TKO Group Holdings, Inc. (TKO) Earnings Call Transcript & Summary

Great. Thank you, everyone, for taking the time to join us today. We'll get started with our next session. It's a pleasure to welcome back to the Communacopia and Technology Conference this year, Mark Shapiro, the President, COO and COO of TKO Holdings. Mark, thank you for taking the time here.

Great to be with you.

Maybe starting high level, Mark. And this Friday is the 2-year anniversary of TKO. The company has executed against many of the initiatives that I remember speaking with you about 2 years ago when you first combined WWE and UFC together, streamlining the operations, growing sponsorship, live events and more recently, renegotiating many of your media rights deals on improved terms. Maybe just thinking about all that you've executed against and how the TKO story has progressed from here, would be curious to get your latest sense of what makes you most excited at this point looking forward and where we are in the arc of the growth strategy?

Yes. Look, I think one of the things that can really kill a company is hubris, especially in the management team, the leadership, the culture. So we are highly sensitive to that, and antennas are up high. And I say that because right now, we have a lot going for us, right? We're really, knock on wood, hitting on all cylinders, delivering on the promise across the board from a business standpoint on every metric we laid out as recently as you and I sitting here last year. And I would tell you that the strategy is playing to form really, starting with the media rights. Which a year ago, it was what's going to happen here, UFC, is ESPN going to come back? Are you going to get that deal? And WWE is obviously smaller from a PLE standpoint, but nonetheless, a big deal, and our premier events in the portfolio. And what we did really is go out and beat on both, significantly beat on both. We're thrilled with the new deal that we have on UFC, which is 7 years and obviously, $1.1 billion, which is at 2x what we were getting in the ESPN deal. We were fortunate to have a lot of bidders in the deal, which obviously drove up the demand and drove up the price and allowed us to really capitalize and score on that. I'm sure we can talk more about Paramount at length later on. And then on the PLE front, look, that deal wasn't up till the end of April. And instead, we are launching September 20. Next weekend, we're launching in Indianapolis with a brand-new franchise, which we hope will be an annual recurring franchise in Wrestlepalooza, and that was at 1.8x. And if you really look at a lot of the rights and revenue streams we were able to either claw back or retain, it's really closer to a 1.9x is the way we pencil it out. So that's a winner for us. So just all in all, you're looking at long-term media deals, long term, right, recurring stable revenue streams with escalators across the board. Expansion of rights, 10 years on Raw with Netflix, 5 years on SmackDown and the new ESPN PLEs and then 7 years on the UFC deal, which is 43 fights a year. So in a really good place with our biggest revenue driver, and then you get past media and you -- and of course, we can talk about all these individuals or any way you want to take it. But whether it's ticketing and live events or it's global partnerships or it's really our financial forecasting profile from our strong margins, which I think there's a lot of room for expansion, free cash flow conversion, which is normalized at 60-plus percent. Our leverage, which even with the expansion upsides of our term loan, will put us at 2x by the end of the year, and keep the course going, we should be at 1.5x leverage by the end of next year. Our capital return program, which is going to be robust. And of course, a boxing league which by all parts and definition, launches this Saturday as the undercard of the Canelo-Crawford fight. So look, we're hitting on all cylinders, but we're trying to remain humble. We know we have a lot of work to do. It's early innings, and we look at our profile now and our strategy and our road map as an execution story.

That's a great overview, and I definitely want to get into a lot of what you did discuss there. Maybe starting first with the media rights, you mentioned the ESPN deal, the WWE PLEs, Paramount-CBS with UFC. Mark, could you maybe talk a little bit more about these deals specifically and why ESPN and Paramount are the right partners for WWE and UFC, respectively?

