QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
4 |
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4 |
||||
5 |
||||
6 |
||||
7 |
||||
9 |
||||
10 |
||||
33 |
||||
50 |
||||
51 |
||||
51 |
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52 |
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52 |
||||
53 |
• | the impact of the global pandemic related to COVID-19 and its variants on our business, financial condition, liquidity and results of operations; |
• | 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 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 effectively manage the integration of and recognize economic benefits from businesses acquired, 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; |
• | 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 substantial indebtedness; |
• | 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 ability to comply with the U.S. and foreign governmental regulations to which we are subject; |
• | our compliance with certain franchise and licensing requirements of unions and guilds and dependence on unionized labor; |
• | our control by Messrs. Emanuel and Whitesell, the Executive Holdcos, and the Silver Lake Equityholders; |
• | risk related to our organization and structure; |
• | risks related to tax matters; |
• | risks related to our Class A common stock; |
• | other important factors that could cause actual results, performance or achievements to differ materially from those contemplated that are found in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Part II, Item 1A., “Risk Factors” of this Quarterly Report and in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021. |
• | “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 were converted into Endeavor Operating Company Units. |
• | “Endeavor Group Holdings” refers to Endeavor Group Holdings, Inc. (“EGH”). |
• | “Endeavor Manager” refers to Endeavor Manager, LLC, a Delaware limited liability company and a direct subsidiary of Endeavor Group Holdings following the reorganization transactions. |
• | “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 (“EOC”). |
• | “Endeavor Operating Company Units” refers to all of the existing equity interests in Endeavor Operating Company (other than the Endeavor Profits Units) that were 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 were 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, subject to certain conditions and limitations, 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 and that are economically similar to stock options (other than with respect to Endeavor Full Catch-up Profits Units which, upon our achievement of a price per share that would have fully satisfied their preference on distributions, were converted into 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. |
• | “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 were converted into Endeavor Operating Company 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 are controlled by Messrs. Emanuel and Whitesell. |
• | “reorganization transactions” refers to the internal reorganization completed in connection with our May 2021 initial public offering, following which Endeavor Group Holdings manages and operates the business and control the strategic decisions and day-to-day |
Item 1. |
Financial Statements (Unaudited) |
June 30, 2021 |
December 31, 2020 |
|||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
||||||||
Accounts receivable (net of allowance for doubtful accounts of $ |
||||||||
Deferred costs |
||||||||
Other current assets |
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|
|
|
|
|||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Operating lease right-of-use |
||||||||
Intangible assets, net |
||||||||
Goodwill |
||||||||
Investments |
||||||||
Other assets |
||||||||
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|
|
|
|||||
Total assets |
$ | $ | ||||||
|
|
|
|
|||||
LIABILITIES, REDEEMABLE INTERESTS AND SHAREHOLDERS’/MEMBERS’ EQUITY |
|
|||||||
Current Liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Current portion of long-term debt |
||||||||
Current portion of operating lease liabilities |
||||||||
Deferred revenue |
||||||||
Deposits received on behalf of clients |
||||||||
Other current liabilities |
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|
|
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|
|||||
Total current liabilities |
||||||||
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|
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|
|||||
Long-term debt |
||||||||
Long-term operating lease liabilities |
||||||||
Other long-term liabilities |
||||||||
|
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|
|||||
Total liabilities |
||||||||
|
|
|
|
|||||
Commitments and contingencies (Note 19) |
||||||||
Redeemable non-controlling interests |
||||||||
Redeemable equity |
||||||||
Shareholders’/Members’ Equity: |
||||||||
Class A common stock, $ |
||||||||
Class B common stock, $ |
||||||||
Class C common stock, $ |
||||||||
Class X common stock, $ |
||||||||
Class Y common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ||||||
Members’ capital |
||||||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total Endeavor Group Holdings, Inc./Endeavor Operating Company, LLC shareholders’/members’ equity |
||||||||
Nonredeemable non-controlling interests |
||||||||
|
|
|
|
|||||
Total shareholders’/members’ equity |
||||||||
|
|
|
|
|||||
Total liabilities, redeemable interests and shareholders’/members’ equity |
$ | $ | ||||||
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenue |
$ | $ | $ | $ | ||||||||||||
Operating expenses: |
||||||||||||||||
Direct operating costs |
||||||||||||||||
Selling, general and administrative expenses |
||||||||||||||||
Insurance recoveries |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Depreciation and amortization |
||||||||||||||||
