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 ~~March 31,~~September 30, 2022


☐	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, 3rd 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 ~~May 9,~~November 8, 2022, there were ~~284,019,250~~289,423,865 shares of the registrant’s Class A common stock outstanding, ~~185,433,757~~183,110,405 shares of the registrant’s Class X common stock outstanding and ~~235,299,672~~229,875,648 shares of the registrant’s Class Y common stock outstanding.

Table of Contents

TABLE OF CONTENTS


Part I – FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)	3
Consolidated Balance Sheets as of ~~March 31,~~September 30, 2022 and December 31, 2021	3
Consolidated Statements of Operations for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	4
Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	5
Consolidated Statements of Redeemable Interests and Shareholders’/Members' Equity for the Three and Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	78
Consolidated Statements of Cash Flows for the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2022 and 2021	811
Notes to Consolidated Financial Statements	912
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2430
Item 3. Quantitative and Qualitative Disclosures About Market Risk	3544
Item 4. Controls and Procedures	3645
Part II – OTHER INFORMATION
Item 1. Legal Proceedings	3645
Item 1A. Risk Factors	3645
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 5. Other Information	45
Item 6. Exhibits	3746

~~Table of Contents~~

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 "aim," "anticipate," "believe," "could," "mission," "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:

•

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

•

impacts from changes in discretionary and corporate spending on entertainment and sports events due to factors beyond our control, such as adverse economic conditions, on our operations;

•

the impact of the global pandemic related to COVID-19 and its variants on our business, financial condition, liquidity and results of 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, recruit, and retain qualified and experienced agents and managers;

•

our ability to identify, sign, and retain clients;

•

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;

•

risk related to our gaming business and applicable regulatory requirements;

•

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

•

risk related to our organization and structure;

•

risks related to tax matters;

•

risks related to our Class A common stock; and

•

other important factors that could cause actual results, performance or achievements to differ materially from those described in Part I, Item 1A. "Risk Factors" and Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 ("2021 Annual Report"), as updated by Part II, Item 1A. "Risk Factors" of this Quarterly Report, and Part I,

~~Table of Contents~~

Item 2. "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report and in our subsequent filings with the Securities and Exchange Commission.

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 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 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.

•

"Other UFC Holders" refers to the other persons that held equity interests in UFC Parent prior to the IPO and certain of their affiliates.

•

"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.

•

"Silver Lake Equityholders" refers to certain affiliates of Silver Lake that are our stockholders.

•

"UFC LLC Agreement" refers to the limited liability company agreement which governs the management of UFC Parent and the rights of UFC's Parent's equityholders.

•

"UFC Parent" refers to Zuffa Parent LLC, which owns and operations the Ultimate Fighting Championship ("UFC"), the professional mixed martial arts ("MMA") organization.

~~Table of Contents~~

Item 1. Financial Statements (Unaudited)

PART I – FINANCIAL INFORMATION

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

March 31,

December 31,

2022

2021

ASSETS

Current Assets:

Cash and cash equivalents

$
2,030,255

$
1,560,995

Restricted cash

259,334

232,041

Accounts receivable (net of allowance for doubtful accounts of $61,731 and $57,102, respectively)

760,518

615,010

Deferred costs

165,545

255,371

Assets held for sale

0

885,633

Other current assets

200,541

204,697

      Total current assets

3,416,193

3,753,747

Property and equipment, net

630,035

629,807

Operating lease right-of-use assets

361,512

373,652

Intangible assets, net

1,601,477

1,611,684

Goodwill

4,530,728

4,506,554

Investments

492,721

298,212

Other assets

326,721

260,861

Total assets

$
11,359,387

$
11,434,517

LIABILITIES, REDEEMABLE INTERESTS AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$
527,406

$
558,863

Accrued liabilities

460,428

524,061

Current portion of long-term debt

82,649

82,022

Current portion of operating lease liabilities

59,910

59,743

Deferred revenue

496,577

651,760

Deposits received on behalf of clients

242,411

216,632

Liabilities held for sale

0

507,303

Other current liabilities

129,413

105,053

Total current liabilities

1,998,794

2,705,437

Long-term debt

5,621,429

5,631,714

Long-term operating lease liabilities

351,695

363,568

Other long-term liabilities

421,011

402,472

    Total liabilities

8,392,929

9,103,191

Commitments and contingencies (Note 16)

Redeemable non-controlling interests

242,534

209,863

Shareholders' Equity:

Class A common stock, $0.00001 par value; 5,000,000,000 shares authorized;
  275,698,529 and 265,553,327 shares issued and outstanding as of March 31, 2022
  and December 31, 2021, respectively

2

2

Class B common stock, $0.00001 par value; 5,000,000,000 shares authorized;
  NaN issued and outstanding as of March 31, 2022 and December 31, 2021

0

0

Class C common stock, $0.00001 par value; 5,000,000,000 shares authorized;
  NaN issued and outstanding as of March 31, 2022 and December 31, 2021

0

0

Class X common stock, $0.00001 par value; 5,000,000,000 shares authorized;
  176,967,757 and 186,222,061 shares issued and outstanding as of March 31, 2022
  and December 31, 2021, respectively

1

1

Class Y common stock, $0.00001 par value; 1,000,000,000 shares authorized;
  235,415,621 and 238,154,296 shares issued and outstanding as of March 31, 2022
  and December 31, 2021, respectively

2

2

Additional paid-in capital

1,696,851

1,624,201

Retained earnings (accumulated deficit)

22,921

(296,625
)
Accumulated other comprehensive loss

(49,428
)

(80,535
)
Total Endeavor Group Holdings, Inc. shareholders' equity

1,670,349

1,247,046

Nonredeemable non-controlling interests

1,053,575

874,417

Total shareholders' equity

2,723,924

2,121,463

Total liabilities, redeemable interests and shareholders' equity

$
11,359,387

$
11,434,517


	September 30,			December 31,
	2022			2021
ASSETS
Current Assets:
Cash and cash equivalents	$	970,782		$	1,560,995
Restricted cash		294,203			232,041
Accounts receivable (net of allowance for doubtful accounts of $65,695 and $57,102, respectively)		893,369			615,010
Deferred costs		247,864			255,371
Assets held for sale		27,301			885,633
Other current assets		253,620			204,697
Total current assets		2,687,139			3,753,747
Property and equipment, net		642,891			629,807
Operating lease right-of-use assets		324,340			373,652
Intangible assets, net		2,199,670			1,611,684
Goodwill		5,237,971			4,506,554
Investments		407,435			298,212
Other assets		416,469			260,861
Total assets	$	11,915,915		$	11,434,517
LIABILITIES, REDEEMABLE INTERESTS AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	540,142		$	558,863
Accrued liabilities		580,001			524,061
Current portion of long-term debt		89,039			82,022
Current portion of operating lease liabilities		59,355			59,743
Deferred revenue		609,715			651,760
Deposits received on behalf of clients		279,402			216,632
Liabilities held for sale		4,866			507,303
Other current liabilities		186,289			105,053
Total current liabilities		2,348,809			2,705,437
Long-term debt		5,338,364			5,631,714
Long-term operating lease liabilities		308,828			363,568
Other long-term liabilities		496,378			402,472
Total liabilities		8,492,379			9,103,191
Commitments and contingencies (Note 16)
Redeemable non-controlling interests		254,699			209,863
Shareholders' Equity:
Class A common stock, $0.00001 par value; 5,000,000,000 shares authorized; 289,330,904 and 265,553,327 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		2			2
Class B common stock, $0.00001 par value; 5,000,000,000 shares authorized; none issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Class C common stock, $0.00001 par value; 5,000,000,000 shares authorized; none issued and outstanding as of September 30, 2022 and December 31, 2021		—			—
Class X common stock, $0.00001 par value; 4,987,036,068 and 5,000,000,000 shares authorized; 183,173,428 and 186,222,061 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1			1
Class Y common stock, $0.00001 par value; 997,261,325 and 1,000,000,000 shares authorized; 229,875,648 and 238,154,296 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		2			2
Additional paid-in capital		2,061,760			1,624,201
Accumulated deficit		(10,039	)		(296,625	)
Accumulated other comprehensive loss		(61,223	)		(80,535	)
Total Endeavor Group Holdings, Inc. shareholders' equity		1,990,503			1,247,046
Nonredeemable non-controlling interests		1,178,334			874,417
Total shareholders' equity		3,168,837			2,121,463
Total liabilities, redeemable interests and shareholders' equity	$	11,915,915		$	11,434,517

See accompanying notes to consolidated financial statements

~~Table of Contents~~

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

Three Months Ended March 31,

2022

2021

Revenue

$
1,473,763

$
1,069,582

Operating expenses:

Direct operating costs

694,641

546,392

Selling, general and administrative expenses

540,206

381,113

Insurance recoveries

(993
)

(19,657
)
Depreciation and amortization

65,994

67,236

Total operating expenses

1,299,848

975,084

Operating income

173,915

94,498

Other (expense) income:

Interest expense, net

(59,272
)

(68,351
)
Tax receivable agreements liability adjustment

(53,497
)

0

Other income (expense), net

459,941

(3,215
)
Income before income taxes and equity losses of affiliates

521,087

22,932

(Benefit from) provision for income taxes

(17,234
)

5,085

Income before equity losses of affiliates

538,321

17,847

Equity losses of affiliates, net of tax

(20,655
)

(15,471
)
Net income

517,666

2,376

Less: Net income attributable to non-controlling interests

198,120

27,246

Less: Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions

0

(24,870
)
Net income attributable to Endeavor Group Holdings, Inc.

$
319,546

$
—

Earnings per share of Class A common stock:

Basic

$
1.19

N/A

Diluted

$
1.16

N/A

Weighted average number of shares used in computing earnings per share:

Basic

268,489,176

N/A

Diluted

443,038,617

N/A


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenue	$	1,221,416		$	1,391,303		$	4,007,694		$	3,572,157
Operating expenses:
Direct operating costs		398,518			673,215			1,601,544			1,790,562
Selling, general and administrative expenses		601,469			520,626			1,729,174			1,686,840
Insurance recoveries		—			(12,233	)		(993	)		(42,100	)
Depreciation and amortization		63,571			71,661			195,177			208,058
Impairment charges		689			754			689			4,524
Total operating expenses		1,064,247			1,254,023			3,525,591			3,647,884
Operating income (loss)		157,169			137,280			482,103			(75,727	)
Other (expense) income:
Interest expense, net		(75,608	)		(55,783	)		(197,385	)		(207,970	)
Loss on extinguishment of debt		—			—			—			(28,628	)
Tax receivable agreements liability adjustment		(10,405	)		—			(61,497	)		—
Other income (expense), net		9,325			(7,719	)		463,133			(3,001	)
Income (loss) before income taxes and equity losses of affiliates		80,481			73,778			686,354			(315,326	)
Provision for (benefit from) income taxes		8,515			(7,718	)		(6,020	)		58,285
Income (loss) before equity losses of affiliates		71,966			81,496			692,374			(373,611	)
Equity losses of affiliates, net of tax		(84,504	)		(17,883	)		(145,026	)		(77,167	)
Net (loss) income		(12,538	)		63,613			547,348			(450,778	)
Less: Net (loss) income attributable to non-controlling interests		(2,499	)		21,128			212,035			(141,980	)
Less: Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions		—			—			—			(31,686	)
Net (loss) income attributable to Endeavor Group Holdings, Inc.	$	(10,039	)	$	42,485		$	335,313		$	(277,112	)


(Loss) earnings per share of Class A common stock(1):
Basic	$	(0.04	)	$	0.16		$	1.22		$	(1.07	)
Diluted	$	(0.04	)	$	0.16		$	1.19		$	(1.07	)
Weighted average number of shares used in computing (loss) earnings per share:
Basic		285,870,317			262,891,070			278,724,574			261,048,116
Diluted		289,806,633			435,922,511			450,758,061			261,048,116

(1) Basic and diluted income (loss) per share of Class A common stock presented for 2021 is applicable only for the period from May 1, 2021 through September 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 12 for the calculation of the numbers of shares used in computation of net income (loss) per share of Class A common stock and the basis for computation of net income (loss) per share.

See accompanying notes to consolidated financial statements

~~Table of Contents~~

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(Unaudited)

Three months ended March 31,

2022

2021

Net income

$
517,666

$
2,376

Other comprehensive income, net of tax:

Change in unrealized gains/losses on cash flow hedges:

Unrealized gains (losses) on forward foreign exchange contracts

184

(1,358
)
Reclassification of gains to net income for forward foreign exchange contracts

(786
)

0

Unrealized gains on interest rate swaps

48,194

15,076

Reclassification of losses to net income for interest rate swaps

7,333

7,384

Foreign currency translation adjustments

(648
)

(4,550
)
Reclassification of foreign currency translation gains to net income for business divestiture

(127
)

0

Total comprehensive income, net of tax

571,816

18,928

Less: Comprehensive income attributable to non-controlling interests

218,615

27,246

Less: Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions

0

(8,318
)
Comprehensive income attributable to Endeavor Group Holdings, Inc.

$
353,201

$
—


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Net (loss) income	$	(12,538	)	$	63,613		$	547,348		$	(450,778	)
Other comprehensive (loss) income, net of tax:
Change in unrealized gains/losses on cash flow hedges:
Unrealized losses on forward foreign exchange contracts		(1,023	)		(628	)		(1,036	)		(416	)
Reclassification of gains to net (loss) income for forward foreign exchange contracts		(38	)		(1,475	)		(824	)		(1,468	)
Unrealized gains (losses) on interest rate swaps		45,083			(41	)		107,308			13,233
Reclassification of losses to net (loss) income for interest rate swaps		5			7,677			14,497			22,613
Foreign currency translation adjustments		(42,890	)		(1,128	)		(82,716	)		(3,508	)
Reclassification of foreign currency translation gains to net income for business divestiture		—			—			(127	)		—
Total comprehensive (loss) income, net of tax		(11,401	)		68,018			584,450			(420,324	)
Less: Comprehensive (loss) income attributable to non-controlling interests		(2,084	)		22,814			226,299			(137,811	)
Less: Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions		—			—			—			(12,021	)
Comprehensive (loss) income attributable to Endeavor Group Holdings, Inc.	$	(9,317	)	$	45,204		$	358,151		$	(270,492	)

See accompanying notes to consolidated financial statements

~~Table of Contents~~

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE INTERESTS AND SHAREHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)


	Three Months Ended September 30, 2022
																								Accumulated			Total Shareholders'
	Redeemable																	Additional						Other			Equity Attributable			Nonredeemable			Total
	Non-controlling			Class A Common Stock				Class X Common Stock					Class Y Common Stock					Paid-In			Accumulated			Comprehensive			to Endeavor Group			Non-controlling			Shareholders'
	Interests			Shares		Amount		Shares			Amount		Shares			Amount		Capital			Deficit			Loss			Holdings, Inc.			Interests			Equity

Balance at July 1, 2022	$	48,630			285,731,884	$	2		183,897,784		$	1		235,001,875		$	2	$	1,962,051		$	-		$	(61,265	)	$	1,900,791		$	1,175,928		$	3,076,719
Comprehensive income		(921	)		—		—		—			—		—			—		—			(10,039	)		722			(9,317	)		(1,163	)		(10,480	)
Equity-based compensation		—			—		—		—			—		—			—		43,754			—			—			43,754			1,373			45,127
Issuance of Class A common stock due to exchanges		—			658,573		—		(724,356	)		—		(5,126,227	)		—		—			—			—			—			—			—
Issuance of Class A common stock due to releases of RSUs		—			70,718		—		—			—		—			—		—			—			—			—			—			—
Distributions		—			—		—		—			—		—			—		—			—			—			—			(329	)		(329	)
Accretion of redeemable non- controlling interests		(3,160	)		—		—		—			—		—			—		3,160			—			—			3,160			—			3,160
Issuance of Class A common stock due to an acquisition		—			2,869,729		—		—			—		—			—		59,240			—			—			59,240			—			59,240
Establishment and acquisition of non-controlling interests		210,150			—		—		—			—		—			—		—			—			—			—			—			—
Non-controlling interests for sale of businesses		—			—		—		—			—		—			—		—			—			—			—			(4,644	)		(4,644	)
Equity reallocation between controlling and non-controlling interests		—			—		—		—			—		—			—		(6,489	)		—			(680	)		(7,169	)		7,169			—
Tax receivable agreements in connection with exchanges		—			—		—		—			—		—			—		44			—			—			44			—			44
Balance at September 30, 2022	$	254,699			289,330,904	$	2		183,173,428		$	1		229,875,648		$	2	$	2,061,760		$	(10,039	)	$	(61,223	)	$	1,990,503		$	1,178,334		$	3,168,837

Three Months Ended March 31, 2022

Accumulated

Total Shareholders'

Redeemable

Additional

Retained Earnings

Other

Equity Attributable

Nonredeemable

Total

Non-controlling

Class A Common Stock

Class X Common Stock

Class Y Common Stock

Paid-In

(Accumulated

Comprehensive

to Endeavor Group

Non-controlling

Shareholders'

Interests

Shares

Amount

Shares

Amount

Shares

Amount

Capital

Deficit)

Loss

Holdings, Inc.

