million viewers on Netflix.

Separately, we continue to operationalize our JV in preparation for our first event in January 2026. At the end of the quarter, we announced a pivotal milestone, a long-term media rights agreement with Paramount to become the exclusive home of Zuffa Boxing throughout the United States, Canada and Latin America.

Now moving on to our capital structure. In the third quarter, we generated $399 million of free cash flow. Our free cash flow conversion of adjusted EBITDA was 111%. Free cash flow was positively impacted by the timing of cash receipts and payments related to the Canelo versus Crawford boxing event. During the third quarter, we collected a meaningful amount of cash on behalf of our partner, Sela. In the fourth quarter, we plan to transfer substantially all of these proceeds to Sela and therefore, expect an offsetting impact in our results.

Free cash flow in the third quarter also included the unfavorable impact of approximately $12 million of net payments related to On Location for the 2026 FIFA World Cup. In early September, we announced a 100% increase in our quarterly cash dividend program. On September 30, we made our first payment under the upsized program from TKO OpCo of approximately $150 million. We intend to fund quarterly cash dividends with cash flow from operations or cash on hand.

Regarding our previously announced share repurchase program, in September, we entered into an ASR agreement to repurchase $800 million of our Class A common stock. We received an initial delivery of approximately 3.2 million shares and expect to complete the agreement in early December. We also repurchased approximately $26 million of shares under a privately negotiated transaction.

Lastly, we entered into a 10b5-1 trading plan for the repurchase of up to $174 million of Class A common stock. Repurchases contemplated under the 10b5-1 plan are to commence immediately once the ASR agreement is completed. These repurchases are being funded with proceeds from the $1 billion term loan add-on that we closed in mid-September. We ended the quarter with $3.759 billion in debt and $861 million in cash and cash equivalents in addition to $312 million of restricted cash.

Now turning to our outlook. As we've discussed in the past, we manage the business with a focus on full year performance. Therefore, we believe results are best evaluated on a full year basis given the quarterly fluctuations that are inherent in our operations. As noted in our press release, we are raising our full year 2025 guidance for revenue and adjusted EBITDA for the third quarter in a row. We are now targeting revenue of $4.69 billion to $4.72 billion and adjusted EBITDA of $1.57 billion to $1.58 billion, an increase of $45 million and $25 million, respectively, at the midpoint of the ranges as compared to the prior guidance we issued in August.

The increase is related primarily to strong operating performance at UFC and WWE through the first 9 months of the year as well as our anticipated performance for the remainder of the year. It also reflects the accelerated timing of the WWE PLE deal with ESPN, net of costs associated with terminating the NBCU deal early. In terms of free cash flow, while we have not given formal guidance, we are targeting a full year 2025 free cash flow conversion rate in excess of 60%.

As we've discussed on prior calls, this excludes the impact of approximately $300 million of nonrecurring amounts as well as the net benefit of restricted cash related to the 2026 FIFA World Cup. On our last call, we highlighted a few notable items that we expected to occur in the third quarter, and our results were consistent with all of them. As we look to the fourth quarter of 2025, we want to highlight the following: At UFC, results are expected to be positively impacted as the current calendar for the fourth quarter is expected to include 11 events compared to 10 in the prior year period. Within these 11, we expect 4 numbered events, which is comparable to the prior year. However, we intend to stage 9 events with live audiences compared to 7 in the fourth quarter of 2024.

At WWE, as we previously discussed, the results will reflect the favorable impact of the Raw domestic rights deal. As a reminder, the fourth quarter of this year will reflect the new long-term agreement with Netflix compared to the short-term agreement we reached with USA Network in the prior year. The fourth quarter will also benefit from the new domestic rights agreement with ESPN.

However, the timing of the calendar is expected to significantly offset the benefit of these items. WWE is planning to have 2 nights of main roster PLE programming in the fourth quarter compared to 3 nights in the prior year. Most notably, as we announced earlier in the year, one PLE in Saudi Arabia is shifting from Q4 2025 to the first quarter of 2026. All these items taken together, along with continued underlying momentum in the business are expected to yield strong financial performance in Q4.

At the IMG segment, we expect fourth quarter revenue and adjusted EBITDA to be down modestly year-over-year in terms of absolute dollars, primarily due to the absence at IMG of the Gulf Cup, which, as a reminder, is a biannual event as well as an increase in cost at On Location related to preparations for the upcoming Olympic Games.

In closing, while we're not providing formal guidance for 2026 on this call, we would be remiss if we didn't highlight some things we're excited about looking ahead. Number one, media rights. Our 2026 financials will include the significant step up in connection with the commencement in January of the 7-year UFC rights deal with Paramount as well as a full year of media rights fees from our new 5-year agreement with ESPN for the WWE PLEs. This high-margin contractual revenue stream with annual escalators will provide attractive visibility and stability for our businesses for years to come.

Number two, site fees. We continue to see meaningful momentum in securing significant financial incentives and delivering measurable economic impact by bringing our events to cities, both in the United States and around the globe. We're focused on a multipronged strategy that's predicated on receiving higher value from markets we currently have incentive packages with, site fees from markets we've been to but don't currently receive a fee from as well as site fees from new markets. Additionally, in 2026, the current WWE calendar includes 3 PLEs in Saudi Arabia compared to 1 in 2025.

Number three, global partnerships. We continue to make significant progress in this area of our business, adding new partners and categories while also growing existing partnerships. Our recently announced media rights deals, including commercial inventory, will further bolster this area of our business. In 2025, at UFC and WWE, we expect to achieve $450 million in high-margin partnership revenue and continue to work towards achieving our previously communicated target of $1 billion in total company partnership revenue by around 2030.

Number four, boxing, which we believe represents an additional opportunity to drive value for shareholders in multiple ways. The initiative is anchored by our JV Zuffa Boxing, which we anticipate will launch in January. For the avoidance of doubt, the financials for Zuffa Boxing are not consolidated. We have an equity interest in the joint venture, and therefore, we account for it as an equity method investment. Also within our reported results are management fees for services to the JV.

Our consolidated results in 2026 are expected to include a full year of management fees as opposed to the partial year that we recorded in 2025. Over time, as Zuffa Boxing scales, our meaningful ownership interest will enhance the value to and inure to the benefit of TKO shareholders. Separate from the JV, we expect to work with our partner, Sela, to host 2 to 4 super fights per year.

As with the recent Canelo versus Crawford event, TKO will receive additional promotional and management services fees as well as a commission for negotiating the media rights deals related to these events. In addition to these 4 items, we continue to focus on the integration of IMG, On Location and PBR as well as realizing revenue and cost efficiencies across all of our businesses, which we expect will be incremental to our already attractive margin profile.

With that, I'll turn it back to Seth.

