TKO Group Holdings (TKO) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our ability to generate revenue from discretionary and corporate spending on events, such as corporate sponsorships and advertising, is subject to many factors, including many that are beyond our control, such as general macroeconomic conditions
2. 02can be provided as to the outcome of these negotiations and, if we are unable to renew existing agreements or find alternative streaming or distribution partners on at least as favorable terms, if at all, our results of operations could be adversely impacted
3. 03We may not be able to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies
4. 04We may fail to complete the Endeavor Asset Acquisition if certain required conditions, many of which are outside our control, are not satisfied
5. 05We may fail to realize the anticipated benefits of the Endeavor Asset Acquisition and may assume unanticipated liabilities, including in connection with termination of the Services Agreement
6. 06Failure to complete the Endeavor Asset Acquisition could negatively impact our stock price, future business and financial results
7. 07The planned issuance of Class B common stock and TKO OpCo Units to the EDR Parties will dilute the ownership and voting interests
8. 08Because our success depends substantially on our ability to maintain a professional reputation, adverse publicity concerning us, or our key personnel could adversely affect our business
9. 09The markets in which we operate are highly competitive, rapidly changing and increasingly fragmented, both within the United States and internationally, and we may not be able to compete effectively, which could adversely affect our operating results
10. 10We depend on the continued services of executive management and other key employees, and of our parent company, Endeavor. The loss or diminished performance of these individuals, or any diminished performance by Endeavor, could adversely affect our business
11. 11Changes in public and consumer tastes and preferences and industry trends could reduce demand for our content offerings and adversely affect our business
12. 12Our business and operating results may be affected by the outcome of pending and future litigation, investigations, claims and other disputes
13. 13The special committee of independent members of WWE’s Board of Directors’ investigation into allegations of misconduct by Vincent McMahon, and any further allegations, claims or investigations may have an adverse financial and operational impact on our business performance
14. 14The impact of global pandemics or other health crises could adversely affect our business, financial condition and results of operations
15. 15Our key personnel, athletes and performers may be adversely impacted by immigration restrictions and related factors
16. 16Our failure to continue to build and maintain our properties of entertainment could adversely affect our operating results
17. 17Our failure to retain or continue to discover key athletes and performers could lead to a decline in the appeal of our events, our storylines and the popularity of its brand of entertainment, which could adversely affect its operating results
18. 18Failure to protect our IT Systems and Confidential Information against breakdowns, security breaches, and other cybersecurity risks could result in financial penalties, legal liability, and/or reputational harm, which would adversely affect our business, results of operations, and financial condition
19. 19As a result, cyberattacks may be difficult to detect for an extended period of time, and the measures we take to safeguard our technology may not adequately prevent them
20. 20Unauthorized disclosure of sensitive or confidential customer information could harm our business and standing with our customers
21. 21these parties may breach the agreements and disclose our Confidential Information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches
22. 22If, for any number of reasons, we are unable to continue to develop and monetize WWE Network successfully, it could adversely affect our operating results
23. 23We may be unable to protect and enforce our intellectual property rights, which could enable others to copy or use aspects of our intellectual property rights without compensating us, which may substantially harm our business and operating results
24. 24As a result of our operations in international markets, we are subject to risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to such markets
25. 25variability in venue security standards and accepted practices; and
26. 26If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings
27. 27Participants and spectators in connection with our live events are subject to potential injuries and accidents, which could subject us to personal injury or other claims and increase our expenses, as well as reduce attendance at our live events, causing a decrease in our revenue
28. 28We are subject to extensive U.S. and foreign governmental regulations, and our failure to comply with these regulations could adversely affect our business
29. 29imposition by foreign countries of trade restrictions, restrictions on the manner in which content is currently licensed and distributed, ownership restrictions, or currency exchange controls
30. 30Changes in the regulatory atmosphere and related private sector initiatives could adversely affect our businesses
31. 31We have a substantial amount of indebtedness, which could adversely affect our business, and we cannot be certain that additional financing will be available on reasonable terms when required, or at all
32. 32Restrictive covenants applicable to the Credit Facilities may restrict our ability to pursue our business strategies
33. 33We will require a significant amount of cash to service our indebtedness. The ability to generate cash or refinance our indebtedness as it becomes due depends on many factors, some of which are beyond our control
34. 34Our accounts receivable relate principally to a limited number of distributors, licensees, and other partners increasing our exposure to bad debts and counter-party risk which could potentially have a material adverse effect on our results of operations
35. 35We could be subject to union-organizing and labor disruption, which could adversely affect our business
36. 36We may face labor shortages that could slow our growth
37. 37require us to pay higher wages, which could result in higher labor costs and could have an adverse effect on our business, financial condition, and results of operations
38. 38Exchange rates may cause fluctuations in our results of operations
39. 39Costs associated with, and our ability to, obtain insurance could adversely affect our business
40. 40Certain of our key operating metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business

Risks Related to Our Organization and Structure

1. 41We are a holding company whose principal assets are the TKO OpCo Units we hold in TKO OpCo and, accordingly, we are dependent upon distributions from TKO OpCo to pay taxes and other expenses
2. 42We are currently controlled by Endeavor. The interests of Endeavor or, subject to the Endeavor Take-Private, Silver Lake, may differ from the interests of other stockholders of TKO Group Holdings
3. 43We cannot predict the impact our capital structure and the concentrated control by Endeavor or, subject to the Endeavor Acquisition, Silver Lake, may have on our stock price or our business
4. 44If Endeavor or its subsidiaries sell a controlling interest in us to a third party in a private transaction, we may become subject to the control of a presently unknown third party
5. 45Further, the distribution or sale by Endeavor’s subsidiaries of a substantial number of shares, even if not a controlling interest, or a perception that a distribution or such sales could occur, could significantly reduce the market price of our Class A common stock
6. 46We are exempt from certain corporate governance requirements since we are a “controlled company” within the meaning of NYSE rules, and as a result our stockholders do not have the protections afforded by these corporate governance requirements
7. 47If we are unable to effectively implement or maintain a system of internal control over financial reporting, we may not be able to accurately or timely report our financial results and our stock price could be adversely affected
8. 48Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party
9. 49These provisions of our certificate of incorporation and bylaws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our Class A common stock in the future, which could reduce the market price of our Class A common stock
10. 50As a public company, our costs may be significant, and the regular operations of our business may be disrupted
11. 51The competitive opportunity provisions in our certificate of incorporation could enable certain directors, principals, officers, employees, members and/or other representatives of Endeavor, Mr. McMahon or their respective affiliates to benefit from competitive opportunities that might otherwise be available to us
12. 52Our executive officers and directors may have actual or potential conflicts of interest because of their equity interest in Endeavor. Also, certain of Endeavor’s current executive officers are our directors and officers, which may create conflicts of interest or the appearance of conflicts of interest
13. 53Endeavor and subsidiaries of Endeavor may compete with us
14. 54If Endeavor in the future decides to engage in the type of business we conduct, it may have a competitive advantage over us, which may cause our business, financial condition and results of operations to be materially adversely affected

Risks Related to Our Class A Common Stock

1. 55An active trading market for our Class A common stock may not develop and you may not be able to sell your shares of Class A common stock
2. 56The market price of our Class A common stock may be volatile, and holders of our Class A common stock may be unable to resell their Class A common stock at or above their purchase price or at all
3. 57changes in accounting principles
4. 58We cannot guarantee we will conduct share repurchases or pay dividends in any specified amounts or particular frequency
5. 59We expect to issue additional shares of Class A common stock. Issuing additional shares of our capital stock or other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders or reduce the market price of our Class A common stock or both

Risks Related to Tax Matters

1. 60Tax matters may cause significant variability in our financial results
2. 61TKO OpCo may be required to pay additional taxes as a result of the partnership audit rules
3. 62We could incur tax liabilities in connection with stock repurchases
4. 63Future changes to U.S. and foreign tax laws could adversely affect us
5. 64If securities or industry analysts publish inaccurate or unfavorable research about us or our business, the price of our Class A common stock and trading volume could decline
6. 65Our business may involve potential internal conflicts of interest due to the breadth and scale of our platform
7. 66We could face a variety of risks if we expand into other new and complementary businesses and/or make certain investments or acquisitions
8. 67We will share control in joint venture projects, other investments, and strategic alliances, which will limit our ability to manage third-party risks associated with these projects
9. 68Increasing scrutiny of, and evolving expectations for, sustainability and environmental, social, and governance initiatives could increase our costs, harm our reputation, or otherwise adversely impact our business
10. 69Catastrophic events, severe weather conditions and natural disasters could adversely affect our operations, sales or financial results