Impairment charges |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other (expense) income: |
||||||||||||||||
Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Loss on extinguishment of debt |
( |
) | — | ( |
) | — | ||||||||||
Other income, net |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes and equity losses of affiliates |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Provision for (benefit from) income taxes |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before equity losses of affiliates |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Equity losses of affiliates, net of tax |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Less: Net loss attributable to non-controlling interests |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Less: Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss attributable to Endeavor Group Holdings, Inc. |
$ | ( |
) | $ | $ | ( |
) | $ | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic and diluted loss per share of Class A common stock (1) |
$ | ( |
) | N/A | $ | ( |
) | N/A | ||||||||
Weighted average number of shares used in computing basic and diluted loss per share |
N/A | N/A |
(1) |
Basic and diluted loss per share of Class A common stock is applicable only for the period from May 1, 2021 through June 30, 2021, which is the period following the initial public offering (“IPO”) and the related Reorganization Transactions (as defined in Note 1 to the unaudited consolidated financial statements). See Note 14 for the calculation of the numbers of shares used in computation of net loss per share of Class A common stock and the basis for computation of net loss per share. |
Three Months Ended June 30, |
Six months ended June 30, |
||||||||||||||||
2021 |
2020 |
2021 |
2020 |
||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||
Other comprehensive income (loss), net of tax: |
|||||||||||||||||
Change in unrealized gains/losses on cash flow hedges: |
|||||||||||||||||
Unrealized gain lossess () on forward foreign exchange contracts |
( |
) | |||||||||||||||
Reclassification of losses to net loss for forward foreign exchange contracts |
— | — | |||||||||||||||
Unrealized (losses) gains on interest rate swaps |
( |
) | ( |
) | ( |
) | |||||||||||
Reclassification of losses to net income (loss) for interest rate swaps |
|||||||||||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | |||||||||||||
Reclassification of loss to net income (loss) for business divestiture |
— | — | — | ||||||||||||||
|
|
|
|
|
|
|
|
||||||||||
Total comprehensive loss, net of tax |
( |
) | ( |
) | ( |
) | ( |
) | |||||||||
Less: Comprehensive loss attributable to non-controlling interests |
( |
) | ( |
) |
( |
) | ( |
) |
|||||||||
Less: Comprehensive loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions |
( |
) | ( |
) | ( |
) | ( |
) | |||||||||
|
|
|
|
|
|
|
|
||||||||||
Comprehensive loss attributable to Endeavor Group Holdings, Inc. |
$ | ( |
) | $ | — | $ | ( |
) | $ | — | |||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Non- controlling |
Redeemable |
Members’ |
Class A Common Stock |
Class X Common Stock |
Class Y Common Stock |
Additional Paid- |
Accumulated |
Accumulated Other Comprehensive |
Total Shareholders’ Equity Attributable to Endeavor Group Holdings, Inc./ |
Nonredeemable Non- controlling |
Total Shareholders’/ |
|||||||||||||||||||||||||||||||||||||||||||||||||
Interests |
Equity |
Capital |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
In Capital |
Deficit |
Loss |
Members’ Equity |
Interests |
Members’ Equity |
||||||||||||||||||||||||||||||||||||||||||||||
Balance at April 1, 2021 |
$ |
$ |
$ |
— |
$ |
— |
— |
$ |
— |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||||||||||||||||||
Comprehensive (loss) income prior to Reorganization and IPO |
( |
) |
— |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
|||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation expense prior to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||||
Distributions prior to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
|||||||||||||||||||||||||||||||||||||||||||||||
Effect of Reorganization |
( |
) |
( |
) |
— |
( |
) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A common stock sold in IPO, including underwriters’ option, and Private Placement, net of underwriting discounts |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||||||
Use of proceeds, including the UFC Buyout |
— |
— |
— |
— |
— |
— |
( |
) |
— |
( |
) | ( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||||||||||||
Comprehensive (loss) income subsequent to Reorganization and IPO |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||||||||||
Equity-based compensation subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A common stock due to exchanges subsequent to Reorganization and IPO |
— |
— |
— |
— |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A common stock for vested RSUs subsequent to Reorganization and IPO |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Contributed capital subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||
Distributions subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interests subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
— |
( |
) |
— |
( |
) | |||||||||||||||||||||||||||||||||||||||||||
Establishment of non-controlling interests subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||||||
Equity reallocation between controlling and non-controlling interests |
— | — | — | — | — | — | — | — | — | — | — | ( |
) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Establishment of tax receivable agreements liability |
— |
— |
— |
— |
( |
) |
— |
— |
( |
) |
— |
( |
) | |||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Balance at June 30, 2021 |
$ |
$ |
$ |
— |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
$ |
|||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021 |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Non- controlling |