Interests

Equity

Balance at January 1, 2022

$
209,863

265,553,327

$
2

186,222,061

$
1

238,154,296

$
2

$
1,624,201

$
(296,625
)

$
(80,535
)

$
1,247,046

$
874,417

$
2,121,463

Comprehensive income

4,236

-

-

-

-

-

-

-

319,546

33,655

353,201

214,379

567,580

Equity-based compensation

1,127

-

-

-

-

-

-

45,522

-

-

45,522

3,353

48,875

Issuance of Class A common stock due to exchanges

-

9,233,445

-

(9,254,304
)

-

(2,738,675
)

-

-

-

-

-

-

-

Issuance of Class A common stock due to releases of RSUs

-

911,757

-

-

-

-

-

-

-

-

-

-

-

Distributions

-

-

-

-

-

-

-

-

-

-

(351
)

(351
)
Accretion of redeemable non- controlling interests

27,308

-

-

-

-

-

-

(27,308
)

-

-

(27,308
)

-

(27,308
)
Acquisition of non-controlling interests

-

-

-

-

-

-

-

1,346

-

-

1,346

3,754

5,100

Non-controlling interests for sale of businesses

-

-

-

-

-

-

-

-

-

-

-

7,884

7,884

Equity reallocation between controlling and non-controlling interests

-

-

-

-

-

-

-

52,409

-

(2,548
)

49,861

(49,861
)

-

Tax receivable agreements in connection with exchanges

-

-

-

-

-

-

-

681

-

-

681

-

681

Balance at March 31, 2022

$
242,534

275,698,529

$
2

176,967,757

$
1

235,415,621

$
2

$
1,696,851

$
22,921

$
(49,428
)

$
1,670,349

$
1,053,575

$
2,723,924


	Nine Months Ended September 30, 2022

																								Accumulated			Total Shareholders'
	Redeemable																	Additional						Other			Equity Attributable			Nonredeemable			Total
	Non-controlling			Class A Common Stock				Class X Common Stock					Class Y Common Stock					Paid-In			Accumulated			Comprehensive			to Endeavor Group			Non-controlling			Shareholders'
	Interests			Shares		Amount		Shares			Amount		Shares			Amount		Capital			Deficit			Loss			Holdings, Inc.			Interests			Equity
Balance at January 1, 2022	$	209,863			265,553,327	$	2		186,222,061		$	1		238,154,296		$	2	$	1,624,201		$	(296,625	)	$	(80,535	)	$	1,247,046		$	874,417		$	2,121,463
Comprehensive income		3,796			—		—		—			—		—			—		—			335,313			22,838			358,151			222,503			580,654
Equity-based compensation		(2,276	)		—		—		—			—		—			—		135,552			—			—			135,552			20,490			156,042
Issuance of Class A common stock due to exchanges		—			11,645,986		—		(11,746,012	)		—		(8,278,648	)		—		—			—			—			—			—			—
Issuance of Class A common stock due to releases of RSUs		—			2,678,113		—		—			—		—			—		—			—			—			—			—			—
Distributions		—			—		—		—			—		—			—		—			—			—			—			(26,282	)		(26,282	)
Accretion of redeemable non- controlling interests		83,848			—		—		—			—		—			—		(35,121	)		(48,727	)		—			(83,848	)		—			(83,848	)
Issuance of Class A common stock due to an acquisition		—			3,266,646		—		—			—		—			—		70,254			—			—			70,254			—			70,254
Establishment and acquisition of non-controlling interests		(40,532	)		6,186,832		—		8,697,379			—		—			—		211,405			—			—			211,405			135,090			346,495
Non-controlling interests for sale of businesses		—			—		—		—			—		—			—		—			—			—			—			3,240			3,240
Equity reallocation between controlling and non-controlling interests		—			—		—		—			—		—			—		54,650			—			(3,526	)		51,124			(51,124	)		—
Tax receivable agreements in connection with exchanges		—			—		—		—			—		—			—		819			—			—			819			—			819
Balance at September 30, 2022	$	254,699			289,330,904	$	2		183,173,428		$	1		229,875,648		$	2	$	2,061,760		$	(10,039	)	$	(61,223	)	$	1,990,503		$	1,178,334		$	3,168,837

See accompanying notes to consolidated financial statements

~~Table of Contents~~

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF REDEEMABLE INTERESTS AND MEMBERS' EQUITY

(In thousands)

(Unaudited)

Three Months Ended March 31, 2021

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, 2021

$
168,254

$
22,519

$
468,633

$
(190,786
)

$
277,847

$
686,129

$
963,976

Comprehensive (loss) income

(2,098
)

—

(24,870
)

16,552

(8,318
)

29,344

21,026

Equity-based compensation expense

—

—

3,444

—

3,444

6,006

9,450

Distributions

—

—

(718
)

—

(718
)

(8,124
)

(8,842
)
Accretion of redeemable non-controlling interests

(271
)

—

271

—

271

—

271

Establishment of non-controlling interests

2,888

—

560

—

560

(3,448
)

(2,888
)
Balance at March 31, 2021

$
168,773

$
22,519

$
447,320

$
(174,234
)

$
273,086

$
709,907

$
982,993


	Three Months Ended September 30, 2021

																											Accumulated			Total Shareholders'
	Redeemable																				Additional						Other			Equity Attributable			Nonredeemable			Total
	Non-controlling			Redeemable		Members'		Class A Common Stock				Class X Common Stock					Class Y Common Stock				Paid-In			Accumulated			Comprehensive			to Endeavor Group			Non-controlling			Shareholders'/
	Interests			Equity		Capital		Shares		Amount		Shares			Amount		Shares		Amount		Capital			Deficit			Loss			Holdings, Inc.			Interests			Members' Equity

Balance at July 1, 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
Comprehensive (loss) income subsequent to Reorganization and IPO		(4,114	)		—		—		—		—		—			—		—		—		—			42,485			2,719			45,204			26,928			72,132
Equity-based compensation subsequent to Reorganization and IPO		—			—		—		—		—		—			—		—		—		55,174			—			—			55,174			5,048			60,222
Issuance of Class A common stock due to exchanges subsequent to Reorganization and IPO		—			—		—		545,951		—		(565,259	)		—		—		—		—			—			—			—			—			—
Issuance of Class A common stock due to vested RSUs subsequent to Reorganization and IPO		—			—		—		53,040		—		—			—		—		—		—			—			—			—			—			—
Distributions subsequent to Reorganization and IPO		—			—		—		—		—		—			—		—		—		95			—			—			95			(162	)		(67	)
Accretion of redeemable non-controlling interests subsequent to Reorganization and IPO		33,821			—		—		—		—		—			—		—		—		(33,821	)		—			—			(33,821	)		—			(33,821	)
Establishment of non-controlling interests subsequent to Reorganization and IPO		43			—		—		—		—		—			—		—		—		—			—			—			—			(43	)		(43	)
Non-controlling interests for sale of businesses		—			—		—		—		—		—			—		—		—		—			—			—			—			(2,868	)		(2,868	)
Equity reallocation between controlling and non-controlling interests		—			—		—		—		—		—			—		—		—		2,399			—			—			2,399			(2,399	)		—
Balance at September 30, 2021	$	208,890		$	—	$	—		261,970,674	$	2		187,515,124		$	1		238,154,296	$	2	$	1,580,638		$	(277,112	)	$	(95,811	)	$	1,207,720		$	838,072		$	2,045,792

See accompanying notes to consolidated financial statements

~~Table of Contents~~


	Nine Months Ended September 30, 2021

																													Accumulated			Total Shareholders'
	Redeemable																						Additional						Other			Equity Attributable			Nonredeemable			Total
	Non-controlling			Redeemable			Members'			Class A Common Stock				Class X Common Stock					Class Y Common Stock				Paid-In			Accumulated			Comprehensive			to Endeavor Group			Non-controlling			Shareholders'/
	Interests			Equity			Capital			Shares		Amount		Shares			Amount		Shares		Amount		Capital			Deficit			Loss			Holdings, Inc.			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	)
Effects 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		(5,808	)		—			—			—		—		—			—		—		—		—			(277,112	)		6,620			(270,492	)		(170,751	)		(441,243	)
Equity-based compensation expense subsequent to Reorganization and IPO		—			—			—			—		—		—			—		—		—		214,020			—			—			214,020			281,912			495,932
Issuance of Class A common stock due to exchanges subsequent to Reorganization and IPO		—			—			—			2,426,147		—		(2,416,590	)		—		—		—		—			—			—			—			—			—


Issuance of Class A common stock for vested RSUs subsequent to reorganization and IPO		—		—		—	1,557,587		—	—		—	—		—		—			—			—			—			—			—
Contributed capital subsequent to Reorganization and IPO		5,400		—		—	—		—	—		—	—		—		—			—			—			—			—			—
Distributions subsequent to Reorganization and IPO		—		—		—	—		—	—		—	—		—		—			—			—			—			(162	)		(162	)
Accretion of redeemable non-controlling interests subsequent to Reorganization and IPO		34,688		—		—	—		—	—		—	—		—		(34,688	)		—			—			(34,688	)		—			(34,688	)
Establishment of non-controlling interests subsequent to Reorganization and IPO		2,121		—		—	—		—	—		—	—		—		—			—			—			—			(2,121	)		(2,121	)
Non-controlling interests for sale of businesses		—		—		—	—		—	—		—	—		—		—			—			—			—			(2,868	)		(2,868	)
Equity reallocation between controlling and non-controlling interests		—		—		—	—		—	—		—	—		—		7,426			—			—			7,426			(7,426	)		—
Establishment of tax receivable agreements liability		—		—		—	—		—	—		—	—		—		(32,081	)		—			—			(32,081	)		—			(32,081	)
Balance at September 30, 2021	$	208,890	$	—	$	—	261,970,674	$	2	187,515,124	$	1	238,154,296	$	2	$	1,580,638		$	(277,112	)	$	(95,811	)	$	1,207,720		$	838,072		$	2,045,792

See accompanying notes to consolidated financial statements

ENDEAVOR GROUP HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three months ended March 31,						Nine Months Ended September 30,
	2022			2021			2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	517,666		$	2,376
Adjustments to reconcile net income to net cash used in operating activities:
Net income (loss)							$	547,348		$	(450,778	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		65,994			67,236			195,177			208,058
Amortization and write-off of original issue discount and deferred financing cost		5,099			7,139			16,986			33,887
Loss on extinguishment of debt								—			28,628
Amortization of content costs		9,848			10,730			18,535			319,844
Loss (gain) on sale/disposal and impairment of assets		1,108			(2,539	)
Gain on business divestiture		(478,641	)		0
Impairment charges								689			4,524
Gain on business divestitures and sale/disposal/impairment of assets								(507,560	)		(2,408	)
Equity-based compensation expense		50,856			16,491			159,851			464,393
Change in fair value of contingent liabilities		790			4,572			2,243			14,414
Change in fair value of equity investments with and without readily determinable fair value		(1,851	)		(5,205	)		(13,833	)		(12,134	)
Change in fair value of financial instruments		6,915			16,482			20,793			26,812
Equity losses of affiliates		20,655			15,471			145,026			77,167
Net provision for (benefit from) allowance for doubtful accounts		5,128			(352	)		12,173			(5,837	)
Net loss (gain) on foreign currency transactions		8,487			(2,966	)
Net loss on foreign currency transactions								28,353			6,156
Distributions from affiliates		2,009			1,202			5,205			3,881
Tax receivable agreements liability adjustment		53,497			0			61,497			—
Income taxes		(25,787	)		(4,782	)		(29,024	)		26,048
Other, net		(442	)		88			(869	)		(1,431	)
Changes in operating assets and liabilities - net of acquisitions and divestiture:
Changes in operating assets and liabilities - net of acquisitions and divestitures:
Increase in receivables		(157,050	)		(76,788	)		(299,431	)		(298,304	)
(Increase)/decrease in other current assets		(4,960	)		12,578
Increase in other current assets								(51,176	)		(48,510	)
Increase in other assets		(37,183	)		(189,401	)		(39,479	)		(699,667	)
Decrease in deferred costs		87,278			41,390			2,964			6,883
(Decrease)/increase in deferred revenue		(153,627	)		51,170			(43,626	)		228,995
Decrease in accounts payable and accrued liabilities		(92,547	)		(19,196	)
Increase/(decrease) in other liabilities		58,660			(16,526	)
Net cash used in operating activities		(58,098	)		(70,830	)
Increase in accounts payable and accrued liabilities								92,752			169,914
Increase in other liabilities								80,575			87,534
Net cash provided by operating activities								405,169			188,069
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired		(64,168	)		(425	)		(1,434,518	)		(258,493	)
Purchases of property and equipment		(21,840	)		(9,313	)		(94,757	)		(40,974	)
Proceeds from business divestiture, net of cash sold		649,706			0
Proceeds from business divestitures, net of cash sold								910,845			—
Proceeds from sale of assets		110			16,513			3,448			19,337
Investments in affiliates		(18,708	)		(954	)		(46,730	)		(139,733	)
Other, net		(361	)		1,789			663			11,233
Net cash provided by investing activities		544,739			7,610
Net cash used in investing activities								(661,049	)		(408,630	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings		7,037			132,982			10,033			319,948
Payments on borrowings		(21,528	)		(193,669	)		(324,017	)		(974,806	)
Contributions								—			5,400
Distributions		(351	)		(5,173	)		(26,283	)		(8,836	)
Redemption payments related to pre-IPO units		(7,067	)		(7,177	)		(7,765	)		(16,147	)
Proceeds from equity offering, net of underwriting discounts and offering expenses								—			1,886,643
Acquisition of non-controlling interests		4,600			(500	)		92,487			(835,039	)
Payments of contingent consideration related to acquisitions		(1,697	)		(1,778	)		(11,644	)		(2,136	)
Other, net		(137	)		(2,528	)		(982	)		(3,972	)
Net cash used in financing activities		(19,143	)		(77,843	)
Net cash (used in) provided by financing activities								(268,171	)		371,055
Change in cash, cash equivalents and restricted cash balances held for sale		28,736			0			25,952			(59,504	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		319			(1,171	)		(29,952	)		(2,593	)
Increase (decrease) in cash, cash equivalents and restricted cash		496,553			(142,234	)
(Decrease) increase in cash, cash equivalents and restricted cash								(528,051	)		88,397
Cash, cash equivalents and restricted cash at beginning of year		1,793,036			1,190,333			1,793,036			1,190,333
Cash, cash equivalents and restricted cash at end of period	$	2,289,589		$	1,048,099		$	1,264,985		$	1,278,730

See accompanying notes to consolidated financial statements

811

~~Table of Contents~~

ENDEAVOR GROUP HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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 sports and entertainment company.

Prior to the IPO, Endeavor was owned by WME Holdco, LLC (which is referred to as "Holdco" herein and iswas 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 closed on May 12, 2021.

Reorganization Transactions

Prior to the closing of the IPO, a series of reorganization transactions was completed. 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. Then, through a series of transactions, EOC acquired the equity interests of the minority unitholders of Zuffa, which owns and operates the Ultimate Fighting Championship. This resulted in EOC directly or indirectly owning 100% of the equity interests of Zuffa.