Thanks, Andrew. Operator, we're ready to open the call for questions.

[Operator Instructions] First question is from the line of Stephen Laszczyk with Goldman Sachs.

Maybe starting off first with UFC and the media rights picture coming a bit more into focus with the U.S., LatAm and Australia, I think, locked in. I'd just be first curious, Mark, if you could maybe discuss why you thought Paramount was the right partner on the LatAm and Australian side of the international equation. And then as you look out across the rest of the international portfolio, perhaps what you're thinking about and discussing and prioritizing in terms of partners, maybe why Paramount wasn't included more holistically on the international side and where that opportunity lies at the moment looking forward? And then a follow-up on WWE after.

Great. Thanks, Stephen. Good to hear from you. Look, we're -- I think just back up a step, we're viewing TKO right now really as an execution story. Our primary focus is really continuing the momentum we're seeing in the business, which is continued operational expansion, integration. And of course, as you know, we're laser-focused on capital return. On the media rights side, look, we're in a real good place domestically, obviously, contractual revenue, annual escalators that are strong. It is a high-margin revenue stream with high visibility, which will be good for investors.

And then on the international front, we're really focused on increasing our monetization opportunities there. Remember, a majority of our fan base, especially with UFC, is international. So we really need to close the gap on our fan base, make it a priority with regard to maximizing our media rights opportunities. Of course, global partnerships will end up benefiting if we do that. And as we're successful country to country and maybe starting to have multiple cities having events, especially with WWE in a country at the same time as we move around, that will be a real opportunity for us in terms of audience growth. And all of this will, I think, improve our attractive margin profile that we currently sit with.

We expect to see margin expansion through high-margin revenue growth as well as continued cost discipline as we go into '26. And when we sat back and looked at these specific territories that you referenced, it's really -- it's a matter of negotiations really with various bidders. And we were fortunate to have 3 separate bidders at the table when it came to those specific regions because remember, what's important to one is not necessarily important to another. And at the end of the day, as it turned out with the domestic deal, Paramount and CBS for that matter.

But overall, that company, PSKY, ended up having the best equation, which is best for our brand, best marketing plan, a holistic effort given what they're doing on the domestic side with that investment and, of course, the best rights fee. So for us, it's always going to be brand, reach, dollars. And for those 3 territories specifically, we knew we were going to have a nice bidding war because it was attractive and it has strong fan bases, and we capitalized on it. And frankly, nobody here has taken a victory lap, not on those specific territories in that deal or really even on the quarterly earnings here. I mean we're proud of where we are. We're proud of the road ahead. We're cautiously optimistic. We're encouraged by each of the revenue drivers, but we know we have a lot of work to do if we're going to continue to really beat and raise as a continual thing.

That's great. And then maybe one on WWE for Nick, if he's on. Just be curious, WWE live events revenue continues to re-rate meaningfully higher here. Just would love your take on the story that's playing out in that part of the business. Is this mostly PLE story at the moment? Or have the weekly events started to contribute as well and pricing versus capacity, would just love your take on where you think that could go as you look into 2026 and you re-rate off this higher base here?

So thanks for the question. It's both. Capacity continues to be very high. We've increased prices appropriately with the marketplace. That's for the PLEs, Raw, SmackDown, Saturday night's main event and every other ticketed program that WWE has. We remain bullish on it. A couple of years ago, when TKO was stood up, one of the first things we collectively did was reduce the non-televised live events, which created more scarcity in the marketplace for our televised events and our continued international expansion only furthered that. So even in January, you'll see us on a European tour for Raw and SmackDown leading into Royal Rumble, which takes place in Saudi Arabia. Tickets already on fire for that event and again, creates more scarcity in the United States, which is a good thing in terms of our overall gates.

Next question is from the line of Brandon Ross with LightShed Partners.

Just a quick follow-up on Stephen's first question. You talked about brand and reach and dollars kind of being what you're aiming for. Just focusing on the reach side of that, can you just talk about what the distribution model with Paramount is going to look like in the wake of this deal and what you expect going forward with other territories? Should we expect the pay-per-view model that, I guess, has now been replaced domestically and really at WWE to still have residence? Or do you expect that to kind of go away internationally as well? And then I have a follow-up.

Yes, Brandon, thanks for the question. There were very few markets where we actually, at UFC, did transactional pay-per-view and have deals to sell on a transactional basis. So legacy, we are still looking at Australia and Canada were the 2 big markets. And as part of the deal with Paramount, that excluded in Australia, the pay-per-view or numbered event main cards, which still sit with the DAZN Foxtel. But those are really the 2 major markets where we're selling on a transactional basis. So you can expect like we historically have done is selling 42 nights of content to distributors and the ultimate distribution decision is based upon their go-to-market strategy in the case of Paramount, base tier subscription, all you can eat for all of our content.

Okay. Got it. And then with the UFC domestic deal done, just wanted to get a better understanding of exactly what the incremental flow-through is in terms of margin percentage. I know it's high, but any more color, should we -- how should we expect the fighters to be compensated? Is the fighter pay going to go up? And what is exactly the framework now for fighter pay? I know like going back in time, the North Star used to first -- certain fights used to be points and pay-per-views and the business has changed quite a bit. So any color you could give around that would be great.

Yes. So Brandon, I'll take the first part and then Lawrence Epstein, who's here with us, will take the fighter compensation and the structure around that going forward. Look, at this point, we're not going to give specific guidance around the flow-through other than the fact and consistent with past commentary is that it will be meaningfully margin accretive to the UFC business. And you've seen the last couple of quarters, Q2, the business operated at 59% operating margins, Q3, 51% operating margins for the variety of factors that we laid out on the call. But we do believe that there is going to be meaningful accretion to our operating margins going forward.

Brandon, this is Lawrence Epstein. On the fighter Pay question, there's going to be some changes to the structure of our deals, in particular, with some of our premium athletes that had a percentage of their compensation based upon pay-per-view sales. But that being said, our team is already in the process of working out those deals. And as Dana White said, there's going to be an increase in fighter pay. There's no doubt about that. But we feel like it's going to be in line with what -- will be consistent with the margins that we've maintained over the last several years.

Next question is from the line of Ben Swinburne with Morgan Stanley.

I wanted to ask you guys about boxing. The Canelo-Crawford fight. I mean, just was a massive, massive hit, and I think at least opened my eyes to the possibilities here. You guys have these sort of JV structure, management fee structure. I'm just wondering if there are thoughts or opportunities or maybe that ship has sailed of doing more in boxing kind of wholly owned as a promoter. You certainly have -- you have Dana White. You have a strong balance sheet, lots of cash flow, equity currency. Are there things you're looking at on the boxing front maybe to go even bigger than some of the initial investments that you're making as you sort of get ready for what you're launching in 2026 with Zuffa?