Look, I can't say enough about ESPN. I mean, they were an extraordinary partner on the UFC. A lot of our growth, the fact that we're mainstream and we're so young and we're so diverse and we're so global has a lot to do with the marketing machine that is the Walt Disney Company, period, end of story. They are the definitive authority and stage when it comes to sports. Having said that, we knew they were not going to be there at the price we wanted for UFC. So while we had conversations and across the time line, there was a time where they might have come in for some of the numbered events, which are the pay-per-views, or some of the fight nights or all of the fight nights, they were always in the mix, and they wanted to be in the mix. And Bob Iger and Jimmy Pitaro are huge fans of the UFC and they have a great personal relationship with us and with Dana White. So we never ruled them out, but we pretty much knew they weren't going to be able to get to a 2x, and that's what we were setting our sights on. So we pivoted them as soon as we knew that was going to be the case into the PLEs to get the big increase on the WWE. The minute we did that, it really meant the UFC was going to be a small package, were they to stay. And then we set our sights on talking with everybody else, from Warner Bros. Discovery, to a lesser extent, Apple, Amazon in a big way, YouTube in a big way, Netflix in a big way, [ DAZN ] in a big way. I mean, there are a lot of players at the table. I'm not saying all of them would have been at the number that we ultimately received and signed or that they would have all taken the entire package because there's a lot of volume when it comes to 43 fights. And then you have the Contender Series and Ultimate Fighter and our library. Only a few vehicles can take that kind of a load. And ultimately, we pivoted this to CBS and Paramount+, and we're really excited about the opportunity there, the growth plan, David Ellison's vision, technology at the forefront of everything they do, knowing that Oracle, big time in the news today, is kind of behind that, vis-a-vis the Ellisons. They are visionaries, really. They are at the forefront of technology and content merging. We have a lot of history with David. We represent Skydance on the WME side of the equation. And really, everything he's touched against all odds from a content narrative business standpoint has very much been in the footsteps of his father. Success breeds success. And we're big believers in where P Sky is going to go. Especially CBS still, right? CBS has so much sports tradition, so much sports history, so much sports lineage. Even now, their properties from the Masters to the Final Four, UEFA, the NFL, they're not going to slow down. And frankly, everything David says is sports is first for them. So that's a good place to be. You just want to make sure your neighbors are strong. So we're happy we had those neighbors. We like to see the fact that they're investing in South Park as an example, that they're buying new series and are getting behind new movies, and sports was going to be the priority. So all in all, it's just a really good place to be. And the fact that we will have CBS broadcast windows, which will allow us to grow our audience, grow our reach, grow our brand and monetize our brand is enormous for us. And that they'll, of course, use CBS as a marker channel to not just retain subscribers at P+, but really grow the P+ subscriber base, which is huge for us. They wanted something that was year round, they wanted an antidote to churn and they wanted something that was global because they're chasing global subs, and we fit the bill.

Along the story of media rights, there's a few other media rights properties out there at the moment up for renegotiation or will be coming up for renegotiation in UFC International, PBR Boxing, which you mentioned earlier. Maybe just talk a little bit more about the status of those rights negotiations, the right type of partner that you're looking for in others and how you see that process playing out?

