Now here’s Eriq…

You may recall that Vince McMahon, the swashbuckling and cartoonish billionaire WWE chairman, enjoyed an astonishing comeback in 2022—one that would have defied even the imagination of his old storyline architect and board member Paul “Triple H” Levesque. To wit: McMahon was forced out amid a sexual misconduct scandal, only to reclaim his board seat in time to orchestrate his baby’s merger with UFC into TKO Group Holdings. At the time, McMahon insisted that he alone could oversee a potential sale. But not everyone was happy with the $21 billion deal. In 2023, shareholders sued—eventually claiming in a consolidated case that McMahon’s comeback wasn’t about saving the WWE, but rather handing it on a silver platter to TKO boss Ari Emanuel, perhaps the one suitor who was willing to keep McMahon in power while solving a few other problems along the way.

When the trial begins, on June 8, shareholders will present the results of a years-long effort to reconstruct the aftermath of The Wall Street Journal’s reporting that McMahon paid $12 million in hush money to women who accused him of sexual misconduct over a 16-year period. (In January 2025, McMahon agreed to pay $1.7 million to settle S.E.C. charges related to the payments, and blamed his failure to disclose them on “minor accounting errors.”) Among the most striking artifacts: a September 2022 voice memo in which Ari tried to reassure McMahon by saying he’d spoken with his apparently well-connected lawyer at Latham & Watkins. “Just F.Y.I., everyone at the D.O.J. is former Latham lawyers,” said Ari, adding that an S.E.C. civil inquiry into the hush-money payments was a separate matter, but manageable. “Yes, we can indemnify you and we will,” Ari allegedly said. (At a December deposition, Ari said he couldn’t recall making the offer.)

All of this happened months before WWE was officially on the market—evidence, plaintiffs may argue, that the sale process was compromised from the start. They are also poised to hammer the WWE’s former board of directors, including Levesque, Nick Khan, and Frank Riddick, for brushing aside other suitors, including Liberty Media, KKR, and Tony Khan’s All Elite Wrestling, without even countering their offers. The board, they will likely stress, never submitted the deal to a vote of non-controlling, disinterested shareholders. The directors did, of course, approve millions in bonuses.

All of which should make for an unusually colorful merger trial in Delaware—part valuation fight, part referendum on whether McMahon turned a corporate merger into something closer to a personal rescue mission. Did WWE extract the best possible price, or did a controlling figure bend the process toward a preferred outcome? The plaintiff’s expert estimates potential damages could run as high as $957 million.

With the trial just weeks away, both sides have begun the pregame ritual of jockeying for position, and dumping voluminous material into the public record while battling over what testimony the court will ultimately hear. Some of it is quite gossipy. In a deposition, Nick Khan testified that the Saudis refer to McMahon as “father” in their communications because he was among the first American sports executives to do business with the kingdom and, unlike others, WWE stayed the course through the public furor over Jamal Khashoggi’s murder. There’s also a fair amount of color on WWE’s rising talent costs and the intricacies of media negotiations.

Then there’s the bigger stuff—notably, a technical dispute with broader implications for the sports rights market. At issue is WWE’s valuation relative to UFC, and the assumptions underlying their future media-rights deals. Plaintiffs say WWE was valued using conservative projections: a 1.43x step-up in rights fees, or roughly $670 million annually, despite a Wall Street consensus of 1.73x and internal materials touting the upside as potentially 2.5x—about $1.18 billion. In a hot live-rights market, the plaintiff’s economics expert concluded, with bidders like Netflix and Amazon circling, WWE shareholders should have ended up with 53 to 57 percent of the equity in TKO, not 49 percent.

Defendants countered that the 1.43x figure was not some merger-window contrivance, but a genuine management forecast developed in the normal course of business and carried forward amid an uncertain media market. These were bona fide operating assumptions, used for planning and compensation, not litigation. Their own experts said that the plaintiffs’ math flattered WWE while discounting UFC’s strengths, pointing out that the latter better aligns with the growth of sports gambling since the outcomes aren’t fixed. They accused the plaintiffs of ignoring synergies supporting a 51-49 split, even if WWE deserved somewhat more credit on a stand-alone basis.

Most consequentially, defendants want to introduce post-merger evidence—especially Netflix’s 10-year, $5 billion deal for Raw and the NBCUniversal SmackDown renewal—to show that WWE’s pre-merger forecast was, if anything, optimistic. Plaintiffs, for their part, wish to exclude that material as improper hindsight. The dispute may turn on whether the court views those later deals as an illuminating reality check or an after-the-fact effort to retroactively varnish an old bargain.

As for WWE’s post-merger, post-McMahon trajectory—now underscored by the outsize numbers that WrestleMania delivered for ESPN last week—the story isn’t as simple as an alternate timeline with Ari out of the picture. Take the Netflix deal, which was hardly straightforward to value, given its opt-outs, extension triggers, and layered international rights. This was one of those “transformational” deals that reshaped WWE’s economics while accelerating Netflix’s ambitions in live sports. As TKO C.F.O. Andrew Schleimer put it in his deposition, the agreement marked Netflix’s “first foray into appointment programming”—a beachhead that arguably led to Christmas Day NFL games, MLB opening night, and a growing slate of boxing.

It also raises an uncomfortable question for the plaintiffs—whether that deal would have materialized without Ari. WWE and TKO executives will testify that it’s unlikely, while former board members defend the merger from a billion-dollar body slam.

Thanks, Eriq. See you all tomorrow.

John

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