Yes. I would just say, Ben, that ultimately, I think these superfights are going to be a huge catalyst for us, right? And we -- I wouldn't say we downplayed the first one, but it was obviously the first one we didn't really know what to expect. And we didn't anticipate necessarily pouring a lot of fuel over that. We're more focused on the Zuffa Boxing League, if you will. But at the end of the day, as we've told you, I mean, we expect to receive a services fee of $10 million on each of the fights. And we expect to do 2 to 4 fights per year. I think you can expect that in 2026. And frankly, we want to do them because we can populate the undercards, some of the time, if not most of the time, with Zuffa fighters, which will help us build name, personalities, followings, rivalries and just really shed more of a spotlight onto our Zuffa Boxing League.

I think the opportunity beyond that lies in each of those fights, $10 million was just a starter. Nick is obviously hands-on involved with the negotiations with our partners in Saudi Arabia and putting these cards together, putting these featured matches, these main cards together. And then ultimately, how can we bring them value and as such, take a commission from it. And remember, this is all outside of our JV. So really, beyond the fee they pay us to co-promote or promote, there's the media deals and getting paid on doing those deals. There's partnership deals and getting paid on doing those deals. There's ticket sales.

And then there's also just serving as their marketing agency on the ticket sales. So while we're not necessarily laying out a financial model for you right now, we're laying out a strategic model of ways that we can bring in incremental high-margin dollars. So we're -- frankly, we have a big appetite for this. Having said that, Nick got a full-time job in WWE. We're not taking our eye off the ball there or taking anything for granted, especially with the success we're having this year, that just compounds the pressure to beat that next year. And Dana White definitely has a lot on his plate and therefore, isn't going to be out there working as a promoter for one-off boxing fights on a regular basis. He could do a few of these annually, but really no more than that.

Yes. And just as a follow-up, Mark, I mean, you hit earlier, I think in your prepared remarks and then I think in the Q&A about TKO is an execution story right now and you're focused on executing. You look at UFC, what you guys have done with that asset kind of speaks for itself in the last decade. WWE, the numbers are way ahead of the deal model, at least that was filed. So it sort of begs the question like why not go out elephant hunting for more? And maybe the answer is there aren't opportunities. They are scarce assets. It's not like there's a long list of them. Maybe the answer is management bandwidth. You guys need to clone yourself. But I guess the question is, why not be looking for the next thing, just given how well WWE has gone, UFC has gone and clearly, the muscle you guys have built up here.

Yes. And our financial profile, I mean we certainly have the ammo to do that. Look, bottom line is we are. I want to make it clear. Nobody here is resting, sitting back. That's not just in our DNA whatsoever. We are focused on the execution story. We don't want to get distracted. We're not -- we want certainties. There isn't a lot out there that reaches our level, but we're on the hunt. And in the absence of something coming to market, we're going to go full on with boxing. I'm not worried about the team. Everybody does have a day job, as I said, and they're stretched. I'm not going to say stretched thin, but they're stretched. But we have a number of relationships, each of us dating back decades here with high-level individuals, value creators across the sports spectrum, and we are just waiting to bring people off the bench, but we need those opportunities to materialize.

And again, in that absence, we go full on with boxing. It's 12 to 16 fights on Zuffa this year. It's 2 to 4 superfights. It's collecting commissions as we bring value to our partners in Saudi Arabia. It's seeing that Zuffa Boxing League achieves the same kind of revenue opportunities as our other leagues. We obviously did that first with our Paramount deal that we announced. They're going to be a terrific partner. But we have global partnerships to do there. We have consumer licensing opportunities to do there. We have ticket sales we're going to be embarking to obviously sell. And then beyond that, there's site fees that come into that, and that gives us an even stronger hand when you start to complement the opportunities we have with WWE and UFC and PBR. So we'll be plenty busy on the execution story and boxing. But if something else comes to market that has scale, reach, significant demand and we see as having upside opportunity, we will jump into an exploration of that.

Next question is from the line of Peter Supino with Wolfe Research.

I wanted to ask a question about site fees. You mentioned them in your prepared remarks as a driver of 2026. I think you've in the past provided some color on the number of sites that historically have paid fees and the number that haven't. I wonder if you could just give us any more color about to what extent that can be a significant driver of revenue in '26 and beyond? Anything we can do to think constructively about that?

So Peter, I'll look -- 2 ways to answer this. Number one, kind of inorganic timing, '25 benefit from one Saudi Arabia event. 2026 will benefit from 3 as the calendar shift from December into January with the first ever Royal Rumble in Saudi Arabia in January. So as we think about '26 specifically, it will be the beneficiary of 3 large site fees from Saudi Arabia. And then sort of on the organic side, I outlined really 3 key strategic areas of focus for us in my prepared remarks. And really, that's where we're seeing a significant amount of momentum. The TAM, as we've previously outlined, is no longer just sort of our premium, the 20 premium or so not encumbered by our Middle East events. We're seeing a lot of interest in the Raws, in the SmackDowns, in our UFC Fight Nights. And we have a whole host of comps that we've discussed over the last couple of calls that give us even more of a bullish tone to strike as we think about 2026. So while we're not going to talk about specifics on site fees, we'll save that for our '26 guide, we feel real good going into next year.

Just remember, Peter, we have a full-time team that does nothing but work on site fees for the 3 major sports that are in our portfolio, let alone boxing, which is on the way. And we had a Board meeting just earlier this week where we're walking the Board through 60-plus different events where we're in conversations ranging from a couple of hundred thousand in cash and in kind to multimillion around the globe. So this is a high-margin revenue opportunity that we are approaching like a heat-seeking missile.

How long has that team existed at scale doing what it's doing?

Really the last 3 months, I would say, is where we've made a couple of outside hires, added them to our revenue generation team, if you will, across TKO. So it's really like a 6-person roster that is dialing for dollars.

Well, I think you've heard us say this also before, Peter, the deeper we've gotten into TKO sort of '24, given the formation in '23 was already locked and spoken for. So '25 had some carryover where we had a little bit less flex in terms of dates and locations. '26 is really one of the first years where we have an open calendar where we can make more strategic decisions and offer up some of these opportunities to municipalities and tourism boards that are willing to pay.

And Raw has really gained so much momentum. I mean I know you follow the viewership. When you're #1 in 29 to 30 countries week-to-week on Netflix, that catches a lot of people's eyes. And that kind of opens the door for these conversations we're having with regional governments, municipalities, cities, et cetera.

Next question is from the line of Ryan Gravett with UBS.

So as you called out, there's a big opportunity for audience growth at the UFC next year without the pay-per-view paywall. So I'm wondering how that has impacted your conversations with current and potential new sponsors since the deal was announced. And Andrew, you referenced this in the prepared remarks, but how should we think about the impact of this on partnerships growth in 2026?