Yes. Look, on the international rights, that's a big part of the story. Had we done a deal with Netflix and Ted and Bela, they would have taken global rights when it comes to media distribution. So it would have been very similar to our Raw and PLE deal. Obviously, they have the PLEs internationally. In the U.S. here, of course, it was Peacock, and now it will be ESPN. But it would have been all of it. And one of the foundational strategies and justification for spending what we spent in stock really to get IMG into the TKO equation was because they are the global leader in sports media rights distribution by far, first, second and third place. I mean, they're sweeping all the medals. They have 160 now, almost 160 properties that they distribute across 160 countries and territories. They have great leverage, great scale, experts in their space, strategically, AI, digital, social. And they've been doing it for quite a long time with boots on the ground in all these different countries. So the idea of keeping them in the fold to continue really monetizing, selling media rights on the UFC globally was in our best interest. Frankly, we thought they would do better than Netflix. And so our goal was to retain the international rights. We did just that with P Sky and overall CBS/Paramount+. IMG will be selling those. We have roughly about 150 properties -- excuse me, 150 territories where we sell rights into on the UFC. Those come up in a staggered way, about 1/3 every single year. So IMG will be out there selling it. And where they have an opportunity to package it, they will package it. We think there's tremendous upside that we wouldn't have had. And those are the kinds of examples when you talk about the step-up we got. These are the extras, getting ad inventory, right? Not having to spend so much on ancillary programming and production, as we were committed to in some of our historic deals, retaining international rights. I mean, these are all upside opportunities for the UFC going forward. And then just to finish out your question on boxing, we hope to have an announcement in the next 2 to 3 weeks on what we're doing with boxing. We will have the undercard of the Canelo-Crawford fight Saturday night on Netflix will be Zuffa Boxing. There is 6 of the 8 fights. One is we've got a salary fighter coming in. So it's -- it's not part of Zuffa, but it's a 6-round fight we'll be doing. And then, of course, Canelo-Crawford are not Zuffa. But the rest of the card is all Zuffa. So it's the first time getting out there with our brand, with Dana White's roster of talent and fighters. And we look to do about really, 2 to 4 fights per year with the Saudis on a super fight scale. And of course, I'll just remind you, we don't pay to bring the fighters in. We don't take any risk on that. We are the Saudis' partner in this. And we promote the event, we market the event, we stage the event, we produce the event, we do the media rights deal and we help out on the global partnerships. And for all of that, we're paid a fee, which will, of course, be incremental to our plan.

Maybe since you mentioned boxing, there's -- thinking about the longer-term plan for boxing, so you mentioned 2 to 4 fights ramping up over the next year or so, potentially layering in media rights on the back of that. I guess as you see execution, both over the next 12 months in boxing and then maybe further ambitions, looking out over the next couple of years, how big could boxing get in the U.S. and then the opportunity internationally?

Look, I think you just have to go all the way back to Jack Dempsey and the Golden Age. I mean, boxing has been around for 100 years, not many sports can say that. So it's fully entrenched. I mean, it's got extraordinary historical equity. And no sportsman ever grows tired of mano-a-mano fisticuffs, gladiator one-on-one. It just makes a lot of sense. You have to have the right personalities, obviously. Muhammad Ali and his charisma took that to a whole another level. But the opportunity is there if you have a closed system, which we will have if you have a guy like Dana White at the forefront of it. And if you have a stable of 200 fighters, which we expect to have. Now I'll remind you, we're talking about two different things here. Zuffa Boxing, which will be our league, will be about 12 to 16 fights per year, and we are in the market right now, selling media rights to those 12 to 16 fights. And then we will monetize that across the board, again, in partnership with the Saudis. Separate and apart from that will be the super fights like Canelo-Crawford that we have this weekend, where we're working for a fee to be essentially their promoter and their producer and their media right seller of the business. So we're going to take a bite of both parts of the apple. And we're going to try to put this on super acceleration and really gas boxing. Because the most popular question that I get on the road from investors is, okay, before we can even breathe or smell the roses on the media rights deal is, okay, you've got the media rights deal, great. You're going to break $400 million on global partnerships, which is ahead of our internal forecast. Nothing hotter these days than live events and experiences. Not just sports music as well, so I'm trying to be objective there. But we're seeing no slowdown in that respect. We're going to sell out Allegiant Stadium Saturday night for Canelo-Crawford. It's a stadium for a boxing match. I mean, this doesn't happen. Folks just want to get out. They've got time. They're off on "Fridays." It's communal. And everybody suffers from FOMO, especially the younger folks in the demos that we really serve and cater to. So like we're in the sweet spot with a lot of opportunity to increase our margin by increasing our ticket yield, especially at WWE. So we feel really good about that. And what I would tell you is -- so when you look at global partnerships and ticket sales and media rights, hey, well, where are you guys going to go from there? Like, we're an execution story, to exactly your point. That's what we are right now. It's early innings. We're still trying to squeeze out more synergies on bringing UFC and WWE together under one roof. We're still trying to squeeze out synergies in bringing IMG on location and PBR into the fold. Remember, we forecast $30 million on a year-long run rate, then we upped that to $40 million. Andrew and I were talking this morning, there might be a little more than that. But that will play out over the course of '26. Andrew Schleimer, my CFO. And so that's still upon us here. We're looking at margins. I mean, second quarter was incredible, WWE, equalized. UFC at 59% EBITDA margins, driven largely by global partnerships. Ticketing, a lot -- and of course, site fees. And really, when you look at next year, you're talking about a consolidated EBITDA margin of 35% to 40%, good place to be, and free cash flow conversion normalized at 60-plus percent. And of course, our leverage is as I've already talked about. So we're going to be a cash gusher. We really are, and we take a lot of pride in that because we are laser-focused on cash flow, laser-focused on sustainable long-term EPS growth. And that all equates to the bottom line where it benefits shareholders as long as we are pushing those returns, that capital return to our shareholders. And that's going to happen. We doubled our dividend last week. And we're embarking upon a buyback program that we promised our shareholders we would do by the end of third quarter. And last time I checked, that's coming up in just a couple of weeks.

