S-1/A 1 d156166ds1a.htm S-1/A S-1/A
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As filed with the Securities and Exchange Commission on April 26, 2021.

Registration No. 333-254908

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

AMENDMENT NO. 2

to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Endeavor Group Holdings, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   7900   83-3340169
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

 

 

9601 Wilshire Boulevard, 3rd Floor

Beverly Hills, CA 90210

(310) 285-9000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

Jason Lublin

Chief Financial Officer

9601 Wilshire Boulevard, 3rd Floor

Beverly Hills, CA 90210

(310) 285-9000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

Copies to:

 

Justin G. Hamill, Esq.

Marc D. Jaffe, Esq.
Ian D. Schuman, Esq.

Benjamin J. Cohen, Esq.

Latham & Watkins LLP

885 Third Avenue
New York, New York 10022
(212) 906-1200

 

Seth Krauss, Esq.

Chief Legal Officer

Robert Hilton, Esq.

Senior Vice President, Associate General Counsel & Corporate Secretary

Endeavor Group Holdings, Inc.
11 Madison Avenue
New York, NY 10010
(212) 586-5100

 

Thomas Holden, Esq.

Rachel Phillips, Esq.

Ropes & Gray LLP

1211 Avenue of the Americas

New York, New York 10036

(212) 596-9000

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.

 

Subject to Completion. Dated April 26, 2021.

Preliminary Prospectus

LOGO

 

 

 

Class A Common Stock    21,300,000 Shares

 

 

This is an initial public offering of shares of Class A common stock of Endeavor Group Holdings, Inc. All of the 21,300,000 shares of Class A common stock being offered are being sold by the Company.

Prior to this offering, there has been no public market for the Class A common stock. It is currently estimated that the initial public offering price per share will be between $23.00 and $24.00.

We currently conduct our business through Endeavor Operating Company and its subsidiaries. Prior to the closing of this offering, we intend to complete an internal reorganization through a series of transactions, which we refer to as the “reorganization transactions.” After the completion of this offering, Endeavor Group Holdings will manage and operate the business and control the strategic decisions and day-to-day operations of Endeavor Operating Company through Endeavor Manager and include the operations of Endeavor Operating Company in our consolidated financial statements.

Following this offering, Endeavor Group Holdings, Inc. will have five classes of authorized common stock: Class A common stock, Class B common stock, Class C common stock, Class X common stock, and Class Y common stock. The Class A common stock offered hereby and the Class X common stock will have one vote per share. The Class Y common stock will have 20 votes per share. The Class B and Class C common stock will be non-voting. Our Chief Executive Officer, Ariel Emanuel, and our Executive Chairman, Patrick Whitesell, and their affiliates, together with affiliates of Silver Lake, will hold a majority of our issued and outstanding Class Y common stock and Class X common stock after this offering and, as a group, will control more than a majority of the combined voting power of our common stock. As a result, they will be able to control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and by-laws, and the approval of any merger or sale of substantially all of our assets.

Affiliates of, or certain funds and accounts advised by, each of Capital Research and Management Company, Coatue Management, L.L.C., Dragoneer Investment Group LLC, Elliott Investment Management L.P., Fertitta Capital, Fidelity Management & Research Company LLC, Kraft Group LLC, MSD Capital, L.P., Mubadala Investment Company, Silver Lake, Tako Ventures, LLC, Tencent, Third Point LLC and Zeke Capital Advisors, LLC (the “private placement investors”) have entered into an agreement (the “Subscription Agreement”) with us and affiliates of KKR (as defined herein) to purchase an aggregate of 74,543,080 shares of our common stock which, based on the high point of the public offering price range set forth on the cover page of this prospectus, we estimate to be 56,336,830 shares of our Class A common stock from us and 18,206,250 shares of Class A common stock from affiliates of KKR, in each case, in a private placement at a price per share equal to $24.00. The aggregate proceeds from this concurrent private placement will be $1,789.0 million, which includes proceeds of $1,352.1 million to us and proceeds of $437.0 million to affiliates of KKR. Our agreement with the private placement investors will also require us, within 60 days following the closing of this offering, to register their shares of Class A common stock on a Form S-1 registration statement. We intend to file such registration statement on or around June 30, 2021. Our agreements with the Private Placement Investors are contingent upon, and are scheduled to close immediately subsequent to, the closing of this offering, as well as the satisfaction of certain conditions to closing as further described in the section titled “Concurrent Private Placements.”

We have applied to list the Class A common stock on the New York Stock Exchange (the “Exchange”) under the symbol “EDR.”

We will be a “controlled company” under the corporate governance rules of the Exchange applicable to listed companies, and therefore we will be permitted to, and we intend to, elect not to comply with certain corporate governance requirements thereunder. See “Management—Controlled Company.”

 

 

Investing in our Class A common stock involves risks. See “Risk Factors” on page 38 to read about factors you should consider before buying shares of our Class A common stock.

 

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

     Per Share      Total  

Initial public offering price

   $                  $              

Underwriting discount(1)

   $        $    

Proceeds, before expenses, to us

   $        $    

 

(1)

See “Underwriting.”

To the extent that the underwriters sell more than 21,300,000 shares of Class A common stock, the underwriters have the option to purchase up to an additional 3,195,000 shares from us at the initial public offering price less the underwriting discount within 30 days from the date of this prospectus.

KKR Capital Markets LLC and Raine Securities LLC are acting as our financial advisors in connection with this offering.

The underwriters expect to deliver the shares against payment in New York, New York on                 , 2021.

 

 

 

 

Morgan Stanley

 

Goldman Sachs & Co. LLC

 

J.P. Morgan

  Deutsche Bank Securities

 

 

Barclays

  Citigroup   Credit Suisse   Evercore ISI   HSBC   Jefferies  

Moelis &

Company

 

Piper Sandler

 

RBC Capital

Markets

 

UBS Investment

Bank

 

CODE Advisors

  DBO Partners   LionTree   Academy Securities   R. Seelaus & Co., LLC  

Ramirez & Co., Inc.

  Siebert Williams Shank

Prospectus dated                 , 2021.


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INDUSTRY AND MARKET DATA

     ii  

TRADEMARKS

     ii  

BASIS OF PRESENTATION

     ii  

PROSPECTUS SUMMARY

     1  

THE OFFERING

     23  

SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL AND OTHER DATA

     31  

RISK FACTORS

     38  

FORWARD-LOOKING STATEMENTS

     73  

ORGANIZATIONAL STRUCTURE

     75  

USE OF PROCEEDS

     90  

DIVIDEND POLICY

     91  

CAPITALIZATION

     92  

DILUTION

     94  

UNAUDITED PRO FORMA FINANCIAL INFORMATION

     96  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

     106  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     108  

BUSINESS

     146  

MANAGEMENT

     161  

EXECUTIVE COMPENSATION

     167  

PRINCIPAL STOCKHOLDERS

     202  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     206  

DESCRIPTION OF CAPITAL STOCK

     219  

SHARES AVAILABLE FOR FUTURE SALE

     225  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

     228  

UNDERWRITING

     232  

CONCURRENT PRIVATE PLACEMENTS

     242  

LEGAL MATTERS

     243  

EXPERTS

     244  

WHERE YOU CAN FIND MORE INFORMATION

     245  

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

     F-1  

 

 

Through and including                 , 2021 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

 

 

We have not, and the underwriters have not, authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give to you. This prospectus is an offer to sell only the shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of the date hereof.

 

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INDUSTRY AND MARKET DATA

Industry and market data used throughout this prospectus were obtained through Company research, surveys and studies conducted by third parties and industry and general publications. Certain information contained under the heading “Business” is based on studies, analyses, and surveys prepared by AdAge, ActionNetwork, Activate, Inc., the American Gaming Association, Ampere Analysis, Billboard, The Business Research Company, the Bureau of Economic Analysis, The Center for Generational Kinetics, LLC, Expedia, Forbes, H2 Global, License Global, Licensing International, the Organization for Economic Co-operation and Development (the “OECD”), Technavio, and the University of Texas at Austin. While we are not aware of any misstatements regarding the industry data presented herein, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the headings “Risk Factors” and “Forward-Looking Statements.”

TRADEMARKS

This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or symbols, but such references are not intended to indicate, in any way, that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

BASIS OF PRESENTATION

Organizational Structure

In connection with the closing of this offering, we will effect what we refer to herein as the “reorganization transactions.” Unless otherwise stated or the context otherwise requires, all information in this prospectus reflects the consummation of the reorganization transactions, the UFC Buyout, the concurrent private placements and this offering. See “Organizational Structure” for a description of the reorganization transactions and a diagram depicting our organizational structure before and after giving effect to the reorganization transactions, the UFC Buyout, the concurrent private placements and this offering.

As used in this prospectus, unless we state otherwise or the context otherwise requires:

 

   

“we,” “us,” “our,” “Endeavor,” the “Company,” and similar references refer (a) after giving effect to the reorganization transactions, to Endeavor Group Holdings and its consolidated subsidiaries, and (b) prior to giving effect to the reorganization transactions, to Endeavor Operating Company and its consolidated subsidiaries.

 

   

“Endeavor Catch-Up Profits Units” refer to the Endeavor Full Catch-Up Profits Units and the Endeavor Partial Catch-Up Profits Units.

 

   

“Endeavor Full Catch-Up Profits Units” refer to the Endeavor Profits Units that are designated as “catchup” units. Endeavor Full Catch-Up Profits Units have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Full Catch-Up Profits Units will be converted into Endeavor Operating Company Units.

 

   

“Endeavor Group Holdings” refers to Endeavor Group Holdings, Inc., a Delaware corporation and the issuer in this offering.

 

   

“Endeavor Manager” refers to Endeavor Manager, LLC, a Delaware limited liability company and a direct subsidiary of Endeavor Group Holdings following the reorganization transactions.

 

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“Endeavor Manager Units” refers to the common interest units in Endeavor Manager.

 

   

“Endeavor Operating Company” refers to Endeavor Operating Company, LLC, a Delaware limited liability company and a direct subsidiary of Endeavor Manager’s and indirect subsidiary of ours following the reorganization transactions.

 

   

“Endeavor Operating Company Units” refers to all of the existing equity interests in Endeavor Operating Company (other than the Endeavor Profits Units) that will be reclassified into Endeavor Operating Company’s non-voting common interest units upon the consummation of the reorganization transactions.

 

   

“Endeavor Partial Catch-Up Profits Units” refer to the Endeavor Profits Units that are designated as “catchup” units. Endeavor Partial Catch-Up Profits Units have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Partial Catch-Up Profits Units will be converted into Endeavor Profits Units (without any such preference) with a reduced per unit hurdle price to take into account such prior preference.

 

   

“Endeavor Phantom Units” refers to the phantom units outstanding, which, following this offering, and subject to certain conditions and limitations, will entitle the holder to cash equal to the value of a number of Endeavor Manager Units, Endeavor Operating Company Units, or Endeavor Profits Units, or of equity settled to the equivalent number of Endeavor Manager Units, Endeavor Operating Company Units, or Endeavor Profits Units.

 

   

“Endeavor Profits Units” refers to the profits units of Endeavor Operating Company that will remain outstanding following this offering. Endeavor Profits Units will be economically similar to stock options (other than with respect to Endeavor Full Catch-up Profits Units which, upon achievement of a price per share that would have fully satisfied their preference on distributions, will be economically similar to Endeavor Operating Company Units). Each Endeavor Profits Unit (other than Endeavor Full Catch-Up Profits Units) has a per unit hurdle price, which is economically similar to the exercise price of a stock option. After the consummation of this offering, certain senior officers and employees, including Ariel Emanuel and Patrick Whitesell, will hold Endeavor Profits Units.

 

   

“Executive Holdcos” refers to Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC, and Endeavor Executive II Holdco, LLC, each a management holding company, the equity owners of which include current and former senior officers, employees, or other service providers of Endeavor Operating Company, and which will be controlled by Messrs. Emanuel and Whitesell.

 

   

“Management Holdcos” refers to WME Holdco, LLC and certain other management holding companies, the equity owners of which include current and former senior officers, employees or other service providers of Endeavor Operating Company.

We are a holding company and, immediately after the consummation of the reorganization transactions and this offering, our principal asset will be our indirect ownership interests in Endeavor Operating Company.

Presentation of Financial Information

Endeavor Operating Company, LLC is the predecessor of the issuer, Endeavor Group Holdings, Inc., for financial reporting purposes. Endeavor Group Holdings, Inc. will be the audited financial reporting entity following this offering. Accordingly, this prospectus contains the following historical financial statements:

 

   

Endeavor Group Holdings, Inc. Other than the audited balance sheets as of December 31, 2020 and 2019, the historical financial information of Endeavor Group Holdings, Inc. has not been included in this prospectus as it has no business transactions or activities to date other than those incidental to its

 

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formation and preparation of this prospectus and registration statement of which this prospectus forms a part. Endeavor Group Holdings, Inc. had no other assets or liabilities during the periods presented in this prospectus.

 

   

Endeavor Operating Company, LLC. As we will have no other interest in any operations other than those of Endeavor Operating Company, LLC and its subsidiaries, the historical consolidated financial information included in this prospectus is that of Endeavor Operating Company, LLC and its subsidiaries.

The unaudited pro forma financial information of Endeavor Group Holdings, Inc. presented in this prospectus has been derived by the application of pro forma adjustments to the historical consolidated financial statements of Endeavor Operating Company, LLC and its subsidiaries included elsewhere in this prospectus. These pro forma adjustments give effect to the reorganization transactions described in “Organizational Structure,” the UFC Buyout, the concurrent private placements and other transactions including the consummation of this offering, as if all such transactions had occurred on January 1, 2020, in the case of the unaudited pro forma consolidated statements of operations, and as of December 31, 2020, in the case of the unaudited pro forma consolidated balance sheet. See “Unaudited Pro Forma Financial Information” for a complete description of the adjustments and assumptions underlying the pro forma financial information included in this prospectus.

 

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LETTER FROM OUR CEO

As challenging a year as 2020 was, it underscored the strength, creativity, and resilience of our people who mobilized time and time again in the face of overwhelming odds. We made difficult decisions but worked as a team to find creative solutions and best position the business for the future.

As the global pandemic unfolded, we developed the protocols necessary to help our businesses safely restart operations, providing a model for other professional sports, events, and programs. UFC and PBR were two of the first sports organizations to responsibly return last spring, and we followed in the summer by hosting the WNBA’s season at IMG Academy. In the fall, we brought New York Fashion Week to life, becoming one of the first major events to resume in New York City. Meanwhile, we delivered virtual solutions to our more consumer-dependent live events and experiences—from speaking and book tours to art fairs to sports training—while Endeavor Content relied on our global network and local expertise to relocate and restart productions. In a year when the unique ability of content to unite people and elevate important issues was never more apparent, we were proud to do our part in ensuring the most powerful stories were heard, while supporting our clients in using their platforms to amplify diverse voices.

The power of the Endeavor platform has been on full display as we have brought commercial activity back online, guided our clients through an unprecedented set of events, and fostered innovation of new digital business models that will drive growth well into the future. The events of 2020 reminded us of the enduring value of premium intellectual property and content, while reinforcing the strength of our position within the sports and entertainment ecosystem.

We remain committed to our mission of:

 

   

Leading and innovating on behalf of our premium sports and entertainment properties

 

   

Expanding our reach across new and emerging content formats

 

   

Cultivating an environment that encourages prudent risk taking and cross-platform integration

 

   

Aggressively advocating on behalf of those who’ve placed their trust in us

 

   

Embracing diversity, inclusion, and equality across our platform—content, clients, and employees

 

   

Defining success based on long-term growth and innovation, not short-term gains

We believe being a public company will enable us to accelerate this mission and further the vision we set out in 1995 to build a company for where the world was headed.

We hope you’ll join us.

 

 

LOGO

ARIEL EMANUEL

 

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PROSPECTUS SUMMARY

Our Company

Endeavor is a premium intellectual property, content, events, and experiences company. We own and operate premium sports properties, including the UFC, produce and distribute sports and entertainment content, own and manage exclusive live events and experiences, and represent top sports and entertainment talent, as well as blue chip corporate clients. Founded as a client representation business, we expanded organically and through strategic mergers and acquisitions, investing in new capabilities, including sports operations and advisory, events and experiences management, media production and distribution, brand licensing, and experiential marketing. The addition of these new capabilities and insights transformed our business into an integrated global platform anchored by owned and managed premium intellectual property.

We believe that our unique business model gives us a competitive advantage in the industries in which we operate. Our direct ownership of scarce sports properties positions us to directly benefit from the generally rising value of sports assets, while giving us direct control to make decisions that sustain the long-term value of our properties. Our dual role as an intellectual property owner and as a trusted advisor to clients and rights holders allows us to make connections across our platform, increasing the earnings of our clients and the value of our sports and entertainment properties. We possess category leading capabilities in various industries, each of which contributes to our financial success. The integration of our broad range of capabilities, along with our owned and managed premium sports and entertainment properties, drives network effects across our platform. We measure these effects by evaluating the impact that activity in one business segment has on growth in another. Our management team has successfully executed a mergers and acquisitions and organic-driven growth strategy that has transformed our business from a pure representation model to an integrated global platform. After we founded Endeavor in 1995, we gained scale in representation by merging with the venerable William Morris Agency to form WME in 2009, which was followed by our acquisition of IMG in 2014, adding marketing and licensing, events, media production and distribution, and the sports training institution, IMG Academy. The acquisition of a controlling interest in the UFC in 2016 served as a major step forward in the transformation of our business. We have also built businesses primarily organically that take advantage of our unique role within the sports and entertainment ecosystem.



 

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We operate across three segments: (i) Owned Sports Properties, (ii) Events, Experiences & Rights, and (iii) Representation, which are covered in greater detail in “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Business Overview.” Our segments are presented in the table below:

 

 

LOGO

We have a 6,400+ person team operating in 28 countries. We generate revenue in both a principal and an agency capacity and use risk mitigation strategies including pre-sales and licensing when we take on investment risk in content or sports rights. Our business benefits from strong revenue visibility via sports rights fee payments, predictable client commissions, content rights payments, recurring annual or quadrennial events, corporate client retainers, licensing agreements, and annual tuition payments. We believe that visibility into our performance provides us with a stable and growing revenue base.

Our business delivered strong revenue growth prior to the impact of COVID-19. For the year ended December 31, 2019, we generated $4,571.0 million in revenue, net loss of $530.7 million, Adjusted Net Income of $240.9 million and Adjusted EBITDA of $733.5 million. COVID-19 has had a significant impact on our 2020



 

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financial performance. For the year ended December 31, 2020, we generated $3,478.7 million in revenue, net loss of $625.3 million, Adjusted Net Income of $84.8 million and Adjusted EBITDA of $572.5 million. For a

discussion of Adjusted Net Income and Adjusted EBITDA and reconciliations to the most closely comparable GAAP measures, see “Prospectus Summary—Summary Historical and Pro Forma Consolidated Financial and Other Data.” For a discussion of factors impacting our financial performance, see “Risk Factors—Risks Related to Our Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Industry Dynamics

In response to the consistently high demand for premium sports and entertainment content, we have grown the scope and scale of our platform with the addition of owned premium intellectual property and new content capabilities. We have successfully positioned our business to benefit from continuous technological disruption and resulting increased demand for premium content.

The impact of increasing consumer adoption of digital platforms in sports, entertainment, and social media is changing the way that our clients conduct business. We have adapted our advisory strategies and added capabilities to enable us to prosper as new industry trends develop. The insights that we gain across our platform allow us to spot these trends early. We have made organic investments and pursued mergers and acquisitions with the benefit of these insights. We believe our acquisition of marketing business 160over90, for example, positioned us to be a leader in the transition of traditional media marketing budgets to experiential and digital platforms. We created an alternative to the traditional studio model through Endeavor Content in part to fulfill a demand for streaming video and podcast content. We also developed sports data distribution capabilities through IMG ARENA to address the emergence of online sports gaming services. We built and acquired streaming service capabilities via Endeavor Streaming to provide critical infrastructure to support our entertainment and sports clients as they increased their premium AVOD and SVOD product offerings.

Our Integrated Global Platform

Our global platform is comprised of premium owned assets and an integrated set of capabilities. These capabilities include Sports Operations & Advisory, Events & Experiences Management, Client Representation, Media Production & Distribution, Experiential Marketing, and Brand Licensing. We believe that our integrated set of global capabilities is an essential attribute of our growth strategy.

Sports Operations & Advisory

We own, manage, operate and monetize a unique portfolio of scarce sports properties that generate significant revenue and cash flow through innovative rights deals and exclusive live events. We acquired our first sports organization, PBR, in 2015. Our most transformative acquisition was the UFC in 2016, adding a one-of-a-kind, global, and category defining sports organization to our portfolio.

Events & Experiences Management

We own, operate, or represent more than 800 events annually around the globe, including live sports events covering more than 15 sports across more than 25 countries (e.g. Miami Open), international fashion weeks (e.g. New York Fashion Week), art fairs (e.g. Frieze London), and music, culinary, and lifestyle festivals (e.g. Hyde Park Winter Wonderland). In January 2020, we acquired On Location, a leading provider of premium live event experiences across sports and music in North America with more than 900 experiences built around annual events like the Super Bowl, Ryder Cup, NCAA Final Four, and Coachella. We also operate IMG Academy, a sports training institution serving more than 1,200 full-time students and approximately 10,000 camp participants annually, and dozens of professional athletes, teams, leagues, and corporate clients annually.



 

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Media Production & Distribution

We are a full-service content production and distribution platform with experience in development, financing, production, marketing and sales, servicing hundreds of creators, sports leagues and federations, events and other brands, as well as our owned sports intellectual property. Our state-of-the-art studios produce tens of thousands of hours of sports programming annually for leading sports properties, such as the English Premier League, Wimbledon, and Ryder Cup, as well as for our owned assets including UFC and PBR. Endeavor Content provides a premium alternative to traditional studios, offering a range of services including content development, production, financing, sales, and advisory services to creators. The studio has financed and/or sold more than 200 projects, including “La La Land,” “Just Mercy,” “Hamilton,” “Normal People,” and “See.”

We are also one of the largest independent global distributors of sports and entertainment programming and possess deep relationships with a wide variety of broadcasters and media partners around the world. We sell media rights globally on behalf of more than 150 clients such as the NFL, IOC, and NHL and for our owned assets including UFC and PBR. We believe that our collective offering is more important than ever, as premium content is consistently in high demand and in short supply.

Client Representation

We represent many of the world’s greatest creators, performers, influencers, athletes, and models across entertainment, sports, and fashion. In 2019, WME was named music touring agency of the year by Billboard, booking more than 37,000 concert dates, while its clients took home more Grammys than any other agency in 2019 and 2020. For the past several years, WME clients have won more Academy Awards than any other agency and in 2019, WME clients were involved in all of the top 10 domestic grossing films.

Brand Licensing

We are a leading provider of licensing services to entertainment, sports, and consumer products brands, having earned a No. 1 ranking based on total retail sales of $16 billion, according to License Global magazine in 2020. We license our owned intellectual property including the UFC and PBR, and represent third party brands across the automotive, fashion, lifestyle, entertainment, athletics, legends, personalities, corporate, sports league, and event categories. Our clients include Anheuser-Busch InBev, Jeep, Lamborghini, Epic Games (Fortnite), Arnold Palmer, Harvard, the Gap, and the NFL. Through our licensing activities, we source incremental revenue opportunities for our clients, while enhancing their brand with consumers.

Experiential Marketing

Our corporate marketing services are delivered by 160over90, our premium, full-service marketing business that provides experiential, influencer, digital and cultural marketing, and public relations expertise. We work on behalf of some of the world’s largest consumer facing brands that collectively spend over $80 billion in worldwide advertising annually according to AdAge, including Anheuser-Busch InBev, AT&T, and Coca–Cola.

Our Competitive Strengths

Ownership of Intellectual Property

We believe that our Company is distinguished by our ownership of intellectual property, including UFC, a global sports property and the premier mixed martial arts sports organization, and PBR, an internationally renowned Western lifestyle competitive series. UFC was founded in 1993 and has grown in popularity after hosting more than 500 events, growing its fan base to approximately 625 million fans, and reaching a global audience of approximately 1 billion households through an increasing array of broadcast license agreements and



 

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our owned FIGHT PASS streaming platform. In 2020, FIGHT PASS subscriptions were up over 40%, and UFC set a record for the most global Pay-Per-View buys in its history. Meanwhile, social media followers across platforms increased by more than 65% year-over-year in 2020, and we grew to more than 10 million subscribers on YouTube, second only to the NBA in terms of global sports organizations. PBR, meanwhile, is the world’s premier bull riding circuit with more than 500 bull riders from the United States, Australia, Brazil, Canada, and Mexico, competing in more than 200 bull riding events each year. We also have a strategic partnership with Euroleague, the elite European professional basketball league, which is one of the most popular indoor sports leagues in the world, averaging attendance of over 8,500 per game in the 2019-2020 season.

Perpetual Demand for Premium Content

Our platform allows us to participate in industries that are benefitting from increasing demand for content in all forms. We are positioned at the center of this demand through our owned sports properties, media production and distribution, and client representation businesses. We operate across all genres and benefit regardless of how and where the demand for this content is fulfilled. Disruption has increased the value of sports media rights as illustrated in consistent increases in Contract Average Annual Values (AAV) over previous contracts. Additionally, as digital video distribution services such as ESPN+, Disney+, Peacock, HBO Max, and others have proliferated in recent years, demand has surged with more than 500 original shows airing in 2019, compared to 288 in 2012, according to an industry study.

Positioned Where the Consumer is Going in Experiential

According to Expedia and The Center for Generational Kinetics (“2018 Expedia and The Center for Generational Kinetics, LLC”), 74% of Americans place more value on experiences than products or things. A University of Texas at Austin research paper published in May 2020 found that consumers were happier when spending on experiences as opposed to material items. This trend has driven us to invest in our portfolio of more than 800 events globally across sports, music, art, fashion, and culinary. Through IMG Academy, we offer an elite academic and athletic experience, with 90% of graduates moving on to play collegiate sports (compared to 7% nationally). On Location, meanwhile, is a leading provider of premium entertainment and travel experiences, offering a large portfolio of events, tours, and hospitality packages.

Creating Asymmetric Risk / Reward Opportunities

We believe that the insights that we have gained from our vast network reduce the risk of organic investment and strategic mergers and acquisitions. Our team evaluates potential merger and acquisition opportunities with the benefit of data and industry knowledge that enables us to identify integration synergies and better forecast revenue growth potential. Our role as an industry counterpart often avails us early insights into strategic processes. We also frequently have the opportunity to invest in and support new business ventures that we have negotiated on behalf of our clients, and our commission structure allows us to participate alongside them in their commercial success.

Platform Integration Drives Upside for Our Stakeholders

Our commitment to business unit collaboration has allowed us to enhance returns for our owned and managed intellectual property, content and experiences, and for our clients. From 2017 through 2019, we grew revenue at a 23% CAGR, driven by industry tailwinds, geographic expansion, organic reinvestment, and strategic acquisitions. In 2020, our focus turned to realizing further cost efficiencies across the business and identifying complementary business extensions in the virtual/digital space. The practical linkages between our business units manifest themselves in myriad examples that result in maximizing revenue generation opportunities, improved client acquisition and retention, and proprietary acquisition and investment opportunities. Each of our owned



 

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assets and capabilities reinforces the others, creating a global platform that is very difficult to replicate. We have executed multi-pronged growth strategies on behalf of many of our clients, and we leverage our network to forge meaningful partnerships between our talent and brands. Additionally, we have realized top line and cost synergies as we have integrated more than 20 acquisitions.

Strong Revenue Visibility

Our services are underpinned by highly visible and recurring revenue streams across the platform. A primary example is our seven-year UFC media rights deal with ESPN. We have numerous similarly contracted revenue streams from media rights contracts in our media rights and distribution business. Our work with recurring annual events such as Wimbledon and quadrennial events such as the Rugby World Cup adds to the recurring revenue nature of our business. We also have retainer-based agreements with many of our marketing clients and our representation business benefits from revenue visibility, as measured by industry award recognitions, predictable production volumes, and residual income streams. Finally, our four-year tuition-based IMG Academy provides a high degree of revenue visibility.

Our Growth Strategies

Leverage Our Platform to Expand Globally and Increase Platform Productivity

We intend to continue leveraging our integrated global platform to maximize the growth potential of our business. We believe that our integrated capabilities and global reach allow us to deepen relationships with existing clients, attract new clients and partners, and access proprietary acquisition and investment opportunities that contribute to our growth and strengthen our network.

Expand our Experiential Offering

The concert, sports, and live entertainment categories have been increasingly prioritized over material goods by younger demographics. With a portfolio of more than 800 owned or managed events across Endeavor and 900 experiences curated by On Location, we believe we are well positioned to take advantage of these continuing secular trends and create new offerings and investment opportunities. IMG Academy, meanwhile, is a sports training institution with the ability to expand its campus footprint as well as its products and offerings, such as the addition of virtual training.

Invest in Adjacent High Growth Industry Segments

Our global platform has enabled us to enter new, fast-growing industry segments where we are able to leverage long standing business partnerships and relevant commercial insights to accelerate scale. Our existing footprint helps to facilitate organic investment in new adjacent industry segments. We have successfully executed against these opportunities that have emerged in sports gaming (IMG ARENA), streaming (Endeavor Streaming), podcasting (Endeavor Content), experiential marketing (160over90), and partnerships with our clients (Talent Ventures).

Emphasize Strategic Growth Through Mergers and Acquisitions on Our Unique Platform

Our disciplined mergers and acquisitions strategy has been focused on investing in intellectual property and acquiring capabilities for our global platform. We have successfully completed more than 20 mergers and acquisitions since 2014. We will continue to invest in mergers and acquisitions to complement our internal capabilities and enhance the value of our network.



 

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Our Business and Industry Opportunity

Global Content Spend (Film & TV) Industry

Our client representation business is largely driven by demand for content creators and performers in film and television. Our market constituents for our client representation and media businesses include linear and digital media distributors. The combined spend in both global film and television content was $128 billion in 2019 according to Ampere Analysis. A primary growth driver for global content spend has been the dramatic expansion of the global over-the-top (“OTT”) media industry. To capitalize on this growth and generate revenue, streaming services are both investing in original content and acquiring licensed content.

Global Experiences (Sporting Events, Concerts & Performing Arts Ticket Segments)

The sporting events, concerts, and performing arts segments are core to our owned sports properties and experiences operations. Our market constituents primarily include retail consumers, sponsors and corporate customers. The global sporting events, concerts, and performing arts ticket segment was $79 billion in 2019 and is expected to grow at a 5% CAGR to $102 billion by 2024, according to Technavio. According to the Bureau of Economic Analysis, average annual US consumer expenditure growth on experience-related services is 66% higher vs. goods (2014—2019). Additionally, according to data from the OECD collected over a 40-year period from 1979 to 2019, U.S. experiential spend grew 2.2x faster than the real GDP.

Global Sports Media Rights Expenditure

Spending on media rights continues to be a significant component of revenues in the sports industry with rights values appreciating consistently over the past decade. Our market constituents include linear and digital distributors, which acquire sports media rights and broadcast sports content. In 2019, global sports media rights spend was $39 billion, having grown at a 9% CAGR since 2017, according to The Business Research Company (via MRDC), and this is expected to grow at an 8% CAGR to $53 billion in 2023. The rise of streaming, increased legalization of sports betting, increased competition from tech entrants, and continued viewership appeal attribute to the projected growth on the rights price tags.

Global Marketing and Licensing

We are active in the global marketing and brand licensing industries, which totaled $67 billion in 2019 based on the collective reported revenues of $51 billion from IPG, WPP, Omnicom, and Dentsu, plus $16 billion reflecting the royalty revenue for brand owners per Licensing International’s 2020 Global Licensing Survey. Our market constituents include corporate clients seeking brand marketing or IP owners looking to license their brands. Our licensing work is closely attached to the global brand licensing industry of $16 billion which increased 5% in 2019.

Global Sports Gaming

The global sports gaming industry comprised of land-based and interactive sports betting grew at a 10% CAGR from 2017 to 2019 reaching $42 billion (Gross Win) in 2019 and is expected to grow at a 12% CAGR through 2024 to $76 billion, according to H2 Global. As of February 2021, 25 total states across the United States have legalized sports betting, and sports betting is currently operational in 20 states according to the American Gaming Association. Based on current legislative momentum and individual state need for tax revenues, ActionNetwork predicts that 30-33 states will legalize sports betting by the end of 2021.



 

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Recent Developments

COVID-19 Pandemic

While we believe the long-term value of premium intellectual property, content, and experiences is enduring, the near-term impact to our business as a result of COVID-19 has been significant. We experienced disruption across our business units and geographies given the hiatus of live sports and entertainment events coupled with film and television series production stoppages and the interruption of the school year and sports camp schedule. We navigated the early phase of the crisis by undertaking all appropriate measures to address the safety of our personnel, taking necessary steps to ensure adequate liquidity to fund operations, imposing cost cuts, and reducing and realigning our workforce to best position the business for future success.

As the situation evolved, we stayed in close contact with government and health officials, our clients, sports and media partners, and students. UFC and PBR were among the first professional sports in North America to implement safety protocols and return from the COVID-19 shutdown, in May and April 2020, respectively. Since resuming, UFC has held some of its most watched PPV events in the ESPN+ era, starting in Florida and continuing in Abu Dhabi followed by our owned Apex venue in Las Vegas.

As more sports resumed action, we leveraged our experience with UFC and PBR to provide insights to promote best practices throughout the industry. Similarly, as film and television production resumed, we have been committed to creating a safe work environment for our employees, clients, and partners. While we expect to benefit from the significant pent up global demand for content, the path to full capacity will be gradual.

We have focused our time during this period to explore innovation and identify ways to become a more efficient company. Our business units are investing in new digitally focused in-home entertainment business models that are complementary to our core businesses. Further, we believe that a meaningful portion of the cost savings that we have realized through the crisis may continue once commercial activity normalizes, which we expect would have a positive effect on our long-term operating margins and free cash flow generation. See “Risk Factors—Risks Relating to Our Business—The impact of the COVID-19 global pandemic could materially and adversely affect our business, financial condition, and results of operations” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Business Overview— Impact of the COVID-19 Pandemic” for additional information.

