Ultimate Fighting Championship (UFC) and WWE owner TKO Group Holdings (TKO) has agreed to a $335 million settlement to close a series of class-action lawsuits brought by former UFC fighters over their pay, an SEC filing showed.
This agreement comes after allegations that TKO violated antitrust laws by establishing a monopsony in the elite professional mixed-martial-arts market, effectively keeping fighters' wages artificially low.
The settlement, which TKO plans to pay in installments, is also noted to be deductible for tax purposes.
TKO shares closed 7.8% higher on Wednesday.
These lawsuits stem from claims filed between December 2014 and March 2015, which were then consolidated into a single action in June 2015, along with an additional lawsuit filed in 2021.
With this settlement, TKO aims to resolve all outstanding claims against it regarding its market practices and fighter compensation issues.
In their comments on the settlement, Guggenheim analysts said:
“We view this as a positive outcome for multiple reasons: 1) it removes the litigation overhang, which could have gone on for years; 2) the settlement amount should be easily digestible for TKO; and 3) we believe it likely clears an overhang for shareholder returns to be announced potentially later this year.”
“We would further note the magnitude of the settlement is unlikely to change our outlook for capital returns over the next several years in any material way,” they added.