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Ari and Egon Take the Bromance Private

ari emanuel
Photo: Stefanie Keenan/Getty Images for LACMA
Matthew Belloni
April 5, 2024

Honestly, I was kinda hoping there’d be some fireworks during today’s Endeavor town hall discussing the company’s long-discussed move to go private. Instead, the meeting was brief and virtual, I’m told—mostly just Ari Emanuel, Patrick Whitesell, and Mark Shapiro thanking their 10,000 or so employees. It was also a chance for Whitesell to try to assuage concerns that the disclosure of his new $250 million venture opportunity—his first without Emanuel since the agents began working together at InterTalent in the early ’90s—means he’s got one foot out the door. A separate meeting followed with a couple hundred pre-I.P.O. equity holders, with executives revealing that once the transaction closes, shareholders will be cashed out for at least 90 percent of their vested pre-I.P.O. shares.

Great, good for them, but have you seen these payouts for the leadership? The C-suite stands to make a killing. When private equity firm Silver Lake officially acquires Endeavor early next year at a valuation of $13 billion, or $27.50 per share, casual investors will largely shrug. Endeavor I.P.O.’d in April 2021 at $24 per share, meaning those who bought into the sports and entertainment conglomerate on Day One have endured a profitable yet ultimately disappointing three-year ride.

And yet Emanuel, C.E.O. of the current public and future private Endeavor, will get quarterly royalty payments of 2.5 percent of net cash profits from the WME talent agency, plus potentially tons of new shares in Endeavor. Whitesell, who will stay on the Endeavor board, has the option to become chairman of WME and get that rich 2.5 percent royalty, or do his own thing with a $60 million payday. Shapiro, the Endeavor president, will see his salary more than double, to $7 million a year, with a guaranteed $15 million bonus. Plus he gets another $15 million bonus when the deal closes, and 1 percent of equity in the new entity.

That’s not all. The 8K filing also reveals huge “asset sale bonuses” to be paid when the disparate pieces of Endeavor are inevitably offloaded even more quickly than they were cobbled together. Ari gets a $25 million bonus when assets are sold, plus Shapiro will earn a $20 million bonus if aggregate proceeds of the sales equal $1 billion, $2 billion, and then $3 billion; he gets $100 million total if he purges everything they want purged, after which he’ll get a new deal with a $5 million salary and a $2 million bonus. Plus private jets for Ari and Patrick. (Shapiro has to settle for “reasonable access” to the PJs; I know… thoughts and prayers.) And, after two years, Ari can make Silver Lake buy him out. Patrick can force the buyout after one year. And Patrick gets $250 million of Silver Lake’s money to help him launch the new thing, which could end up being his primary focus, even though he’ll still be on the board and involved in the agency.

The Consolation Prize

Phew, got all that? Remember, that’s on top of the usual outsize salaries for the trio—$19 million last year for Ari, more than most Fortune 500 leaders; in 2021, his package topped $300 million, thanks to a stock grant tied to the I.P.O. And back in 2017, before Endeavor failed to go public in its first effort, Emanuel and Whitesell enraged some staffers by taking $165 million each out of the company while employees were told to sit tight for the eventual I.P.O. payday. At a time when most of Hollywood is on fire, these numbers are eye-popping for many people—including, I assume, some WME clients. 

So, no, going private is not a bad consolation prize for essentially failing to accomplish the dream that Ari has been pitching his employees for years now: build build build, go public, and everyone gets phenomenally rich. It’s true that all the agents and other Endeavor employees with pre-I.P.O. shares will make a lot more at a $27.50 per-share price, fully vested or double-triggered, than at $17, which was the price when Silver Lake announced its plan last October. And if Endeavor can grow more as a private company than what the public market gave it credit for, that’s a big positive. 

Despite three years of Emanuel screaming at investors like they were Ari Gold’s Lloyd, Wall Street never cared for the talent agency or the other businesses that weren’t UFC, and it certainly never understood why the sum of everything from the Miami Open tennis tournament to stylists at the Wall Group to Professional Bull Riders would be greater than its parts. So finally, Ari and Egon Durban, whose Silver Lake has bankrolled his ascent for more than a decade, threw up their hands. In the end, the Endeavor assets,  including its 51 percent ownership of TKO, the separate and still-public home of UFC and WWE, will carry an enterprise value of $25 billion, according to Silver Lake.