Acquisitions

On January 14, 2021, we entered into a Membership Interests Purchase Agreement (the “Reigning Champs Purchase Agreement”), to acquire the path-to-college business of Reigning Champs, LLC (“Reigning Champs”). Pursuant to the Reigning Champs Purchase Agreement, we agreed to acquire all of the issued and outstanding membership interests or other equity securities of all of the subsidiaries within the path-to-college business of Reigning Champs (collectively, the “Reigning Champs PTC Business”) for an aggregate cash purchase price of $200 million. We refer to this proposed acquisition of the Reigning Champs PTC Business as the “Reigning Champs Acquisition.” The Reigning Champs PTC Business consists of companies that offer recruiting and admissions services and related software products to high school student athletes, as well as college athletic departments and admissions officers. We expect the closing of the Reigning Champs Acquisition to take place following the closing of this offering. There is no guarantee that we will close the Reigning Champs Acquisition on the terms described herein or at all.

On April 1, 2021, we entered into a Share Purchase Agreement (the “FlightScope Purchase Agreement”), to acquire all of the issued and outstanding equity interests of EDH Tennis Limited, the holding company of FlightScope Services sp. z o.o., comprising the services business of FlightScope (collectively, the “FlightScope Services Business”) and simultaneously closed the acquisition. Pursuant to the FlightScope Purchase Agreement,



 

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we acquired the FlightScope Services Business for an aggregate cash purchase price of approximately $60 million (approximately $35 million was paid upfront as initial consideration, and the remainder will be paid as deferred consideration in two installments in 2022 and 2024). The FlightScope Services Business is a data collection, audio-visual production and tracking technology specialist for golf and tennis events.

Credit Facility Amendment

On April 19, 2021, the Company entered into an amendment to the credit agreement governing the Credit Facilities (as defined below) to, among other things, waive the financial covenant for the test periods ending June 30, 2021, September 30, 2021 and December 31, 2021. In addition, subject to completion of an IPO (as defined in the credit agreement), the amendment will also extend the maturity date of the Revolving Credit Facility to May 18, 2024.

Risks Associated with Our Business

An investment in our Class A common stock involves a high degree of risk. You should carefully consider the risks summarized in the “Risk Factors” section of this prospectus immediately following this prospectus summary, including:

 

   

the COVID-19 pandemic’s significant adverse impact on our business;

 

   

changes in public and consumer tastes and preferences and industry trends that could reduce demand for our services and content;

 

   

our ability to generate revenue from discretionary and corporate spending on entertainment and sports events is subject to many factors, including many that are beyond our control, such as general macroeconomic conditions;

 

   

our ability to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies could adversely affect our business;

 

   

our ability to maintain a professional reputation among our businesses, key personnel, and clients;

 

   

our dependence on the relationships of our agents, managers, and other key personnel with clients across many categories could adversely affect our business;

 

   

our failure to identify, sign, and retain clients;

 

   

the highly competitive nature of the markets in which we operate, both within the United States and internationally;

 

   

our dependence on key relationships with television and cable networks, satellite providers, digital streaming partners and other distribution partners, as well as corporate sponsors;

 

   

our ability to protect our trademarks and other intellectual property rights;

 

   

our ability to comply with extensive U.S. and foreign governmental regulations;

 

   

we are signatory to certain franchise agreements of unions and guilds and are subject to certain licensing requirements of the states in which we operate, and are signatories to certain collective bargaining agreements and depend upon unionized labor for the provision of certain of our services;

 

   

our substantial indebtedness;

 

   

we are a holding company and our principal asset after completion of this offering will be our indirect equity interests in Endeavor Operating Company, and accordingly we are dependent upon distributions from Endeavor Operating Company to pay taxes and other expenses;



 

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provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party;

 

   

we will be required to pay certain of our pre-IPO investors, including the Other UFC Holders (collectively, the “pre-IPO investors”) for certain tax benefits we may claim (or are deemed to realize) in the future, and the amounts we may pay could be significant; and

 

   

we are controlled by Messrs. Emanuel and Whitesell, Executive Holdcos and certain affiliates of Silver Lake, whose interest in our business may be different than an investor in this offering.

Corporate History

The Endeavor Agency, L.L.C. was founded in 1995 by Ariel Emanuel and several partners. In 2009, The Endeavor Agency, L.L.C. merged with the William Morris Agency, LLC (founded in 1898) to form William Morris Endeavor Entertainment, LLC (“WME”), with Ariel Emanuel and Patrick Whitesell becoming WME’s Co-Chief Executive Officers.

In May 2012, affiliates of Silver Lake made a strategic minority investment in WME, the first of several investments by affiliates of Silver Lake in us or our affiliates (e.g., UFC, Learfield IMG College).

In 2014, WME acquired media, sports, and fashion leader IMG Worldwide Holdings, Inc. (“IMG”) (founded in 1960) (the “IMG Acquisition”) and formed Endeavor Operating Company, with additional equity capital from, among others, affiliates of Silver Lake.

Since the IMG Acquisition, additional investments have been made in Endeavor by, among others, affiliates of Silver Lake (and now Silver Lake’s equity stake is primarily held in vehicles which began their investment periods in 2014 or later), the Canada Pension Plan Investment Board, and GIC Private Limited, Singapore’s sovereign wealth fund. Endeavor has also completed a series of organic growth initiatives, entered into several strategic joint ventures, and made a number of additional acquisitions.

In 2016, Endeavor, together with affiliates of Silver Lake and affiliates of Kohlberg Kravis Roberts & Co. L.P. (collectively, “KKR”) and certain other investors (collectively with certain other persons that hold equity interests in UFC Parent and certain of their affiliates, the “Other UFC Holders”), acquired Zuffa Parent, LLC (“UFC Parent”), which owns and operates the Ultimate Fighting Championship (“UFC”), the world’s premier professional mixed martial arts (“MMA”) organization (the “UFC Acquisition”). We have a controlling financial interest over the business and affairs of UFC Parent and have consolidated UFC Parent’s financial results from the date of the UFC Acquisition. We currently own 50.1% of UFC Parent’s common equity.

Additional acquisitions include: Frieze, a leading arts event and media company; Professional Bull Riders (“PBR”), the premier professional bull riding organization; 160over90, a full-service branding and marketing agency; and NeuLion, a video streaming services leader. In addition, we formed Endeavor China, a strategic partnership with Sequoia Capital China, a venture capital and private equity firm, Tencent Holdings Limited, a provider of media, entertainment, internet and mobile services in China, and affiliates of FountainVest Partners, a China-focused private equity firm.

On December 31, 2018, we completed the merger of our IMG College business with Learfield Communications, LLC (“Learfield”), a provider of integrated marketing solutions in college sports, to form Learfield IMG College. In connection with the merger, we sold approximately 13% of the equity interests in Learfield IMG College to affiliates of Silver Lake for $250 million. We received cash proceeds totaling



 

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$399.2 million and approximately 36% of the equity interests of Learfield IMG College, which is recognized as an equity method investment. The results of operations of our IMG College business are presented as discontinued operations for all periods prior to its disposal.

On January 2, 2020, we acquired On Location Experiences (“On Location”), a premium experiential hospitality business that serves iconic rights holders with extensive experience in ticketing, curated hospitality, live event production, and travel management in sports and entertainment. The National Football League (“NFL”) is a minority investor and strategic partner of On Location.

UFC Buyout

On February 16, 2021, Endeavor Operating Company entered into a Transaction Agreement (the “Transaction Agreement”) with the Other UFC Holders and certain of their affiliates pursuant to which Endeavor Operating Company will directly or indirectly acquire equity interests in UFC Parent (including warrants of UFC Parent or common equity received by warrant holders from the exercise of warrants of UFC Parent) from the Other UFC Holders (or their affiliates) resulting in Endeavor Operating Company directly or indirectly owning 100% of the equity interests of UFC Parent (the “UFC Buyout”). We currently own 50.1% of UFC Parent’s common equity, or 44.0% of UFC Parent on a diluted basis, and have consolidated UFC Parent’s financial results from the date of the UFC acquisition in 2016.

Pursuant to the Transaction Agreement, we will issue Endeavor Operating Company Units to (i) certain of the Other UFC Holders as consideration for the acquisition of interests of UFC Parent held by such Other UFC Holders (a portion of which Endeavor Operating Company Units will subsequently be sold by certain of the Other UFC Holders, as described below); and (ii) certain of the Other UFC Holders as consideration for the acquisition of all or only a portion of the interests of UFC Parent held by such Other UFC Holders (with the balance of the equity interests in UFC Parent retained by the Other UFC Holders to be sold to Endeavor Operating Company or its designee for cash, as described below), and certain of which Endeavor Operating Company Units will promptly be exchanged by such holders for Endeavor Manager Common Units. Certain holders of profit units in UFC Parent (the “UFC profits units”) will receive Endeavor Operating Company Units or Endeavor Manager Common Units. The Other UFC Holders that receive Endeavor Operating Company Units and/or Endeavor Manager Common Units will also receive paired shares of our Class X common stock corresponding on a 1:1 basis to the Endeavor Operating Company Units or Endeavor Manager Common Units they receive. Additionally, certain of the Other UFC Holders that receive Endeavor Operating Company Units will also receive paired shares of our Class Y common stock corresponding on a 1:1 basis to the Endeavor Operating Company Units they receive. Furthermore certain of the Other UFC Holders or their affiliates will each merge with and into Endeavor Group Holdings in a series of mergers, whereby we will acquire the existing interests in Endeavor Operating Company held by them. As consideration for the mergers, we will issue to certain affiliates of such Other UFC Holders, including certain affiliates of Silver Lake, shares of Class A common stock and Class Y common stock and rights to receive payments under the tax receivable agreement described herein. Based on an assumed initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), we anticipate issuing after the consummation of such transactions (after giving effect to the use of proceeds from this offering and the concurrent private placements to purchase from certain Other UFC Holders Endeavor Operating Company Units and Class A common stock and the sale of Class A common stock by affiliates of KKR in the concurrent private placements as further described below) 42,400,877 shares of Class A common stock, 58,753,559 Endeavor Operating Company Units, 9,156,546 Endeavor Manager Units, 67,910,105 shares of Class X common stock and 70,946,278 shares of Class Y common stock to the Other UFC Holders in the aggregate.



 

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The Endeavor Operating Company Units that will be held by the Other UFC Holders will be subject to the same general rights and obligations as all other holders of the Endeavor Operating Company Units after this offering, including with respect to transfer restrictions and redemption rights, as more fully described under “Certain Relationships and Related Party Transactions—Limited Liability Company Agreement of Endeavor Operating Company.” Additionally, certain of such holders will be entitled to customary registration rights, as described under the heading “Certain Relationships and Related Party Transactions—Registration Rights Agreement,” and will be a party to the tax receivable agreement, as described under “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

Moreover, in accordance with the Transaction Agreement, we have agreed to use $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or interests in UFC Parent) or Class A common stock directly from certain of the Other UFC Holders (or their affiliates) at a price per unit (with respect to Endeavor Operating Company Units) or a price per share (with respect to Class A common stock) equal to the initial public offering price per share of Class A common stock sold in this offering. Additionally, affiliates of KKR, who are Other UFC Holders, will sell 18,206,250 shares of Class A common stock for aggregate proceeds of $437.0 million in the concurrent private placements to the private placement investors at a price per share equal to $24.00. Certain of the Other UFC Holders (or their affiliates) will also receive rights to receive payments under the tax receivable agreement described herein.

The UFC Buyout will be conditioned upon the substantially concurrent closing of (i) this offering and (ii) the concurrent private placements, with aggregate minimum net cash proceeds (including, with respect to the concurrent private placements, funds used to purchase shares of Class A common stock from the persons referenced in the immediately preceding paragraph ) of at least $1,750 million. We estimate that our net proceeds from this offering and the concurrent private placements will be approximately $1,787.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us based on an assumed initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus). The UFC Buyout will also be subject to certain other customary closing conditions, including certain regulatory approvals, as more fully described in the Transaction Agreement filed as an exhibit to the registration statement of which this prospectus forms a part.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Transaction Agreement filed as an exhibit to the registration statement of which this prospectus forms a part. The representations, warranties and covenants contained in the Transaction Agreement are made only for the purposes of the Transaction Agreement and are made as of specific dates and are solely for the benefit of the parties to the Transaction Agreement.

The Reorganization Transactions

“Up-C” Structure

This offering is being conducted through what is commonly referred to as an “Up-C” structure, which is often used by partnerships and limited liability companies when they decide to undertake an initial public offering. The Up-C structure can provide tax benefits and associated cash flow advantages to both the issuer corporation and the existing owners of the partnership or limited liability company in the initial public offering.

We currently conduct our business through Endeavor Operating Company and its subsidiaries. Prior to the closing of this offering, we intend to complete an internal reorganization through a series of transactions, which we refer to as the “reorganization transactions.” After the completion of this offering, Endeavor Group Holdings will manage and operate the business and control the strategic decisions and day-to-day operations of Endeavor Operating Company through Endeavor Manager and include the operations of Endeavor Operating Company in our consolidated financial statements.



 

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Capital and Voting Structure

In connection with the reorganization transactions:

 

   

we will amend and restate our certificate of incorporation and will be authorized to issue five classes of common stock, which we refer to collectively as our “common stock” and which are summarized in the following table:

 

Class of Common Stock

   Votes    Economic
Rights

Class A common stock

   1    Yes

Class B common stock

   None    Yes

Class C common stock

   None    Yes

Class X common stock

   1    None

Class Y common stock

   20    None

Voting shares of our common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders. We will issue shares of our Class A common stock to the investors in this offering and the investors in the concurrent private placements. No shares of our Class B common stock and Class C common stock will be outstanding upon the closing of this offering. We do not intend to list our Class B common stock, Class C common stock, Class X common stock or Class Y common stock on any stock exchange;

 

   

Endeavor Manager, a newly formed subsidiary of Endeavor Group Holdings, will become the sole managing member of Endeavor Operating Company, and Endeavor Group Holdings will become the sole managing member of Endeavor Manager;

 

   

Endeavor Manager will issue to the equityholders of certain management holding companies common interest units in Endeavor Manager, which we refer to as “Endeavor Manager Units,” along with paired shares of our Class X common stock, as consideration for the acquisition of Endeavor Operating Company Units held by such management holding companies;

 

   

we will (i) issue to affiliates of certain of our pre-IPO investors, including certain affiliates of Silver Lake, shares of our Class Y common stock, Class A common stock, and rights to receive payments under the tax receivable agreement described below and (ii) issue to affiliates of certain other of our pre-IPO investors shares of our Class A common stock, in each case as consideration for the acquisition of Endeavor Operating Company Units held by such pre-IPO investors;

 

   

all of the existing equity interests in Endeavor Operating Company (other than certain profits units, which will remain outstanding after this offering) will be reclassified into Endeavor Operating Company’s non-voting common interest units, which we refer to as “Endeavor Operating Company Units;”

 

   

we will issue to the holders of Endeavor Operating Company Units (other than Endeavor Manager) paired shares of our Class X common stock and, in certain instances, Class Y common stock, in each case equal to the number of Endeavor Operating Company Units held by each of them upon completion of this offering and in exchange for the payment by such holders of the aggregate par value of the Class X common stock and Class Y common stock that is received;

 

   

Endeavor Profits Units (other than Endeavor Catch-Up Profits Units) that will remain outstanding following this offering will be economically similar to stock options. Each such Endeavor Profits Unit has a per unit hurdle price, which is economically similar to the exercise price of a stock option;

 

   

Endeavor Full Catch-Up Profits Units that will remain outstanding following this offering will have a per unit hurdle price and will be entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully



 

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satisfied such preference on distributions, the Endeavor Full Catch-Up Profits Units will be converted into Endeavor Operating Company Units; and

 

   

Endeavor Partial Catch-Up Profits Units that will remain outstanding following this offering will have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Partial Catch-Up Profits Units will be converted into Endeavor Profits Units (without any such preference) with a reduced per unit hurdle price to take into account such prior preference. Such per unit hurdle price is economically similar to the exercise price of a stock option.

Ownership of Economic Interests

Upon completion of the reorganization transactions, the concurrent private placements, the UFC Buyout and this offering, and assuming an initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), except as set forth in the footnotes below, and an offering size of $511.2 million, the economic interests in Endeavor Group Holdings owned by investors in this offering and our pre-IPO equityholders will be as follows:

 

    Endeavor Group
Holdings
    Fully Converted     Fully Converted
Diluted
 
    Shares     %     Shares     %     Shares     %  
    (1)           (2)           (3)        

Shareholders of Endeavor Group Holdings

           

Investors in this offering

    21,300,000       8.4     21,300,000       5.0     21,300,000       5.0

Investors in the concurrent private placements (other than Silver Lake and related parties)

    69,820,745       27.5     69,820,745       16.4     69,820,745       16.2

Silver Lake and related parties

    91,978,947       36.2     91,978,947       21.7     91,978,947       21.4

Affiliates of our other pre-IPO investors

    70,650,579       27.8     70,650,579       16.6     70,650,579       16.4

Sub-Total

    253,750,271       100.0     253,750,271       59.8     253,750,271       59.0

Members of Endeavor Manager (other than Endeavor Group Holdings)

    —         0.0     30,132,501       7.1     30,132,501       7.0

Sub-Total

    —         0.0     30,132,501       7.1     30,132,501       7.0

Members of Endeavor Operating Company (other than Endeavor Manager)

           

Silver Lake and related parties

    —         0.0     82,138,074       19.3     82,138,074       19.1

Affiliates of our other pre-IPO investors

    —         0.0     26,051,913       6.1     26,051,913       6.1

Messrs. Emanuel and Whitesell and Executive Holdcos

    —         0.0     32,550,111       7.7     37,654,485       8.8

Sub-Total

    —         0.0     140,740,098       33.1     145,844,472       33.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   
253,750,271
 
    100.0     424,622,870       100.0     429,727,244       100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Reflects the number of shares of our Class A common stock then outstanding. If the underwriters exercise in full their option to purchase additional shares of our Class A common stock, the number of shares owned by investors in this offering, and in the table above, would be 24,495,000.

(2)

Reflects the number of shares of our Class A common stock that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A common stock.



 

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(3)

Reflects the number of shares of our Class A common stock (excluding approximately 9,094,852 restricted stock units and 3,233,644 options based on the high point of the estimated public offering price range set forth on the cover page of this prospectus that we intend to grant to certain directors, employees, and other service providers in connection with this offering) that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A common stock , assuming that we achieved a price per share that would have fully satisfied all Endeavor Catch-Up Units’ preferences on distributions and all Endeavor Profits Units were thereafter exchanged into Endeavor Operating Company Units in respect of their in-the-money value at such initial offering price per unit hurdle price.

The economic rights in Endeavor Group Holdings owned by Messrs. Emanuel and Whitesell and Executive Holdcos as members of Endeavor Operating Company as reflected in the table above will vary depending on, among other things, the extent to which the Endeavor Profits Units are in the money. The following table summarizes the Endeavor Operating Company Units and Endeavor Profits Units owned by Messrs. Emanuel and Whitesell and Executive Holdcos and their applicable performance-based vesting conditions and hurdle prices:

 

            Endeavor Operating Company  
     Weighted Average
Per-Unit
     Basic      Fully Converted
Diluted
     Fully Converted
Diluted
 
     Hurdle Price      Units      Units      Units  
     (1)      (2)      (3)      (4)  

Endeavor Operating Company Units

     —          32,550,111        32,550,111        32,550,111  

Endeavor Full Catch-Up Profits Units

     —          —          3,809,522        3,809,522  

Endeavor Profits Units (other than the Endeavor Catch-Up Units)

   $ 17.68           878,493        3,337,048  

Endeavor Partial Catch-Up Profits Units

   $ 23.16        —          416,359        11,919,786  

Total

           

 

(1)

Reflects distribution thresholds, expressed as a per unit hurdle price on a weighted-average basis (similar to an exercise price for stock options). Subject to certain restrictions, Endeavor Profits Units will be exchangeable by their holders into a number of Endeavor Operating Company Units that will generally be equal to (a) the amount to which the holder of such Endeavor Profits Units would be entitled to receive if an amount equal to the fair market value of Endeavor Operating Company as of the date of the exchange were distributed to the members of Endeavor Operating Company in accordance with the terms of the Endeavor Operating Company Agreement, divided by (b) the per unit value of an Endeavor Operating Company Unit.

(2)

Reflects the number of Endeavor Operating Company Units then outstanding assuming an initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus).

(3)

Reflects the number of Endeavor Operating Company Units that would be outstanding if all Endeavor Profits Units were exchanged into Endeavor Operating Company Units in respect of their in-the-money value, assuming an initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), and that all Endeavor Catch-Up Profits Units have been fully converted to Endeavor Operating Company Units or Endeavor Profits Units (without any preference), as applicable.

(4)

Reflects the number of Endeavor Operating Company Units that would be outstanding if all Endeavor Profits Units were exchanged into Endeavor Operating Company Units on a one-to-one basis (regardless of their in-the-money value).

For illustrative purposes only, the following table shows how the number of economic interests in Endeavor Group Holdings would vary at various future trading prices per share of our Class A common stock after the completion of this initial public offering, assuming an offering size of $511.2 million and the reorganization transactions, the UFC Buyout and the concurrent private placements are completed on the basis of an initial



 

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public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus).

 

Hypo thetical Price Per Share of Class A Common
Stock

   Endeavor
Group
Holdings

Basic
     Fully
Converted

Basic
     Fully
Converted
Diluted
 
   Shares      Shares      Shares  
     (1)      (2)      (3)  

$21.00

     262,921,377        442,851,920        447,249,727  

$22.00

     259,587,847        436,203,800        440,699,852  

$23.00

     256,544,239        430,134,123        434,719,877  

$24.00

     253,750,271        424,622,870        429,727,244  

$25.00

     251,183,657        419,532,778        425,193,318  

$26.00

     248,871,846        419,563,349        421,936,618  

$27.00

     246,675,652        415,321,395        418,171,419  

 

(1)

Reflects the number of shares of our Class A common stock then outstanding.

(2)

Reflects the number of shares of our Class A common stock that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A Common stock. For purposes of calculating the number of shares, this amount assumes, that all Endeavor Catch-Up Profits Units have been fully converted to Endeavor Operating Company Units or Endeavor Profits Units (without any preference), as applicable.

(3)

Reflects the number of shares of our Class A common stock that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A common stock, assuming (a) the applicable hypothetical price per share of Class A common stock, and (b) that all Endeavor Profits Units then outstanding were exchanged into Endeavor Operating Company Units in respect of their in-the-money value at such hypothetical price per share. For purposes of calculating the number of shares, this amount assumes, that all Endeavor Catch-Up Profits Units have been fully converted to Endeavor Operating Company Units or Endeavor Profits Units (without any preference), as applicable.

Additionally, in accordance with certain agreements with non-affiliate holders of Endeavor Operating Company Units, we will be required to make certain cash payments or issue additional shares of Class A common stock, at our option, to such holders if the initial public offering price per share at which shares of our Class A common stock are sold in this offering is equal to or less than $24.00 per share (the “Minimum Cash Returns”). If the initial public offering price per share of Class A common stock sold in this offering is $24.00, $23.00 or $22.00 per share, we would be required to make cash payments or issue shares of Class A common stock at the initial public offering price, at our option, in an aggregate amount of $0.8 million, $3.0 million or $7.8 million, respectively, to such holders, and for each dollar decrease in the initial public offering price per share of the Class A common stock below $22.00 per share, we would make cash payments or issue shares of Class A common stock, at our option, in an aggregate amount of an additional $13.0 million.



 

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Ownership of Voting Rights.

Upon completion of the reorganization transactions, the concurrent private placements, the UFC Buyout and this offering, and assuming an initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), the combined voting power in Endeavor Group Holdings will be as follows:

 

     If the underwriters do not exercise
their option to purchase additional
shares of Class  A common stock
    If the underwriters exercise in full
their option to purchase additional
shares of Class  A common stock
 
     Votes     Votes  
     Total      %     Total      %  

Investors in this offering

     21,300,000        0.4     24,495,000        0.5

Investors in the concurrent private placements (other than Silver Lake and related parties)

     69,820,745        1.3     69,820,745        1.3

Silver Lake and related parties

     3,562,010,741        68.4     3,562,010,741        68.4

Affiliates of our other pre-IPO investors

     439,615,492        8.4     439,615,492        8.4

Members of Endeavor Manager (other than Endeavor Group Holdings)

     30,132,501        0.6     30,132,501        0.6

Messrs. Emanuel and Whitesell, Executive Holdcos

     1,083,945,802        20.8     1,083,945,802        20.8
  

 

 

    

 

 

   

 

 

    

 

 

 

Total

     5,206,825,281        100     5,210,020,281        100.0
  

 

 

    

 

 

   

 

 

    

 

 

 

Upon completion of the reorganization transactions, the concurrent private placements, the UFC Buyout and this offering, and assuming an initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus) and an offering size of $511.2 million, the voting rights in Endeavor Group Holdings will be owned as follows:

 

    Shares     Votes  
    Class A     Class X     Class Y     Total     %  
    (1)     (2)     (3)              

Shareholders of Endeavor Group Holdings

         

Investors in this offering

    21,300,000       —         —         21,300,000       0.4

Investors in the concurrent private placements (other than Silver Lake and related parties)

    69,820,745       —         —         69,820,745       1.3

Silver Lake and related parties

    91,978,947       —         87,256,612       1,837,111,187       35.3

Affiliates of our other pre-IPO investors

    70,650,579       —         11,482,062       300,291,819       5.8

Sub-Total

    253,750,271       —         98,738,674       2,228,523,751       42.8

Members of Endeavor Manager (other than Endeavor Group Holdings)

    —         30,132,501       —         30,132,501       0.6

Sub-Total

    —         30,132,501       —         30,132,501       0.6

Members of Endeavor Operating Company (other than Endeavor Manager)

         

Silver Lake and related parties

    —         82,138,074       82,138,074       1,724,899,554       33.1

Affiliates of our other pre-IPO investors

    —         26,051,913       5,663,588       139,323,673       2.7

Messrs. Emanuel and Whitesell and Executive Holdcos

    —         51,616,467       51,616,467       1,083,945,802       20.8

Sub-Total

    —         159,806,454       139,418,129       2,948,169,029       56.6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    253,750,271       189,938,955       238,156,803       5,206,825,281       100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

If the underwriters exercise in full their option to purchase additional shares of our Class A common stock, the number of shares of Class A common stock owned by investors in this offering, and in the table above, would be 24,495,000.



 

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(2)

Members of Endeavor Manager (other than Endeavor Group Holdings) will receive one share of our Class X common stock for each Endeavor Manager Unit owned by them. Members of Endeavor Operating Company (other than Endeavor Manager) will receive one share of our Class X common stock for each Endeavor Operating Company Unit and Endeavor Profits Unit owned by them, as applicable.

(3)

Silver Lake and related parties, affiliates of certain of our other pre-IPO investors, Messrs. Emanuel and Whitesell, and Executive Holdcos will receive one share of our Class Y common stock for each share of Class A common stock, Endeavor Operating Company Unit, and Endeavor Profits Unit owned by them, as applicable.

At such time that Endeavor Profits Units are exchanged into a number of Endeavor Operating Company Units, the holders exchanging such Endeavor Profits Units will receive a number of shares of our Class X common stock and shares of our Class Y common stock such that they will hold one share of our Class X common stock and one share of Class Y common stock for each Endeavor Operating Company Unit into which such Endeavor Profits so exchanged.



 

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The following diagram depicts our organizational structure following the reorganization transactions, the concurrent private placements, the UFC Buyout, this offering and the application of the net proceeds from this offering and the concurrent private placements (assuming an initial public offering price of $24.00 per share, the high point of the estimated public offering price range set forth on the cover page of this prospectus, and no exercise of the underwriters’ option to purchase additional shares). For purposes of depicting ownership of voting power in Endeavor Group Holdings, the below diagram takes into account shares of Class X common stock and Class Y common stock held by investors in this offering and our pre-IPO equityholders (including holders of all Endeavor Manager Units and Endeavor Operating Company Units). For purposes of depicting ownership of economic interests in Endeavor Group Holdings, the below diagram does not take into account (a) any performance-based vesting Endeavor Operating Company Units whose vesting conditions would not be satisfied at such initial offering price, and (b) any Endeavor Profits Units. This chart is provided for illustrative purposes only and does not purport to represent all legal entities within our organization:

 

 

LOGO

 

(1)

Other pre-IPO investors include Jasmine Ventures Pte Ltd. and Canada Pension Plan Investment.

(2)

Endeavor Manager members include current senior officers, employees, former employees and other service providers of Endeavor Operating Company.

Endeavor Group Holdings is a holding company and, immediately after the consummation of the reorganization transactions and this offering, our principal asset will be our indirect ownership interests in Endeavor Operating Company. The total number of Endeavor Operating Company Units and Endeavor Profits Units indirectly owned by us, the other members of Endeavor Manager and the members of Endeavor Operating Company (other than Endeavor Manager) at any given time will equal the sum of the outstanding shares of our

 

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Class A common stock, Class B common stock, Class C common stock and our Class X common stock. For additional information regarding our stockholders and the holders of Endeavor Operating Company Units, Endeavor Profits Units and Endeavor Manager Units, see “Organizational Structure” and “Principal Stockholders.”

Exchange Mechanics

Following this offering, the members of Endeavor Operating Company (other than Endeavor Manager) will have the right from time to time to cause Endeavor Operating Company to redeem any or all of their Endeavor Operating Company Units (and paired shares of Class X common stock) in exchange for, at our election (subject to certain exceptions), either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock, and if such redemption is made in exchange for shares of Class A common stock, it shall be effected as a direct purchase by Endeavor Group Holdings. Upon the disposition of the Class A common stock received by members of Endeavor Operating Company from the exchange of their Endeavor Operating Company Units (and corresponding cancelation of paired shares of Class X common stock), or a Triggering Event (as defined below), any shares of Class Y common stock that are paired with such Class A common stock as a result of the redemption or exchange will be cancelled/redeemed for no consideration.

Following this offering, the members of Endeavor Manager (other than Endeavor Group Holdings) will have the right from time to time, subject to certain restrictions, to cause Endeavor Manager to redeem any or all of their vested Endeavor Manager Units (and paired shares of Class X common stock) in exchange for, at our election, either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock, and if such redemption is made in exchange for shares of Class A common stock, it shall be effected as a direct purchase by Endeavor Group Holdings.

Proceeds

We estimate that our net proceeds from this offering and the concurrent private placements will be approximately $1,787.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, based on an assumed initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus) and assuming the underwriters’ option to purchase additional shares is not exercised. If the underwriters exercise their option to purchase additional shares in full, we expect to receive approximately $1,863.8 million of net proceeds, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, based on an assumed initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus). We intend to (1) use $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or interests in UFC Parent) directly from certain of the Other UFC Holders (or their affiliates) and holders of UFC Profit Units at a price per unit (with respect to Endeavor Operating Company Units) equal to the initial public offering price per share of Class A common stock sold in this offering and (2) contribute $951.5 million of the net proceeds from this offering and the concurrent private placements to Endeavor Manager (or $1,028.1 million if the underwriters exercise their option to purchase additional shares in full) in exchange for a number of Endeavor Manager Units equal to the contribution amount divided by the price paid by the underwriters for shares of our Class A common stock in this offering (provided that we may reduce such contribution amount, without reducing the number of Endeavor Manager Units we receive, by the amount of any expenses we pay in connection with this offering, the concurrent private placements and the UFC Buyout (which we estimate will be approximately $76.1 million) that are not otherwise paid or for which we are not otherwise reimbursed by Endeavor Operating Company). Endeavor Manager would then, in turn, contribute such contribution amount to Endeavor Operating Company in exchange for an equal number of Endeavor Operating Company Units.



 

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Tax Receivable Agreement

In connection with the transactions described herein, we will acquire existing equity interests in Endeavor Operating Company held by certain of our pre-IPO investors in exchange for the issuance of shares of our Class A common stock, Class Y common stock and rights to receive payments under a tax receivable agreement and will acquire certain existing interests in Endeavor Operating Company (or of UFC Parent) from certain of the Other UFC Holders (or their affiliates) in exchange for cash and rights to receive payments under the tax receivable agreement. As a result of these acquisitions, we will succeed to certain tax attributes of certain of our pre-IPO investors and will receive the benefit of tax basis in the assets of Endeavor Operating Company and certain of its subsidiaries. In addition, redemptions or exchanges of Endeavor Operating Company Units in exchange for shares of our Class A common stock or cash are expected to produce favorable tax attributes that would not be available to us in the absence of such redemptions or exchanges. We intend to enter into a tax receivable agreement with certain of our pre-IPO investors and certain affiliates of our pre-IPO investors, including certain affiliates of Silver Lake and certain management holding vehicles (or their members), and certain of the Other UFC Holders, whom we refer to collectively as the “Post-IPO TRA Holders,” that will provide for the payment by us to the Post-IPO TRA Holders (or their transferees of Endeavor Operating Company Units or other assignees) of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we realize or are deemed to realize (determined by using certain assumptions) as a result of certain tax attributes and tax attributes resulting from payments made under the tax receivable agreement. See “Organizational Structure—Tax Receivable Agreement” and “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

Our Principal Equityholders

Following the completion of the reorganization transactions, the concurrent private placements, the UFC Buyout, and this offering, Messrs. Emanuel and Whitesell and entities controlled by Messrs. Emanuel and Whitesell, together with certain affiliates of Silver Lake that will be our stockholders upon the completion of this offering (the “Silver Lake Equityholders”), as a group, will control approximately 89.2% of the combined voting power of our outstanding common stock (or 89.2% if the underwriters exercise their option to purchase additional shares in full) based on an assumed initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus). As a result, Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will control any action requiring the general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and by-laws and the approval of any merger or sale of substantially all of our assets. Because Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will collectively control, as a group, more than 50% of the combined voting power of our outstanding common stock, we will be a “controlled company” under the corporate governance rules for Exchange-listed companies. Therefore we will be permitted to, and we intend to, elect not to comply with certain corporate governance requirements of the Exchange. See “Management—Controlled Company,” “Principal Stockholders” and “Certain Relationships and Related Party Transactions—Stockholders Agreement” for additional information.

Mr. Emanuel has successfully served as our Co-Chief Executive Officer from 2009 to 2017 and as our Chief Executive Officer since 2017, and Mr. Whitesell has successfully served as our Co-Chief Executive Officer from 2009 to 2017 and as our Executive Chairman since 2017. Combined, Messrs. Emanuel and Whitesell have nearly 60 years of experience in the entertainment industry. Each Executive Holdco is managed by an executive committee composed of Messrs. Emanuel and Whitesell.

Silver Lake is a global technology investment firm, with more than $79 billion in combined assets

under management and committed capital, and a team of investment and operating professionals based in North America, Europe and Asia.