Look, I think it's clear that we have a lot of excitement around the table from our sponsors by virtue of this content, the most premium content in our numbered events being more accessible to a broader fan base than it's been in the past or at least over the last 7 years with ESPN and the double paywall. And I just bring you back to when we did the ESPN deal where we actually made a conscious decision to assist in the launch of ESPN DTC with a sort of nascent offering and a 2 million to 3 million subscriber base that we assisted in growing to north of 20 million.

And at that time, we actually had the opposite question and why should we get more value from our sponsors when reach and frequency and distribution was becoming more narrow. And we were able to sell through that. So look, the team is excited. Our sponsors are excited. Our partners at Paramount are excited. What I'll tell you is a meaningful growth lever over the next 3 to 5 years is not only reach and frequency, but it's the ability to combine the commercial units and commercial inventory that we've got in these media rights deals. Hence, why we're getting even more comfortable with that long-term $1 billion goal.

Yes. Also, Ryan, I mean, we don't view -- although we may slip and say that now and then, we don't view these brands as sponsors. I mean these are multiple levels and layers and intricacies of partnership opportunities from activation, experiential, branded content, as Andrew said, commercial inventory. I mean, these are massive deals that cover a lot of ground as our brand partners attempt to maximize reach and eyeballs for their product or their own brands. This is a home run in the sense that even to Andrew's point that we matured with ESPN+ and got to a point of having 25 million subs, you're now talking about Paramount having 75 million-plus global subs.

So from Day 1, we've got a wider universe and it's actually flipped. It's not our partners coming to us saying, "Should we be paying as much for only 3 million subs" like when we launched with ESPN+. It's us going to them saying, "Hey, now you're in 75 million plus, maybe we should reopen your deal and you should pay more and we'll blend and extend." So we're having those opportunities with existing partners in our quest to get to $1 billion. We're having fruitful conversations with new categories, and we plan to announce 2 major deals, new deals with new brands by the end of the year. I'm making sure Seth Zaslow write that down on his legal pad right now.

Operator, why don't we take one last question, please?

Final question is from the line of Vikram Kesavabhotla with Baird.

I wanted to ask about WWE, and I'm curious if you could talk more about your initial reactions to this new relationship with ESPN. How have these first couple of PLEs performed relative to your expectations? And what's standing out to you so far in terms of the potential benefits of that partnership?

Great. So by the way, we're thrilled with the start of it. So it's obviously a new product. It's a new platform. If you noticed any of the promotion going into our first event with them, Wrestlepalooza, which is a new event for us, which we're really pleased with. You saw wall-to-wall coverage on all ESPN platforms so much so that on College GameDay, the morning of Wrestlepalooza, you had the entire panel, Pat McAfee, Coach Saban, Kirk Herbstreit, Desmond Howard, Rece Davis, all predicting the winner of Brock Lesnar versus John Cena. It was phenomenal. It's going to take time for ESPN to grow that platform the way that they want to grow it. We're patient. We'll continue to put on our product the way that we think only we can do, and let's see where we end up.

Yes. Vik, ESPN can be one of the best marketing partners in the media space when they strategize and get behind something. We've seen that firsthand with the UFC. And to Nick's point, Wrestlepalooza was an incredible launch, great for our brand, great exposure. Out there in some of their most prominent shows with some of their most prominent talent promoting our event. We want to sustain that. We need to sustain that. And I think at the same time, it's extremely important to us, and we're watching like everybody else to see that as they renew a lot of their distribution partner deals that they get the ability to authenticate for free. So ESPN DTC, if you're a so and so subscriber, I'm not going to get into who has it and who doesn't, some of these folks can just authenticate and they get the DTC partnership for free. So you just carry the app and others are paying $29.99. And it's their goal, of course, to redo all their transmission deals and get these consents, and we're anxious to see that happen. YouTube TV is a prime example of that.

Operator, we have a couple of extra minutes. Why don't we take one more question?

Next question is from the line of Eric Handler with ROTH Capital.

Okay. Wonder if you could talk a little bit more about partnerships and marketing. Specifically, what's been the increase in the number of brands who are now doing sponsorships with both UFC and WWE? And what's been the overall increase in the number of brands? And at this point, is it still a volume game with a lot more brands to be added? Or is there some pricing leverage, too?

Thanks, Eric. Look, I think it's both. I mean, most recently, and I articulated this in my prepared remarks, brands like Wingstop are now advertising across both UFC and WWE. It is the most recent, but we've had a handful of crossover brands. But again, to your point, it's new brands, it's existing partners spending more. It's existing and new partners looking at us differently now via the Paramount relationship, just given the reach and distribution opportunity of all of our content, particularly our premium content in the numbered events. So this is an area where we still believe it's early innings. And our team led by Grant Norris-Jones is not going to rest until they get to that $1 billion-plus overall company goal. So we wouldn't be talking as specifically about numbers if we didn't feel good about them, and we've got our sights set on meaningful growth going into '26.

Yes. I think it's important to add, Eric, we've now reached a point where we're taking a great deal of incoming calls, right? When we started with the UFC, this was an outbound business when we first acquired it way back in Endeavor. And now it's an incoming -- significant incoming call, not just to check on the UFC, but can they wrap a package portfolio of PBR and WWE. And frankly, we think that's how they can maximize reach and engagement, and it really presents a nice opportunity for us.

All right. At this point, thank you, everyone, for joining us on today's call. And operator, you can conclude the call.

That concludes the conference call. Thank you for your participation. You may now disconnect your lines.

Great. Thank you, everyone, for taking the time to join us today. We'll get started with our next session. It's a pleasure to welcome back to the Communacopia and Technology Conference this year, Mark Shapiro, the President, COO and COO of TKO Holdings. Mark, thank you for taking the time here.

Great to be with you.

Maybe starting high level, Mark. And this Friday is the 2-year anniversary of TKO. The company has executed against many of the initiatives that I remember speaking with you about 2 years ago when you first combined WWE and UFC together, streamlining the operations, growing sponsorship, live events and more recently, renegotiating many of your media rights deals on improved terms.

Maybe just thinking about all that you've executed against and how the TKO story has progressed from here, would be curious to get your latest sense of what makes you most excited at this point looking forward and where we are in the arc of the growth strategy?

Yes. Look, I think one of the things that can really kill a company is hubris, especially in the management team, the leadership, the culture. So we are highly sensitive to that, and antennas are up high. And I say that because right now, we have a lot going for us, right? We're really, knock on wood, hitting on all cylinders, delivering on the promise across the board from a business standpoint on every metric we laid out as recently as you and I sitting here last year.

