TKO Group Holdings, Inc. (TKO) stock intrinsic value fair value estimate & owner earnings analysis

TKO owns the UFC (mixed martial arts), WWE (professional wrestling and live events), and, since February 2025, the IMG sports media and events business, On Location (event hospitality) and Professional Bull Riders. Its money comes mainly from selling the rights to broadcast its events (Netflix for WWE Raw, ESPN for WWE premium live events, Paramount for the UFC from 2026), plus sponsorships, ticket sales, consumer products and event hospitality. About $16.7 billion of future revenue is already contracted, of which roughly $3.3 billion falls in 2026, $3.2 billion in 2027 and $3.0 billion in 2028, tapering to $1.7 billion in 2030 as current contracts run off. How we measured earnings. We start from cash generated by operations and remove swings in working capital (customer deposits, deferred event costs, receivables), the cost of stock compensation, and the capital spending needed to keep the business running. We treat depreciation and the amortisation of acquired intangibles as non-cash. On this basis the business generated about $5.10 per share in 2025, or about $6.21 per share before paying lenders (interest paid was $215 million). Per-share figures use about 194 million shares, which includes the units held by Endeavor that convert into TKO shares. 2024 looks much weaker at $1.16 per share (about $4.47 before lenders once the one-off is removed) because it carried a $375 million settlement of the UFC fighter antitrust lawsuit, now fully paid. 2023 is not comparable because WWE was only included from September. We anchor on 2025, the first full year with the Netflix and ESPN agreements in place, and treat 2024 as a distorted year. Cash tied up in or released from event deposits, such as the roughly $297 million of customer money received in 2025 for the 2026 FIFA World Cup hospitality business, is excluded from earnings so it does not flatter the level. Base case: business worth about $114 per share, debt about $23 per share, shares worth about $91. In 2025 earnings before lenders grew sharply from 2024 even after adjusting for the settlement. For 2026 we assume just 10% growth (to about $6.83 per share), which rests only on signed contracts: the first full year of the Paramount agreement replacing ESPN for UFC events, and the ESPN premium live events agreement that began in September 2025. First-half 2026 revenue was up 22% and operating cash flow well ahead of last year, which supports this, but part of that comes from the one-off World Cup hospitality work, so we credit only 10%. After 2026 we assume no growth: the brands are decades old and the contracts run through 2029 to 2035, but we cannot name a signed contract that lifts earnings beyond that, so nothing further is credited. Debt is about $4.6 billion (June 30, 2026) less roughly $250 million of cash we consider excess; the term loan costs about SOFR plus 2.00% (5.87% at year end), close to our 6% rate, so no adjustment is made. Maturity is November 2031. Bear case: business worth about $56 per share, debt about $25 per share, shares worth about $31. Here 2026 gains from Paramount are absorbed by higher costs, and cash earnings settle at about $4.47 per share, the level of 2024 once the settlement is removed, then decline about 2% a year as media contracts renew on weaker terms and the acquired customer relationships and event contracts wear off. Named risks are: the IMG and On Location businesses (about 32% of revenue) are lumpy, with revenue there falling by $603 million in 2025 when the Paris Olympics dropped out; the UFC fighter case Johnson v. Zuffa, covering 2017 to the present, is still in discovery and seeks changes to fighter contracts; and the roughly $4.6 billion floating-rate term loan could cost 2 percentage points more after its 2031 maturity, which we price at about $2 per share. The business still covers its interest more than three times in this case. Bull case: business worth about $155 per share, debt about $23 per share, shares worth about $133. This case assumes 20% growth in 2026 as Paramount and the WWE premium events deal are fully in place, followed by 3% a year for ten years as the UFC and WWE keep renewing rights, with sponsorship gains such as the $76.6 million rise in WWE partnerships in 2025 continuing, then flat. We limit growth to 3% because renewal steps are single large events, not a steady process, and we do not credit new leagues, boxing or international expansion, none of which is contracted. What we left out and why: media-rights price rises at future renewals, new events, margin gains and the World Cup, because none is contracted or repeatable. What could make this wrong: a stronger renewal cycle than we credit (the UFC has re-priced its US rights sharply upward at each renewal, which would put the outcome nearer the bull case); the cash earnings level shifting because of the mix of event years (2026 has the World Cup and a large hospitality build); or debt-funded share repurchases. Debt rose about $0.9 billion in the first half of 2026 to $4.6 billion, and we could not confirm from the filings available to us what the borrowing was spent on or the exact share count now, so we used the 2025 share count; if the money went to buybacks, per-share values would be a few percent higher. All three cases are after debt. The shares appear worth about $91 in the base case against $31 in the bear case and $133 in the bull case; the margin-of-safety price sits well below the base value, given the event-driven revenue, a floating-rate debt load and ongoing fighter litigation.