 

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Corporate Information

We were formed as a Delaware corporation in January 2019. We have no material assets and have not engaged in any business or other activities except in connection with the reorganization transactions and this offering. Our corporate headquarters are located at 9601 Wilshire Boulevard, 3rd Floor, Beverly Hills, CA 90210, and our telephone number is (310) 285-9000. Our website address is www.endeavorco.com. Information contained on, or that can be accessed through, our website does not constitute a part of this prospectus.



 

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THE OFFERING

 

Class A common stock offered by us

21,300,000 shares.

 

Option to purchase additional shares

We have granted the underwriters the right to purchase an additional 3,195,000 shares of Class A common stock from us within 30 days from the date of this prospectus.

 

Class A common stock sold in the concurrent private placements

Immediately subsequent to the closing of this offering, and subject to certain conditions to closing as described in the section titled “Concurrent Private Placements,” the private placement investors will purchase in the aggregate of 74,543,080 shares of our common stock, which, based on the high point of the public offering price range set forth on the cover page of this prospectus, we estimate to be 56,336,830 shares of our Class A common stock from us and 18,206,250 shares of Class A common stock from affiliates of KKR, in each case, in a private placement at a price per share equal to $24.00. Additionally, the Company has the option to designate certain of the Private Placement Investors to purchase Class A common stock directly from certain of its investors at a price per share of $24.00, with the number of shares being purchased from such existing investors reducing the number of shares of Class A common stock purchased from the Company in the concurrent private placements.

 

  The aggregate proceeds from this concurrent private placement will be $1,789.0 million, which includes proceeds of $1,352.1 million to us and proceeds of $437.0 million to affiliates of KKR. Additionally, we have the option to designate certain of the Private Placement Investors to purchase Class A common stock directly from certain of our existing investors that sign a joinder to the Subscription Agreement at a price per share of $24.00, with the number of shares being purchased from such investors reducing the number of shares of Class A common stock purchased from us in the concurrent private placements. We will not receive any proceeds with respect to the shares that will be sold by certain of our investors. Our agreement with the private placement investors will also require us to, within 60 days following the closing of this offering, register their shares of Class A common stock on a Form S-1 registration statement. We intend to file such registration statement on or around June 30, 2021. The sale of the shares in the private placements are contingent upon the completion of this offering.

 

Class A common stock to be outstanding immediately after this offering and the concurrent private placements

253,750,271 shares (or 256,945,271 shares if the underwriters exercise their option to purchase additional shares in full).

 

  If, immediately after this offering, the concurrent private placements and the application of the net proceeds from this offering and the concurrent private placements, all of the members of Endeavor


 

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  Operating Company and Endeavor Manager were to elect to have their Endeavor Operating Company Units or Endeavor Manager Units, as applicable, and corresponding shares of Class X common stock, redeemed and we elected to redeem such units in exchange for shares of our Class A common stock 424,622,870 shares of our Class A common stock would be outstanding (34.9% of which would be owned by non-affiliates of the Company) (427,817,870 shares (34.5% of which would be owned by non-affiliates of the Company) if the underwriters exercise their option to purchase additional shares in full).

 

Class B common stock to be outstanding immediately after this offering and the concurrent private placements

None. Shares of our Class B common stock have economic but no voting rights (except as required by applicable law). Shares of our Class B common stock are automatically convertible into shares of our Class A common stock immediately after the resale of such shares to an unaffiliated third party.

 

Class C common stock to be outstanding immediately after this offering and the concurrent private placements

None. Shares of our Class C common stock have economic but no voting rights (except as required by applicable law).

 

Class X common stock to be outstanding immediately after this offering and the concurrent private placements

189,938,955 shares. Shares of our Class X common stock have voting but no economic rights (including rights to dividends and distributions upon liquidation) and will be issued in the reorganization transactions and the UFC Buyout to the members of Endeavor Manager (other than Endeavor Group Holdings) in an amount equal to the number of Endeavor Manager Units held by such persons and to other members of Endeavor Operating Company in an amount equal to the number of Endeavor Operating Company Units and Endeavor Operating Company Profits Units held by such persons. When a member of Endeavor Manager exercises its right from time to time to cause Endeavor Manager to redeem any or all of its Endeavor Manager Units as described elsewhere in this prospectus, a corresponding number of shares of our Class X common stock held by such member will be simultaneously cancelled. When a holder of Endeavor Operating Company Units exercises its right from time to time to cause Endeavor Operating Company to redeem any or all of its Endeavor Operating Company Units as described elsewhere in this prospectus, a corresponding number of shares of our Class X common stock held by such member will be simultaneously canceled.

 

Class Y common stock to be outstanding immediately after this offering and the concurrent private placements

238,156,803 shares. Shares of our Class Y common stock have voting but not economic rights (including rights to dividends and



 

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distributions upon liquidation). We will issue shares of our Class Y common stock to affiliates of certain of our pre-IPO investors, including certain affiliates of Silver Lake, in consideration for Endeavor Operating Company Units acquired by Endeavor Group Holdings from such pre-IPO investors in the reorganization transactions and the UFC Buyout. We will also issue paired shares of our Class Y common stock to certain other holders of Endeavor Operating Company Units and Endeavor Operating Company Profits Units (other than Endeavor Manager), equal to the number of Endeavor Operating Company Units and Endeavor Operating Company Profits Units held. See “Organizational Structure.”

 

Voting rights

Each share of our Class A common stock entitles its holder to one vote per share, representing an aggregate of 4.9% of the combined voting power of our outstanding common stock upon the completion of this offering, the concurrent private placements and the UFC Buyout and the application of the net proceeds from this offering and the concurrent private placements (or 4.9% if the underwriters exercise their option to purchase additional shares in full).

 

  Shares of our Class B and Class C common stock do not entitle holders to any voting rights (except as required by applicable law).

 

  Each share of our Class X common stock entitles its holder to one vote per share, representing an aggregate of 3.6% of the combined voting power of our outstanding common stock upon the completion of this offering, the concurrent private placements and the UFC Buyout and the application of the net proceeds from this offering and the concurrent private placements (or 3.6% if the underwriters exercise their option to purchase additional shares in full).

 

  Each share of our Class Y common stock entitles its holder to 20 votes per share, representing an aggregate of 91.5% of the combined voting power of our outstanding common stock upon the completion of this offering, the concurrent private placements and the UFC Buyout and the application of the net proceeds from this offering and the concurrent private placements (or 91.5% if the underwriters exercise their option to purchase additional shares in full).

 

  All classes of our common stock with voting rights generally vote together as a single class on all matters submitted to a vote of our stockholders. See “Description of Capital Stock.”

 

Redemption rights

The members of Endeavor Operating Company (other than Endeavor Manager) will have the right from time to time to cause Endeavor Operating Company to redeem any or all of their Endeavor Operating Company Units, (and paired shares of Class X common stock), in exchange for, at our election (subject to certain exceptions), either cash (based on the market price of a share of our Class A common



 

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stock) or shares of our Class A common stock, and if such redemption is made in exchange for shares of Class A common stock, it shall be effected as a direct purchase by Endeavor Group Holdings. Upon the disposition of the Class A common stock received by members of Endeavor Operating Company from the exchange of their Endeavor Operating Company Units (and paired shares of Class X common stock), or a Triggering Event, any paired shares of Class Y common stock will be cancelled/redeemed for no consideration.

 

  The holders of Endeavor Profits Units will have the right from time to time, subject to certain restrictions, to cause Endeavor Operating Company to exchange their vested Endeavor Profits Units into (1) a number of Endeavor Operating Company Units that will generally be equal to (a) the amount to which the holder of such Endeavor Profits Units would be entitled to receive if an amount equal to the fair market value of Endeavor Operating Company as of the date of such exchange were distributed in cash to the members of Endeavor Operating Company in accordance with the terms of the Endeavor Operating Company Agreement divided by (b) the per unit value of an Endeavor Operating Company Unit at the time of the exchange and (2) a corresponding number of shares of our Class X common stock and Class Y common stock.

 

  The members of Endeavor Manager (other than Endeavor Group Holdings) will have the right from time to time, subject to certain restrictions, to cause Endeavor Manager to redeem any or all of their vested Endeavor Manager Units (and paired shares of our Class X common stock), in exchange for, at our election, either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock, and if such redemption is made in exchange for shares of Class A common stock, it shall be effected as a direct purchase by Endeavor Group Holdings.

 

 

Each share of our Class Y common stock will automatically be canceled/redeemed (a) upon any sale or other transfer of (i) the paired Endeavor Operating Company Unit (or the paired Class A common stock in the case that the Endeavor Operating Company Unit and paired share of Class X common stock is redeemed and converted) in the case of affiliates of certain of our pre-IPO investors, including certain affiliates of Silver Lake, and other holders of Endeavor Operating Company Units (other than Endeavor Manager), and (ii) those paired shares of Class A common stock, in the case of affiliates of certain other pre-IPO investors, in each case subject to certain limited exceptions, such as transfers to certain permitted transferees, or (b) upon the earlier of (i) the date on which neither Messrs. Emanuel nor Whitesell is employed as our Chief Executive Officer or Executive Chairman and (ii) the date on which neither Messrs. Emanuel nor Whitesell own shares of our Class A common stock representing, and/or own securities that if redeemed for shares of our Class A common stock would represent an ownership interest



 

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in our Class A common stock representing, at least 25% of the shares of our Class A common stock owned by Messrs. Emanuel and Whitesell (or that would be owned by Messrs. Emanuel and Whitesell if all relevant securities they own were redeemed for shares of our Class A common stock), respectively, as of the completion of this offering (together with (i), a “Triggering Event”). See “Organizational Structure,” “Description of Capital Stock” and “Principal Stockholders.”

 

Use of proceeds

We estimate that our net proceeds from this offering and the concurrent private placements will be approximately $1,787.2 million (or approximately $1,863.8 million if the underwriters exercise their option to purchase additional shares in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, based on an assumed initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus). We intend to (1) use $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or interests in UFC Parent) directly from certain of the Other UFC Holders (or their affiliates) at a price per unit (with respect to Endeavor Operating Company Units) equal to the initial public offering price per share of Class A common stock sold in this offering and (2) contribute $951.5 million of the net proceeds from this offering and the concurrent private placements to Endeavor Manager (or $1,028.1 million if the underwriters exercise their option to purchase additional shares in full) in exchange for a number of Endeavor Manager Units equal to the contribution amount divided by the price paid by the underwriters for shares of our Class A common stock in this offering (provided that we may reduce such contribution amount, without reducing the number of Endeavor Manager Units we receive, by the amount of any expenses we pay in connection with this offering, the concurrent private placements and the UFC Buyout (which we estimate will be approximately $76.1 million) that are not otherwise paid or for which we are not otherwise reimbursed by Endeavor Operating Company). Endeavor Manager would then, in turn, contribute such contribution amount to Endeavor Operating Company in exchange for an equal number of Endeavor Operating Company Units. We intend to cause Endeavor Operating Company to use the net proceeds we contribute to it from this offering and the concurrent private placements for working capital and general corporate purposes. We may also use a portion of the net proceeds from this offering and the concurrent private placements to fund our current or future joint ventures, investments or acquisitions of complementary businesses or other assets, including the Reigning Champs Acquisition.

 

Dividend policy

We do not expect to pay any dividends or other distributions on our Class A common stock in the foreseeable future. We currently intend to retain future earnings. See “Dividend Policy.”


 

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Proposed Exchange symbol

“EDR”

 

Risk factors

You should read the “Risk Factors” section of this prospectus for a discussion of factors that you should consider carefully before deciding to invest in shares of our Class A common stock.

Unless we indicate otherwise or the context otherwise requires, the information in this prospectus:

 

   

gives effect to the reorganization transactions and the reclassification of existing ownership interests in Endeavor Operating Company into Endeavor Operating Company Units;

 

   

gives effect to the UFC Buyout;

 

   

gives effect to the issuance of an aggregate of 56,336,830 shares of our Class A common stock and the sale of 18,206,250 shares of Class A common stock from affiliates of KKR, in each case, to the private placement investors in each case, upon the closing of the concurrent private placements;

 

   

assumes an initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus);

 

   

assumes no exercise by the underwriters of their option to purchase additional shares of Class A common stock from us;

 

   

excludes shares issuable pursuant to stock options, restricted stock units, or other equity-based awards with respect to an aggregate amount of 21,700,000 shares of Class A common stock, that are initially reserved for issuance under the Endeavor Group Holdings, Inc. 2021 Incentive Award Plan (the “2021 Incentive Award Plan”) following the completion of this offering including shares issuable pursuant to stock options and restricted stock units with respect to an aggregate amount of 12,328,496 shares to be granted in connection with this offering (the “IPO Awards”). See “Executive Compensation—2021 Incentive Award Plan;”

 

   

excludes shares issuable pursuant to restricted stock units pursuant to potential future equity-based awards to Mr. Emanuel and Mr. Whitesell, as further described under “Executive Compensation - New Equity Awards;”

 

   

excludes 30,132,501 shares of Class A common stock reserved for issuance upon the exchange of Endeavor Manager Units (together with corresponding shares of our Class X common stock);

 

   

excludes 140,740,098 shares of Class A common stock reserved for issuance upon the exchange of Endeavor Operating Company Units (together with corresponding shares of our Class X common stock);

 

   

excludes 3,809,522 shares of Class A common stock reserved for issuance upon the exchange of Endeavor Operating Company Units (and paired shares of Class X common stock) issuable upon the exercise of the exchange rights of the holders of Endeavor Profits Units that will remain outstanding with a weighted-average per unit hurdle price of $23.16;

 

   

excludes 3,337,048 shares of Class A common stock reserved for issuance upon the exchange of Endeavor Operating Company Units (and paired shares of Class X common stock) issuable upon the exercise of the exchange rights of the holders of Endeavor Full Catch-Up Profits Units that will remain outstanding;

 

   

excludes 11,919,786 shares of Class A common stock reserved for issuance upon the exchange of Endeavor Operating Company Units (and paired shares of Class X common stock) issuable upon the exercise of the exchange rights of the holders of Endeavor Partial Catch-Up Profits Units that will remain outstanding with a weighted-average per unit hurdle price of $23.16;



 

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excludes Endeavor Phantom Units, which, at the time of this offering, and subject to certain conditions and limitations, would entitle their holders to cash equal to the value of (a) 659,131 Endeavor Operating Company Units, assuming an initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), and excluding 354,902 Endeavor Phantom Units that track the value of Endeavor Profits Units, or (b) 1,014,033 Endeavor Operating Company Units, if all performance-based vesting conditions of Endeavor Phantom Units with such conditions were satisfied and all Endeavor Phantom Units that track the value of Endeavor Profits Units instead tracked the value of Endeavor Operating Company Units on a one-to-one basis (regardless of such Endeavor Profits Units’ in-the-money value). The Company has historically settled Endeavor Phantom Units in cash, but may in its discretion settle these in Endeavor Manager Units, Endeavor Operating Company Units, Endeavor Profits Units or shares of our Class A common stock.

Securities Outstanding at Assumed Offering Price

Although the total number of Endeavor Operating Company Units and Endeavor Manager Units outstanding after the offering will not fluctuate based on the trading price of our Class A common stock, certain share information and information regarding Endeavor Operating Company Units and Endeavor Manager Units presented in this prospectus will vary depending on the initial public offering price in this offering. Specifically, the number of Endeavor Operating Company Units and Endeavor Manager Units issued in the reorganization transactions will vary, depending on the initial public offering price in this offering, which will also impact the shares of Class X common stock and Class Y common stock, received by members of Endeavor Manager (other than Endeavor Group Holdings) and members of Endeavor Operating Company (other than Endeavor Manager). An increase in the assumed initial public offering price would result in a decrease in the amount of Endeavor Operating Company Units and Endeavor Manager Units, and in turn, shares of Class X common stock, received by holders of Endeavor Manager Units (other than Endeavor Group Holdings) and shares of Class X common stock and Class Y common stock, as applicable, received by members of Endeavor Operating Company (other than Endeavor Manager). A decrease in the assumed initial public offering price would result in an increase in the amount of Endeavor Operating Company Units and Endeavor Manager Units, and in turn, shares of Class X common stock, received by holders of Endeavor Manager Units (other than Endeavor Group Holdings) and shares of Class X common stock and Class Y common stock, as applicable, received by members of Endeavor Operating Company (other than Endeavor Manager).



 

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For illustrative purposes only, the table below shows the number of Endeavor Manager Units held by members of Endeavor Manager (other than Endeavor Group Holdings), Endeavor Operating Company Units held by members of Endeavor Operating Company (other than Endeavor Manager), shares of Class X common stock and Class Y common stock outstanding immediately after giving effect to the reorganization transactions, the UFC Buyout, the concurrent private placements, and this offering (assuming no exercise of the underwriters’ option to purchase additional shares of Class A common stock from us) at various initial public offering prices:

 

Hypo Price    Class A
Shares
     Manager
Units
     EOC Units      Class X
Shares
     Class Y
Shares
 

$21.00

     262,921,377        28,346,554        151,583,988        198,996,279        250,782,546  

$22.00

     259,587,847        28,974,396        147,641,557        195,681,106        246,192,174  

$23.00

     256,544,239        29,547,913        144,041,971        192,654,506        242,001,015  

$24.00

     253,750,271        30,132,501        140,740,098        189,938,955        238,156,803  

$25.00

     251,183,657        30,644,586        137,704,535        187,414,940        234,622,353  

$26.00

     248,871,846        32,009,402        138,682,100        185,997,945        231,409,378  

$27.00

     246,675,652        32,540,501        136,105,242        183,949,850        228,403,102  

The table above excludes the following interests: (i) Endeavor Full Catch-Up Profits Units, (ii) Endeavor Profits Units (other than Endeavor Partial Catch-Up Profits Units) that will remain outstanding with a weighted average per unit hurdle price, and (iii) Endeavor Partial Catch-Up Profits Units. For illustrative purposes, the table below shows the number of such interests outstanding immediately after giving effect to the reorganization transactions, the concurrent private placements, the UFC Buyout, and this offering (assuming no exercise of the underwriters’ option to purchase additional shares of Class A common stock from us) at various initial public offering prices:

 

     Endeavor
Full Catch-
Up Profits
Units
     Endeavor Profits Units
other than Endeavor
Catch-Up Profits
Units (with a
weighted-
average per unit
hurdle price)
     Endeavor
Partial
Catch-Up
Profits Units
 

$21.00

     3,809,522        3,336,428        11,919,786  

$22.00

     3,809,522        3,335,845        11,919,786  

$23.00

     3,809,522        3,335,314        11,919,786  

$24.00

     3,809,522        3,337,048        11,919,786  

$25.00

     3,809,522        3,336,511        11,919,786  

$26.00

     —          3,337,370        11,969,072  

$27.00

     —          3,336,861        11,967,246  

Unless we indicate otherwise throughout this prospectus or the context otherwise requires, all information in this prospectus assumes (i) there are no restrictions on the ability of holders of Endeavor Operating Company Units or Endeavor Manager Units, in each case together with corresponding shares of our Class X common stock, to exercise at any time and from time to time the redemption rights described elsewhere in this prospectus, (ii) that, in each case where a member of Endeavor Operating Company or Endeavor Manager exercises such rights to cause Endeavor Operating Company or Endeavor Manager to redeem any or all of its Endeavor Operating Company Units (and in each case paired shares of Class X common stock) or Endeavor Manager Units (and paired shares of Class X common stock), as applicable, we determine to issue shares of Class A common stock in exchange therefor, rather than redeem or exchange for cash and (iii) there will be no exchange of Endeavor Profits Units for Endeavor Operating Company Units and paired shares of Class X common stock as described in “Organizational Structure.”



 

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SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL AND OTHER DATA

The following tables set forth our summary historical consolidated financial and other data for the periods presented. We were formed as a Delaware corporation in January 2019 and have not, to date, conducted any activities other than those incidental to our formation and the preparation of this prospectus and the registration statement of which this prospectus forms a part.

The consolidated statements of operations data for the years ended December 31, 2018, 2019 and 2020 and the consolidated balance sheet data as of December 31, 2019 and 2020 have been derived from Endeavor Operating Company’s audited consolidated financial statements included elsewhere in this prospectus.

The unaudited pro forma consolidated statements of operations for the year ended December 31, 2020 give effect to (i) the reorganization transactions described under “Organizational Structure,” (ii) the creation or acquisition of certain tax assets in connection with this offering and the reorganization transactions and the creation or acquisition of related liabilities in connection with entering into the tax receivable agreement with the Post-IPO TRA Holders, (iii) the adoption of the 2021 Incentive Award Plan, the expected issuance of the IPO grants upon the completion of this offering, and the modification of certain pre-IPO equity-based awards, (iv) the concurrent private placements and the application of the net proceeds from the concurrent private placements as described under “Use of Proceeds,” (v) the UFC Buyout and the fees and expenses related thereto, and (vi) this offering and the application of the net proceeds as described under “Use of Proceeds,” as if each had occurred on January 1, 2020. The unaudited pro forma consolidated balance sheet as of December 31, 2020 gives effect to (i) the reorganization transactions described under “Organizational Structure,” (ii) the acquisition or creation of certain tax assets in connection with this offering and the reorganization transactions and the creation or acquisition of related liabilities in connection with entering into the tax receivable agreement with the Post-IPO TRA Holders, (iii) the adoption of the 2021 Incentive Award Plan, the expected issuance of the IPO grants upon the completion of this offering, and the modification of certain pre-IPO equity-based awards, (iv) the concurrent private placements and the application of the net proceeds from the concurrent private placements as described under “Use of Proceeds,” (v) the UFC Buyout and the fees and expenses related thereto, and (vi) this offering and the application of the net proceeds from this offering as described under “Use of Proceeds,” as if each had occurred on December 31, 2020.

The summary historical and unaudited pro forma consolidated financial and other data presented below do not purport to be indicative of the results that can be expected for any future period and should be read together with “Capitalization,” “Unaudited Pro Forma Financial Information,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our respective consolidated financial statements and related notes thereto included elsewhere in this prospectus.



 

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Consolidated Statements of Operations Data:

 

     Years Ended
December 31,
    Pro Forma
Year Ended
December 31,
 
     2018     2019     2020     2020  
(In thousands, except per share data)                         

Revenue

   $ 3,613,478     $ 4,570,970     $ 3,478,743     $ 3,478,743  

Total operating expenses

     3,720,897       4,360,434       3,631,961       4,007,152  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income from continuing operations

     (107,419     210,536       (153,218     (528,409

Interest expense, net

     (277,200     (270,944     (284,586     (284,586

Loss from continuing operations, net of tax

     (463,694     (525,661     (625,318     (991,595

Income (loss) from discontinued operations, net of tax (including gain on sale in 2018)

     694,998       (5,000     —         —    

Net (loss) income

     231,304       (530,661     (625,318     (991,595

Net (loss) income attributable to non-controlling interests

     (85,241     23,158       29,616    
  

 

 

   

 

 

   

 

 

   

Net income (loss) attributable to Endeavor Operating Company, LLC

   $ 316,545     $ (553,819   $ (654,934  
  

 

 

   

 

 

   

 

 

   

Loss attributable to non-controlling interests

           (348,061
        

 

 

 

Loss attributable to Endeavor Group Holdings, Inc.

         $ (643,534
        

 

 

 

Pro forma loss per share data:

        

Basic and diluted loss per share of Class A common stockholders:

        

Basic

         $ (2.54

Diluted

         $ (2.54

Weighted average number of shares used in computing loss per share

        

Basic

           253,750,271  

Diluted

           253,750,271  

Selected Other Data:

        

Adjusted EBITDA(2)

   $ 551,086     $ 733,503     $ 572,547    

Net income (loss) margin

     6.4     (11.6 )%      (18.0 )%   

Adjusted EBITDA margin(2)

     15.3     16.0     16.5  

Adjusted Net Income(2)

   $ 100,117     $ 240,868     $ 84,811    


 

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Consolidated Balance Sheet Data:

 

     As of
December 31,
     Pro Forma
As of
December 31,
 
(In thousands)    2019      2020      2020 (1)  

Cash and cash equivalents

   $ 705,348      $ 1,008,485      $ 1,960,353  

Total assets

     9,292,299        9,633,634        10,582,727  

Long-term debt, including current portion

     5,045,273        5,925,805        5,925,805  

Total liabilities

     7,424,214        8,478,885        8,554,340  

Redeemable non-controlling interests

     136,809        168,254        176,823  

Redeemable equity

     43,693        22,519        —    

Members’ equity/shareholders’ equity

     913,274        277,847        898,947  

Nonredeemable non-controlling interests

     774,309        686,129        952,617  

Total members’/shareholders’ equity

     1,687,583        963,976        1,851,564  

 

(1)

Excludes any potential cash payments or issuances of Class A common stock pursuant to the Minimum Cash Returns.

 

(2)

Adjusted EBITDA is a non-GAAP financial measure and is defined as net income (loss), excluding the results of discontinued operations, income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger, acquisition and earn-out costs, certain legal costs, restructuring, severance and impairment charges, certain non-cash fair value adjustments, certain equity earnings, COVID-19 related expenses and certain other items when applicable. Adjusted EBITDA margin is a non-GAAP financial measure and is defined as Adjusted EBITDA divided by revenue.

Management believes that Adjusted EBITDA is useful to investors as it eliminates the significant level of non-cash depreciation and amortization expense that results from our capital investments and intangible assets recognized in business combinations, and improves comparability by eliminating the significant level of interest expense associated with our debt facilities, as well as income taxes, which may not be comparable with other companies based on our tax structure.

Adjusted EBITDA and Adjusted EBITDA margin are used as the primary bases to evaluate our consolidated operating performance.

Adjusted Net Income is a non-GAAP financial measure and is defined as net income (loss) attributable to Endeavor Operating Company, adjusted to exclude the results of discontinued operations and our share (excluding those relating to non-controlling interests) of the adjustments used to calculate Adjusted EBITDA, other than income taxes, net interest expense and depreciation, on an after-tax basis, the release of tax valuation allowances and other tax items.

Adjusted Net Income adjusts income or loss from continuing operations attributable to the Company for items not considered reflective of our operating performance. Management believes that such non-GAAP information is useful to investors and analysts as it provides a better understanding of the performance of our continuing operations for the periods presented and, accordingly, facilitates the development of future projections and earnings growth prospects.

Other companies may define Adjusted EBITDA, Adjusted EBITDA margin, or Adjusted Net Income differently, and as a result our measures of Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income may not be directly comparable to those of other companies. Although we use Adjusted EBITDA and Adjusted EBITDA margin as financial measures to assess the performance of our business, such use is limited because they do not include certain material costs necessary to operate our business. Adjusted



 

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EBITDA, Adjusted EBITDA margin, and Adjusted Net Income should be considered in addition to, and not as a substitute for, net income (loss) in accordance with GAAP as a measure of performance. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income should not be construed as an indication that our future results will be unaffected by unusual or nonrecurring items. Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

 

   

they do not reflect every cash expenditure, future requirements for capital expenditures, or contractual commitments;

 

   

Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

 

   

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income do not reflect any cash requirement for such replacements or improvements; and

 

   

they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

 

   

Because of these limitations, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income are not intended as alternatives to net income (loss) as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance. Our GAAP-based measures can be found in our consolidated financial statements and related notes included elsewhere in this prospectus.

The following table reconciles net (loss) income to Adjusted EBITDA:

 

     Years Ended
December 31,
 
(In thousands)    2018     2019     2020  

Net income (loss)

   $ 231,304     $ (530,661   $ (625,318

(Income) loss from discontinued operations, net of tax (including gain on sale in 2018)

     (694,998     5,000       —    

Provision for income taxes

     88,235       3,371       8,507  

Interest expense, net

     277,200       270,944       284,586  

Depreciation and amortization

     365,959       280,749       310,883  

Equity-based compensation expense(1)

     149,138       101,188       91,271  

Merger, acquisition and earn-out costs(2)

     66,577       49,869       22,178  

Certain legal costs(3)

     26,677       29,681       12,520  

Restructuring, severance and impairment(4)

     38,363       42,441       271,868  

Fair value adjustment—Droga5(5)

     38,962       3,734       405  

Fair value adjustment—equity investments(6)

     (67,318     11,759       469  

Equity method losses—Learfield IMG College(7)

     —         366,797       250,726  

COVID-19 related costs(8)

     —         —         2,692  

Other(9)

     30,987       98,631       (58,240
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 551,086     $ 733,503     $ 572,547  
  

 

 

   

 

 

   

 

 

 

Net income (loss) margin

     6.4     (11.6 )%      (18.0 )% 

Adjusted EBITDA margin

     15.3     16.0     16.5


 

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The following table reconciles net income (loss) to Adjusted Net Income:

 

     Years Ended
December 31,
 
(In thousands)    2018     2019     2020  

Net income (loss)

   $ 231,304     $ (530,661   $ (625,318

Net loss (income) attributable to non-controlling interests

     85,241       (23,158     (29,616
  

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to Endeavor Operating Company, LLC

     316,545       (553,819     (654,934

(Income) loss from discontinued operations, net of tax (including gain on sale in 2018)

     (694,998     5,000       —    

Amortization

     301,162       209,243       225,492  

Equity-based compensation expense(1)

     149,138       101,188       91,271  

Merger, acquisition and earn-out costs(2)

     66,577       49,869       22,178  

Certain legal costs(3)

     26,677       29,681       12,520  

Restructuring, severance and impairment(4)

     38,363       42,441       271,868  

Fair value adjustment—Droga5(5)

     38,962       3,734       405  

Fair value adjustment—equity investments(6)

     (67,318     11,759       469  

Equity method losses—Learfield IMG College(7)

     —         366,797       250,726  

COVID-19 related costs(8)

     —         —         2,692  

Other(9)

     30,987       98,631       (58,240

Tax effects of adjustments(10)

     (9,295     (29,757     (25,528

Adjustments allocated to non-controlling interests(11)

     (135,990     (93,899     (69,272

Valuation allowance and other tax items(12)

     39,307       —         15,164  
  

 

 

   

 

 

   

 

 

 

Adjusted Net Income

   $ 100,117     $ 240,868     $ 84,811  
  

 

 

   

 

 

   

 

 

 

 

(1)

Equity-based compensation expense represents primarily non-cash compensation expense associated with our equity-based compensation plans.

 

    

The decrease for the year ended December 31, 2020 as compared to the year ended December 31, 2019 was primarily due to fewer awards being granted in 2020. For the year ended December 31, 2019 and 2020, equity-based compensation expense primarily related to our Owned Sports Properties and Representation segments and Corporate.

 

    

The decrease for the year ended December 31, 2019 as compared to the year ended December 31, 2018 was primarily due to lower expense recorded for modifications offset by expense for new awards granted in 2019 and a full year of expense from grants awarded in 2018. In 2018 and 2019, equity-based compensation expense primarily related to our Owned Sports Properties and Representation segments and Corporate.

 

(2)

Includes (i) certain costs of professional advisors related to mergers, acquisitions, dispositions, or joint ventures and (ii) fair value adjustments for contingent consideration liabilities related to acquired businesses and compensation expense for deferred consideration associated with selling shareholders that are required to remain our employees.

 

    

Such costs for the year ended December 31, 2020 primarily related to professional advisor costs of approximately $13 million and primarily related to our Events, Experiences & Rights segment. Acquisition earn-out adjustments were approximately $9 million primarily related to our Representation segment.

 

    

Such costs for the year ended December 31, 2019 primarily related to our Representation segment, of which the largest component was earn-out adjustments, as well as our Events, Experiences & Rights segment, of which the largest component was professional advisor costs. Acquisition earn-out adjustments were approximately $34 million.



 

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Such costs for the year ended December 31, 2018 primarily related to our Representation segment, of which the largest component was earn-out adjustments as well as approximately $31 million of professional advisor costs primarily related to our Representation and Events, Experiences & Rights segments. Acquisition earn-out adjustments were approximately $36 million.

 

(3)

Includes costs related to certain litigation or regulatory matters impacting all of our segments and Corporate.

 

(4)

Includes certain costs related to our restructuring activities and non-cash impairment charges.

 

    

Such costs for the year ended December 31, 2020 included approximately $220 million related to the impairment of intangible assets and goodwill, approximately $19 million related to the impairment of certain other assets and investments, and approximately $32 million for severance and restructuring expenses, in each case primarily related to COVID-19, and primarily related to our Owned Sports Properties and Events, Experiences & Rights segments and Corporate.

 

    

Such costs for the year ended December 31, 2019 included approximately $29 million related to the impairment of certain investments and approximately $14 million for severance and restructuring expenses and primarily related to our Representation and Events, Experiences & Rights segments.

 

    

Such costs for the year ended December 31, 2018 primarily related to severance and restructuring expenses, including costs related to the cessation of operations of certain events and the impairment of related assets, and had a comparable impact on our Events, Experiences & Rights and Representation segments.

 

(5)

Reflects the change in fair value of our investment in Droga5, which was accounted for using the fair value option through the disposal of our interest in April 2019; such non-cash fair value adjustments relate to our Representation segment; and adjustment for cash items including receipt of working capital adjustments and other amounts after disposal.

 

(6)

Includes the net change in fair value for certain equity investments with and without readily determinable fair values, based on observable price changes, in accordance with ASU 2016-01 and ASU 2018-03 effective January 1, 2018.

 

(7)

Relates to equity method losses, including impairment charges, from our investment in Learfield IMG College following the merger of our IMG College business with Learfield in December 2018. Prior to its disposal in December 2018, income or loss from our IMG College business is classified as discontinued operations.

 

(8)

Includes COVID-19 related expenses that are non-recurring and incremental costs that would have otherwise not been incurred. Such adjustment does not include the write off of $11.0 million of deferred event costs, net of insurance recoveries, which is adjusted in our Events, Experiences & Rights segment profitability measure.

 

(9)

For the year ended December 31, 2020, other costs primarily comprised of a gain of approximately $27 million related to the consolidation of a previously held equity interest in FC Diez Media, a gain of approximately $15 million related to the sale of an investment, a gain of approximately $8 million associated with the deconsolidation of Asian Tour Media Pte. Ltd., a gain of approximately $13 million related to non-cash fair value adjustments of embedded foreign currency derivatives and approximately $3 million increase related to purchase price adjustments to deferred revenue and ticket inventory at On Location, which related primarily to our Events, Experiences & Rights segment.

 

    

For the year ended December 31, 2019, other costs primarily comprised charges of approximately $17 million related to the impairment of a note receivable due from an equity investment related to our Representation segment, approximately $39 million related to non-cash fair value adjustments of embedded foreign currency derivatives related to our Events, Experiences & Rights segment,



 

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  approximately $7 million of costs associated with the refinancing of our UFC Credit Facilities, which related primarily to our Owned Sports Properties segment, charges of approximately $28 million related to our prior initial public offering costs and $5 million related to a premium on the redemption of certain equity units held by an investor, which related to Corporate.

