7. INVESTMENTS

Equity Method Investments

In July 2024, the Company paid $15.0 million in exchange for an approximately 5% ownership stake in EverPass, LLC, which owns a live sports media platform that assists in distributing live sports and entertainment content to bars, restaurants, hotels and other commercial venues. The Company also made additional pro rata capital contributions of $2.0 million in September 2024 and $10.5 million in February 2025.

In March 2025, the Company entered into a joint venture with Sela Company and Ruby PR to launch a global boxing promotion business. Sela Company and Ruby PR collectively hold a majority of the common equity units, while TKO was granted profit interests, subject to vesting upon the achievement of certain future milestones. TKO will also provide executive and operational services to the joint venture under a services agreement with an annual fee over an initial five-year term. No amounts were recorded as of March 31, 2025 related to the investment in this joint venture.

The Company recognized equity earnings of $2.5 million and $2.8 million for the three months ended March 31, 2025 and 2024, respectively, from its equity method investments. During the three months ended March 31, 2025 and March 31, 2024, the Company received distributions of $3.7 million and $1.4 million, respectively, from these equity method investments. During the three months ended March 31, 2025, the Company recorded a net loss on sale of equity method investments of $4.7 million and received proceeds of $1.5 million. The Company did not sell equity method investments during the three months ended March 31, 2024.

Nonmarketable Equity Investments Without Readily Determinable Fair Values

As of March 31, 2025 and December 31, 2024, the Company held various investments in nonmarketable equity instruments of private companies.

The Company did not record any impairment charges on its nonmarketable equity investments during the three months ended March 31, 2025 and 2024. In addition, there were no observable price change events that were completed during the three months ended March 31, 2025 and 2024.

The fair value measurements of the Company’s nonmarketable equity investments without readily determinable fair values are classified within Level 3 as significant unobservable inputs are used as part of the determination of fair value. Significant unobservable inputs may include variables such as near-term prospects of the investees, recent financing activities of the investees, and the investees' capital structure, as well as other economic variables, which reflect assumptions market participants would use in pricing these assets. For equity investments without readily determinable fair values, the Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes.