Endeavor Group Holdings, Inc. - Quarter Report: 2021 June (Form 10-Q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

 

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

or

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 001-40373

 

 

ENDEAVOR GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		83-3340169
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

9601 Wilshire Boulevard, 3^rd Floor

Beverly Hills, CA 90210

(Address of principal executive offices) (Zip Code)

(310) 285-9000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, par value $0.00001 per share		EDR		The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☐
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of July 31, 2021, there were 261,483,029 shares of the registrant’s Class A common stock outstanding, 188,001,676 shares of the registrant’s Class X common stock outstanding and 238,154,296 shares of the registrant’s Class Y common stock outstanding.

 

 

 

 

TABLE OF CONTENTS

Part I – FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)			4
Consolidated Balance Sheets as of June 30, 2021 and December  31, 2020			4
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020			5
Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2021 and 2020			6
Consolidated Statements of Redeemable Interests and Shareholders’/ Members’ Equity for the Three and Six Months Ended June 30, 2021 and 2020			7
Consolidated Statements of Cash Flows for the Six Months Ended June  30, 2021 and 2020			9
Notes to Consolidated Financial Statements			10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			33
Item 3. Quantitative and Qualitative Disclosures about Market Risk			50
Item 4. Controls and Procedures			51
Part II – OTHER INFORMATION
Item 1. Legal Proceedings			51
Item 1A. Risk Factors			52
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			52
Item 6. Exhibits			53

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the “Quarterly Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of present and historical facts contained in this Quarterly Report, including without limitation, statements regarding our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, future events or expected performance, are forward-looking statements.

Without limiting the foregoing, you can generally identify forward-looking statements by the use of forward-looking terminology, including the terms “may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “target,” “predict,” “potential,” “contemplate,” or, in each case, their negative, or other variations or comparable terminology and expressions. The forward-looking statements in this Quarterly Report are only predictions and are based on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report and are subject to a number of known and unknown risks, uncertainties and assumptions, including, but not limited to:

 

•

the impact of the global pandemic related to COVID-19 and its variants on our business, financial condition, liquidity and results of operations;

 

•

changes in public and consumer tastes and preferences and industry trends;

 

•

the effect of factors beyond our control, such as adverse economic conditions, on our operations;

 

•

our ability to adapt to or manage new content distribution platforms or changes in consumer behavior resulting from new technologies;

 

•

our reliance on our professional reputation and brand name;

 

•

our dependence on the relationships of our management, agents, and other key personnel with clients across many content categories;

 

•

our ability to identify, sign, and retain clients;

 

•

our ability to identify, recruit, and retain qualified and experienced agents and managers;

 

•

our ability to avoid or manage conflicts of interest arising from our client and business relationships;

 

•

the loss or diminished performance of members of our executive management and other key employees;

 

•

our dependence on key relationships with television and cable networks, satellite providers, digital streaming partners, corporate sponsors, and other distribution partners;

 

•

our ability to effectively manage the integration of and recognize economic benefits from businesses acquired, our operations at our current size, and any future growth;

 

•

the conduct of our operations through joint ventures and other investments with third parties;

 

•

immigration restrictions and related factors;

 

•

failure in technology, including at live events, or security breaches of our information systems;

 

•

the unauthorized disclosure of sensitive or confidential client or customer information;

 

•

our substantial indebtedness;

 

•

our ability to protect our trademarks and other intellectual property rights, including our brand image and reputation, and the possibility that others may allege that we infringe upon their intellectual property rights;

 

•

the risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions specific to both domestic and international markets;

 

•

fluctuations in foreign currency exchange rates;

 

•

litigation and other proceedings to the extent uninsured or underinsured;

 

•

our ability to comply with the U.S. and foreign governmental regulations to which we are subject;

 

•

our compliance with certain franchise and licensing requirements of unions and guilds and dependence on unionized labor;

 

•

our control by Messrs. Emanuel and Whitesell, the Executive Holdcos, and the Silver Lake Equityholders;

 

1

•

risk related to our organization and structure;

 

•

risks related to tax matters;

 

•

risks related to our Class A common stock;

 

•

other important factors that could cause actual results, performance or achievements to differ materially from those contemplated that are found in Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in Part II, Item 1A., “Risk Factors” of this Quarterly Report and in Part II, Item 1A, “Risk Factors” in our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021.

These risks could cause actual results to differ materially from those implied by forward-looking statements in this Quarterly Report. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Even if our results of operations, financial condition and liquidity and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods.

You should read this Quarterly Report and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we have no obligation to update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

DEFINITIONS

As used in this Quarterly Report, unless we state otherwise or the context otherwise requires:

 

•

“we,” “us,” “our,” “Endeavor,” the “Company,” and similar references refer (a) after giving effect to the reorganization transactions, to Endeavor Group Holdings and its consolidated subsidiaries, and (b) prior to giving effect to the reorganization transactions, to Endeavor Operating Company and its consolidated subsidiaries.

 

•

“Endeavor Catch-Up Profits Units” refer to the Endeavor Full Catch-Up Profits Units and the Endeavor Partial Catch-Up Profits Units.

 

•

“Endeavor Full Catch-Up Profits Units” refer to the Endeavor Profits Units that are designated as “catchup” units. Endeavor Full Catch-Up Profits Units have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Full Catch-Up Profits Units were converted into Endeavor Operating Company Units.

 

•

“Endeavor Group Holdings” refers to Endeavor Group Holdings, Inc. (“EGH”).

