During TKO’s third quarter 2026 earnings call, executives addressed questions about UFC compensation and its impact on the company’s financial performance, clarifying that recent increases were a one-time adjustment rather than an ongoing trend.
CFO Andrew Schleimer directly responded to analyst questions about the pay reset and future margin expectations. When asked how investors should think about balancing athlete compensation with margin expansion, Schleimer provided specific context.
“I think in Q2, we came out and we talked about level setting investment in talent and that being flowing through our financial statements for the balance of the year,” Schleimer explained. “And that’s what you’ve seen.”
He outlined the scope of the compensation adjustments: “I think we’ve taken, given the step up in the Paramount deal increases across the board, whether they be through bonuses that we articulated earlier on in the year or an investment in top to bottom talent, new roster talent, and those that are coming up through our contender series development programming.”
Regarding future implications, Schleimer was emphatic that this represented a singular adjustment tied to the new media deal.
“I don’t think there’s a read through. I don’t think that you’re going to be in a position or we’re going to be in a position as we look forward to the balance of the year or twenty seven where incremental athlete compensation is going to be required, which would impact our margins,” he stated.
The compensation reset was funded by increased revenue from UFC’s media rights deal with Skydance, which began in January 2026. According to the earnings report, UFC’s media rights revenue increased 66% in the third quarter, driven by higher fees from the Skydance agreement.
Despite the increased compensation flowing through the financial statements in 2026, UFC maintained strong margin performance. The division generated a 55% adjusted EBITDA margin in the third quarter, up from 51% in the prior year period. Adjusted EBITDA increased 72% to $285 million on revenue of $519 million.
The executive confirmed this trajectory: “We expect meaningful enhancement in the UFC margin profile in the fourth quarter and for the full year.”
President and COO Mark Shapiro connected the compensation adjustment to the broader strength of the UFC business.
“UFC is white hot and advertisers want to get in front of our audience, specifically our hard to reach demos. Recall that 46% of the UFC audience is in the demo of 18 to 34,” he noted.
The pay reset coincided with exceptional live event performance. Every UFC event held outside the Apex facility in the third quarter sold out, with UFC 329 in Las Vegas becoming the highest grossing event in company history at $26 million. Live events revenue increased 83% in the quarter.
TKO raised its full year 2026 guidance for the second consecutive quarter, now targeting adjusted EBITDA of $2.295 billion to $2.315 billion. The company emphasized that the compensation reset was completed as planned and would not require further margin-impacting increases going forward.