And I would tell you that the strategy is playing to form really, starting with the media rights. Which a year ago, it was what's going to happen here, UFC, is ESPN going to come back? Are you going to get that deal? And WWE is obviously smaller from a PLE standpoint, but nonetheless, a big deal, and our premier events in the portfolio. And what we did really is go out and beat on both, significantly beat on both.

We're thrilled with the new deal that we have on UFC, which is 7 years and obviously, $1.1 billion, which is at 2x what we were getting in the ESPN deal. We were fortunate to have a lot of bidders in the deal, which obviously drove up the demand and drove up the price and allowed us to really capitalize and score on that. I'm sure we can talk more about Paramount at length later on.

And then on the PLE front, look, that deal wasn't up till the end of April. And instead, we are launching September 20. Next weekend, we're launching in Indianapolis with a brand-new franchise, which we hope will be an annual recurring franchise in Wrestlepalooza, and that was at 1.8x. And if you really look at a lot of the rights and revenue streams we were able to either claw back or retain, it's really closer to a 1.9x is the way we pencil it out. So that's a winner for us.

So just all in all, you're looking at long-term media deals, long term, right, recurring stable revenue streams with escalators across the board. Expansion of rights, 10 years on Raw with Netflix, 5 years on SmackDown and the new ESPN PLEs and then 7 years on the UFC deal, which is 43 fights a year.

So in a really good place with our biggest revenue driver, and then you get past media and you -- and of course, we can talk about all these individuals or any way you want to take it. But whether it's ticketing and live events or it's global partnerships or it's really our financial forecasting profile from our strong margins, which I think there's a lot of room for expansion, free cash flow conversion, which is normalized at 60-plus percent. Our leverage, which even with the expansion upsides of our term loan, will put us at 2x by the end of the year, and keep the course going, we should be at 1.5x leverage by the end of next year. Our capital return program, which is going to be robust. And of course, a boxing league which by all parts and definition, launches this Saturday as the undercard of the Canelo-Crawford fight.

So look, we're hitting on all cylinders, but we're trying to remain humble. We know we have a lot of work to do. It's early innings, and we look at our profile now and our strategy and our road map as an execution story.

That's a great overview, and I definitely want to get into a lot of what you did discuss there. Maybe starting first with the media rights, you mentioned the ESPN deal, the WWE PLEs, Paramount-CBS with UFC. Mark, could you maybe talk a little bit more about these deals specifically and why ESPN and Paramount are the right partners for WWE and UFC, respectively?

Look, I can't say enough about ESPN. I mean, they were an extraordinary partner on the UFC. A lot of our growth, the fact that we're mainstream and we're so young and we're so diverse and we're so global has a lot to do with the marketing machine that is the Walt Disney Company, period, end of story. They are the definitive authority and stage when it comes to sports.

Having said that, we knew they were not going to be there at the price we wanted for UFC. So while we had conversations and across the time line, there was a time where they might have come in for some of the numbered events, which are the pay-per-views, or some of the fight nights or all of the fight nights, they were always in the mix, and they wanted to be in the mix. And Bob Iger and Jimmy Pitaro are huge fans of the UFC and they have a great personal relationship with us and with Dana White. So we never ruled them out, but we pretty much knew they weren't going to be able to get to a 2x, and that's what we were setting our sights on.

So we pivoted them as soon as we knew that was going to be the case into the PLEs to get the big increase on the WWE. The minute we did that, it really meant the UFC was going to be a small package, were they to stay. And then we set our sights on talking with everybody else, from Warner Bros. Discovery, to a lesser extent, Apple, Amazon in a big way, YouTube in a big way, Netflix in a big way, [ DAZN ] in a big way. I mean, there are a lot of players at the table. I'm not saying all of them would have been at the number that we ultimately received and signed or that they would have all taken the entire package because there's a lot of volume when it comes to 43 fights. And then you have the Contender Series and Ultimate Fighter and our library. Only a few vehicles can take that kind of a load.

And ultimately, we pivoted this to CBS and Paramount+, and we're really excited about the opportunity there, the growth plan, David Ellison's vision, technology at the forefront of everything they do, knowing that Oracle, big time in the news today, is kind of behind that, vis-a-vis the Ellisons. They are visionaries, really. They are at the forefront of technology and content merging. We have a lot of history with David. We represent Skydance on the WME side of the equation. And really, everything he's touched against all odds from a content narrative business standpoint has very much been in the footsteps of his father. Success breeds success. And we're big believers in where P Sky is going to go.

Especially CBS still, right? CBS has so much sports tradition, so much sports history, so much sports lineage. Even now, their properties from the Masters to the Final Four, UEFA, the NFL, they're not going to slow down. And frankly, everything David says is sports is first for them. So that's a good place to be. You just want to make sure your neighbors are strong. So we're happy we had those neighbors. We like to see the fact that they're investing in South Park as an example, that they're buying new series and are getting behind new movies, and sports was going to be the priority.

So all in all, it's just a really good place to be. And the fact that we will have CBS broadcast windows, which will allow us to grow our audience, grow our reach, grow our brand and monetize our brand is enormous for us. And that they'll, of course, use CBS as a marker channel to not just retain subscribers at P+, but really grow the P+ subscriber base, which is huge for us. They wanted something that was year round, they wanted an antidote to churn and they wanted something that was global because they're chasing global subs, and we fit the bill.

Along the story of media rights, there's a few other media rights properties out there at the moment up for renegotiation or will be coming up for renegotiation in UFC International, PBR Boxing, which you mentioned earlier. Maybe just talk a little bit more about the status of those rights negotiations, the right type of partner that you're looking for in others and how you see that process playing out?

Yes. Look, on the international rights, that's a big part of the story. Had we done a deal with Netflix and Ted and Bela, they would have taken global rights when it comes to media distribution. So it would have been very similar to our Raw and PLE deal. Obviously, they have the PLEs internationally. In the U.S. here, of course, it was Peacock, and now it will be ESPN.

But it would have been all of it. And one of the foundational strategies and justification for spending what we spent in stock really to get IMG into the TKO equation was because they are the global leader in sports media rights distribution by far, first, second and third place. I mean, they're sweeping all the medals. They have 160 now, almost 160 properties that they distribute across 160 countries and territories. They have great leverage, great scale, experts in their space, strategically, AI, digital, social. And they've been doing it for quite a long time with boots on the ground in all these different countries.

So the idea of keeping them in the fold to continue really monetizing, selling media rights on the UFC globally was in our best interest. Frankly, we thought they would do better than Netflix. And so our goal was to retain the international rights. We did just that with P Sky and overall CBS/Paramount+. IMG will be selling those. We have roughly about 150 properties -- excuse me, 150 territories where we sell rights into on the UFC. Those come up in a staggered way, about 1/3 every single year. So IMG will be out there selling it. And where they have an opportunity to package it, they will package it. We think there's tremendous upside that we wouldn't have had.