 

•

“Endeavor Manager” refers to Endeavor Manager, LLC, a Delaware limited liability company and a direct subsidiary of Endeavor Group Holdings following the reorganization transactions.

 

•

“Endeavor Manager Units” refers to the common interest units in Endeavor Manager.

 

•

“Endeavor Operating Company” refers to Endeavor Operating Company, LLC, a Delaware limited liability company and a direct subsidiary of Endeavor Manager’s and indirect subsidiary of ours following the reorganization transactions (“EOC”).

 

•

“Endeavor Operating Company Units” refers to all of the existing equity interests in Endeavor Operating Company (other than the Endeavor Profits Units) that were reclassified into Endeavor Operating Company’s non-voting common interest units upon the consummation of the reorganization transactions.

 

•

“Endeavor Partial Catch-Up Profits Units” refer to the Endeavor Profits Units that are designated as “catchup” units. Endeavor Partial Catch-Up Profits Units have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Partial Catch-Up Profits Units were converted into Endeavor Profits Units (without any such preference) with a reduced per unit hurdle price to take into account such prior preference.

 

•

“Endeavor Phantom Units” refers to the phantom units outstanding, which, subject to certain conditions and limitations, entitle the holder to cash equal to the value of a number of Endeavor Manager Units, Endeavor Operating Company Units, or Endeavor Profits Units, or of equity settled to the equivalent number of Endeavor Manager Units, Endeavor Operating Company Units, or Endeavor Profits Units.

 

2

•

“Endeavor Profits Units” refers to the profits units of Endeavor Operating Company and that are economically similar to stock options (other than with respect to Endeavor Full Catch-up Profits Units which, upon our achievement of a price per share that would have fully satisfied their preference on distributions, were converted into Endeavor Operating Company Units). Each Endeavor Profits Unit (other than Endeavor Full Catch-Up Profits Units) has a per unit hurdle price, which is economically similar to the exercise price of a stock option.

 

•

“Endeavor Full Catch-Up Profits Units” refer to the Endeavor Profits Units that are designated as “catchup” units. Endeavor Full Catch-Up Profits Units have a per unit hurdle price and are entitled to receive a preference on distributions once the hurdle price applicable to such unit has been met. Upon our achievement of a price per share that would have fully satisfied such preference on distributions, the Endeavor Full Catch-Up Profits Units were converted into Endeavor Operating Company Units.

 

•

“Executive Holdcos” refers to Endeavor Executive Holdco, LLC, Endeavor Executive PIU Holdco, LLC, and Endeavor Executive II Holdco, LLC, each a management holding company, the equity owners of which include current and former senior officers, employees, or other service providers of Endeavor Operating Company, and which are controlled by Messrs. Emanuel and Whitesell.

 

•

“reorganization transactions” refers to the internal reorganization completed in connection with our May 2021 initial public offering, following which Endeavor Group Holdings manages and operates the business and control the strategic decisions and day-to-day operations of Endeavor Operating Company through Endeavor Manager and includes the operations of Endeavor Operating Company in its consolidated financial statements.

 

3

PART I – FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

		June 30, 2021				December 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents		$	869,775			$	1,008,485
Restricted cash			224,347				181,848
Accounts receivable (net of allowance for doubtful accounts of $64,059 and $67,975, respectively)			597,581				445,778
Deferred costs			154,678				234,634
Other current assets			240,315				194,463
Total current assets			2,086,696				2,065,208
Property and equipment, net			603,012				613,139
Operating lease right-of-use assets			360,462				386,911
Intangible assets, net			1,592,439				1,595,468
Goodwill			4,399,594				4,181,179
Investments			295,038				251,078
Other assets			966,876				540,651
Total assets		$	10,304,117			$	9,633,634
LIABILITIES, REDEEMABLE INTERESTS AND SHAREHOLDERS’/MEMBERS’ EQUITY
Current Liabilities:
Accounts payable		$	522,100			$	554,260
Accrued liabilities			430,993				322,749
Current portion of long-term debt			94,845				212,971
Current portion of operating lease liabilities			59,249				58,971
Deferred revenue			774,213				606,530
Deposits received on behalf of clients			193,083				176,572
Other current liabilities			91,006				65,025
Total current liabilities			2,165,489				1,997,078
Long-term debt			5,255,743				5,712,834
Long-term operating lease liabilities			365,901				395,331
Other long-term liabilities			387,607				373,642
Total liabilities			8,174,740				8,478,885
Commitments and contingencies (Note 19)
Redeemable non-controlling interests			179,140				168,254
Redeemable equity			—				22,519
Shareholders’/Members’ Equity:
Class A common stock, $0.00001 par value; 5,000,000,000 shares authorized; 261,371,683 shares issued and outstanding as of June 30, 2021			2				—
Class B common stock, $0.00001 par value; 5,000,000,000 shares authorized; none issued and outstanding as of June 30, 2021			—				—
Class C common stock, $0.00001 par value; 5,000,000,000 shares authorized; none issued and outstanding as of June 30, 2021			—				—
Class X common stock, $0.00001 par value; 5,000,000,000 shares authorized; 188,080,383 shares issued and outstanding as of June 30, 2021			1				—
Class Y common stock, $0.00001 par value; 1,000,000,000 shares authorized; 238,154,296 shares issued and outstanding as of June 30, 2021			2				—
Additional paid-in capital			1,556,791				—
Accumulated deficit			(319,597	)			—
Members’ capital			—				468,633
Accumulated other comprehensive loss			(98,530	)			(190,786	)
Total Endeavor Group Holdings, Inc./Endeavor Operating Company, LLC shareholders’/members’ equity			1,138,669				277,847
Nonredeemable non-controlling interests			811,568				686,129
Total shareholders’/members’ equity			1,950,237				963,976
Total liabilities, redeemable interests and shareholders’/members’ equity		$	10,304,117			$	9,633,634

