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Conglomerate thinking: Endeavor positioned to become sport’s LVMH 👜
After the acquisition of WWE for $9.3 billion, Endeavor CEO Ari Emanuel appears best positioned to become sport's answer to Bernard Arnault.
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Endeavor recently acquired WWE in a $9.3 billion deal.
The publicly traded holding company (NYSE: EDR) plans to pair the UFC with WWE and create a new $21 billion plus sports and entertainment giant with global reach, scale and omnichannel distribution. The new company will trade under the symbol TKO.
The move speaks to the ‘sports conglomerate’ thinking Roger Mitchell (founder, Albachiara) referenced in a recent column entitled 'Who is Going to be Sport's LVMH?'.
“The best [companies] will have synergies and economies of scale, [and] deploy finances across businesses that give a return,” he said.
Endeavor CEO Ari Emanuel now appears positioned to become sport's answer to Bernard Arnault.
Arnault, the world's wealthiest man, first recognized the power of global brands when he acquired Christian Dior as part of a purchase of Boussac Saint-Frères from the French government in 1984.
Three years later, it was a profitable label, and he, along with Alain Chevalier (CEO, Moët Hennessy) and Henry Racamier (president, Louis Vuitton), founded the luxury brand group LVMH.
Today, LVMH is the 15th largest company in the world by market cap (north of $450 billion).
Arnault's successful integration of various aspirational brands under a single umbrella inspired other European luxury labels to pursue similar rollups (see: Kering, Richemont).
However, his learnings can also be applied to sport.
“The acquisitions you make should be with clear governing criteria, looking for companies where you can eliminate duplicate costs, but also improve revenues and marginality by unlocking in the new company better efficiencies, better distribution, a top brand, a common tech stack, CRM etc.,” Mitchell said.
LVMH successfully took advantage of ‘light synergies’ across its brand portfolio.
The company found synergies “negotiating advertising deals, negotiating real estate and distribution deals, and giving people the ability to make career moves within [the] company where they jump from brand to brand," Ben Gilbert (co-host, Acquired FM and managing director, PSL Ventures) said.
"But you do not have any synergies, and you [must] be very careful not to mess this up, with the creatives [operating with individual brands],” he added.
Emanuel can operate from a similar playbook.
“From a live entertainment perspective, both companies are large style arena show productions. Negotiating favorable rates with arenas globally will improve the bottom line of both companies,” said David McKenzie (founder and CEO, Psyched4).
Endeavor should maintain advertising and promotional leverage through the sheer scale of its existing businesses, and like LVMH, must be careful to protect the creative integrity of its two marquee sporting assets.
TKO's size also makes it one of the few viable suitors for valuable sports properties that make their way to market.
“Never forget the additional opportunities for future acquisitions with a stronger balance sheet. The combined group will be better positioned to pursue joint ventures and acquisitions over the medium term,” McKenzie said.
Endeavor's next target remains unclear. However, a recent comment from president Mark Shapiro about the company being both “the owner and the commissioner” of WWE and UFC suggests it favors sports properties where it can wield total control.
The influencer boxing business would fit that description (think: Triller Fight Club or Misfits Boxing). And the company has kicked the tires on boxing promotions before.
Back in 2019, Endeavor reportedly looked at Premier Boxing Champions.
It wouldn't be shocking to see the company take a stab at professional bowling either. WWE board members and former company co-presidents George Barrios and Michelle Wilson helped take Bowlero Corp, the owner of the Professional Bowlers Association, public through a SPAC merger in December '21.
Regardless of what that next move is, the WWE acquisition has placed Endeavor in the conversation to become the ‘LVMH of sport,’ or at least the Kering or Richemont.
‘Conglomerate thinking’ is upon us.
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