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 Annual Report on Form 10-K for the year ended December 31, 2021. Certain information and note disclosures normally included in the annual financial statements have been condensed or omitted from these interim financial statements. The interim consolidated financial statements as of ~~March 31,~~September 30, 2022 and for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 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.

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, 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, tax receivable agreements liability, 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.

912

~~Table of Contents~~

RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("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 were effective for public entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The adoption did not have a material effect on the Company’s financial position or results of operations.

Recently Issued Accounting Pronouncements

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 in the process of assessing the impact of this ASU on its consolidated financial statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method. This ASU clarifies the guidance in ASC 815 on fair value hedge accounting of interest rate risk for portfolios of financial assets, expanding the scope of this guidance to allow entities to apply the portfolio layer method to portfolios of all financial assets, including both prepayable and nonprepayable financial assets. The amendments in this update are effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption will not have a material effect on the Company’s financial position or results of operations.

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the accounting guidance on troubled debt restructurings (TDRs) for creditors in ASC 310-40 and amends the guidance on "vintage disclosures" to require disclosure of current-period gross write-offs by year of origination. The ASU also updates the requirements related to accounting for credit losses under ASC 326 and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. For entities that have already adopted ASU 2016-13, the amendments in this update are effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption will not have a material effect on the Company’s financial position or results of operations.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurements (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The amendments in this update are effective for public entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The adoption will not have a material effect on the Company’s financial position or results of operations.

In September 2022, the FASB issued ASU 2022-04, Liabilities–Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. This ASU enhances the transparency of supplier finance programs. The amendments in this update are effective for public entities for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption will not have a material effect on the Company’s financial position or results of operations.

ACQUISITIONS AND ~~DIVESTITURE~~DIVESTITURES

2022 ACQUISITIONS

Diamond Baseball Holdings, Madrid Open, Barrett-Jackson, and OpenBet

In January 2022, the Company acquired four additional Professional Development League clubs (the "PDL Clubs"), which ~~are~~were being operated under the Diamond Baseball Holdings ("DBH") umbrella. DBH ~~will support~~supported the PDL Clubs' commercial activities, content strategy and media rights. ~~The combined aggregate purchase price for~~For these four ~~acquisitions was~~additional PDL Clubs, the Company paid $64.2 million in cash.

In April 2022, the Company acquired the Mutua Madrid Open tennis tournament and additional assets ("Madrid Open"), including the Acciona Open de España golf tournament, from Super Slam Ltd and its affiliates. The Company paid $386.1 million for consideration and transfer fees at closing, an additional $31.8 million of consideration is payable within two years of closing, and $0.6 million of contingent consideration payable within three years of closing.

In August 2022, the Company acquired 55% of Barrett-Jackson Holdings, LLC ("Barrett-Jackson"), which is engaged in the business of collector car auctions and sales as well as other collector car related events and experiences, in exchange for consideration having an aggregate value of $256.9 million. The aggregate consideration consisted of $244.4 million of cash and 563,935 newly-issued shares of the Company's Class A common stock valued at $12.5million.

In September 2022, the Company acquired the OpenBet business ("OpenBet") of Light & Wonder, Inc. (formerly known as Scientific Games Corporation) ("Light & Wonder"). OpenBet consists of companies that provide products and services to sports betting operators for the purposes of sports wagering. The Company paid consideration to Light & Wonder of $847.1 million, consisting of $800.4 million of cash and 2,305,794 newly-issued shares of the Company's Class A common stock valued at $46.7 million.

The Company incurred $~~0.6~~31.6 million in transaction related costs in connection with these acquisitions. The costs were expensed as incurred and included in selling, general and administrative expenses in the consolidated statement of operations.

The goodwill for the PDL Clubs was assigned to the Owned Sports Properties segment and the goodwill for the Madrid Open, Barrett-Jackson, and OpenBet acquisitions 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 these four PDL Clubs is 18.7 ~~years.~~years and the intangibles acquired for Madrid Open are indefinite-lived. The intangibles acquired for Barrett-Jackson and OpenBet include both indefinite-lived intangibles and finite-lived intangibles with a weighted average life of 6.2 and 11.1 years, respectively.

The results of these four PDL Clubs, Madrid Open, Barrett-Jackson, and OpenBet have been included in the consolidated financial statements since the dates of acquisition. For the ~~three~~nine months ended ~~March 31,~~September 30, 2022, these four PDL ~~Clubs'~~Clubs, Madrid Open, Barrett-Jackson, and OpenBet's consolidated revenue and net ~~loss~~income included in the consolidated statement of operations from the acquisition dates were $~~0.2~~82.4 million and $~~1.0~~32.2 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):


	DBH			Madrid Open			Barrett-Jackson			OpenBet
Cash and cash equivalents	$	—		$	18,659		$	10,783		$	49,795
Accounts receivable		89			2,123			1,706			34,062
Deferred costs		—			1,124			—			12,276
Other current assets		491			470			1,386			12,653
Property and equipment		4,403			162			4,290			6,889
Right of use assets		7,270			—			9,054			8,401
Investments		—			—			—			1,100
Other assets		103			381			—			6,033
Intangible assets:
Trade names		—			—			120,900			70,000
Customer relationships		1,960			—			12,300			135,000
Internally developed software		—			—			1,300			155,000
Owned events		—			407,070			—			—
Other		35,410			—			—			14,500
Goodwill		25,585			15,385			328,854			468,192
Accounts payable and accrued expenses		(93	)		(1,609	)		(7,009	)		(13,784	)
Other current liabilities		(56	)		—			—			(14,517	)
Operating lease liability		(9,470	)		—			(4,458	)		(8,401	)
Deferred revenue		(1,455	)		(20,780	)		(667	)		(5,983	)
Debt		—			—			(11,439	)		—
Other liabilities		—			(4,474	)		—			(84,130	)
Redeemable non-controlling interests		—			—			(210,150	)		—
Net assets acquired	$	64,237		$	418,511		$	256,850		$	847,086

Except for DBH, the estimated fair values 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.

Other 2022 Acquisitions

In May 2022, the Company completed an acquisition for a total purchase price of $15.6 million in return for a 73.5% controlling interest. The Company paid $4.6 million in cash and issued 396,917 shares of EGH Class A common stock valued at $11.0 million. In September 2022, the Company completed another acquisition for a total purchase price of $3.9 million including contingent consideration with a fair value of $0.9 million. The Company recorded $13.8 million of goodwill and $4.2 million of intangible assets, of which the weighted average useful life ranges from 5 to 10 years. The goodwill for both acquisitions was assigned to the Events, Experiences & Rights segment and is partially deductible for tax purposes.

~~Table of Contents~~

Accounts receivable

$
89

Other current assets

491

Property and equipment

4,403

Right of use assets

7,270

Other assets

103

Intangible assets:

Customer relationships

1,960

Other

35,410

Goodwill

25,487

Accounts payable and accrued expenses

(93
)
Other current liabilities

(56
)
Operating lease liability

(9,470
)
Deferred revenue

(1,426
)
Net assets acquired

$
64,168

2022 ~~DIVESTITURE~~DIVESTITURES

Endeavor Content

In February 2021, the Company signed a new franchise agreement and side letter (the "Franchise Agreements") directly with the Writer’s Guild of America East and the Writer’s Guild of America West (collectively, the "WGA"). These Franchise Agreements included terms that, among other things, prohibited the Company from (a) negotiating packaging deals after June 30, 2022 and (b) having more than a 20% non-controlling ownership or other financial interest in, or being owned or affiliated with any individual or entity that has more than a 20% non-controlling ownership or other financial interest in, any entity or individual engaged in the production or distribution of works written by WGA members under a WGA collective bargaining agreement. As a result, in the third quarter of 2021, the Company began marketing the restricted Endeavor Content business for sale and such assets and liabilities were reflected as held for sale in the consolidated balance sheet as of December 31, 2021. The sale of 80% of the restricted Endeavor Content business closed in January 2022. The Company received cash proceeds of $666.3 million and divested $16.6 million of cash and restricted cash on the date of sale. The retained 20% interest of the restricted Endeavor Content business is reflected as an equity method investment as of ~~March 31,~~September 30, 2022 and was valued at $196.3 million at the date of sale. The fair value of the retained 20% interest of the restricted Endeavor Content business was determined using the market approach. The key input assumption was the transaction price paid for the Company's 80% interest in the restricted Endeavor Content business. The Company recorded a net gain of $463.6 million, inclusive of a $121.1 million gain related to the remeasurement of the retained interest in the restricted Endeavor Content business to fair value and $15.0 million of transaction costs, in other income (expense), net during the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The restricted Endeavor Content business was included in the Company’s Representation segment prior to the sale.

Diamond Baseball Holdings

In September 2022, the Company closed the sale of the ten PDL Clubs that operated under the DBH umbrella to Silver Lake, stockholders of the Company, for an aggregate purchase price of $280.1 million in cash. The Company recorded a net gain of $23.3 million in other income (expense), net during the nine months ended September 30, 2022. The business was included in the Company's Owned Sports Properties segment.

2022 HELD FOR SALE

In the second and third quarters of 2022, the Company began marketing two businesses for sale and due to the progression of the sale processes, determined that each met all of the criteria to be classified as held for sale as of September 30, 2022. The businesses are included in the Company's Events, Experiences & Rights reporting segment. The aggregate assets and liabilities of these businesses held for sale are $27.3 million and $4.9 million, respectively, which are not material to the Company’s overall financial position. Subsequent to September 30, 2022, the Company sold one of the held for sale businesses.

2021 ACQUISITIONS

FlightScope, Next College Student Athlete, and Mailman

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. In July 2021, the Company acquired 100% of the equity interests of Wishstar Enterprises Limited, the holding company of multiple entities (collectively, "Mailman"). Mailman is a digital sports agency and consultancy serving global sports properties. The combined aggregate purchase price for these three acquisitions was $290.8 million.

The Company incurred $4.6 million in transaction related costs in connection with these acquisitions. 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 and the goodwill for Mailman was assigned to the Representation and Events, Experiences & Rights segments. The goodwill is partially deductible for tax purposes. The weighted average life of finite-lived intangible assets acquired for FlightScope, NCSA, and Mailman is 4.4, 5.2, and 7.6 years, respectively.

Allocation of Purchase Price

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


	FlightScope			NCSA			Mailman
Cash and cash equivalents	$	1,042		$	3,655		$	16,598
Accounts receivable		475			5,619			11,292
Deferred costs		94			1,096			476
Other current assets		1,640			10,238			1,713
Property and equipment		1,089			2,804			585
Right of use assets		1,272			4,951			359
Investments		—			—			1,239
Other assets		1,056			5,472			2,085
Intangible assets:
Trade names		—			21,100			800
Customer relationships		2,700			10,000			12,400
Internally developed software		15,400			37,100			—
Goodwill		33,550			214,106			22,342
Accounts payable and accrued expenses		(806	)		(20,855	)		(16,255	)
Other current liabilities		(187	)		(10,318	)		(1,606	)
Debt		—			—			(4,338	)
Operating lease liability		(1,272	)		(4,951	)		(359	)
Deferred revenue		(631	)		(51,617	)		(972	)
Other liabilities		(4,334	)		(31,603	)		(3,485	)
Net assets acquired	$	51,088		$	196,797		$	42,874

5. SUPPLEMENTARY DATA

Accrued Liabilities

The following is a summary of accrued liabilities (in thousands):


	March 31,		December 31,		September 30,		December 31,
	2022		2021		2022		2021
Accrued operating expenses	$	286,576	$	302,024	$	244,453	$	302,024
Payroll, bonuses and benefits		113,938		162,688		247,102		162,688
Other		59,914		59,349		88,446		59,349
Total accrued liabilities	$	460,428	$	524,061	$	580,001	$	524,061

Allowance for Doubtful Accounts

The changes in the allowance for doubtful accounts are as follows (in thousands):

Balance at

Additions/Charged

Balance at

Beginning

(Credited) to Costs

Foreign

End of

of Year

and Expenses

Deductions

Exchange

Period

Allowance for doubtful accounts

��

Three Months Ended March 31, 2022

$
57,102

$
5,699

$
(571
)

$
(499
)

$
61,731


	Balance at		Additions/Charged											Balance at
	Beginning		to Costs and					Foreign			Assets Held			End of
	of Year		Expenses, Net		Deductions			Exchange			for Sale			Period
Nine Months Ended September 30, 2022	$	57,102	$	12,577	$	(203	)	$	(3,581	)	$	(200	)	$	65,695

1116

~~Table of Contents~~

Supplemental Cash Flow

The Company’s supplemental cash flow information is as follows (in thousands):


	Three months ended March 31,					Nine Months Ended September 30,
	2022		2021			2022		2021
Supplemental information:
Cash paid for interest	$	47,038	$	41,726		$	160,217	$	145,966
Cash payments for income taxes		7,751		7,709			33,309		27,185

Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	11,639	$	5,924		$	8,037	$	15,931
Contingent consideration provided in connection with acquisitions							1,500		4,472
Establishment and acquisition of non-controlling interests		0		2,888			414,985		3,087,301
Tax receivable agreements liability adjustments							819		32,081
Accretion of redeemable non-controlling interests		27,308		(271	)		83,849		34,417
Tax receivable agreements in connection with exchanges		681		0
Investment in affiliates retained from a business divestiture		196,345		0			202,220		—
Accrued redemption of units in other current liabilities		0		3,733
Deferred consideration in connection with acquisitions							31,770		—
Issuance of Class A common stock in connection with acquisitions							70,254		—

6. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The changes in the carrying value of goodwill are as follows (in thousands):


	Owned Sports Properties		Events, Experiences & Rights			Representation		Total			Owned Sports Properties			Events, Experiences & Rights			Representation			Total
Balance — December 31, 2021	$	2,741,048	$	1,266,144		$	499,362	$	4,506,554		$	2,741,048		$	1,266,144		$	499,362		$	4,506,554
Acquisitions		25,487		0			0		25,487			25,585			826,221			—			851,806
Divestiture												(91,960	)		—			—			(91,960	)
Impairment												—			(689	)		—			(689	)
Foreign currency translation and other		142		(1,488	)		33		(1,313	)		(635	)		(13,830	)		(1,278	)		(15,743	)
Balance — March 31, 2022	$	2,766,677	$	1,264,656		$	499,395	$	4,530,728
Assets held for sale												—			(11,997	)		—			(11,997	)
Balance — September 30, 2022											$	2,674,038		$	2,065,849		$	498,084		$	5,237,971

Intangible Assets

The following table summarizes information relating to the Company’s identifiable intangible assets as of ~~March 31,~~September 30, 2022 (in thousands):


	Weighted Average Estimated Useful Life (in years)		Gross Amount		Accumulated Amortization			Carrying Value		Weighted Average Estimated Useful Life (in years)		Gross Amount		Accumulated Amortization			Carrying Value
Amortized:
Trade names		17.3	$	990,126	$	(305,384	)	$	684,742		17.1	$	1,045,525	$	(329,005	)	$	716,520
Customer and client relationships		6.5		1,337,226		(1,023,960	)		313,266		6.9		1,448,375		(1,045,532	)		402,843
Internally developed technology		3.4		121,173		(73,612	)		47,561		6.0		279,176		(83,400	)		195,776
Other		15.3		177,947		(46,131	)		131,816		4.3		45,188		(44,180	)		1,008
			$	2,626,472	$	(1,449,087	)	$	1,177,385			$	2,818,264	$	(1,502,117	)	$	1,316,147
Indefinite-lived:
Trade names			$	336,437	$	—		$	336,437			$	438,369	$	—		$	438,369
Owned events				87,655		—			87,655				431,154		—			431,154
Other													14,000		—			14,000
Total intangible assets			$	3,050,564	$	(1,449,087	)	$	1,601,477			$	3,701,787	$	(1,502,117	)	$	2,199,670

1217

~~Table of Contents~~

The following table summarizes information relating to the Company’s identifiable intangible assets as of December 31, 2021 (in thousands):


	Weighted Average Estimated Useful Life (in years)		Gross Amount		Accumulated Amortization			Carrying Value
Amortized:
Trade names		17.3	$	991,021	$	(291,326	)	$	699,695
Customer and client relationships		6.7		1,344,783		(1,012,509	)		332,274
Internally developed technology		3.9		120,175		(66,939	)		53,236
Other		14.3		142,657		(44,608	)		98,049
			$	2,598,636	$	(1,415,382	)	$	1,183,254
Indefinite-lived:
Trade names			$	340,029	$	—		$	340,029
Owned events				88,401		—			88,401
Total intangible assets			$	3,027,066	$	(1,415,382	)	$	1,611,684

Intangible asset amortization expense was $~~42.9~~39.1 million and $~~45.7~~48.6 million for the three months ended ~~March 31,~~September 30, 2022 and 2021, ~~respectively.~~respectively, and $123.4 million and $141.0 million for the nine months ended September 30, 2022 and 2021, respectively.