See accompanying notes to consolidated financial statements

 

4

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Revenue		$	1,111,272			$	462,914			$	2,180,854			$	1,653,311
Operating expenses:
Direct operating costs			570,955				172,643				1,117,347				853,927
Selling, general and administrative expenses			785,101				302,047				1,166,214				691,018
Insurance recoveries			(10,210	)			(16,841	)			(29,867	)			(33,960	)
Depreciation and amortization			69,161				84,751				136,397				165,198
Impairment charges			3,770				172,232				3,770				175,282
Total operating expenses			1,418,777				714,832				2,393,861				1,851,465
Operating loss			(307,505	)			(251,918	)			(213,007	)			(198,154	)
Other (expense) income:
Interest expense, net			(83,836	)			(71,693	)			(152,187	)			(141,677	)
Loss on extinguishment of debt			(28,628	)			—				(28,628	)			—
Other income, net			7,933				21,810				4,718				47,167
Loss before income taxes and equity losses of affiliates			(412,036	)			(301,801	)			(389,104	)			(292,664	)
Provision for (benefit from) income taxes			60,918				(4,049	)			66,003				44,555
Loss before equity losses of affiliates			(472,954	)			(297,752	)			(455,107	)			(337,219	)
Equity losses of affiliates, net of tax			(43,813	)			(198,013	)			(59,284	)			(209,807	)
Net loss			(516,767	)			(495,765	)			(514,391	)			(547,026	)
Less: Net loss attributable to non-controlling interests			(190,354	)			(29,211	)			(163,108	)			(25,516	)
Less: Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions			(6,816	)			(466,554	)			(31,686	)			(521,510	)
Net loss attributable to Endeavor Group Holdings, Inc.		$	(319,597	)		$	—			$	(319,597	)		$	—
Basic and diluted loss per share of Class A common stock(1)		$	(1.24	)			N/A			$	(1.24	)			N/A
Weighted average number of shares used in computing basic and diluted loss per share			258,266,323				N/A				258,266,323				N/A

 

(1)

Basic and diluted loss per share of Class A common stock is applicable only for the period from May 1, 2021 through June 30, 2021, which is the period following the initial public offering (“IPO”) and the related Reorganization Transactions (as defined in Note 1 to the unaudited consolidated financial statements). See Note 14 for the calculation of the numbers of shares used in computation of net loss per share of Class A common stock and the basis for computation of net loss per share.

See accompanying notes to consolidated financial statements

 

5

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

 

		Three Months Ended June 30,								Six months ended June 30,
		2021				2020				2021				2020
Net loss		$	(516,767	)		$	(495,765	)		$	(514,391	)		$	(547,026	)
Other comprehensive income (loss), net of tax:
Change in unrealized gains/losses on cash flow hedges:
Unrealized gains (losses) on forward foreign exchange contracts			1,570				988				212				(2,124	)
Reclassification of losses to net loss for forward foreign exchange contracts			7				—				7				—
Unrealized (losses) gains on interest rate swaps			(1,802	)			(12,465	)			13,274				(92,464	)
Reclassification of losses to net income (loss) for interest rate swaps			7,552				5,483				14,936				6,912
Foreign currency translation adjustments			2,170				3,022				(2,380	)			(11,460	)
Reclassification of loss to net income (loss) for business divestiture			—				—				—				4,231
Total comprehensive loss, net of tax			(507,270	)			(498,737	)			(488,342	)			(641,931	)
Less: Comprehensive loss attributable to non-controlling interests			(187,871	)			(29,211	)			(160,625	)			(25,516	)
Less: Comprehensive loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions			(3,703	)			(469,526	)			(12,021	)			(616,415	)
Comprehensive loss attributable to Endeavor Group Holdings, Inc.		$	(315,696	)		$	—			$	(315,696	)		$	—

See accompanying notes to consolidated financial statements

 

6

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE INTERESTS AND SHAREHOLDERS’/ MEMBERS’ EQUITY

(In thousands)

(Unaudited)

 