And those are the kinds of examples when you talk about the step-up we got. These are the extras, getting ad inventory, right? Not having to spend so much on ancillary programming and production, as we were committed to in some of our historic deals, retaining international rights. I mean, these are all upside opportunities for the UFC going forward.

And then just to finish out your question on boxing, we hope to have an announcement in the next 2 to 3 weeks on what we're doing with boxing. We will have the undercard of the Canelo-Crawford fight Saturday night on Netflix will be Zuffa Boxing. There is 6 of the 8 fights. One is we've got a salary fighter coming in. So it's -- it's not part of Zuffa, but it's a 6-round fight we'll be doing. And then, of course, Canelo-Crawford are not Zuffa. But the rest of the card is all Zuffa. So it's the first time getting out there with our brand, with Dana White's roster of talent and fighters. And we look to do about really, 2 to 4 fights per year with the Saudis on a super fight scale.

And of course, I'll just remind you, we don't pay to bring the fighters in. We don't take any risk on that. We are the Saudis' partner in this. And we promote the event, we market the event, we stage the event, we produce the event, we do the media rights deal and we help out on the global partnerships. And for all of that, we're paid a fee, which will, of course, be incremental to our plan.

Maybe since you mentioned boxing, there's -- thinking about the longer-term plan for boxing, so you mentioned 2 to 4 fights ramping up over the next year or so, potentially layering in media rights on the back of that. I guess as you see execution, both over the next 12 months in boxing and then maybe further ambitions, looking out over the next couple of years, how big could boxing get in the U.S. and then the opportunity internationally?

Look, I think you just have to go all the way back to Jack Dempsey and the Golden Age. I mean, boxing has been around for 100 years, not many sports can say that. So it's fully entrenched. I mean, it's got extraordinary historical equity. And no sportsman ever grows tired of mano-a-mano fisticuffs, gladiator one-on-one. It just makes a lot of sense. You have to have the right personalities, obviously. Muhammad Ali and his charisma took that to a whole another level.

But the opportunity is there if you have a closed system, which we will have if you have a guy like Dana White at the forefront of it. And if you have a stable of 200 fighters, which we expect to have. Now I'll remind you, we're talking about two different things here. Zuffa Boxing, which will be our league, will be about 12 to 16 fights per year, and we are in the market right now, selling media rights to those 12 to 16 fights. And then we will monetize that across the board, again, in partnership with the Saudis.

Separate and apart from that will be the super fights like Canelo-Crawford that we have this weekend, where we're working for a fee to be essentially their promoter and their producer and their media right seller of the business. So we're going to take a bite of both parts of the apple. And we're going to try to put this on super acceleration and really gas boxing. Because the most popular question that I get on the road from investors is, okay, before we can even breathe or smell the roses on the media rights deal is, okay, you've got the media rights deal, great. You're going to break $400 million on global partnerships, which is ahead of our internal forecast. Nothing hotter these days than live events and experiences. Not just sports music as well, so I'm trying to be objective there. But we're seeing no slowdown in that respect.

We're going to sell out Allegiant Stadium Saturday night for Canelo-Crawford. It's a stadium for a boxing match. I mean, this doesn't happen. Folks just want to get out. They've got time. They're off on "Fridays." It's communal. And everybody suffers from FOMO, especially the younger folks in the demos that we really serve and cater to.

So like we're in the sweet spot with a lot of opportunity to increase our margin by increasing our ticket yield, especially at WWE. So we feel really good about that. And what I would tell you is -- so when you look at global partnerships and ticket sales and media rights, hey, well, where are you guys going to go from there? Like, we're an execution story, to exactly your point. That's what we are right now. It's early innings. We're still trying to squeeze out more synergies on bringing UFC and WWE together under one roof. We're still trying to squeeze out synergies in bringing IMG on location and PBR into the fold. Remember, we forecast $30 million on a year-long run rate, then we upped that to $40 million. Andrew and I were talking this morning, there might be a little more than that. But that will play out over the course of '26. Andrew Schleimer, my CFO.

And so that's still upon us here. We're looking at margins. I mean, second quarter was incredible, WWE, equalized. UFC at 59% EBITDA margins, driven largely by global partnerships. Ticketing, a lot -- and of course, site fees. And really, when you look at next year, you're talking about a consolidated EBITDA margin of 35% to 40%, good place to be, and free cash flow conversion normalized at 60-plus percent. And of course, our leverage is as I've already talked about.

So we're going to be a cash gusher. We really are, and we take a lot of pride in that because we are laser-focused on cash flow, laser-focused on sustainable long-term EPS growth. And that all equates to the bottom line where it benefits shareholders as long as we are pushing those returns, that capital return to our shareholders. And that's going to happen. We doubled our dividend last week. And we're embarking upon a buyback program that we promised our shareholders we would do by the end of third quarter. And last time I checked, that's coming up in just a couple of weeks.

I do want to get to capital returns and capital allocation more broadly. But maybe picking up on something that you touched on, on partnership and sponsors and a broader opportunity with bringing more brands into the ecosystem, it's been a great growth story over the last year or two for UFC and WWE in particular. The new deals, you mentioned have some ad inventory available, I think 2 minutes an hour. Could you just talk a little bit more about where we are in the growth story in sponsorship? Maybe how does new inventory unlocks opportunities for you and where you see...

We forecast -- I believe it's 2030 [indiscernible] global partnerships. Now remember, when we bought the UFC -- I mean this is talking back in the Endeavor days, which I barely remember -- we were at $30 million, $30 million to $40 million is what UFC was doing. UFC is now knocking on the door of $300 million in global partnerships. And then, of course, WWE is coming up the rear, adding to that, and we should surpass 400. Our goal was 375, but we should surpass 400.

Same thing, too. Contractual, stable, escalators, recurring. A good place to be in more and more brands, especially as these two properties become more mainstream want to be involved with us. So you take the UFC deal that you're talking about, we've got all-in broadcast integration. So all broadcast integration, we control, all in-arena, we control. And then, of course, our IP in terms of supermarket aisles and consumer products, we control. And then on top of that, we'll have the 2 minutes an hour.

Now I would tell you for both the WWE and ESPN and this deal, we'll probably use 1 of the 2 minutes to do institutional. So we'll use it as a marketing vehicle, at least in the early going, because we're still building our ad team. And Paramount/CBS, will be our partner in some of this is still building their ad tech solution, which we hope will be best-in-class. But we'll be out there, to your point, selling a 360 holistic package to an advertiser. I want to come in on broadcast integration. I want to come in on being in the arena and touching that 20,000 to 30,000 fan base that shows up for these fights on the UFC. And now I actually can run media spots as part of the broadcast, that's a great incremental lift up for us.