Redeemable |
Members’ |
Class A Common Stock |
Class X Common Stock |
Class Y Common Stock |
Additional Paid- |
Accumulated |
Accumulated Other Comprehensive |
Total Shareholders’ Equity Attributable to Endeavor Group Holdings, Inc./ |
Nonredeemable Non- controlling |
Total Shareholders’/ |
|||||||||||||||||||||||||||||||||||||||||||||||||
Interests |
Equity |
Capital |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
In Capital |
Deficit |
(Loss) Income |
Members’ Equity |
Interests |
Members’ Equity |
||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2021 |
$ |
$ |
$ |
— |
$ |
— |
— |
$ |
— |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
( |
) |
$ |
$ |
$ |
||||||||||||||||||||||||||||||||||||||
Comprehensive (loss) income prior to Reorganization and IPO |
( |
) |
— |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
|||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation expense prior to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||||||
Distributions prior to Reorganization and IPO |
— |
— |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) | |||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interests prior to Reorganization and IPO |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||||
Establishment of non-controlling interests prior to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||||||||
Effect of Reorganization |
( |
) |
( |
) |
— |
( |
) |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A common stock sold in IPO, including underwriters’ option, and Private Placement, net of underwriting discounts |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||||||
Use of proceeds, including the UFC Buyout |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) | |
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Comprehensive (loss) income subsequent to Reorganization and IPO |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A common stock due to exchanges subsequent to Reorganization and IPO |
— |
— |
— |
— |
( |
) |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A common stock for vested RSUs subsequent to Reorganization and IPO |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Contributed capital subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||
Distributions subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||||||||||||||||||||
Accretion of redeemable non-controlling interests subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
— |
( |
) |
— |
( |
) | |||||||||||||||||||||||||||||||||||||||||||
Establishment of non-controlling interests subsequent to Reorganization and IPO |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||||||
Equity reallocation between controlling and non-controlling interests |
— | — | — | — | — | — | — | — | — | — | — | ( |
) | — | ||||||||||||||||||||||||||||||||||||||||||||||
Establishment of t agreements liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Balance at June 30, 2021 |
$ |
$ |
$ |
— |
$ |
$ |
$ |
$ |
$ |
( |
) | $ |
( |
) | $ |
$ |
$ |
|||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020 |
||||||||||||||||||||||||||||
Redeemable Non- controlling Interests |
Redeemable Equity |
Members’ Capital |
Accumulated Other Comprehensive (Loss) Income |
Total Endeavor Operating Company, LLC Members’ Equity |
Nonredeemable Non-controlling Interests |
Total Members’ Equity |
||||||||||||||||||||||
Balance at April 1, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||
Comprehensive (loss) income |
( |
) | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||
Equity-based compensation expense |
— | — | — | |||||||||||||||||||||||||
Distributions |
— | — | ( |
) | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||
Accretion of redeemable non-controlling interests |
( |
) | — | — | — | |||||||||||||||||||||||
Redemption of units |
— | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||
Balance at June 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||
Six Months Ended June 30, 2020 |
||||||||||||||||||||||||||||
Redeemable Non-controlling Interests |
Redeemable Equity |
Members’ Capital |
Accumulated Other Comprehensive (Loss) Income |
Total Endeavor Operating Company, LLC Members’ Equity |
Nonredeemable Non-controlling Interests |
Total Members’ Equity |
||||||||||||||||||||||
Balance at January 1, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||
Cumulative transition adjustment of ASU 2016-13 adoption |
— | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||
Comprehensive (loss) income |
( |
) | — | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||
Equity-based compensation expense |
— | — | — | |||||||||||||||||||||||||
Contributions |
— | — | — | — | ||||||||||||||||||||||||
Distributions |
— | — | ( |
) | — | ( |
) | ( |
) | ( |
) | |||||||||||||||||
Accretion of redeemable non-controlling interests |
( |
) | — | — | — | |||||||||||||||||||||||
Redemption of units |
— | — | ( |
) | — | ( |
) | — | ( |
) | ||||||||||||||||||
Acquisition of non-controlling interests |
— | — | — | — | ||||||||||||||||||||||||
Business deconsolidation |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Balance at June 30, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||
Six Months Ended June 30, |
||||||||||||||||
2021 |
2020 |
|||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||||||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
||||||||||||||||
Depreciation and amortization |
||||||||||||||||
Amortization and write-off of original issue discount and deferred financing cost |
||||||||||||||||
Loss on extinguishment of debt |
— | |||||||||||||||
Amortization of content costs |
||||||||||||||||
Impairment charges |
||||||||||||||||
(Gain) loss on sale/disposal and impairment of assets |
( |
) | ||||||||||||||
Gain on business acquisition and deconsolidation |
— | ( |
) | |||||||||||||
Equity-based compensation expense |
