WHEN: Today, Monday, April 3, 2023
WHERE: CNBC’s “Squawk on the Street”
Following are excerpts from the unofficial transcript of a CNBC exclusive interview with WWE Co-Founder & Executive Chairman Vince McMahon and Endeavor CEO Ari Emanuel on CNBC’s “Squawk on the Street” (M-F, 9AM-12PM ET) today, Monday, April 3rd. Following is a link to video of the full interview on CNBC.com:
All references must be sourced to CNBC.
EMANUEL AND MCMAHON ON ENDEAVOR-WWE DEAL
SCOTT WAPNER: Endeavor won the battle royal for WWE after what our own colleague David Faber reported last week was a quote, “hot and heavy auction.” Under the terms of the deal, Endeavor will merge its UFC brand with the WWE forming a new company that will eventually go public on the New York Stock Exchange. The transaction values the entity at some $21 billion, 12 billion for the UFC, 9.3 billion for the WWE. That is a substantial premium over WWE’s current six and a half billion-dollar market cap. Now after the deal closes, expected in the fourth quarter, Endeavor will hold a 51% controlling interest in the new enterprise while existing WWE shareholders will hold a 49% interest. So how exactly did these two parties end up as tag team partners? We asked Endeavor CEO Ari Emanuel and WWE founder Vince McMahon during an exclusive interview on Sunday in Los Angeles where the WWE was holding its two-day WrestleMania extravaganza.
VINCE MCMAHON: This is the biggest thing Ari Emanual and Vince McMahon have ever done, combining forces like this, there’s nothing like this. There’s never been anything like this. People may talk about this for a long time.
WAPNER: There were a lot of other suitors.
MCMAHON: Sure there were but Ari really the synergies everyone was was very interested in us and I appreciate that. But these synergies that Ari brings totally different than everyone else.
WAPNER: That said, many doubted we would ever see this day that you would ever be willing to sell a controlling stake in your company. You are the WWE and the WWE is you so why?
MCMAHON: It’s the right time, it’s the right time to do the right thing and it’s the next evolution of WWE. I could probably do what Ari is right now, you’ll know it’ll take me 10 years. You know, in the time I would grab those 10 years, he’ll be 10 years ahead of you so it’s like it makes all the sense in the world for all these synergies that we have to extract all the value we can out of the marketplace.
WAPNER: The deal values UFC, you mentioned some numbers, $12 billion and WWE at 9.3 billion. That’s a big number. WWE’s market cap is six and a half.
ARI EMANUEL: Here’s what I would say exactly why we did this because I think we weren’t getting the pure value. I don’t think the WWE was getting the pure value. Combine, it’s rarefied air, the two of us, and I think the analysts will be able to do it. It’s good for the shareholders, shareholders of WWE and for the shareholders of Endeavor and then when you look back, I don’t believe that the Endeavor shareholders were getting pure play for the rest of the assets that we had and I think for the first time, you now have the ability to do that in both situations. And that’s a win win, which is what Vince and I have always talked about.
WAPNER: When I throw those kinds of numbers out to you, I mean the word on the street was that you wanted 9 billion this values the WWE at 9.3 so despite everything that’s happened—
MCMAHON: I’m a visionary.
WAPNER: Well, you hit the number.
MCMAHON: Yes, deservedly so.
EMANUEL: But here’s what I would also say to you. We paid a fair price and I’ll tell you why. We paid a little bit for control premium with our cost cuts, their new deal’s coming up which is right now and our cost savings that we think we can extract from the business right now and grow the business with all of our levers whether it’ll be international sales, domestic, sponsorship, gambling, all the things that we do. I think it’s, I would also say to you is when I bought IMG, everybody said I overpaid, it was actually one of the cheapest deals in sports. For sure when I bought the UFC, everybody was like at 4.2 billion they were like crazy. We’ve tripled the EBITA in that period of time and now with this, this is going to be UFC 2.0 as it relates to all the things in the flywheel that we can bring to them and we have unbelievably attractive economics. The balance sheet’s incredible. Our debt ratio is less than three times, our free cash flow conversion is unbelievable. So I think when people look at this business on a combined basis and also look at the remaining assets, for bull shareholder, it’s incredible.
EMANUEL AND MCMAHON ON MCMAHON STAYING ON AS EXECUTIVE CHAIRMAN
WAPNER: Now the newly created sports and entertainment giant will have Emanuel as CEO with current WWE CEO Nick Khan staying on as president of the brand, Dana White continues as president of the UFC. While Mark Shapiro assumes the role of president and COO of both Endeavor and the new company. The wildcard throughout the bidding process was what role if any WWE founder McMahon would play after a sexual misconduct scandal and investigation revealed he paid four women $12 million in hush money. McMahon was forced to retire thereafter, he did leave the company for nearly six months before returning to help lead a potential transaction and most had assumed McMahon would leave altogether if a deal happened. But he is staying on as executive chairman of the board at the behest of Emanuel himself.
What I thought was interesting Ari is that Vince is going to be the executive chairman of the new company. That implies that he is going to have a say.
