Endeavor postpones planned US IPO

Co-CEO of William Morris Endeavor Ari Emanuel speaks onstage during 2017 LACMA Art + Film Gala (Photo by Neilson Barnard/Getty Images for LACMA)

Endeavor late last night pulled its US initial public offering planned for today (Friday) after facing continued headwinds regarding the offering and its company financials. 

The sports and entertainment group that owns talent agencies IMG and WME and the Ultimate Fighting Championship said it “postponed its previously announced initial public offering,” and that it would “continue to evaluate the timing for the proposed offering as market conditions develop.” 

A new date for the IPO has not been disclosed.

The days leading up to the planned IPO had not been particularly kind to Endeavor as an initial offering of 19.35 million shares offered at launch at $30 to $32 each had been reduced to 15 million shares at $26 to $27 each. 

But Endeavor is encountering a decidedly choppy US market for IPOs that yesterday saw popular treadmill, exercise bike and virtual spin class provider Peloton make its IPO down 8 percent from its $29 offer price and end its first day of trading down 11.2 percent at $25.76 per share. Wanda Sports in July similarly saw reduced share and price targets and downward trading for its IPO.

Endeavor, meanwhile, is facing its own scrutiny for a financial prospectus that revealed roughly $4.6 billion in long-term debt and fiscal losses in four of the last five years. It has also not yet closed a long-rumored deal to buy hospitality provider On Location Enterprises, which notably controls 9,500 Super Bowl tickets each year and packages them for sale with hotel, travel, and access to various parties and events, is partially owned by the NFL and Bruin Sports Capital.

The Writers Guild of America said in a statement that, “reports that the Endeavor IPO has been withdrawn show that investors didn’t buy the company’s conflicted practices.” The WGA, which represents entertainment writers, has been in legal battles with Endeavor, as well as other Hollywood agencies, over packaging fees, which the guild believes is a conflict of interest.

Last month, Endeavor reported first-half revenues of $2.05bn and adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of $249.7m, as the effect of a trio of hefty football media-rights contracts was felt. The financial results, as reported by SportBusiness, particularly highlighted the impact of IMG’s international media-rights distribution deals for Serie A, LaLiga and the FA Cup, with all three contracts beginning at the start of the 2018-19 season.

Endeavor’s operations are split into three main divisions: Entertainment and Sports (including rights trading); Representation (of talent); and Endeavor X (the direct-to-consumer and business-to-business streaming services).

The Entertainment and Sports segment comfortably generates the highest slice of revenues, and posted $1.33bn in first-half revenues, a 46.4-per-cent year-on-year rise.

Approximately $352m of the total $422.4m increase was attributable to the sale of media rights – chiefly through the trio of football rights contracts – but also the media rights and residential pay-per-view contracts between the Endeavor-owned UFC and US sports broadcaster ESPN. Growth at IMG Arena, IMG’s betting business, plus owned events and sports production were also credited for the overall revenue rise.

First-half adjusted Ebitda at the Entertainment and Sports segment was $187.6m, up 9.8 per cent on the figure posted 12 months earlier.