||||||||||||||||
Change in fair value of contingent liabilities |
( |
) | ||||||||||||||
Change in fair value of equity investments with and without readily determinable fair value |
( |
) | ||||||||||||||
Change in fair value of financial instruments |
( |
) | ||||||||||||||
Equity losses from affiliates |
||||||||||||||||
Net (benefit) provision for allowance for doubtful accounts |
( |
) | ||||||||||||||
Net gain on foreign currency transactions |
( |
) | ( |
) | ||||||||||||
Distributions from affiliates |
||||||||||||||||
Income taxes |
||||||||||||||||
Other, net |
||||||||||||||||
Changes in operating assets and liabilities - net of acquisitions: |
||||||||||||||||
(Increase)/decrease in receivables |
( |
) | ||||||||||||||
Decrease/(increase) in other current assets |
( |
) | ||||||||||||||
Increase in other assets |
( |
) | ( |
) | ||||||||||||
Decrease in deferred costs |
||||||||||||||||
Increase in deferred revenue |
||||||||||||||||
Increase/(decrease) in accounts payable and accrued liabilities |
( |
) | ||||||||||||||
Decrease in other liabilities |
( |
) |
( |
) | ||||||||||||
|
|
|
|
|||||||||||||
Net cash (used in) provided by operating activities |
( |
) | ||||||||||||||
|
|
|
|
|||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||||||||||
Acquisitions, net of cash acquired |
( |
) | ( |
) | ||||||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||||||||||
Proceeds from sale of assets |
||||||||||||||||
Investments in affiliates |
( |
) | ( |
) | ||||||||||||
Other, net |
( |
) | ||||||||||||||
|
|
|
|
|||||||||||||
Net cash used in investing activities |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||||||||||
Proceeds from borrowings |
||||||||||||||||
Payments on borrowings |
( |
) | ( |
) | ||||||||||||
Contributions |
|
|
|
|
|
|
— |
| ||||||||
Distributions |
( |
) | ( |
) | ||||||||||||
Redemption of units |
( |
) | ( |
) | ||||||||||||
Proceeds from equity offering, net of underwriting discounts and offering expenses |
— | |||||||||||||||
Payments of contingent consideration related to acquisitions |
( |
) | ( |
) | ||||||||||||
Acquisition of non-controlling interests |
|
|
( |
) |
|
|
— |
| ||||||||
Other, net |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|||||||||||||
Net cash provided by financing activities |
||||||||||||||||
|
|
|
|
|||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
( |
) | ||||||||||||||
|
|
|
|
|||||||||||||
(Decrease) increase in cash, cash equivalents and restricted cash |
( |
) | ||||||||||||||
Cash, cash equivalents and restricted cash at beginning of year |
||||||||||||||||
|
|
|
|
|||||||||||||
Cash, cash equivalents and restricted cash at end of period |
$ | $ | ||||||||||||||
|
|
|
|
1. |
DESCRIPTION OF BUSINESS AND ORGANIZATION |
• | EGH’s certificate of incorporation was amended and restated to, among other things, provide for the following common stock: |
Class of Common Stock |
Par Value |
Votes |
Economic Rights | |||||
Class A common stock |
$ | |||||||
Class B common stock |
$ | |||||||
Class C common stock |
$ | |||||||
Class X common stock |
$ | |||||||
Class Y common stock |
$ |
• | Endeavor Manager became the sole managing member of EOC and EGH became the sole managing member of Endeavor Manager; |
• | Endeavor Manager issued to equityholders of certain management holding companies common interest units in Endeavor Manager along with paired shares of its Class X common stock as consideration for the acquisition of Endeavor Operating Company Units held by such management holding companies; |
• | For certain pre-IPO investors, EGH issued shares of its Class A common stock, Class Y common stock and rights to receive payments under a tax receivable agreement and for certain other pre-IPO investors, EGH issued shares of its Class A common stock as consideration for the acquisition of Endeavor Operating Company Units held by such pre-IPO investors; |
• | For holders of Endeavor Operating Company Units which remained outstanding following the IPO, EGH issued paired shares of its 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 and in exchange for the payment of the aggregate par value of the Class X common stock and Class Y common stock received; and |
• |
Certain Endeavor Profits Units, Endeavor Full Catch-Up Profits Units and Endeavor Partial Catch-Up Profits Units remained outstanding following the closing of the IPO. Subsequent to the IPO, the Endeavor Full Catch-up Profits Units were recapitalized and converted into Endeavor Operating Company Units and the Endeavor Partial Catch-Up Profits Units were recapitalized and converted into Endeavor Profits Units. |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3. |
RECENT ACCOUNTING PRONOUNCEMENTS |
4. |
IMPACT OF THE GLOBAL COVID-19 PANDEMIC |
5. |
ACQUISITIONS AND DECONSOLIDATION |
FlightScope |
NCSA |
|||||||
Cash and cash equivalents |
$ |
$ |
||||||
Accounts receivable |
||||||||
Deferred costs |
||||||||
Other current assets |
||||||||
Property and equipment |
||||||||
Right of use assets |
— | |||||||
Other assets |
||||||||
Intangible assets: |
||||||||
Trade names |
— | |||||||
Customer relationships |
||||||||
Internally developed software |
||||||||
Goodwill |
||||||||
Accounts payable and accrued expenses |
( |
) |
( |
) | ||||
Other current liabilities |
( |
) |
( |
) | ||||
Operating lease liability |
( |
) | — | |||||
Deferred revenue |
( |
) |
( |
) | ||||
Other liabilities |
( |
) |
( |
) | ||||
Net assets acquired |
$ |
$ |
||||||
Cash and cash equivalents |
$ | |||
Restricted cash |
||||
Accounts receivable |
||||
Deferred costs |
||||
Other current assets |
||||
Property and equipment |
||||
Operating lease right-of-use |
||||
Other assets |
||||
Intangible assets: |
||||
Trade names |
||||
Customer and client relationships |
||||
Goodwill |
||||
Accounts payable and accrued expenses |
( |
) | ||
Other current liabilities |
( |
) | ||
Deferred revenue |
( |
) | ||
Debt |