 

    

For the year ended December 31, 2018, other costs primarily comprised charges of approximately $19 million of costs associated with the refinancing of our Credit Facilities, which related primarily to Corporate, approximately $19 million related to the non-cash fair value adjustment of our UFC warrant liability at the Owned Sports Properties segment, as well as approximately $8 million of losses on foreign exchange transactions, which related primarily to our Events, Experiences & Rights segment and Corporate. In 2018, these charges were partially offset by approximately $18 million of a gain on disposal of a business, which related to our Representation segment.

 

(10)

Reflects the U.S. and non-U.S. tax impacts with respect to each adjustment noted above, as applicable.

 

(11)

Reflects the share of the adjustments noted above that are allocated to our non-controlling interests, net of tax.

 

(12)

Such items for the year ended December 31, 2020 relate to $34.3 million tax expense recorded as a result of acquisitions and subsequent tax restructurings, and the release of $19.1 million of valuation allowances on net deferred U.S. tax assets, exclusive of deferred tax liabilities on indefinite lived intangible assets, state income taxes, and foreign tax credits.

 

    

Such items for the year ended December 31, 2018 relate to a $21.8 million net tax expense recorded as a result of our acquisition of NeuLion and subsequent tax restructuring and $17.5 million related to the tax impact of losses recognized on certain agreements for foreign statutory purposes, subject to limitation under foreign tax law.



 

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RISK FACTORS

Investing in our Class A common stock involves substantial risks. You should carefully consider the following factors, together with all of the other information included in this prospectus, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes included elsewhere in this prospectus, before investing in our Class A common stock. Any of the risk factors we describe below could adversely affect our business, financial condition or results of operations. The market price of our Class A common stock could decline if one or more of these risks or uncertainties develop into actual events, causing you to lose all or part of your investment. We cannot assure you that any of the events discussed below will not occur. While we believe these risks and uncertainties are especially important for you to consider, we may face other risks and uncertainties that could adversely affect our business. Please also see “Forward-Looking Statements” for more information.

Risks Related to Our Business

The impact of the COVID-19 global pandemic could continue to materially and adversely affect our business, financial condition and results of operations.

In March 2020, the World Health Organization declared COVID-19 a global pandemic, and governmental authorities around the world implemented measures to reduce the spread of COVID-19. Numerous state and local jurisdictions, including in markets where we operate, imposed “shelter-in-place” orders, quarantines, travel restrictions, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19. For example, the federal and state governments in the United States imposed social distancing measures and restrictions on movement, at times only allowing essential businesses to remain open and restricting or regulating the way in which many businesses were able to operate. Such orders or restrictions resulted in work stoppages, slowdowns and delays, travel restrictions and cancellation of events, among other effects.

These measures began to have a significant adverse impact on our business and operations beginning in March 2020, including in the following ways: the inability to hold live ticketed PBR and UFC events and the early cancellation of the 2019-2020 Euroleague season adversely impacted our Owned Sports Properties segment; the postponement or cancellation of live sporting events and other in-person events adversely impacted our Events, Experiences & Rights segment; stoppages of entertainment productions, including film, television shows, and music events, as well as reduced corporate spending on marketing, experiential and activation, adversely impacted our Representation segment. 

While activity has resumed in certain of our businesses and restrictions have been lessened or lifted—for example, major sporting events for which we have media rights have restarted without, or with limited numbers of, fans and have gradually increased permitted fan attendance, film and television productions have begun in certain areas around the world, fashion photo shoots have taken place virtually, and students have returned to IMG Academy—restrictions impacting certain of our businesses remain in effect in locations where we are operating and could in the future be reduced or increased, or removed or reinstated. As a result of this and numerous other uncertainties, including the duration of the pandemic, potential for a resurgence of cases, impact of variants, enduring and additional actions that may be taken by governmental authorities to control the spread of COVID-19, including the continuing rollout of vaccines, availability of vaccine doses to the general public, “shelter-in-place” orders, quarantines, travel restrictions, social distancing measures, immigration restrictions, additional postponements or cancellations of live sporting events and other in-person events, and changes in consumer preferences towards our business and the industries in which we operate, we are unable to accurately predict the full impact of COVID-19 on our business, results of operations, financial position and cash flows; however, its impact may be significant. The ongoing pandemic has had a significant impact on our cash flows from operations. We expect that any recovery will continue to be gradual and that the wider impact on revenue and cash flows will vary, but will generally depend on the factors listed above and the general uncertainty surrounding COVID-19.

 

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As an example, for those live events that resume, attendance may continue at significantly reduced levels throughout 2021, and any resumption may bring increased costs to comply with new health and safety guidelines. Given the ongoing uncertainty, we have taken several steps to preserve capital and increase liquidity. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of the COVID-19 Pandemic.” We cannot assure you that such measures and our cash flows from operations, cash and cash equivalents, or cash available under our Senior Credit Facilities (as defined below) will be sufficient to meet our working capital requirements and commitments, including long-term debt service, in the foreseeable future.

We will continue to assess the situation, including abiding by any government-imposed restrictions, market by market. We are unable to accurately predict the ultimate impact that COVID-19 will have on our operations going forward due to the aforementioned uncertainties. We may be unable to accurately predict the impact, operating costs and effectiveness of continuing to adapt certain aspects of our business or restarting certain of our businesses that have not been fully operational during this period, or the future ways in which we will need to adapt our businesses to further changes or consumer behaviors arising out of the pandemic. In addition, any broader global deterioration in economic conditions, which may have an adverse impact on discretionary consumer spending, could also impact our business. For instance, consumer spending may be negatively impacted by general macroeconomic conditions, including a rise in unemployment and decreased consumer confidence resulting from the pandemic. Changing consumer behaviors as a result of COVID-19 may also have a material impact on our revenue for the foreseeable future.

In the past, governments have taken unprecedented actions in an attempt to address and rectify these extreme market and economic conditions by providing liquidity and stability to financial markets. If these actions are not successful, the return of adverse economic conditions may cause a material impact on our ability to raise capital, if needed, on a timely basis and on acceptable terms, or at all.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those relating to our liquidity, indebtedness, and our ability to comply with the covenants contained in the agreements that govern our indebtedness.

Changes in public and consumer tastes and preferences and industry trends could reduce demand for our services and content offerings and adversely affect our business.

Our ability to generate revenues is highly sensitive to rapidly changing consumer preferences and industry trends, as well as the popularity of the talent, brands, and owners of IP we represent, and the assets we own. Our success depends on our ability to offer premium content through popular channels of distribution that meet the changing preferences of the broad consumer market and respond to competition from an expanding array of choices facilitated by technological developments in the delivery of content. Our operations and revenues are affected by consumer tastes and entertainment trends, including the market demand for the distribution rights to live sports events, which are unpredictable and may be affected by changes in the social and political climate, or global issues such as the COVID-19 pandemic. Changes in consumers’ tastes or a change in the perceptions of our brands and business partners, whether as a result of the social and political climate or otherwise, could adversely affect our operating results. Our failure to avoid a negative perception among consumers or anticipate and respond to changes in consumer preferences, including in the form of content creation or distribution, could result in reduced demand for our services and content offerings or those of our clients and owned assets across our platform, which could have an adverse effect on our business, financial condition and results of operations.

Consumer tastes change frequently and it is a challenge to anticipate what offerings will be successful at any point in time. We may invest in our content and owned assets, including in the creation of original content, before learning the extent to which it will achieve popularity with consumers. For example, as of December 31, 2020 we have committed to spending approximately $2.2 billion in guaranteed payments for media, event, or other representation rights and similar expenses, regardless of our ability to profit from these rights. Specifically,

 

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our results of operations have been negatively impacted in the years ended December 31, 2020 and 2019 due to the costs associated with acquired media rights to major soccer events in excess of revenue, which will continue to adversely impact our results of operations for the term of certain of these contracts, two of which expire in 2021 and the last in 2024. A lack of popularity of these, our other content offerings, or our owned assets, as well as labor disputes, unavailability of a star performer, equipment shortages, cost overruns, disputes with production teams, or adverse weather conditions, could have an adverse effect on our business, financial condition and results of operations.

Our ability to generate revenue from discretionary and corporate spending on entertainment and sports events, such as corporate sponsorships and advertising, is subject to many factors, including many that are beyond our control, such as general macroeconomic conditions.

Our business depends on discretionary consumer and corporate spending. Many factors related to corporate spending and discretionary consumer spending, including economic conditions affecting disposable consumer income such as unemployment levels, fuel prices, interest rates, changes in tax rates, and tax laws that impact companies or individuals and inflation can significantly impact our operating results. While consumer and corporate spending may decline at any time for reasons beyond our control, the risks associated with our businesses become more acute in periods of a slowing economy or recession, which may be accompanied by reductions in corporate sponsorship and advertising and decreases in attendance at live entertainment and sports events, among other things. There can be no assurance that consumer and corporate spending will not be adversely impacted by current economic conditions, or by any future deterioration in economic conditions, thereby possibly impacting our operating results and growth. A prolonged period of reduced consumer or corporate spending, such as those during the COVID-19 pandemic, could have an adverse effect on our business, financial condition, and results of operations.

We may not be able to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies.

We must successfully adapt to and manage technological advances in our industry, including the emergence of alternative distribution platforms. If we are unable to adopt or are late in adopting technological changes and innovations that other entertainment providers offer, it may lead to a loss of consumers viewing our content, a reduction in revenues from attendance at our live events, a loss of ticket sales, or lower ticket fees. It may also lead to a reduction in our clients’ ability to monetize new platforms. Our ability to effectively generate revenue from new distribution platforms and viewing technologies will affect our ability to maintain and grow our business. Emerging forms of content distribution may provide different economic models and compete with current distribution methods (such as television, film, and pay-per-view (“PPV”)) in ways that are not entirely predictable, which could reduce consumer demand for our content offerings. We must also adapt to changing consumer behavior driven by advances that allow for time shifting and on-demand viewing, such as digital video recorders and video-on-demand, as well as internet-based and broadband content delivery and mobile devices. If we fail to adapt our distribution methods and content to emerging technologies and new distribution platforms, while also effectively preventing digital piracy, our ability to generate revenue from our targeted audiences may decline and could result in an adverse effect on our business, financial condition, and results of operations.

Because our success depends substantially on our ability to maintain a professional reputation, adverse publicity concerning us, one of our businesses, our clients, or our key personnel could adversely affect our business.

Our professional reputation is essential to our continued success and any decrease in the quality of our reputation could impair our ability to, among other things, recruit and retain qualified and experienced agents, managers, and other key personnel, retain or attract agency clients or customers, or enter into multimedia, licensing, and sponsorship engagements. Our overall reputation may be negatively impacted by a number of factors, including negative publicity concerning us, members of our management or our agents, managers, and

 

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other key personnel. In addition, we are dependent for a portion of our revenues on the relationships between content providers and the clients and key brands, such as sports leagues and federations, that we represent, many of whom are significant public personalities with large social media followings whose actions generate significant publicity and public interest. Any adverse publicity relating to such individuals or entities that we employ or represent, or to our company, including from reported or actual incidents or allegations of illegal or improper conduct, such as harassment, discrimination, or other misconduct, could result in significant media attention, even if not directly relating to or involving Endeavor, and could have a negative impact on our professional reputation. This could result in termination of licensing or other contractual relationships, or our employees’ ability to attract new customer or client relationships, or the loss or termination of such employees’ services, all of which could adversely affect our business, financial condition, and results of operations. Our professional reputation could also be impacted by adverse publicity relating to one or more of our owned or majority owned brands, events, or businesses.

We depend on the relationships of our agents, managers, and other key personnel with clients across many categories, including television, film, professional sports, fashion, music, literature, theater, digital, sponsorship and licensing.

We depend upon relationships that our agents, managers, and other key personnel have developed with clients across many content categories, including, among others, television, film, professional sports, fashion, music, literature, theater, digital, sponsorship, and licensing. The relationships that our agents, managers, and other key personnel have developed with studios, brands, and other key business contacts help us to secure access to sponsorships, endorsements, professional contracts, productions, events, and other opportunities for our clients. Due to the importance of those industry contacts to us, a substantial deterioration in these relationships, or substantial loss of agents, managers, or other key personnel who maintain these relationships, could adversely affect our business. In particular, our client management business is dependent upon the highly personalized relationships between our agent and manager teams and their respective clients. A substantial deterioration in the team managing a client may result in a deterioration in our relationship with, or the loss of, the clients represented by that agent or manager. The substantial loss of multiple agents or managers and their associated clients could have an adverse effect on our business, financial condition, and results of operations. Most of our agents, managers, and other key personnel are not party to long-term contracts and, in any event, can leave our employment with little or no notice. We can give no assurance that all or any of these individuals will remain with us or will retain their associations with key business contacts.

Our success depends, in part, on our continuing ability to identify, recruit, and retain qualified and experienced agents and managers. If we fail to recruit and retain suitable agents or if our relationships with our agents change or deteriorate, it could adversely affect our business.

Our success depends, in part, upon our continuing ability to identify, recruit, and retain qualified and experienced agents and managers. There is great competition for qualified and experienced agents and managers in the entertainment and sports industry, and we cannot assure you that we will be able to continue to hire or retain a sufficient number of qualified persons to meet our requirements, or that we will be able to do so under terms that are economically attractive to us. Any failure to retain certain agents and managers could lead to the loss of sponsorship, multimedia, and licensing agreements, and other engagements and have an adverse effect on our business, financial condition, and results of operations.

Our failure to identify, sign, and retain clients could adversely affect our business.

We derive substantial revenue from the engagements, sponsorships, licensing rights, and distribution agreements entered into by the clients with whom we work. We depend on identifying, signing, and retaining as clients those artists, athletes, models, and businesses whose identities or brands are in high demand by the public and, as a result, are deemed to be favorable candidates for engagements. Our competitive position is dependent on our continuing ability to attract, develop, and retain clients whose work is likely to achieve a high degree of

 

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value and recognition as well as our ability to provide such clients with sponsorships, endorsements, professional contracts, productions, events, and other opportunities. Our failure to attract and retain these clients, an increase in the costs required to attract and retain such clients, or an untimely loss or retirement of these clients could adversely affect our financial results and growth prospects. We have not entered into written agreements with many of the clients we represent. These clients may decide to discontinue their relationship with us at any time and without notice. In addition, the clients with whom we have entered into written contracts may choose not to renew their contracts with us on reasonable terms or at all or they may breach or seek to terminate these contracts. If any of our clients decide to discontinue their relationships with us, whether they are under a contract or not, we may be unable to recoup costs expended to develop and promote them and our financial results may be adversely affected. Further, the loss of such clients could lead other of our clients to terminate their relationships with us.

We derive substantial revenue from the sale of multimedia rights, licensing rights, and sponsorships. A significant proportion of this revenue is dependent on our commercial agreements with entertainment and sports events. Our failure to renew or replace these key commercial agreements on similar or better terms could have an adverse effect on our business, financial condition and results of operations.

Our business involves potential internal conflicts of interest and includes our client representation businesses representing both talent and content rights holders and distributors while our content businesses produce content, which may create a conflict of interest.

Increasingly, we must manage actual and potential internal conflicts of interest in our business due to the breadth and scale of our platform. Different parts of our business may have actual or potential conflicts of interest with each other, including our client representation, media production, events production, sponsorship, and content development businesses. Although we attempt to manage these conflicts appropriately, any failure to adequately address or manage internal conflicts of interest could adversely affect our reputation, and the willingness of clients and third parties to work with us may be affected if we fail, or appear to fail, to deal appropriately with actual or perceived internal conflicts of interest, which could have an adverse effect on our business, financial condition, and results of operations.

The markets in which we operate are highly competitive, both within the United States and internationally.

We face competition from a variety of other domestic and foreign companies. We face competition from alternative providers of the content, services, and events we and our clients offer and from other forms of entertainment and leisure activities in a rapidly changing and increasingly fragmented environment. Any increased competition, which may not be foreseeable, or our failure to adequately address any competitive factors, could result in reduced demand for our content, live events, clients, or key brands, which could have an adverse effect on our business, financial condition, and results of operations.

We depend on the continued service of the members of our executive management and other key employees, as well as management of acquired businesses, the loss or diminished performance of whom could adversely affect our business.

Our performance is substantially dependent on the performance of the members of our executive management and other key employees, as well as management of acquired businesses. We seek to acquire businesses that have strong management teams and often rely on these individuals to conduct day-to-day operations and pursue growth. Although we have entered into employment and severance protection agreements with certain members of our senior management team and we typically seek to sign employment agreements with the management of acquired businesses, we cannot be sure that any member of our senior management or management of the acquired businesses will remain with us or that they will not compete with us in the future. The loss of any member of our senior management team could impair our ability to execute our business plan and growth strategy, have a negative impact on our revenues and the effective working relationships that our

 

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executive management have developed, and cause employee morale problems and the loss of additional key employees, agents, managers, and clients.

We depend on key relationships with television and cable networks, satellite providers, digital streaming partners and other distribution partners, as well as corporate sponsors.

A key component of our success is our relationships with television and cable networks, satellite providers, digital streaming and other distribution partners, as well as corporate sponsors. We are dependent on maintaining these existing relationships and expanding upon them to ensure we have a robust network with whom we can work to arrange multimedia rights sales and sponsorship engagements, including distribution of our owned, operated, or represented events. Our television programming for our owned, operated, and represented events is distributed by television and cable networks, satellite providers, PPV, digital streaming, and other media. Because a portion of our revenues are generated, directly and indirectly, from this distribution, any failure to maintain or renew arrangements with distributors and platforms, the failure of distributors or platforms to continue to provide services to us, or the failure to enter into new distribution opportunities on terms favorable to us could adversely affect our business. We regularly engage in negotiations relating to substantial agreements covering the distribution of our television programming by carriers located in the United States and abroad. We have an important relationship with ESPN as they are the exclusive domestic home to all UFC events. We have agreements with multiple PPV providers globally and distribute a portion of our owned, operated, or represented events through PPV, including certain events that are sold exclusively through PPV. Any adverse change in these relationships or agreements or a deterioration in the perceived value of our clients, sponsorships, or these distribution channels could have an adverse effect on our business, financial condition and results of operations.

Owning and managing certain events for which we sell media and sponsorship rights, ticketing and hospitality exposes us to greater financial risk. If the live events that we own and manage are not financially successful, our business could be adversely affected.

We act as a principal by owning and managing certain live events for which we sell media and sponsorship rights, ticketing and hospitality, such as UFC’s events, the Miami Open, the Miss Universe competition, the Professional Bull Riders’ events, and On Location’s experiences. Organizing and operating a live event involves significant financial risk as we bear all or most event costs, including a significant amount of up-front costs. In addition, we typically book our live events many months in advance of holding the event and often agree to pay a fixed guaranteed amount prior to receiving any related revenue. Accordingly, if a planned event fails to occur or there is any disruption in our ability to live stream or otherwise distribute, whether as a result of technical difficulties or otherwise, we could lose a substantial amount of these up-front costs, fail to generate the anticipated revenue, and be forced to issue refunds for media and sponsorship rights, advertising fees, and ticket sales. If we are forced to postpone a planned event, we would incur substantial additional costs in order to stage the event on a new date, may have reduced attendance and revenue, and may have to refund fees. We could be compelled to cancel or postpone all or part of an event for many reasons, including poor weather, issues with obtaining permits or government regulation, performers failing to participate, as well as operational challenges caused by extraordinary incidents, such as terrorist or other security incidents, mass-casualty incidents, natural disasters, public health concerns including pandemics, or similar events. Such incidents have been shown to cause a nationwide disruption of commercial and leisure activities. We often have cancellation insurance policies in place to cover a portion of our losses if we are compelled to cancel an event, but our coverage may not be sufficient and is subject to deductibles. If the live events that we own and manage are not financially successful, we could suffer an adverse effect on our business, financial condition and results of operations.

 

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Our recent acquisitions have caused us to grow rapidly, and we will need to continue to make changes to operate at our current size and scale. We may face difficulty in further integrating the operations of the businesses acquired in our recent transactions, and we may never realize the anticipated benefits and cost synergies from all of these transactions. If we are unable to manage our current operations or any future growth effectively, our business could be adversely affected.

Our recent acquisitions have caused us to grow rapidly, and we may need to continue to make changes to operate at our current size and scale. If we fail to realize the anticipated benefits and cost synergies from our recent acquisitions, or if we experience any unanticipated or unidentified effects in connection with these transactions, including write-offs of goodwill, accelerated amortization expenses of other intangible assets, or any unanticipated disruptions with important third-party relationships, our business, financial condition, and results of operations could be adversely affected. Moreover, our recent acquisitions involve risks and uncertainties including, without limitation, those associated with the integration of operations, financial reporting, technologies and personnel, and the potential loss of key employees, agents, managers, clients, customers, or strategic partners. Because the integration of the businesses acquired in our recent transactions have and will require significant time and resources, and we may not be able to manage the process successfully, these acquisitions may not be accretive to our earnings and they may negatively impact our results of operations. If our operations continue to grow, we will be required, among other things, to upgrade our management information systems and other processes and to obtain more space for our expanding administrative support and other headquarters personnel. Our continued growth could strain our resources and we could experience operating difficulties, including difficulties in hiring, training, and managing an increasing number of employees. These difficulties could result in the erosion of our brand image and reputation and could have an adverse effect on our business, financial condition, and operating results.

We may be unsuccessful in our strategic acquisitions, investments and commercial agreements, and we may pursue acquisitions, investments or commercial agreements for their strategic value in spite of the risk of lack of profitability.

We face significant uncertainty in connection with acquisitions, investments, and commercial agreements. To the extent we choose to pursue certain commercial, investment, or acquisition strategies, we may be unable to identify suitable targets for these deals, or to make these deals on favorable terms. If we identify suitable acquisition candidates, investments, or commercial partners, our ability to realize a return on the resources expended pursuing such deals, and to successfully implement or enter into them will depend on a variety of factors, including our ability to obtain financing on acceptable terms, requisite governmental approvals, as well as the factors discussed below. Additionally, we may decide to make or enter into acquisitions, investments, or commercial agreements with the understanding that such acquisitions, investments, or commercial agreements will not be profitable, but may be of strategic value to us. Our current and future acquisitions, investments, including existing investments accounted for under the equity method, or commercial agreements may also require that we make additional capital investments in the future, which would divert resources from other areas of our business. We cannot provide assurances that the anticipated strategic benefits of these deals will be realized in the long-term or at all.

We may fail to identify or assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring a company, making an investment or entering into a commercial agreement and, as such, may not obtain sufficient warranties, indemnities, insurance, or other protections. This could result in unexpected litigation or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes, a loss of anticipated tax benefits, or other adverse effects on our business, operating results, or financial condition. Additionally, some warranties and indemnities may give rise to unexpected and significant liabilities. Future acquisitions and commercial arrangements that we may pursue could result in dilutive issuances of equity securities and the incurrence of further debt.

Our compliance with regulations may limit our operations and future acquisitions.

We are also subject to laws and regulations, including those relating to antitrust, that could significantly affect our ability to expand our business through acquisitions or joint ventures. For example, the Federal Trade

 

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Commission and the Antitrust Division of the U.S. Department of Justice with respect to our domestic acquisitions and joint ventures, and the European Commission, the antitrust regulator of the European Union (the “E.U.”), with respect to our European acquisitions and joint ventures, have the authority to challenge our acquisitions and joint ventures on antitrust grounds before or after the acquisitions or joint ventures are completed. State agencies, as well as comparable authorities in other countries, may also have standing to challenge these acquisitions and joint ventures under state or federal antitrust law. Our failure to comply with all applicable laws and regulations could result in, among other things, regulatory actions or legal proceedings against us, the imposition of fines, penalties, or judgments against us, or significant limitations on our activities. Multiple or repeated failures by us to comply with these laws and regulations could result in increased fines, actions or legal proceedings against us. Gaming authorities may levy fines against us or seize certain of our assets if we violate gaming regulations. In addition, the regulatory environment in which we operate is subject to change. New or revised requirements imposed by governmental regulatory authorities could have adverse effects on us, including increased costs of compliance. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and regulations by these governmental authorities.

Our business and operations are subject to a variety of regulatory requirements in the United States and abroad, including, among other things, with respect to labor, tax, import and export, anti-corruption, data privacy and protection and communications monitoring and interception. Compliance with these regulatory requirements may be onerous and expensive, especially where these requirements are inconsistent from jurisdiction to jurisdiction or where the jurisdictional reach of certain requirements is not clearly defined or seeks to reach across national borders. Regulatory requirements in one jurisdiction may make it difficult or impossible to do business in another jurisdiction. We may also be unsuccessful in obtaining permits, licenses or other authorizations required to operate our business. While we have implemented policies and procedures designed to achieve compliance with these laws and regulations, we cannot be sure that we or our personnel will not violate applicable laws and regulations or our policies regarding the same.

We and certain of our affiliates, major stockholders (generally persons and entities beneficially owning a specified percentage (typically 5% or more) of our equity securities), directors, officers, and key employees are also subject to extensive background investigations and suitability standards in our businesses. Our failure, or the failure of any of our major stockholders, directors, officers, key employees, products, or technology, to obtain or retain a required license or approval in one jurisdiction could negatively impact our ability (or the ability of any of our major stockholders, directors, officers, key employees, products, or technology) to obtain or retain required licenses and approvals in other jurisdictions.

We share control in joint venture projects, other investments, and strategic alliances, which limits our ability to manage third-party risks associated with these projects.

We participate in a number of joint ventures, other non-controlling investments, and strategic alliances and may enter into additional joint ventures, investments, and strategic alliances in the future. In these joint ventures, investments, and strategic alliances, we often have shared control over the operation of the assets and businesses. As a result, such investments and strategic alliances may involve risks such as the possibility that a partner in an investment might become bankrupt, be unable to meet its capital contribution obligations, have economic or business interests or goals that are inconsistent with our business interests or goals, or take actions that are contrary to our instructions or to applicable laws and regulations. In addition, we may be unable to take action without the approval of our partners, or our partners could take binding actions without our consent. Consequently, actions by a partner or other third party could expose us to claims for damages, financial penalties, additional capital contributions, and reputational harm, any of which could have an adverse effect on our business, financial condition, and results of operations.

Preparing our financial statements requires us to have access to information regarding the results of operations, financial position, and cash flows of our joint ventures and other investments. Any deficiencies in their internal controls over financial reporting may affect our ability to report our financial results accurately or

 

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prevent or detect fraud. Such deficiencies also could result in restatements of, or other adjustments to, our previously reported or announced operating results, which could diminish investor confidence and reduce the market price for our Class A common stock. Additionally, if our joint ventures and other investments are unable to provide this information for any meaningful period or fail to meet expected deadlines, we may be unable to satisfy our financial reporting obligations or timely file our periodic reports.

Our key personnel may be adversely impacted by immigration restrictions and related factors.

Our ability to retain our key personnel is impacted, at least in part, by the fact that a portion of our key personnel in the United States is comprised of foreign nationals who are not United States citizens. In order to be legally allowed to work in the United States, these individuals generally hold immigrant visas (which may or may not be tied to their employment with us) or green cards, the latter of which makes them permanent residents in the United States.

The ability of these foreign nationals to remain and work in the United States is impacted by a variety of laws and regulations, as well as the processing procedures of various government agencies. Changes in applicable laws, regulations, or procedures could adversely affect our ability to hire or retain these key personnel and could affect our costs of doing business and our ability to deliver services to our clients. In addition, if the laws, rules or procedures governing the ability of foreign nationals to work in the United States were to change or if the number of visas available for foreign nationals permitted to work in the United States were to be reduced, our business could be adversely affected, if, for example, we were unable to retain an employee who is a foreign national.

Corresponding issues apply with respect to our key personnel working in countries outside of the United States relating to citizenship and work authorizations. Similar changes in applicable laws, regulations or procedures in those countries could adversely affect our ability to hire or retain key personnel internationally.

The business of our agents and managers and the clients we represent is international in nature and may require them to frequently travel or live abroad. The ability of our key personnel and talent to travel internationally for their work is impacted by a variety of laws and regulations, policy considerations of foreign governments, the processing procedures of various government agencies and geopolitical actions, including war and terrorism, or natural disasters including earthquakes, hurricanes, floods, fires, as well as pandemics, such as the COVID-19 pandemic. In addition, our productions and live events internationally subject us to the numerous risks involved in foreign travel and operations and also subject us to local norms and regulations, including regulations requiring us to obtain visas for our key personnel and, in some cases, hired talent. Actions by the clients we represent that are out of our control may also result in certain countries barring them from travelling internationally, which could adversely affect our business. If our key personnel and talent were prevented from conducting their work internationally for any reason, it could have an adverse effect on our business, financial condition, and results of operations.

We rely on technology, such as our information systems, to conduct our business. Failure to protect our technology against breakdowns and security breaches could adversely affect our business.

We rely on technology, such as our information systems, content distribution systems, ticketing systems, and payment processing systems, to conduct our business. This technology is vulnerable to service interruptions and security breaches from inadvertent or intentional actions by our employees, partners, and vendors, or from attacks by malicious third parties. Such attacks are of ever-increasing levels of sophistication and are made by groups and individuals with a wide range of motives and expertise, including organized criminal groups, “hacktivists,” nation states, and others. The techniques used to breach security safeguards evolve rapidly, and they may be difficult to detect for an extended period of time, and the measures we take to safeguard our technology may not adequately prevent such incidents.

 

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While we have taken steps to protect our confidential and personal information and that of our clients and other business relationships and have invested in information technology, there can be no assurance that our efforts will prevent service interruptions or security breaches in our systems or the unauthorized or inadvertent wrongful use or disclosure of such confidential information. Such incidents could adversely affect our business operations, reputation, and client relationships. Any such breach would require us to expend significant resources to mitigate the breach of security and to address matters related to any such breach, including the payment of fines. Although we maintain an insurance policy that covers data security, privacy liability, and cyber-attacks, our insurance may not be adequate to cover losses arising from breaches or attacks on our systems. We also may be required to notify regulators about any actual or perceived personal data breach as well as the individuals who are affected by the incident within strict time periods.

Furthermore, we have a large number of operating entities throughout the world and, therefore, operate on a largely decentralized basis. We are also in the process of integrating the technology of our acquired companies. The resulting size and diversity of our technology systems, as well as the systems of third-party vendors with whom we contract, increase the vulnerability of such systems to breakdowns and security breaches. In addition, we rely on technology at live events, the failure or unavailability of which, for any significant period of time, could affect our business, our reputation and the success of our live events. We also rely on technology to provide our digital offerings, live streaming, and virtual events, which may be vulnerable to hacking, denial of service attacks, human error and other unanticipated problems or events that could result in interruptions in our service and to unauthorized access to, or alteration of, the content and data contained on our systems and those of our third-party vendors. Any significant interruption or failure of the technology upon which we rely, or any significant breach of security, could result in decreased performance and increased operating costs, adversely affecting our business, financial condition, and results of operations.

In addition, our use of social media presents the potential for further vulnerabilities. For instance, we may be subject to boycotts, spam, spyware, ransomware, phishing and social engineering, viruses, worms, malware, DDOS attacks, password attacks, man-in-the-middle attacks, cybersquatting, impersonation of employees or officers, abuse of comments and message boards, fake reviews, doxing, and swatting. While we have internal policies in place to protect against these vulnerabilities, we can make no assurances that we will not be adversely affected should one of these events occur. Additionally, there is an increased risk that we may experience cybersecurity-related events such as COVID-19-themed phishing attacks and other security challenges as a result of most of our employees and our service providers working remotely from non-corporate-managed networks during the ongoing COVID-19 pandemic and potentially beyond.

Unauthorized disclosure of sensitive or confidential client or customer information could harm our business and standing with our clients and customers.

The protection of our client, customer, employee, and other company data is critical to us. We collect, store, transmit, and use personal information relating to, among others, our clients, IMG Academy students, employees, consumers, and event participants. We also collect certain data through our 160over90 marketing ventures and our Endeavor Content offerings, which may include a range of talent and production information and data provided to us by our clients. During the COVID-19 pandemic, we also have been collecting certain COVID-related health and wellness information about our employees and others. We rely on commercially available systems, software, tools, and monitoring to provide security for processing, transmission, and storage of confidential client and customer information. Our facilities and systems, and those of our third-party service providers, may be vulnerable to security breaches, acts of vandalism, payment card terminal tampering, computer viruses, misplaced, lost or stolen data, programming or human errors, or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of client or customer information, whether by us or our third-party service providers, could damage our reputation, result in the loss of clients and customers, expose us to risk of litigation and liability or regulatory investigations or actions, disrupt our operations, and harm our business. In addition, as a result of recent security breaches, the media and public scrutiny of information security and privacy has become more intense. As a result, we may incur significant costs to change our business practices or modify our service offerings in connection with the protection of personally identifiable information.

 

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Regulatory action for alleged privacy violations could result in significant fines.

Regulators may impose significant fines for privacy and data protection violations. Our business operations involve the collection, transfer, use, disclosure, security, and disposal of personal or sensitive information in various locations around the world, including the E.U. As a result, our business is subject to complex and evolving U.S. and international laws and regulations regarding privacy and data protection. Many of these laws and regulations are subject to change and uncertain interpretation and could result in claims, changes to our business practices, penalties, increased cost of operations, or otherwise harm our business. For example, the European Union’s General Data Protection Regulation (“GDPR”) creates requirements for in-scope businesses regarding personal data, broadly defined as information relating to an identifiable person. Non-compliance with the GDPR carries significant monetary penalties of up to the higher of 4% of a company’s worldwide total revenue or €20 million. However, there can be no assurances that we will be successful in our efforts to comply with the GDPR or other privacy and data protection laws and regulations, or that violations will not occur, particularly given the complexity of both these laws and our business, as well as the uncertainties that accompany new laws. In addition, in June 2018, California passed the California Consumer Privacy Act of 2018 (the “CCPA”), which became operational on January 1, 2020 and imposes significant data privacy and potential statutory damages related to data protection for the data of California residents. The effects of this legislation potentially are far-reaching and may require us to modify our data processing practices and policies and to incur significant costs and expenses in an effort to comply. Further, on November 3, 2020, the California Privacy Rights Act (the “CPRA”) was voted into law by California residents. The CPRA significantly amends the CCPA, and imposes additional data protection obligations on companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. It also creates a new California data protection agency specifically tasked to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security. The substantive requirements for businesses subject to the CPRA will go into effect on January 1, 2023, and become enforceable on July 1, 2023. Similar laws have been proposed in other states and at the federal level. Other international laws are also in place or pending, and such laws may have potentially conflicting requirements that would make compliance challenging.

