TKO is feasting on tax payer dollars in Florida & Nevada

Mark Shapiro's strategy to increase revenue is working

We told you so!

Since moving to Substack in 2023, The MMA Draw has heavily focused our coverage of fight monopoly TKO on their lust for taxpayer cash. Government contracts.

TKO executives were explicit in their aim to dramatically increase the amount of revenue they extracted from city, state, and national governments, and true to form, they haven’t disappointed their investors.

Their increasing ability to hoover up cash from local governments is pretty amazing, but that’s what value extractors do.

And for pointing out the obvious, we got lambasted linguistically.

“They’re not a ‘government contractor.’ Government contracts are a small part of their financial puzzle. They’re not a political mercenary for hire. You guys just don’t know what you are talking about.”

Yes, we do know exactly what we are talking about and have the evidence to prove it. We always show our homework.

TKO hits the jackpot in Nevada and Orlando

Let’s address two brand-new reports that provide evidence to back up our long-standing assertions. Then we’ll show how we got to this point where the world’s largest fight promoter became a state-sanctioned shop.

Stateside, The Nevada Current reported this morning that TKO will receive over $9.2 million in taxpayer cash for the Wrestlemania 41 event at Allegiant Stadium.

You’ll notice that when it comes to taxpayer cash, TKO deploys a bunch of euphemisms: Site fees, tax credits, film credits, sponsorships, etc. There may even be a secondary market:

We’re not here to blast TKO for doing their job. If politicians are giving tax cash away, promoters will take it. What we’re alarmed about is the complete and total lack of agency from taxpayers, media writers, and self-appointed watchdogs who will fight tooth and nail for school or hospital funding and yet have zero problem dishing out the dollars to the Mark Shapiros and John Fishers of the world.

There’s no other way to say it, but watching the fight business transform into a bunch of state-sanctioned welfare kings is unnerving.

We’re not the only ones unnerved. It’s Hollywood that is completely unnerved, seeking a bailout from California Governor Gavin Newsom on what they can do to keep the lights on.

Leave it to Ari Emanuel, The King of Hollywood, to utilize the Hollywood tax playbook for fight sports.

And it’s enough for all of us as fight fans to ask, “Where’s our handout?”

Sucks to be us.

TKO feasting on taxpayer handouts is the cable business model reinvented for sports. Taxpayers with zero interest in fight sports are paying to bring the circus to town, whether they like it or not, and whether they even know it.

Bundling and tying. And nobody does that better than TKO.

According to recent Florida media reports, TKO is reportedly in line for at least $18 million spanning four major TKO events in the Orlando area through 2031.

If you believe the final bill from TKO to taxpayers will be $18 million, I’ve got a bridge in Brooklyn I’d like to sell you.

How did we ever get to this point?

Mark Shapiro warned all of us in 2023

When Zach Arnold jumped back into the writing fray with The MMA Draw in 2023, he noticed something glaring that wasn’t being reported in the mass media.

TKO was telling you exactly what they were going to do in the future, and nobody said a word. Nobody batted an eye, despite TKO COO Mark Shapiro’s explicit promises to make government contracts a major revenue driver.

Shapiro was clear about what he intended to do: set local politicians against each other in a bidding war for the pleasure of hosting UFC and WWE events. Shapiro first declared that TKO’s profit margins weren’t high enough when they traveled to “C&D markets” (ie, smaller cities that had been hosting these events for decades).

The implication was clear: if places like Kansas City, San Antonio, and Perth, Australia, want the circus to come to town, they better pay up.

Never fear, TKO had plenty of Economic Impact Reports on hand so politicians can claim that the “investment” will be a profitable one for their constituents.

It’s easier to sell a circus than to sell the public on the prospects of a sports stadium that will become a rust bucket in 20 years. And unlike, say, the Alamo Dome, the UFC and WWE will be long gone by the time taxpayers get angry.

In his now-famous UBS December 2023 conference call, Mark Shapiro made it clear to the world that he had no patience for the poors:

“WWE, just as an example though, let's remember they have over 300 events a year with 170 televised. So there's probably, while all those other fights, there's a reason to have them, those cards, those, or excuse me, those, you know, superstar events on WWE, while there's a reason to have them because it's good for the brand, we're building audience, we're putting them on in C & D counties, so we're really stretching the brand and we're kind of amassing a greater array of eyeballs from all demos, so it's good for our long term growth. From a margin perspective, they are dilutive. So there's probably an opportunity as we go through our efficiencies and our synergy opportunities to cut back on some of those non televised events, which of course will push our margin up. So we're going through that exercise now.

”We'll get [margin expansion] a number of different ways. We'll get it from pruning the WWE live event portfolio, which I talked about, you got it, the non-televised portfolio. And then you'll get it from obviously the cost synergies we're going to see.”

Translation: If cities want to see the circus come back to town, they must pony up cash.

TKO’s strategy was a simple leverage play to scare politicians with the threat that WWE and/or UFC would never return to their city.

Then they created artificial scarcity.

The UFC stayed in their Las Vegas APEX warehouse for over a dozen shows last year.

TKO dramatically reduced the number of WWE house shows.

The message resonated all around the world.

First, it was backwaters like Perth, Indianapolis, Kansas City, and St. Louis that paid up.

Then they made it clear to traditional tourist destinations like Greater New York (ie, Newark), Las Vegas, and Orlando, Florida, we don’t need you, you need us.

The threats worked.

Every market now has a strike price. St. Louis? Try a million dollars (at least). Des Moines, Iowa? We’re not listening unless it’s at least half a million.

This weekend’s UFC Kansas City event is a perfect example. To bring the circus to town, be prepared to pay for a whole TKO Fight Week. Give us your best arena and all the fixings.

Now, big municipalities are ponying up tens of millions of dollars to TKO to bring the circus to town, and taxpayers are paying for it with government contracts, site fees, and incentives.

For the corporate brass at WME Group (formerly Endeavor), jacking politicians pairs great with the inflated ticket prices they’re charging fans and the ever-increasing media rights fees they’re trying to get out of Hollywood.

As we highlighted earlier, TKO is now getting massive taxpayer handouts from traditional tourism magnets like Orlando and Las Vegas.

Mark Shapiro: To your point on site fees, frankly, they're becoming the norm. When we take the show on the road, we're going to need subsidies and/or cash in order to bring our events to your city. And beyond that, the cities where we're already getting site fees. So we're coming back for year 2, we're seeing those site fees increase. So demand is high and the dollars that cities are willing to pay for our business is increasing with every phone call we have.

So what? What’s your point?

The entire point of this exercise is threefold. One, this is an issue worthy of the public’s attention.

Second, you’re damn right it’s an I told you so! moment for us.

But third, and most importantly, is the fact that we at The MMA Draw newsletter on Substack take our mission to keep fans informed seriously.

You’re welcome.

Nate Wilcox is Editor-in-Chief of The MMA Draw. He founded BloodyElbow.com in 2007 and sold it in 2024.

Zach Arnold is a lead opinion writer for The MMA Draw on Substack. His archives can be read at FightOpinion.com.