Coronavirus' Impact on MMAReport: UFC Parent Company Endeavor Has Credit Rating Downgraded
Endeavor, the parent company of the Ultimate Fighting Championship,
continues to feel the negative effects of the ongoing COVID-19
pandemic.
According to The Hollywood Reporter, S&P Global Ratings reduced its overall credit rating for Endeavor Operating Co. on Monday from a B to CCC+ due to concerns for a “high-borrowing strategy” and the lack of a live events market during the outbreak.
"Federal guidelines in the U.S. for social distancing will remain
in place at least until April 30, extending the possibility for a
prolonged downturn for event- and entertainment-based businesses,"
S&P Global wrote in an investor’s note.
Because of a debt of more than $4 billion owed to Silver Lake Partners and other investors and a significant reliance on live events such as the UFC, Miss Universe and Professional Bull Riders, Endeavor is struggling as a result of social distancing and government mandated restrictions placed on public gatherings.
"We believe the level of financial risk could motivate the company to seek a distressed debt restructuring if coronavirus containment does not occur by midyear so that revenue can begin to recover," S&P Global wrote regarding Endeavor.
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The U.S. Government is providing tax relief on your upcoming tax returns due to the financial impact of Coronavirus. Find out what additional savings you qualify for your 2019 federal tax return by clicking here.
Endeavor CEO Ari Emanuel and executive chairman Patrick Whitesell recently announced that they are foregoing their salaries for the remainder of the year, as the company instituted company-wide pay cuts. In late March, Endeavor laid off approximately 250 staff members whose work was tied to physical locations. White, meanwhile, vehemently maintained that the UFC would not lay off any of its employees.
“All my employees, nobody’s getting laid off at the UFC, everybody’s good, we will be the first sport back,” White said following the cancellation of UFC 249.
Endeavor planned to become a publicly-owned company last fall in hopes of raising more than $600 million, the majority of which would have been used to pay off its debt. However, the company eventually pulled its initial public offering just before it was set to trade due to a lack of demand.
According to S&P Global, an "anticipated significant drop in revenue in 2020 could potentially result in an unsustainable capital structure" for Endeavor due to its high debt load at the beginning of the year.
Endeavor spent more than $4 billion to purchase the UFC in 2016. The promotion’s multi-year broadcast deal with ESPN provided some stability for its parent company, but that revenue is currently in doubt with no live events due to the pandemic.
Sherdog recommends all readers comply with CDC guidelines and remain as isolated as possible during this urgent time. Visit the Centers for Disease Control at CDC.gov or the World Health Organization at Who.int for the latest information on the coronavirus and learn what you can do to stop the spread.
The U.S. Government is providing tax relief for you due to the economic effects of the coronavirus. H&R Block helps you find out what tax savings you qualify for by clicking here.
According to The Hollywood Reporter, S&P Global Ratings reduced its overall credit rating for Endeavor Operating Co. on Monday from a B to CCC+ due to concerns for a “high-borrowing strategy” and the lack of a live events market during the outbreak.
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Because of a debt of more than $4 billion owed to Silver Lake Partners and other investors and a significant reliance on live events such as the UFC, Miss Universe and Professional Bull Riders, Endeavor is struggling as a result of social distancing and government mandated restrictions placed on public gatherings.
The UFC, which is not completely owned by Endeavor, attempted to
push forward with its schedule, including plans to hold UFC 249 on
Saturday at Tachi Palace Casino Resort in Lemoore, Calif.
Ultimately, high-ranking Disney and ESPN executives asked UFC
president Dana White to halt those plans, and the Las Vegas-based
promotion has
suspended all events indefinitely.
"We believe the level of financial risk could motivate the company to seek a distressed debt restructuring if coronavirus containment does not occur by midyear so that revenue can begin to recover," S&P Global wrote regarding Endeavor.
RELATED LINKS SPONSORED BY H&R BLOCK:
The U.S. Government is providing tax relief on your upcoming tax returns due to the financial impact of Coronavirus. Find out what additional savings you qualify for your 2019 federal tax return by clicking here.
Endeavor CEO Ari Emanuel and executive chairman Patrick Whitesell recently announced that they are foregoing their salaries for the remainder of the year, as the company instituted company-wide pay cuts. In late March, Endeavor laid off approximately 250 staff members whose work was tied to physical locations. White, meanwhile, vehemently maintained that the UFC would not lay off any of its employees.
“All my employees, nobody’s getting laid off at the UFC, everybody’s good, we will be the first sport back,” White said following the cancellation of UFC 249.
Endeavor planned to become a publicly-owned company last fall in hopes of raising more than $600 million, the majority of which would have been used to pay off its debt. However, the company eventually pulled its initial public offering just before it was set to trade due to a lack of demand.
According to S&P Global, an "anticipated significant drop in revenue in 2020 could potentially result in an unsustainable capital structure" for Endeavor due to its high debt load at the beginning of the year.
Endeavor spent more than $4 billion to purchase the UFC in 2016. The promotion’s multi-year broadcast deal with ESPN provided some stability for its parent company, but that revenue is currently in doubt with no live events due to the pandemic.
Help Prevent the Spread of the Coronavirus
Sherdog recommends all readers comply with CDC guidelines and remain as isolated as possible during this urgent time. Visit the Centers for Disease Control at CDC.gov or the World Health Organization at Who.int for the latest information on the coronavirus and learn what you can do to stop the spread.
The U.S. Government is providing tax relief for you due to the economic effects of the coronavirus. H&R Block helps you find out what tax savings you qualify for by clicking here.
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