Endeavor Q1 revenue boosted by demand for events
WME parent company Endeavor has reported significant growth in the first quarter of 2022, driven by the resumption of concert touring and demand for live events.
Endeavor, which also owns sports agency IMG and the Ultimate Fighting Championship (UFC), among other properties, generated revenue of US$1.474 billion for the first fiscal quarter of 2022.
Net revenue came to $517.7m, while EBITDA (earnings before interest, taxes, depreciation and amortisation) totalled $314.4m.
The agency’s representation business (comprising WME, sports agency IMG and Endeavor Content) generated revenue of $357.3m for the quarter, up $108.4m or 44% compared to the first quarter of 2021.
The segment’s adjusted EBITDA was $101.7m for the quarter, up $40.2m or 65%, year on year.
According to the company, the growth was primarily driven by increased brand spending, as well as higher commissions resulting from continued strong demand for Endeavor’s talent, and the recovery of live entertainment, primarily music and comedy touring.
WME artists include Drake, Justin Timberlake, Adele, Bruno Mars, Pearl Jam, Kendrick Lamar, the Killers, Bjork, Frank Ocean, Foo Fighters, St Vincent, Shakira and more.
“Our growth in the first quarter was driven by our ability to respond to the high demand for premium content and live events”
Elsewhere, the Events, Experiences & Rights segment revenue was $825.8m for the quarter, up $286.2m or 53% compared to the first quarter of 2021.
Increases were primarily driven by the return of more full-capacity live events in the quarter compared to the first quarter of 2021, including Super Bowl LVI, the Miami Open, the NCAA Final Four and Frieze LA, as well as $38m in revenue from the acquisition of NCSA, which closed in Q2 2021.
The segment’s adjusted EBITDA was $132.5m for the quarter, up $93.4m or 239%, year on year.
Owned Sports Properties segment revenue was $296.7m for the quarter, up $13.2m or 5% compared to the first quarter of 2021 – primarily driven by greater sponsorship, licensing, commercial PPV and event-related revenue for UFC among other factors. The segment’s adjusted EBITDA was $148.7m for the quarter, up $3.2m or 2% year on year.
“Our growth in the first quarter was driven by our ability to respond to the high demand for premium content and live events,” said Ariel Emanuel, CEO, Endeavor. “We feel great about where we sit relative to the secular tailwinds across all of our businesses, and we’ve raised our guidance for the fourth quarter in a row to reflect our positive outlook for the balance of the year.”
For 2022, Endeavor is projecting revenue between $5.235bn and $5.475bn, as well as adjusted EBITDA between $1.1bn and $1.15bn.
Last year, the company generated $5.1bn in revenue but posted a net loss of $467.5m.
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Endeavor closes first day on Nasdaq up 5%
Endeavor Group Holdings, the parent company of international booking agency WME, is finally a listed company after shares began trading on New York’s Nasdaq stock market yesterday (29 April).
Endeavor’s or stock market launch, or ‘initial public offering’ (IPO), sees nearly 25 million shares of the company’s class-A stock offered to the market at US$24 per share, and is expected to close on Monday 3 May.
At the close of market yesterday, Endeavor (EDR) shares were priced at $25.20 – up $1.20 on the IPO price, but down from a daily high of $28.47 – with a trade volume of nearly 16m shares for the day.
Endeavor expects to raise around $1.8bn from the share sale, which also includes a private placement of 74.5m shares being sold to an investment group that includes the likes of Silver Lake Partners, Tencent, Dragoneer Investment Group, MSD Capital and Abu Dhabi’s Mubadala Investment Company.
Endeavor plans to use $835.7m of the proceeds to buy the remainder of UFC
Silver Lake, which also owns shares in Oak View Group and MSG Entertainment and a majority stake in TEG, is an existing Endeavor investor, while Tencent has partnered with WME on joint ventures in China. Dragoneer, meanwhile, recently bought into one-to-watch videogaming platform Roblox.
Endeavor says it plans to use $835.7m to buy the remainder of Ultimate Fighting Championship (UFC), in which it acquired a majority stake in 2016, with other new funding put towards future joint ventures, investments and acquisitions.
The Nasdaq listing is Endeavor’s second attempt to take the company public, following an aborted flotation in 2019 amid unfavourable market conditions. Yesterday’s successful IPO came despite a 24% drop in revenues, to $3.5bn, in 2020 owing to the impact of the coronavirus pandemic.
In addition to WME and UFC, Endeavor’s portfolio includes sports agency IMG, comedy agency Dixon Talent and the Miss Universe pageant.
