Endeavor’s Move to Go Private Will Form a New Media Company

Endeavor’s move to become a private company is additionally creating a new media entity, in part targeting the sports industry, that will be run by one of the company’s key leaders.

Patrick Whitesell, Endeavor executive chairman, will be starting and leading a separate company that will receive $250 million in seed equity from Silver Lake, the private equity giant that is leading the Endeavor privatization. The business, according to a filing made Wednesday with the U.S. Securities and Exchange Commission, is “(a) investing in and providing services to companies in the entertainment, media and sports industries, (b) developing, producing, financing and exploiting film, television and digital audio visual content, (c) talent management and (d) consulting with other entertainment companies.”

Whitesell will retain his role with Endeavor, and particularly the WME agency it controls, while also leading this new venture. But the filing provides a further window into the lengths that Endeavor and its key leaders are going to create additional value in and around the company, as well as additional terms of the Silver Lake deal. A lack of full recognition from investors in what Endeavor has built in recent years helped prompt the move to go private. 

Among the other elements contained in the latest Endeavor SEC filing:

• CEO Ari Emanuel is set to receive a $25 million “asset sale bonus” as part of the deal and also will get quarterly royalty payments equal to 2.5% of quarterly net cash profits for WME. He will get a company plane, as well as reimbursement for costs related to usage of it. Additionally, Emanuel will receive a series of equity awards in the newly private Endeavor. 
• Endeavor president and COO Mark Shapiro will see his base salary more than double from $3 million to $7 million, and he is also now eligible for a guaranteed annual bonus of $15 million for every year he is with the newly private company, as well as a bonus of up to $100 million upon completion of certain qualifying asset sales.
• If Endeavor enters into a “superior proposal” than the Silver Lake deal, it will pay a breakup fee of $288.5 million. If Silver Lake fails to complete the agreement, it will pay a $705 million termination fee.

Endeavor is the majority owner of UFC and WWE parent TKO Group Holdings, and is also the corporate parent of assets such as IMG, On Location, and Professional Bull Riders.