		Three Months Ended June 30, 2021
		Redeemable Non- controlling				Redeemable				Members’				Class A Common Stock								Class X Common Stock								Class Y Common Stock								Additional Paid-				Accumulated				Accumulated Other Comprehensive				Total Shareholders’ Equity Attributable to Endeavor Group Holdings, Inc./				Nonredeemable Non- controlling				Total Shareholders’/
		Interests				Equity				Capital				Shares				Amount				Shares				Amount				Shares				Amount				In Capital				Deficit				Loss				Members’ Equity				Interests				Members’ Equity
Balance at April 1, 2021		$	168,773			$	22,519			$	447,320				—			$	—				—			$	—				—			$	—			$	—			$	—			$	(174,234	)		$	273,086			$	709,907			$	982,993
Comprehensive (loss) income prior to Reorganization and IPO			(2,013	)			—				(6,816	)			—				—				—				—				—				—				—				—				3,113				(3,703	)			13,515				9,812
Equity-based compensation expense prior to Reorganization and IPO			—				—				—				—				—				—				—				—				—				—				—				—				—				1,630				1,630
Distributions prior to Reorganization and IPO			—				—				473				—				—				—				—				—				—				—				—				—				473				(279	)			194
Effect of Reorganization			5,729				(22,519	)			(440,977	)			133,712,566				1				122,021,609				1				167,208,026				2				242,017				—				80,645				(118,311	)			135,101				16,790
Issuance of Class A common stock sold in IPO, including underwriters’ option, and Private Placement, net of underwriting discounts			—				—				—				81,873,497				1				—				—				—				—				1,886,642				—				—				1,886,643				—				1,886,643
Use of proceeds, including the UFC Buyout			—				—				—				42,400,877				—				67,910,105				—				70,946,270				—				(702,698	)			—				(11,955	)			(714,653	)			(120,386	)			(835,039	)
Comprehensive (loss) income subsequent to Reorganization and IPO			(1,694	)			—				—				—				—				—				—				—				—				—				(319,597	)			3,901				(315,696	)			(197,679	)			(513,375	)
Equity-based compensation subsequent to Reorganization and IPO			—				—				—				—				—				—				—				—				—				158,846				—				—				158,846				276,864				435,710
Issuance of Class A common stock due to exchanges subsequent to Reorganization and IPO			—				—				—				1,880,196				—				(1,851,331	)			—				—				—				—				—				—				—				—				—
Issuance of Class A common stock for vested RSUs subsequent to Reorganization and IPO			—				—				—				1,504,547				—				—				—				—				—				—				—				—				—				—				—
Contributed capital subsequent to Reorganization and IPO			5,400				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Distributions subsequent to Reorganization and IPO			—				—				—				—				—				—				—				—				—				(95	)			—				—				(95	)			—				(95	)
Accretion of redeemable non-controlling interests subsequent to Reorganization and IPO			867				—				—				—				—				—				—				—				—				(867	)			—				—				(867	)			—				(867	)
Establishment of non-controlling interests subsequent to Reorganization and IPO			2,078				—				—				—				—				—				—				—				—				—				—				—				—				(2,078	)			(2,078	)
Equity reallocation between controlling and non-controlling interests			—				—				—				—				—				—				—				—				—				5,027				—				—				5,027				(5,027	)			—
Establishment of tax receivable agreements liability			—				—				—				—																								(32,081	)			—				—				(32,081	)			—				(32,081	)
Balance at June 30, 2021		$	179,140			$	—			$	—				261,371,683			$	2				188,080,383			$	1				238,154,296			$	2			$	1,556,791			$	(319,597	)		$	(98,530	)		$	1,138,669			$	811,568			$	1,950,237

		Six Months Ended June 30, 2021
		Redeemable Non- controlling				Redeemable				Members’				Class A Common Stock								Class X Common Stock								Class Y Common Stock								Additional Paid-				Accumulated				Accumulated Other Comprehensive				Total Shareholders’ Equity Attributable to Endeavor Group Holdings, Inc./				Nonredeemable Non- controlling				Total Shareholders’/
		Interests				Equity				Capital				Shares				Amount				Shares				Amount				Shares				Amount				In Capital				Deficit				(Loss) Income				Members’ Equity				Interests				Members’ Equity
Balance at January 1, 2021		$	168,254			$	22,519			$	468,633				—			$	—				—			$	—				—			$	—			$	—			$	—			$	(190,786	)		$	277,847			$	686,129			$	963,976
Comprehensive (loss) income prior to Reorganization and IPO			(4,111	)			—				(31,686	)			—				—				—				—				—				—				—				—				19,665				(12,021	)			42,859				30,838
Equity-based compensation expense prior to Reorganization and IPO			—				—				3,444				—				—				—				—				—				—				—				—				—				3,444				7,636				11,080
Distributions prior to Reorganization and IPO			—				—				(245	)			—				—				—				—				—				—				—				—				—				(245	)			(8,403	)			(8,648	)
Accretion of redeemable non-controlling interests prior to Reorganization and IPO			(271	)			—				271				—				—				—				—				—				—				—				—				—				271				—				271
Establishment of non-controlling interests prior to Reorganization and IPO			2,888				—				560				—				—				—				—				—				—				—				—				—				560				(3,448	)			(2,888	)
Effect of Reorganization			5,729				(22,519	)			(440,977	)			133,712,566				1				122,021,609				1				167,208,026				2				242,017				—				80,645				(118,311	)			135,101				16,790
Issuance of Class A common stock sold in IPO, including underwriters’ option, and Private Placement, net of underwriting discounts			—				—				—				81,873,497				1				—				—				—				—				1,886,642				—				—				1,886,643				—				1,886,643
Use of proceeds, including the UFC Buyout			—				—				—				42,400,877				—				67,910,105				—				70,946,270				—				(702,698	)			—				(11,955	)			(714,653	)			(120,386	)			(835,039	)
Comprehensive (loss) income subsequent to Reorganization and IPO			(1,694	)			—				—				—				—				—				—				—				—								(319,597	)			3,901				(315,696	)			(197,679	)			(513,375	)
Equity-based compensation subsequent to Reorganization and IPO			—				—				—				—				—				—				—				—				—				158,846				—				—				158,846				276,864				435,710
Issuance of Class A common stock due to exchanges subsequent to Reorganization and IPO			—				—				—				1,880,196				—				(1,851,331	)			—				—				—				—				—				—				—				—				—
Issuance of Class A common stock for vested RSUs subsequent to Reorganization and IPO			—				—				—				1,504,547				—				—				—				—				—				—				—				—				—				—				—
Contributed capital subsequent to Reorganization and IPO			5,400				—				—				—				—				—				—				—				—				—				—				—				—				—				—
Distributions subsequent to Reorganization and IPO			—				—				—				—				—				—				—				—				—				(95	)			—				—				(95	)			—				(95	)
Accretion of redeemable non-controlling interests subsequent to Reorganization and IPO			867				—				—				—				—				—				—				—				—				(867	)			—				—				(867	)			—				(867	)
Establishment of non-controlling interests subsequent to Reorganization and IPO			2,078				—				—				—				—				—				—				—				—				—				—				—				—				(2,078	)			(2,078	)
Equity reallocation between controlling and non-controlling interests			—				—				—				—				—				—				—				—				—				5,027				—				—				5,027				(5,027	)			—
Establishment of tax receivable agreements liability			—				—				—				—																								(32,081	)			—				—				(32,081	)			—				(32,081	)
Balance at June 30, 2021		$	179,140			$	—			$	—				261,371,683			$	2				188,080,383			$	1				238,154,296			$	2			$	1,556,791			$	(319,597	)		$	(98,530	)		$	1,138,669			$	811,568			$	1,950,237