7. INVESTMENTS

The following is a summary of the Company’s investments (in thousands):


	March 31,		December 31,		September 30,		December 31,
	2022		2021		2022		2021
Equity method investments	$	373,417	$	196,423	$	281,385	$	196,423
Equity investments without readily determinable fair values		118,379		101,124		125,744		101,124
Equity investments with readily determinable fair values		925		665		306		665
Total investments	$	492,721	$	298,212	$	407,435	$	298,212

Equity Method Investments

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company held various investments in non-marketable equity instruments of private companies. As of ~~March 31,~~September 30, 2022, the Company’s equity method investments are primarily comprised of the restricted Endeavor Content business ~~Learfield IMG College,~~ (now called Fifth Season) and Sports News Television Limited. The Company’s ownership of its equity method investments ~~ranges~~ranged from 206% to 50% as of ~~March 31,~~September 30, 2022.

In January 2022, in connection with the Company's sale of 80% of the restricted Endeavor Content business, the Company retained 20% ownership in the restricted Endeavor Content business. The investment is accounted for as an equity method investment. The Company’s share of the net loss of Fifth Season for the three and nine months ended September 30, 2022 was $4.4 million and $9.5 million, respectively, and is recognized within equity losses of affiliates in the consolidated statements of operations.

As of ~~March 31,~~September 30, 2022, the Company’s ownership in Learfield IMG College was approximately 42%. The Company’s share of the net loss of Learfield IMG College for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 was $~~21.5~~78.7 million, $137.5 million, $14.8 million and $~~18.8~~76.3 million, respectively, and is recognized within equity losses of affiliates in the consolidated statements of operations.

~~In January 2022, in connection with the~~ The Company's ~~sale of~~ 80% of the restricted Endeavor Content business, the Company retained 20% ownership in the restricted Endeavor Content business. The investment is accounted for as an equity method investment. The Company’s share of the ~~net loss~~ results of ~~the restricted Endeavor Content~~ ~~business~~Learfield IMG College for the three and nine months ended ~~March 31,~~September 30, 2022 ~~was~~included a $~~2.9~~56.1 million charge as a result of its annual goodwill and ~~is recognized within equity losses of affiliates in the consolidated statement of operations.~~indefinite lived intangibles asset impairment test, primarily due to continued losses.

Equity Investments without Readily Determinable Fair Values

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company held various investments in non-marketable equity instruments of private companies.

~~For the three months ended March 31, 2022 and 2021, the~~The Company performed its assessment on its investments without readily determinable fair values and recorded an increase in fair value of $~~1.9~~0.5 million and $~~NaN~~0.9, million for the three months ended September 30, 2022 and 2021, respectively, and $14.5 million and $0.9 million for the nine months ended September 30, 2022 and 2021, respectively, in other income (expense), net in the consolidated statements of operations. The ~~increase was~~net increases were due to observable price ~~changes. No investments were sold during the three months ended March 31, 2022.~~changes partially offset by impairments. For the three and nine months ended ~~March 31,~~September 30, 2022 and the nine months ended September 30, 2021, the Company sold investments for net proceeds of $~~4.8~~3.0 million, $3.3 million and ~~recorded~~$4.8 million, respectively, and a related ~~gains~~gain of $3.0 million, $3.3 million and $2.6 ~~million.~~million, respectively. For the three months ended September 30, 2021, the Company sold no investments.

Equity Investments with Readily Determinable Fair Values

As of ~~March 31,~~September 30, 2022, the Company had three investments in publicly traded companies. During the three and nine months ended ~~March 31,~~September 30, 2022, , the Company did not sell any investments in publicly traded companies. ~~During the three months ended March 31, 2021, the Company sold two investments in publicly traded companies for total net proceeds of $11.5~~ ~~million.~~ As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company’s equity investments with readily determinable fair values were valued at $0.3 $~~0.9~~million and $0.7 million, respectively. For the three and nine months ended ~~March 31,~~September 30, 2022, ~~and 2021,~~ the Company recorded ~~(losses) gains~~$(0.3) million and $(0.9) million, respectively, due to the change in fair value in other income (expense), net in the consolidated statements of operations. For the three and nine months ended September 30, 2021, the company recorded $(~~0.2~~0.1) million and $~~5.2~~5.1 million, respectively, due to the change in fair value in other income (expense), net in the consolidated statements of operations. See Note 9 for additional information

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regarding fair value measurements for these equity investments. ~~The Company recorded~~ 0 ~~gains or losses on disposals/sales for the three months ended March 31, 2022 and 2021.~~

8. FINANCIAL INSTRUMENTS

The Company enters into forward foreign exchange contracts that economically hedge certain of its foreign currency risks, although hedge accounting does not apply or the Company elects not to apply hedge accounting. In addition, the Company enters into interest rate swaps to hedge certain of its interest rate risks on its debt. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions. Prior to the sale of the restricted Endeavor Content business, the Company also entered into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses denominated in various foreign currencies (i.e., cash flow hedges).

As of ~~March 31,~~September 30, 2022, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 12 months from ~~March 31, 2022)~~September 30, 2022, with the exception of four contracts which mature within 18 months from such date) (in thousands except for exchange rates):

Foreign Currency

Foreign
Currency
Amount

US Dollar
Amount

Weighted Average
Exchange Rate Per
$1 USD
British Pound Sterling

£ 21,066

in exchange for

$
28,499

£ 0.74


Foreign Currency	Foreign Currency Amount		US Dollar Amount	Weighted Average Exchange Rate Per $1 USD
British Pound Sterling	£ 61,992	in exchange for	$77,648	£ 0.80
Euro	€9,907	in exchange for	$10,100	€0.98
Singapore Dollar	S$2,400	in exchange for	$1,754	S$ 1.37

For forward foreign exchange contracts designated as cash flow hedges, the Company recognized net gains (losses) in accumulated other comprehensive income (loss) of $~~0.3~~none ~~million~~ and $(~~1.4~~0.6) million for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and $0.3 million and $(0.4) million for the nine months ended September 30, 2022 and 2021, respectively. The Company reclassified a $0.8 million gain into net income for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 in connection with the sale of the restricted Endeavor Content business and is included in the gain as described in Note 4. The Company did not reclassify any gains or losses into net income (loss) for the three months ended ~~March 31,~~September 30, 2022. The Company reclassified a $1.5 million gain into net income (loss) for the three and nine months ended September 30, 2021.

For forward foreign exchange contracts not designated as cash flow hedges, the Company recorded a net loss of $~~1.3~~4.3 million and net gain of $~~0.2~~0.6 million for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and a net loss of $7.4 million and net gain of $1.4 million for the nine months ended September 30, 2022 and 2021, respectively, in other income (expense), net in the consolidated statements of operations.

In certain circumstances, the Company enters into contracts that are settled in currencies other than the functional or local currencies of the contracting parties. Accordingly, these contracts consist of the underlying operational contract and an embedded foreign currency derivative element. Hedge accounting is not applied to the embedded foreign currency derivative element. The Company recorded a net ~~gain (loss)~~loss of $~~0.5~~7.7 million and $($~~11.4~~1.2) million for the three months ended ~~March 31,~~September 30, 2022 and 2021, respectively, and $8.8 million and $10.4 million for the nine months ended September 30, 2022 and 2021, respectively, in other income (expense), net in the consolidated statements of operations.

In addition, the Company has entered into interest rate swaps for ~~portions~~$1.5 billion of its 2014 Credit Facilities and other variable interest bearing debt and has designated them cash flow hedges. The LIBOR portion of the facility from these interest rate swaps has been fixed at a coupon of 2.12% commencing from June 2019 until June 2024. In August 2022, the Company entered into additional interest rate hedges to swap additional $750 million of its 2014 Credit Facilities from floating interest expense to fixed. The LIBOR portion of the facility from these interest rate swaps has been fixed at a coupon of 3.162% until August 2024. Hedge accounting is applied to these additional interest rate swaps, similar to the pre-existing interest rate swaps. For the three months ended ~~March 31,~~September 30, 2022 and 2021, the Company recorded gains (losses) of $45.1 million and $(0.1) million in accumulated other comprehensive income (loss) and reclassified losses of none and $7.7 million into net income (loss), respectively. For the nine months ended September 30, 2022 and 2021, the Company recorded gains of $~~47.7~~107.3 million and $~~15.1~~13.2 million in accumulated other comprehensive income (loss) and reclassified losses of $~~7.3~~12.4 million and $~~7.4~~22.6 million into net income ~~respectively.~~(loss).

9. FAIR VALUE MEASUREMENTS

The fair value hierarchy is composed of the following three categories:

Level 1—Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3—Inputs to the valuation methodology are unobservable and significant to the fair value measurements.

The following tables present, for each of the fair value hierarchy levels, the Company’s assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	Fair Value Measurements as of								Fair Value Measurements as of
	March 31, 2022								September 30, 2022
	Level I		Level II		Level III		Total		Level I		Level II		Level III		Total
Assets:
Investments in equity securities with readily determinable fair values	$	925	$	—	$	—	$	925	$	306	$	—	$	—	$	306
Interest rate swaps		—		8,846		—		8,846		—		71,497		—		71,497
Forward foreign exchange contracts		—		2,423		—		2,423		—		2,412		—	$	2,412
Total	$	925	$	11,269	$	—	$	12,194	$	306	$	73,909	$	—	$	74,215
Liabilities:
Contingent consideration	$	—	$	—	$	25,957	$	25,957	$	—	$	—	$	4,377	$	4,377
Interest rate swaps		—		2,130		—		2,130
Forward foreign exchange contracts		—		12,408		—		12,408		—		20,803		—		20,803
Total	$	—	$	14,538	$	25,957	$	40,495	$	—	$	20,803	$	4,377	$	25,180

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	Fair Value Measurements as of
	December 31, 2021
	Level I		Level II		Level III		Total
Assets:
Investments in equity securities with readily determinable fair values	$	665	$	—	$	—	$	665
Forward foreign exchange contracts		—		2,529		—		2,529
Total	$	665	$	2,529	$	—	$	3,194
Liabilities:
Contingent consideration	$	—	$	—	$	26,900	$	26,900
Interest rate swaps		—		48,427		—		48,427
Forward foreign exchange contracts		—		13,363		—		13,363
Total	$	—	$	61,790	$	26,900	$	88,690

There have been 0no transfers of assets or liabilities between the fair value measurement classifications during the three and nine months ended ~~March 31,~~September 30, 2022.

Investments in Equity Securities with Readily Determinable Fair Values

The estimated fair value of the Company’s equity securities with readily determinable fair values is based on observable inputs in an active market, which is a Level 1 measurement within the fair value hierarchy.

Contingent Consideration

The Company has recorded contingent consideration liabilities in connection with its acquisitions. Contingent consideration is included in current liabilities and other long-term liabilities in the consolidated balance sheets. Changes in fair value are recognized in selling, general and administrative expenses. The estimated fair value of the contingent consideration is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

The changes in the fair value of contingent consideration were as follows (in thousands):


	Three Months Ended March 31,
	2022			Nine Months Ended September 30, 2022
Balance at December 31, 2021	$	26,900		$	26,900
Acquisitions					1,500
Payments		(1,733	)		(26,183	)
Change in fair value		790			2,243
Balance at March 31, 2022	$	25,957
Foreign currency translation					(83	)
Balance at September 30, 2022				$	4,377

Payments made during the nine months ended September 30, 2022 primarily related to the settlement of the premium contingent consideration with 32 Equity LLC ("32 Equity"). See Note 11.

Foreign Currency Derivatives

The Company classifies its foreign currency derivatives within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (Note 8). As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had $~~0.4~~2.1 million and $2.3 million in other current assets, ~~NaN~~none and $0.2 million in assets held for sale, $~~2.0~~0.3 million and ~~NaN~~none in other assets, $~~5.8~~11.6 million and $4.5 million in other current liabilities, ~~NaN~~none and $0.4 million in liabilities held for sale, and $~~6.6~~9.2 million and $8.5 million in other long-term liabilities, respectively, recorded in the consolidated balance sheets related to the Company’s foreign currency derivatives.

Interest Rate Swaps

The Company classifies its interest rate swaps within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (Note 8). As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had $~~8.8~~71.5 million and ~~NaN~~none in other assets and

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~~and $~~none~~2.1~~ ~~million~~ and $48.4 million in other long-term liabilities, respectively, recorded in the consolidated balance sheets related to the Company’s interest rate swaps.

10. DEBT

The following is a summary of outstanding debt (in thousands):


	March 31,			December 31,			September 30,			December 31,
	2022			2021			2022			2021
2014 Credit Facilities:
First Lien Term Loan (due May 2025)	$	2,778,515		$	2,786,048		$	2,513,449		$	2,786,048
Zuffa Credit Facilities:
Zuffa First Lien Term Loan (due April 2026)		2,833,017			2,840,767			2,817,517			2,840,767
Other debt (2.86%-14.50% Notes due at various dates through 2031)		159,828			159,010
Other debt (3.25%-14.50% Notes due at various dates through 2031)								152,417			159,010
Total principal	$	5,771,360		$	5,785,825		$	5,483,383		$	5,785,825
Unamortized discount		(24,081	)		(26,077	)		(19,645	)		(26,077	)
Unamortized issuance costs		(43,201	)		(46,012	)		(36,335	)		(46,012	)
Total debt	$	5,704,078		$	5,713,736		$	5,427,403		$	5,713,736
Less: current portion		(82,649	)		(82,022	)		(89,039	)		(82,022	)
Total long-term debt	$	5,621,429		$	5,631,714		$	5,338,364		$	5,631,714

2014 Credit Facilities

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had $2.5 billion and $2.8 billion, respectively, outstanding under a credit agreement that was entered into in connection with the 2014 IMG acquisition (the "2014 Credit Facilities"). The 2014 Credit Facilities consist of a first lien secured term loan (the “First Lien Term Loan”) and a $200.0 million secured revolving credit facility (the "Revolving Credit Facility"). In September 2022, we repaid $250.0 million of term loans under the 2014 Credit Facilities.

The financial debt covenant of the 2014 Credit Facilities did not apply as of ~~March 31,~~September 30, 2022 and December 31, 2021 as the Company had no borrowings outstanding under the Revolving Credit Facility.

The Company had outstanding letters of credit under the 2014 Credit Facilities totaling $~~19.6~~19.3 million and $23.8 million as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

Zuffa Credit Facilities

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company has $2.8 billion outstanding under a credit agreement that was entered into in connection with the 2016 Zuffa acquisition (the "Zuffa Credit Facilities"). The Zuffa Credit Facilities consist of a first lien secured term loan (the "Zuffa First Lien Term Loan") and a secured revolving credit facility in an aggregate principal amount of $205.0 million, letters of credit in an aggregate face amount not in excess of $40.0 million and swingline loans in an aggregate principal amount not in excess of $15.0 million (collectively, the "Zuffa Revolving Credit Facility"). The Zuffa Credit Facilities are secured by liens on substantially all of the assets of Zuffa.

The financial debt covenants of the Zuffa Credit Facilities did not apply as of ~~March 31,~~September 30, 2022 and December 31, 2021 as Zuffa had 0no borrowings outstanding under the Zuffa Revolving Credit Facility.