I do want to get to capital returns and capital allocation more broadly. But maybe picking up on something that you touched on, on partnership and sponsors and a broader opportunity with bringing more brands into the ecosystem, it's been a great growth story over the last year or two for UFC and WWE in particular. The new deals, you mentioned have some ad inventory available, I think 2 minutes an hour. Could you just talk a little bit more about where we are in the growth story in sponsorship? Maybe how does new inventory unlocks opportunities for you and where you see...

We forecast -- I believe it's 2030 [indiscernible] global partnerships. Now remember, when we bought the UFC -- I mean this is talking back in the Endeavor days, which I barely remember -- we were at $30 million, $30 million to $40 million is what UFC was doing. UFC is now knocking on the door of $300 million in global partnerships. And then, of course, WWE is coming up the rear, adding to that, and we should surpass 400. Our goal was 375, but we should surpass 400. Same thing, too. Contractual, stable, escalators, recurring. A good place to be in more and more brands, especially as these two properties become more mainstream want to be involved with us. So you take the UFC deal that you're talking about, we've got all-in broadcast integration. So all broadcast integration, we control, all in-arena, we control. And then, of course, our IP in terms of supermarket aisles and consumer products, we control. And then on top of that, we'll have the 2 minutes an hour. Now I would tell you for both the WWE and ESPN and this deal, we'll probably use 1 of the 2 minutes to do institutional. So we'll use it as a marketing vehicle, at least in the early going, because we're still building our ad team. And Paramount/CBS, will be our partner in some of this is still building their ad tech solution, which we hope will be best-in-class. But we'll be out there, to your point, selling a 360 holistic package to an advertiser. I want to come in on broadcast integration. I want to come in on being in the arena and touching that 20,000 to 30,000 fan base that shows up for these fights on the UFC. And now I actually can run media spots as part of the broadcast, that's a great incremental lift up for us. And that's why it does come back to execution story. Keep in mind, we launch on ESPN in a week, as I mentioned. Then we have to come right back in January and launch with a new property like P Sky. And that's a big road to hoe here. And let's not forget Netflix. They're still doing, obviously, Raw. And we did a great number Friday night, and we're -- week in and week out, upwards of 30 different countries, we're in the top 10 list each week with Raw. And the PLEs, the premium live events, are also returning beyond their pro forma. So that's a good story. But we don't want to take that for granted. We need them to keep marketing us. You could quickly get lost in the Squid Games or the K-Pops of the world. So you have to keep Netflix focused on that. We're partners. It's in their best interest, and we have work to do there. So my message to the team is we're not here to talk about acquisitions right now. Of course, we'll be opportunistic. But we're here to talk about executing. We're here to talk about strong launches. We're here about -- talk about more marketing. Let's expand our margins, let's bring in that free cash flow and let's get it back to shareholders. And if stuff comes up along the way, terrific. In the meantime, we're launching boxing, and that's like an acquisition all by itself.