See accompanying notes to consolidated financial statements

 

7

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE INTERESTS AND SHAREHOLDERS’/ MEMBERS’ EQUITY

(In thousands)

(Unaudited)

 

		Three Months Ended June 30, 2020
		Redeemable Non- controlling Interests				Redeemable Equity				Members’ Capital				Accumulated Other Comprehensive (Loss) Income				Total Endeavor Operating Company, LLC Members’ Equity				Nonredeemable Non-controlling Interests				Total Members’ Equity
Balance at April 1, 2020		$	197,768			$	43,693			$	1,016,206			$	(217,337	)		$	798,869			$	672,784			$	1,471,653
Comprehensive (loss) income			(20,712	)			—				(466,554	)			(2,972	)			(469,526	)			(8,499	)			(478,025	)
Equity-based compensation expense			—				—				5,339				—				5,339				2,876				8,215
Distributions			—				—				(252	)			—				(252	)			(399	)			(651	)
Accretion of redeemable non-controlling interests			(1,752	)			—				1,752				—				1,752				—				1,752
Redemption of units			—				—				(7,071	)			—				(7,071	)			—				(7,071	)
Balance at June 30, 2020		$	175,304			$	43,693			$	549,420			$	(220,309	)		$	329,111			$	666,762			$	995,873
		Six Months Ended June 30, 2020
		Redeemable Non-controlling Interests				Redeemable Equity				Members’ Capital				Accumulated Other Comprehensive (Loss) Income				Total Endeavor Operating Company, LLC Members’ Equity				Nonredeemable Non-controlling Interests				Total Members’ Equity
Balance at January 1, 2020		$	136,809			$	43,693			$	1,038,678			$	(125,404	)		$	913,274			$	774,309			$	1,687,583
Cumulative transition adjustment of ASU 2016-13 adoption			—				—				(1,803	)			—				(1,803	)			—				(1,803	)
Comprehensive (loss) income			(18,608	)			—				(521,510	)			(94,905	)			(616,415	)			(6,908	)			(623,323	)
Equity-based compensation expense			—				—				9,166				—				9,166				5,812				14,978
Contributions			—				—				26,476				—				26,476				—				26,476
Distributions			—				—				(2,470	)			—				(2,470	)			(110,339	)			(112,809	)
Accretion of redeemable non-controlling interests			(8,101	)			—				8,101				—				8,101				—				8,101
Redemption of units			—				—				(7,218	)			—				(7,218	)			—				(7,218	)
Acquisition of non-controlling interests			65,204				—				—				—				—				5,635				5,635
Business deconsolidation			—				—				—				—				—				(1,747	)			(1,747	)
Balance at June 30, 2020		$	175,304			$	43,693			$	549,420			$	(220,309	)		$	329,111			$	666,762			$	995,873

See accompanying notes to consolidated financial statements

 

8

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

		Six Months Ended June 30,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(514,391	)		$	(547,026	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization			136,397				165,198
Amortization and write-off of original issue discount and deferred financing cost			28,807				10,393
Loss on extinguishment of debt			28,628				—
Amortization of content costs			73,282				25,085
Impairment charges			3,770				175,282
(Gain) loss on sale/disposal and impairment of assets			(2,512	)			82
Gain on business acquisition and deconsolidation			—				(30,999	)
Equity-based compensation expense			403,508				16,975
Change in fair value of contingent liabilities			14,378				(7,048	)
Change in fair value of equity investments with and without readily determinable fair value			(11,285	)			5,709
Change in fair value of financial instruments			21,034				(17,644	)
Equity losses from affiliates			59,284				209,807
Net (benefit) provision for allowance for doubtful accounts			(3,916	)			17,676
Net gain on foreign currency transactions			(5,156	)			(5,730	)
Distributions from affiliates			902				4,675
Income taxes			42,342				29,615
Other, net			174				718
Changes in operating assets and liabilities - net of acquisitions:
(Increase)/decrease in receivables			(141,807	)			247,061
Decrease/(increase) in other current assets			2,325				(59,024	)
Increase in other assets			(490,715	)			(104,235	)
Decrease in deferred costs			84,250				106,121
Increase in deferred revenue			124,524				112,091
Increase/(decrease) in accounts payable and accrued liabilities			44,394				(77,270	)
Decrease in other liabilities			(20,416	)			(75,607	)
Net cash (used in) provided by operating activities			(122,199	)			201,905
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired			(255,633	)			(309,803	)
Purchases of property and equipment			(27,107	)			(40,813	)
Proceeds from sale of assets			19,237				83,007
Investments in affiliates			(113,959	)			(21,075	)
Other, net			4,897				(1,997	)
Net cash used in investing activities			(372,565	)			(290,681	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings			220,841				1,081,677
Payments on borrowings			(852,341	)			(437,065	)
Contributions			5,400				—
Distributions			(8,743	)			(69,557	)
Redemption of units			(14,402	)			(5,947	)
Proceeds from equity offering, net of underwriting discounts and offering expenses			1,886,643				—
Payments of contingent consideration related to acquisitions			(1,778	)			(2,320	)
Acquisition of non-controlling interests			(835,683	)			—
Other, net			(2,439	)			(16,115	)
Net cash provided by financing activities			397,498				550,673
Effect of exchange rate changes on cash, cash equivalents and restricted cash			1,055				(6,418	)
(Decrease) increase in cash, cash equivalents and restricted cash			(96,211	)			455,479
Cash, cash equivalents and restricted cash at beginning of year			1,190,333				886,073
Cash, cash equivalents and restricted cash at end of period		$	1,094,122			$	1,341,552