That’s also not bad. Certainly not what Egon and Ari wanted, of course, but remember, Emanuel and his inner circle still tend to compare themselves to Bryan Lourd and his CAA, which was valued at “just” $7 billion when it sold to François-Henri Pinault last year. (CAA’s leadership reaped enormous sums in that deal while longtime agents and employees were only allowed to cash out a small amount of their equity, with uncertain prospects now that the company is housed in a family office.) 

Unlike the CAA guys—or the leaders of UTA, the other major private equity-backed talent company—Ari and Patrick co-founded Endeavor, and its rise from tiny ICM offshoot to a global sports and entertainment conglomerate justifies those outsize payments, at least in their eyes. Plus, once WME and the other representation-oriented businesses are freed from baggage like On Location Experiences and the Frieze Art Fair, perhaps another suitor (like the Pinaults) would come calling, triggering another big equity event. Agents can dream.     

The Egon Question

Maybe that’s why I hear fewer complaints about piggishness from WME employees. It may help that Ari plans to roll $200 million into the new deal, Whitesell will contribute $150 million, and Shapiro about $50 million, per sources. But the media and rival agencies seem to care about Ari’s payday and the ultimately failed I.P.O. more than the people at the company. (The usual disclosure: WME represents Puck, but not me personally.)

Still, this outcome must be a bummer for Egon. The Bay Area tech investor first began pouring money into Endeavor 12 years ago, money that Ari used to go on a 1980s Wheel of Fortune-style shopping spree—except these fabulous prizes were companies that, at best, were tangentially related to the representation business (IMG Worldwide for $2.3 billion; OpenBet for $800 million), and at worst, just seemed like buy-it-because-it’s-available trophy assets (the Madrid Open??) that could be shoehorned into a “narrative” of Endeavor as a “next-generation” sports and entertainment powerhouse, with Ari there to sell the whole thing like it was a Mark Wahlberg movie package.  

The vision didn’t pan out, but after whittling down the company, there will still be good assets, not least of which is the 51 percent stake in TKO, which Emanuel will still run as C.E.O. TKO could even be a potential buyer for some of the Endeavor assets, though most are probably too small or off-mission.  

The Patrick Question 

Whitesell’s future with Endeavor seems like the most urgent issue, since losing him would be such a big blow to WME. It’s been 27 years since Matt and Ben first thanked him at the Oscars, and Patrick is still one of the biggest and best agents in town. Sources at the agency note that Whitesell has stepped back a bit in recent years, while still helping WME co-chairmen Christian Muirhead and Richard Weitz as an advisor on major deals and when problems arise. Whitesell resolved Cruella star Emma Stone’s beef with Disney over box office bonuses during the pandemic without resorting to the litigation circus that CAA chose with Scarlett Johansson over Black Widow. More recently, he helped Ryan Coogler auction his new vampire project to Warner Bros., even though Whitesell reps star Michael B. Jordan, not Coogler.   

Is this new venture an off-ramp? For now, no. I’ve heard the same rumors you have about Ari and Patrick growing further apart in recent years. They always deny any rifts, and with Ari, it’s hard to separate the usual screaming matches from something more problematic. TKO was technically Emanuel’s first venture without Whitesell, and as the empire has grown, what was once The Ari and Patrick Show has often become The Ari Show… With Patrick. Even though Whitesell is recently remarried, I’m guessing he doesn’t love that Ari sometimes hangs out with Jeff Bezos and Lauren Sanchez, Whitesell’s ex-wife. That’d definitely annoy me, at least.

Still, their partnership has made both men extraordinarily rich and powerful. Whitesell will remain one of the largest shareholders in the company. And his new deal gives him options. He can stay heavily involved with Endeavor and collect that hefty royalty on WME profits. Or he can leverage that $250 million from Silver Lake to raise more money and launch something new, and take a $60 million personal check for his troubles. Or he can do a version of both, staying on the Endeavor board, but doing his own thing.

Seems like Whitesell doesn’t know yet what his new venture will be. I’m told he is not interested in launching a management company, despite “management” being listed in the 8K as a possible business. More likely, it will be something at the center of entertainment, sports, and A.I., helping Silver Lake take advantage of the coming disruption. Durban loves Whitesell, hence the blank check, so the goal is to keep him involved in Endeavor. Egon “doesn’t want to face Ari without Patrick in the mix,” one friend of theirs texted.

Importantly, none of this will happen until early next year, when the go-private deal is expected to close. And given the volatilities in Hollywood, in general, and the agency business, in particular, a lot can change between now and then.