In regulatory paperwork filed shortly after its September launch, TKO Group Holdings listed Vince McMahon’s position on its board as something that could bring negative publicity to the Endeavor-owned corporation which includes UFC & WWE. They also stated that McMahon’s position could “have other adverse financial and operational impacts on our business.”
Those risks, of course, are due to the various sexual misconduct allegations made against McMahon, the initially incorrectly accounted for financial settlements with accusers, and ongoing investigations into both.
In filings made to the United States Securities & Exchange Commission in conjunction with their first quarterly earnings report yesterday (Nov. 7), TKO further documented the risk McMahon brings to their business.
Under the heading “Risk Factors”, TKO’s Form 10-Q lists:
The special committee of independent members of WWE’s Board of Directors’ investigation into allegations of misconduct by Mr. McMahon, and any further allegations and investigations may have an adverse financial and operational impact on our business performance.
Under this sub-head, TKO documents the specifics of McMahon’s 2022 hush money scandal, including improperly recorded payments and costs associated with the investigation that he reimbursed the company for prior to its sale to Endeavor. It also addresses the possibility of future costs & other negative impacts related to the scandal:
Professional costs resulting from WWE’s Special Committee’s investigation have been significant and are expected to continue to be significant as the Company continues to incur costs arising from ongoing and/or potentially new regulatory, investigative and enforcement inquiries, subpoenas and demands and claims. We expect Mr. McMahon to reimburse the Company for reasonable expenses incurred in connection with the investigation. Although we are not aware that significant business has been lost to date, it is possible that a change in the perceptions of our business partners could occur as a result of the investigation or other matters described above. In addition, as a result of the investigation or other matters described above, certain other operational changes, including without limitation other personnel changes, have occurred and may continue to occur in the future, which may have adverse financial and operational impacts on our business. Any adverse impacts as a result of the investigation and related matters, and any further allegations or investigations, could exacerbate any of the risks described herein.
A second Vince-related sub-section is identical to the one reported on in September:
Mr. McMahon’s membership on our Board could have adverse financial and operational impacts on our business.
Mr. McMahon’s membership on our Board could expose us to negative publicity and/or have other adverse financial and operational impacts on our business. His membership also may result in additional scrutiny or otherwise exacerbate the other risks described herein. Any of these outcomes could directly or indirectly have adverse financial and operational impacts on our business.
TKO and its parent company Endeavor clearly believe McMahon’s involvement in their business is worth these risks. While CEO Ari Emanuel reportedly curtailed Vince’s involvement in WWE creative, he’s publicly stated that keeping Vince on-board was a key factor in the decision to acquire WWE. UFC President Dana White has praised McMahon as a partner, and gave Vince credit for the mixed martial arts brand starting a relationship with the Saudi Arabian government. WWE’s own partnership with the Saudis has been and figures to continue to be incredibly lucrative.