 

See accompanying notes to consolidated financial statements

9

ENDEAVOR GROUP HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

1.	DESCRIPTION OF BUSINESS AND ORGANIZATION

Endeavor Group Holdings, Inc. (the “Company” or “EGH”) was incorporated as a Delaware corporation in January 2019. The Company was formed as a holding company for the purpose of completing an initial public offering (“IPO”) and other related transactions in order to carry on the business of Endeavor Operating Company, LLC (d.b.a. Endeavor) and its subsidiaries (collectively, “Endeavor” or “EOC”). As the sole managing member of Endeavor Manager, LLC (“Endeavor Manager”), which in turn is the sole managing member of EOC, the Company operates and controls all the business and affairs of Endeavor, and through Endeavor and its subsidiaries, conducts the Company’s business. The Company is a global entertainment, sports and content company.

Prior to the IPO, Endeavor was owned by WME Holdco, LLC (which is referred to as “Holdco” herein and is principally owned by executive employees of the Company), affiliates of Silver Lake (which are collectively referred to as “Silver Lake” herein), and other investors and executive employees of the Company.

Initial Public Offering

On May 3, 2021, the Company closed an IPO of 24,495,000 shares of Class A common stock at a public offering price of $24.00 per share, which included 3,195,000 shares of Class A common stock issued pursuant to the underwriters’ option to purchase additional shares of Class A common stock. This option to purchase additional shares of Class A common stock was closed on May 12, 2021.

Reorganization Transactions

Prior to the closing of the IPO, a series of reorganization transactions (the “Reorganization Transactions”) was completed:

 

•

EGH’s certificate of incorporation was amended and restated to, among other things, provide for the following common stock:

 

Class of Common Stock		Par Value				Votes		Economic Rights
Class A common stock		$	0.00001			1		Yes
Class B common stock		$	0.00001			None		Yes
Class C common stock		$	0.00001			None		Yes
Class X common stock		$	0.00001			1		None
Class Y common stock		$	0.00001			20		None

Voting shares of EGH’s common stock will generally vote together as a single class on all matters submitted to a vote of our stockholders;

 

•

Endeavor Manager became the sole managing member of EOC and EGH became the sole managing member of Endeavor Manager;

 

•

Endeavor Manager issued to equityholders of certain management holding companies common interest units in Endeavor Manager along with paired shares of its Class X common stock as consideration for the acquisition of Endeavor Operating Company Units held by such management holding companies;

 

•

For certain pre-IPO investors, EGH issued shares of its Class A common stock, Class Y common stock and rights to receive payments under a tax receivable agreement and for certain other pre-IPO investors, EGH issued shares of its Class A common stock as consideration for the acquisition of Endeavor Operating Company Units held by such pre-IPO investors;

 

•

For holders of Endeavor Operating Company Units which remained outstanding following the IPO, EGH issued paired shares of its Class X common stock and, in certain instances, Class Y common stock, in each case equal to the number of Endeavor Operating Company Units held and in exchange for the payment of the aggregate par value of the Class X common stock and Class Y common stock received; and

 

•

Certain Endeavor Profits Units, Endeavor Full Catch-Up Profits Units and Endeavor Partial Catch-Up Profits Units remained outstanding following the closing of the IPO. Subsequent to the IPO, the Endeavor Full Catch-up Profits Units were recapitalized and converted into Endeavor Operating Company Units and the Endeavor Partial Catch-Up Profits Units were recapitalized and converted into Endeavor Profits Units.

Subsequent to the closing of the IPO, several new and current investors purchased in the aggregate 75,584,747 shares of Class A common stock at a price per share of $24.00 (the “Private Placement”). Of these shares, 57,378,497 were purchased from EGH and 18,206,250 were

 

10

purchased from an existing investor. EGH registered these shares of Class A common stock on a Form S-1 registration statement. Net proceeds from the IPO and the Private Placement, after deducting underwriting discounts and commissions and offering expenses, was $1,886.6 million.

Subsequent to the closing of the IPO and the Private Placement, through a series of transactions, EOC acquired the equity interests of the minority unitholders of Zuffa, which owns and operates the Ultimate Fighting Championship (the “UFC Buyout”). This resulted in EOC directly or indirectly owning 100% of the equity interests of Zuffa. In consideration for the minority unitholders’ equity interests of Zuffa, (a) EGH and its subsidiaries issued to certain of such unitholders shares of Class A common stock, Endeavor Operating Company Units, Endeavor Manager Units, shares of Class X common stock and/or shares of Class Y common stock, and (b) EGH used $835.7 million of the net proceeds from this offering and the concurrent private placements to purchase Endeavor Operating Company Units (or equity interests of Zuffa) from certain of such holders. In addition, some of those minority unitholders sold their equity interests of EGH to the private placement investors in the concurrent private placement.

