The Fight to Dominate Global Sports and Remake Hollywood Just Started. Is Endeavor Group Already on the Ropes?

Endeavor's fight to survive as the leader of the Sports plus Entertainment revolution. Feature Image

The company’s balance sheet assets are now worth more than the market value of its shares and the wealthiest international investors and legacy media majors are circling.

Right now the most important strategic objective for the world’s highest paid CEOs, in one of the world’s most lucrative industries, is to successfully combine sport and entertainment into a broad-spectrum content generating machine, from celebrity-filled stadiums to tent-pole feature films, and to dominate the next-generation of Media Majors.

There is a lot at stake with over US$2.5 trillion in annual industry revenues.

One company has already achieved this by assembling some of the most valuable media businesses and premium sports properties on the planet. Each of the global multi-billion dollar media conglomerates are jumping in the ring to compete. The price is high and the fight is on.

That one company, however, is struggling with the costs of leadership.

Ari Emanuel, one of Hollywood’s most tenacious chief executives, openly announced that his publicly-listed company will “evaluate strategic alternatives” in a move to forestall a shareholder revolt. The formal move is to assess alternatives to Endeavor Group Holdings’ (NASDAQ: EDR) primary financial backer, Silver Lake Technology Management, which is considering the option of taking Emanuel’s company private and selling off its assets in a manner reminiscent of the plot from Oliver Stone’s 1987 Hollywood classic, Wall Street.

It’s a classic tale of life imitating art.

“Given the continued dislocation between Endeavor’s public market value and the intrinsic value of Endeavor’s underlying assets, we believe an evaluation of strategic alternatives is a prudent approach to ensure we are maximizing value for our shareholders,” Emanuel stated in the press release dated October 25, 2023.

Oliver Stone's Wall Street Movie Poster
Movie poster for Oliver Stone’s iconic hit movie, Wall Street (1987) staring Michael Douglas as Gordon Gekko (Oscar: Best Actor for the role) plus Charlie Sheen and Daryl Hannah. (image: IMDB).

Silver Lake’s Egon Durban, however, is no Gordon Gekko. Unlike the movie’s antagonist corporate raider, played by Michael Douglas, Durban is Co-CEO of a private equity firm ranked 11th largest in the world by Private Equity International’s PEI300 for 2023.

With equity investments exceeding US$850 million and a 71% stake, Silver Lake has a vested interest in Endeavor’s continued growth. This fact, however, doesn’t mean that corporate raiders aren’t circling. The dilemma facing Endeavor’s senior management team, including Emanuel, is a mountain of debt perched precariously on high-value balance sheet assets intended to transform the business into a next-generation media principal from its humble origins as agent.

The Good Fight

For more than a decade, Silver Lake has been a considerable supporter of Emanuel’s effort to build Endeavor into something more than a talent agency.

With capital support from Silver Lake, Emanuel has bet big on sport being that something extra. His strategy has been wildly successful for them both. Endeavor has reported annual revenues for 2023 of US$5.96 billion. That success took some effort.

Endeavor's Ari Emanuel & Silver Lake's Egon Durban.
Ari Emanuel, left and Egon Durban, right. (image courtesy of IMDB and Silver Lake).

Silver Lake initially invested in Emanuel’s company in 2012, taking a 31% stake and valuing then William Morris Endeavor at US$880 million. With a combination of healthy revenues, new capital and further support from Silver Lake, Emanuel acquired IMG, the global sports management agency founded by Mark McCormack for US$2.4 billion in 2013.

This was followed by the acquisition of Zuffa Parent LLC, owner of the lucrative mixed martial arts media platform Ultimate Fighting Championship (UFC) in 2016 for US$4.025 billion.  Emanuel’s company, then WME-IMG, led a consortium of private equity firms including Silver Lake, Kohlberg Kravis Roberts (KKR) and MSD Capital (Michael Dell’s private family office) into the deal. Abu Dhabi-controlled Flash Entertainment retained a 10% minority stake.

Endeavor sold additional shares to Silver Lake and other private equity investors, using the proceeds to buy out the other shareholders in UFC for US$1.7 billion and making Zuffa a wholly-owned subsidiary when Endeavor went public on April 28, 2021.

According to documents filed last year with the US Securities and Exchange Commission (SEC) and reviewed by the Media C-Suite, “At the time of the transaction, [the UFC deal] was the largest sale of a sports property in history.”