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Thrill One: ‘world’s largest indie action sports’ brand launches
Nitro Circus, Street League Skateboarding (SLS) and Superjacket Productions, three of the biggest names in extreme sports, have partnered to create Thrill One Sports and Entertainment, a ‘next-generation content company’ focused on producing live action-sports events.
According to Thrill One CEO Joe Carr, formerly of UFC and the World Surf League, the company “immediately becomes the world’s largest independent action sports operator and media company”, transforming “what has historically been a fragmented landscape into the biggest platform in action sports”.
Investment firms the Raine Group and Causeway Media Partners, along with commercial finance company MidCap Financial, are backing Thrill One, which will produce 30 events globally in 2020 across the three brands.
“Action sports are enjoying a renaissance right now with Olympic inclusion in 2020, the democratisation of media and the worldwide fanbase at an all-time high,” says Carr.
“Action sports are enjoying a renaissance right now”
“I look forward to working with our athletes and talented management team to drive organic growth in our existing businesses while also identifying potential M&A opportunities and complimentary IP.”
Nitro Circus, led by CEO Andy Edwards, creates live events and sports competitions across a portfolio that includes Nitro World Games, Nitro Rallycross and Nitro Circus Live. SLS, meanwhile, is the world’s leading street skateboarding competition series, and Superjacket is the film production company behind TV programmes such as Ridiculousness, The Dude Perfect Show and Rob Dyrdek’s Fantasy Factory.”
“At Nitro Circus, we have the amazing opportunity to work with the best athletes, content creators and technical geniuses in the business, reaching fans worldwide,” comments Travis Pastrana, co-founder of Nitro Circus.
“Now, by teaming up with SLS and Superjacket to create this game-changing team, we can pull our resources together with the unified goal of growing the fun and progression of action sports on a global level.”
Silver Lake invests in OVG Manchester arena partner
Silver Lake, a private equity firm with stakes in a number of major live entertainment companies, has acquired a US$500 million stake in Manchester City Football Club owner City Football Group (CFG), the partner on Oak View Group’s (OVG) new arena project.
The buy-in, which sees the investor take control of more than 10% of CFG, complements the $100m investment Silver Lake made in venue development group OVG last year.
OVG is currently working in partnership with CFG on building a major new concert venue in the Eastlands area of Manchester, home to the football club’s Etihad Stadium. The arena project entered into its second round of consultation meetings yesterday (Thursday 28 November), the day after Silver Lake announced its CFG investment.
“We and Silver Lake share the strong belief in the opportunities being presented by the convergence of entertainment, sports and technology”
“We and Silver Lake share the strong belief in the opportunities being presented by the convergence of entertainment, sports and technology,” comments CFG chairman Khaldoon Al Mubarak.
Silver Lake has invested heavily in the entertainment industry in recent years and currently owns 100% of Asia-Pacific live entertainment giant TEG, 51% of WME/UFC parent company Endeavor and 8.4% of Madison Square Garden Company.
The investor’s most recent deal places CFG at a valuation of $4.8 billion – a record for a sports group. According to the Financial Times, the $500m cash injection will help fund CFG’s acquisition of more football clubs globally, as well as the planned construction of a new stadium in New York.
Silver Lake eyes up potential TEG buy
US private-equity firm Silver Lake Partners is in talks to buy Australian live entertainment powerhouse TEG, according to a report by the Australian Financial Review.
Reports suggest that the California-based buyout specialist is in “late-stage talks” with TEG’s owner Affinity Equity and senior management team, led by CEO Geoff Jones, in a deal expected to surpass AUS$1 billion (US$675 million).
Silver Lake has over $43 billion in combined assets across a portfolio of tech-related businesses such as Alibaba, AMC, Dell Technologie and Tesla. The firm also has stakes in various live entertainment-related enterprises, including in WME parent company Endeavor, the Madison Square Garden Company, UFC and Oak View Group (OVG).
The firm is the not the first potential buyer to register interest in TEG over the past few years. In 2016, CTS Eventim and Chinese conglomerates Fosun and Wanda Group made up a trio of potential buyers in the running to acquire TEG.
Silver Lake has stakes in various live entertainment-related enterprises
The company also owns self-service ticketing platform Eventopia, promotion business TEG Live, concert promoter TEG Dainty – formerly Dainty Group –, data firm TEG Analytics and the AEG-Ogden-operated the Qudos Bank Arena (21,000-cap.) in Sydney.
TEG launched a new live family entertainment division, TEG Experiences, earlier this month.
IQ has contacted TEG for comment.