Remaining net proceeds after the UFC Buyout were contributed to Endeavor Manager in exchange for Endeavor Manager Units. Endeavor Manager then in turn contributed such net proceeds to Endeavor Operating Company in exchange for Endeavor Operating Company Units.

See Note 15 for the 2021 Incentive Award Plan which became effective upon the IPO, as well as for the equity-based compensation charges recorded in the three months ended June 30, 2021 from the impact of the IPO.

 

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting interim financial information and should be read in conjunction with the Company’s consolidated financial statements and accompanying footnotes in our prospectus dated April 28, 2021, filed with the SEC on April 30, 2021 pursuant to Rule 424(b) of the Securities Act of 1933, as amended (referred to herein as the “Prospectus”). Certain information and note disclosures normally included in annual financial statements have been condensed or omitted from these interim financial statements. The interim consolidated financial statements as of June 30, 2021 and for the three and six months ended June 30, 2021 and 2020 are unaudited; however, in the opinion of management, such interim consolidated financial statements reflect all adjustments, consisting solely of normal and recurring adjustments, necessary for a fair statement of its financial position, results of operations and cash flows for the interim periods presented.

During the fourth quarter of 2020, the Company concluded there was a revision required to the presentation of Zuffa Parent, LLC’s (“Zuffa”) distributions to Silver Lake and the related issuances of common stock units and the convertible promissory note by the Company in the consolidated statements of cash flows for the first three quarters of 2020. Such distributions and related issuances are described in Note 12. The Company originally reported these distributions and the related issuances as financing cash flows rather than correctly presenting them as non-cash financing activities in the supplemental cash flow disclosures. These items had no impact on the reported amount of net cash provided by financing activities for these periods. The Company has revised its statement of consolidated cash flows and the supplemental cash flow disclosures for the six months ended June 30, 2020 to present these distributions and related issuances as non-cash activities and will prospectively revise, in connection with future filings, its statement of cash flows and supplemental cash flow disclosures for the nine months ended September 30, 2020.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and the accompanying disclosures.

Significant accounting policies that contain subjective management estimates and assumptions include those related to revenue recognition, allowance for doubtful accounts, content cost amortization and impairment, the fair value of acquired assets and liabilities associated with acquisitions, the fair value of the Company’s reporting units and the assessment of goodwill, other intangible assets and long-lived assets for impairment, consolidation, investments, redeemable non-controlling interests, the fair value of equity-based compensation, income taxes and contingencies.

Management evaluates these estimates using historical experience and other factors, including the general economic environment and actions it may take in the future. The Company adjusts such estimates when facts and circumstances dictate. However, these estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on management’s best judgment at a point in time and as such, these estimates may ultimately differ from actual results. Changes in estimates resulting from weakness in the economic environment or other factors beyond the Company’s control could be material and would be reflected in the Company’s consolidated financial statements in future periods.

 

11

Earnings per Share

Earnings per share (“EPS”) is computed in accordance with ASC 260, Earnings per Share. Basic EPS is computed by dividing the net income available to our Class A Common Stockholders by the weighted average number of shares outstanding for the period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period. Diluted EPS includes the determinants of basic EPS and, in addition, reflects the dilutive effect of additional shares of Class A Common Stock issuable in exchange for vested Units of Endeavor Manager LLC and Endeavor Operating Company, as well as under the Company’s share based compensation plans (if dilutive), with adjustments to net income available for common stockholders for dilutive potential common shares.

The Company may be required to calculate basic EPS using the two-class method as a result of our redeemable non-controlling interests. To the extent that the redemption value increases and exceeds the then-current fair value of a redeemable non-controlling interest, net income available to common stockholders (used to calculate EPS) could be negatively impacted by that increase, subject to certain limitations. The partial or full recovery of any reductions to net income available to common stockholders (used to calculate EPS) is limited to any cumulative prior-period reductions. There was no impact to EPS for adjustments related to our redeemable non-controlling interests.

 

3.	RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In January 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323 and Topic 815 (“ASU 2020-01”). ASU 2020-01 clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying the fair value measurement alternative. This ASU is effective for annual and interim reporting periods beginning after December 15, 2020. The Company adopted this new guidance on January 1, 2021 with no material impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The update removes certain exceptions to the general principles in Topic 740 and simplifies accounting for income taxes in certain areas of Topic 740 by clarifying and amending existing guidance. This ASU is effective for annual and interim reporting periods beginning after December 15, 2020. The Company adopted this new guidance on January 1, 2021 with no material impact on its consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This ASU addresses issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. The amendments in this update are effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the effect of this update on its consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. Adoption of the expedients and exceptions is permitted upon issuance of this update through December 31, 2022. The Company is currently evaluating the effect of this update on its consolidated financial statements.

 

4.	IMPACT OF THE GLOBAL COVID-19 PANDEMIC

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The COVID-19 pandemic has rapidly changed market and economic conditions globally and has significantly impacted the entertainment and sports industries. The COVID-19 pandemic resulted in various governmental restrictions, including government-mandated stay-at-home orders, travel restrictions and limitations on social or public gatherings, and began to have a significant adverse impact on the Company’s business and operations beginning in March 2020. In particular, this led to a lack of live ticketed events as well as the postponement or cancellation of live sporting events and other in-person events, including concerts, fashion shows, public appearances, and experiential marketing events. In addition, many entertainment productions, including film and television shows, were put on hiatus.