( |
) | ||
Operating lease liabilities |
( |
) | ||
Other long-term liabilities |
( |
) | ||
Non-redeemable non-controlling interest |
( |
) | ||
Net assets acquired |
$ | |||
6. |
SUPPLEMENTARY DATA |
June 30, 2021 |
December 31, 2020 |
|||||||
Licensed program rights, net of accumulated amortization |
$ | $ | ||||||
Produced programming: |
||||||||
Released, net of accumulated amortization |
||||||||
In production |
||||||||
In development |
||||||||
Total content costs |
$ | $ | ||||||
Content cost monetized on a title-by-title basis |
$ | $ | ||||||
Content cost monetized as a film group |
||||||||
Total content costs |
$ | |
$ | |
||||
June 30, 2021 |
December 31, 2020 |
|||||||
Accrued operating expenses |
$ | $ | ||||||
Payroll, bonuses and benefits |
||||||||
Other |
||||||||
Total accrued liabilities |
$ | |
$ | |
||||
Balance at Beginning of Year |
Additions/Charged (Credited) to Costs and Expenses |
Deductions |
Foreign Exchange |
Balance at End of Period |
||||||||||||||||
Six months ended June 30, 2021 |
$ | $ | $ | ( |
) | $ | $ |
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Supplemental information: |
||||||||
Cash paid for interest |
$ | $ | ||||||
Cash payments for income taxes |
||||||||
Non-cash investing and financing activities: |
||||||||
Capital expenditures included in accounts payable and accrued liabilities |
$ | $ | ||||||
Contingent consideration provided in connection with acquisitions |
||||||||
Accretion of redeemable non-controlling interests |
( |
) | ||||||
Accrued redemption of units included in accrued liabilities and other current liabilities |
||||||||
Issuance of Class A Common Units |
||||||||
Issuance of promissory note |
||||||||
Establishment and acquisition of non-controlling interests |
|
|
|
|
|
|
|
|
Establishment of tax receivable agreements liability |
|
|
|
|
|
|
|
|
7. |
GOODWILL AND INTANGIBLE ASSETS |
Owned Sports Properties |
Events, Experiences & Rights |
Representation |
Total |
|||||||||||||
Balance — December 31, 2020 |
$ | $ | $ | $ | ||||||||||||
Acquisitions |
||||||||||||||||
Impairment |
( |
) | ( |
) | ( |
) | ||||||||||
Foreign currency translation and other |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance — June 30, 2021 |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Weighted Average Estimated Useful Life (in years) |
Gross Amount |
Accumulated Amortization |
Carrying Value |
|||||||||||||
Amortized: |
||||||||||||||||
Trade names |
$ | $ | ( |
) | $ | |||||||||||
Customer and client relationships |
( |
) | ||||||||||||||
Internally developed technology |
( |
) | ||||||||||||||
Other |
( |
) | ||||||||||||||
|
|
|
|
|
|
|||||||||||
( |
) | |||||||||||||||
|
|
|
|
|
|
|||||||||||
Indefinite-lived: |
||||||||||||||||
Trade names |
— | |||||||||||||||
Owned events |
— | |||||||||||||||
|
|
|
|
|
|
|||||||||||
Total intangible assets |
$ | $ | ( |
) | $ | |||||||||||
|
|
|
|
|
|
Weighted Average Estimated Useful Life (in years) |
Gross Amount |
Accumulated Amortization |
Carrying Value |
|||||||||||||
Amortized: |
||||||||||||||||
Trade names |
$ | $ | ( |
) | $ | |||||||||||
Customer and client relationships |
( |
) | ||||||||||||||
Internally developed technology |
( |
) | ||||||||||||||
Other |
( |
) | ||||||||||||||
|
|
|
|
|
|
|||||||||||
( |
) | |||||||||||||||
|
|
|
|
|
|
|||||||||||
lndefinite-lived: |
||||||||||||||||
Trade names |
— | |||||||||||||||
Owned events |
— | |||||||||||||||
|
|
|
|
|
|
|||||||||||
Total intangible assets |
$ | $ | ( |
) | $ | |||||||||||
|
|
|
|
|
|
8. |
INVESTMENTS |
June 30, |
December 31, |
|||||||
2021 |
2020 |
|||||||
Equity method investments |
$ | $ | ||||||
Equity investments without readily determinable fair values |
||||||||
Equity investments with readily determinable fair values |
||||||||
|
|
|
|
|||||
Total investments |
$ | $ | ||||||
|
|
|
|
9. |
FINANCIAL INSTRUMENTS |
Foreign Currency |
Foreign Currency Amount |
US Dollar Amount |
Weighted Average Exchange Rate Per $1 USD | |||||||
British Pound Sterling |
£ |
in exchange for | $ | £ | ||||||
Canadian Dollar |
C$ |
in exchange for | $ | C$ | ||||||
Swedish Krona |
kr |
in exchange for | $ | kr | ||||||
Australian Dollar |
AUD$ |
in exchange for | $ | AUD$ | ||||||
Singapore Dollar |
S$ |
in exchange for | $ | S$ |
10. |
FAIR VALUE MEASUREMENTS |
Fair Value Measurements as of June 30, 2021 |
||||||||||||||||
Level I |
Level II |
Level III |
Total |
|||||||||||||
Assets: |
||||||||||||||||
Investments in equity securities with readily determinable fair values |
$ | $ | — | $ | — | $ | ||||||||||
Forward foreign exchange contracts |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | — | $ | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | — | $ | — | $ |
2 1,371 |
$ | |||||||||
Interest rate swaps |
— | — | ||||||||||||||
Forward foreign exchange contracts |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | — | $ | $ | $ | |||||||||||
|
|
|
|
|
|
|
|
Fair Value Measurements as of December 31, 2020 |
||||||||||||||||
Level I |
Level II |
Level III |
Total |
|||||||||||||
Assets: |
||||||||||||||||
Investments in equity securities with readily determinable fair values |
$ | $ | — | $ | — | $ | ||||||||||
Forward foreign exchange contracts |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | — | $ | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | — | $ | — | $ | $ | ||||||||||
Interest rate swaps |
— | — | ||||||||||||||
Forward foreign exchange contracts |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | — | $ | $ | $ | |||||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021 |
||||
Balance at December 31, 2020 |
$ | |||
Payments |
( |
) | ||
Change in fair value |
||||
|
|
|||
Balance at June 30, 2021 |
$ | |||
|
|
11. |
DEBT |
June 30, 2021 |
December 31, 2020 |
|||||||
2014 Credit Facilities: |
||||||||
First Lien Term Loan (due |
$ | $ | ||||||
Revolving Credit Facility (due |
||||||||
Zuffa Credit Facilities: |
||||||||
