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Agency giant Endeavor, owner of IMG and the Ultimate Fighting Championship (UFC), is being put under heavy strain by the coronavirus pandemic, according to a report by the Wrap.
Endeavor’s credit rating was downgraded from B to CCC+, which represents significant risk, on 13th April. S&P Global also changed the company’s outlook to negative.
‘The negative outlook on Endeavor reflects a high level of uncertainty surrounding event and entertainment-based revenue streams due to the spread of the coronavirus, resulting in significantly heightened financial risk over at least the next several quarters,’ S&P Global wrote in its report. ‘We believe the level of financial risk could motivate the company to seek a distressed debt restructuring if coronavirus containment does not occur by midyear so that revenue can begin to recover.’
With virtually all live sport on hiatus and none of Endeavor’s portfolio of interests in the sector bringing in revenue, the US$4.6 billion in long-term debt and overall liabilities totalling US$7.2 billion reportedly leave the agency in a precarious position.
Based on Endeavor’s IPO filing from September last year, its entertainment and sports division – including live entertainment and media rights revenue – brought in US$2.3 billion in 2018. That is significantly more than the US$1.3 billion in revenue from WME during the same period.
Without that income Endeavor’s leadership duo, Ari Emanuel and Patrick Whitesell, have had to forgo their salaries for the remainder of the year and already laid off 250 staff, according to CNN. The agency is estimated to be paying down debt at roughly US$25 million per month.
The UFC, which Endeavor paid US$4 billion to acquire, offers a solid revenue source through its media rights deals but is struggling to hold its live events, despite the best efforts of president Dana White. According to the Wrap, UFC’s US$1.5 billion ESPN exclusive US rights deals that cover its regular fights and pay-per-view bouts are not enough to sustain Endeavor, especially without secondary income from live events.
Endeavor’s other investments in sports are also partially reliant on live event income. Even once on-field action returns, the likes of recently acquired On Location Experiences, Professional Bull Riders (PBR) and the EuroLeague Basketball joint venture are likely to suffer from a wariness of consumers towards mass gatherings.
Private equity firm Silver Lake, which in 2012 acquired a 31 per cent stake in the agency when it was still known as William Morris Endeavor for US$200 million, could serve as an emergency backup resource. According the report, Silver Lake could negotiate good credit terms as the ‘lender of last resort’.
‘The long-term prospects for our business remain unchanged, but like other companies, we are implementing measures to mitigate the impact of this pandemic,’ Endeavor said in a statement to the Wrap.
Endeavor, owner of IMG and the Ultimate Fighting Championship (UFC), is being put under heavy strain by the coronavirus pandemic
Agency giant Endeavor, owner of IMG and the Ultimate Fighting Championship (UFC), is being put under heavy strain by the coronavirus pandemic, according to a report by the Wrap.
Endeavor’s credit rating was downgraded from B to CCC+, which represents significant risk, on 13th April. S&P Global also changed the company’s outlook to negative.
‘The negative outlook on Endeavor reflects a high level of uncertainty surrounding event and entertainment-based revenue streams due to the spread of the coronavirus, resulting in significantly heightened financial risk over at least the next several quarters,’ S&P Global wrote in its report. ‘We believe the level of financial risk could motivate the company to seek a distressed debt restructuring if coronavirus containment does not occur by midyear so that revenue can begin to recover.’
With virtually all live sport on hiatus and none of Endeavor’s portfolio of interests in the sector bringing in revenue, the US$4.6 billion in long-term debt and overall liabilities totalling US$7.2 billion reportedly leave the agency in a precarious position.
Based on Endeavor’s IPO filing from September last year, its entertainment and sports division – including live entertainment and media rights revenue – brought in US$2.3 billion in 2018. That is significantly more than the US$1.3 billion in revenue from WME during the same period.
Without that income Endeavor’s leadership duo, Ari Emanuel and Patrick Whitesell, have had to forgo their salaries for the remainder of the year and already laid off 250 staff, according to CNN. The agency is estimated to be paying down debt at roughly US$25 million per month.
The UFC, which Endeavor paid US$4 billion to acquire, offers a solid revenue source through its media rights deals but is struggling to hold its live events, despite the best efforts of president Dana White. According to the Wrap, UFC’s US$1.5 billion ESPN exclusive US rights deals that cover its regular fights and pay-per-view bouts are not enough to sustain Endeavor, especially without secondary income from live events.
Endeavor’s other investments in sports are also partially reliant on live event income. Even once on-field action returns, the likes of recently acquired On Location Experiences, Professional Bull Riders (PBR) and the EuroLeague Basketball joint venture are likely to suffer from a wariness of consumers towards mass gatherings.
Private equity firm Silver Lake, which in 2012 acquired a 31 per cent stake in the agency when it was still known as William Morris Endeavor for US$200 million, could serve as an emergency backup resource. According the report, Silver Lake could negotiate good credit terms as the ‘lender of last resort’.
‘The long-term prospects for our business remain unchanged, but like other companies, we are implementing measures to mitigate the impact of this pandemic,’ Endeavor said in a statement to the Wrap.