On live events, you guys have spent the better part of the last 2 years optimizing some of the capacity around UFC and WWE, optimizing some of the pricing. You mentioned the fight this weekend, ticket prices are very impressive in terms of what they're going for. I think it shows the demand at the upper end of the spectrum. Maybe you could just give us a lay land of where do you see the consumer at today? Where do you see demand for live events today? And then looking ahead, room for further optimization on maybe up-tiering venues, up-tiering pricing? Where is the bigger growth opportunity for TKO?

Look, On Location is internally on plan for this year. And I would tell you, sales from Milan are going really well. Sales for FIFA World Cup are going really well. L.A. is obviously too early. Sales for the Super Bowl, we're only 1 week in, and our advanced sales on the Super Bowl are very strong. I went to the Monday night game in Chicago at Soldier Field, bad outcome on the Bears. But stadium is filled to the brim, and everybody is looking for that plus up, that personalized experience, that customized experience, that red carpet behind the rope experience. I mean, that's where fans are. It's not enough to just go to the game and sit in your seat and have a hotdog and a beer. I mean, they're all looking for meet and greets. They're all looking for advanced entrance. They're all looking to touch the trophy or meet the game winner or the MVP at the end of the game. That is what On Location does. I mean, it is the premier, preeminent premium hospitality provider for sports around the globe. I mean, that's the business of what we do. And whether it's the Olympics, the World Cup or the Super Bowl, it's just really firing. I can't tell you it will be like this forever, but I do believe the 4-day in-office work week is here to stay. And having said that, it makes it a 3-day weekend and people have more time or they're moving errands to Friday and they have more time for Saturday and Sunday to see a concert with their friends or go to a sporting event, and there's nothing like being there. It's -- that experience is premium, and it's invaluable, and you can't replicate it. And as long as rivalries stay strong and these sports remain strong and competition remains strong, we're going to be in a good place. Look at Major League Baseball. Major League Baseball has been around a long time, obviously. They've had their challenges, their ups and downs. They have a big collective bargaining agreement in front of them that hopefully doesn't stall their growth and the momentum they have. But their attendance is up across the board. And the A game, strong college football. I mean, it's gone to a whole another level now with the expansion of the CFP, but it's not just folks at home or in the [ boroughs ] watching, they want to be there in person. So back to your point on the boxing, it drives demand and that helps us on the ticket yield. Now WWE is not where the UFC is yet, as you know, on ticket yield. We have our work to do there. But we've seen a meaningful increase, as evidenced by the 59% margin we did second quarter with regard to EBITDA margin, which was equal to the UFC. That ticket yield and site fees playing a big part driving that. And we know we have more room to go. Why do we know that? Because UFC is breaking records everywhere they go. The last number, the fight in Chicago was the highest grossing event in the history of the United Center, dating back through to Michael Jordan days. I mean, the highest grossing event. And they're already at the table trying to get another fight for next year, and we're just a couple of weeks post. And so WWE, which granted, their PLEs are mostly in stadium, so it's not apples-to-apples. And of course, they have a lot more volume with Raw and SmackDown and NXT happening on a weekly basis, 52 weeks a year. But having said that, we know we have a lot of room there because Vince McMahon was primarily pricing tickets for families and wasn't totally focused on maxing the opportunity there. And what we've -- now that we've seen what we can do with UFC, we're replicating that in terms of ticket yield and holding back and advanced sales when it comes to On Location on the WWE side. It's really working out well.

On-site fees, this has been a story that's been building for the better part of the last few years. Over the last year, you just signed deals with Las Vegas, New Jersey, Baku, Qatar. Maybe you could just update us on where we are in terms of execution against the site fee opportunity? I think you have 24 marquee fights that you've looked to put site fees around. So just be curious where you are in terms of your goal of reaching 24? And then how's the pipeline looking?

