Endeavor Reports $303.5 Million Q1 Loss Amid Restructuring and Legal Costs

Endeavor Group Holdings Inc. reported a $303.5 million net loss in Q1 2024, citing restructuring charges, legal costs, and event timing. The company will be acquired by Silver Lake at a $13 billion equity value and taken private, with the deal expected to close by Q1 2025.

Nitish Verma
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Endeavor Reports $303.5 Million Q1 Loss Amid Restructuring and Legal Costs

Endeavor Reports $303.5 Million Q1 Loss Amid Restructuring and Legal Costs

Endeavor, net, lossGroup Holdings Inc. has reported a net loss of $303.5 million in its first quarter of 2024, a stark contrast to the $36.26 million profit it posted a year ago. The company's revenue of $1.85 billion also fell short of analysts' expectations of $1.93 billion, as surveyed by Zacks Investment Research.

The substantial net loss was attributed to several factors, including $92.65 million in restructuring and impairment charges, $25.6 million in costs related to mergers and acquisitions, and $11.3 million in legal costs stemming from a $335 million settlement with mixed martial arts fighters who alleged that the UFC, which Endeavor owns, shut down competition and served as a monopoly holding down fighter pay.

Despite the challenges, Endeavor's Owned Sports Properties segment, which includes TKO Group Inc., saw a 94% year-over-year surge in revenue to $685.4 million, primarily due to the WWE acquisition that contributed $317 million in revenue during the quarter. The segment's adjusted EBITDA also increased by 61% to $299 million.

However, the company's other segments experienced declines. The Representation segment, which includes WME, saw a 1.4% drop in revenue to $345.3 million, impacted by certain fashion projects that took place in the prior year but did not occur this quarter. The Events, Experiences, and Rights segment's revenue fell 7% to $744.9 million, largely due to a $90 million decrease from the sale of IMG Academy in June 2023 and the timing of media rights associated with certain biennial events.

Amid the financial challenges, Endeavor has entered into an agreement to be acquired at an equity value of $13 billion and taken private by its majority owner, Silver Lake. The deal, unanimously approved by Endeavor's special committee of independent directors, will be financed through a combination of new and reinvested equity from Silver Lake and additional capital from Mubadala Investment Company, DFO Management LLC, Lexington Partners, and funds managed by Goldman Sachs Asset Management.

"We remain focused on maintaining our momentum through the year while working toward the close of our take-private transaction with Silver Lake," Endeavor CEO Ari Emanuel addressed the company's focus moving forward. The transaction is expected to close by the end of the first quarter of 2025, subject to the satisfaction of customary closing conditions and required regulatory approvals.

Endeavor Group Holdings Inc.'s first-quarter results underscore the significant impact of restructuring charges, legal costs, and the timing of certain events on the company's financial performance. As the company navigates these challenges and works towards the completion of its acquisition by Silver Lake, it remains to be seen how Endeavor will position itself for future growth and profitability in the dynamic entertainment and sports industry landscape.