UFC Revenue Rises As Endeavor Sees Sales Slip in Events, Talent

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An increase in sponsorship and media rights revenue for Ultimate Fighting Championship was a bright spot for Endeavor Group Goldings, as the newly public business reported its first quarter sales Wednesday evening.

Revenue for UFC and Endeavor’s other owned sports properties–Professional Bull Riders and a half interest in Euroleague basketball–increased 22.1% in the period ended March 31, rising to $283.5 million, with the division’s adjusted earnings before interest, taxes, depreciation and amortization (ebitda) rising more than 40% to $145.5 million, according to Endeavor’s news release. The sports properties were the only segment of Endeavor to see sales rise at the start of 2021.

Events, experiences and rights slumped 19% to $539.6 million and talent representation declined 15% to $248.9 million. Endeavor said the continuing effect of the pandemic hurt first quarter performance in both segments, due to fewer in-person events and a lack of media productions that generate fees from the actors and athletes its agency arm represents. Overall Endeavor reported $1.07 billion in total first quarter sales and saw net income of $2.4 million, compared to a net loss of $51.3 a year ago. Management struck an optimistic note to analysts on a conference call Wednesday evening.

“The convergence of technologies, sports, entertainment, media and gaming play to our strength as an integrated company that both owns and represents IP and content,” Ari Emanuel, CEO of Endeavor Group, said on the call. “The group benefits from all trends in media, content, sports, events and gaming and remains well-positioned to continue capitalizing on, and growing alongside, the high-growth industries in which we operate.”

In particular, Emanuel said the company sees the Discovery-Warner Media merger, the expansion of Amazon in sports and original content and other media trends as a positive for the business, given the scarcity in rights to original content.

For Endeavor, it appears the key content business is UFC. The mixed martial arts league is the “crown jewel” of Endeavor, according to an analyst opinion issued last week by Credit Suisse, powering the company’s margins and long-term growth prospects. The mixed martial arts league reaches about 1 billion households annually and anchors ESPN+, the Disney direct-to-consumer streaming platform. UFC’s library content and original series offering Fight Pass grew subscribers 40% in 2020, according to the investment bank.

For 2021, Endeavor says its revenue will be between $4.76 billion and $4.83 billion, and adjusted ebitda, a preferred measure of growth for companies that lose money, may be as much as $745 million. The business also expects to lower its debt load by $600 million this year, according to the earnings release.

Endeavor Group held its initial public offering at the end of April. This morning, Endeavor inked a deal to handle the Olympics hospitality efforts for the upcoming Paris, Milan and Los Angeles games. Shares were up about 2% in after-hours trading in New York, touching $30, in response to earnings.

(This story has corrected Endeavor’s numbers for total sales revenue and net income in the third paragraph.)

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