WWE Implements Cost-Cutting Measures With Significant Layoffs

In the last few months, WWE has been going through dramatic restructuring after it acquired the Ultimate Fighting Championship (UFC) with the support of parent company Endeavor and the recently formed TKO Group Holdings. The acquisition has been followed with a string of cost-cutting efforts that comprise mass layoffs at several divisions of WWE. The layoffs are part of a larger effort of operational simplification and redundancy removal with an eye toward realising significant cost reductions.

The Merger and the TKO Group Holdings

WWE and the UFC finally came together in September 2023 in a move that radically changed the live sports and entertainment landscape. The merging of the TKO Group Holding brought together two of the largest companies in each of their respective niches with Endeavor gaining a majority 51% of the firm. The acquisition was done with the intention of leveraging the synergy of the two companies, enhance profitability, and further expand geographically.

The transaction valued WWE at an enterprise value of $9.3 billion and at a price of $106 per WWE share, a 16% premium to the company’s closing price at the date of the announcement. The business of the UFC had an enterprise value of $12.1 billion. The company will be listed on the New York Stock Exchange with the trading symbol of “TKO”.

Ari Emanuel, the CEO of Endeavor at the moment, will remain in the position and will also be the CEO of the new company. The president of the UFC will be Dana White and the CEO of WWE will be elevated to be the president of the wrestling business. The 11 members of the Board of Directors of the company will comprise of six members nominated by Endeavor and five members nominated by WWE1.

Layoffs and restructuring

There were two large rounds of cuts that WWE enforced after the acquisition. The first came immediately after the acquisition had been finalized in September 2023 and impacted more than 100 staff members. The second came in April 2024 and saw dozens of additional positions lost. The cuts affected multiple departments such as the finances, the departments of sales and partnerships, human resources, and production. Senior executives also had positions eliminated with notable executives such as Michael Weitz, Craig Stimmel, Karen Mullane, Stewart Frey, and Matt Geyer.

Layoffs came mainly because of the elimination of the duplicative positions that had been created with the merging of the companies. Endeavor had expected major cost-cutting through the mergers and planned to shave between 50 million and 100 million dollars a year in expenses. This move is standard in mergers with the removal of duplicative positions often done in an effort to enhance operational effectiveness and profitability.

Impact on Employees and Employee Morality

These budget cuts and terminations had an immense impact on WWE employees. They had been discontent with diminished benefits, small wage raises, and increased responsibilities. Regardless of WWE’s great financial results of record profits and major deals, worker morale has been hit hard. Elimination of such perks such as the stock purchase program, colleague-recognition rewards, and complimentary ticket privileges has added further to this issue.

Employees also say they’ve been granted minimal cost-of-living increases and no raises based on merit after receiving good review scores. This comes in contrast with the large bonuses paid to top executives such as WWE President Nick Khan and Chief Content Officer Paul Levesque, who each got millions of dollars’ worth of bonuses tied to the merger5.

Executive Compensation and Investor Rewards

Executive compensation and staff benefits have been a major source of dispute. Executives have experienced increases in finances, yet employees experienced cuts and stagnant compensation. Ari Emanuel, the CEO of TKO, received a cash award of $20 million and a stock award of approximately $60 million, and COO Mark Shapiro received an award of $5 million and large grants of shares5.

Shareholders of non-Endeavor firms also stand to gain with the acquisition with the company announcing a share buyback program with a ceiling of $2 billion and the initiation of quarterly dividends. The two programs will drive the price of shares and compensate non-Endeavor investors5.

Future prospects and Cost Reduction Strategies

In the future, the expectation will be that the TKO Group Holdings will continue reducing the costs further. The COO of the TKO, Mark Shapiro, has also indicated that reducing the live events may be a solution that will boost the margin because the non-televised events are not that profitable. WWE has about 300 events a year with half of them live broadcast events. The strategy in 2025 will be cutting the live events down to “nearing 200” and focusing on the higher-margin events and higher ticketing.

Also in the works are additional synergy and efficiencies in WWE and UFC events’ production and travel costs. The Fight Nights’ success has been identified as a future source of growth and expense savings.

Integration of Live Events Teams

In a move that marks a large leap toward operational optimization, WWE and UFC integrated the live events divisions of the two organizations into a singular unit that will be known as the TKO Live Events Strategy Team. The initiative will endeavor to leverage the strengths of the two organizations and maximize event revenue and growth opportunity. The unit will be overseen by the Executive Vice President of Event Development and Operations at UFC and will be closely supported by the likes of Dana White, Nick Khan, and Paul Levesque.

The live events unit will be focused on making operational efficiencies and strategies that will maximize economic returns within hosting cities through government partnership and site-fee income optimization. This consolidation is part of the general strategy of TKO of streamlining services and reducing the cost and making it profitable.

Reduction of Live Events

One of the largest of WWE’s cost-cutting efforts includes the elimination of live events. WWE has historically averaged a schedule of 300 events annually and will scale this back in 2025 to “near 200” events annually. This will be accomplished in an effort to consolidate higher-revenue events and price them higher in an effort to replace the diminished volume.

Incorporation of Live Events Teams

Combining the live events teams of WWE and the UFC into the TKO Live Events Strategy Team is a move that will drive operational efficiency. The two companies will be able to tap into each other’s strength and capabilities and maximize event revenue and drive growth prospects with this combination. The unified team will be tasked with making operational efficiencies and strategies that will be used to tap economic gains in hosting cities.

Synergies and Cost Savings

The combination will be expected to realize meaningful synergies, substantially based on Endeavor’s highly efficient back office and solid infrastructure. The synergies will be expected to realize an estimated annualized cost of between $50 million and $100 million. The company will also be more powerful at media rights negotiations and will be able to place their programs on further platforms and reach a larger audience1.

Impact of Employee Morale 

These restructurings and the resultant dismissals had a profound influence on the morale of the workers. The workers feel devalued with diminished rewards and small increases in compensation, yet the company has been earning good profits. The disconnection between the company message and the workers’ experience has also contributed to this issue.

Executive Compensation vs. Employee Benefits 

These large executive bonuses, such as those paid to Ari Emanuel and Nick Khan, contrast with the small raises and limited benefits that the rest of the employees get. This contrast has contributed to feelings of resentment among staff members who feel that they are not fairly receiving the rewards and recognition that they actually deserve. 

Future prospects 

While the future of many of the employees at WWE and UFC becomes doubtful with the two firms uniting under the direction of TKO Group Holdings, the company has promised to push forward and find future paths of development and growth and confront the issues that arise with such a large company combination. The future of the combination will be dependent on how it will be able to balance the needs of each of the stakeholders—workers, executives, and investors—while remaining competitive in the sports entertainment business. In the years ahead, WWE will need to balance such issues with the need to be a leading player in the world of professional wrestling.

The cross-promotion and shared resource abilities that the acquisition of the UFC will potentially allow will create interesting and fascinating possibilities among the public. The impact it will have on staff and the overall impact it will have on the company will be closely watched as this acquisition continues to unfold.