Ari Emanuel's new Endeavor after UFC 300 & Wrestlemania XL

Everyone is asking when he's selling. He's got unfinished business with CAA.

Patrick Whitesell & Ari Emanuel. (Image attribution: Financial Times, CC BY 2.0)

The world is on fire… and so is business for TKO.

The last 30 days has been Ari Emanuel’s most impactful as a major player in North American sport. Wrestlemania XL in Philadelphia generated record traffic on Peacock, only slightly below the NFL playoff game featuring the Kansas City Chiefs. UFC 300, according to Google Trends, generated more interest than Wrestlemania XL.

The combination of TKO box office bonanzas in conjunction with Endeavor going private, a major settlement in the UFC antitrust lawsuit, and Vince McMahon preparing to unload his final TKO stock shares, has positioned Ari Emanuel into a role as one of the most influential moguls in American sports.

Arguing that Ari is currently a top ten sports power broker in America, thanks to his ownership of both UFC & WWE, will stir up a hornet’s nest.

Does Ari belong in the same level as Joe Lacob & Peter Guber? Jerry Jones? John Donahoe at Nike? John Malone at Liberty? Michael Rubin at Fanatics? John Henry? Maverick Carter? The PGA and Saudis? Mark Cuban? Hal Steinbrenner?

What Ari has that other powerful figures don’t is Endeavor. Endeavor is on all sides of the negotiating table in professional sports. When you recognize that Ari is a system and not simply a sports owner, it becomes easier to appreciate the scope of his empire.

Obviously, there will be changes to the day-to-day vision of Endeavor after Silver Lake completes their private takeover — lawsuits or other road blocks, notwithstanding. But far from being his swan song and being on the Back 9, Ari Emanuel is on a heater and is ready to maximize his imprint in the sports and business world.

Sports are a tool for the ultimate end game, which is the Endeavor spider web.

“Monopolizing” two sports into a larger entertainment empire

The biggest mistake analysts make about Ari Emanuel’s entry into sports business is motive. What drives his interest?

Money? Yes. Fame? Yes. Power? Yes. Celebrity? Yes.

But a key motivator for Ari Emanuel is his baby, Endeavor. It’s politics. It’s representation. It’s the marriage of sport, culture, government, politics, and big business in one giant bundle of influence.

That is what drives Ari Emanuel.

What makes UFC and WWE so valuable to Ari Emanuel is that they carry cultural cachet. They have no real competition. They may not drive the ratings numbers that the World Series or the NBA Final does, but they do generate good numbers for live programming.

These events generate high margins. Most importantly, a lot of the kids and family members of those in politics who make decisions with your tax money are huge fans. That kind of sway has an impact on recruitment of government contracts for TKO content.

UFC & WWE has a huge advantage over other sports operations because of their year-long inventory. The profit margins are excellent. The reach is large. It's not as large as The Attitude Era or Ruthless Aggression but it's still very respectable.

When Endeavor makes the sales pitch to political leaders about buying one of their events, they don’t have to argue that they’re the number two sport in terms of ratings.

Their argument is that Endeavor’s content inventory, analytics (AI), Hollywood and TV representation, and tourism dollars makes them the second most influential American sporting and cultural event behind NFL & NCAA football.

If enough power brokers buy into that argument, the government contracts keep flowing and increasing in size. Once you increase government investment into your product, world leaders take notice and also decide they want to get in on the action.

It’s also an easier sell for politicians to convince voters to buy a UFC or WWE show than it is to build a new sports stadium or renovate a decrepit hellhole built only 25 years prior.

No one in the history of the fight business has been able to pull off what Endeavor is doing right now with TKO. You have city and state governments like Minneapolis bidding for Wrestlemania and Milwaukee bidding for the Royal Rumble.

These are areas that desperately need money for schools, roads, bridges, and basic civic services. Instead, those politicians are convinced — and wisely so — that buying time and buying votes by paying Endeavor to “bring the circus to town” is a political winner.

Ari Emanuel has rightly convinced politicians and government leaders that buying his product is a winner when it comes to buying the hearts and minds of voters.

When Ari Emanuel paid $4 billion dollars for UFC in 2016, the transaction looked ridiculous on paper. All of that debt financing… for a second or third tier sport?

Ari Emanuel didn’t look at buying UFC as a pure sports transaction. He saw the value of UFC as a building block for a cultural and political transaction that Endeavor could maximize.

He took a sport that mirrored a monopoly and — using Endeavor resources such as TV contracts, sponsorships, and talent agreements — shrunk costs to enlarge his pie of profits.

A business with a margin of under 20% to athletes with a potential to generate billions of dollars in revenue?

Because Ari Emanuel and Patrick Whitesell are super-agents, they know how much everything is currently worth. They know the value of their fighters a hell of a lot more than the fighters themselves and certainly their “agents.”

They control their own market for free agency. Who’s competing against them?