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Endeavor, UFC, IPO – What It All Means

This week the news broke that Endeavor, the company that owns WME–and, therefore, the UFC–filed the necessary papers to go public. What the heck does that mean? It means a lot, actually.

In case you know nothing about finance, going public means a company is opening up ownership stakes to whoever wants to buy them on (in this particular case) the New York Stock Exchange. Companies do this to generate capital, and if the company is “hot” then the idea is everyone will clamor for shares. If that happens, the value of each individual share will rise, thereby increasing the value of the company, and all the executives can buy their own private islands and own slaves. Or something along those lines.

First, here’s what the Hollywood Reporter [1] had to say:

Insiders have said the media company is angling to raise roughly $500 million at a valuation of more than $6 billion.
Endeavor is finally declaring its intention to go public and, in doing so, is offering details of its financial position.

The media company that counts talent agency WME among its holdings generated $3.61 billion in revenue in 2018 and net income of $231.3 million, according to a filing Thursday with the Securities and Exchange Commission. After adjustments, net income was $100.1 million, and earnings before interest, taxes, depreciation and amortization was $551.1 million.

A key asset is Ultimate Fighting Championship, and its Endeavor Content asset has financed or sold more than 100 shows and movies, including La La Land, Killing Eve and The Night Manager. Endeavor also owns Sport 24, an all-day sport channel for airplanes and cruise ships.

The most notable thing about this filing and the potential for an initial public offering (IPO) is that the law requires tons of transparency when it comes to a company being traded on the stock exchange. In other words, we’re going to get a peek at the UFC’s financials, which has been one of the best kept secrets in mixed martial arts.

The second most notable thing is that for a company to even consider an IPO, and for a major investment bank like Goldman Sachs to take the ball for this and run with it, the outlook for the company must be hella positive. Translation: Endeavor, and by de facto, the UFC, must be doing really well.

Think about it: the ESPN deal, the evolution past the pay-per-view business model, all the assets… Friends, the UFC is doing well.