A UFC MMA Fight.
Islam Makhachev of Russia and Alexander Volkanovski of Australia compete for the UFC lightweight championship fight during UFC 284 at RAC Arena on February 12, 2023 in Perth, Australia. (Photo by Chris Unger/Zuffa LLC)

Then, last year, Endeavor led a deal to wrap World Wrestling Entertainment, Inc. (WWE) and UFC into an Endeavor-controlled, publicly-listed sports media powerhouse called TKO Group Holdings (NASDAQ: TKO), which valued WWE at US$9.1 billion. While Endeavor holds 51% of the new TKO, the transaction agreement reviewed by the Media C-Suite and filings with the US Securities and Exchange Commission (SEC) show that WWE’s co-founder, Vince McMahon, may control as much as 40.5% of the voting shares.

Each of these acquisitions resulted in a steady accumulation of assets that have transformed Endeavor from an agency to the underlying owner of the content itself.

In documents filed with the SEC, Endeavor reported its balance sheet assets at the end of 2023 to be worth more than US$21.5 billion.

Making Weight

Even with the healthiest of revenues, Endeavor has never held close to the cash reserves necessary to pay for these acquisitions. Corporate finance doesn’t work that way. Acquisitions of this type are achieved with debt.

According to Endeavor’s Annual Report for the year ended December 31, 2023, that debt is crippling.

The company’s debt is reported as US$5.1 billion, which includes “long-term” debt facilities for the IMC and UFC acquisitions. Yet the total contractual obligations of the company, which includes interest payments, lease liabilities and purchase obligations is a staggering US$9.9 billion. Of that, Endeavor is contractually obligated to pay out over US$6.5 billion between January 2025 and December 2026. US$4.9 billion of that is principal repayments on the IMC and UFC debt facilities.

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buried in cash

Entertainment Targeted by Sovereign Wealth

The Media & Entertainment industry topped the unofficial agenda for an invitation-only gathering of the world’s most powerful money managers hosted within the British House of Commons and organised by the Sovereign Wealth Fund Institute.

Despite 2023 revenues of US$5.96 billion, the public company reported a net income of only US$356.5 million. Total operating expenses, which include financing costs of US$734 million, was reported at US$5.6 billion.

As a public company, Endeavor’s market capitalisation, also known as its net worth, is determined by multiplying the number of outstanding shares by the current price of those shares on the open market.

As of March 18, 2023 Endeavor’s market value is US$7.51 billion.

It’s total contractual obligations are US$9.9 billion.

The reported value of Endeavor’s balance sheet assets, as of December 31, 2023 is US$21.5 billion.

Simple math places Endeavor in a difficult position. If all of Endeavor’s balance sheet assets were sold at the values reported, and after debts are repaid, shareholders could hold as much as US$11.6 billion in cash.

This is the calculation tickling the far reaches of executive minds at both Silver Lake and Endeavor. As a tag-team, the two have risen to undefeated heights. But is it still early in the season. The debt principal repayments that are coming due over the next two years, US$4.9 billion worth of repayments, is a ticking clock counting down to a bell that could end that record.

WWE's Smack Down
Dwayne “The Rock” Johnson (left), Roman Reigns (centre) and Paul Heyman (right) in the ring during a recent episode of WWE’s Smack Down show. (image: Scott Brinegar/WWE via AP).

Endeavor’s clients within its own premium sports properties include professional athletes that know exactly what to do about it. Cut Weight.

That may be one of the strategic alternatives being reviewed by Endeavor. Another manoeuvre would be for an investor to buy the debt coming due and hold Endeavor’s fate. Both of these options would allow the time necessary for Endeavor to sweat off some of that debt.

Other options are far more surgical.

If Silver Lake were to submit to pressure for it to act more like the Private Equity firm it is, rather than holding publicly-listed equity, it could return a sizeable capital gain to its own partners. At 71% of Endeavor, that could mean profits as high as US$7.3 billion after deducting an estimated US$850 million in equity investments.

These ball park figures demonstrate the value of what Emanuel has built. His sport plus entertainment strategy has attracted many fans. Many of those fans lost out in the fight to acquire IMG, UFC and WWE. This includes Saudi Arabia’s Public Investment Fund, which acts through a variety of proxies. But the likes of Amazon, Apple and Disney are also watching this space carefully.

In addition, a growing number of sports betting companies, particularly in the UK and the US, are more than capable of meeting an asking price for Endeavor’s equity in TKO.

