TKO Parent Company Reveals Covering McMahon’s Settlement Expenses, Legal Battles Continue

THUNDER BAY, ONTARIO – TKO, the parent company of WWE, released a statement today revealing they are covering former Chairman Vincent McMahon’s legal settlements following numerous allegations against him. The statement sheds light on the financial impact of McMahon’s controversial exit from the company and the potential for further legal costs.

McMahon’s History of Hush Money and Ongoing Legal Woes

Prior to the latest graphic lawsuit filed this year, McMahon admitted to paying millions in hush money to several women.

The newest suit has reportedly sparked a federal investigation and carries major legal risks for the former WWE chairman. Industry analysts suggest McMahon might finance his mounting legal bills by selling additional company shares.

McMahon still owns about 20 million shares in TKO. The current market value of that stock is $85.84US or $1,716,800,000US.

McMahon dismissed the suit filed by Janel Grant last month as “replete with lies, obscene made-up instances that never occurred, and is a vindictive distortion of the truth.” He maintains his intention to “vigorously defend myself against these baseless accusations.”

TKO’s Statement

TKO confirms that Vincent McMahon, despite stepping down as Executive Chair in January 2024, still has considerable sway within the company due to his stock ownership. The company detailed expenses and liabilities directly related to McMahon:

• Counterparty Payments: WWE assumed $3.5 million in liabilities associated with payments owed by McMahon to unnamed counterparties. $2 million of this was paid directly by McMahon between September and December of 2023.
• Legal Costs: During the same period, the company expensed $3.5 million associated with payments relating to these counterparties made directly by McMahon. These were classified as ‘selling, general, and administrative expenses.’
• Headquarters Lease: Additionally, WWE recorded $3.5 million connected to McMahon’s payments on the company’s global headquarters lease. These costs are accounted for as non-cash capital contributions.
• Ongoing Liabilities: As of December 31st, 2023, a remaining $1.5 million liability owed by McMahon to the counterparties is listed in WWE’s accrued expenses.

Text of TKO’s Statement:

“Vincent K. McMahon, who served as Executive Chair of the Company’s Board of Directors until January 26, 2024, controls a significant portion of the voting power of the issued and outstanding shares of the Company’s common stock.

Mr. McMahon has agreed to make future payments to certain counterparties personally. In accordance with the SEC’s Staff Accounting Bulletin Topic 5T, Miscellaneous Accounting, Accounting for Expenses or Liabilities Paid by Principal Stockholders (“Topic 5T”), the Company concluded that these amounts should be recognized by the Company as expenses in the period in which they become probable and estimable.

In connection with the acquisition of WWE, the Company assumed $3.5 million of liabilities related to future payments owed by Mr. McMahon to certain counterparties, of which $2.0 million was paid directly by Mr. McMahon during the period of September 12, 2023 through December 31, 2023.

“During the period of September 12, 2023 through December 31, 2023, the Company recorded $3.5 million of expenses associated with payments made directly by Mr. McMahon to certain counterparties. These costs are included within selling, general and administrative expenses in our consolidated statements of operations.

Additionally, during the period of September 12, 2023 through December 31, 2023, the Company recorded $3.5 million of costs associated with payments made directly by Mr. McMahon related to WWE’s global headquarters lease. These costs are included within finance lease right-of-use assets, net in our consolidated balance sheets. These payments are considered non-cash capital contributions and are included as a component of principal stockholder contributions in our consolidated statements of stockholders’/members’ equity.

“As of December 31, 2023, total liabilities of $1.5 million are included within accrued expenses in our consolidated balance sheets related to future payments owed by Mr. McMahon to certain counterparties.

Background on the Situation

Vincent McMahon stepped down from WWE in July of 2022 amidst a storm of allegations surrounding hush-money payments and sexual misconduct. He returned as Executive Chair in January of 2023, a controversial move that led to increased scrutiny and concern amongst stockholders.