And that's why it does come back to execution story. Keep in mind, we launch on ESPN in a week, as I mentioned. Then we have to come right back in January and launch with a new property like P Sky. And that's a big road to hoe here. And let's not forget Netflix. They're still doing, obviously, Raw. And we did a great number Friday night, and we're -- week in and week out, upwards of 30 different countries, we're in the top 10 list each week with Raw. And the PLEs, the premium live events, are also returning beyond their pro forma. So that's a good story.

But we don't want to take that for granted. We need them to keep marketing us. You could quickly get lost in the Squid Games or the K-Pops of the world. So you have to keep Netflix focused on that. We're partners. It's in their best interest, and we have work to do there. So my message to the team is we're not here to talk about acquisitions right now. Of course, we'll be opportunistic. But we're here to talk about executing. We're here to talk about strong launches. We're here about -- talk about more marketing. Let's expand our margins, let's bring in that free cash flow and let's get it back to shareholders. And if stuff comes up along the way, terrific. In the meantime, we're launching boxing, and that's like an acquisition all by itself.

On live events, you guys have spent the better part of the last 2 years optimizing some of the capacity around UFC and WWE, optimizing some of the pricing. You mentioned the fight this weekend, ticket prices are very impressive in terms of what they're going for. I think it shows the demand at the upper end of the spectrum. Maybe you could just give us a lay land of where do you see the consumer at today? Where do you see demand for live events today? And then looking ahead, room for further optimization on maybe up-tiering venues, up-tiering pricing? Where is the bigger growth opportunity for TKO?

Look, On Location is internally on plan for this year. And I would tell you, sales from Milan are going really well. Sales for FIFA World Cup are going really well. L.A. is obviously too early. Sales for the Super Bowl, we're only 1 week in, and our advanced sales on the Super Bowl are very strong. I went to the Monday night game in Chicago at Soldier Field, bad outcome on the Bears. But stadium is filled to the brim, and everybody is looking for that plus up, that personalized experience, that customized experience, that red carpet behind the rope experience. I mean, that's where fans are. It's not enough to just go to the game and sit in your seat and have a hotdog and a beer. I mean, they're all looking for meet and greets. They're all looking for advanced entrance. They're all looking to touch the trophy or meet the game winner or the MVP at the end of the game.

That is what On Location does. I mean, it is the premier, preeminent premium hospitality provider for sports around the globe. I mean, that's the business of what we do. And whether it's the Olympics, the World Cup or the Super Bowl, it's just really firing. I can't tell you it will be like this forever, but I do believe the 4-day in-office work week is here to stay. And having said that, it makes it a 3-day weekend and people have more time or they're moving errands to Friday and they have more time for Saturday and Sunday to see a concert with their friends or go to a sporting event, and there's nothing like being there.

It's -- that experience is premium, and it's invaluable, and you can't replicate it. And as long as rivalries stay strong and these sports remain strong and competition remains strong, we're going to be in a good place. Look at Major League Baseball. Major League Baseball has been around a long time, obviously. They've had their challenges, their ups and downs. They have a big collective bargaining agreement in front of them that hopefully doesn't stall their growth and the momentum they have. But their attendance is up across the board.

And the A game, strong college football. I mean, it's gone to a whole another level now with the expansion of the CFP, but it's not just folks at home or in the [ boroughs ] watching, they want to be there in person. So back to your point on the boxing, it drives demand and that helps us on the ticket yield.

Now WWE is not where the UFC is yet, as you know, on ticket yield. We have our work to do there. But we've seen a meaningful increase, as evidenced by the 59% margin we did second quarter with regard to EBITDA margin, which was equal to the UFC. That ticket yield and site fees playing a big part driving that. And we know we have more room to go. Why do we know that? Because UFC is breaking records everywhere they go. The last number, the fight in Chicago was the highest grossing event in the history of the United Center, dating back through to Michael Jordan days. I mean, the highest grossing event. And they're already at the table trying to get another fight for next year, and we're just a couple of weeks post.

And so WWE, which granted, their PLEs are mostly in stadium, so it's not apples-to-apples. And of course, they have a lot more volume with Raw and SmackDown and NXT happening on a weekly basis, 52 weeks a year. But having said that, we know we have a lot of room there because Vince McMahon was primarily pricing tickets for families and wasn't totally focused on maxing the opportunity there. And what we've -- now that we've seen what we can do with UFC, we're replicating that in terms of ticket yield and holding back and advanced sales when it comes to On Location on the WWE side. It's really working out well.

On-site fees, this has been a story that's been building for the better part of the last few years. Over the last year, you just signed deals with Las Vegas, New Jersey, Baku, Qatar. Maybe you could just update us on where we are in terms of execution against the site fee opportunity? I think you have 24 marquee fights that you've looked to put site fees around. So just be curious where you are in terms of your goal of reaching 24? And then how's the pipeline looking?

Yes. Good question, Stephen. I mean, look, we're now at really about 25 premier fights because you got 13 on the UFC side, 13 numbered events. Granted, 1 of them is in Abu Dhabi and it airs afternoon here in the U.S. And then you've got, of course, the PLEs. And hopefully, Wrestlepalooza is a winner and we can bring that back annually because that could just be a marketing bonanza for us if we do that right. Triple H is spending night and day creatively around making that what we think it can be, which is another WrestleMania or another SummerSlam. Those two stand out above the rest. Royal Rumble is beneath that, and we think Wrestlepalooza can get into that quadrant.

And what I would say on this front is that we need to sell all those out. We haven't done that yet. We're having a lot of conversations, everywhere from Atlanta to Charlotte, to London and Paris. I mean, no shortage of countries. Similar to F1, that want to see us bring our show to town. And we're going to maximize those opportunities, both in kind, but most important to me is cash, cash kills. So that's where we are.

So we're making -- we're in the early innings, but I don't even have my sights set on finishing those out. It's -- once we do that, we still have 30 fight nights to sell for UFC. And they can be smaller. But if we've got a St. Louis up against a Des Moines, Iowa, if you want us back there and you've sold out and broke -- broken records in both your arenas, you have to pay for us to come back, or else we'll take it to another town. And that goes for NXT and Raw and SmackDown on the WWE side.

So while we can't help you model that today on what that could be, all I can tell you is conversations are going great. They're very robust. I've named some cities that we're in conversation, Detroit is another one. And even in the Middle East, where we're breaking out of just the Middle East, we're in conversations right now with the Saudis and Abu Dhabi on bringing a UFC fight night to Saudi. We've done one before, but we're embarking upon bringing a second one there. And that should be financially a very good story for everybody involved because as you remember, Abu Dhabi does have the exclusive rights in the Middle East. So anything -- anywhere we go like putting an event in Doha, which we have a deal to do, it gets split between the two.

