Endeavor looks to raise $250M to keep afloat, looks to Silver Lake for help

UFC parent company Endeavor is looking to raise $250 million to offset the impact the coronavirus has had on its business per the New York Post.  The company is looking at private equity firm Silver Lake for help.

Silver Lake owns a 42% stake in the business already and will be looking to other institutions about investing according to the NY Post report.

Prior to the shutdown, Endeavor would have received approximately $150 million from a dividend payment from the UFC.  This past February, $300 million was paid out to investors which included $150 million given to Endeavor.  Another payout this year would have allowed a stock buyback program to employees and rebuild the company after it pulled its IPO in September according to the New York Post. 

The UFC is returning in full force with events this May.  According to a report from the Wall Street Journal, the UFC will receive $750 million if it is able to complete its contracted 42 events in 2020.  The company has 7 thus far and reports are that it will have 3 events in the first 8 days that it returns to live action.

Without ticket sales as a buffer, a lot of the UFC revenue hinges on the ESPN television deal. 

Endeavor has gone through employee salary reductions, cuts and furloughs to save about $100 million for the year according to the New York Post.  The article notes that its costs savings and anticipated money raised from private equity will go toward “basic company functions, such as payroll and rent.” 

Silver Lake Partners most recent investments have occurred in the travel sector.  Its last round of raising equity occurred this month with $1.2 billion raised in post-IPO equity for only travel shopping company, Expedia.   It also helped in a debt financing with AirBnB. 

Payout Perspective:

Even though the Professional Bull Riders began this past weekend, it’s Endeavor’s property, the UFC that is the main revenue piece for the company right now.  The $750 million contract with ESPN should help alleviate some of the financial issues with the company although its high-flying hopes of an IPO are now over for the time being.  In the near-term, one has to wonder what private equity firm (aside from Silver Lake) will invest into Endeavor at a time when the company is highly leveraged with just one main piece of its business doing well (i.e., UFC).  MPO will continue to follow.