Why I’m Betting Big on TKO (Now 7% of My Portfolio)
Dear CMQ Investors,
Back in December 2023, I made my first purchase of TKO Group Holdings—the parent company behind both UFC and WWE. As you read in my latest update, TKO now makes up 7% of my stock portfolio, and I’ve continued to add to the position.
This post breaks down some of the key reasons why.
While TKO is a blend of two iconic sports entertainment brands, this write-up focuses on UFC. That’s where I see the clearest near-term upside and long-term compounding potential.
The TKO Business Model
TKO generates revenue through four main channels: Media rights (62% of revenue), live events, sponsorships, and consumer products—all growing.
Media rights are the engine:
High-margin revenue
Recurring revenue
Predictable revenue—exactly what you want in a core holding.
TKO’s consolidated results (UFC + WWE) tell the story:
46% EBITDA margins
60% free cash flow conversion
That’s what a well-run, tightly controlled media business looks like.
From Fringe to Force
UFC isn’t just a sports league. It’s a vertically integrated combat entertainment brand.
Unlike traditional leagues (NFL, NBA) that share revenue, TKO directly monetizes every ticket sale, pay-per-view, and sponsorship deal.
Additionally, UFC owns the entire value chain—talent, production, event operations, and media distribution.
This structural advantage means fewer bottlenecks, smoother operations, and faster decision making.
It explains how UFC can adapt so quickly—like during COVID, when it launched Fight Island.
During COVID, UFC’s fan base grew nearly 70%.
Without the structural advantage, this would not have been possible.
Live Events: Real Demand, Real Pricing Power
Social media followers can be bought. Gate revenue can’t.
UFC 314 just set a new record at Miami’s Kaseya Center: $11.5 million—the top gate in the arena’s history. UFC now holds the top three.
More broadly:
UFC has already set 10 all-time gate records in 2024
WWE has broken 40+ local ticket sales records
People aren’t just watching—they’re paying. That’s pricing power in action.
Sponsorship & Media: The Next Leg Up
Live events build heat, but the scalable dollars come from media and sponsors.
TKO is targeting $1B in annual sponsorship revenue by 2030 (from ~$375M in 2025)
UFC’s next media rights deal could top $1B/year, nearly 3x its 2019 deal
These aren’t projections based on hope—they’re structurally driven by trends in streaming, sports betting, and global fandom.
The Flywheel: Distribution → Fandom → Revenue
UFC’s rise has always followed distribution.
In 2005, a struggling UFC struck a deal with SpikeTV for The Ultimate Fighter. The finale (“Griffin vs. Bonnar”) changed everything—converting viewers into lifelong fans.
That same flywheel still turns.
Dana White credits distribution. The fans didn’t fade—they stuck. And now the next leap is coming through streaming.
WWE’s Netflix deal ($5.2B) is already generating results:
13% YTD viewership growth
Some events up 38%
UFC could be next. And with Netflix’s 300M+ global subscribers, the flywheel could accelerate again.
Distribution drives fandom. Fandom drives revenue. UFC converts. That’s the core of the investment case.
Valuation: Reasonably Priced Strength
When UFC was acquired for $4B in 2016, it was doing ~$600M in revenue (~6.7x multiple).
Today, UFC generates $1.4B. Applying that same multiple gives a standalone valuation of $9.4B—without factoring in WWE or upside from the next media rights deal.
It’s not cheap. But it’s not expensive for a dominant IP business with control, cash flow, and tailwinds.
Leadership: Fanatical Operators with Skin in the Game
Dana White has the fanaticism that Charlie Munger looked for in management.
Even after making a small fortune when the UFC was acquired in 2016, White is still the hardest working man in the fight business.
At the UFC 314 post-fight presser, when asked how the TKO merger was going, Dana replied:
“Everything is good right now… we’ve been busy as hell. I’ve been home like 22 days since Christmas.”
I also love that TKO CEO Ari Emanuel purchased $300M+ in TKO stock in 2025 through 10b5-1 plans. Our incentives are aligned.
Final Bell
TKO isn’t without risk. Regulation, labor negotiations, and macro shocks all matter.
But it's rare to find a business with this kind of control, brand power, global tailwinds, and monetization leverage.
Unless the fundamentals break—I’m staying in the fight.
Sincerely,
Chris Franco (follow me on X)
P.S. Please make sure you invest based on what’s best for you.
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