Maybe switching gears...

And then you have boxing, by the way. Once we get boxing going too, we're going to put them into the site fee package. And then you've also got PBR to put into the site fee package. So we've got a lot we could bring to town. I'm not saying all in 1 weekend necessarily, but it could be something where we're going to bring 3 or 4 over the course of the year and you pay one fee to get spread out.

It could be as many as 30 site fee opportunities out there?

Yes, more than that once you get into the Raws and the SmackDowns and all that. I mean, we've got a team that does -- we hired Dean Garfield from Netflix, who historically has done this with Netflix expansion plans and the offices they've opened up around the world. He's a real pro. He's a real expert. He's got a fantastic rolodex. And he has an entire team that works across the board with Nick Khan at WWE and Lawrence Epstein at the UFC. And we are knocking on doors everywhere to really sell these out.

But we're not a hurry. We're not going to rush these deals and [ we won't max them out ] because once you set that level of where you're going to be and it ends up being too low, getting 100% increase of basically nothing is 100% of nothing.

I want to pivot to margins. You mentioned earlier that the revenue growth that you expected to achieve over the next couple of years, I think most investors think of you as a high operating leverage business in the sense that a lot of revenue growth dropped down to the bottom line. I would just be curious to your take as you look forward into next year, balancing reinvestment in the OpEx of the business, whether that's fighter pay, whether that's more ancillary programming around the UFC and WWE to build engagement, to build fan momentum. How should investors really be thinking about the level of reinvestment?

I think it will be a normalized course, frankly. I mean, we're running a pretty lean cost structure. And in that cost structure is fighter pay. And we're going to continue to do right by our fighters and our superstars. And the cream of the crop will be paid the premium dollars. And when we do deals like this, it's not -- we're don't hoard that money. We invest in the product.

So our last deal with ESPN saw us give bonuses for Fight of the Night, give bonuses for the Knockdown or Submission of the Night, saw us give fees for any of the global partnerships deals we did and consumer licensing, consumer product licensing deals we've done. So we're going to share as much as it makes sense with the stars of both leagues. And we will be very competitive. We are very competitive. We pay more than anybody -- any other competitor we have in the combat sports space.

And we know why we're here, and it's a team effort. It's our brand. It's the work that Dana White does. On the WWE side, it's the creative force that Triple H is. It's the strategy that Nick Khan drives. And it's ultimately the hard work put in by our crews. I mean, remember, we're doing -- we're doing a lot of fights per week. Monday Night Raw, you got a NXT on Tuesday night. You got a Friday night SmackDown. You've got a UFC fight, and sometimes you have a PLE or a numbered event. I mean, these are -- there's a lot of events to put down. There's no brakes in this company. It's 52 weeks a year.

So we have to pay for performance in terms of our people, and the same goes for our fighters and superstars. So you shouldn't expect anything out of the ordinary. It's a run rate for us. But we're focused on it. And yes, you'll get some of those Connor McGregors, if you will, that really move the needle or Jon Jones that get paid a little more, but they deliver more in return. So it's a scale and it's a formula, and we're very transparent about it with our fighters and our superstars.

Maybe pivoting back to some of the other assets within the Endeavor complex, you mentioned On Location, World Cup and Olympics selling out well for the next year. Can you talk a little bit more about the longer-term growth for On Location and picking up new pieces of IP, new events to layer on to the platform? And then as part of this, the conversation I do have with investors around this is thinking through the risk profile of some of these contracts that typically tend to be more fixed deals, which transfers the risk to On Location, how do you get comfortable with that?

Yes. I get comfortable with not doing those deals. Doing a minimum guarantee is not something we're in the business of doing going forward. I mean, will there be one-offs where it makes sense and the clear -- the demand is so insane that the risk profile is lower, so therefore, we have more tolerance? Yes. But by and large, we want splits. We're the leader in the industry. Most importantly, it's not about just the portfolio, it's that we do it better than anyone. I mean, there is no peer as it relates to the quality, the delivery of quality and high premium experience that On Location brings to the table.

You don't do work with the Masters in Augusta unless you're the best of the best, period. They are very careful about who they surround themselves with in terms of partners. We don't take that for granted. We keep investing in the product, the people and really, the brand partners that we have. So there are some properties to pick up here and there, but we have our hands full with UFC, WWE, obviously, the NFL. We're doing bowls with college football. We're doing the MLB All-Star Game. We have the Indy 500. We have the Daytona 500 and more opportunities with NASCAR. We're doing a lot in the golf space. We work on a few music festivals, Coachella and Stagecoach and really the top of the top.

So there might be an opportunity to look at some more music festivals. I don't want to get out of our core, which is sports. That's what TKO is. But music brings big audiences. And these days, every rock star wants to be an athlete, and every athlete wants to be a rock star. So if we can jump into a little bit of music where there's no big upfront payment, we're going to look at those opportunities.

But right now, again, execution story. Let's make sure Milan is everything we envisioned it to be. Let's make sure World Cup in North America and Mexico turns out to be what, frankly, the President thinks it's going to be. And then right behind it is L.A., which has a chance to make the same kind of impact in time in this era as Peter Ueberroth did with the L.A. Olympics in 1984.

Mark, I can't let you go without digging deeper into capital allocation. You mentioned earlier, the free cash flow generation profile of the business, leverage, modest, not too much capital intensity or needs at the moment. How do you think about capital allocation within that capital returns versus M&A?

It's a priority. It's a priority. Because M&A, were just -- we're not out there hunting. We'll be opportunistic and we'll listen and we'll follow up on a phone call that might come our way. Or if there's something out there that we think we can pick off or bolt-on, fantastic. But capital return comes first. I mean, that's frankly what our shareholders want. And when you're going to be producing the amount of cash that we expect to bring in year in and year out, given that we just need to fund our operations, have enough for working capital, the answer is going to be the dividend, which we answered, and more of a share buyback. That's really the opportunity here. I mean, the float is already limited, just given the amount of shares that Endeavor Group Holdings controls. But I think that's the bang for the buck, and we will be opportunistic with a plan there in short order.

You mentioned the commitment by end of 3Q to start the share repurchase?

Yes. I mean, we'll put something out in due time, but I think that most people saw that we upsized the term loan by $1 billion. And meanwhile, they know that there's a share buyback on the horizon. So you do your own homework and make your own prognostication, but we're moving on what we said and promised we were going to do in time by the deadline at the end of the third quarter.

That's great. Mark, we have to leave it there, but thank you for taking the time to attend the conference this week.

Thank you, Stephen.