Endeavor ends IPO plans, but leaves door open to return

Endeavor, the US-based sports and entertainment group whose assets include the IMG agency and UFC, has formally ended its planned initial public offering, but could yet decide to return to a trading of its shares on the stock exchange.

Endeavor confirmed its intentions in a filing to the U.S. Securities and Exchange Commission yesterday (Wednesday) after initially postponing the venture last month.

Endeavor, also the parent company of the WME talent agency, said in the filing that it was seeking to withdraw its IPO plan “because it no longer wishes to conduct a public offering of securities at this time”.

However, the filing added: “The Company acknowledges that no refund will be made for fees paid to the Commission in connection with the filing of the Registration Statement. However, in accordance with Rule 457(p) under the Securities Act, the Company requests that all fees paid to the Commission in connection with the filing of the Registration Statement be credited for future use.”

Endeavor initially pulled its IPO planned for September 27 after facing continued headwinds regarding the offering and its company financials. It had initially been expected that Endeavor would list on the New York Stock Exchange by August.

In a statement at the time, Endeavor said it would “continue to evaluate the timing for the proposed offering as market conditions develop”. The days leading up to the planned IPO had not been kind to Endeavor as an initial offering of 19.35 million shares offered at launch at $30 (€27) to $32 each had been reduced to 15 million shares at $26 to $27 each.

Endeavor had also faced scrutiny over a financial prospectus that revealed roughly $4.6bn in long-term debt and fiscal losses in four of the last five years. It has also not yet closed a long-rumoured 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, and is partially owned by the NFL and Bruin Sports Capital.

In August, 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.