Ari Emanuel is quietly devising a brilliant plan to buy half of the Final Fight Championship that his entertainment empire does not already have, The Post has learned.
The Hollywood super agent’s group AndyWor – which owns the WME and IMG agencies as well as the Miss Universe pageant – already owns 50.1 percent of the mixed martial-arts giant behind fighters such as Connor McGregor and Ronda Rousey.
Sources said that now, Emanuel wants to scoop the remaining 49.9 percent, as he renewed efforts to take the Endeavor public after an unsuccessful IPO attempt a year ago.
Sources said the bid for the new IPO will now be made under the leadership of Morgan Stanley. Goldman led the first IPO roadshow, with Endeavor seeking to raise above $ 600 before pulling the plug in September 2019.
The multi-billion dollar UFC buyout would likely require price cuts with Silver Lake and KKR, a buyout firm owned by 40 percent of the MMA company. However, Endeavor believes that owning all the popular Combat Clubs allows him to offer investors a “stronger package” when the UFC would prove capable of bettering the epidemic than most live-event businesses is.
According to a person familiar with the deal, Endeavor wants to sell equity in Endeavor to private investors before the IPO. It will use those proceeds to purchase the UFC. The source said that Endeavor, which had sunk $ 5.5 billion in debt last year, would not take much debt in the process.
The amount that Endeavor is raising cannot be determined immediately, nor can the amount that UFC is prepared to pay for the rest of the year. A person familiar with the situation described the company’s valuation as between $ 6 billion to $ 10 billion, saying the rest of the company was shrinking.
“Why hasn’t Endeavor done this before? The source said that it does not look like it is needed. He said, “It was a possible thing. They thought they would just go public and that would be fine. It’s not so hard, is it? He felt that the rest of the company was not worth it. ”
The move comes in the form of much of Endeavor’s business – which relies on Hollywood film and TV production, as well as live events such as sports, music and fashion, have been shut down by epidemic restrictions. One exception has been the UFC, which faced a two-month hiatus before airing its bloody mixed martial arts fiasco – giving Endeavor a much-needed blow to its bottom line.
The MMA promotion company accounted for 80 percent of Endeavor’s overall profits in 2020, Endeavor president Mark Shapiro told Endeavor’s employees at a December virtual town hall. At the same town hall, sources said, Shapiro revealed that the epidemic accounted for $ 2 billion of total company revenue as earnings fell by 80 percent.
Even the Mixed Martial Arts Promotion Company’s pre-epidemic keeps 50 percent of the company’s annual earnings healthy, a source said, which pegged UFC’s pandemic profits between $ 400 million and $ 450 million.
“Buying the remaining portion of the UFC makes for better investment,” the source said. “Endeavor’s business still has complexity, but is the crown of the UFC.”
After his first attempt to publicly flop, Emanuel blamed the gloomy IPO market, which saw investors tuning in to stocks of newly listed companies such as stable bike seller Peloton and the ride-hailing app Uber and Lyft.
But sources told The Post that there was a slowdown in demand for the company’s stock due to Endeavor’s unusual assets as well as its hefty $ 4.6 billion debt burden. Sources said investors also noted the complexities of Endeavor’s tie-up with UFC, noting that it would be simpler if the company owned MMA’s promotions company.
Endeavor declined to comment.
Sources said that initially, Emanuel was planning to list Endeavor by merging with a so-called SPAC, or special purpose acquisition company. A source said that those plans were quickly shifted after management took a look at the mathematics.
Endeavor officials calculated that an SPAC – which is generally a faster way to go public, as the auditing process is shortened – would cost Endeavor $ 100 million that would go to the SPAC sponsor.
Those fees will come out of Endeavor investors’ pockets, including Silver Lake, which in addition to its stake in UFC, Endeavor has a 35 percent stake.
An insider said Endeavor, the confidential that filed its IPO paperwork with the Securities and Exchange Commission in February, did not completely dismiss SPAC. Nevertheless, it is proceeding with the direct IPO scheme with the belief that investors are interested in “direct ownership” of the UFC, sources said.
Consolidating its ownership of the UFC has long been on Endeavor’s agenda, and Silver Lake and KKR intend to hold off their investments for more than five years. But the brutal impact of the epidemic on its other businesses accelerated the negotiations.
Likewise Emanuel – the inspiration for the Ari Gold agent character in HBO’s “Entourage” – has been eager to try his IPO fortune again as the vaccine rollout returned to life for some of TK’s businesses, including agency businesses is. Damon and Ryan Reynolds, sources said.
As The Post has previously reported, the results of the epidemic forced Emanuel and the other Endeavor to implement an aggressive $ 500 million cost-cutting plan, which included mass layoffs, $ 80 million at Epic Games Selling stakes and other start-ups and acquiring $ 260. Million loan.
A source said Endeavor’s valuation is now “quite low” when it first tried to go public in 2019, when it was valued at $ 6.4 billion.
Leave a Reply