Yes. Good question, Stephen. I mean, look, we're now at really about 25 premier fights because you got 13 on the UFC side, 13 numbered events. Granted, 1 of them is in Abu Dhabi and it airs afternoon here in the U.S. And then you've got, of course, the PLEs. And hopefully, Wrestlepalooza is a winner and we can bring that back annually because that could just be a marketing bonanza for us if we do that right. Triple H is spending night and day creatively around making that what we think it can be, which is another WrestleMania or another SummerSlam. Those two stand out above the rest. Royal Rumble is beneath that, and we think Wrestlepalooza can get into that quadrant. And what I would say on this front is that we need to sell all those out. We haven't done that yet. We're having a lot of conversations, everywhere from Atlanta to Charlotte, to London and Paris. I mean, no shortage of countries. Similar to F1, that want to see us bring our show to town. And we're going to maximize those opportunities, both in kind, but most important to me is cash, cash kills. So that's where we are. So we're making -- we're in the early innings, but I don't even have my sights set on finishing those out. It's -- once we do that, we still have 30 fight nights to sell for UFC. And they can be smaller. But if we've got a St. Louis up against a Des Moines, Iowa, if you want us back there and you've sold out and broke -- broken records in both your arenas, you have to pay for us to come back, or else we'll take it to another town. And that goes for NXT and Raw and SmackDown on the WWE side. So while we can't help you model that today on what that could be, all I can tell you is conversations are going great. They're very robust. I've named some cities that we're in conversation, Detroit is another one. And even in the Middle East, where we're breaking out of just the Middle East, we're in conversations right now with the Saudis and Abu Dhabi on bringing a UFC fight night to Saudi. We've done one before, but we're embarking upon bringing a second one there. And that should be financially a very good story for everybody involved because as you remember, Abu Dhabi does have the exclusive rights in the Middle East. So anything -- anywhere we go like putting an event in Doha, which we have a deal to do, it gets split between the two.

Maybe switching gears...

And then you have boxing, by the way. Once we get boxing going too, we're going to put them into the site fee package. And then you've also got PBR to put into the site fee package. So we've got a lot we could bring to town. I'm not saying all in 1 weekend necessarily, but it could be something where we're going to bring 3 or 4 over the course of the year and you pay one fee to get spread out.

It could be as many as 30 site fee opportunities out there?

Yes, more than that once you get into the Raws and the SmackDowns and all that. I mean, we've got a team that does -- we hired Dean Garfield from Netflix, who historically has done this with Netflix expansion plans and the offices they've opened up around the world. He's a real pro. He's a real expert. He's got a fantastic rolodex. And he has an entire team that works across the board with Nick Khan at WWE and Lawrence Epstein at the UFC. And we are knocking on doors everywhere to really sell these out. But we're not a hurry. We're not going to rush these deals and [ we won't max them out ] because once you set that level of where you're going to be and it ends up being too low, getting 100% increase of basically nothing is 100% of nothing.

I want to pivot to margins. You mentioned earlier that the revenue growth that you expected to achieve over the next couple of years, I think most investors think of you as a high operating leverage business in the sense that a lot of revenue growth dropped down to the bottom line. I would just be curious to your take as you look forward into next year, balancing reinvestment in the OpEx of the business, whether that's fighter pay, whether that's more ancillary programming around the UFC and WWE to build engagement, to build fan momentum. How should investors really be thinking about the level of reinvestment?

I think it will be a normalized course, frankly. I mean, we're running a pretty lean cost structure. And in that cost structure is fighter pay. And we're going to continue to do right by our fighters and our superstars. And the cream of the crop will be paid the premium dollars. And when we do deals like this, it's not -- we're don't hoard that money. We invest in the product. So our last deal with ESPN saw us give bonuses for Fight of the Night, give bonuses for the Knockdown or Submission of the Night, saw us give fees for any of the global partnerships deals we did and consumer licensing, consumer product licensing deals we've done. So we're going to share as much as it makes sense with the stars of both leagues. And we will be very competitive. We are very competitive. We pay more than anybody -- any other competitor we have in the combat sports space. And we know why we're here, and it's a team effort. It's our brand. It's the work that Dana White does. On the WWE side, it's the creative force that Triple H is. It's the strategy that Nick Khan drives. And it's ultimately the hard work put in by our crews. I mean, remember, we're doing -- we're doing a lot of fights per week. Monday Night Raw, you got a NXT on Tuesday night. You got a Friday night SmackDown. You've got a UFC fight, and sometimes you have a PLE or a numbered event. I mean, these are -- there's a lot of events to put down. There's no brakes in this company. It's 52 weeks a year. So we have to pay for performance in terms of our people, and the same goes for our fighters and superstars. So you shouldn't expect anything out of the ordinary. It's a run rate for us. But we're focused on it. And yes, you'll get some of those Connor McGregors, if you will, that really move the needle or Jon Jones that get paid a little more, but they deliver more in return. So it's a scale and it's a formula, and we're very transparent about it with our fighters and our superstars.