We may be unable to protect our trademarks and other intellectual property rights, and others may allege that we infringe upon their intellectual property rights.

We have invested significant resources in brands associated with our business such as “Endeavor,” “WME,” “William Morris Endeavor,” “IMG” and “UFC” in an attempt to obtain and protect our public recognition. These brands are essential to our success and competitive position. We have also invested significant resources in the premium content that we produce.

Our trademarks and other intellectual property rights are critical to our success and our competitive position. Our intellectual property rights may be challenged and invalidated by third parties and may not be strong enough to provide meaningful commercial competitive advantage. If we fail to maintain our intellectual property, our competitors might be able to enter the market, which would harm our business. Further, policing unauthorized use and other violations of our intellectual property is difficult, particularly given our global scope, so we are susceptible to others infringing, diluting or misappropriating our intellectual property rights. If we are unable to maintain and protect our intellectual property rights adequately, we may lose an important advantage in the markets in which we compete. In particular, the laws of certain foreign countries do not protect intellectual property rights in the same manner as do the laws of the United States and, accordingly, our intellectual property is at greater risk in those countries even where we take steps to protect such intellectual property. While we believe we have taken, and take in the ordinary course of business, appropriate available legal steps to reasonably protect our intellectual property, we cannot predict whether these steps will be adequate to prevent infringement or misappropriation of these rights.

 

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From time to time, in the ordinary course of our business, we become involved in opposition and cancellation proceedings with respect to some of our intellectual property or third-party intellectual property. Any opposition and cancellation proceedings or other litigation or dispute involving the scope or enforceability of our intellectual property rights or any allegation that we infringe, misappropriate or dilute upon the intellectual property rights of others, regardless of the merit of these claims, could be costly and time-consuming. If any infringement or other intellectual property claim made against us by any third party is successful, if we are required to indemnify a third party with respect to a claim, or if we are required to, or decide to, cease use of a brand, rebrand or obtain non-infringing intellectual property (such as through a license), it could result in harm to our competitive position and could adversely affect our business and financial condition.

Through new and existing legal and illegal distribution channels, consumers have increasing options to access entertainment video. Piracy, in particular, threatens to damage our business. Furthermore, in light of the compelling consumer proposition, piracy services are subject to rapid global growth. The success of our streaming video solutions (e.g. FIGHT PASS) is directly threatened by the availability and use of pirated alternatives. The value that streaming services are willing to pay for content that we develop may be reduced if piracy prevents these services from realizing adequate revenues on these acquisitions.

Lastly, in the event of a bankruptcy, our intellectual property licenses could be affected in numerous ways. There is a concern that a bankruptcy can result in us losing intellectual property rights. Although some protections are granted via the United States Bankruptcy Code, the United States Bankruptcy Code definition of intellectual property only includes trade secrets, patents and patent applications, copyrights, and mask works and does not include trademarks. Because we rely heavily on the licensing of trademarks, we are at risk of losing rights in the event of a bankruptcy.

As a result of our operations in international markets, we are subject to risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to such markets.

We provide services in various jurisdictions abroad through a number of brands and businesses that we own and operate, as well as through joint ventures, and we expect to continue to expand our international presence. We face, and expect to continue to face, additional risks in the case of our existing and future international operations, including:

 

   

political instability, adverse changes in diplomatic relations and unfavorable economic conditions in the markets in which we have international operations or into which we may expand;

 

   

more restrictive or otherwise unfavorable government regulation of the entertainment and sports industry, which could result in increased compliance costs or otherwise restrict the manner in which we provide services and the amount of related fees charged for such services;

 

   

limitations on the enforcement of intellectual property rights;

 

   

enhanced difficulties of integrating any foreign acquisitions;

 

   

limitations on the ability of foreign subsidiaries to repatriate profits or otherwise remit earnings;

 

   

adverse tax consequences;

 

   

less sophisticated legal systems in some foreign countries, which could impair our ability to enforce our contractual rights in those countries;

 

   

limitations on technology infrastructure;

 

   

variability in venue security standards and accepted practices; and

 

   

difficulties in managing operations due to distance, language and cultural differences, including issues associated with (i) business practices and customs that are common in certain foreign countries but might be prohibited by U.S. law and our internal policies and procedures and (ii) management and

 

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operational systems and infrastructures, including internal financial control and reporting systems and functions, staffing and managing of foreign operations, which we might not be able to do effectively or on a cost—efficient basis.

If our goodwill or intangible assets become impaired, we may be required to record an additional significant charge to earnings.

We review our goodwill for impairment annually as of October 1 and at any time upon the occurrence of certain events or substantive changes in circumstances that indicate the carrying amount of goodwill may not be recoverable. If such goodwill or intangible assets are deemed to be impaired, an impairment loss equal to the amount by which the carrying amount exceeds the fair value of the assets would be recognized. In the year ended December 31, 2020, we recorded $220.5 million of goodwill and intangible asset impairment charges primarily at our Events, Experiences & Rights segment, driven by lower projections as a result of the impact of COVID-19 and restructuring in certain of our businesses. In the future, any further impacts to our business, including as a result of COVID-19, could result in additional impairments and additional significant charges to earnings. For additional information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of the COVID-19 Pandemic.”

Participants and spectators in connection with our live entertainment and sports events are subject to potential injuries and accidents, which could subject us to personal injury or other claims and increase our expenses, as well as reduce attendance at our live entertainment and sports events, causing a decrease in our revenue.

There are inherent risks to participants and spectators involved with producing, attending, or participating in live entertainment and sports events. Injuries and accidents have occurred and may occur from time to time in the future, which could subject us to substantial claims and liabilities for injuries. Incidents in connection with our entertainment and sports events at any of our venues or venues that we rent could also result in claims, reducing operating income or reducing attendance at our events, causing a decrease in our revenues. There can be no assurance that the insurance we maintain will be adequate to cover any potential losses. The physical nature of many of our live sports events exposes the athletes that participate to the risk of serious injury or death. These injuries could include concussions, and many sports leagues and organizations have been sued by athletes over alleged long-term neurocognitive impairment arising from concussions. Although the participants in certain of our live sports events, as independent contractors, are responsible for maintaining their own health, disability and life insurance, we may seek coverage under our accident insurance policies, if available, or our general liability insurance policies, for injuries that athletes incur while competing. To the extent such injuries are not covered by our policies, we may self-insure medical costs for athletes for such injuries. Liability to us resulting from any death or serious injury, including concussions, sustained by athletes while competing, to the extent not covered by our insurance, could adversely affect our business, financial condition, and operating results.

We are subject to extensive U.S. and foreign governmental regulations, and our failure to comply with these regulations could adversely affect our business.

Our operations are subject to federal, state and local laws, statutes, rules, regulations, policies, and procedures in the United States and around the world, which are subject to change at any time, governing matters such as:

 

   

licensing laws for talent agencies, such as California’s Talent Agencies Act and the New York General Business Law;

 

   

licensing laws for athlete agents;

 

   

licensing laws for the promotion and operation of MMA events;

 

   

licensing laws for the supply of sports betting data, gaming software, and other products to gambling operators;

 

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licensing, permitting and zoning requirements for operation of our offices, locations, venues, and other facilities;

 

   

health, safety, and sanitation requirements;

 

   

the service of food and alcoholic beverages;

 

   

the welfare and protection of animals;

 

   

working conditions, labor, minimum wage and hour, citizenship, immigration, visas, harassment and discrimination, and other labor and employment laws and regulations;

 

   

human rights and human trafficking, including compliance with the U.K. Modern Slavery Act and similar current and future legislation;

 

   

our employment of youth workers and compliance with child labor laws;

 

   

compliance with the U.S. Americans with Disabilities Act of 1990 and the U.K.’s Disability Discrimination Act 1995;

 

   

compliance with the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), the U.K. Bribery Act 2010 (the “Bribery Act”) and similar regulations in other countries, which prohibit U.S. companies and their intermediaries from engaging in bribery or other prohibited payments to foreign officials and require companies to keep books and records that accurately and fairly reflect the transactions of the company and to maintain an adequate system of internal accounting controls;

 

   

compliance with applicable antitrust and fair competition laws;

 

   

compliance with international trade controls, including applicable import/export regulations, and sanctions and international embargoes that may limit or restrict our ability to do business with specific individuals or entities or in specific countries or territories;

 

   

compliance with anti-money laundering and countering terrorist financing rules, currency control regulations, and statutes prohibiting tax evasion and the aiding or abetting of tax evasion;

 

   

marketing activities;

 

   

environmental protection regulations;

 

   

compliance with current and future privacy and data protection laws imposing requirements for the processing and protection of personal or sensitive information, including the GDPR and the E.U. e-Privacy Regulation;

 

   

compliance with cybersecurity laws imposing country-specific requirements relating to information systems and network design, security, operations, and use;

 

   

tax laws; and

 

   

imposition by foreign countries of trade restrictions, restrictions on the manner in which content is currently licensed and distributed, ownership restrictions, or currency exchange controls.

Noncompliance with these laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, reputational harm, adverse media coverage, and other collateral consequences. Multiple or repeated failures by us to comply with these laws and regulations could result in increased fines or proceedings against us. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, results of operations, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees. Enforcement actions and sanctions could further harm our business,

 

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results of operations, and financial condition. While we attempt to conduct our business and operations in a manner that we believe to be in compliance with such laws and regulations, there can be no assurance that a law or regulation will not be interpreted or enforced in a manner contrary to our current understanding. In addition, the promulgation of new laws, rules, and regulations could restrict or unfavorably impact our business, which could decrease demand for our services, reduce revenue, increase costs, or subject us to additional liabilities. For example, some legislatures have proposed laws in the past that would impose potential liability on us and other promoters and producers of live events for incidents that occur at our events, particularly relating to drugs and alcohol or the spread of the COVID-19 virus.

In the United States and certain foreign jurisdictions, we may have direct and indirect interactions with government agencies and state-affiliated entities in the ordinary course of our business. In particular, athletic commissions and other applicable regulatory agencies require us to obtain licenses for promoters, medical clearances, licenses for athletes, or permits for events in order for us to promote and conduct our live events and productions. In the event that we fail to comply with the regulations of a particular jurisdiction, whether through our acts or omissions or those of third parties, we may be prohibited from promoting and conducting our live events and productions in that jurisdiction. The inability to present our live events and productions in jurisdictions could lead to a decline in various revenue streams in such jurisdictions, which could have an adverse effect on our business, financial condition, and results of operations.

We operate in a number of countries which are considered to be at a heightened risk for corruption. Additionally, we operate in industry segments, such as sports marketing, that have been the subject of past anti-corruption enforcement efforts. As a global company, a risk exists that our employees, contractors, agents, or managers could engage in business practices prohibited by applicable U.S. laws and regulations, such as the FCPA, as well as the laws and regulations of other countries prohibiting corrupt payments to government officials and others, such as the U.K. Bribery Act. There can be no guarantee that our compliance programs will prevent corrupt business practices by one or more of our employees, contractors, agents, managers, or vendors, or that regulators in the U.S. or in other markets will view our program as adequate should any such issue arise.

We are also required to comply with economic sanctions laws imposed by the United States or by other jurisdictions where we do business, which may restrict our transactions in certain markets, and with certain customers, business partners, and other persons and entities. As a result, we are not permitted to, directly or indirectly (including through a third-party intermediary), procure goods, services, or technology from, or engage in transactions with, individuals and entities subject to sanctions. While we believe we have been in compliance with sanctions requirements, there can be no guarantee that we will remain in compliance. Any violation of anti-corruption or sanctions laws could result in fines, civil and criminal sanctions against us or our employees, prohibitions on the conduct of our business (e.g., debarment from doing business with International Development Banks and similar organizations), and damage to our reputation, which could have an adverse effect on our business, financial condition, and results of operations.

In addition, following a national referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union on January 31, 2020 and entered into a transition period that expired on December 31, 2020. The United Kingdom will continue its ongoing and complex negotiations with the European Union relating to the future trading relationship between the parties. Significant political and economic uncertainty remains about whether the terms of the relationship will differ materially from the terms before withdrawal. The developments, or the perception that any of them could occur, may result in increased legal and regulatory complexities, potential higher costs of conducting business in Europe as well as less demand for concerts and other live entertainment in the United Kingdom and the E.U. Brexit has also contributed to significant volatility and uncertainty in global stock markets and currency exchange rates, and such volatility could continue to occur as the negotiation process progresses.

 

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We are signatory to certain franchise agreements of unions and guilds and are subject to certain licensing requirements of the states in which we operate. We are also signatories to certain collective bargaining agreements and depend upon unionized labor for the provision of some of our services. Our clients are also members of certain unions and guilds that are signatories to collective bargaining agreements. Any expiration, termination, revocation or non-renewal of these franchises, collective bargaining agreements, or licenses and any work stoppages or labor disturbances could adversely affect our business.

Certain of our business, clients, or employees at some of the locations in which we operate are subject to collective bargaining and/or franchise agreements. These collective bargaining and/or franchise agreements regularly expire and require negotiation in the ordinary course of business. Upon the expiration of any of these collective bargaining and/or franchise agreements, however, we, the trade associations with which we are affiliated, and/or our clients’ unions may be unable to negotiate new collective bargaining and/or franchise agreements on satisfactory terms or at all. Our operations may be interrupted as a result of labor disputes or difficulties and delays in the process of renegotiating. Certain of such unions and guilds have in the past gone on strike, and in the future may do so again. In addition, our operations at one or more of our facilities may also be interrupted as a result of labor disputes by outside unions attempting to unionize one or more groups of employees (even if not employed by us) at a venue even though we do not currently have unionized labor at that venue. There have also been efforts to unionize the MMA athletes that participate in UFC’s events. A work stoppage at one or more of our operated venues or at our promoted events could have an adverse effect on our business, financial condition and results of operations. We cannot predict the effect that a potential work stoppage would have on our business.

We are party to certain collective bargaining agreements that require contributions to various multiemployer pension, health, and welfare plans that cover unionized employees. Required contributions to these plans could unexpectedly increase during the term of a collective bargaining agreement due to the Employee Retirement Income Security Act of 1974, as amended, which requires additional contributions to be made when a pension fund enters into critical status, which may occur for reasons that are beyond our control. In addition, we may be required by law to fulfill our pension withdrawal liability with respect to any multiemployer pension plans from which we may withdraw or partially withdraw. Our potential withdrawal liability will increase if a multiemployer pension plan in which we participate has significant underfunded liabilities. Any unplanned multiemployer pension liabilities could have an adverse effect on our business, financial condition, and results of operations.

Our talent agency business is and was signatory, through a trade association, The Association of Talent Agents (“ATA”), to certain franchise agreements with the unions and guilds that represent certain of its clients (for example, with the Directors Guild of America). The agency is also subject to licensing and other requirements of certain states in which we operate. Our ability to maintain, renew, or operate without such licenses and franchises is not guaranteed. For example, the Writer’s Guild of America East and the Writer’s Guild of America West (collectively, the “WGA”), terminated its previous 1976 franchise agreement, the Artists’ Manager Basic Agreement, with the ATA, effective April 6, 2019 and while the parties were attempting to negotiate a new franchise agreement, the WGA instructed its members to terminate writing representation services. Furthermore, the WGA and certain writers filed a lawsuit in state court in California against WME and other talent agencies alleging, among other things, breach of fiduciary duty and unfair competition under California law (the “State Court Action”). In addition, on June 24, 2019, WME filed a lawsuit in federal court in California against the WGA alleging violations of Section 1 of the Sherman Act (the “Federal Court Action”). In August 2019, the WGA voluntarily dismissed the State Court Action and instead refiled its claims as counterclaims in the Federal Court Action. The WGA claims included breach of fiduciary duty, unfair competition, violations of Section 1 of the Sherman Act, violations of the California Cartwright Act and RICO, among others. The case was resolved and dismissed with prejudice upon WME signing a new franchise agreement and side letter directly with the WGA on February 5, 2021 (the “Franchise Agreements”).

The Franchise Agreements include terms that prohibit WME from (a) negotiating packaging deals after June 30, 2022 and (b) having more than a 20% non-controlling ownership or other financial interest in, or being

 

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owned or affiliated with any individual or entity that has more than a 20% non-controlling ownership or other financial interest in, any entity or individual engaged in the production or distribution of works written by WGA members under a WGA collective bargaining agreement (any such entity or individual, a “Restricted Production Entity” and the restrictions set forth in clause (b), the “Restricted Production Entity Limit”). The Franchise Agreements provide for a transition period (the “Transition Period”) for WME to come into compliance with certain of its provisions, including the Restricted Production Entity Limit. During the term of the Franchise Agreements, until we are in compliance, the Franchise Agreements require that we place into escrow (i) Endeavor Content’s after-tax gross profits from the production of works written by WGA members under a WGA collective bargaining agreement and (ii) WME’s after-tax writer commissions and package fees received in connection with such Endeavor Content productions.

Given Endeavor’s current ownership of certain Restricted Production Entities exceeds 20% (including with respect to certain portions of the Endeavor Content business), we will need to reduce our ownership in those Restricted Production Entities to 20% or less by the end of the Transition Period in order to come into compliance and not be in violation of the Franchise Agreements. The potential consequences of any failure to comply may include, among other things, failure to access such escrowed funds during the term until we are in compliance, WGA’s termination of the Franchise Agreements, and, as a result, WGA member clients’ termination of WME as their agency for writing representation services.

Furthermore, the Restricted Production Entity Limit set forth in the Franchise Agreements applies to WME, its agents, employees, partners, principals and shareholders, other than a de minimis holder of general stock (defined as a shareholder that (i) does not hold more than 5% of Endeavor and (ii) does not have voting or other control of the operation or management of Endeavor (a “De Minimis Shareholder”)). We do not have control over who acquires our shares in the public markets, and cannot limit the percentage of our shares held by any given shareholder. In the event that a shareholder of the Company (other than a De Minimis Shareholder) acquires a greater than 20% ownership or other financial interest in a Restricted Production Entity, we would also be in violation of the Franchise Agreements and the potential consequences set forth above would similarly apply.

The outcome of any similar disputes with unions or guilds that represent our clients, including the commercial landscape that will exist in the future with our clients after such disputes, could have an adverse effect on our business. As with the WGA dispute, any revocation, non-renewal or termination of our or our clients’ franchises or licenses, including but not limited to the Franchise Agreements, including the limitation on our client representation business’ ability to generate new future packaging revenues or its ability to affiliate with other Endeavor companies that produce content, or any disputed application of, or unexpected change in franchise or licensing requirements (whether applicable to us, our clients or otherwise), could have an adverse effect on our business, financial condition, and results of operations.

We cannot be certain that additional financing will be available on reasonable terms when required, or at all.

From time to time, we may need additional financing, whether in connection with our capital improvements, acquisitions, or otherwise. Our ability to obtain additional financing, if and when required, will depend on investor demand, our operating performance, the condition of the capital markets and other factors. For example, if borrowings available under our first lien credit agreement entered into by certain of our subsidiaries in May 2014 in connection with the acquisition of IMG (as amended, restated, modified and/or supplemented from time to time, the “Credit Facilities”) and UFC Holdings, LLC’s term loan and revolving credit facilities (the “UFC Credit Facilities” and, collectively with the Credit Facilities, the “Senior Credit Facilities”), or borrowings under certain of our other debt facilities, are insufficient or unavailable at a reasonable cost, we may be required to adopt one or more alternatives to raise cash, such as incurring additional indebtedness, selling our assets, seeking to raise additional equity capital, or restructuring, which alternatives may not be available to us on favorable terms when required, or at all. Any of the foregoing could have a material adverse effect on our business. In addition, if we raise additional funds through the issuance of equity, equity-linked or debt securities, those

 

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securities may have rights, preferences, or privileges senior to the rights of our Class A common stock, and our then existing stockholders may experience dilution.

Unfavorable outcomes in legal proceedings may adversely affect our business and operating results.

Our results may be affected by the outcome of pending and future litigation. Unfavorable rulings in our legal proceedings could result in material liability to us or have a negative impact on our reputation or relations with our employees or third parties. The outcome of litigation, including class action lawsuits, is difficult to assess or quantify. Plaintiffs in class action lawsuits may seek recovery of very large or indeterminate amounts and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. UFC is currently named in five related class-action lawsuits filed against it alleging that UFC violated Section 2 of the Sherman Act by monopolizing the alleged market for the promotion of elite professional MMA bouts and monopolizing the alleged market for elite professional MMA fighters’ services. Additionally, IMG is currently named in four claims against it in Milan, Italy alleging anti-competitive practices. See “Business—Legal Proceedings.” If we are unable to resolve these or other matters favorably, our business, operating results, and our financial condition may be adversely affected.

In addition, we are currently, and from time to time in the future may be, subject to various other claims, investigations, legal and administrative cases and proceedings (whether civil or criminal), or lawsuits by governmental agencies or private parties. If the results of these investigations, proceedings, or suits are unfavorable to us or if we are unable to successfully defend against third-party lawsuits, we may be required to pay monetary damages or may be subject to fines, penalties, injunctions, or other censure that could have an adverse effect on our business, financial condition, and results of operations. Even if we adequately address the issues raised by an investigation or proceeding or successfully defend a third-party lawsuit or counterclaim, we may have to devote significant financial and management resources to address these issues, which could have an adverse effect on our business, results of operations, and financial condition.

Risks Related to Our Organization and Structure

We are a holding company and our principal asset after completion of this offering will be our indirect equity interests in Endeavor Operating Company and, accordingly, we are dependent upon distributions from Endeavor Operating Company to pay taxes and other expenses.

We are a holding company and, upon completion of the reorganization transactions and this offering, our principal asset will be our indirect ownership of Endeavor Operating Company. See “Organizational Structure.” We have no independent means of generating revenue. As the indirect sole managing member of Endeavor Operating Company, we intend to cause Endeavor Operating Company to make distributions to its equityholders, including the members of Endeavor Operating Company (including Endeavor Profits Units holders) and Endeavor Manager, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Endeavor Operating Company. As the sole managing member of Endeavor Manager, we intend to cause Endeavor Manager, to the extent it is able, to make non-pro rata distributions to us such that we will be able to cover all applicable taxes payable by us, any payments we are obligated to make under the tax receivable agreement we intend to enter into as part of the reorganization transactions and other costs or expenses, but we will be limited in our ability to cause Endeavor Operating Company to make distributions to its equityholders (including for purposes of paying corporate and other overhead expenses and dividends) under the Senior Credit Facilities. In addition, certain laws and regulations may result in restrictions on Endeavor Manager’s ability to make distributions to us, Endeavor Operating Company’s ability to make distributions to its equityholders, or the ability of Endeavor Operating Company’s subsidiaries to make distributions to it.

To the extent that we need funds and Endeavor Manager, Endeavor Operating Company or Endeavor Operating Company’s subsidiaries are restricted from making such distributions, under applicable law or regulation, as a result of covenants in the Senior Credit Facilities or otherwise, we may not be able to obtain such

 

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funds on terms acceptable to us or at all and, as a result, could suffer an adverse effect on our liquidity and financial condition. In certain situations, including where Endeavor Operating Company does not have sufficient cash to make tax distributions to all of its members in the full amount provided for in the Endeavor Operating Company Agreement, tax distributions made to Endeavor Manager may be reduced (relative to those tax distributions made to other members of Endeavor Operating Company) to reflect the income tax rates to which Endeavor Manager and Endeavor Group Holdings are subject and certain other factors. Tax distributions will generally be treated as advances of other distributions made under the Endeavor Operating Company Agreement, but no adjustments will be made to the exchange ratio for members of Endeavor Operating Company or Endeavor Manager who exercise the redemption rights described above to account for prior tax distributions (and tax distributions paid prior to such an exercise of redemption rights will not reduce distributions otherwise payable to Endeavor Manager in respect of Endeavor Operating Company Units acquired in connection with the exercise of such redemption rights).

Under the limited liability company agreement of Endeavor Operating Company (the “Endeavor Operating Company Agreement”), we expect Endeavor Operating Company, from time to time, to make distributions in cash to its equityholders, including the members of Endeavor Operating Company (including the Endeavor Profits Units holders) and Endeavor Manager, in amounts sufficient to cover the taxes on their allocable share of the taxable income of Endeavor Operating Company. We further expect that, under the limited liability company agreement of Endeavor Manager (the “Endeavor Manager LLC Agreement”), Endeavor Manager may make non-pro rata distributions in cash to us using the proceeds it receives from any such tax distributions by Endeavor Operating Company. As a result of (i) potential differences in the amount of net taxable income indirectly allocable to us and to Endeavor Operating Company’s other equityholders, (ii) the lower tax rate applicable to corporations as opposed to individuals, (iii) the favorable tax benefits that we anticipate from (a) redemptions or exchanges of Endeavor Operating Company Units (and paired shares of Class X common stock), in exchange for, at our election (subject to certain exceptions), either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock, (b) payments under the tax receivable agreement and (c) the acquisition of interests in Endeavor Operating Company from its equityholders (other than Endeavor Group Holdings and Endeavor Manager) and (iv) the fact that tax distributions made in respect of Endeavor Operating Company Units will generally be made pro rata in respect of such Units as described in the Endeavor Operating Company Agreement, we expect that these tax distributions may be in amounts that exceed our tax liabilities. Our board of directors will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, the payment of obligations under the tax receivable agreement and the payment of other expenses. We will have no obligation to distribute such cash (or other available cash) to our stockholders. No adjustments to the exchange ratio for Endeavor Operating Company Units or Endeavor Manager Units and corresponding shares of common stock will be made as a result of any cash distribution by us or any retention of cash by us. To the extent we do not distribute such cash as dividends on our Class A common stock and instead, for example, hold such cash balances, or lend them to Endeavor Operating Company, this may result in shares of our Class A common stock increasing in value relative to the value of Endeavor Operating Company Units. The holders of Endeavor Operating Company Units may benefit from any value attributable to such cash balances if they acquire shares of Class A common stock in exchange for their Endeavor Operating Company Units (and paired shares of Class X common stock).

We are controlled by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, whose interests in our business may be different than yours, and our board of directors has delegated significant authority to an Executive Committee and to Messrs. Emanuel and Whitesell.

Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will, as a group, control approximately 89.4% of the combined voting power of our common stock (or 89.5% if the underwriters exercise their option to purchase additional shares in full) after the completion of this offering and the application of the net proceeds from this offering as a result of their ownership of shares of our Class A common stock and Class X common stock, each share of which is entitled to 1 vote on all matters submitted to a vote of our stockholders, and Class Y common stock, each share of which is entitled to 20 votes on all matters submitted to a vote of our stockholders.

Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will collectively have the ability to substantially control our Company, including the ability to control any action requiring the

 

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general approval of our stockholders, including the election of our board of directors, the adoption of amendments to our certificate of incorporation and stockholder amendments to our by-laws, and the approval of any merger or sale of substantially all of our assets. This concentration of ownership and voting power may also delay, defer, or even prevent an acquisition by a third party or other change of control of our Company, and may make some transactions more difficult or impossible without the support of Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, even if such events are in the best interests of minority stockholders. This concentration of voting power may have a negative impact on the price of our Class A common stock. In addition, because shares of our Class Y common stock each have 20 votes per share on matters submitted to a vote of our stockholders, Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will be able to control our Company as long as they own Class Y common stock representing more than a majority of the total voting power of our issued and outstanding common stock, voting together as a single class. Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will continue to control the outcome of matters submitted to stockholders so long as they collectively hold 123,972,031 shares of Class Y common stock, which represents 18.2% of the outstanding shares of all our common stock outstanding upon the closing of this offering. Holders of Class Y common stock would continue to control the outcome of matters submitted to stockholders where Class Y common stock represents 18.2% of the outstanding shares of all our common stock.

Additionally, prior to a Triggering Event, pursuant to Section 141(a) of the Delaware General Corporation Law (“DGCL”), the Executive Committee will have all of the power and authority (including voting power) of the board of directors. The Executive Committee will have the authority to approve any actions of the Company, except for matters that must be approved by the Audit Committee of the board (or both the Executive Committee and the Audit Committee), or by a committee qualified to grant equity to persons subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for purposes of exempting transactions pursuant to Section 16b-3 thereunder, or as required under Delaware law, SEC rules and the rules of the Exchange. The Executive Committee will consist of Messrs. Emanuel and Whitesell and two directors nominated to our board of directors by the Silver Lake Equityholders. The Executive Committee will further delegate to Messrs. Emanuel and Whitesell the authority to manage the business of the Company with power and authority to approve any actions of the Company, except for certain specified actions that require the approval of the Executive Committee and as required under Delaware law, SEC rules and the rules of the Exchange. See “Management—Structure of the Board of Directors.”

Messrs. Emanuel’s and Whitesell’s, Executive Holdcos’, and the Silver Lake Equityholders’ interests may not be fully aligned with yours, which could lead to actions that are not in your best interest. Because Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders hold part of their economic interest in our business through Endeavor Operating Company, rather than through the public company, they may have conflicting interests with holders of shares of our Class A common stock. For example, Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders may have different tax positions from us, which could influence their decisions regarding whether and when we should dispose of assets or incur new or refinance existing indebtedness, and whether and when we should undergo certain changes of control within the meaning of the tax receivable agreement or terminate the tax receivable agreement. In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to us. See “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.” Messrs. Emanuel’s and Whitesell’s, Executive Holdcos’, and the Silver Lake Equityholders’ significant ownership in us and resulting ability to effectively control us may discourage someone from making a significant equity investment in us, or could discourage transactions involving a change in control, including transactions in which you as a holder of shares of our Class A common stock might otherwise receive a premium for your shares over the then-current market price.

Section 203 of the DGCL may affect the ability of an “interested stockholder” to engage in certain business combinations, including mergers, consolidations or acquisitions of additional shares, for a period of three years following the time that the stockholder becomes an “interested stockholder.” An “interested stockholder” is defined to include persons owning directly or indirectly 15% or more of the outstanding voting stock of a

 

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corporation. We have elected in our amended and restated certificate of incorporation not to be subject to Section 203 of the DGCL. Nevertheless, our amended and restated certificate of incorporation will contain provisions that will become operative following a Triggering Event and that will have a similar effect to Section 203 of the DGCL, except that they provide that Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders and their respective affiliates and direct and indirect transferees will not be deemed to be “interested stockholders,” regardless of the percentage of our voting stock owned by them, and accordingly will not be subject to such restrictions.

Our amended certificate of incorporation will provide that, to the fullest extent permitted by law, Endeavor Group Holdings renounces any interest or expectancy in a transaction or matter that may be a corporate opportunity for Endeavor Group Holdings and Messrs. Emanuel and Whitesell (other than in their capacity as officers and employees of the Company), Executive Holdcos, the Silver Lake Equityholders, or any of our non-employee directors have no duty to present such corporate opportunity to Endeavor Group Holdings and they may invest in competing businesses or do business with our clients or customers. To the extent that Messrs. Emanuel and Whitesell, Executive Holdcos, the Silver Lake Equityholders, or our non-employee directors invest in other businesses, they may have differing interests than our other stockholders. In addition, we may in the future partner with or enter into transactions with our pre-IPO investors or their affiliates, including with respect to future investments, acquisitions, and dispositions.

For additional information regarding the share ownership of, and our relationship with, the Silver Lake Equityholders, you should read the information under the headings “Principal Stockholders” and “Certain Relationships and Related Party Transactions.”

We cannot predict the impact our capital structure and the concentrated control by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders may have on our stock price or our business.

We cannot predict whether our multiple share class capital structure, combined with the concentrated control by Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders, will result in a lower trading price or greater fluctuations in the trading price of our Class A common stock, or will result in adverse publicity or other adverse consequences. In addition, some indices are considering whether to exclude companies with multiple share classes from their membership. For example, in July 2017, FTSE Russell, a provider of widely followed stock indices, stated that it plans to require new constituents of its indices to have at least five percent of their voting rights in the hands of public stockholders. In addition, in July 2017, S&P Dow Jones, another provider of widely followed stock indices, stated that companies with multiple share classes will not be eligible for certain of their indices. As a result, our Class A common stock will likely not be eligible for these stock indices. We cannot assure you that other stock indices will not take a similar approach to FTSE Russell or S&P Dow Jones in the future. Exclusion from indices could make our Class A common stock less attractive to investors and, as a result, the market price of our Class A common stock could be adversely affected.

We have a substantial amount of indebtedness, which could adversely affect our business.

As of December 31, 2020, we had an aggregate of $5.7 billion outstanding indebtedness under our Senior Credit Facilities, with the ability to borrow up to approximately $207.2 million more under revolving credit facilities under our Senior Credit Facilities, consisting primarily of availability under the UFC Credit Facilities. Additionally, as of December 31, 2020, we had certain other revolving line of credit facilities and long-term debt liabilities, primarily related to Endeavor Content, with total committed amounts of $240.0 million, of which $185.4 million was outstanding and $11.7 million was available for borrowing based on the supporting asset base, and similar to our Senior Credit Facilities, these facilities include restrictive covenants that may restrict certain business operations of the respective businesses who have borrowed from these facilities.

If we cannot generate sufficient cash flow from operations to service this debt, we may need to refinance this debt, dispose of assets, or issue equity to obtain necessary funds. Additionally, our credit rating has in the past and may in the future be downgraded. We do not know whether we will be able to take any of these actions on a timely basis, on terms satisfactory to us or at all.

 

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This substantial amount of indebtedness could:

 

   

require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing funds available for working capital, capital expenditures or other purposes;

 

   

require us to refinance in order to accommodate the maturity of the term loans under our Credit Facilities in 2025 and the term loans under our UFC Credit Facilities in 2026;

 

   

increase our vulnerability to adverse economic and industry conditions, which could lead to a downgrade in our credit rating and may place us at a disadvantage compared to competitors who may have proportionately less indebtedness;

 

   

increase our cost of borrowing and cause us to incur substantial fees from time to time in connection with debt amendments or refinancings; and

 

   

limit our ability to obtain necessary additional financing for working capital, capital expenditures, or other purposes in the future, plan for or react to changes in our business and the industries in which we operate, make future acquisitions or pursue other business opportunities, and react in an extended economic downturn.

Despite this substantial indebtedness, we may still have the ability to incur significantly more debt. The incurrence of additional debt could increase the risks associated with this substantial leverage, including our ability to service this indebtedness. In addition, because a portion of the borrowings under our credit facilities bear interest at a variable rate, our interest expense could increase, exacerbating these risks. Of the aggregate principal balance of $5.7 billion outstanding under the Senior Credit Facilities as of December 31, 2020, $1.5 billion has been fixed through interest rate swaps leaving $4.2 billion of floating rate debt under those facilities. A 1% increase in the interest rates charged on the outstanding amount of our floating rate debt would increase our annual interest expense by $42 million.