Zuffa First Lien Term Loan (due |
||||||||
Other debt ( |
||||||||
|
|
|
|
|||||
Total principal |
||||||||
Unamortized discount |
( |
) |
( |
) | ||||
Unamortized issuance costs |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total debt |
||||||||
Less: current portion |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total long-term debt |
$ | $ | ||||||
|
|
|
|
12. |
MEMBERS’ EQUITY |
13. |
REDEEMABLE NON-CONTROLLING INTERESTS |
14. |
EARNINGS PER SHARE |
Period Through May 1 - June 30, 2021 |
||||
Basic and diluted net loss per share |
||||
Numerator |
||||
Consolidated Net Loss |
$ | ( |
) | |
Net loss attributable to NCI (Endeavor Operating Company Unit) |
( |
) | ||
Net loss attributable to NCI (Endeavor Manager LLC Manager Unit) |
( |
) | ||
|
|
|||
Net loss attributable to EGH common shareholders |
$ |
( |
) | |
Denominator |
||||
Weighted average Class A Common Shares outstanding - Basic |
||||
|
|
|||
Basic and diluted net loss per share |
$ |
( |
) | |
|
|
Securities that are anti-dilutive this period |
||||
Stock Option s |
||||
Unvested RSUs |
||||
Manager LLC Units |
||||
EOC Common Units |
||||
EOC Profits Interest |
|
|
|
|
15. |
EQUITY BASED COMPENSATION |
Time Vested RSUs |
Market / Market and Time Vested RSUs |
|||||||||||||||
Units |
Value * |
Units |
Value * |
|||||||||||||
Outstanding at January 1, 2021 |
$ | $ | ||||||||||||||
Granted |
$ | |||||||||||||||
Released |
( |
) |
$ | ( |
) |
|||||||||||
Forfeited |
( |
) | $ | ( |
) | |||||||||||
|
|
|
|
|||||||||||||
Outstanding at June 30, 2021 |
$ | |||||||||||||||
Vested and releasable at June 30, 2021 |
$ |
$ |
||||||||||||||
|
|
|
|
* | Weighted average grant date fair value |
Stock Options |
||||||||
Options |
Weighted Average Exercise Price |
|||||||
Outstanding at Janu a ry 1, 2021 |
$ | |||||||
Granted |
$ | |||||||
Forfeited or expired |
( |
) |
$ | |||||
|
|
|||||||
Outstanding at June 30, 2021 |
$ | |||||||
Vested and exercisable at June 30, 2021 |
$ |
|||||||
|
|
Stock Options |
||||
Risk-free i nterest r ate |
% | |||
Expected v olatility |
% | |||
Expected l ife (in years) |
||||
Expected d ividend y ield |
% |
16. |
INCOME TAXES |
17. |
REVENUE |
Three Months Ended June 30, 2021 |
||||||||||||||||
Owned Sports Properties |
Events, Experiences & Rights |
Representation |
Total |
|||||||||||||
Media rights |
$ | $ | $ | $ | ||||||||||||
Media production, distribution and content |
||||||||||||||||
Events and performance |
||||||||||||||||
Talent representation and licensing |
||||||||||||||||
Marketing |
||||||||||||||||
Eliminations |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Six Months Ended June 30, 2021 |
||||||||||||||||
Owned Sports Properties |
Events, Experiences & Rights |
Representation |
Total |
|||||||||||||
Media rights |
$ | $ | $ | $ | ||||||||||||
Media production, distribution and content |
||||||||||||||||
Events and performance |
||||||||||||||||
Talent representation and licensing |
||||||||||||||||
Marketing |
||||||||||||||||
Eliminations |
( |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Three Months Ended June 30, 2020 |
||||||||||||||||
Owned Sports Properties |
Events, Experiences & Rights |
Representation |
Total |
|||||||||||||
Media rights |
$ | $ | $ | — | $ | |||||||||||
Media production, distribution and content |
||||||||||||||||
Events and performance |
— | |||||||||||||||
Talent representation and licensing |
— | — | ||||||||||||||
Marketing |
— | — | ||||||||||||||
Eliminations |
— | — | — | ( |
) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Six Months Ended June 30, 2020 |
||||||||||||||||
Owned Sports Properties |
Events, Experiences & Rights |
Representation |
Total |
|||||||||||||
Media rights |
$ | $ | $ | — | $ | |||||||||||
Media production, distribution and content |
||||||||||||||||
Events and performance |
— | |||||||||||||||
Talent representation and licensing |
— | — | ||||||||||||||
Marketing |
— | — | ||||||||||||||
Eliminations |
— | — | — | ( |
) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Years Ending December 31, |
||||
Remainder of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
Thereafter |
||||
|
|
|||
$ | ||||
|
|
Description |
December 31, 2020 |
Additions |
Deductions |
Acquisitions |
Foreign Exchange |
June 30, 2021 |
||||||||||||||||||
Deferred revenue - current |
$ | $ | $ | ( |
) | $ | $ | $ | ||||||||||||||||
Deferred revenue - noncurrent |
$ | $ | $ | ( |
) | $ |
$ |
— |
$ |
18. |
SEGMENT INFORMATION |
Three months ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Owned Sports Properties |
$ | $ | $ | $ | ||||||||||||
Events, Experiences & Rights |
||||||||||||||||
Representation |
||||||||||||||||
Eliminations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total consolidated revenue |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Three months ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Owned Sports Properties |
$ | $ | $ | $ | ||||||||||||
Events, Experiences & Rights |
( |
) | ||||||||||||||
Representation |
||||||||||||||||
Corporate |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
||||||||||||||||
Reconciling items: |
||||||||||||||||
Equity losses (income) losses of affiliates |
( |
) | ||||||||||||||
Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Equity-based compensation expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Merger, acquisition and earn-out costs |
( |
) | ( |
) | ( |
) | ||||||||||
Certain legal costs |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Restructuring, severance and impairment |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Fair value adjustment - equity investments |
( |
) | ( |
) | ||||||||||||
COVID-19 related costs |
( |
) | ( |
) | ||||||||||||
Other |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes and equity losses of affiliate s |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
|
|
19. |
COMMITMENTS AND CONTINGENCIES |
20. |
RELATED PARTY TRANSACTIONS |