Maybe pivoting back to some of the other assets within the Endeavor complex, you mentioned On Location, World Cup and Olympics selling out well for the next year. Can you talk a little bit more about the longer-term growth for On Location and picking up new pieces of IP, new events to layer on to the platform? And then as part of this, the conversation I do have with investors around this is thinking through the risk profile of some of these contracts that typically tend to be more fixed deals, which transfers the risk to On Location, how do you get comfortable with that?

Yes. I get comfortable with not doing those deals. Doing a minimum guarantee is not something we're in the business of doing going forward. I mean, will there be one-offs where it makes sense and the clear -- the demand is so insane that the risk profile is lower, so therefore, we have more tolerance? Yes. But by and large, we want splits. We're the leader in the industry. Most importantly, it's not about just the portfolio, it's that we do it better than anyone. I mean, there is no peer as it relates to the quality, the delivery of quality and high premium experience that On Location brings to the table. You don't do work with the Masters in Augusta unless you're the best of the best, period. They are very careful about who they surround themselves with in terms of partners. We don't take that for granted. We keep investing in the product, the people and really, the brand partners that we have. So there are some properties to pick up here and there, but we have our hands full with UFC, WWE, obviously, the NFL. We're doing bowls with college football. We're doing the MLB All-Star Game. We have the Indy 500. We have the Daytona 500 and more opportunities with NASCAR. We're doing a lot in the golf space. We work on a few music festivals, Coachella and Stagecoach and really the top of the top. So there might be an opportunity to look at some more music festivals. I don't want to get out of our core, which is sports. That's what TKO is. But music brings big audiences. And these days, every rock star wants to be an athlete, and every athlete wants to be a rock star. So if we can jump into a little bit of music where there's no big upfront payment, we're going to look at those opportunities. But right now, again, execution story. Let's make sure Milan is everything we envisioned it to be. Let's make sure World Cup in North America and Mexico turns out to be what, frankly, the President thinks it's going to be. And then right behind it is L.A., which has a chance to make the same kind of impact in time in this era as Peter Ueberroth did with the L.A. Olympics in 1984.

Mark, I can't let you go without digging deeper into capital allocation. You mentioned earlier, the free cash flow generation profile of the business, leverage, modest, not too much capital intensity or needs at the moment. How do you think about capital allocation within that capital returns versus M&A?

It's a priority. It's a priority. Because M&A, were just -- we're not out there hunting. We'll be opportunistic and we'll listen and we'll follow up on a phone call that might come our way. Or if there's something out there that we think we can pick off or bolt-on, fantastic. But capital return comes first. I mean, that's frankly what our shareholders want. And when you're going to be producing the amount of cash that we expect to bring in year in and year out, given that we just need to fund our operations, have enough for working capital, the answer is going to be the dividend, which we answered, and more of a share buyback. That's really the opportunity here. I mean, the float is already limited, just given the amount of shares that Endeavor Group Holdings controls. But I think that's the bang for the buck, and we will be opportunistic with a plan there in short order.

You mentioned the commitment by end of 3Q to start the share repurchase?

Yes. I mean, we'll put something out in due time, but I think that most people saw that we upsized the term loan by $1 billion. And meanwhile, they know that there's a share buyback on the horizon. So you do your own homework and make your own prognostication, but we're moving on what we said and promised we were going to do in time by the deadline at the end of the third quarter.

That's great. Mark, we have to leave it there, but thank you for taking the time to attend the conference this week.

Thank you, Stephen.