Restrictive covenants in the Senior Credit Facilities may restrict our ability to pursue our business strategies.

The credit agreements governing the terms of the Senior Credit Facilities restrict, among other things, asset dispositions, mergers and acquisitions, dividends, stock repurchases and redemptions, other restricted payments, indebtedness, loans and investments, liens, and affiliate transactions. The Senior Credit Facilities also contain customary events of default, including a change in control. These covenants, among other things, limit our ability to fund future working capital needs and capital expenditures, engage in future acquisitions or development activities, or otherwise realize the value of our assets and opportunities fully. Such covenants could limit the flexibility of our subsidiaries in planning for, or reacting to, changes in the entertainment and sports industry. Our ability to comply with these covenants is subject to certain events outside of our control. Additionally, we have in the past, and may in the future need to amend or obtain waivers to our existing covenants, and cannot guarantee that we will be able to obtain those amendments or waivers on commercially reasonable terms or at all. If we are unable to comply with these covenants, the lenders under the Senior Credit Facilities could terminate their commitments and accelerate repayment of our outstanding borrowings, which also may result in the acceleration of or default under any other debt we may incur in the future to which a cross-acceleration or cross-default provision applies. If such an acceleration were to occur, we may be unable to obtain adequate refinancing for our outstanding borrowings on favorable terms, or at all. We have pledged a significant portion of our assets as collateral under our Senior Credit Facilities. If we are unable to repay our outstanding borrowings when due, the lenders under the Senior Credit Facilities will also have the right to proceed against the collateral granted to them to secure the indebtedness owed to them, which may have an adverse effect on our business, financial condition, and operating results.

We will require a significant amount of cash to service our indebtedness. The ability to generate cash or refinance our indebtedness as it becomes due depends on many factors, some of which are beyond our control.

Our ability to make payments on, or to refinance our respective obligations under, our indebtedness will depend on future operating performance and on economic, financial, competitive, legislative, regulatory, and

 

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other factors. Many of these factors are beyond our control. Additionally, the terms of the UFC Credit Facilities restrict the ability of our UFC subsidiaries to make distributions to us, which may limit us from using funds from our UFC subsidiaries to make payments on our indebtedness under the Credit Facilities. Our consolidated cash balance also includes cash from other consolidated non-wholly owned entities, such as our Endeavor China business. These businesses may have restrictions in their ability to distribute cash to the rest of the company, including under the terms of applicable operating agreements or debt agreements, which may require the approval of certain of our investors based on the timing and amount of distribution. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to satisfy our respective obligations under our indebtedness or to fund our other needs. In order for us to satisfy our obligations under our indebtedness, we must continue to execute our business strategy. If we are unable to do so, we may need to refinance all or a portion of our indebtedness on or before maturity.

We will be exempt from certain corporate governance requirements since we will be a “controlled company” within the meaning of the Exchange rules, and as a result our stockholders will not have the protections afforded by these corporate governance requirements.

Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders will control, as a group, more than 50% of our combined voting power upon the completion of this offering. As a result, we will be considered a “controlled company” for the purposes of the Exchange rules and corporate governance standards, and therefore we will be permitted to, and we intend to, elect not to comply with certain corporate governance requirements of the Exchange, including those that would otherwise require our board of directors to have a majority of independent directors and require that we either establish Compensation and Nominating and Corporate Governance Committees, each comprised entirely of independent directors, or otherwise ensure that the compensation of our executive officers and nominees for directors are determined or recommended to the board of directors by the independent members of the board of directors. Accordingly, holders of our Class A common stock will not have the same protections afforded to stockholders of companies that are subject to all of the rules and corporate governance standards of the Exchange, and the ability of our independent directors to influence our business policies and affairs may be reduced. We expect to remain a controlled company until Messrs. Emanuel and Whitesell, Executive Holdcos, and the Silver Lake Equityholders no longer control, as a group, more than 50% of our combined voting power. Each member of our control group holds Class A common stock and Class X common stock, each of which has 1 vote per share, and Class Y common stock, which has a 20-vote per share feature. See “Management—Controlled Company.” The shares of Class Y common stock held by our control group will be canceled/redeemed for no consideration upon the earlier of (i) the disposition of (a) the paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) and (b) the shares of Class A common stock (as a result of a redemption of paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock)) paired with such Class Y common stock, as applicable, and (ii) with respect to all shares of Class Y common stock, a Triggering Event. Because there is no time-based sunset date for our Class Y common stock, we may continue to be a controlled company indefinitely.

We will be required to pay certain of our pre-IPO investors, including certain Other UFC Holders, for certain tax benefits we may claim (or are deemed to realize) in the future, and the amounts we may pay could be significant.

In connection with the transactions contemplated by this offering, we will acquire existing equity interests in Endeavor Operating Company from certain of our pre-IPO investors in exchange for the issuance of shares of our Class A common stock, Class Y common stock and rights to receive payments under the tax receivable agreement and will acquire certain existing interests in Endeavor Operating Company (or in UFC Parent) from certain of the Other UFC Holders in exchange for cash and rights to receive payments under the tax receivable agreement. As a result of these acquisitions, we will succeed to certain tax attributes of certain of our pre-IPO investors and will receive the benefit of tax basis in the assets of Endeavor Operating Company and certain of its subsidiaries. In addition, redemptions or exchanges of Endeavor Operating Company Units from members of

 

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Endeavor Operating Company (other than Endeavor Manager) in exchange for shares of our Class A common stock or cash are expected to produce favorable tax attributes that would not be available to us in the absence of such redemptions or exchanges.

We intend to enter into the tax receivable agreement with the Post-IPO TRA Holders that will provide for the payment by us to the Post-IPO TRA Holders (or their transferees of Endeavor Operating Company Units or other assignees) of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we realize or are deemed to realize (determined by using certain assumptions) as a result of (i) any tax basis in the assets of Endeavor Operating Company and certain of its subsidiaries resulting from (a) the acquisition of equity interests in Endeavor Operating Company from certain of our pre-IPO investors and the acquisition of interests in Endeavor Operating Company (or UFC Parent) from certain of the Other UFC Holders, (b) future redemptions or exchanges by us of Endeavor Operating Company Units from members of Endeavor Operating Company (other than Endeavor Manager) in exchange for shares of our Class A common stock or cash or (c) payments made under the tax receivable agreement, (ii) any net operating losses or certain other tax attributes of certain pre-IPO investors or Other UFC Holders that are available to us to offset income or gain earned after the mergers, (iii) any existing tax basis associated with Endeavor Operating Company Units, the benefit of which is allocable to us as a result of the exchanges of such Endeavor Operating Company Units for shares of our Class A common stock or cash, and (iv) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. The tax receivable agreement will make certain simplifying assumptions regarding the determination of the cash savings that we realize or are deemed to realize from the covered tax attributes, which may result in payments pursuant to the tax receivable agreement in excess of those that would result if such assumptions were not made.

The actual tax benefit, as well as the amount and timing of any payments under the tax receivable agreement, will vary depending upon a number of factors, including, among others, the timing of redemptions or exchanges by members of Endeavor Operating Company, the price of our Class A common stock at the time of the redemptions or exchanges, the extent to which such redemptions or exchanges are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable, and the portion of our payments under the tax receivable agreement constituting imputed interest.

Future payments under the tax receivable agreement could be substantial. Assuming that all units eligible to be redeemed for cash or Class A common stock would be exchanged for Class A common stock by Endeavor Group Holdings at the time of the offering and that we will have sufficient taxable income to utilize all of the tax attributes covered by the tax receivable agreement when they are first available to be utilized under applicable law, we estimate that payments to the Post-IPO TRA Holders under the tax receivable agreement would aggregate to approximately $2,324.2 million over the next 15 years and for yearly payments over that time to range between approximately $104.3 million to $201.3 million per year, based on an assumed public offering price of $24.00 (the high point of the range set forth on the cover page of this prospectus). The payments under the tax receivable agreement are not conditioned upon any Post-IPO TRA Holder’s continued ownership of us.

In addition, the Post-IPO TRA Holders (or their transferees or other assignees) will not reimburse us for any payments previously made if any covered tax benefits are subsequently disallowed, except that any excess payments made to any Post-IPO TRA Holder (or such holder’s transferees or assignees) will be netted against future payments that would otherwise be made under the tax receivable agreement, if any, after our determination of such excess. We could make payments to the Post-IPO TRA Holders under the tax receivable agreement that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity.

In addition, the tax receivable agreement provides that, upon certain mergers, asset sales or other forms of business combination, or certain other changes of control, our or our successor’s obligations with respect to tax benefits would be based on certain assumptions, including that we or our successor would have sufficient taxable

 

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income to fully utilize the tax benefits covered by the tax receivable agreement. As a result, upon a change of control, we could be required to make payments under the tax receivable agreement that are greater than the specified percentage of our actual cash tax savings, which could negatively impact our liquidity.

In addition, the tax receivable agreement will provide that in the case of a change in control of the Company or a material breach of our obligations under the tax receivable agreement, the Post-IPO TRA Holders will have the option to terminate the tax receivable agreement, and we will be required to make a payment to the Post-IPO TRA Holders covered by such termination in an amount equal to the present value of future payments (calculated using a discount rate equal to the lesser of 6.50 % or LIBOR plus 200 basis points, which may differ from our, or a potential acquirer’s, then-current cost of capital) under the tax receivable agreement, which payment would be based on certain assumptions, including those relating to our future taxable income. In these situations, our obligations under the tax receivable agreement could have a substantial negative impact on our, or a potential acquirer’s, liquidity and could have the effect of delaying, deferring, modifying, or preventing certain mergers, asset sales, other forms of business combinations, or other changes of control. These provisions of the tax receivable agreement may result in situations where the Post-IPO TRA Holders have interests that differ from or are in addition to those of our other stockholders. In addition, we could be required to make payments under the tax receivable agreement that are substantial, significantly in advance of any potential actual realization of such further tax benefits, and in excess of our, or a potential acquirer’s, actual cash savings in income tax.

Finally, because we are a holding company with no operations of our own, our ability to make payments under the tax receivable agreement is dependent on the ability of our subsidiaries to make distributions to us. The Senior Credit Facilities restrict the ability of our subsidiaries to make distributions to us, which could affect our ability to make payments under the tax receivable agreement. To the extent that we are unable to make payments under the tax receivable agreement as a result of restrictions in our Senior Credit Facilities, such payments will be deferred and will accrue interest until paid, which could negatively impact our results of operations and could also affect our liquidity in periods in which such payments are made.

Risks Related to this Offering and Our Class A Common Stock

Future sales of our Class A common stock, or the perception in the public markets that these sales may occur, may depress the price of our Class A common stock.

Additional sales of a substantial number of shares of our Class A common stock in the public market after this offering, or the perception that such sales may occur, could have an adverse effect on our stock price and could impair our ability to raise capital through the sale of additional stock. Upon the completion of this offering, we will have 253,750,271 shares of Class A common stock issued and outstanding (or 256,945,271 shares of Class A common stock if the underwriters exercise their option to purchase additional shares). In addition, 170,872,599 shares of Class A common stock may be issued upon the exercise of the redemption rights of our pre-IPO equityholders (other than outstanding Endeavor Profits Units and Endeavor Catchup Profits Units described below) described elsewhere in this prospectus. Furthermore, redemptions or exchanges of Endeavor Manager Units and Endeavor Operating Company Units (and the corresponding shares of Class X common stock) into Class A common stock will have a dilutive effect on the number of outstanding shares of our Class A common stock, even if the indirect or direct economic ownership of Endeavor Operating Company or Endeavor Manager, as applicable, by holders of our Class A common stock remain unchanged. The Class A common stock offered hereby will be freely tradable without restriction under the Securities Act of 1933, as amended (the “Securities Act”), except for any Class A common stock that may be held or acquired by our directors, executive officers, and other affiliates (as that term is defined in the Securities Act), which will be restricted securities under the Securities Act. The shares of Class A common stock not being offered hereby or issuable as described above will be restricted securities. Restricted securities may not be sold in the public market unless they are registered under the Securities Act or an exemption from registration is available.

 

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Under the Registration Rights Agreement described under the heading “Certain Relationships and Related Party Transactions—Registration Rights Agreement,” certain of our equityholders immediately following the completion of the reorganization transactions and the UFC Buyout, but prior to the completion of this offering, including Executive Holdcos and the Silver Lake Equityholders (our “Principal Stockholders”), will have demand and piggyback rights that will require us to file registration statements registering their Class A common stock (including shares of Class A common stock issuable upon the exercise by members of Endeavor Operating Company (other than Endeavor Manager) or members of Endeavor Manager (other than us) of their redemption rights described elsewhere in this prospectus) or to include sales of such Class A common stock in registration statements that we may file for ourselves or other stockholders. Additionally, as described under “Concurrent Private Placements,” the private placement investors will also have the right to require us to register their shares of Class A common stock on a Form S-1 registration statement within 60 days following the closing of this offering. We intend to file such registration statement on or around June 30, 2021. Additionally, we will bear common stock sold under these registration statements will be freely tradable in the public market. In the event that such registration rights are exercised and a large number of Class A common stock is sold in the public market, such sales could reduce the trading price of our Class A common stock. These sales could also impede our ability to raise future capital. all expenses in connection with any such registrations, including reimbursement of the reasonable fees and disbursements of one law firm for the selling stockholders (except that selling stockholders will be responsible for their pro rata share of underwriters’ commissions and discounts). See “Certain Relationships and Related Party Transactions—Registration Rights Agreement.”

We and each of our executive officers and directors, the Silver Lake Equityholders and certain of our other existing equityholders have agreed with the underwriters that for a period of 180 days after the date of this prospectus, we and they will not offer, sell, assign, transfer, pledge, contract to sell or otherwise dispose of or hedge any of our common stock, or any options or warrants to purchase any of our common stock or any securities convertible into, exchangeable for or that represent the right to receive our common stock (including, without limitation, Endeavor Operating Company Units and Endeavor Manager Units), subject to specified exceptions including that we may, during such 180-day period, (i) offer, contract to sell or issue Class A common stock or securities convertible into Class A common stock (including Endeavor Operating Company Units or Endeavor Manager Units) in connection with an acquisition or business combination (including the filing of a registration statement on Form S-4 or other appropriate form with respect thereto) or the entering into of a joint venture, provided that the aggregate number of shares of Class A common stock that may be issued (excluding any shares of Class A common stock, Endeavor Manager Units or Endeavor Operating Company Units offered or contracted to be sold pursuant to a signed agreement in connection with an acquisition, business combination, joint venture or any similar transaction solely to the extent no shares of Class A common stock, Endeavor Operating Company Units or Endeavor Manager Units are issued during the 180-day period) shall not exceed 10% of the total number of shares of Class A common stock (determined after giving effect to the assumed exchange of all Endeavor Operating Company Units and Endeavor Manager Units then outstanding for newly issued shares of Class A common stock) issued and outstanding as of the closing of this offering and provided further that the acquirer of such common stock agrees in writing to be bound by the obligations and restrictions of our lock-up agreement and (ii) offer or issue Endeavor Operating Company Units to our employees or employees of any of our subsidiaries who are not employees of such entity as of the date of this prospectus. Morgan Stanley & Co. LLC may, in its discretion, at any time without prior notice (except with respect to common stock held by our executive officers and directors as described in the lock-up agreement), release all or any portion of the common stock from the restrictions in any such agreement. See “Underwriting” for more information. In addition, the Management Equityholders will be subject to market standoff restrictions with us in the Endeavor Manager LLC Agreement and Endeavor Operating Company LLC Agreement that restricts certain transfers of such shares of Class A common stock and securities directly or indirectly convertible into or exchangeable or exercisable for our Class A common stock, including equity awards issued under our equity incentive plans for one year following the closing of this offering, covering an aggregate of 170,872,599 shares of Class A common stock. Notwithstanding the foregoing, up to 4,950,000 shares of our outstanding Class A common stock may be sold beginning at the commencement of trading on the second trading day on which our common stock is traded on NYSE and up to an additional 1,300,000 shares of our outstanding Class A common

 

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stock on the effective date of the Resale Registration Statement. After the lock-up agreements and market standoff restrictions expire, up to an additional 164,742,419 shares of Class A common stock (including shares of Class A common stock issuable upon the exercise by members of Endeavor Operating Company (other than Endeavor Manager) or Endeavor Manager (other than us) of their redemption rights described elsewhere in this prospectus) may be sold by these equityholders in the public market either in a registered offering or pursuant to an exemption from registration, such as Rule 144 promulgated under the Securities Act (“Rule 144”). Of these shares, 124,344,980 shares may be immediately sold under Rule 144 without being subject to the volume, manner of sale and other restrictions of such rule. See “Shares Available for Future Sale” for a more detailed description of the restrictions on selling Class A common stock after this offering.

In addition, subject to certain restrictions:

 

   

the holders of 3,809,522 Endeavor Full Catch-up Profits Units (assuming our achievement of a $25.10 price per share that would fully satisfy their preference on distributions and result in their conversion into Endeavor Operating Company Units), will be able to exchange their Endeavor Operating Company Units and paired shares of our Class X common stock and Class Y common stock, as described in “Organizational Structure”. These holders may subsequently acquire shares of Class A common stock upon the exercise of their redemption rights;

 

   

the holders of 3,337,048 Endeavor Profits Units, which have a weighted-average per unit hurdle price of $17.68, will be able to exchange their Endeavor Profits Units into Endeavor Operating Company Units and paired shares of our Class X common stock and Class Y common stock, as described in “Organizational Structure.” These holders may subsequently acquire shares of Class A common stock upon the exercise of their redemption rights; and

 

   

the holders of 11,919,786 Endeavor Partial Catch-Up Profits Units, which have a per unit hurdle price of $23.16 (assuming our achievement of a $25.10 price per share that would fully satisfy their preference on distributions and result in their conversion into Endeavor Profits Units), will be able to exchange their Endeavor Profits Units and paired shares of our Class X common stock, as described in “Organizational Structure.” These holders may subsequently acquire shares of our Class A common stock upon the exercise of their redemption rights.

In addition, we have initially reserved for issuance under our 2021 Incentive Award Plan 21,700,000 shares of Class A common stock. In connection with this offering, we will grant the IPO Awards under our 2021 Incentive Award Plan. Moreover, if the price of our Class A common stock increases over time we will issue additional restricted stock units pursuant to potential future equity-based awards to Mr. Emanuel and Mr. Whitesell, as further described under “Executive Compensation - New Equity Awards.” Any shares of Class A common stock that we issue, including under our 2021 Incentive Award Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the investors who purchase Class A common stock in this offering. Moreover, while in the past the Company has historically settled Endeavor Phantom Units in cash, it may in its discretion settle these in equity in the future, which would dilute the percentage ownership held by the investors who purchase Class A common stock in this offering.

The price of our Class A common stock may be volatile, and you may be unable to resell your Class A common stock at or above the initial public offering price or at all.

After this offering, the market price for our Class A common stock is likely to be volatile, in part because our Class A common stock has not previously been traded publicly. In addition, the market price for our Class A common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others:

 

   

trends and changes in consumer preferences in the industries in which we operate;

 

   

changes in general economic or market conditions or trends in our industry or the economy as a whole and, in particular, in the consumer and advertising marketplaces;

 

   

changes in key personnel;

 

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our entry into new markets;

 

   

changes in our operating performance;

 

   

investors’ perceptions of our prospects and the prospects of the businesses in which we participate;

 

   

fluctuations in quarterly revenue and operating results, as well as differences between our actual financial and operating results and those expected by investors;

 

   

the public’s response to press releases or other public announcements by us or third parties, including our filings with the SEC;

 

   

announcements relating to litigation;

 

   

guidance, if any, that we provide to the public, any changes in such guidance or our failure to meet such guidance;

 

   

changes in financial estimates or ratings by any securities analysts who follow our Class A common stock, our failure to meet such estimates or failure of those analysts to initiate or maintain coverage of our Class A common stock;

 

   

downgrades in our credit ratings or the credit ratings of our competitors;

 

   

the development and sustainability of an active trading market for our Class A common stock;

 

   

investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives;

 

   

the inclusion, exclusion, or deletion of our Class A stock from any trading indices;

 

   

future sales of our Class A common stock by our officers, directors, and significant stockholders;

 

   

other events or factors, including those resulting from system failures and disruptions, hurricanes, wars, acts of terrorism, other natural disasters, or responses to such events;

 

   

price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; and

 

   

changes in accounting principles.

These and other factors may lower the market price of our Class A common stock, regardless of our actual operating performance. As a result, our Class A common stock may trade at prices significantly below the initial public offering price.

In addition, the stock markets, including the Exchange, have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, we could incur substantial costs and our resources and the attention of management could be diverted from our business.

If you invest in our Class A common stock, you will experience dilution to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma net tangible book deficit per share of our Class A common stock.

Purchasers of our Class A common stock in this offering will experience immediate and substantial dilution in net tangible book deficit per share to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma net tangible book deficit per share of our Class A common stock. After giving effect to the reorganization transactions, the estimated impact of the tax receivable agreement, this offering and the application of the net proceeds from this offering, on a fully exchanged and converted basis, our pro forma net tangible book deficit would have been approximately $(3,748.3) million, or $(8.83) per share,

 

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representing an immediate decrease in net tangible book deficit of $12.56 per share to existing equityholders and an immediate dilution in net tangible book deficit of $32.83 per share to new investors in this offering. For a further description of the dilution that you will experience immediately after the closing of this offering, see “Dilution.”

We do not expect to pay any cash dividends for the foreseeable future.

We currently expect to retain all of our future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends for the foreseeable future following the completion of this offering. The declaration and payment of future dividends to holders of our Class A common stock will be at the discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, legal requirements, tax obligations, restrictions in the debt instruments of our subsidiaries, including the Senior Credit Facilities, and other factors deemed relevant by our board of directors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Historical Liquidity and Capital Resources—Debt Facilities” for more information on the restrictions the Senior Credit Facilities impose on our ability to declare and pay cash dividends. As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our subsidiaries, which may further restrict our ability to pay dividends as a result of the laws of their respective jurisdictions of organization, agreements of our subsidiaries, or covenants under future indebtedness that we or they may incur.

We will have broad discretion in the use of the net proceeds from this offering.

Our management will have broad discretion in the application of a portion of the net proceeds from this offering, including for any of the purposes described in the section entitled “Use of Proceeds,” and you will not have the opportunity as part of your investment decision to assess how a portion of the net proceeds are being used. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management may not apply the net proceeds from this offering in ways that ultimately increase the value of your investment. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

If we are unable to effectively implement or maintain a system of internal control over financial reporting, we may not be able to accurately or timely report our financial results and our stock price could be adversely affected.

Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires us to evaluate the effectiveness of our internal controls over financial reporting as of the end of each fiscal year, including a management report assessing the effectiveness of our internal controls over financial reporting, and a report issued by our independent registered public accounting firm on that assessment, in each case beginning with the filing of our second Annual Report on Form 10-K. In fiscal year 2019, we identified a material weakness with our internal controls over financial reporting that resulted from not having a sufficiently documented risk assessment process to identify and analyze risks of misstatement due to error and/or fraud, and not having sufficiently documented compliance communication and investigation policies. This deficiency did not result in any error or restatement of our financial statements. We have since enhanced the documentation of our risk assessment process and controls to identify and analyze risks of misstatement due to error or fraud, and implemented process and controls over our enhanced compliance communication and investigation policies. Such controls have operated effectively over a sufficient period of time to conclude we have fully remediated this material weakness. In the future, it is possible that additional material weaknesses or significant deficiencies may be identified that we may be unable to remedy before the requisite deadline for those reports. Our ability to comply with the annual internal control reporting requirements will depend on the effectiveness of our financial reporting and data systems and controls across our company. We expect these systems and controls to require

 

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additional investment as we become increasingly more complex and our business grows. To effectively manage this complexity, we will need to continue to maintain and revise our operational, financial and management controls, and our reporting systems and procedures. Any weaknesses or deficiencies or any failure to implement required new or improved controls, or difficulties encountered in the implementation or operation of these controls, could harm our operating results and cause us to fail to meet our financial reporting obligations, or result in material misstatements in our financial statements, which could adversely affect our business and reduce our stock price.

Provisions in our organizational documents and certain rules imposed by regulatory authorities may delay or prevent our acquisition by a third party.

Our certificate of incorporation and by-laws will contain several provisions that may make it more difficult or expensive for a third party to acquire control of us without the approval of our board of directors. These provisions, which may delay, prevent, or deter a merger, acquisition, tender offer, proxy contest or other transaction that stockholders may consider favorable, include the following, some of which may only become effective upon the Triggering Event:

 

   

the 20 vote per share feature of our Class Y common stock;

 

   

the fact that our Class Y common stock retains its 20 vote per share feature until such share of Class Y common stock is canceled/redeemed for no consideration upon, subject to certain exceptions, (i) the disposition of (a) the paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) and/or (b) the shares of Class A common stock (as a result of a redemption of paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) paired with such Class Y common stock or as a result of other transfers thereof) or (ii) a Triggering Event;

 

   

the division of our board of directors into three classes and the election of each class for three-year terms;

 

   

the sole ability of the Executive Committee, prior to the Triggering Event, to fill a vacancy on the board of directors;

 

   

prior to a Triggering Event and subject to certain exceptions, the vesting of all the power and authority of our board of directors to our Executive Committee;

 

   

advance notice requirements for stockholder proposals and director nominations;

 

   

after the Triggering Event, provisions limiting stockholders’ ability to call special meetings of stockholders, to require special meetings of stockholders to be called and to take action by written consent;

 

   

after the Triggering Event, in certain cases, the approval of holders representing at least 662/3% of the total voting power of the shares entitled to vote generally in the election of directors will be required for stockholders to adopt, amend or repeal our by-laws, or amend or repeal certain provisions of our certificate of incorporation;

 

   

the required approval of holders representing at least 662/3% of the total voting power of the shares entitled to vote at an election of the directors to remove directors; and

 

   

the ability of our governing body to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used, among other things, to institute a rights plan that would have the effect of significantly diluting the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our governing body.

These provisions of our certificate of incorporation and by-laws could discourage potential takeover attempts and reduce the price that investors might be willing to pay for shares of our Class A common stock in the future, which could reduce the market price of our Class A common stock. For more information, see “Description of Capital Stock.”

 

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In the event of a merger, consolidation or tender or exchange offer, holders of our Class A common stock shall not be entitled to receive excess economic consideration for their shares over that payable to the holders of the Class C common stock.

No shares of Class C common stock, the primary purpose of which is to be available for issuance in connection with acquisitions, joint ventures, investments or other commercial arrangements, will be issued and outstanding upon the closing of this offering. If we choose to issue Class C common stock in the future, the holders of our Class A common stock shall not be entitled to receive economic consideration for their shares in excess of that payable to the holders of the then outstanding shares of Class C common stock in the event of a merger, consolidation or tender or exchange offer, even though our Class C common stock does not have the right to vote. This would result in a lesser payment to the holders of Class A common stock than if there are no shares of Class C common stock outstanding at the time of such merger, consolidation or tender or exchange offer. For more information, see “Description of Capital Stock.”

The provision of our certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits and the federal district courts of the United States for the resolution of any complaint asserting a cause of action under the Securities Act may have the effect of discouraging lawsuits against our directors and officers.

Our amended and restated certificate of incorporation will provide that, unless we consent in writing to the selection of an alternative forum, (A) the Court of Chancery of the State of Delaware be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of our company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director (including any director serving as a member of the Executive Committee), officer, agent or other employee or stockholder of our company to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the amended and restated certificate of incorporation or our by-laws or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein or, if such court does not have subject matter jurisdiction thereof, the federal district court located in the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, the exclusive forum provision shall not apply to claims seeking to enforce any liability or duty created by the Exchange Act. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers. It is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action. If a court were to find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition, or results of operations.

Transformation into a public company may increase our costs and disrupt the regular operations of our business.

We have historically operated as a privately owned company and we have incurred, and expect to in the future incur, significant additional legal, accounting, reporting, and other expenses as a result of having publicly traded common stock, including, but not limited to, increased costs related to auditor fees, legal fees, directors’ fees, directors and officers insurance, investor relations, and various other costs. We also anticipate that we will incur costs associated with corporate governance requirements, including requirements under the Exchange Act, the Sarbanes-Oxley Act and the Dodd–Frank Wall Street Reform and Consumer Protection Act, 2010, as well as rules implemented by the Securities and Exchange Commission (the “SEC”) and the Public Company

 

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Accounting Oversight Board. Compliance with these rules and regulations will make some activities more difficult, time-consuming, or costly, and increase demand, and, as a result, may place a strain on our systems and resources. Moreover, the additional demands associated with being a public company may disrupt regular operations of our business by diverting the attention of some of our senior management team away from revenue producing activities.

In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs, and making some activities more time consuming. These laws, regulations, and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations, and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations, and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us, which could have an adverse effect on our business, financial condition, and results of operations.

Risks Related to Tax Matters

Tax matters may cause significant variability in our financial results.

Our businesses are subject to income taxation in the United States, as well as in many tax jurisdictions throughout the world. Tax rates in these jurisdictions may be subject to significant change. If our effective tax rate increases, our operating results and cash flow could be adversely affected. Our effective income tax rate can vary significantly between periods due to a number of complex factors including, but not limited to, projected levels of taxable income, pre-tax income being lower than anticipated in countries with lower statutory rates or higher than anticipated in countries with higher statutory rates, increases or decreases to valuation allowances recorded against deferred tax assets, tax audits conducted and settled by various tax authorities, adjustments to income taxes upon finalization of income tax returns, the ability to claim foreign tax credits, and changes in tax laws and their interpretations in countries in which we are subject to taxation.

We may be required to pay additional taxes as a result of the new partnership audit rules.

The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships, including entities such as Endeavor Operating Company that are taxed as partnerships. Under these rules (which generally are effective for taxable years beginning after December 31, 2017), subject to certain exceptions, audit adjustments to items of income, gain, loss, deduction, or credit of an entity (and any holder’s share thereof) is determined, and taxes, interest, and penalties attributable thereto, are assessed and collected, at the entity level. Although it is uncertain how these rules will continue to be implemented, it is possible that they could result in Endeavor Operating Company (or any of its applicable subsidiaries that are or have been treated as partnerships for U.S. federal income tax purposes) being required to pay additional taxes, interest and penalties as a result of an audit adjustment, and we, as an indirect member of Endeavor Operating Company (or such other entities), could be required to indirectly bear the economic burden of those taxes, interest, and penalties even though we may not otherwise have been required to pay additional corporate-level taxes as a result of the related audit adjustment.

Under certain circumstances, Endeavor Operating Company may be eligible to make an election to cause holders of Endeavor Operating Company Units to take into account the amount of any understatement, including any interest and penalties, in accordance with such holders’ interest in Endeavor Operating Company in the year under audit. We will decide whether to cause Endeavor Operating Company to make this election in our sole

 

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discretion. If Endeavor Operating Company does not make this election, the then-current holders of Endeavor Operating Company Units (including Endeavor Group Holdings as an indirect member of Endeavor Operating Company) would economically bear the burden of the understatement even if such holders had a different percentage interest in Endeavor Operating Company during the year under audit, unless, and only to the extent, Endeavor Operating Company is able to recover such amounts from current or former impacted holders of Endeavor Operating Company. Similar rules also apply with respect to any of Endeavor Operating Company’s subsidiaries that are or have been treated as partnerships for U.S. federal income tax purposes.

The changes created by these new rules are sweeping, and in many respects, dependent on the promulgation of future regulations or other guidance by the U.S. Department of the Treasury.

The tax classification of Endeavor Operating Company could be challenged.

We intend that Endeavor Operating Company has been and will continue to be treated as a partnership for federal and, if applicable, state or local income tax purposes and not as an association taxable as a corporation. However, if any taxing authority were to successfully assert otherwise, the tax consequences resulting therefrom would be materially different than those described elsewhere in this prospectus.

We may be required to fund withholding tax upon certain exchanges of Endeavor Operating Company Units into shares of our common stock by non-U.S. holders

In the event of a transfer by a non-U.S. transferor of an interest in a partnership that is engaged in a U.S. trade or business, the transferee generally must withhold tax in an amount equal to ten percent of the amount realized (as determined for U.S. federal income tax purposes) by the transferor on such transfer. After the reorganization transactions, holders of Endeavor Operating Company Units may include non-U.S. holders. Pursuant to the Endeavor Operating Company Agreement, any non-U.S. holders’ Endeavor Operating Company Units may be redeemed for, at our election (subject to certain exceptions), either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock (which redemption, if made for shares of Class A common stock, would be effectuated via a direct purchase by Endeavor Group Holdings). It is expected that we would have to withhold ten percent of the amount realized (as determined for U.S. federal income tax purposes) by the non-U.S. holders in respect of any such transactions. We may not have sufficient cash to satisfy such withholding obligation, and, we may be required to incur additional indebtedness or sell shares of our Class A common stock in the open market to raise additional cash in order to satisfy our withholding tax obligations.

We may incur certain tax liabilities attributable to our pre-IPO investors and Other UFC Holders as a result of the transactions contemplated to occur in connection with this offering.

In connection with the transactions contemplated to occur in connection with this offering, certain of our pre-IPO investors and certain Other UFC Holders, including certain affiliates of Silver Lake, will merge with and into Endeavor Group Holdings. See “Organizational Structure—Reorganization Transactions—Pre-IPO Investors Mergers” and “Prospectus Summary—UFC Buyout.” As the successor to these merged entities, Endeavor Group Holdings will generally succeed to and be responsible for any outstanding or historical tax liabilities of the merged entities, including any liabilities that might be incurred as a result of the mergers described in the previous sentence. Any such liabilities for which Endeavor Group Holdings is responsible could have an adverse effect on our liquidity and financial condition.

Our ability to use certain net operating loss carryforwards and certain other tax attributes may be limited.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income and taxes may be limited. In general, an

 

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“ownership change” occurs if there is a cumulative change in ownership of the relevant corporation by “5% shareholders” (as defined under U.S. income tax laws) that exceeds 50 percentage points over a rolling three-year period. Similar rules apply under state tax laws. If our corporate subsidiaries experience one or more ownership changes in connection with this offering and other transactions in our stock, then we may be limited in our ability to use our corporate subsidiaries’ net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that such subsidiaries earn. Any such limitations on the ability to use net operating loss carryforwards and other tax assets could adversely impact our business, financial condition, and operating results.

General Risks

We may face labor shortages that could slow our growth.

