Endeavor Fever & Wall Street Succession Moves

Ari Emanuel’s Endeavor has always been either hard to understand or misunderstood.
Ari Emanuel’s Endeavor has always been either hard to understand or misunderstood. Photo: Chris Unger/Zuffa LLC
William D. Cohan
October 29, 2023

Ari Emanuel’s gambit to take Endeavor private, a notion reported by Bloomberg and then elaborated upon brilliantly by my partner Matt Belloni, reeks to me of opportunism. Of course, longtime loyal readers know that the whims and vicissitudes of Ari and Endeavor have long been of interest to me. Ari first attempted to take Endeavor public, in 2019, after amassing a series of live-events businesses adjacent to his core talent agencies. But, alas, the market didn’t understand the synergy of assets, or Ari’s idea for them, and the listing got pulled at the last minute due to weak investor demand. Eventually, though, Ari being Ari, in April 2021, Endeavor raised $511 million in an I.P.O. priced at $24 a share that valued Endeavor at $10.3 billion. (Puck is a client of WME, Endeavor’s talent agency.)

Endeavor has always been either hard to understand or misunderstood. On the first day of trading, Endeavor’s stock opened at $27 a share, up 12.5 percent. The stock reached an all-time high of $35 a share in December 2021. It has floated down ever since. Then, back in April, Ari announced that Endeavor’s UFC, a leader in mixed-martial arts, would merge with World Wrestling Entertainment, in a $21 billion deal, to create the publicly traded TKO Group Holdings. (Under the terms of the deal, Endeavor would own 51 percent of TKO and WWE’s shareholders would own the balance of 49 percent.) Ari was named the C.E.O. of TKO in addition to being the C.E.O. of Endeavor. That deal closed on September 12. Since then, however, the TKO stock price is down nearly 20 percent and the company’s market value has slipped to $14 billion. 

Endeavor always seemed like an ill-conceived public company. It never traded well after the initial I.P.O. burst, except for a few months during the pandemic when everything went up in price. Endeavor’s stock reached its low point of just less than $18 a share in the week or so before Wednesday’s announcement that Emanuel was considering Endeavor’s “strategic alternatives,” which is code on Wall Street for exploring a sale of the company without putting an actual “for sale” sign on the business. Indeed, one presumes that Ari had some legitimate concerns. After all, rival talent agency CAA had just undergone a change in control at a valuation of $7 billion, or just slightly more than Endeavor’s entire market capitalization. He’s probably been wondering what gives. “Given the continued dislocation between Endeavor’s public market value and the intrinsic value of Endeavor’s underlying assets, we believe an evaluation of strategic alternatives is a prudent approach to ensure we are maximizing value for our shareholders,” he said.