June 30, 2021 |
December 31, 2020 |
|||||||
Other current assets |
$ | $ | ||||||
Other assets |
||||||||
Current liabilities |
||||||||
Other current liabilities |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenue |
$ | $ | $ |
$ | ||||||||||||
Direct operating costs |
( |
) | ||||||||||||||
Selling, general and administrative expenses |
||||||||||||||||
Other income, net |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenue |
$ | 1,111,272 | $ | 462,914 | $ | 2,180,854 | $ | 1,653,311 | ||||||||
Operating expenses: |
||||||||||||||||
Direct operating costs |
570,955 | 172,643 | 1,117,347 | 853,927 | ||||||||||||
Selling, general and administrative expenses |
785,101 | 302,047 | 1,166,214 | 691,018 | ||||||||||||
Insurance recoveries |
(10,210 | ) | (16,841 | ) | (29,867 | ) | (33,960 | ) | ||||||||
Depreciation and amortization |
69,161 | 84,751 | 136,397 | 165,198 | ||||||||||||
Impairment charges |
3,770 | 172,232 | 3,770 | 175,282 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
1,418,777 | 714,832 | 2,393,861 | 1,851,465 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(307,505 | ) | (251,918 | ) | (213,007 | ) | (198,154 | ) | ||||||||
Other (expense) income: |
||||||||||||||||
Interest expense, net |
(83,836 | ) | (71,693 | ) | (152,187 | ) | (141,677 | ) | ||||||||
Loss on extinguishment of debt |
(28,628 | ) | — | (28,628 | ) | — | ||||||||||
Other income, net |
7,933 | 21,810 | 4,718 | 47,167 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes and equity losses of affiliates |
(412,036 | ) | (301,801 | ) | (389,104 | ) | (292,664 | ) | ||||||||
Provision for (benefit from) income taxes |
60,918 | (4,049 | ) | 66,003 | 44,555 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before equity losses of affiliates |
(472,954 | ) | (297,752 | ) | (455,107 | ) | (337,219 | ) | ||||||||
Equity losses of affiliates, net of tax |
(43,813 | ) | (198,013 | ) | (59,284 | ) | (209,807 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
(516,767 | ) | (495,765 | ) | (514,391 | ) | (547,026 | ) | ||||||||
Net loss attributable to non-controlling interests |
(190,354 | ) | (29,211 | ) | (163,108 | ) | (25,516 | ) | ||||||||
Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions |
(6,816 | ) | (466,554 | ) | (31,686 | ) | (521,510 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss attributable to Endeavor Group Holdings, Inc. |
$ | (319,597 | ) | $ | — | $ | (319,597 | ) | $ | — | ||||||
|
|
|
|
|
|
|
|
• | Owned Sports Properties |
• | Events, Experiences & Rights |
• | Representation |
• | Owned Sports Properties |
• | Events, Experiences & Rights in-person events in the first quarter 2021, resulting from COVID-19. |
• | Representation |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenue: |
||||||||||||||||
Owned Sports Properties |
$ | 258,865 | $ | 152,239 | $ | 542,346 | $ | 384,406 | ||||||||
Events, Experiences & Rights |
528,672 | 119,834 | 1,068,282 | 788,610 | ||||||||||||
Representation |
328,232 | 192,840 | 577,141 | 485,574 | ||||||||||||
Eliminations |
(4,497 | ) | (1,999 | ) | (6,915 | ) | (5,279 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Revenue |
$ | 1,111,272 | $ | 462,914 | $ | 2,180,854 | $ | 1,653,311 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA: |
||||||||||||||||
Owned Sports Properties |
$ | 132,267 | $ | 65,502 | $ | 277,816 | $ | 167,796 | ||||||||
Events, Experiences & Rights |
36,800 | (42,655 | ) | 75,850 | 26,468 | |||||||||||
Representation |
61,685 | 52,036 | 123,168 | 120,649 | ||||||||||||
Corporate |
(62,704 | ) | (29,046 | ) | (109,320 | ) | (83,538 | ) |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenue |
$ | 258,865 | $ | 152,239 | $ | 542,346 | $ | 384,406 | ||||||||
Direct operating costs |
$ | 81,079 | $ | 48,558 | $ | 173,294 | $ | 139,017 | ||||||||
Selling, general and administrative expenses |
$ | 44,389 | $ | 35,980 | $ | 92,102 | $ | 75,421 | ||||||||
Adjusted EBITDA |
$ | 132,267 | $ | 65,502 | $ | 277,816 | $ | 167,796 | ||||||||
Adjusted EBITDA margin |
51.1 | % | 43.0 | % | 51.2 | % | 43.7 | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenue |
$ | 528,672 | $ |
119,834 | $ | 1,068,282 | $ |
788,610 | ||||||||
Direct operating costs |
$ | 389,533 | $ | 93,254 | $ | 811,069 | $ | 606,998 | ||||||||
Selling, general and administrative expenses |
$ | 112,803 | $ | 88,237 | $ | 213,074 | $ | 199,108 | ||||||||
Adjusted EBITDA |
$ | 36,800 | $ | (42,655 | ) | $ | 75,850 | $ | 26,468 | |||||||
Adjusted EBITDA margin |
7.0 | % | -35.6 | % | 7.1 | % | 3.4 | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Revenue |
$ | 328,232 | $ | 192,840 | $ | 577,141 | $ | 485,574 | ||||||||
Direct operating costs |
$ | 104,842 | $ | 32,524 | $ | 139,901 | $ | 101,422 | ||||||||
Selling, general and administrative expenses |
$ | 161,693 | $ | 108,603 | $ | 313,851 | $ | 263,829 | ||||||||
Adjusted EBITDA |
$ | 61,685 | $ | 52,036 | $ | 123,168 | $ | 120,649 | ||||||||
Adjusted EBITDA margin |
18.8 | % | 27.0 | % | 21.3 | % | 24.8 | % |
Three Months Ended June 30, |
Three Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands) |
||||||||||||||||
Adjusted EBITDA |
$ | (62,704 | ) | $ | (29,046 | ) | $ | (109,320 | ) | $ | (83,538 | ) |
• | 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. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Net loss |
$ | (516,767 | ) | $ | (495,765 | ) | $ | (514,391 | ) | $ | (547,026 | ) | ||||
Provision for (benefit from) income taxes |
60,918 | (4,049 | ) | 66,003 | 44,555 | |||||||||||
Interest expense, net |
83,836 | 71,693 | 152,187 | 141,677 | ||||||||||||
Depreciation and amortization |
69,161 | 84,751 | 136,397 | 165,198 | ||||||||||||
Equity-based compensation expense (l) |
387,017 | 9,204 | 403,508 | 16,975 | ||||||||||||
Merger, acquisition and earn-out costs (2) |
14,199 | (859 | ) | 25,184 | 9,303 | |||||||||||
Certain legal costs (3) |
574 | 3,357 | 4,526 | 6,159 | ||||||||||||