Under the Zuffa Credit Facilities, Zuffa had $10.0 million and 0no outstanding letters of credit as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

Other Debt

On Location Revolver

The On Location ("OL") revolving credit agreement contains a financial covenant that requires OL to maintain a First Lien Leverage Ratio of Consolidated First Lien Debt to Consolidated EBITDA, as defined in the credit agreement, of no more than 3-to-1. The Company is only required to meet the First Lien Leverage Ratio if the sum of outstanding borrowings on the Revolving Credit Facility plus outstanding letters of credit exceeding $2.0 million that are not cash collateralized exceeds 40forty percent of the total Revolving Commitments as measured on a quarterly basis, as defined in the credit agreement. As of ~~March~~September 30, 2022 and December 31, ~~2022,~~2021, the Company was in compliance with the financial debt covenants.

OL had 0no letters of credit outstanding under the revolving credit agreement as of ~~March 31,~~September 30, 2022 and December 31, 2021.

Receivables Purchase Agreement

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the debt outstanding under these arrangements was $~~46.2~~28.2 million and $50.5 million, respectively.

Zuffa Secured Commercial Loans

As of ~~March 31,~~September 30, 2022 and December 31, 2021, Zuffa was in compliance with its financial debt covenant under the Zuffa Secured Commercial Loans.

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2014 Credit Facilities and Zuffa Credit Facilities

The 2014 Credit Facilities and the Zuffa Credit Facilities restrict the ability of certain subsidiaries of the Company to make distributions and other payments to the Company. These restrictions do include exceptions for, among other things, (1) amounts necessary to make tax payments, (2) a limited annual amount for employee equity repurchases, (3) distributions required to fund certain parent entities, (4) other specific allowable situations and (5) a general restricted payment basket. As of ~~March 31,~~September 30, 2022, EGH held cash of $40.7 million, long-term deferred tax benefits of $~~122.6~~132.9 million in other assets and a tax receivable agreements liability of $~~191.2~~200.0 million, of which $41.2 million is in other current liabilities and $~~149.9~~158.8 million is in other long-term liabilities. As of December 31, 2021, EGH held long-term deferred tax benefits of $61.5 million in other assets and a tax receivable agreements liability of $133.8 million, of which $41.2 million is in other current liabilities and $92.6 million is in other long-term liabilities. Otherwise, EGH has no material separate cash flows, assets or liabilities other than the investments in its subsidiaries. All its business operations are conducted through its operating subsidiaries; it has no material independent operations. EGH has no other material commitments or guarantees. As a result of the restrictions described above, substantially all of the subsidiaries’ net assets are effectively restricted in their ability to be transferred to EGH as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company’s First Lien Term Loan under the 2014 Credit Facilities and Zuffa’s First Lien Term Loan under its Credit Facilities had an estimated fair value of $~~5.5~~5.1 billion and $5.6 billion, respectively. The estimated fair values of the Company’s First Lien Term Loan under the 2014 Credit Facilities and Zuffa’s First Lien Term Loan under its Credit Facilities are based on quoted market values for the debt. Since the First Lien Term Loan under the 2014 Credit Facilities and Zuffa’s First Lien Term Loan under its Credit Facilities do not trade on a daily basis in an active market, fair value estimates are based on market observable inputs based on quoted market prices and borrowing rates currently available for debt with similar terms and average maturities, which are classified as Level 2 under the fair value hierarchy.

11. REDEEMABLE NON-CONTROLLING INTERESTS

On Location

In connection with the acquisition of OL in 2020, the Company entered into an Amended and Restated Limited Liability Company Agreement ("OL LLC Agreement") of Endeavor OLE Parent, LLC ("OLE Parent") with 32 ~~Equity LLC ("32 Equity").~~Equity. The terms of the agreement ~~provide~~provided 32 Equity with certain rights to put its common units in OLE Parent to the Company upon a termination of the Commercial License Agreement ("CLA") or at its option at any time following the Lockup Period as defined. The Company also ~~has~~had certain call rights to require 32 Equity to sell its common units in OLE Parent to the Company upon a termination of the CLA in the event the aforementioned put rights ~~are~~were not exercised. The put/call price iswas an amount equal to fair market value and the exercise of these put/call rights ~~may give~~would have given rise to an obligation of the Company to make a premium payment to 32 Equity in certain circumstances. ~~At any time following the Lockup Period, 32 Equity will be entitled to a $41.0~~ million premium payment from the Company if both (i) 32 Equity or the Company exercise the put/call rights described above or there is a sale or IPO of OLE Parent and (ii) certain performance metrics based on average OL gross profit or NFL related business gross profit are achieved. The $~~41.0~~ million premium payment will also be payable if, prior to January 2, 2026, a sale or IPO of OLE Parent occurs or if 32 Equity exercises its put rights following a termination of the CLA due to an OL event of default (in which case the $~~41.0~~ ~~million premium payment may be subject to proration). The $41.0~~ ~~million~~ premium payment was recognized as a separate unit of account from the non-controlling interest. ~~The non-controlling interest was recognized at acquisition based on fair value of $65.2~~ million. During the three months ended March 31, 2021, the redeemable non-controlling interest was adjusted for certain net assets that were contributed during the period. In June 2021, the Company and 32 Equity agreed to fund a combined $~~40.0~~ ~~million to OL. This amount was funded via a pro-rata capital contribution from the Company and 32 Equity of $34.6~~ ~~million and $5.4~~ ~~million, respectively. No further capital contributions are contracted for future periods.~~ As of ~~March 31, 2022 and~~ December 31, 2021, the estimated redemption value of the non-controlling interest was $~~69.3~~ ~~million and~~ $57.9 million.

In April 2022, a series of transactions was completed between the Company and 32 Equity. Per the terms of the OL LLC Agreement, 32 Equity had the right to purchase additional common units in OLE Parent from the Company that would result in 32 Equity having an aggregate ownership percentage interest in OLE Parent of 32% at a price per unit equal to the original acquisition price of its rollover equity. 32 Equity exercised such right and paid the Company cash of $87.9 million. Following this exercise, EOC issued 8,037,483 EOC common units (and 32 Equity obtained an equal number of paired shares of the Company's Class X common stock) in exchange for 32 Equity's non-controlling interests of OLE Parent. The aggregate value of the shares was $223.7million ~~respectively. See Note 18~~based on the volume-weighted average trading price of the Class A common stock for ~~related~~thirty days ending on the day before the close. The Company and 32 Equity also agreed to settle the premium contingent consideration resulting in the Company paying 32 Equity $24.0 million in cash (Note 9). In addition, the Company issued 495,783 shares of Class A common stock to several employees of the Company in exchange for the employees' direct or indirect interests in OLE Parent based on the same valuation. As a result of these transactions, ~~that closed subsequent to March 31, 2022.~~OLE Parent became an indirect wholly-owned subsidiary of EOC.

China

In June 2016, the Company received a contribution of $75.0 million from third parties in a newly formed subsidiary of the Company that was formed to expand the Company’s existing business in ~~China.~~China ("Endeavor China"). This contribution gave the non-controlling interests holders approximately 34% ownership of the subsidiary. The holders of the non-controlling interests ~~have~~had the right to put their investment to the Company at any time after June 1, 2023 for fair market value. As of ~~March 31, 2022 and~~ December 31, 2021, the estimated redemption value was $~~119.5~~107.5 million.

In April 2022, the Company issued 5,693,774 shares of Class A common stock in exchange for the non-controlling partnership interests of Endeavor China. The aggregate value of the shares was $158.5 million based on the volume-weighted average trading price of the Class A common stock for thirty days ending on the day before the close. In addition, EOC issued 659,896 common units in EOC to several employees of the Company, including members of management (and such employees obtained an equal number of paired shares of the Company's Class X common stock), in exchange for the employees' direct or indirect interests in Endeavor China based on the same valuation. As a result of these transactions, Endeavor China became an indirect wholly-owned subsidiary of EOC.

Barrett-Jackson

In connection with the acquisition of Barrett-Jackson in August 2022 (Note 4), the terms of the agreement provide the sellers a put option to sell their remaining ownership to IMG Auction Company, LLC, a subsidiary of the Company. The first election is between April and July 2029 for 29.9% of the total issued and outstanding units of Barrett-Jackson at that time and the second election is between April and July 2031 for any remaining ownership at that time. The purchase price of the put right is equal to Barrett-Jackson's EBITDA, as defined, multiplied by 13. This redeemable non-controlling interest was recognized at the acquisition date at fair value of $~~107.5~~210.1 ~~million, respectively. See Note 18 for related transactions that closed subsequent to March 31, 2022.~~million.

Zuffa

In July 2018, the Company received a contribution of $9.7 million from third parties (the "Russia Co-Investors") in a newly formed subsidiary of the Company (the "Russia Subsidiary") that was formed to expand the Company’s existing business in Russia and certain other countries in the Commonwealth of Independent States. The terms of this contribution provide the Russia Co-Investors with a put option to sell their ownership in the Russia Subsidiary five years and nine months after the consummation of the contribution. The purchase price of the put option is the greater of the total investment amount, defined as the Russia Co-Investors’ cash contributions less cash distributions, or fair value. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the estimated redemption value was $9.7 million.

Frieze

In connection with the acquisition of Frieze in 2016, the terms of the agreement provide the sellers with a put option to sell their remaining ~~30%~~30% interest after fiscal year 2020. The Company also has a call option to buy the remaining ~~30%~~30% interest after fiscal year 2020 or

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upon termination of employment of the sellers who continued to be employees of Frieze after the acquisition. The price of the put and call option is equal to Frieze’s prior year’s EBITDA multiplied by 7.5. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the estimated redemption value was below the carrying value of $~~23.2~~23.5 million and $23.8 million, respectively.

12. EARNINGS PER SHARE

~~Basic earnings~~Earnings per share is calculated utilizing net income available to common stockholders of the Company divided by the weighted average number of shares of Class A Common Stock outstanding during the ~~same~~ period. Diluted EPS is calculated by dividing the net income available for common stockholders by the diluted weighted average shares outstanding for that period.

The computation of basic and diluted earnings per share and weighted average shares of the Company’s common stock outstanding for the ~~period~~periods presented below:

Three Months Ended March 31, 2022

Basic earnings per share

Numerator

Consolidated net income

$
517,666

Net income attributable to NCI (Endeavor Operating Company)

170,943

Net income attributable to NCI (Endeavor Manager Units)

27,177

Net income attributable to EGH common shareholders

$
319,546

Denominator

Weighted average Class A Common Shares outstanding - Basic

268,489,176

Basic earnings per share

$
1.19


	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		May 1, 2021 - September 30, 2021

Basic (loss) earnings per share
Numerator
Consolidated net (loss) income	$	(12,538	)	$	63,613	$	547,348	$	(457,841	)
Net (loss) income attributable to NCI (Endeavor Operating Company)		(1,879	)		17,177		183,353		(154,395	)
Net (loss) income attributable to NCI (Endeavor Manager Units)		(620	)		3,951		28,682		(26,334	)
Net (loss) income attributable to the Company		(10,039	)		42,485		335,313		(277,112	)
Adjustment to net (loss) income attributable to the Company		—			—		4,348		(1,399	)
Net (loss) income attributable to EGH common shareholders	$	(10,039	)	$	42,485	$	339,661	$	(278,511	)
Denominator
Weighted average Class A Common Shares outstanding - Basic		285,870,317			262,891,070		278,724,574		261,048,116
Basic (loss) earnings per share	$	(0.04	)	$	0.16	$	1.22	$	(1.07	)

Three Months Ended March 31, 2022

Diluted earnings per share

Numerator

Consolidated net income

$
517,666

Net income attributable to NCI (Endeavor Operating Company)

5,407

Net income attributable to EGH common shareholders

$
512,259

Denominator

Weighted average Class A Common Shares outstanding - Basic

268,489,176

Additional shares assuming exchange of all Endeavor Profits Units

4,219,455

Additional shares from RSUs, Stock Options and Phantom Units, as calculated using the
treasury stock method

2,863,781

Additional shares assuming exchange of all Endeavor Operating Units and Endeavor Manager Units

167,466,205

Weighted average number of shares used in computing diluted earnings per share

443,038,617

Diluted earnings per share

$
1.16


~~Securities that are anti-dilutive for the three months ended March 31, 2022~~
~~Stock Options~~			~~2,512,767~~
~~Unvested RSUs~~			~~1,268,888~~


	Three Months Ended September 30, 2022			Three Months Ended September 30, 2021			Nine Months Ended September 30, 2022			May 1, 2021 - September 30, 2021

Diluted (loss) earnings per share
Numerator
Consolidated net (loss) income	$	(12,538	)	$	63,613		$	547,348		$	(457,841	)
Net (loss) income attributable to NCI (Endeavor Operating Company)		(1,879	)		(5,507	)		8,645			(154,395	)
Net loss attributable to NCI (Endeavor Manager Units)		(620	)		—			—			(26,334	)
Net (loss) income attributable to the Company		(10,039	)		69,120			538,703			(277,112	)
Adjustment to net (loss) income attributable to the Company		(1,422	)		—			(1,803	)		(1,399	)
Net (loss) income attributable to EGH common shareholders	$	(11,461	)	$	69,120		$	536,900		$	(278,511	)

Denominator
Weighted average Class A Common Shares outstanding - Basic		285,870,317			262,891,070			278,724,574			261,048,116
Additional shares assuming exchange of all Endeavor Profits Units		—			3,569,639			1,884,386			—
Additional shares from RSUs, Stock Options and Phantom Units, as calculated using the treasury stock method		—			202,490			1,875,609			—
Additional shares assuming exchange of all Endeavor Operating Units and Endeavor Manager Units		—			169,259,312			167,046,923			—
Additional shares assuming redemption of redeemable non-controlling interests		3,936,316			—			1,226,569			—
Weighted average number of shares used in computing diluted (loss) earnings per share		289,806,633			435,922,511			450,758,061			261,048,116

Diluted (loss) earnings per share	$	(0.04	)	$	0.16		$	1.19		$	(1.07	)


	Three Months Ended September 30, 2022		Three Months Ended September 30, 2021		Nine Months Ended September 30, 2022		May 1, 2021 - September 30, 2021
Securities that are anti-dilutive for the period
Stock Options		4,131,574		2,654,007		2,512,767		3,217,374
Unvested RSUs		6,925,143		7,125,939		1,261,040		7,576,141
Manager LLC Units		24,524,798		—		—		25,340,263
EOC Common Units		143,438,952		—		—		143,087,739
EOC Profits Interest & Phantom Units		15,777,736		—		—		16,238,545

13. INCOME TAXES

EGH was incorporated as a Delaware corporation in January 2019. It was formed as a holding company for the purpose of completing an IPO and other related transactions. As the sole managing member of Endeavor Manager, which is the sole managing member of EOC, EGH operates and controls all the business and affairs of EOC, and through EOC and its subsidiaries, conducts the Company’s business. EGH is subject to corporate income tax on its share of taxable income or loss of EOC derived through Endeavor Manager. EOC is treated as a partnership for U.S. federal income tax purposes and is therefore not subject to U.S. corporate income tax. However, certain of EOC’s subsidiaries are subject to U.S. or foreign corporate income tax.

In accordance with ASC Topic 740, each interim period is considered integral to the annual period and tax expense is generally determined using an estimate of the annual effective income tax rate ("AETR"). The Company would record income tax expense each quarter using the estimated AETR to provide for income taxes on a current year-to-date basis, adjusted for discrete items, if any, that are noted in the relevant period. In accordance with the authoritative guidance for accounting for income taxes in interim periods, the Company computed its income tax provision for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 based upon the AETR.