While activity has resumed in certain of our businesses and restrictions have been lessened or lifted, restrictions impacting certain of our businesses remain in effect in locations where we are operating and could in the future be reduced or increased, or removed or reinstated. The Company’s events, experiences and experiential marketing businesses primarily generate their revenue from live events and many events remain cancelled, and where live events are able to take place, attendance may be at reduced levels. Overall, the Company expects a recovery in 2021 to be gradual due to general uncertainty surrounding COVID-19 and recently emerged variants.

 

12

The full magnitude the pandemic will have on the Company’s financial condition, liquidity and future results is uncertain and will depend on the duration of the pandemic, as well as the effectiveness of mass vaccinations and the impact of variants of the virus. Accordingly, the Company’s estimates regarding the magnitude and length of time that these disruptions will continue to impact its results of operations, cash flows and financial condition may change in the future, and such changes could be material. Additionally, changes to estimates related to the COVID-19 disruptions could result in other impacts, including but not limited to, additional goodwill, indefinite lived intangibles, long-lived assets and equity-method investment impairment charges, and increased valuation allowances for deferred tax assets. Such changes will be recognized in the period in which they occur.

Liquidity

The ongoing COVID-19 pandemic has had a significant impact on the Company’s cash flows from operations. The Company’s primary need for liquidity is to fund working capital requirements, debt service obligations, acquisitions and capital expenditures. As of June 30, 2021, cash and cash equivalents totaled $869.8 million, including cash held at non-wholly owned consolidated subsidiaries where cash distributions may be subject to restriction under applicable operating agreements or debt agreements and, due to such restrictions, may not be readily available to service obligations outside of those subsidiaries. These balances, which primarily consist of Endeavor China and OLE, were $75 million as of June 30, 2021.

After considering the impact of COVID-19, the Company believes that existing cash, cash generated from operations and available capacity for borrowings under its credit facilities will satisfy working capital requirements, capital expenditures, and debt service requirements for at least the succeeding year.

 

13

5.	ACQUISITIONS AND DECONSOLIDATION

2021 ACQUISITIONS

FlightScope and Next College Student Athlete

In April 2021, the Company acquired the issued and outstanding equity interests of EDH Tennis Limited, the holding company of FlightScope Services sp. z o.o., comprising the services business of FlightScope (collectively, “FlightScope”). FlightScope is a data collection, audio-visual production and tracking technology specialist for golf and tennis events. In June 2021, the Company acquired the Path-to-College business of Reigning Champs, LLC, whose primary business is Next College Student Athlete (collectively, with the other acquired Path-to-College businesses, “NCSA”). NCSA consists of companies that offer recruiting and admissions services and related software products to high school student athletes, as well as college athletic departments and admissions officers. The combined aggregate purchase price for these two acquisitions was $232.6 million.

The Company incurred $4.2 million in transaction related costs in connection with the acquisition of FlightScope and NCSA. The costs were expensed as incurred and included in selling, general and administrative expenses in the consolidated statement of operations.

The goodwill for FlightScope and NCSA was assigned to the Events, Experiences & Rights segment. The goodwill is partially deductible for tax purposes. The weighted average life of finite-lived intangible assets acquired for FlightScope and NCSA is 4.4 and 5.2 years, respectively.

The results of FlightScope and NCSA have been included in the consolidated financial statements since the dates of acquisition. For the three and six months ended June 30, 2021, FlightScope’s and NCSA’s consolidated revenue and net income/loss included in the consolidated statements of operations from the acquisition dates were $14.7 million and $1.7 million, respectively.

Preliminary Allocation of Purchase Price

The acquisitions were accounted for as business combinations and the preliminary fair values of the assets acquired and liabilities assumed in the business combinations are as follows (in thousands):

 

		FlightScope				NCSA
Cash and cash equivalents		$	1,042			$	3,783
Accounts receivable			475				5,619
Deferred costs			94				1,096
Other current assets			1,640				8,856
Property and equipment			1,090				2,804
Right of use assets			1,272				—
Other assets			166				5,472
Intangible assets:
Trade names			—				21,100
Customer relationships			2,700				10,000
Internally developed software			15,400				37,100
Goodwill			30,271				193,508
Accounts payable and accrued expenses			(806	)			(21,385	)
Other current liabilities			(187	)			(8,608	)
Operating lease liability			(1,272	)			—
Deferred revenue			(631	)			(37,636	)
Other liabilities			(15,346	)			(25,014	)
Net assets acquired		$	35,908			$	196,695

The estimated fair value of assets acquired and liabilities assumed are preliminary and subject to change as we finalize purchase price allocations, which is expected within one year of the respective acquisitions.

2020 ACQUISITIONS

On Location Events, LLC

In January 2020, the Company acquired On Location Events, LLC, dba On Location Experiences (“OLE”) for total consideration of $441.1 million consisting of cash consideration of $366.4 million; rollover equity, representing 13.5% of the equity interest of OLE, valued at $65.2 million and a contingent premium payment, as discussed below, valued at $9.5 million. The rollover equity is held by 32 Equity, LLC (“32 Equity”), the strategic investment firm affiliated with the National Football League (“NFL”). OLE is party to a Commercial License Agreement (“CLA”) with NFL Properties, LLC, an affiliate of the NFL, which provides OLE with the right to operate as the official hospitality partner of the NFL.

 

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