WWE, Endeavor Shares Plunge on Saudi Investment Into PFL

Shares of WWE and UFC parent Endeavor group fell Thursday on heavy volume in apparent reaction to the Saudi Arabian PIF investing $100 million into MMA upstart league Professional Fighters League.

WWE shares dropped $13.50 a share, or 12%, on the news, while Endeavor shares shed $2.26, or 9%, of their value. In the next few weeks, Endeavor will close its purchase of WWE and combine it with UFC into a publicly traded business majority controlled by Endeavor called TKO Group Holdings. The sell-off reflects investor concerns that the Saudi investment in PFL represents a potential significant MMA competitor to TKO.

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“While there is room for all to succeed in the growing MMA market, PIF backing augurs poorly for WWE and UFC’s medium/long term talent costs,” Wolfe Research analyst Peter Supino said in a Thursday research note titled, “WWE: Saudi Arabia Deals a Body Blow to Industry Structure Forecasts.”

On Wednesday, Sportico was first to report that PFL received a $100 million equity investment from PIF, the sovereign wealth fund through which the Saudis conduct the majority of their sports-related investing. The investment is in the PFL parent company and will support the launch of two new efforts next year: a PFL league for the Middle East/North Africa region and the company’s “Super Fight” pay-per-view arm. The funds will also be used to attract more stars to PFL, as well as increase participation in the disciplines of MMA across Saudi Arabia and the MENA region. Saudi Arabia will also host and underwrite a “substantial” number of PFL PPV events in the coming years.

The drop in both WWE and Endeavor shares came on the heaviest trading volume since the business combination was announced at the start of April. WWE generates more than $100 million in revenue a year through two annual events in Saudi Arabia under a 10-year contract.

The relationship between the two is evolving: In 2019, Endeavor returned an equity investment from the country after the murder of journalist Jamal Khashoggi, which the U.S. has attributed to the Saudi government. The company’s past hesitation in dealing with Saudi Arabia isn’t expected to change Saudi Arabia’s importance to WWE.

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