1824

~~Table~~

The provision for (benefit from) income taxes for the three months ended September 30, 2022 and 2021 is $8.5 million and $(7.7) million, respectively, based on pretax income of ~~Contents~~$

80.5 million and $73.8 million, respectively. The effective tax rate is 10.6% and (10.5%) for the three months ended September 30, 2022 and 2021, respectively. The (benefit from) provision for income taxes for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021 is $(~~17.2~~6.0) million and $~~5.1~~58.3 million, respectively, based on pretax income (loss) of $~~521.1~~686.4 million and $$(~~22.9~~315.3) million, respectively. The effective tax rate is (~~3.3)% and~~ ~~22.2~~0.9%) and (18.5%) for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 and 2021, respectively. The tax expense for the three months ended ~~March 31,~~September 30, 2022 differs from the same period in 2021 primarily due to additional estimated annual pre-tax income in 2022, which affects the AETR, partially offset by the release of a $12.2 million valuation allowance on deferred tax assets in 2022. The tax expense for the nine months ended September 30, 2022 differs from the same period in 2021 primarily due to the release of a $~~56.5~~65.9 million valuation allowance on deferred tax assets ~~offset by additional~~in 2022. The release of the valuation allowance was due to the expected realization of certain tax benefits in connection with a tax receivable agreement ("TRA") liability. In addition, during the nine months ended September 30, 2021, $7.4 million of deferred tax liabilities associated with indefinite lived intangibles were recorded as a result of the IPO and tax expense of $~~34.2~~10.2 million ~~primarily~~was recorded related to ~~increased income during~~a change in tax rate in the ~~current period.~~United Kingdom. Any tax balances reflected on the ~~March 31,~~September 30, 2022 balance sheet would be adjusted accordingly to reflect the actual financial results for the year ending December 31, 2022.

The Company’s effective tax rate differs from the U.S. federal statutory rate primarily due to partnership income not subject to income tax; state and local income taxes; withholding taxes in foreign jurisdictions that are not based on net income; and income subject to tax in foreign jurisdictions which differ from the U.S. federal statutory income tax rate as well as the relative amount of income earned in those jurisdictions.

As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had unrecognized tax benefits of $~~41.4~~41.5 million and $40.0 million, respectively, for which we are unable to make a reasonable and reliable estimate of the period in which these liabilities will be settled with the respective tax authorities.

The Company records valuation allowances against its net deferred tax assets when it is more likely than not that all, or a portion, of a deferred tax asset will not be realized. The Company evaluates the realizability of its deferred tax assets by assessing the likelihood that its deferred tax assets will be recovered based on all available positive and negative evidence, including historical results, reversals of deferred tax liabilities, estimates of future taxable income, tax planning strategies and results of operations. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company released ~~an additional~~a $~~56.5~~65.9 million valuation allowance on deferred tax assets due to the expected realization of certain tax benefits based on estimates of future taxable income. The Company has determined the remaining net deferred tax assets at EGH, exclusive of deferred tax liabilities associated with indefinite lived intangibles, will not be realized and as a result, has recorded a valuation allowance as of ~~March~~September 30, 2022.

Inflation Reduction Act of 2022

On August 16, 2022, the United States enacted the Inflation Reduction Act of 2022 ("IRA"). The IRA, among other things, creates a 15% corporate alternative minimum tax ("CAMT") on adjusted financial statement income for applicable corporations. The CAMT is effective for tax years beginning after December 31, 2022. Additionally, the IRA establishes a 1% excise tax on stock repurchases made by publicly traded US corporations and is effective for stock repurchases after December 31, 2022. While we continue to evaluate the potential tax effects of the IRA, we are currently not expecting the IRA to have a material impact on our consolidated financial statements.

Tax Receivable Agreements

In connection with the IPO and related transactions, the Company entered into TRAs with certain persons that held direct or indirect interests in EOC and Zuffa prior to the IPO, including management of the Company ("TRA Holders"). The TRAs generally provide for the payment by EGH of 85% of the amount of any tax benefits that EGH actually realizes, or in some cases is deemed to realize, as a result of (i) increases in EGH’s share of the tax basis in the net assets of EOC resulting from any redemptions or exchanges of LLC Units, (ii) increases in tax basis attributable to payments made under the TRAs, (iii) deductions attributable to imputed interest pursuant to the TRAs and (iv) other tax attributes allocated to EGH post-IPO and related transactions that were allocable to the TRA Holders prior to the IPO and related transactions.

~~As noted above, during the three months ended March 31, 2022, the Company released a valuation allowance of $56.5~~ ~~million.~~ In connection with the expected realization of certain tax benefits including deferred tax assets, the Company ~~recorded an additional~~has a $~~57.3~~200.0 million TRA ~~liability. With the exception~~liability as of ~~the above, the Company has recorded a full valuation allowance with respect to the remaining deferred tax assets subject to the TRA.~~September 30, 2022.

If the existing valuation allowance recorded against deferred tax assets is released in a future period as a result of having sufficient taxable income, among other criteria, or other taxtax attributes subject to the TRAs are determined to be payable, additional TRA liabilities may be recorded. If the relevant criteria are met in 2022, the Company would release a valuation allowance and record the associated TRA liability, each of which we would expect to be material.

14. REVENUE

The following table presents the Company’s revenue disaggregated by primary revenue sources for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 (in thousands):


	Three Months Ended March 31, 2022									Three Months Ended September 30, 2022
	Owned Sports Properties		Events, Experiences & Rights		Representation		Total			Owned Sports Properties		Events, Experiences & Rights		Representation		Total
Media rights	$	156,965	$	163,121	$	0	$	320,086		$	200,310	$	133,600	$	—	$	333,910
Media production, distribution and content		2,300		85,224		73,743		161,267			1,026		84,160		61,387		146,573
Events and performance		137,424		577,468		0		714,892
Events and academy											200,936		222,845		—		423,781
Talent representation and licensing		0		0		199,171		199,171			—		—		244,370		244,370
Marketing		0		0		84,407		84,407			—		—		82,578		82,578
Eliminations		0		0		0		(6,060	)		—		—		—		(9,796	)
Total	$	296,689	$	825,813	$	357,321	$	1,473,763		$	402,272	$	440,605	$	388,335	$	1,221,416


	Nine Months Ended September 30, 2022
	Owned Sports Properties		Events, Experiences & Rights		Representation		Total
Media rights	$	529,343	$	470,797	$	—	$	1,000,140
Media production, distribution and content		5,150		248,159		199,140		452,449
Events and academy		496,398		1,175,334		—		1,671,732
Talent representation and licensing		—		—		665,929		665,929
Marketing		—		—		238,542		238,542
Eliminations		—		—		—		(21,098	)
Total	$	1,030,891	$	1,894,290	$	1,103,611	$	4,007,694


	Three Months Ended September 30, 2021
	Owned Sports Properties		Events, Experiences & Rights		Representation		Total
Media rights	$	156,973	$	162,365	$	—	$	319,338
Media production, distribution and content		1,510		81,818		399,473		482,801
Events and academy		130,038		202,150		—		332,188
Talent representation and licensing		—		��		201,106		201,106
Marketing		—		—		64,144		64,144
Eliminations		—		—		—		(8,274	)
Total	$	288,521	$	446,333	$	664,723	$	1,391,303

~~Table of Contents~~


	Three Months Ended March 31, 2021									Nine Months Ended September 30, 2021
	Owned Sports Properties		Events, Experiences & Rights		Representation		Total			Owned Sports Properties		Events, Experiences & Rights		Representation		Total
Media rights	$	177,653	$	323,126	$	0	$	500,779		$	497,564	$	796,348	$	—	$	1,293,912
Media production, distribution and content		2,187		84,713		58,923		145,823			4,937		259,229		591,671		855,837
Events and performance		103,641		131,771		0		235,412
Events and academy											328,366		459,038		—		787,404
Talent representation and licensing		0		0		146,745		146,745			—		—		493,780		493,780
Marketing		0		0		43,241		43,241			—		—		156,413		156,413
Eliminations		0		0		0		(2,418	)		—		—		—		(15,189	)
Total	$	283,481	$	539,610	$	248,909	$	1,069,582		$	830,867	$	1,514,615	$	1,241,864	$	3,572,157

In the three months ended ~~March 31,~~September 30, 2022 and 2021, there was revenue recognized of $~~17.4~~12.8 million and $~~13.1~~14.6 million, respectively, from performance obligations satisfied in prior periods. In the nine months ended September 30, 2022 and 2021, there was revenue recognized of $42.4 millionand $36.8 million, respectively, from performance obligations satisfied in prior periods.

Remaining Performance Obligations

The following table presents the aggregate amount of transaction price allocated to remaining performance obligations for contracts greater than one year with unsatisfied or partially satisfied performance obligations as of ~~March 31,~~September 30, 2022 (in thousands). The transaction price related to these future obligations does not include any variable consideration.


	Years Ending December 31,		Years Ending December 31,
Remainder of 2022	$	1,197,201	$	391,316
2023		1,405,785		1,659,804
2024		1,106,909		1,253,988
2025		1,001,196		1,092,802
2026		151,097		198,750
Thereafter		583,010		576,626
	$	5,445,198	$	5,173,286

Contract Liabilities

The Company records deferred revenue when cash payments are received or due in advance of its performance. The Company’s deferred revenue balance primarily relates to advance payments received related to advertising and sponsorship agreements, event advanced ticket sales and performance tuition. Deferred revenue is included in the current liabilities section and in other long-term liabilities in the consolidated balance sheets.

The following table presents the Company’s contract liabilities as of ~~March 31,~~September 30, 2022 and December 31, 2021 (in thousands):


Description	December 31, 2021		Additions		Deductions			Acquisitions		Foreign Exchange			March 31, 2022		December 31, 2021		Additions		Deductions (1)			Acquisitions		Held for Sale			Foreign Exchange			September 30, 2022
Deferred revenue - current	$	651,760	$	651,266	$	(806,155	)	$	1,321	$	(1,615	)	$	496,577	$	651,760	$	1,901,792	$	(1,960,241	)	$	26,974	$	(2,903	)	$	(7,667	)	$	609,715
Deferred revenue - noncurrent	$	62,155	$	4,141	$	6,871		$	—	$	(120	)	$	73,047	$	62,155	$	12,447	$	(3,980	)	$	2,082	$	—		$	(289	)	$	72,415

(1) As of September 30, 2022, the balance in deductions also included $3.6 million and $0.8 million in deferred revenue - current and deferred revenue - noncurrent, respectively, primarily due to the divestiture of DBH (Note 4).

15. SEGMENT INFORMATION

As of ~~March 31,~~September 30, 2022, the Company has 3three reportable segments: Owned Sports Properties, Events, Experiences & Rights, and Representation. The Company also reports the results for the "Corporate" group. The profitability measure employed by the Company’s chief operating decision maker for allocating resources and assessing operating performance is Adjusted EBITDA. Segment information is presented consistently with the basis for the year ended December 31, 2021. Summarized financial information for the Company’s reportable segments is shown in the following tables (in thousands):

Revenue


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021
Owned Sports Properties	$	296,689		$	283,481		$	402,272		$	288,521		$	1,030,891		$	830,867
Events, Experiences & Rights		825,813			539,610			440,605			446,333			1,894,290			1,514,615
Representation		357,321			248,909			388,335			664,723			1,103,611			1,241,864
Eliminations		(6,060	)		(2,418	)		(9,796	)		(8,274	)		(21,098	)		(15,189	)
Total consolidated revenue	$	1,473,763		$	1,069,582		$	1,221,416		$	1,391,303		$	4,007,694		$	3,572,157

2027

~~Table of Contents~~

Reconciliation of segment profitability


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021				2022		2021			2022			2021
Owned Sports Properties	$	148,741		$	145,549		$	195,749		$	134,679		$	505,760		$	412,495
Events, Experiences & Rights		132,483			39,050			49,668			84,993			290,268			160,843
Representation		101,705			61,483			132,923			141,801			345,849			264,969
Corporate		(68,480	)		(46,616	)		(75,258	)		(78,156	)		(217,991	)		(187,476	)
Adjusted EBITDA		314,449			199,466			303,082			283,317			923,886			650,831
Reconciling items:
Equity earnings of affiliates		(3,749	)		(3,334	)
Equity losses (earnings) of affiliates								1,333			3,052			(4,060	)		876
Interest expense, net		(59,272	)		(68,351	)		(75,608	)		(55,783	)		(197,385	)		(207,970	)
Depreciation and amortization		(65,994	)		(67,236	)		(63,571	)		(71,661	)		(195,177	)		(208,058	)
Equity-based compensation expense		(50,856	)		(16,491	)		(48,388	)		(60,885	)		(159,851	)		(464,393	)
Merger, acquisition and earn-out costs		(12,794	)		(10,985	)		(30,529	)		(13,107	)		(57,891	)		(38,291	)
Certain legal costs		(1,002	)		(3,952	)		(1,604	)		266			(11,204	)		(4,260	)
Restructuring, severance and impairment		(518	)		(407	)		(869	)		(2,179	)		(2,829	)		(6,612	)
Fair value adjustment - equity investments		1,653			7,799			291			(90	)		13,635			13,614
Gain on sale of the restricted Endeavor Content business		463,641			0			—			—			463,641			—
Tax receivable agreements liability adjustment		(53,497	)		0			(10,405	)		—			(61,497	)		—
Other		(10,974	)		(13,577	)		6,749			(9,152	)		(24,914	)		(51,063	)
Income before income taxes and equity losses of affiliates	$	521,087		$	22,932
Income (loss) before income taxes and equity losses of affiliates							$	80,481		$	73,778		$	686,354		$	(315,326	)

16. COMMITMENTS AND CONTINGENCIES

Claims and Litigation

The Company is involved in legal proceedings, claims and governmental investigations arising in the normal course of business. The types of allegations that arise in connection with such legal proceedings vary in nature, but can include contract, employment, tax and intellectual property matters. The Company evaluates all cases and records liabilities for losses from legal proceedings when the Company determines that it is probable that the outcome will be unfavorable and the amount, or potential range, of loss can be reasonably estimated. While any outcome related to litigation or such governmental proceedings cannot be predicted with certainty, management believes that the outcome of these matters, except as otherwise may be discussed below, individually or in the aggregate, will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

An employee of the Company is one of several individuals and entities named in a complaint by India’s Director of Enforcement ("DE"), initially filed in January 2015, alleging violations of the Foreign Exchange Management Act ("FEMA"). The complaint alleges that the employee participated as an advisor in a series of transactions in 2009 that were completed by and on behalf of a client, the Board of Control for Cricket in India (the "BCCI"), and that contravened two provisions of FEMA. The subject transactions were pursued under the direction and control of one of the BCCI’s board members. The Company is not alleged to have possessed any funds improperly or to have made or received any of the payments that are alleged to have violated FEMA. The Company is cooperating with the DE’s investigation which, at present, is in its early stages.

In July 2017, the Italian Competition Authority ("ICA") issued a decision opening an investigation into alleged breaches of competition law in Italy, involving inter alia IMG, and relating to bidding for certain media rights of the Serie A and Serie B football leagues. In April 2018, the European Commission conducted on-site inspections at a number of companies that are involved with sports media rights, including the Company. The inspections were part of an ongoing investigation into the sector and into potential violations of certain antitrust laws that may have taken place within it. The Company investigated these ICA matters, as well as other regulatory compliance matters. In May 2019, the ICA completed its investigation and fined the Company approximately EUR 0.3 million. As part of its decision, the ICA acknowledged the Company’s cooperation and ongoing compliance efforts since the investigation commenced. In July 2019, three football clubs and in June 2020, the Serie A football league (Lega Nazionale Professionisti Serie A or "Lega Nazionale," and together with the three clubs, the "Plaintiffs") each filed separate claims against IMG and certain other unrelated parties in the Court of Milan, Italy, alleging that IMG engaged in anti-competitive practices with regard to bidding for certain media rights of the Serie A and Serie B football leagues. The Plaintiffs seek damages from all defendants in amounts totaling EUR 554.6 million in the aggregate relating to the three football clubs and EUR 1,592.2 million relating to Lega Nazionale, along with attorneys’ fees and costs (the "Damages Claims"). Since December 2020, four additional football clubs have each filed requests to intervene in the Lega Nazionale proceedings and individually seek to claim amounts in the aggregate totaling EUR 251.5 million. Ten other clubs also filed requests to intervene in support of Lega Nazionale’s claim or alternatively to individually claim in the amount of EUR 92.1 million, in the case of one club, and unspecified amounts (to be quantified as a percentage of the total amount sought by Lega Nazionale) in the other nine cases. Collectively, the interventions of these 14 clubs are the "Interventions." The Company has defended in its submissions to date, and intends to continue to defend, against the Damages Claims, Interventions and any related claims, and management believes that the Company has meritorious defenses to these claims, including the absence of standing of the clubs, and the absence of actual damage. The Company may also be subject to regulatory and other claims and actions with respect to these ICA and other regulatory matters. Any judgment entered against the Company or settlement entered into, including with respect to claims or actions brought by other parties, could materially and adversely impact the Company’s business, financial condition and results of operations.

