Endeavor goes through another round of cuts, UFC spared

Liz Mullen of the Sports Business Journal reports that the UFC will not be affected by cuts made by its parent company, Endeavor. 

Mullen’s report indicated that the 300 employees of the UFC will be “exempt from the reductions.”  The report goes on to state that the reason for not being a part of the cuts is due to its domestic media-rights deals which are still in place and are being paid out.  Endeavor made cuts in late March when it laid off about 250 employees. 

Endeavor rolling out cost-cutting measures

As of yesterday, none of the WME Sports or Entertainment agents had been laid off. Conversations between Endeavor & execs about their individual situations will continue through May.

SBJ Morning Buzz: https://t.co/Ko3bwDNoQ8 pic.twitter.com/67T91LJJyP

— Liz Mullen (@SBJLizMullen) April 23, 2020

On Thursday, it announced another round of cost-cutting measures.  According to the LA Times, “one-third of its workforce, or roughly 2,500 employees, will be affected by furloughs, have their positions eliminated, or be shifted from full-time to part-time work.” 

In a statement addressing the move on Thursday it indicated, “[t]he long-term prospects for Endeavor remain unchanged, but like other companies, we are taking a variety of actions to mitigate the impact of this pandemic.” 

The LA Times story notes that Endeavor carries a heavy debt load with $4.6 billion in debt as of this past September when it was slated for an IPO which it eventually postponed indefinitely.  Last week, S&P Global downgraded Endeavor to a CCC+ credit rating from a B and pinned it as having a negative outlook.

Payout Perspective:

It should not be a surprise that the UFC has been spared any cuts to its business as of yet considering it has been one of the only pieces that Endeavor has that is making money.  Thus, the overarching reason for a full-speed ahead on events to satisfy its contract with ESPN.  It was apparent that Endeavor’s business plan, which was built on debt load, had a tipping point.  A stoppage of events has caused it major setbacks.