Ari-Adjusted EBITDA vs. Wall Street

Ari Emanuel in 2010
Photo by Bobby Bank/WireImage
William D. Cohan
June 23, 2021

“The only way to get to success,” Ari Emanuel recently told New Yorker writer Connie Bruck, “[is that] you realize you are going to fuck it up and you gotta just start going to work. There’s a boxing or UFC analogy: You gotta bite down on your mouthpiece and start fighting! You have to be willing to take the emotional damage. People get exhausted from that beating. I don’t know why I don’t.”

Emanuel, of course, was referring to his own bildungsroman of the super agent who becomes a legitimate Hollywood mogul. And like any screenplay, this story had some second act problems. Back in 2019, Emanuel had led Endeavor, his entertainment live-event business roll-up, to the brink of an I.P.O. before pulling out at the very last moment. Inside WME, his talent agency, morale plummeted, and Emanuel endured his fair share of wound-licking in a town that knows how to eat its own. But two years and a pandemic later, Emanuel appeared chastened yet unexhausted by the beating. WME had been slimmed down. Endeavor Holdings bought out the remaining position in UFC, one of its many live-event portfolio companies. Most mesmerizingly, Emanuel had positioned Endeavor as a “reopening play”—a serendipitous way for investors to bet on the revitalization of the global economy as the pandemic receded.

It seemed like a phenomenal Hollywood ending, but would Wall Street ever buy it? Emanuel deserves credit for building WME into a talent agency powerhouse, but I’ve long been skeptical about his talents as a C.E.O. While he correctly understood long ago that his agency needed greater scale to compete and cut deals with the tech giants, these deals themselves didn’t always make sense. For instance, Emanuel acquired IMG, the sports marketing company he long coveted, for $500 million more than his nearest competitor. By 2019, Endeavor Holdings had become a hodgepodge of assets—a bull-fighting and martial-arts business combined with a Hollywood talent and literary agency.