2128

~~Table of Contents~~

Zuffa has 5five related class-action lawsuits filed against it in the United States District Court for the Northern District of California (the "District Court") between December 2014 and March 2015 by a total of 11eleven former UFC fighters. The complaints in the five lawsuits are substantially identical. Each alleges that Zuffa violated Section 2 of the Sherman Act by monopolizing the alleged market for the promotion of elite professional MMA bouts and monopolizing the alleged market for elite professional MMA fighters’ services. Plaintiffs claim that Zuffa’s alleged conduct injured them by artificially depressing the compensation they received for their services and their intellectual property rights, and they seek treble damages under the antitrust laws, as well as attorneys’ fees and costs, and injunctive relief. On December 14, 2020, the District Court orally indicated its intention to grant plaintiffs’ motion to certify the Bout Class (comprised of fighters who participated in bouts from December 16, 2010 to September 30, 2017) and to deny plaintiffs’ motion to certify the Identity Class (a purported class based upon the alleged expropriation and exploitation of fighter identities). The Company is awaiting the official written order from the judge and assuming he rules as previously indicated, then the Company will seek an appeal of this decision. On June 23, 2021, plaintiffs’ lawyers filed a new case against Zuffa and EGH alleging substantially similar claims, but providing for a class period from July 1, 2017 to present. Management believes that the Company has meritorious defenses against the allegations and intends to defend itself vigorously.

~~Commitments~~

In September 2021, the Company signed an agreement to acquire the OpenBet business of Scientific Games Corporation ("OpenBet"). OpenBet consists of companies that provide products and services to sports betting operators for the purposes of sports wagering. Based on the agreement, the Company will pay Scientific Games Corporation consideration of $~~1.0~~ ~~billion in cash and will issue~~ ~~7,605,199~~ ~~shares of the Company's Class A common stock, a value of $200.0~~ million based on the volume-weighted average trading price of the Class A common stock for the twenty trading days ended on September 24, 2021. The closing of this transaction is subject to regulatory approvals and other customary closing conditions and is expected to close in the third quarter of 2022.

17. RELATED PARTY TRANSACTIONS

The Company has the following related party transactions as of ~~March 31,~~September 30, 2022 and December 31, 2021 and for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021 (in thousands):


	March 31,		December 31,		September 30,		December 31,
	2022		2021		2022		2021
Other current assets	$	13,454	$	4,728	$	22,109	$	4,728
Investments		660		0		2,174		—
Other assets		0		322		—		322
Current liabilities		818		320
Accrued liabilities						10,800		—
Deferred revenue						2,350		264
Other current liabilities		2,306		2,111		2,006		2,431


	Three Month Ended March 31,					Three Months Ended September 30,					Nine Months Ended September 30,
	2022			2021		2022			2021		2022			2021
Revenue	$	7,739		$	7,000	$	9,365		$	641	$	26,946		$	13,680
Direct operating costs		4,696			2,133		9,661			772		14,003			3,629
Selling, general and administrative expenses		1,861			1,126		859			1,768		3,325			6,198
Other income (expense), net		(14,125	)		875
Other (expense) income, net							(9,925	)		875		(23,175	)		2,625

As of ~~March 31,~~September 30, 2022, the Company has an equity-method investment in Euroleague, a related party. For the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company recognized revenue of $~~3.7~~0.5 million, $3.8 million, $0.2 million and $~~2.2~~0.2 million, respectively, for a management fee to compensate it for representation and technical services it provides to Euroleague in relation to the distribution of media rights. This revenue is included in the Owned Sports Properties segment. Also, for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, the Company recognized revenue of $(0.3) million, $~~2.8~~5.1 million, $(0.1) million and $~~2.6~~0.1 million, respectively, for production services provided to Euroleague as well as direct operating costs of $~~1.4~~3.1 million, ~~and~~ $~~1.8~~5.5 million, less than a hundred thousand, $(0.2) million, respectively, for the procurement of a license for gaming rights from Euroleague, which are included in the Events, Experiences & Rights segment. As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had a receivable of $~~4.6~~5.1 million and $1.4 million, respectively, and a payable of $0.2 million and $1.4 million, ~~for both the periods.~~respectively.

Silver Lake and certain of our executives indirectly own a minority interest in The Raine Group ("Raine"). During the three and nine months ended ~~March 31,~~September 30, 2022, the Company ~~paid~~recorded expense of $~~15.0~~10.8 million inand $25.8 million, respectively, related to transaction costs ~~to Raine~~ for investment banking services in connection with the sale of the restricted Endeavor Content business and the acquisitions of OpenBet and Barrett-Jackson (Note 4). As of September 30, 2022, the Company had accrued liabilities of $10.8 million. In addition, during the ~~three~~nine months ended ~~March 31,~~September 30, 2022, the Company invested $~~0.7~~2.2 million in a non-marketable ~~fund~~funds maintained by Raine.

~~18. SUBSEQUENT EVENTS~~

In ~~April~~September 2022, the Company ~~acquired Mutua Madrid Open tennis tournament and additional assets, including~~sold the ~~Acciona Open de España golf tournament, from Super Slam Ltd and its affiliates. The Company paid approximately EUR~~ ~~360~~ ~~million for consideration and transfer fees at closing and an additional EUR~~ 30 ~~million of consideration is payable within two years of closing. Considering~~ten PDL Clubs that operated under the ~~proximity of the closing of the acquisition, additional disclosures required under ASC Topic 805,~~ ~~Business Combinations, will be provided in the Company's next quarterly interim financial statements.~~

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~~In April 2022, EOC issued~~ ~~8,037,483~~ EOC common units (and 32 Equity obtained an equal number of paired shares of the Company's Class X common stock) in exchange for the non-controlling interests of OLE Parent. The aggregate value of the shares was $~~223.7~~ ~~million based on the volume-weighted average trading price of the Class A common stock for thirty days ending on the day before the close. The Company also issued~~ ~~495,783~~ ~~shares of Class A common stock~~DBH umbrella to ~~several employees~~Silver Lake, stockholders of the Company ~~in exchange for the employees' direct or indirect interests in OLE Parent based on the same valuation. As a result of these transactions, OLE Parent became an indirect wholly-owned subsidiary of EOC.~~

~~In April 2022, the Company issued~~ ~~5,693,774~~ ~~shares of Class A common stock in exchange for the non-controlling partnership interests of WME IMG China, L.P ("Endeavor China")~~(Note 4). ~~The aggregate value of the shares was $158.5~~ ~~million based on the volume-weighted average trading price of the Class A common stock for thirty days ending on the day before the close. In addition, EOC issued~~ ~~659,896~~ common units in EOC to several employees of the Company, including members of management (and such employees obtained an equal number of paired shares of the Company's Class X common stock), in exchange for the employees' direct or indirect interests in Endeavor China based on the same valuation. As a result of these transactions, Endeavor China became an indirect wholly-owned subsidiary of EOC.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report and with our audited financial statements and related notes included in our 2021 Annual Report. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under Part I, Item 1A. "Risk Factors" of our 2021 Annual Report, as updated by Part II, Item 1A. "Risk Factors" in this Quarterly Report, or in other sections of the 2021 Annual Report and this Quarterly Report.

BUSINESS OVERVIEW

Endeavor is a global sports and entertainment company. We own and operate premium sports properties, including the UFC, produce and distribute sports and entertainment content, own and manage exclusive live events and experiences, and represent top sports and entertainment talent, as well as blue chip corporate clients. Founded as a client representation business, we expanded organically and through strategic mergers and acquisitions, investing in new capabilities, including sports operations and advisory, events and experiences management, media production and distribution, brand licensing, and experiential marketing. The addition of these new capabilities and insights transformed our business into an integrated global platform anchored by owned and managed premium intellectual property.

Segments

We operate our business in three segments: (i) Owned Sports Properties; (ii) Events, Experiences & Rights; and (iii) Representation.

Owned Sports Properties

Our Owned Sports Properties segment is comprised of a unique portfolio of scarce sports properties, including UFC, Professional Bull Riders ("PBR"), and Euroleague, ~~and Diamond Baseball Holdings ("DBH"),~~ that generate significant growth through innovative rights deals and exclusive live events.

Through the UFC, the world’s premier professional MMA organization, we produce more than 40 live events annually which are broadcast in over 160 countries and territories to approximately one billion TV households. UFC was founded in 1993 and has grown in popularity after hosting more than 500 events and reaching a global audience through an increasing array of broadcast license agreements and our owned FIGHT PASS streaming platform. The value of our content is demonstrated by our licensing arrangements with ESPN and other international broadcasters and our increasing consumer engagement is reflected by the growth of FIGHT PASS subscribers and overall follower growth and engagement across our social channels - now reaching 188 million followers.

PBR is the world’s premier bull riding circuit with more than 500 bull riders from the United States, Australia, Brazil, Canada, and Mexico, competing in more than 200 bull riding events each year pre-pandemic. PBR is one of America’s fastest growing sports with annual attendance for its premier series quadrupling since its inception in 1995.

We have an up to 20-year partnership with Euroleague basketball, which could extend into 2036, to manage and capitalize on all of the commercial business of the league, including media rights, sponsorship, content production, licensing, digital distribution, events staging, and hospitality, for which we receive a management fee.

At the end of 2021 and in January 2022, we acquired ten Professional Development League clubs (the "PDL Clubs"), whose results ~~are~~were included in Owned Sports Properties and ~~are~~were being operated under the ~~DBH~~Diamond Baseball Holdings ("DBH") umbrella. In September 2022, we sold the PDL Clubs to Silver Lake, stockholders of the Company, for an aggregate purchase price of $280 million cash.

Events, Experiences & Rights

In our Events, Experiences & Rights segment, we own, operate, and provide services to a diverse portfolio of over 800 live events annually, including sporting events covering 20 sports across 25 countries, international fashion weeks, art fairs and music, culinary and lifestyle festivals. We own and operate many of these events, including the Miami Open, HSBC Champions, Frieze Art Fair, New York Fashion Week, and Hyde Park Winter Wonderland. We also operate other events on behalf of third parties, including the AIG Women’s ~~British~~ Open and Honda Classic. Through On Location, we provide premium experiences, historically providing more than 900 per year for sporting and music events such as the Super Bowl, Ryder Cup, NCAA Final Four and Coachella.

We are one of the largest independent global distributors of sports video programming and data. We sell media rights globally on behalf of more than 150 clients such as the International Olympic Committee, the National Football League, and the National Hockey League, as well as for our owned assets and channels. We also provide league advisory services given the array of experience we have to offer. Through IMG ARENA, we work with more than 470 leading sportsbook brands worldwide to deliver live streaming video and data feeds for more than 45,000 sports events annually, as well as for on-demand virtual sports products including our own UFC Event Centre. We also leverage the technology derived from IMG ARENA to provide streaming video solutions to our clients and our owned assets via Endeavor Streaming.

Additionally, we own and operate IMG Academy, a leading academic and sports training institution located in Florida, as well as Next College Student Athlete ("NCSA"), which provides recruiting and admissions services to high school student athletes and college athletic departments and admissions ~~officers.~~

~~In September 2021, we signed an agreement to acquire the OpenBet business of Scientific Games Corporation ("OpenBet"~~officers, (collectively, "Academy"). OpenBet consists of companies that provide products and services to sports betting operators for the purposes of sports wagering. Based on the agreement, we will pay consideration to Scientific Games Corporation of $1.2 billion, consisting of cash of $1.0 billion, expected to be funded with cash on hand and 7,605,199 newly-issued shares of our Class A common stock with a value of $200 million based on the volume-weighted average trading price of the Class A common stock for the twenty trading days ended on September 24, 2021. The closing of this transaction is subject to regulatory approvals

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and other customary closing conditions and is expected to close in the third quarter of 2022. Upon closing of the acquisition, we expect to create a new reportable segment that will include IMG ARENA and the OpenBet business.

In April 2022, we acquired the Mutua Madrid Open tennis tournament and additional assets, including the Acciona Open de España golf tournament, from Super Slam Ltd and its affiliates. We paid ~~approximately EUR 360~~$386.1 million for consideration and transfer fees ~~upon~~at closing, ~~and~~ an additional ~~EUR 30~~$31.8 million of consideration is payable within two years of closing, and $0.6 million of contingent consideration payable within three years of closing.

In August 2022, we acquired 55% of Barrett-Jackson Holdings, LLC ("Barrett-Jackson"), which is engaged in the business of collector car auctions and sales as well as other collector car related events and experiences, in exchange for consideration having an aggregate value of $256.9 million. The aggregate consideration consisted of $244.4 million of cash and 563,935 newly-issued shares of our Class A common stock valued at $12.5 million.

In September 2022, we acquired the OpenBet business ("OpenBet") of Light & Wonder, Inc. (formerly known as Scientific Games Corporation) ("Light & Wonder") for consideration of $847.1 million, consisting of $800.4 million of cash and 2,305,794 newly-issued shares of our Class A common stock valued at $46.7 million. OpenBet consists of companies that provide products and services to sports betting operators for the purposes of sports wagering. We will create a new reportable segment that will include IMG ARENA and the OpenBet business in 2023.

Representation

Our Representation segment provides services to more than 7,000 talent and corporate clients. Our Representation business deploys a subset of our integrated capabilities on behalf of our clients.

Through our client representation and management businesses, including the WME talent agency and IMG Models, we represent a diverse group of talent across entertainment, sports, and fashion, including actors, directors, writers, athletes, models, musicians, and other artists, in a variety of mediums, such as film, television, books, and live events. Through our 160over90 business, we provide brand strategy, marketing, advertising, public relations, analytics, digital, activation, and experiential services to many of the world’s largest brands. Through IMG Licensing, we provide IP licensing services to a large portfolio of entertainment, sports, and consumer product brands, including representing these clients in the licensing of their logos, trade names and trademarks.

Previously, our Representation segment included our restricted Endeavor Content business, which provided a premium alternative to traditional content studios, offering a range of services including content development, production, financing, sales, and advisory services for creators. In February 2021, the Company signed the Franchise Agreements directly with the WGA. These Franchise Agreements included terms that, among other things, prohibited the Company from (a) negotiating packaging deals after June 30, 2022 and (b) having more than a 20% non-controlling ownership or other financial interest in, or being owned or affiliated with any individual or entity that has more than a 20% non-controlling ownership or other financial interest in, any entity or individual engaged in the production or distribution of works written by WGA members under a WGA collective bargaining agreement. As a result, in the third quarter, the Company began marketing the restricted Endeavor Content business for sale and such assets and liabilities were reflected as held for sale in the consolidated balance sheet as of December 31, 2021. The sale of 80% of the restricted Endeavor Content business closed in January 2022. Our retained 20% interest is reflected as an equity method investment as of ~~March 31,~~September 30, 2022 and is not part of the Representation segment.

Components of Our Operating Results

Revenue

In our Owned Sports Properties segment, we primarily generate revenue via media rights fees, pay-per-view, sponsorships, ticket sales, subscriptions, and license fees. In our Events, Experiences & Rights segment, we primarily generate revenue from media rights sales, production service and studio fees, sponsorships, ticket and premium experience sales, subscriptions, streaming fees, tuition, profit sharing, and commissions. In our Representation segment, we generate revenue primarily through commissions, packaging fees, marketing and consulting fees, production fees, and content licensing fees.

Direct Operating Costs

Our direct operating costs primarily include third-party expenses associated with the production of events and experiences, content production costs, operation of our training and education facilities, and fees for media rights, including required payments related to sales agency contracts when minimum sales guarantees are not met.

