As of October 25, according to U.S. sports business media FrontOfficeSports, Endeavor's stock has been on a consistent decline, dropping over 16% this year on the New York Stock Exchange (NYSE). Since its initial public offering in 2021, the company's stock has plummeted by nearly 36%.
This significant drop in stock value suggests that the integration of popular sports IPs hasn't been as smooth as Endeavor had hoped.
On April 29, 2021, Endeavor went public on the NYSE, with Tesla CEO Elon Musk's name prominently featured on the board of directors list in the new prospectus. By February 11, 2022, its market capitalization reached $224.2 billion, solidifying its unshakeable position in the international sports market.
Acquisition Ambitions
In 2016, global sports giant Endeavor acquired the Ultimate Fighting Championship (UFC) for $4 billion, showcasing its ambition to dominate the combat sports industry.
UFC stands as the world's premier and largest professional mixed martial arts event. Since 1993, the UFC has been favored by major investors due to its immense commercial value.
Under its new ownership, UFC's revenue increased by 1.5 times in just a year. Company financial reports indicate that in 2022, the UFC generated $1.3 billion in revenue for Endeavor, a 20% increase from the previous year.
Seeing the lucrative returns from UFC, Endeavor quickly set its sights on acquiring World Wrestling Entertainment (WWE).
In early April of this year, WWE announced its merger with UFC's parent company, Endeavor, forming a publicly traded sports behemoth valued at approximately $210 billion.
This move signifies the union of the world's two largest wrestling and entertainment companies into a new commercial entity. The new company was listed on the NYSE under the ticker "TKO." Endeavor holds 51% of the new company's shares, while WWE shareholders possess the remaining 49%.
Unlike the UFC, WWE is more of an entertainment spectacle, with each match typically having a pre-arranged storyline and predetermined outcomes.
However, thanks to its "entertainment + sports" model, WWE's revenue figures have always been impressive. In 2022, the company's revenue reached a record $10.3 billion. After meticulous planning, Endeavor successfully took control of WWE.
With the successful acquisition and now possessing the top two IPs in combat sports, Endeavor anticipates growth in broadcasting rights, ticket sales, sponsorship revenue, and related products.
Yet, following the acquisition announcement, Endeavor's stock price fell 5.9% to $22.52, and WWE's stock dropped 2.2% to $89.30. The decline might be related to the acquisition method.
At the time, Endeavor converted WWE shareholders' stocks directly into equity in the new company, a move that disappointed many stockholders. This dampened investor confidence, naturally leading to stock price fluctuations.
Challenges in the Chinese Market
Regarding the vast Chinese sports market, Endeavor has long had plans but has seen limited progress.
In 1979, Endeavor's predecessor, IMG, was the first foreign company to promote sports in the Chinese market.
Over the next decade, IMG successfully secured the operational rights for dozens of domestic events, including tennis, track and field, basketball, table tennis, gymnastics, golf, and billiards.
In the Chinese combat sports market, Endeavor has been working for a long time. However, UFC remains a niche sport in China, with only moderate attention.