EMANUEL: Well, I would have said the following, I would have body slammed him if he thought he was going to leave. Because as I said to you before, here’s a man who has seen around the corners at every beat over the last four years of this business and has a vision for where this business way before a lot of people see it. Him now being able to utilize what we have built in our flywheel, I’m the luckiest guy in the world because I got Vince McMahon, a visionary that sees around corners, I got Dana White, and what we’ve built, that’s pretty unstoppable.
WAPNER: So you wanted him to stay?
EMANUEL: Oh my god. Yes. Oh my god.
WAPNER: Did he have to convince you to stay?
MCMAHON: Not that much.
WAPNER: Would you have been—
MCMAHON: I love what I do. I’ve loved building WWE. All my life, it’s my passion and to have an opportunity to have it grow like this in an exponential kind of standpoint is like, can’t be better than that.
WAPNER: It’s an interesting plot twist because not a lot of people saw this coming. In fact, your own CEO Nick Khan told our David Faber just back in February quote, “Vince has declared to the board to me to other upper management he is 100% open to a transaction where he’s not included in the company moving forward.”
MCMAHON: Sure.
WAPNER: You were ready to walk away?
MCMAHON: Absolutely.
EMANUEL: I wasn’t gonna let him and let me tell you, we have a relationship for 23 years. There’s a trust, there’s a friendship when you’re going into business and going forward, I think that’s important. I’m glad he chose us because it was a very competitive situation. But for us, it’s an honor and also we’re so lucky because of his vision about where the business is and where it’s going.
WAPNER: What happens if you guys disagree? The Executive Chairman McMahon says I think we should be doing this, CEO Emanuel says no, I think we should be doing this and this is my show. What happens?
MCMAHON: Well, what happens there is we have a little contest in the ring.
WAPNER: Some people are gonna say he’s not joking.
MCMAHON: Okay. I outweigh Ari by 100 pounds but I think that’s the answer.
WAPNER: But seriously, what happens if you guys disagree?
EMANUEL: Here’s what we, here’s what we said, right? And I said it to him. If we disagree on something that we want to do, guess what? We’re not doing it. It’s the relationship I have with Silver Lake. I would never put that and it’s the relationship I have with Dana. Dana’s got the say as it relates to the UFC, Vince as it relates to the WWE. He’s gonna have he’s gonna have the say. We, we have nothing to do with the creative process. That’s Vince’s and that’s Dana’s situation. All the back stuff, we’re going to try and do what we do. I think that’s what he wants. But if there’s a disagreement, that’s called a relationship we will work it out. And that’s how we have it.
MCMAHON: Now, let me make it clear, I thought you worked for me.
WAPNER: On the creative side, Vince, do you plan to be as involved as you have in the past on the creative side?
MCMAHON: Yes and no. On a higher level, yes. In the weeds, which always love to get in the weeds in the past, no, can’t do that.
WAPNER: What happens if Vince says, you know what? Mr. McMahon, the character—
MCMAHON: Mr. Mahon is dead.
WAPNER: Decides he wants to get back into the ring. You let him?
EMANUEL: His choice.
WAPNER: Purely his choice?
EMANUEL: Purely.
MCMAHON: That’s not going to happen.
MCMAHON ON LEGACY AND SEXUAL MISCONDUCT SCANDAL
WAPNER: Yeah, I got some more for you now. It was the biggest question once it became clear that Vince McMahon was willing to sell a controlling stake in the WWE what role if any would he play in a new company? Most assumed McMahon would leave the ring altogether following a sexual misconduct scandal that rocked the wrestling company. I asked McMahon about the emotions of parting with a business his father founded back in 1953 and whether that scandal ultimately led to this moment.
I can’t help but wonder and I have to ask you had the scandal not happened, would we be sitting here today?
MCMAHON: Absolutely.
WAPNER: Why?
MCMAHON: Because it makes sense. If you take, nothing’s ever happened like this before. And again, I’m always looking at what’s best for our stockholders, what’s best for the company. This is the best thing that has happened in a long, long time. All the WrestleMania is combined, been 39 including tomorrow, does it really equal to the magnitude of what we will do together.
WAPNER: Did that event push you towards this day faster than you thought you’d ever be here?
MCMAHON: No, it didn’t really in and of itself, no, but it’s great that we can combine all of this news together at the same time.
WAPNER: Is this a good day—
MCMAHON: A good day?
WAPNER: For Vince McMahon and the WWE or is it—
MCMAHON: It’s a great day. Best day of my life.
WAPNER: Or is it a tough day as well? This company has been in your family for 70 years, is it a tough day?
MCMAHON: No, it’s a great day. Things have to evolve, family business, it all has to evolve for all the right reasons and this is the right business decision thus far, it’s the right family decision.
WAPNER: I want to ask you about how you think about your legacy given where you took this company, what’s happened in the last year, the regrets you may have as a result of all that and how you think your legacy will and your story will be told.
MCMAHON: Well, let me just say I’ve made mistakes obviously both personally and professionally through my 50-year career. I’ve owned up to every single one of them and then moved on. I’m not sure the legacy stuff. I’m not gonna write it so I don’t know. I want to say is someone who had an extraordinary amount of fun, great passion for what they did, and wound up doing the biggest deal he’s ever done in his life.