The successful operation of our business depends upon our ability to attract, motivate, and retain a sufficient number of qualified employees. Shortages of labor may make it increasingly difficult and expensive to attract, train, and retain the services of a satisfactory number of qualified employees and could adversely impact our events and productions. Competition for qualified employees could require us to pay higher wages, which could result in higher labor costs and could have an adverse effect on our business, financial condition, and results of operations.

We also rely on contingent workers and volunteers in order to staff our live events and productions, and our failure to manage our use of such workers effectively could adversely affect our business, financial condition, and results of operations. We could potentially face various legal claims from contingent workers and volunteers in the future, including claims based on new laws or stemming from employees being misclassified. We may be subject to shortages, oversupply, or fixed contractual terms relating to contingent workers. Our ability to manage the size of, and costs associated with, the contingent workforce may be subject to additional constraints imposed by local laws.

Exchange rates may cause fluctuations in our results of operations.

Because we own assets overseas and derive revenues from our international operations, we may incur currency translation losses or gains due to changes in the values of foreign currencies relative to the U.S. Dollar. We cannot, however, predict the effect of exchange rate fluctuations upon future operating results. Although we cannot predict the future relationship between the U.S. Dollar and the currencies used by our international businesses, principally the British Pound and the Euro, we experienced a foreign exchange rate net loss of $2.1 million for the year ended December 31, 2020. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk—Foreign Currency Risk.”

Costs associated with, and our ability to, obtain insurance could adversely affect our business.

Heightened concerns and challenges regarding property, casualty, liability, business interruption, cancellation, and other insurance coverage have resulted from terrorist and related security incidents along with varying weather-related conditions and incidents, including those in connection with the COVID-19 pandemic. As a result, we may experience increased difficulty obtaining high policy limits of coverage at a reasonable cost and with reasonable deductibles. We cannot assure you that future increases in insurance costs and difficulties obtaining high policy limits and reasonable deductibles will not adversely impact our profitability, thereby possibly impacting our operating results and growth. We have a significant investment in property and equipment at each of our venues, which are generally located near major cities and which hold events typically attended by a large number of people.

We cannot assure you that our insurance policy coverage limits, including insurance coverage for property, casualty, liability and business interruption losses, and acts of terrorism, would be adequate should one or

 

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multiple adverse events occur, or that our insurers would have adequate financial resources to sufficiently or fully pay our related claims or damages. We cannot assure you that adequate coverage limits will be available, offered at a reasonable cost, or offered by insurers with sufficient financial soundness. The occurrence of such an incident or incidents affecting any one or more of our venues could have an adverse effect on our financial position and future results of operations if asset damage or company liability were to exceed insurance coverage limits, or if an insurer were unable to sufficiently or fully pay our related claims or damages.

No public market currently exists for our Class A common stock, and there can be no assurance that an active public market for our Class A common stock will develop.

Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price for our Class A common stock will be determined through negotiations between us and the representative of the underwriters and may not be indicative of the market price of our Class A common stock after this offering. If you purchase shares of our Class A common stock, you may not be able to resell those shares of Class A common stock at or above the initial public offering price. We cannot predict the extent to which investor interest in our Class A common stock will lead to the development of an active trading market on the Exchange or otherwise or how liquid that market might become. If an active public market for our Class A common stock does not develop, or is not sustained, it may be difficult for you to sell your Class A common stock at a price that is attractive to you or at all.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us or our business, the price of our Class A common stock and trading volume could decline.

The trading market for our Class A common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of our company, the trading price for our Class A common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who cover us downgrades our Class A common stock or publishes inaccurate or unfavorable research about us or our business, our share price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our Class A common stock could decrease, which could cause our stock price and trading volume to decline. In addition, if our operating results fail to meet the expectations of securities analysts, our stock price would likely decline.

In making your investment decision, you should understand that we have not authorized any other party to provide you with information concerning this initial public offering or us.

You should carefully evaluate all of the information in this prospectus. We have in the past received, and may continue to receive, a high degree of media coverage, including coverage that is not directly attributable to statements made by our officers or employees, that incorrectly reports on statements made by our officers or employees, or that is misleading as a result of omitting information provided by us, our officers, or our employees. We have not authorized any other party to provide you with information concerning this initial public offering or us.

Future changes to U.S. and foreign tax laws could adversely affect us.

The Group of Twenty (“the G20”), the OECD, the U.S. Congress and Treasury Department and other government agencies in jurisdictions where we and our affiliates do business have had an extended focus on issues related to the taxation of multinational corporations, including, but not limited to, transfer pricing, country-by-country reporting and base erosion. As a result, the tax laws in the United States and other countries in which we and our affiliates do business could change on a prospective or retroactive basis, and any such changes could have an adverse effect on our worldwide tax liabilities, business, financial condition, and results of operations.

 

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FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. You should not place undue reliance on forward-looking statements because they are subject to numerous uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project” or, in each case, their negative, or other variations or comparable terminology and expressions. These statements are based on assumptions that we have made in light of our experience in the industry as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. As you read and consider this prospectus, you should understand that these statements are not guarantees of performance or results and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this prospectus. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Although we believe that the forward-looking statements contained in this prospectus are based on reasonable assumptions, you should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in such forward-looking statements, including but not limited to:

 

   

the impact of the COVID-19 global pandemic on our business, financial condition, liquidity and results of operations;

 

   

our need to anticipate and address changes in public and consumer tastes and preferences and industry trends;

 

   

the effect of factors beyond our control, such as adverse economic conditions, on our operations;

 

   

our ability to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies;

 

   

our reliance on our professional reputation and brand name;

 

   

our dependence on the relationships of our management, agents, and other key personnel with clients across many content categories;

 

   

our ability to identify, sign, and retain clients;

 

   

our ability to identify, recruit, and retain qualified and experienced agents and managers;

 

   

our ability to represent clients and also develop and sell content, which may create a conflict of interest;

 

   

our ability to avoid or manage conflicts of interest arising from our client and business relationships;

 

   

the loss or diminished performance of members of our executive management and other key employees;

 

   

our dependence on key relationships with television and cable networks, satellite providers, digital streaming partners, corporate sponsors, and other distribution partners;

 

   

our ability to consummate acquisitions including the Reigning Champs Acquisition;

 

   

our ability to effectively manage the integration of and recognize economic benefits from the businesses acquired in our recent and future transactions, our operations at our current size, and any future growth;

 

   

the conduct of our operations through joint ventures and other investments with third parties;

 

   

immigration restrictions and related factors;

 

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failure in technology, including at live events, or security breaches of our information systems;

 

   

the unauthorized disclosure of sensitive or confidential client or customer information;

 

   

our ability to protect our trademarks and other intellectual property rights, including our brand image and reputation, and the possibility that others may allege that we infringe upon their intellectual property rights;

 

   

the risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to both domestic and international markets;

 

   

fluctuations in foreign currency exchange rates;

 

   

litigation and other proceedings to the extent uninsured or underinsured;

 

   

our compliance with certain franchise and licensing requirements of unions and guilds and dependence on unionized labor;

 

   

our substantial indebtedness and our ability to maintain compliance with restrictive covenants in the documents governing such indebtedness; and

 

   

the future trading prices of our Class A common stock and the impact of securities analysts’ reports on these prices.

These and other factors are more fully discussed in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in this prospectus. These risks could cause actual results to differ materially from those implied by forward-looking statements in this prospectus. Even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward looking statements contained in this prospectus, those results or developments may not be indicative of results or developments in subsequent periods.

All information contained in this prospectus is materially accurate and complete as of the date of this prospectus. You should keep in mind, however, that any forward-looking statement made by us in this prospectus, or elsewhere, speaks only as of the date on which we make it. New risks and uncertainties come up from time to time, and it is impossible for us to predict these events or how they may affect us. We have no obligation to update any forward-looking statements in this prospectus after the date of this prospectus, except as required by federal securities laws. All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters and attributable to us or any other person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to within this prospectus. In light of these risks and uncertainties, you should keep in mind that any event described in a forward-looking statement made in this prospectus or elsewhere might not occur.

 

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ORGANIZATIONAL STRUCTURE

This offering is being conducted through what is commonly referred to as an “Up-C” structure, which is often used by partnerships and limited liability companies when they decide to undertake an initial public offering. The Up-C structure can provide tax benefits and associated cash flow advantages to both the issuer corporation and the existing owners of the partnership or limited liability company in the initial public offering.

Structure Prior to the Reorganization Transactions

We currently conduct our business through Endeavor Operating Company and its subsidiaries. Prior to the consummation of the reorganization transactions described below and this offering, all of Endeavor Operating Company’s outstanding equity interests, including its Class A common units, profits units and investment incentive units, are owned by the following persons:

 

   

WME Holdco, LLC, which we refer to as “WME Holdco,” and certain other management holding companies, which we refer to collectively as the “Management Holdcos.” Each of the Management Holdco’s equityholders include current and former senior officers, employees or other service providers of Endeavor Operating Company and its subsidiaries and certain other investors;

 

   

certain entities that are affiliates of Silver Lake;

 

   

certain other institutional pre-IPO investors (including Other UFC Holders); and

 

   

certain other persons, including senior officers and advisers of Endeavor Operating Company and its subsidiaries.

 

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The following diagram depicts Endeavor Operating Company’s organizational structure prior to the reorganization transactions. This chart is provided for illustrative purposes only and does not purport to represent all legal entities within Endeavor Operating Company’s organizational structure.

 

LOGO

Class A Common Units

Prior to the commencement of the reorganization transactions, the Class A common units are owned by WME Holdco, certain affiliates of Silver Lake, and certain pre-IPO investors.

Endeavor Operating Company’s existing Class A common units are entitled to participate pro rata in residual distributions by Endeavor Operating Company, subject to certain preferences.

Profits Units

Prior to the commencement of the reorganization transactions, Endeavor Operating Company will have limited liability company interests outstanding in the form of profits units, which are entitled to participate in a sale or other specified capital transactions subject to certain preferences and their respective hurdle amounts or, in certain cases, distributions of operating cash flow from Endeavor Operating Company. Certain profits units are designated as “catch-up” units and are entitled to receive a preference on distributions once the distribution threshold applicable to such units has been met.

 

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The profits units were issued directly to, and are currently held by:

 

   

the Management Holdcos, on behalf of certain members of the management of Endeavor Operating Company to whom the Management Holdcos, in turn, issued corresponding management units; and

 

   

certain senior officers of Endeavor Operating Company.

Certain of the profits units (and the corresponding management units) vest over specified time periods, subject to the continued service of the applicable employee on each annual vesting date and, in certain cases, acceleration upon an initial public offering. Certain of the profits units (and the corresponding management units) are subject to performance-based vesting based on achievement of certain performance targets.

Certain of the profits units (and the corresponding management units) are subject to forfeiture and repurchase provisions upon certain termination events. If any management units of the Management Holdcos are forfeited for any reason, then the corresponding profits units of Endeavor Operating Company held by the Management Holdcos will be forfeited for no consideration as described below. Each of the Management Holdcos has the right to repurchase vested management units from management members upon a termination of employment for fair market value, subject to a discount under certain circumstances. If any of the Management Holdcos exercises its right to repurchase vested management units from a management member, then the management units held by the management member will be redeemed in exchange for the corresponding profits units, and the applicable Management Holdco will exercise its corresponding right to require Endeavor Operating Company to repurchase the corresponding profits units. If the repurchase price of the management units is less than fair market value (including any situation where the relevant management units are forfeited, as described in the first sentence of this paragraph), then the repurchase price for the corresponding profits units of Endeavor Operating Company will be reduced accordingly.

Investment Incentive Units

Prior to the commencement of the reorganization transactions, Endeavor Operating Company will also have 100 limited liability company interests outstanding in the form of investment incentive units, all held by WME Holdco, which represent the right to receive, upon dispositions of certain specified investments, a non-pro rata priority distribution equal to 5% of the gain, if any, realized by Endeavor Operating Company on such specified investments.

Reorganization Transactions

Prior to the closing of this offering, we intend to complete an internal reorganization through a series of transactions, which we refer to as the “reorganization transactions.” In connection with the reorganization transactions:

General

 

   

we will amend and restate our certificate of incorporation and will be authorized to issue five classes of common stock, which we refer to collectively as our “common stock” and which are summarized in the following table:

 

Class of Common Stock

   Votes    Economic
Rights

Class A common stock

   1    Yes

Class B common stock

   None    Yes

Class C common stock

   None    Yes

Class X common stock

   1    None

Class Y common stock

   20    None

 

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Voting shares of our common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders. We will issue shares of our Class A common stock to the investors in this offering and the investors in the concurrent private placements. No shares of our Class B common stock or Class C common stock will be outstanding upon the closing of this offering. We do not intend to list our Class B common stock, Class C common stock, Class X common stock or Class Y common stock on any stock exchange;

 

   

Endeavor Manager, a newly formed subsidiary of Endeavor Group Holdings, will become the sole managing member of Endeavor Operating Company, and Endeavor Group Holdings will become the sole managing member of Endeavor Manager;

 

   

Endeavor Manager will issue to the equityholders of certain management holding companies common interest units in Endeavor Manager, which we refer to as “Endeavor Manager Units,” along with paired shares of our Class X common stock, as consideration for the acquisition of Endeavor Operating Company Units held by such management holding companies;

 

   

we will (i) issue to affiliates of certain of our pre-IPO investors, including certain affiliates of Silver Lake, shares of our Class Y common stock, Class A common stock and rights to receive payments under the tax receivable agreement described below and (ii) issue to affiliates of certain other of our pre-IPO investors shares of our Class A common stock, in each case as consideration for the acquisition of Endeavor Operating Company Units held by such pre-IPO investors;

 

   

all of the existing equity interests in Endeavor Operating Company (other than certain profits units, which will remain outstanding after this offering) will be reclassified into Endeavor Operating Company’s non-voting common interest units, which we refer to as “Endeavor Operating Company Units;”

 

   

we will issue to the holders of Endeavor Operating Company Units (other than Endeavor Manager) paired shares of our Class X common stock and, in certain instances, Class Y common stock, in each case equal to the number of Endeavor Operating Company Units held by each of them upon completion of this offering and in exchange for the payment by such holders of the aggregate par value of the Class X common stock and Class Y common stock that is received;

 

   

Endeavor Profits Units that will remain outstanding following this offering will be economically similar to stock options. Each Endeavor Profits Unit has a per unit hurdle price, which is economically similar to the exercise price of a stock option.

 

   

Endeavor Full Catch-Up Profits Units that will remain outstanding following this offering will have a per unit hurdle price and will be entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Full Catch-Up Profits Units will be converted into Endeavor Operating Company Units; and

 

   

Endeavor Partial Catch-Up Profits Units that will remain outstanding following this offering will have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Partial Catch-Up Profits Units will be converted into Endeavor Profits Units (without any such preference) with a reduced per unit hurdle price to take into account such prior preference.

Pre-IPO Investors Mergers

 

   

certain of our pre-IPO investors, including certain affiliates of Silver Lake, will each merge with and into Endeavor Group Holdings in a series of mergers, whereby we will acquire the existing equity interests in Endeavor Operating Company held by them. As consideration for the mergers, we will issue to certain affiliates of such pre-IPO investors, including certain affiliates of Silver Lake, shares of our Class Y common stock and/or Class A common stock and rights to receive payments under the tax receivable agreement described below. The number of shares of Class Y common stock and Class A common stock to be issued in the mergers will be based on the value of the existing equity interests in Endeavor Operating Company that we acquire in the mergers, which will be determined based on a

 

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hypothetical liquidation of Endeavor Operating Company using the initial public offering price per share of our Class A common stock in this offering;

 

   

certain other of our pre-IPO investors who are affiliates of other pre-IPO investors will merge with and into Endeavor Group Holdings in a series of mergers, whereby we will acquire the existing equity interests in Endeavor Operating Company held by them. As consideration for the mergers, we will issue to certain affiliates of such pre-IPO investors shares of our Class A common stock. The number of shares of Class A common stock to be issued in the mergers will be based on the value of the existing equity interests in Endeavor Operating Company that we acquire in the mergers, which will be determined based on a hypothetical liquidation of Endeavor Operating Company using the initial public offering price per share of our Class A common stock in this offering;

 

   

we will contribute the existing equity interests in Endeavor Operating Company that we acquire in the mergers to Endeavor Manager in exchange for an equal number of Endeavor Manager Units;

Management Holdcos Restructuring

 

   

certain of the Management Holdcos will distribute a portion of their Endeavor Operating Company Units to certain senior executives of Endeavor Operating Company in liquidation of such senior executives’ interests in such Management Holdcos;

 

   

such senior executives will contribute all or a portion of their Endeavor Operating Company Units to Executive Holdcos in exchange for interests in Executive Holdcos. Executive Holdcos will be managed by an executive committee composed of Messrs. Emanuel and Whitesell, and its equityholders will consist only of such senior executives;

 

   

certain of the Management Holdcos will then merge with and into Endeavor Manager, whereby Endeavor Manager will acquire Endeavor Operating Company Units held by such Management Holdcos. As consideration for the mergers, Endeavor Manager will issue Endeavor Manager Units to the members of the Management Holdcos, along with paired shares of our Class X common stock;

 

   

the equity interests in Executive Holdcos and Endeavor Manager held by the senior executives and other employees of Endeavor Operating Company and its subsidiaries will be subject to the same vesting provisions as the equity interests in the Management Holdcos previously held by them;

Issuances of Class X and Class Y Common Stock

 

   

the holders of Endeavor Operating Company Units (other than Endeavor Manager) will subscribe for and purchase paired shares of our Class X common stock at a purchase price of $0.00001 per share, and, in certain instances, Class Y common stock at a purchase price of $0.00001 per share, in each case in an amount equal to the number of Endeavor Operating Company Units held by each such person;

Redemption Rights

 

   

the members of Endeavor Operating Company (other than Endeavor Manager) will have the right from time to time to cause Endeavor Operating Company to redeem any or all of their Endeavor Operating Company Units (and paired shares of Class X common stock), in exchange for, at our election (subject to certain exceptions), either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock, and if such redemption is made in exchange for shares of Class A common stock, it shall be effected as a direct purchase by Endeavor Group Holdings;

 

   

the members of Endeavor Manager (other than Endeavor Group Holdings) will have the right from time to time, subject to certain restrictions, to cause Endeavor Manager to redeem any or all of their vested Endeavor Manager Units (and paired shares of Class X common stock), in exchange for, at our election, either cash (based on the market price of a share of our Class A common stock) or shares of our Class A common stock, and if such redemption is made in exchange for shares of Class A common stock, it shall be effected as a direct purchase by Endeavor Group Holdings;

 

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shares of our Class Y common stock will automatically be cancelled/redeemed for no consideration, upon, subject to certain exceptions, (i) the disposition of (a) the paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) and/or (b) the shares of Class A common stock received as a result of a redemption of paired Endeavor Operating Company Units (and the corresponding shares of Class X common stock) or as a result of other transfers thereof paired with such Class Y common stock, or (ii) with respect to all shares of Class Y common stock, a Triggering Event;

 

   

from time to time, subject to certain restrictions, members of Executive Holdcos desiring to transfer a portion of their vested interests in Executive Holdcos (i) can elect to cause Executive Holdcos to distribute to them a portion of Endeavor Operating Company Units and corresponding shares of Class X common stock and Class Y common stock indirectly owned by such members in redemption of its corresponding interests in Executive Holdcos and (ii) immediately thereafter shall be required to exercise their redemption and exchange rights as members of Endeavor Operating Company as described above;

 

   

from time to time, subject to certain restrictions, the senior officers that directly or indirectly hold Endeavor Profits Units will have the right to, if applicable, (i) cause the applicable Management Holdco to distribute to them any vested Endeavor Profits Units indirectly owned by them in redemption for their corresponding interests in such Management Holdco, (ii) immediately thereafter shall be required to cause Endeavor Operating Company to convert their vested Endeavor Profits Units into (1) a number of Endeavor Operating Company Units that will generally be equal to (a) the amount to which the holder of such Endeavor Profits Units would be entitled to receive if an amount equal to the fair market value of Endeavor Operating Company as of the date of such exchange were distributed in cash to the members of Endeavor Operating Company in accordance with the terms of the Endeavor Operating Company Agreement divided by (b) the per unit value of an Endeavor Operating Company Unit at the time of the exchange and (2) a corresponding number of paired shares of our Class X common stock and Class Y common stock, and (iii) immediately thereafter shall be required to exercise their redemption and exchange rights as members of Endeavor Operating Company as described above; and

 

   

all holders of Endeavor Operating Company Units, Endeavor Manager Units and Endeavor Profits Units will be prohibited from exercising the redemption and exchange rights described above until at least the later of 180 days after the closing of this offering and the end of the 2021 calendar year.

UFC Buyout

On February 16, 2021, Endeavor Operating Company entered into a Transaction Agreement with the Other UFC Holders and certain of their affiliates pursuant to which Endeavor Operating Company will directly or indirectly acquire equity interests in UFC Parent (including warrants of UFC Parent or common equity received by warrant holders from the exercise of warrants of UFC Parent) from the Other UFC Holders (or their affiliates) resulting in Endeavor Operating Company directly or indirectly owning 100% of the equity interests of UFC Parent.

Pursuant to the Transaction Agreement, we will issue Endeavor Operating Company Units to (i) certain of the Other UFC Holders as consideration for the acquisition of the interests of UFC Parent held by such Other UFC Holders (a portion of which Endeavor Operating Company Units will subsequently be sold by certain of the Other UFC Holders, as described below); and (ii) certain of the Other UFC Holders as consideration for the acquisition of all or only a portion of the interests of UFC Parent held by such Other UFC Holders (with the balance of the interests in UFC Parent retained by the Other UFC Holders to be sold to Endeavor Operating Company or its designee for cash, as described below), and certain of which Endeavor Operating Company Units will promptly be exchanged by such holders for Endeavor Manager Common Units. Certain holders of UFC Profit Units will receive Endeavor Operating Company Units or Endeavor Manager Common Units on the same vesting terms. The Other UFC Holders that receive Endeavor Operating Company Units and/or Endeavor

 

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Manager Common Units will also receive paired shares of our Class X common stock corresponding on a 1:1 basis to the Endeavor Operating Company Units or Endeavor Manager Common Units they receive. Additionally, certain of the Other UFC Holders that receive Endeavor Operating Company Units will also receive paired shares of our Class Y common stock corresponding on a 1:1 basis to the Endeavor Operating Company Units they receive. Certain Other UFC Holders will merge with and into Endeavor Group Holdings, and affiliates of such Other UFC Holders will receive shares of Class A common stock in such mergers in exchange for Endeavor Operating Company Units. Based on an assumed initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), we anticipate issuing after the consummation of such transactions (after giving effect to the use of proceeds from this offering and the concurrent private placements to purchase from certain Other UFC Holders Endeavor Operating Company Units and Class A common stock and the sale of Class A common stock by affiliates of KKR in the concurrent private placements as further described below) 42,400,877 shares of Class A common stock, 58,753,559 Endeavor Operating Company Units, 9,156,546 Endeavor Manager Units, 67,910,105 shares of Class X common stock and 70,946,278 shares of Class Y common stock to the Other UFC Holders in the aggregate. Furthermore, certain of the Other UFC Holders or their affiliates will each merge with and into Endeavor Group Holdings in a series of mergers, whereby we will acquire the existing interests in Endeavor Operating Company held by them. As consideration for the mergers, we will issue to certain affiliates of such Other UFC Holders, including certain affiliates of Silver Lake, shares of Class A common stock and Class Y common stock and rights to receive payments under the tax receivable agreement described herein.

Moreover, in accordance with the Transaction Agreement, we have agreed to use $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or interests in UFC Parent) or Class A common stock directly from certain of the Other UFC Holders (or their affiliates) at a price per unit (with respect to Endeavor Operating Company Units) or a price per share (with respect to Class A common stock) equal to the initial public offering price per share of Class A common stock sold in this offering. Additionally, affiliates of KKR, who are Other UFC Holders, will sell 18,206,250 shares of Class A common stock for aggregate proceeds of $437.0 million in the concurrent private placements to the private placement investors at a price per share equal to $24.00.

For a full description of the UFC Buyout, see “Prospectus Summary—UFC Buyout.”

This Offering, the Concurrent Private Placements and Our Post-IPO Structure

Based on an assumed initial public offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus), we estimate that the net proceeds from this offering and the concurrent private placements will be $1,787.2 million (or $1,863.8 million if the underwriters exercise their option to purchase additional shares in full), after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to (1) use $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or interests in UFC Parent) directly from certain of the Other UFC Holders (or their affiliates) at a price per unit (with respect to Endeavor Operating Company Units) equal to the initial public offering price per share of Class A common stock sold in this offering and (2) contribute $951.5 million of the net proceeds from this offering and the concurrent private placements to Endeavor Manager (or $1,028.1 million if the underwriters exercise their option to purchase additional shares in full) in exchange for a number of Endeavor Manager Units equal to the contribution amount divided by the price paid by the underwriters for shares of our Class A common stock in this offering (provided that we may reduce such contribution amount, without reducing the number of Endeavor Manager Units we receive, by the amount of any expenses we pay in connection with this offering, the concurrent private placements and the UFC Buyout (which we estimate will be approximately $76.1 million) that are not otherwise paid or for which we are not otherwise reimbursed by Endeavor Operating Company). Endeavor Manager would then, in turn, contribute such contribution amount to Endeavor Operating Company in exchange for an equal number of Endeavor Operating Company Units. We intend to cause Endeavor Operating Company to use the net proceeds we contribute to it from this offering and the concurrent private placements for working capital and

 

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general corporate purposes. We may also use a portion of the net proceeds from this offering and the concurrent private placements to fund our current or future joint ventures, investments or acquisitions of complementary businesses or other assets, including the Reigning Champs Acquisition.

We estimate that the offering expenses (other than the underwriting discounts) will be approximately $12.7 million. All of such offering expenses will be paid for or otherwise borne by Endeavor Operating Company. See “Use of Proceeds” for further details.

We are a holding company, and immediately after the consummation of the reorganization transactions and this offering our principal asset will be our indirect ownership interests in Endeavor Operating Company. The total number of Endeavor Operating Company Units indirectly owned by us and other members of Endeavor Manager and directly owned by the members of Endeavor Operating Company at any given time will equal the sum of the outstanding shares of our Class A common stock, Class B common stock, Class C common stock and Class X common stock. Shares of our Class X common stock cannot be transferred except in connection with a transfer or exchange of Endeavor Operating Company Units or Endeavor Manager Units into shares of our Class A common stock, subject to certain exceptions, such as to permitted transferees. Shares of our Class Y common stock cannot be transferred, subject to certain exceptions, such as to permitted transferees.

Because we will have a controlling financial interest in Endeavor Manager, as its sole managing member, and Endeavor Operating Company, as its indirect sole managing member, we will consolidate the financial results of Endeavor Manager and Endeavor Operating Company. A portion of our net income (loss) will be allocated to the non-controlling interest to reflect (i) the entitlement of the members of Endeavor Operating Company (other than Endeavor Manager) to a portion of Endeavor Operating Company’s net income (loss) attributable to Endeavor Operating Company and (ii) the members of Endeavor Manager (other than Endeavor Group Holdings) to a portion of Endeavor Manager’s net income (loss). We will account for the reorganization transactions in a manner consistent with a common-control transaction and will initially measure the interests of the pre-IPO members of Endeavor Operating Company and the non-controlling members of Endeavor Manager in the assets and liabilities of Endeavor Operating Company at their carrying amounts as of the date of the completion of the reorganization transactions.

 

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The following diagram depicts our organizational structure following the reorganization transactions, this offering, the concurrent private placements, the UFC Buyout and the application of the net proceeds from this offering and the concurrent private placements (assuming an initial public offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus), and no exercise of the underwriters’ option to purchase additional shares). For purposes of depicting ownership of voting power in Endeavor Group Holdings, the below diagram takes into account shares of Class X common stock and Class Y common stock held by investors in this offering and our pre-IPO equityholders (including holders of all Endeavor Manager Units and Endeavor Operating Company Units). For purposes of depicting ownership of economic interests in Endeavor Group Holdings, the below diagram does not take into account (a) any performance-based vesting Endeavor Operating Company Units whose vesting conditions would not be satisfied at such initial offering price, and (b) any Endeavor Profits Units. This chart is provided for illustrative purposes only and does not purport to represent all legal entities within our organization:

 

LOGO

 

(1)

Other pre-IPO investors include Jasmine Ventures Pte Ltd. and Canada Pension Plan Investment.

(2)

Endeavor Manager members include current senior officers, employees, former employees and other service providers of Endeavor Operating Company.

For additional information regarding our stockholders and the holders of Endeavor Operating Company Units, Endeavor Profits Units and Endeavor Manager Units, see “Principal Stockholders.”

 

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Ownership of Economic Interests

Upon completion of the reorganization transactions, the concurrent private placements, the UFC Buyout, and this offering, and assuming an initial offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus), except as set forth in the footnotes below, and an offering size of $511.2 million, the economic interests in Endeavor Group Holdings owned by investors in this offering and our pre-IPO equityholders will be as follows (excluding any equity grants issued in connection with this offering):

 

    Endeavor Group
Holdings Basic
    Fully Converted
Basic
    Fully Converted
Diluted
 
    Shares     %     Shares     %     Shares     %  
    (1)           (2)           (3)        

Shareholders of Endeavor Group Holdings

           

Investors in this offering

    21,300,000       8.4     21,300,000       5.0     21,300,000       5.0

Investors in the concurrent private placements (other than Silver Lake and related parties)

    69,820,745       27.5     69,820,745       16.4     69,820,745       16.2

Silver Lake Partners and related parties

    91,978,947       36.2     91,978,947       21.7     91,978,947       21.4

Affiliates of our other pre-IPO investors

    70,650,579       27.8     70,650,579       16.6     70,650,579       16.4

Sub-Total

    253,750,271       100.0     253,750,271       59.8     253,750,271       59.0

Members of Endeavor Manager (other than Endeavor Group Holdings)

    —         0.0     30,132,501       7.1     30,132,501       7.0

Sub-Total

    —         0.0     30,132,501       7.1     30,132,501       7.0

Members of Endeavor Operating Company (other than Endeavor Manager)

           

Silver Lake Partners and related parties

    —         0.0     82,138,074       19.3     82,138,074       19.1

Affiliates of our other pre-IPO investors

    —         0.0     26,051,913       6.1     26,051,913       6.1

Messrs. Emanuel and Whitesell and Executive Holdcos

    —         0.0     32,550,111       7.7     37,654,485       8.8

Sub-Total

    —         0.0     140,740,098       33.1     145,844,472       33.9
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    253,750,271       100.0     424,622,870       100.0     429,727,244       100.0
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Reflects the number of shares of our Class A common stock then outstanding. If the underwriters exercise in full their option to purchase additional shares of our Class A common stock, the number of shares owned by investors in this offering, and in the table above, would be 24,495,000.

(2)

Reflects the number of shares of our Class A common stock that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A common stock.

(3)

Reflects the number of shares of our Class A common stock (excluding approximately 9,094,852 restricted stock units and 3,233,644 options based on the high point of the estimated public offering price range set forth on the cover page of this prospectus that we intend to grant to certain directors, employees and other service providers in connection with this offering) that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A common stock, assuming that we achieved a price per share that would have fully satisfied all Endeavor Catch-Up Units’ preferences on distributions and all Endeavor Profits Units were thereafter exchanged into Endeavor Operating Company Units in respect of their in-the-money value at such initial offering price per unit hurdle price.

The economic rights in Endeavor Group Holdings owned by Messrs. Emanuel and Whitesell and Executive Holdcos as members of Endeavor Operating Company as reflected in the table above will vary depending on, among other things, the satisfaction of certain performance-based vesting conditions and the extent to which the

 

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Endeavor Profits Units are in the money. The following table summarizes the Endeavor Operating Company Units and Endeavor Profits Units owned by Messrs. Emanuel and Whitesell and Executive Holdcos and their applicable performance-based vesting conditions and hurdle prices:

 

            Endeavor Operating Company  
     Weighted
Average
Per-Unit
     Basic      Fully Converted
Diluted
     Fully Converted
Diluted
 
     Hurdle Price      Units      Units      Units  
     (1)      (2)      (3)      (4)  

Endeavor Operating Company Units

     —          32,550,111        32,550,111        32,550,111  

Endeavor Full Catch-Up Profits Units

     —          —          3,809,522        3,809,522  

Endeavor Profits Units (other than the Endeavor Catch-Up Units)

   $ 17.68           878,493        3,337,048  

Endeavor Partial Catch-Up Profits Units

   $ 23.16        —          416,359        11,919,786  

Total

           

 

(1)

Reflects distribution thresholds, expressed as a per unit hurdle price on a weighted-average basis (similar to an exercise price for stock options). Subject to certain restrictions, Endeavor Profits Units will be exchangeable by their holders into a number of Endeavor Operating Company Units that will generally be equal to (a) the amount to which the holder of such Endeavor Profits Units would be entitled to receive if an amount equal to the fair market value of Endeavor Operating Company as of the date of such exchange were distributed in cash to the members of Endeavor Operating Company in accordance with the terms of the Endeavor Operating Company Agreement, divided by (b) the per unit value of an Endeavor Operating Company Unit.

(2)

Reflects the number of Endeavor Operating Company Units then outstanding, assuming an initial offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus).

(3)

Reflects the number of Endeavor Operating Company Units that would be outstanding if all Endeavor Profits Units were exchanged into Endeavor Operating Company Units in respect of their in-the-money value, assuming an initial offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus), and that all Endeavor Catch-Up Profits Units have been fully converted to Endeavor Operating Company Units or Endeavor Profits Units (without any preference), as applicable.

(4)

Reflects the number of Endeavor Operating Company Units that would be outstanding if all Endeavor Profits Units were exchanged into Endeavor Operating Company Units on a one-to-one basis (regardless of their in-the-money value).

For illustrative purposes only, the following table shows how the number of economic interests in Endeavor Group Holdings would vary at various future trading prices per share of our Class A common stock after the completion of this initial public offering, assuming an offering size of $511.2 million and the reorganization transactions are completed on the basis of an initial offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus):

 

Hypothetical Price Per Share of Class A Common Stock

  Endeavor
Group
Holdings
Basic
    Fully
Converted
Basic
    Fully
Converted
Diluted
 
  Shares     Shares     Shares  
    (1)     (2)     (3)  

$21.00

    262,921,377       442,851,920       447,249,727  

$22.00

    259,587,847       436,203,800       440,699,852  

$23.00

    256,544,239       430,134,123       434,719,877  

$24.00

    253,750,271       424,622,870       429,727,244  

$25.00

    251,183,657       419,532,778       425,193,318  

$26.00

    248,871,846       419,563,349       421,936,618  

$27.00

    246,675,652       415,321,395       418,171,419  

 

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(1)

Reflects the number of shares of our Class A common stock then outstanding.