Restructuring, severance and impairment (4) |
4,026 | 195,305 | 4,433 | 212,247 | ||||||||||||
Fair value adjustment - Droga5 (5) |
— | 473 | — | 473 | ||||||||||||
Fair value adjustment - equity investments (5) |
(5,905 | ) | 2,950 | (13,704 | ) | 5,759 | ||||||||||
Equity method losses - Learfield IMG College (6) |
42,655 | 195,781 | 61,460 | 207,537 | ||||||||||||
COVID-19 related costs (7) |
— | 2,193 | — | 2,403 | ||||||||||||
Other (8) |
28,334 | (19,610 | ) | 41,911 | (43,595 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 168,048 | $ | 45,424 | $ | 367,514 | $ | 221,665 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss margin |
(46.5 | %) | (107.1 | %) | (23.6 | %) | (33.1 | %) | ||||||||
Adjusted EBITDA margin |
15.1 | % | 9.8 | % | 16.9 | % | 13.4 | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
(in thousands) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Net loss |
$ | (516,767 | ) | $ | (495,765 | ) | $ | (514,391 | ) | $ | (547,026 | ) | ||||
Net loss attributable to non-controlling interests |
190,354 | 29,211 | 163,108 | 25,516 | ||||||||||||
Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions |
6,816 | — | 31,686 | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss attributable to Endeavor Group Holdings, Inc |
(319,597 | ) | — | (319,597 | ) | — | ||||||||||
Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions |
— | (466,554 | ) | — | (521,510 | ) | ||||||||||
Amortization |
46,649 | 63,494 | 92,377 | 123,458 | ||||||||||||
Equity-based compensation expense (l) |
387,017 | 9,204 | 403,508 | 16,975 | ||||||||||||
Merger, acquisition and earn-out costs (2) |
14,199 | (859 | ) | 25,184 | 9,303 | |||||||||||
Certain legal costs (3) |
574 | 3,357 | 4,526 | 6,159 | ||||||||||||
Restructuring, severance and impairment (4) |
4,026 | 195,305 | 4,433 | 212,247 | ||||||||||||
Fair value adjustment - Droga5 |
— | 473 | — | 473 | ||||||||||||
Fair value adjustment - equity investments (5) |
(5,905 | ) | 2,950 | (13,704 | ) | 5,759 | ||||||||||
Equity method losses - Learfield IMG College (6) |
42,655 | 195,781 | 61,460 | 207,537 | ||||||||||||
COVID-19 related costs (7) |
— | 2,193 | — | 2,403 | ||||||||||||
Other (8) |
28,334 | (19,610 | ) | 41,911 | (43,595 | ) | ||||||||||
Tax effects of adjustments (9) |
77,550 | (6,354 | ) | 71,231 | (4,988 | ) | ||||||||||
Valuation allowance and other tax items (l0) |
17,608 | — | 17,608 | 32,338 | ||||||||||||
Adjustments allocated to non-controlling interests (l1) |
(241,635 | ) | (16,328 | ) | (337,462 | ) | (39,693 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted Net Income (Loss) |
$ | 51,475 | $ | (36,948 | ) | $ | 51,475 | $ | 6,866 | |||||||
|
|
|
|
|
|
|
|
(1) | Equity-based compensation represents primarily non-cash compensation expense associated with our equity-based compensation plans. |
(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. |
(3) | Includes costs related to certain litigation or regulatory matters in each of our segments and Corporate. |
(4) | Includes certain costs related to our restructuring activities and non-cash impairment charges. |
(5) | Includes the net change in fair value for certain equity investments with and without readily determinable fair values, based on observable price changes. |
(6) | 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. |
(7) | Includes COVID-19 related costs that are non-recurring and incremental costs that would have otherwise not been incurred. Such adjustment for the three months ended June 30, 2020 does not include the write-off of $0.4 million of deferred event costs, net of insurance recoveries, which is adjusted in our Events, Experiences & Rights segment profitability measure. Such adjustment for the six months ended June 30, 2020 does not include the write-off of $10 million of deferred event costs, net of insurance recoveries, which is adjusted in our Events, Experiences & Rights segment profitability measure. |
(8) | For the three months ended June 30, 2021, other costs were comprised primarily of approximately $29 million related to a loss on debt extinguishment, which related to Corporate, and a gain of approximately $2 million related to non-cash fair value adjustments of embedded foreign currency derivatives, which related primarily to our Events, Experiences & Rights segment. |
(9) | Reflects the tax impacts with respect to each adjustment noted above by applying the annual effective tax rate, as applicable. |
(10) | Such items for the three and six months ended June 30, 2021 includes $7.4 million of deferred tax liabilities associated with indefinite lived intangibles recorded as a result of the IPO and tax expense of $10.2 million related to a change in tax rate in the United Kingdom. Such items for the six months ended June 30, 2020 relate to a $32.3 million tax expense recorded as a result of acquisitions and subsequent tax restructurings. |
(11) | Reflects the share of the adjustments noted above that are allocated to our non-controlling interests, net of tax. |
Six Months Ended June 30, |
||||||||
(in thousands) |
2021 |
2020 |
||||||
Net loss, adjusted for non-cash items |
$ | 275,246 | $ | 52,768 | ||||
Changes in working capital |
103,837 | 266,656 | ||||||
Changes in non-current assets and liabilities |
(501,282 | ) | (117,519 | ) | ||||
|
|
|
|
|||||
Net cash (used in) provided by operating activities |
$ | (122,199 | ) | $ | 201,905 | |||
Net cash used in investing activities |
$ | (372,565 | ) | $ | (290,681 | ) | ||
Net cash provided by financing activities |
$ | 397,498 | $ | 550,673 |
# | Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC. |
ENDEAVOR GROUP HOLDINGS, INC. | ||||||
Date: August 17, 2021 | By: | /s/ Ariel Emanuel | ||||
Ariel Emanuel | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
Date: August 17, 2021 | By: | /s/ Jason Lublin | ||||
Jason Lublin | ||||||
Chief Financial Officer | ||||||
(Principal Financial Officer) |