Endeavor to acquire digital video co NeuLion in $250m deal
NeuLion, a New York-based video company specialising in broadcasts of live events, is to be acquired by agency giant Endeavor (formerly WME-IMG) in a US$250 million all-cash deal.
NeuLion provides streaming digital video content for companies including the NFL, NBA, Univision and Sky Sports.
The two companies worked together last August for the Conor McGregor–Floyd Mayweather fight, which was the second most-bought pay-per-view sports event in history. McGregor was at the time world lightweight champion of the Ultimate Fighting Championship (UFC), which WME-IMG bought for $4bn in July 2016.
“NeuLion provides an ideal combination of technology and client services”
On completion of the deal – which sees Endeavor acquire all shares of outstanding NeuLion common stock for $0.84 apiece – NeuLion will become a privately held Endeavor subsidiary.
“We’re excited by the value delivered to our stockholders through this transaction, and we’re looking forward to the dynamic opportunities that being part of the Endeavor family will provide for both our current and new clients,” says Roy Reichbach, president and CEO NeuLion.
Ari Emanuel, CEO of Endeavor, adds: “Through our content portfolio, client base and broader network of rightsholders, we’ve encountered many different platforms for distributing and monetising content. NeuLion provides an ideal combination of technology and client services, and we’re excited for the value this brings to our existing partners and the foundation it provides for our future digital growth.”
WME-IMG becomes Endeavor
WME-IMG – the mega-agency formed by the 2013 merger of music/media agency William Morris Endeavor and sports booking outfit International Management Group – has rebranded as Endeavor.
The new holding company incorporates WME; IMG; UFC, the mixed martial-arts promoter it bought for US$4bn last July; Droga5, a New York-based ad agency; bull-riding team Professional Bull Riders; the Miss Universe Organization; the Frieze art fair; management companies Dixon Talent and The Wall Group; and a number of joint ventures, including Euroleague Basketball, esports championship Eleague and its new division in China.
All WME clients remain with the agency, and daily operations will not be affected, a spokesperson tells IQ.
The creation of WME-IMG represented “a pivotal moment in our company’s history,” says Endeavor CEO Ari Emanuel (pictured), “but it does not accurately reflect the extent of our diversity or indicate where we’re headed.
“Unlike 20 years ago, we’re now sitting at the centre of an incredible global network”
“In creating Endeavor, we now have a holding company that represents the very definition of the word itself, constantly striving to push boundaries on behalf of our clients and owned properties.”
Executive chairman Patrick Whitesell adds: “Our business at its core remains rooted in access, service and creativity. The one substantial difference is that unlike 20 years ago, we’re now sitting at the centre of an incredible global network.
“We have the relationships and the platforms to help our clients and partners extend their reach and bring their creative initiatives to life.”
WME pays $4bn for martial arts promoter
In what is being called the largest sale in sporting history, WME-IMG has acquired mixed martial-arts promoter Ultimate Fighting Championship (UFC) for US$4 billion.
According to Chris Matthuis of KLAS-TV, who broke the story ahead of the official announcement this morning, brothers Lorenzo and Frank Fertitta and Dana White, who have owned UFC in 2001, will retain a “small percentage” of ownership in the company, which produces more than 40 live events a year and is broadcast in 29 languages to over a billion households in 156 countries.
The deal is backed by investors Silver Lake, KKR and MSD Capital, and is the biggest acquisition by WME-IMG parent Silver Lake since it bought sports agency IMG (International Management Group) for US$2.3 billion in late 2013 and merged it with music, media and literary agency WME (William Morris Endeavor).
“We’re committed to pursuing new opportunities for UFC and its talented athletes to ensure the sport’s continued growth and success on a global scale”
The huge amount of money changing hands – rumoured to be an all-cash deal for the Fertittas and White – will renew speculation that Silver Lake is planning to go public with WME-IMG to recoup some of its investment.
“We’ve been fortunate over the years to represent UFC and a number of its remarkable athletes,” say Ariel Emanuel and Patrick Whitesell, co-CEOs of WME-IMG, in a statement. “It’s been exciting to watch the organisation’s incredible growth over the last decade under the leadership of the Fertitta brothers, Dana White and their dedicated team. We’re now committed to pursuing new opportunities for UFC and its talented athletes to ensure the sport’s continued growth and success on a global scale.”
Last month WME-IMG expanded its Chinese operation with backing from private-equity firms Sequoia Capital and FountainVest Partners and Asia’s largest internet company, Tencent, and in April secured close to $6m in funding from wealth-management firm Fidelity and Japanese telecoms company SoftBank.