Eric Handler: Thank you.
Mark Shapiro: Thank you.
Operator: Thank you. The following question comes from Stephen Laszczyk with Goldman Sachs. You may proceed.
Stephen Laszczyk: Hey. Great. Good afternoon. Maybe for Mark on live events. You called out the strength in the quarter. Curious going forward, if you were thinking about size and the opportunity, and growth for that business, between pricing attendance, site fees, where you see the most opportunity for growth through the balance of the year? And then a follow-up for Andrew, just to clarify on the free cash flow guidance, net of the settlement and the tax benefit, was there a change to underlying free cash flow for the year? Thank you.
Andrew Schleimer: Yes. So, on the second one, we changed our guidance from in excess of 50% to in excess of 40% solely due to the fact that the $200 million of cash payments that we’ll make do hit operating cash flow and our free cash flow metric reconciles to the closest GAAP metric which starts with operating cash flow. So, it’s solely to reflect the impact of those payments.
Mark Shapiro: And Steven, are you good on that?
Stephen Laszczyk: Yes. That was great. Thank you.
Mark Shapiro: Okay. And then on just your second I think we do have one more question. Look, I would just tell you because it kind of tees me up to if you would my when Ari and I look at the overall TKO business the way we think about the final thoughts if you will. I mean look this quarter has just been gangbusters for us. We want to sustain this momentum. You are 100% right in this kind of post COVID world. We are still in a major event in experienced economy. It’s hot and it’s a strong reason, not to mention the competition of the brands and of course the writing, that we had such a strong Q1 beat and are effectively putting out our raise for the year. Our business is brisk across the board. We’re seeing strength in the live events at both properties.
Our ticket yields are up. 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 two. 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. Our global partnerships are on track as we’ve discussed. The timing and the magnitude of our net cost synergies are at the upper end of our guidance, arguably slightly north of the guide is where I think we’re going to end up, slightly north. We’ve got the UFC antitrust lawsuit settled.
And going to your point on the events, just take a look at what we have in front of us. Conor McGregor in June at UFC 303, The Sphere in September, UFC 306, although that will be an expensive event to put on, just for the record. That’s not a normal event. The Sphere is the Sphere and it wasn’t necessarily built for UFC events. And it will be a one and done, we will do a one and done. That is what Dana White has told us and he’s going to make it extra special. We’ve got Madison Square Garden in the fall, which we haven’t announced yet in terms of the detail specifics and dates. And as I mentioned, we’ve got WrestleMania and Vegas next year, which will be a powerhouse. We got the extension of the UFC Saudi deal in 2025. And oh, by the way, where it looked like we had a stub period for the WWE at the end of this year.
And no reason really to get a rights fee from anybody, we were able due to a strong partnership to get NBC and Comcast to pay us $25 million for that stub period. So, all things are cooking here.
Stephen Laszczyk: Thanks, Mark. Thanks, Andrew.
Mark Shapiro: Thank you.
Seth Zaslow: Operator, let’s take one last question please.
Operator: I believe the final question comes from Ryan Gravett with UBS. You may proceed.
Ryan Gravett: Great. Thank you. Just for Andrew, you mentioned that the business you think the business can operate at up to three times leverage. I guess what will give you confidence in operating towards the higher end of that range? Is it more macro or interest rate related or maybe the company getting through the next rounds of the media rights renewals versus maybe leaving some room for M&A, if an opportunity comes across?
Andrew Schleimer: I think it’s much more simple. As we’ve articulated and demonstrated through performance and our plan, this is just a company that generates a meaningful amount of free cash flow that will continue to grow top line and accrete margins given the financial profile and the contracted significant amount of contracted revenue here and our sort of bullish nature on the next round of media rights renewals for our key properties, we believe that’s a reasonable and very manageable range even to the upper end. So, the financial profile of this business and really the key underpinning to the investment thesis of this transaction is what really underpins our comfort in those numbers.
Ryan Gravett: Got it. Thanks.
Mark Shapiro: Thanks, Ryan. All right. Well, thank you, everyone, for joining us on the call today. Operator, you can conclude the call.
Operator: This concludes the first quarter TKO 2024 earnings call. Thank you for your participation. You may now disconnect your line.
