Just two months after dolling out a $300 million dividend to its celebrity investors, Endeavor is now seeking to raise $250 million to offset the financial damage caused by the coronavirus pandemic.
As reported by The New York Post, the organization is turning to private equity firm Silver Lake, which already owns 42% of the business, to help it raise the necessary funds.
While both Silver Lake and Endeavor did not comment on the situation, it appears that Silver Lake is seeking out investors willing to inject Endeavor with the necessary cash to continue to operate during the coronavirus pandemic. A source close to Endeavor told The Post that while the private equity firm isn’t planning to increase its stake in Endeavor, it’s going to “support the company financially if it has any liquidity issues.”
Endeavor — a company that includes subsidiaries such talent agency WME IMG, On Location Experiences, Miss Universe Pageant, Professional Bull Riders, and the Ultimate Fighting Championship (UFC) — is saddled with a 4.6 billion debt burden owed to Silver Lake Partners and other private equity investors over the purchase of the UFC in 2016. Unable to proceed with their live events schedule due to the COVID-19 global pandemic, the organization is now struggling with its high debt load and limited revenue sources.
The conglomerate is reportedly relying on a $150 million dividend from the UFC later this year, which would have allowed Endeavor to offer a stock buyback program to employees and rebuild the company after it pulled its IPO in September 2019. The UFC reaped a reported $900 million in revenue in 2019 (only 16% of which was paid out to fighters). However, given that the promotion is unable to proceed with its regular live events schedule for the foreseeable future, Endeavor has lost yet another important source of revenue at a crucial time.
That $150 million dividend was part of the Endeavor $300 million in payments the company splashed out to its celebrity investors in February 2020, as Endeavor is a 50% stakeholder and can only get money from the UFC by issuing a divident to all stakeholders. Since then, the organization has announced that it plans to lay off or furlough 2500 employees, which accounts for one third of its staff. The cutbacks are expected to save Endeavor $100 million in 2020.