All that would be needed is a controlling stake in Endeavor, if Silver Lake could be persuaded to part with it.

After the cost of acquiring a 51% stake in Endeavor at US$3.8 billion, total profits on liquidating the company could be as high as US$2.1 billion. Not a bad day’s work.

Gordon Gekko would absolutely raid Endeavor.

The Contenders

On its surface, Endeavor is a talent-agency-turned-combat-sport-as-entertainment company. Its website opens with, “Endeavor is Global Sports and Entertainment.”

That isn’t, however, what Endeavor really is.

Its premium sports properties include everything from combat sports to pro bull riding to surfing and are a deep well of highly emotive stories that generate highly lucrative intellectual property rights. Transforming those IP rights into content is what many of its clients do extremely well. That type of content sells to global audiences and generates license fees that feed the vast majority of the industry’s US$2.5 trillion in annual global revenues.

Endeavor has acquired the intellectual properties, the content and representation of the talent that creates and produces it. Through its subsidiaries it can also distribute that content through a combination of live events, broadcast network deals, streaming platforms and direct to consumer digital channels.

Endeavor is a vertically integrated media company.

In Endeavor’s early Preliminary Prospectus for its IPO, the company described itself as a, “premium intellectual property, content, events, and experiences company.” It didn’t mention sport or representation in that description.

Endeavor at the NYSE
The promotion of Endeavor’s IPO at the New York Stock Exchange. (image: Bloomberg).

But it is sport that increasingly drives audiences to content and representation that sets the commercial terms. Emanuel seems to have always known this. Everyone else is eager to join the fight.

Sport, as it turns out, is entertainment on steroids. Sport’s appeal to fans is primal and universal across media markets, cultures, politics and gender. Emanuel recognised this as a strategic accelerator that offers what any ambitious entrepreneur, and every professional investor, looks for: an unfair advantage.

In TKO’s 2023 Annual Report, the sport as entertainment model delivers a key demonstration of this unfair advantage. TKO reports that, “As of December 31, 2023, UFC has more than 700 million fans who skew young and diverse, as well as approximately 260 million social media followers, and broadcasts its content to over 900 million households across more than 170 countries.”

The company goes on to report that, at the same time, “WWE, a leader in sports entertainment, has over 700 million fans and approximately 360 million social media followers. WWE counts nearly 100 million YouTube subscribers, making it one of the most viewed YouTube channels globally, and its year-round programming is available in over one billion households across approximately 160 countries.

Those numbers are the envy of every multi-billion dollar media conglomerate on the planet. Every broadcaster. Every film and television studio. Every streamer.

Now consider the size, breadth and reach of the combined audiences of the NFL, the PGA, FIFA and the Olympics. Consider the fans of tennis, cricket and rugby.

Right now, every senior executive in every multi-billion dollar media conglomerate is doing exactly that.

As is Saudi’s PIF, Abu Dhabi’s Mubadala and each of the 10 Private Equity firms that are bigger than Silver Lake.

For more humble production companies, sports teams and professional investors, the opportunity to build value with Emanuel’s sport plus entertainment model couldn’t be more timely.

Those deeper pockets of investment capital, however, have a fighting chance to persuade Silver Lake to sell, or the creditors to sell, or to compete head to head with Ari Emanuel with their own combination of global sports and entertainment. It’s a powerful one-two punch that could prevent Endeavor from getting off the ropes.

All options are on the table.

Those are the strategic alternatives that the senior executes at Endeavor, Silver Lake and TKO are now exploring.

Endeavor’s fans hope that they don’t throw in the towel.


  1. As a UFC fan, I must say their content is worth watching, and there’s never a night where fans are disappointed. Some people speculated that Endeavor would never recoup their $4.2 billion back if they didn’t go public; however, the UFC alone generated over $1 billion in revenue last year. Furthermore, there is a TON of short-form content on social media glorifying fighters, acquiring audiences in Brazil, Russia, the U.S., Europe, China, and the Middle East. I don’t believe they have reached a peaking point yet.

    • Alan. Thanks for your comment. Silver Lake, the giant Private Equity firm, agrees with you. They have now agreed to acquire all outstanding shares in Endeavor and to take the company private again. Big money is firmly behind the sports-as-entertainment business model.

      • This is unique. I heard that taking public shares back into the private market can be VERY expensive. So I can only assume that they have long term goals.

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