(2)

Reflects the number of shares of our Class A common stock that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A Common stock. For purposes of calculating the number of shares this amount assumes, that all Endeavor Catch-Up Profits Units have been fully converted to Endeavor Operating Company Units or Endeavor Profits Units (without any preference), as applicable.

(3)

Reflects the number of shares of our Class A common stock that would be outstanding if all Endeavor Manager Units and Endeavor Operating Company Units were exchanged for shares of our Class A common stock, assuming (a) the applicable hypothetical price per share of Class A common stock, and (b) that all Endeavor Profits Units then outstanding were exchanged into Endeavor Operating Company Units in respect of their in-the-money value at such hypothetical price per share. For purposes of calculating the number of shares this amount assumes, that all Endeavor Catch-Up Profits Units have been fully converted to Endeavor Operating Company Units or Endeavor Profits Units (without any preference), as applicable.

Ownership of Voting Rights.

Upon completion of the reorganization transactions, the concurrent private placements, the UFC Buyout, and this offering, and assuming an initial offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus), the combined voting power in Endeavor Group Holdings will be as follows:

 

     If the underwriters do not exercise
their option to purchase additional
shares of Class  A common stock
     If the underwriters exercise in full
their option to purchase additional
shares of Class  A common stock
 
     Votes      Votes  
     Total      %      Total      %  

Investors in this offering

     21,300,000        0.4      24,495,000        0.5

Investors in the concurrent private placements (other than Silver Lake and related parties)

     69,820,745        1.3      69,820,745        1.3

Silver Lake and related parties

     3,562,010,741        68.4      3,562,010,741        68.4

Affiliates of our other pre-IPO investors

     439,615,492        8.4      439,615,492        8.4

Members of Endeavor Manager (other than Endeavor Group Holdings)

     30,132,501        0.6      30,132,501        0.6

Messrs. Emanuel and Whitesell, Executive Holdcos

     1,083,945,802        20.8      1,083,945,802        20.8
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     5,206,825,281        100.0      5,210,020,281        100.0
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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Upon completion of the reorganization transactions, the concurrent private placements, the UFC Buyout, and this offering, and assuming an initial offering price of $24.00 per share (the high point of the range set forth on the cover page of this prospectus), and an offering size of $511.2 million, the voting rights in Endeavor Group Holdings will be owned as follows:

 

     Shares      Votes  
     Class A      Class X      Class Y      Total      %  
     (1)      (2)      (3)                

Shareholders of Endeavor Group Holdings

              

Investors in this offering

     21,300,000        —          —          21,300,000        0.4

Investors in the concurrent private placements

     69,820,745        —          —          69,820,745        1.3

Silver Lake and related parties

     91,978,947        —          87,256,612        1,837,111,187        35.3

Affiliates of our other pre-IPO investors

     70,650,579        —          11,482,062        300,291,819        5.8

Sub-Total

     253,750,271        —          98,738,674        2,228,523,751        42.8

Members of Endeavor Manager (other than Endeavor Group Holdings)

     —          30,132,501        —          30,132,501        0.6

Sub-Total

     —          30,132,501        —          30,132,501        0.6

Members of Endeavor Operating Company (other than Endeavor Manager)

              

Silver Lake and related parties

     —          82,138,074        82,138,074        1,724,899,554        33.1

Affiliates of our other pre-IPO investors

     —          26,051,913        5,663,588        139,323,673        2.7

Messrs. Emanuel and Whitesell and Executive Holdcos

     —          51,616,467        51,616,467        1,083,945,802        20.8

Sub-Total

     —          159,806,454        139,418,129        2,948,169,029        56.6
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     253,750,271        189,938,955        238,156,803        5,206,825,281        100.0%  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1)

If the underwriters exercise in full their option to purchase additional shares of our Class A common stock, the number of shares of Class A common stock owned by investors in this offering, and in the table above, would be 24,495,000.

(2)

Members of Endeavor Manager (other than Endeavor Group Holdings) will receive one share of our Class X common stock for each Endeavor Manager Unit owned by them. Members of Endeavor Operating Company (other than Endeavor Manager) will receive one share of our Class X common stock for each Endeavor Operating Company Unit and Endeavor Profits Unit owned by them, as applicable.

(3)

Silver Lake and related parties, affiliates of certain of our other pre-IPO investors, Messrs. Emanuel and Whitesell and Executive Holdcos will receive one share of our Class Y common stock for each share of Class A common stock, Endeavor Operating Company Unit and Endeavor Profits Unit owned by them, as applicable.

At such time that Endeavor Profits Units are exchanged into a number of Endeavor Operating Company Units, the holders exchanging such Endeavor Profits Units will receive a number of shares of our Class X common stock and shares of our Class Y common stock for each Endeavor Operating Company Unit into which such Endeavor Profits Units were so exchanged.

Securities Outstanding at Assumed Offering Price

Unless otherwise indicated, this prospectus assumes the shares of Class A common stock are offered at $24.00 per share (the high point of the range set forth on the cover page of this prospectus). Although the total number of Endeavor Operating Company Units and Endeavor Manager Units outstanding after the offering will not fluctuate based on the trading price of our Class A common stock, certain share information and information

 

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regarding Endeavor Operating Company Units and Endeavor Manager Units presented in this prospectus will vary depending on the initial public offering price in this offering. Specifically, the number of Endeavor Operating Company Units and Endeavor Manager Units issued in the reorganization transactions will vary, depending on the initial public offering price in this offering, which will also impact the shares of Class X common stock and Class Y common stock, received by members of Endeavor Manager (other than Endeavor Group Holdings) and members of Endeavor Operating Company (other than Endeavor Manager). An increase in the assumed initial public offering price would result in a decrease in the amount of Endeavor Operating Company Units and Endeavor Manager Units, and in turn, shares of Class X common stock, received by holders of Endeavor Manager Units (other than Endeavor Group Holdings) and shares of Class X common stock and Class Y common stock, as applicable, received by members of Endeavor Operating Company (other than Endeavor Manager). A decrease in the assumed initial public offering price would result in an increase in the amount of Endeavor Operating Company Units and Endeavor Manager Units, and in turn, shares of Class X common stock received by holders of Endeavor Manager Units (other than Endeavor Group Holdings) and shares of Class X common stock and Class Y common stock, as applicable, received by members of Endeavor Operating Company (other than Endeavor Manager).

For illustrative purposes only, the table below shows the number of Endeavor Manager Units held by members of Endeavor Manager (other than Endeavor Group Holdings), Endeavor Operating Company Units held by members of Endeavor Operating Company (other than Endeavor Manager) and shares of Class X common stock and Class Y common stock outstanding immediately after giving effect to the reorganization transactions, the concurrent private placements, the UFC Buyout, and this offering (assuming no exercise of the underwriters’ option to purchase additional shares of Class A common stock from us) at various initial public offering prices:

 

    Class A
Common Stock
    Endeavor Manager
Units held by members
of Endeavor Manager
(other than Endeavor
Group Holdings)
    Endeavor Operating
Company Units held by
members of Endeavor
Operating Company (other
than Endeavor Manager)
    Class X
Common
Stock
    Class Y
Common
Stock
 

$21.00

    262,921,377       28,346,554       151,583,988       198,996,279       250,782,546  

$22.00

    259,587,847       28,974,396       147,641,557       195,681,106       246,192,174  

$23.00

    256,544,239       29,547,913       144,041,971       192,654,506       242,001,015  

$24.00

    253,750,271       30,132,501       140,740,098       189,938,955       238,156,803  

$25.00

    251,183,657       30,644,586       137,704,535       187,414,940       234,622,353  

$26.00

    248,871,846       32,009,402       138,682,100       185,997,945       231,409,378  

$27.00

    246,675,652       32,540,501       136,105,242       183,949,850       228,403,102  

The table above excludes the following interests: (i) Endeavor Full Catch-Up Profits Units, (ii) Endeavor Profits Units (other than Endeavor Catch-Up Profits Units) that will remain outstanding with a weighted average per unit hurdle price, and (iii) Endeavor Partial Catch-Up Profits Units. For illustrative purposes, the table below shows the number of such interests outstanding immediately after giving effect to the reorganization transactions, the concurrent private placements, the UFC Buyout, and this offering (assuming no exercise of the underwriters’ option to purchase additional shares of Class A common stock from us) at various initial public offering prices:

 

     Endeavor Full
Catch-Up Profits Units
     Endeavor Profits Units
other than Endeavor
Catch-Up Profits Units
(with a weighted-average
per unit hurdle price)
     Endeavor Partial
Catch-Up Profits Units
 

$21.00

     3,809,522        3,336,428        11,919,786  

$22.00

     3,809,522        3,335,845        11,919,786  

$23.00

     3,809,522        3,335,314        11,919,786  

$24.00

     3,809,522        3,337,048        11,919,786  

$25.00

     3,809,522        3,336,511        11,919,786  

$26.00

     —          3,337,370        11,969,072  

$27.00

     —          3,336,861        11,967,246  

 

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See “Certain Relationships and Related Party Transactions” and “Description of Capital Stock” for more information on the rights associated with our capital stock and Endeavor Operating Company Units.

Tax Receivable Agreement

In connection with the transactions undertaken in connection with this offering, we will acquire existing equity interests in Endeavor Operating Company from certain of our pre-IPO investors in the mergers described above in exchange for the issuance of shares of our Class A common stock, Class Y common stock and rights to receive payments under a tax receivable agreement and will acquire existing interests in Endeavor Operating Company (or in UFC Parent) from certain of the Other UFC Holders in exchange for cash and rights to receive payments under the tax receivable agreement. As a result of these acquisitions, we will succeed to certain tax attributes of certain of our pre-IPO investors and will receive the benefit of tax basis in the assets of Endeavor Operating Company and certain of its subsidiaries. In addition, redemptions or exchanges of Endeavor Operating Company Units from members of Endeavor Operating Company (other than Endeavor Manager) in exchange for shares of our Class A common stock or cash are expected to produce favorable tax attributes that would not be available to us in the absence of such redemptions or exchanges.

We intend to enter into a tax receivable agreement with the Post-IPO TRA Holders, that will provide for the payment by us to the Post-IPO TRA Holders (or their transferees of Endeavor Operating Company Units or other assignees) of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that we realize or are deemed to realize (determined by using certain assumptions) as a result of (i) any tax basis in the assets of Endeavor Operating Company and certain of its subsidiaries resulting from (a) the acquisition of equity interests in Endeavor Operating Company from certain of our pre-IPO investors in the mergers described above and the acquisition of interests in Endeavor Operating Company (or UFC Parent) from certain of the Other UFC Holders, (b) redemptions or exchanges by us of Endeavor Operating Company Units from certain members of Endeavor Operating Company in exchange for shares of our Class A common stock, or cash or (c) payments under the tax receivable agreement, (ii) any net operating losses or certain other tax attributes of certain pre-IPO investors or Other UFC Holders that are available to us to offset income or gain earned after the mergers, (iii) any existing tax basis associated with Endeavor Operating Company Units the benefit of which is allocable to us as a result of the acquisition by us of such Endeavor Operating Company Units, and (iv) tax benefits related to imputed interest deemed arising as a result of payments made under the tax receivable agreement. The tax receivable agreement will make certain simplifying assumptions regarding the determination of the cash savings that we realize or are deemed to realize from the covered tax attributes, which may result in payments pursuant to the tax receivable agreement in excess of those that would result if such assumptions were not made. The Post-IPO TRA Holders (or their transferees or assignees) will not reimburse us for any payments previously made if such basis increases or other benefits are subsequently disallowed, except that excess payments made to any Post-IPO TRA Holder (or such holder’s transferees or assignees) will be netted against future payments that would otherwise be made under the tax receivable agreement, if any, after our determination of such excess. We could make future payments to the Post-IPO TRA Holders (or their transferees or assignees) under the tax receivable agreement that are greater than our actual cash tax savings and may not be able to recoup those payments, which could negatively impact our liquidity. Assuming that all units eligible to be redeemed for cash or Class A common stock would be exchanged for Class A common stock by Endeavor Group Holdings at the time of the offering and that we will have sufficient taxable income to utilize all of the tax attributes covered by the tax receivable agreement when they are first available to be utilized under applicable law, we estimate that payments to the Post-IPO TRA Holders under the tax receivable agreement would aggregate to approximately $2,324.2 million over the next 15 years and for yearly payments over that time to range between approximately $104.3 million to $201.3 million per year, based on an assumed public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus). See “Risk Factors—Risks Related to Our Organization and Structure—We will be required to pay certain of our pre-IPO investors, including certain Other UFC Holders, for certain tax benefits we may claim (or are deemed to realize) in the future, and the amounts we may pay could be significant” and “Certain Relationships and Related Party Transactions—Tax Receivable Agreement.”

 

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USE OF PROCEEDS

We estimate that our net proceeds from this offering and the concurrent private placements will be approximately $1,787.2 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us based on an assumed initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), and assuming the underwriters’ option to purchase additional shares is not exercised. If the underwriters exercise their option to purchase additional shares in full, we expect to receive approximately $1,863.8 million of net proceeds based on an assumed initial offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus). We intend to (1) use $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or interests in UFC Parent) directly from certain of the Other UFC Holders (or their affiliates) at a price per unit (with respect to Endeavor Operating Company Units) equal to the initial public offering price per share of Class A common stock sold in this offering and (2) contribute $951.5 million of the net proceeds from this offering and the concurrent private placements to Endeavor Manager (or $1,028.1 million if the underwriters exercise their option to purchase additional shares in full) in exchange for a number of Endeavor Manager Units equal to the contribution amount divided by the price paid by the underwriters for shares of our Class A common stock in this offering (provided that we may reduce such contribution amount, without reducing the number of Endeavor Manager Units we receive, by the amount of any expenses we pay in connection with this offering, the concurrent private placements and the UFC Buyout (which we estimate will be approximately $76.1 million) that are not otherwise paid or for which we are not otherwise reimbursed by Endeavor Operating Company). Endeavor Manager would then, in turn, contribute such contribution amount to Endeavor Operating Company in exchange for an equal number of Endeavor Operating Company Units.

We intend to cause Endeavor Operating Company to use the remaining net proceeds we contribute to it from this offering and the concurrent private placements for working capital and general corporate purposes. We may also use a portion of the net proceeds from this offering and the concurrent private placements to fund our current or future joint ventures, investments or acquisitions of complementary businesses or other assets, including the Reigning Champs Acquisition as further described in “Recent Developments—Acquisitions”.

A $1.00 increase (decrease) in the assumed initial public offering price of $24.00 per share would increase (decrease) the amount of proceeds to us from this offering and the concurrent private placements available for working capital and general corporate purposes by $21.3 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to cause Endeavor Operating Company to use any additional proceeds we receive from this offering and the concurrent private placements for working capital and general corporate purposes.

 

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DIVIDEND POLICY

We do not anticipate declaring or paying any cash dividends to holders of our Class A common stock in the foreseeable future. We currently intend to retain future earnings, if any, to finance the growth of our business. If we decide to pay cash dividends in the future, the declaration and payment of such dividends will be at the sole discretion of the Executive Committee, prior to the Triggering Event, and thereafter our board of directors and may be discontinued at any time. In determining the amount of any future dividends, our board of directors will take into account any legal or contractual limitations, restrictions in our debt agreements, including the Senior Credit Facilities, our actual and anticipated future earnings, cash flow, debt service and capital requirements, the amount of distributions to us from Endeavor Operating Company and other factors that our board of directors may deem relevant. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Facilities” for more information on the restrictions the Senior Credit Facilities impose on our ability to declare and pay cash dividends. Because we are a holding company, our cash flow and ability to pay dividends depends upon the financial results and cash flows of our operating subsidiaries and the distribution or other payment of cash to us in the form of dividends or otherwise from Endeavor Operating Company. See “Risk Factors—Risks Related to this Offering and Our Class A Common Stock—We do not expect to pay any cash dividends for the foreseeable future.”

Following the consummation of this offering, we expect that Endeavor Operating Company will make distributions to each of its members, including Endeavor Manager and holders of Endeavor Profits Units, in respect of the U.S. federal, state and local income tax liability attributable to each member’s allocable share of taxable income of Endeavor Operating Company, calculated using an assumed tax rate equal to the highest marginal combined income tax rate applicable to an individual or corporation resident in Los Angeles, California or New York, New York (whichever rate is higher), taking into account the deductibility of applicable state and local income taxes for U.S. federal income tax purposes (which are subject to substantial limitations for tax years 2018 through 2025). Tax distributions will be made quarterly, on an estimated basis. Tax distributions made in respect of Endeavor Operating Company Units (but not Endeavor Profits Units) will generally be made pro rata in respect of such Units, as described in the Endeavor Operating Company Agreement. However, in certain situations, tax distributions made to Endeavor Manager may be reduced (relative to those tax distributions made to other members of Endeavor Operating Company) to reflect the income tax rates to which Endeavor Manager and Endeavor Group Holdings are subject and certain other factors. Tax distributions made to a member of Endeavor Operating Company will generally be treated as an advance of and shall be credited against future distributions to such member and no adjustments will be made to the exchange ratio for members of Endeavor Operating Company or Endeavor Manager who exercise the redemption rights described above to account for prior tax distributions (and tax distributions paid prior to such an exercise of redemption rights will not reduce distributions otherwise payable to Endeavor Manager in respect of Endeavor Operating Company Units acquired in connection with the exercise of such redemption rights). We expect that Endeavor Manager will further distribute the proceeds of any such tax distributions to us on a non-pro rata basis.

 

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CAPITALIZATION

The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2020 (i) on an actual basis, (ii) on a pro forma basis to reflect the reorganization transactions described under “Organizational Structure,” and the estimated impact of the tax receivable agreement and, (iii) on a pro forma as adjusted basis to reflect:

 

   

the sale of 21,300,000 shares of our Class A common stock in this offering at an assumed public offering price of $24.00 per share (the high point of the estimated offering price range set forth on the cover page of this prospectus), after deducting the underwriters’ discounts and commissions;

 

   

the issuance of an aggregate of 56,336,830 shares of our Class A common stock to the private placement investors and the sale of 18,206,250 shares of our Class A common stock to the private placement investors by the Other UFC Holders (or their affiliates), in each case, upon the closing of the concurrent private placements, at a price of $24.00 per share;

 

   

the UFC Buyout and the fees and expenses related thereto; and

 

   

the application of the net proceeds of this offering and the concurrent private placements as described under “Use of Proceeds.”

This table should be read in conjunction with “Use of Proceeds,” “Unaudited Pro Forma Financial Information” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes of us and Endeavor Operating Company appearing elsewhere in this prospectus.

 

     As of December 31, 2020  
(in thousands)    Actual     Pro
Forma
    Pro
Forma As
Adjusted(1)(2)
 

Cash and cash equivalents

   $ 1,008,485     $ 1,008,845     $ 1,960,353  
  

 

 

   

 

 

   

 

 

 

Total indebtedness(3)

   $ 5,925,805     $ 5,925,805     $ 5,925,805  

Redeemable non-controlling interests

     168,254       190,773       176,823  

Redeemable equity

     22,519       —         —    

Equity:

      

Class A common stock, par value $0.00001 per share, no shares authorized, issued and outstanding, actual; 5,000,000,000 shares authorized, 115,506,314 shares issued and outstanding, pro forma; 5,000,000,000 shares authorized, 253,750,271 shares issued and outstanding, pro forma as adjusted

     —         1       2  

Class B common stock, par value $0.00001 per share, no shares authorized, issued and outstanding, actual; 5,000,000,000 shares authorized, no shares issued and outstanding, pro forma; 5,000,000,000 shares authorized, no shares issued and outstanding, pro forma as adjusted

     —         —         —    

Class C common stock, par value $0.00001 per share, no shares authorized, issued and outstanding, actual; 5,000,000,000 shares authorized, no shares issued and outstanding, pro forma; 5,000,000,000 shares authorized, no shares issued and outstanding, pro forma as adjusted

     —         —         —    

Class X common stock, par value $0.00001 per share, no shares authorized, issued and outstanding, actual; 5,000,000,000 shares authorized, 122,028,850 shares issued and outstanding, pro forma; 5,000,000,000 shares authorized, 189,938,955 shares issued and outstanding, pro forma as adjusted

     —         1       1  

Class Y common stock, par value $0.00001 per share, no shares authorized, issued and outstanding, actual; 1,000,000,000 shares authorized, 189,938,955 shares issued and outstanding, pro forma; 1,000,000,000 shares authorized, 238,156,803 shares issued and outstanding, pro forma as adjusted

     —         2       2  

Preferred stock, par value $0.00001 per share, no shares authorized, issued and outstanding, actual; 1,000,000,000 shares authorized, no shares issued and outstanding, pro forma; 1,000,000,000 shares authorized, no shares issued and outstanding, pro forma as adjusted

     —         —         —    

Additional paid-in capital

     —         197,016       1,266,115  

Accumulated deficit

     —         —         (279,438

Members’ capital

     468,633       —         —    

Accumulated comprehensive loss

     (190,786     (100,865     (87,735
  

 

 

   

 

 

   

 

 

 

Total members’ equity/shareholders’ equity

     277,847       96,155       898,947  

Nonredeemable non-controlling interests

     686,129       817,083       952,617  
  

 

 

   

 

 

   

 

 

 

Total equity

     963,976       913,238       1,851,564  
  

 

 

   

 

 

   

 

 

 

Total capitalization

   $ 7,080,554     $ 7,029,816     $ 7,954,192  
  

 

 

   

 

 

   

 

 

 

 

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(1)

Excludes any cash payments or issuances of Class A common stock pursuant to the Minimum Cash Returns.

(2)

A $1.00 increase (decrease) in the assumed initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), would increase (decrease) each of additional paid-in capital, total equity and total capitalization by $21.3 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(3)

Represents borrowings under the Senior Credit Facilities, consisting of (i) our first lien term loan under the Credit Facilities, (ii) our first lien term loan under the UFC Credit Facilities, and (iii) our borrowings under other debt facilities. Under the Senior Credit Facilities’ and other debt facilities, we also had up to $207.2 million and $11.7 million, respectively, of borrowing availability. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional information regarding the Senior Credit Facilities.

 

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DILUTION

If you invest in our Class A common stock, you will experience dilution to the extent of the difference between the initial public offering price per share of our Class A common stock and the pro forma net tangible book deficit per share of our Class A common stock immediately after this offering and the concurrent private placement. Dilution results from the fact that the per share offering price of the Class A common stock is substantially in excess of the book value per share attributable to the Class A common stock held by existing equityholders (including all shares issuable upon exchange or conversion).

Our pro forma net tangible book deficit as of December 31, 2020 would have been approximately $(4,672.6) million, or $(21.39) per share of our common stock. Pro forma net tangible book deficit represents the amount of total tangible assets less total liabilities, and pro forma net tangible book deficit per share represents pro forma net tangible book deficit divided by the number of shares of common stock outstanding, in each case after giving effect to the reorganization transactions (based on an assumed initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), the estimated impact of the tax receivable agreement and assuming that all Endeavor Operating Company Units or Endeavor Manager Units are redeemed or exchanged for newly-issued shares of our Class A common stock.

After giving effect to the reorganization transactions, the estimated impact of the tax receivable agreement and assuming that all Endeavor Operating Company Units or Endeavor Manager Units are redeemed or exchanged for newly-issued shares of our Class A common stock on a one-for-one basis, and after giving further effect (i) to the sale of 21,300,000 shares of Class A common stock in this offering at the assumed initial public offering price of $24.00 per share (the high point of the estimated price range on the cover page of this prospectus) and the application of the net proceeds from this offering, (ii) the sale of 56,336,830 shares of Class A common stock from us and 18,206,250 shares of Class A common stock from affiliates of KKR, in each case, in the concurrent private placements at a price of $24.00 per share and the application of the net proceeds from the concurrent private placements, and (iii) the UFC Buyout, our pro forma as adjusted net tangible book deficit would have been approximately $(3,748.3) million, or $(8.83) per share, representing an immediate decrease in net tangible book deficit of $12.56 per share to existing equityholders and an immediate dilution in net tangible book deficit of $32.83 per share to new investors.

The following table illustrates the per share dilution:

 

Assumed initial public offering price per share

      $ 24.00  

Pro forma net tangible book deficit per share as of December 31, 2020(1)

   $ (21.39   

Decrease in pro forma net tangible book deficit per share attributable to new investors

     12.56     
  

 

 

    

Pro forma adjusted net tangible book deficit per share after this offering and the concurrent private placements(2)

        (8.83
     

 

 

 

Dilution in pro forma net tangible book deficit per share to new investors

      $ 32.83  
     

 

 

 

 

(1)

Reflects 218,486,808 outstanding shares of Class A common stock, including 102,962,494 shares of Class A common stock issuable upon the redemption or exchange of Endeavor Operating Company Units and Endeavor Manager Units outstanding immediately prior to this offering in exchange for shares of Class A common stock on a one-for-one basis. Does not reflect the exchange of any Endeavor Profits Units for Endeavor Operating Company Units.

(2)

Reflects 424,622,870 outstanding shares, consisting of (i) 21,300,000 shares of Class A common stock to be issued in this offering, (ii) 74,543,080 shares of Class A common stock to be issued in the concurrent private placements, (iii) 110,310,982 shares of Class A common stock and Endeavor Operating Company Units and

 

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  Endeavor Manager Units associated with the UFC Buyout, and (iv) the 218,468,808 outstanding shares described in note (1) above.

Dilution is determined by subtracting pro forma net tangible book deficit per share after this offering and the concurrent private placements from the initial public offering price per share of Class A common stock.

A $1.00 increase (decrease) in the assumed initial public offering price of $24.00 per (the high point of the estimated public offering price range set forth on the cover page of this prospectus) share would increase (decrease) our pro forma net tangible book deficit after this offering and the concurrent private placements by $21.3 million and the dilution per share to new investors by $0.05, in each case assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table sets forth, on a pro forma basis as of December 31, 2020, the number of shares of Class A common stock purchased from us, the total consideration paid to us and the average price per share paid by the existing equityholders and by new investors purchasing shares in this offering and the concurrent private placements, at the assumed initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus), before deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us and after giving effect to the reorganization transactions, and after giving further effect to this offering and the application of the net proceeds from this offering:

 

     Shares of Class A
Common Stock Purchased
    Total Consideration     Average
Price
 
     Number      Percent     Amount      Percent     Per Share  

Existing stockholders(1)

     248,433,776        72.2   $ 3,860.6        62.7   $ 15.54  

New investors

     21,300,000        6.2   $ 511.2        8.3   $ 24.00  

Private placement investors

     74,543,080        21.7   $ 1,789.0        29.0   $ 24.00  
  

 

 

    

 

 

   

 

 

    

 

 

   

Total

     344,276,856        100.0   $ 6,160.8        100.0                       
  

 

 

    

 

 

   

 

 

    

 

 

   

 

(1)

Reflects approximately $3.86 billion of consideration paid by existing equityholders in respect of shares of Class A common stock and Endeavor Operating Company Units and Endeavor Manager Units (together with corresponding shares of Class X common stock). Does not reflect the exchange of any Endeavor Profits Units for Endeavor Operating Company Units.

To the extent the underwriters’ option to purchase additional shares is exercised, there will be further dilution to new investors.

A $1.00 increase (decrease) in the assumed initial public offering price of $24.00 per share (the high point of the estimated public offering price range set forth on the cover page of this prospectus) of Class A common stock (the high point of the estimated public offering price range set forth on the cover page of this prospectus) would increase (decrease) total consideration paid by new investors in this offering by $21.3 million and would increase (decrease) the average price per share paid by new investors by $1.00, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

 

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UNAUDITED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma consolidated statement of operations for the year ended December 31, 2020 give effect to (i) the reorganization transactions described under “Organizational Structure,” (ii) the creation or acquisition of certain tax assets in connection with this offering and the reorganization transactions and the creation or acquisition of related liabilities in connection with entering into the tax receivable agreement with the Post-IPO TRA Holders, (iii) the adoption of the 2021 Incentive Award Plan, the expected issuance of the IPO grants upon the completion of this offering, and the modification of certain pre-IPO equity-based awards, (iv) the concurrent private placements and the application of the net proceeds from the concurrent private placements as described under “Use of Proceeds,” (v) the UFC Buyout, and (vi) this offering and the application of the net proceeds as described under “Use of Proceeds,” as if each had occurred on January 1, 2020. The unaudited pro forma consolidated balance sheet as of December 31, 2020 gives effect to (i) the reorganization transactions described under “Organizational Structure,” (ii) the acquisition or creation of certain tax assets in connection with this offering and the reorganization transactions and the creation or acquisition of related liabilities in connection with entering into the tax receivable agreement with the Post-IPO TRA Holders, (iii) the adoption of the 2021 Incentive Award Plan, the expected issuance of the IPO grants upon the completion of this offering, and the modification of certain pre-IPO equity-based awards, (iv) the concurrent private placements and the application of the net proceeds from the concurrent private placements as described under “Use of Proceeds,” (v) the UFC Buyout and the fees and expenses related thereto, and (vi) this offering and the application of the net proceeds as described under “Use of Proceeds,” as if each had occurred on December 31, 2020.

The unaudited pro forma financial information has been derived from Endeavor Operating Company’s historical consolidated financial statements to give effect to pro forma events that are directly attributable to the reorganization transactions and the offering. The unaudited pro forma consolidated financial information reflects pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions we believe are reasonable, but are subject to change.

Our historical financial information for the year ended December 31, 2020 has been derived from Endeavor Operating Company’s audited consolidated financial statements and accompanying notes included elsewhere in this prospectus. The unaudited pro forma financial information does not purport to be indicative of our results of operations or financial position had the relevant transactions occurred on the dates assumed and does not project our results of operations or financial position for any future period or date.

The unaudited pro forma financial information presented assumes no exercise by the underwriters of the option to purchase up to an additional 3,195,000 shares of Class A common stock from us.

The unaudited pro forma financial information should be read together with “Capitalization,” “Selected Historical Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our and Endeavor Operating Company’s respective consolidated financial statements and related notes thereto included elsewhere in this prospectus.

 

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Unaudited Pro Forma Consolidated Statement of Operations

Year Ended December 31, 2020

 

(In thousands, except per share data)    Endeavor
Operating
Company,
LLC

Actual
    Adjustments
for the
Reorganization
Transactions
    As Adjusted
Before this
Offering
    Adjustments
for this
Offering,
UFC Buyout
and the Use
of Proceeds
    Endeavor
Group
Holdings, Inc.
Pro Forma
 

Revenue

   $ 3,478,743     $ —       $ 3,478,743     $ —       $ 3,478,743  

Operating expenses:

          

Direct operating costs

     1,745,275       —         1,745,275       —         1,745,275  

Selling, general and administrative expenses

     1,442,316       —         1,442,316       375,191 (a)      1,817,507  

Insurance recoveries

     (86,990     —         (86,990     —         (86,990

Depreciation and amortization

     310,883       —         310,883       —         310,883  

Impairment charges

     220,477       —         220,477       —         220,477  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     3,631,961       —         3,631,961       375,191       4,007,152  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating loss

     (153,218     —         (153,218     (375,191     (528,409

Other (expense) income:

          

Interest expense, net

     (284,586     —         (284,586     —         (284,586

Other income (expense), net

     81,087       —         81,087       —         81,087  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes and equity losses of affiliates

     (356,717     —         (356,717     (375,191     (731,908

Provision for (benefit from) income taxes

     8,507       (4,882 )(b)      3,625       (4,032 )(b)      (407
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before equity losses of affiliates

     (365,224     4,882       (360,342     (371,159     (731,501

Equity losses of affiliates, net of tax

     (260,094     —         (260,094     —         (260,094
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (625,318     4,882       (620,436     (371,159     (991,595

Net income (loss) attributable to non-controlling interests

     29,616       (307,931 )(c)(d)      (278,315     (69,746 )(c)(d)      (348,061
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to Endeavor Group Holdings, Inc.

   $ (654,934   $ 312,813     $ (342,121   $ (301,413   $ (643,534
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Pro forma loss per share data:

          

Basic and diluted loss per share of Class A Common stockholders:

          

Basic

           $ (2.54

Diluted

           $ (2.54

Weighted average number of shares used in computing loss per share(e)

          

Basic

             253,750,271  

Diluted

             253,750,271  

See accompanying notes to unaudited pro forma financial information.

 

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Unaudited Pro Forma Consolidated Balance Sheet

As of December 31, 2020

 

 

(In thousands, except per interest and share
data)

   Endeavor
Operating
Company, LLC
Actual
     Adjustments
for the
Reorganization
Transactions
    As Adjusted
Before this
Offering
     Adjustments
for this
Offering, UFC
Buyout and
the Use of
Proceeds(f)
    Endeavor
Group
Holdings, Inc.
Pro Forma
 

Assets

            

Current Assets:

            

Cash and cash equivalents

   $ 1,008,485      $ —       $ 1,008,485      $ 951,868 (f)    $ 1,960,353  

Restricted cash

     181,848        —         181,848        —         181,848  

Accounts receivable

     445,778        —         445,778        —         445,778  

Deferred costs

     234,634        —         234,634        —         234,634  

Other current assets

     194,463        —         194,463        —         194,463  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total current assets

     2,065,208        —         2,065,208        951,868       3,071,076  

Property and equipment, net

     613,139        —         613,139        —         613,139  

Operating lease right-of-use assets

     386,911        —         386,911        —         386,911  

Intangible assets, net

     1,595,468        —         1,595,468        —         1,595,468  

Goodwill

     4,181,179        —         4,181,179        —         4,181,179  

Investments

     251,078        —         251,078        —         251,078  

Other assets

     540,651        —         540,651        (2,775 )(n)      537,876  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Total assets

   $ 9,633,634      $ —       $ 9,633,634      $ 949,093     $ 10,582,727  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Liabilities, redeemable interests and members’/shareholders’ equity

            

Current Liabilities:

            

Accounts payable

   $ 554,260      $ —       $ 554,260      $ (2,374 )(n)    $ 551,886  

Accrued liabilities

     322,749        —         322,749        —         322,749  

Current portion of long-term debt

     212,971        —         212,971        —         212,971  

Current portion of operating lease liabilities

     58,971        —         58,971        —         58,971  

Deferred revenue

     606,530        —         606,530        —         606,530  

Deposits received on behalf of clients

     176,572        —         176,572        —         176,572  

Other current liabilities

     65,025        —         65,025        —         65,025