Selling, General and Administrative

Our selling, general and administrative expenses primarily include personnel costs as well as rent, professional service costs and other overhead required to support our operations and corporate structure.

Provision for Income Taxes

EGH was incorporated as a Delaware corporation in January 2019. It was formed as a holding company for the purpose of completing an IPO and other related transactions. As the sole managing member of Endeavor Manager, which is the sole managing member of EOC, EGH operates and controls all the business and affairs of EOC, and through EOC and its subsidiaries, conducts the Company’s business. EGH is subject to corporate income tax on its share of taxable income or loss of EOC, derived from Endeavor Manager. EOC is treated as a partnership for U.S. federal income tax purposes and is therefore not subject to U.S. corporate income tax. However, certain of EOC’s subsidiaries are subject to U.S. or foreign corporate income tax.

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. The COVID-19 pandemic rapidly changed market and economic conditions globally, including significantly impacting the entertainment and sports industries as well as our business, results of operations, financial position and cash ~~flows. It began to have a significant adverse impact on our business and operations~~flows beginning in March 2020, including the lack of ticketed PBR and UFC events and the early cancellation of the 2019-2020 Euroleague season adversely impacting our Owned Sports Properties segment; the postponement or cancellation of live sporting events and other in-person events adversely impacting our Events, Experiences & Rights segment; and stoppages of entertainment productions, including film, television shows and music events, as well as reduced corporate spending on marketing, experiential and activation, adversely impacting our Representation segment.2020. While activity has resumed in all of our businesses and restrictions have been lessened or lifted, restrictions could in the future be increased or reinstated.

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UFC Buyout

Substantially simultaneous with the closing of the IPO, we consummated transactions whereby we acquired equity interests in UFC Parent (including warrants of UFC Parent) from the Other UFC Holders (or their affiliates) resulting in Endeavor Operating Company directly or indirectly owning 100% of the equity interests of UFC Parent (the "UFC Buyout").

As a result of the UFC Buyout, we no longer attribute income (loss) to non-controlling interests related to UFC in our consolidated statement of operations and recognized a reduction in nonredeemable non-controlling interests on our consolidated balance sheet. Furthermore, restrictions on dividends under the UFC LLC Agreement are no longer in place after the UFC Buyout, although restrictions from the UFC Credit Facilities remain in place.

Reorganization

Prior to the closing of the IPO on May 3, 2021, we undertook reorganization transactions, following which Endeavor Group Holdings became a holding company, and its principal asset is an equity interest in a newly formed subsidiary of Endeavor Group Holdings, Endeavor Manager, of which Endeavor Group Holdings serves as the managing member. Endeavor Manager is in turn the managing member of Endeavor Operating Company. Endeavor Group Holdings manages and operates the business and controls the strategic decisions and day-to-day operations of Endeavor Manager as its sole managing member, and Endeavor Operating Company as its indirect sole managing member, and also has a substantial financial interest in Endeavor Manager and, indirectly, Endeavor Operating Company. Accordingly, Endeavor Group Holdings consolidates the results of operations of Endeavor Manager and Endeavor Operating Company, and a portion of Endeavor Group Holding’s net income (loss) is allocated to non-controlling interests to reflect the entitlements of certain former members of Endeavor Operating Company who retain ownership interests in Endeavor Manager and Endeavor Operating Company.

After consummation of the IPO and the reorganization transactions, we became subject to U.S. federal, state and local income taxes with respect to our allocable share of any taxable income of Endeavor Manager and Endeavor Operating Company, and we are taxed at the prevailing corporate tax rates. Endeavor Operating Company makes distributions to us in an amount sufficient to allow us to pay our tax obligations and operating expenses, including distributions to fund any ordinary course payments due under the tax receivable agreements ("TRA"). The Company entered into the TRAs with certain persons that held direct or indirect interests in EOC and UFC Parent prior to the IPO. The TRAs generally provide for the payment by EGH of 85% of the amount of any tax benefits that EGH actually realizes as further described below under "Liquidity and Capital ~~Resources~~—Resources—Future sources and uses of liquidity—Tax receivable agreements".

RESULTS OF OPERATIONS

The following is a discussion of our consolidated results of operations for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021. This information is derived from our accompanying consolidated financial statements prepared in accordance with GAAP.


	Three months ended March 31,						Three Months Ended September 30,						Nine months ended September 30,
(in thousands)	2022			2021			2022			2021			2022			2021
Revenue	$	1,473,763		$	1,069,582		$	1,221,416		$	1,391,303		$	4,007,694		$	3,572,157
Operating expenses:
Direct operating costs		694,641			546,392			398,518			673,215			1,601,544			1,790,562
Selling, general and administrative expenses		540,206			381,113			601,469			520,626			1,729,174			1,686,840
Insurance recoveries		(993	)		(19,657	)		—			(12,233	)		(993	)		(42,100	)
Depreciation and amortization		65,994			67,236			63,571			71,661			195,177			208,058
Impairment charges								689			754			689			4,524
Total operating expenses		1,299,848			975,084			1,064,247			1,254,023			3,525,591			3,647,884
Operating income		173,915			94,498
Operating income (loss)								157,169			137,280			482,103			(75,727	)
Other (expense) income:
Interest expense, net		(59,272	)		(68,351	)		(75,608	)		(55,783	)		(197,385	)		(207,970	)
Loss on extinguishment of debt								—			—			—			(28,628	)
Tax receivable agreements liability adjustment		(53,497	)		—			(10,405	)		—			(61,497	)		—
Other income (expense), net		459,941			(3,215	)		9,325			(7,719	)		463,133			(3,001	)
Income before income taxes and equity losses of affiliates		521,087			22,932
(Benefit from) provision for income taxes		(17,234	)		5,085
Income before equity losses of affiliates		538,321			17,847
Income (loss) before income taxes and equity losses of affiliates								80,481			73,778			686,354			(315,326	)
Provision for (benefit from) income taxes								8,515			(7,718	)		(6,020	)		58,285
Income (loss) before equity losses of affiliates								71,966			81,496			692,374			(373,611	)
Equity losses of affiliates, net of tax		(20,655	)		(15,471	)		(84,504	)		(17,883	)		(145,026	)		(77,167	)
Net income		517,666			2,376
Less: Net income attributable to non-controlling interests		198,120			27,246
Net (loss) income								(12,538	)		63,613			547,348			(450,778	)
Less: Net (loss) income attributable to non-controlling interests								(2,499	)		21,128			212,035			(141,980	)
Less: Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions		—			(24,870	)		—			—			—			(31,686	)
Net income attributable to Endeavor Group Holdings, Inc.	$	319,546		$	—
Net (loss) income attributable to Endeavor Group Holdings, Inc.							$	(10,039	)	$	42,485		$	335,313		$	(277,112	)

Revenue

Revenue ~~increased $404.2~~decreased $169.9 million, or ~~37.8%~~12.2%, to ~~$1,473.8~~$1,221.4 million for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31, 2021 as the Company rebounds from the impact of COVID-19.~~September 30, 2021.

•

Owned Sports Properties increased by ~~$13.2~~$113.8 million, or ~~4.7%~~39.4%. The increase was driven primarily by growth at UFC due to ~~an increase at PBR of $19 million due to an increase in the number of events and elimination of fan attendance restrictions. The increase was offset by a decrease at UFC of $8~~

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~~million due to one less PPV event held in 2022 offset by the benefit from~~increased media rights fees, greater sponsorship, licensing, commercial PPV and event related ~~revenue.~~revenue, and an increase at PBR primarily due to the new team series format. In addition, the acquisition of ten PDL Clubs in December 2021 and January 2022 that operated under the DBH umbrella contributed $33 million.

•

Events, Experiences & Rights decreased by $5.7 million, or 1.3%. The decrease was primarily driven by a decrease of $27 million in media rights fees and media production revenue, primarily due to events that occurred in 2021 but not in 2022. This decrease was partially offset by a net increase of $21 million attributable to new and returning live events in 2022, as well as growth at Academy, offset by the timing of certain events.

•

Representation decreased by $276.4 million, or 41.6%. The decrease was primarily driven by the $334 million of revenue related to the restricted Endeavor Content business recorded in the prior year, which was sold in January 2022. This decrease was partially offset by a $62 million increase in client commissions, primarily from continued strong demand for our talent and the recovery of live entertainment, and corporate spending on marketing and experiential activations as the prior year continued to be impacted by COVID-19.

Excluding the revenue attributable to the restricted Endeavor Content business, revenue for the three months ended September 30, 2022 increased 15% compared to the three months ended September 30, 2021.

Revenue increased $435.5 million, or 12.2%, to $4,007.7 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

•

Owned Sports Properties increased by ~~$286.2~~$200.0 million, or ~~53.0%~~24.1%. The increase was driven primarily by growth at UFC due to increased media rights fees, greater sponsorship, licensing, commercial PPV and event related revenue from more events with live audiences partially offset by Residential PPV revenue. The increase was also due to an increase at PBR from the change in timing of the Unleash The Beast finals and the new team series format, an increase in the number of events and the elimination of fan attendance restrictions. In addition, the acquisition of ten PDL Clubs in December 2021 and January 2022 that operated under the DBH umbrella contributed $64 million.

•

Events, Experiences & Rights increased by $379.7 million, or 25.1%. The increase was primarily driven by an increase of ~~$446~~$716 million attributable to the return of live events in 2022 ~~and $38 million from NCSA~~that were cancelled in 2021 or experienced fan restrictions due to COVID-19. Increases were also due to the Madrid Open, which was acquired in ~~the second quarter of 2021,~~April 2022, as well as growth in Academy and NCSA, which was acquired in June 2021. These increases were partially offset by a decrease of ~~$160~~$337 million in media rights fees and media production revenue, primarily due to the expiration of two European soccer contracts in the second quarter of 2021 ~~and the additional matches in 2021 due to the modified schedules of the 2020 season due to COVID-19.~~that were not renewed.

•

Representation ~~increased~~decreased by ~~$108.4~~$138.3 million, or ~~43.6%~~11.1%. The ~~increase~~decrease was primarily driven by ~~a $52~~the $407 million of revenue related to the restricted Endeavor Content business recorded in the prior year, which was sold in January 2022. This decrease was partially offset by an increase inof $254 million related to client commissions, due primarily from the continued strong demand for our talent and ~~a $41 million increase in~~the recovery of live entertainment, and corporate spending on marketing and experiential activations as the prior year was ~~significantly~~ impacted by COVID-19.

Excluding the revenue attributable to the restricted Endeavor Content business, revenue for the nine months ended September 30, 2022 increased 27% compared to the nine months ended September 30, 2021.

Direct operating costs

Direct operating costs ~~increased $148.2~~decreased $274.7 million, or ~~27.1%~~40.8%, to ~~$694.6~~$398.5 million for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021. ~~The increase was primarily attributable to an increase~~A decrease of ~~$307~~$285 million ~~for event costs~~ related to the ~~return~~sale of ~~live events and a $29 million increase in marketing and experiential activation costs in connection with~~ the ~~revenue increases mentioned above. This increase~~restricted Endeavor Content business was partially offset by athe increases in costs associated with the revenue growth as described above.

Direct operating costs decreased $189.0 million, or 10.6%, to $1,601.5 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The decrease was driven by the $345 million decrease related to the sale of ~~$195 million~~the restricted Endeavor Content business and the decrease in media rights and media production costs of $391 million due to the decrease in ~~media rights~~ revenue described above, ~~including~~primarily due to the expiration of ~~two European soccer~~certain contracts in the second quarter of 2021 whose costs were in excess of revenue. These decreases were partially offset by increases of $545 million for costs related to live events and marketing and experiential activations due to the increases in revenue as described above.

Selling, general and administrative expenses

Selling, general and administrative expenses increased ~~$159.1~~$80.8 million, or ~~41.7%~~15.5%, to ~~$540.2~~$601.5 million for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021. The increase was ~~principally~~primarily due to higher cost of personnel, ~~including equity-based compensation,~~travel expenses and other operating expenses.

Selling, general and administrative expenses increased $42.3 million, or 2.5%, to $1,729.2 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The increase was primarily due to higher cost of personnel, travel expenses and other operating expenses. The increase was partially offset by lower equity-based compensation expense as the ~~business recovers from the impact~~prior period included charges for modifications of ~~COVID-19.~~certain pre-IPO awards to remove certain forfeiture and discretionary call terms.

Insurance recoveries

We maintain events cancellation insurance policies for a significant number of our events. For the three and nine months ended ~~March 31,~~September 30, 2022 and 2021, we recognized none, $1.0 million, $12.2 million and ~~$19.7~~$42.1 million of insurance recoveries, respectively, which primarily related to cancelled events in our Events, Experiences & Rights and Owned Sports Properties segments due to COVID-19.

Depreciation and amortization

Depreciation and amortization decreased ~~$1.2~~$8.1 million, or ~~1.8%~~11.3%, to ~~$66.0~~$63.6 million for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021. Depreciation and amortization decreased $12.9 million, or 6.2%, to $195.2 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.The decreases were primarily driven by certain intangible assets becoming fully amortized partially offset by ~~intangibles~~intangible assets acquired through acquisitions.

Impairment charges

Impairment charges of $0.7 million for the three and nine months ended September 30, 2022, related to goodwill in our Events, Experiences & Rights segment.

Impairment charges of $0.8 million and $4.5 million for the three and nine months ended September 30, 2021, respectively, related to goodwill in our Events, Experiences & Rights and Representation segments.

Interest expense, net

Interest expense, net ~~decreased $9.1~~increased $19.8 million, or ~~13.3%~~35.5% to ~~$59.3~~$75.6 million for the three months ended ~~March 31,~~September 30, 2022 compared to the three months ended ~~March 31,~~September 30, 2021. The increase was primarily driven by higher interest rates and higher average debt outstanding during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021.

Interest expense, net decreased $10.6 million, or 5.1% to $197.4 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The decrease was primarily driven by lower ~~indebtedness as a result of the repayments of~~average debt ~~in June 2021 and the sale of the restricted Endeavor Content business and associated Endeavor Content facility in January 2022~~outstanding partially offset by higher ~~indebtedness under~~interest rates during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.

Loss on extinguishment of debt of $28.6 million for the nine months ended September 30, 2021 was due to fees and expenses incurred for the early redemption of our ~~UFC Credit Facilities.~~term loans issued in May 2020.

Tax receivable agreements liability adjustment

The Company recorded ~~a $53.5~~$(10.4) million ~~expense~~and $(61.5) million of adjustments in the three and nine months ended September 30, 2022, respectively, for the tax receivable agreements liability related to the expected realization of certain tax benefits after concluding that such TRA payments would be probable based on estimates of future taxable income over the terms of the TRAs.

Other income (expense), net

Other income (expense), net for the three months ended ~~March 31,~~September 30, 2022 was income of ~~$459.9~~$9.3 million compared to expense of ~~$3.2~~$7.7 million for the three months ended ~~March 31,~~September 30, 2021. The income for the three months ended ~~March 31,~~September 30, 2022 primarily included a gain of $23.3 million for the sale of DBH partially offset by $12.4 million for foreign currency transaction losses. The expense for the three months ended September 30, 2021 was primarily attributable to foreign currency transaction losses.

Other income (expense), net for the nine months ended September 30, 2022 included a gain of $463.6 million for the sale of the restricted Endeavor Content business, a gain of $23.3 million for the sale of DBH and $16.6 million of gains from changes in fair value of equity investments partially offset by ~~$4.7~~$33.2 million for foreign currency transaction ~~losses.~~losses and $8.8 million of losses due to the change in the fair value of embedded foreign currency derivatives. The expense for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 included ~~an $11.4~~$15.7 million ~~loss~~of foreign currency transaction losses and $10.4 million of losses due to the change in the fair value of embedded foreign currency derivatives partially offset by ~~$7.8~~$23.1 million of gains primarily from sales and changes in the fair value of equity ~~instruments.~~investments.

~~(Benefit for) provision~~Provision for (benefit from) income taxes

For the three months ended ~~March 31,~~September 30, 2022, we recorded a provision for income taxes of $8.5 million compared to a benefit from income taxes of $7.7 million for the three months ended September 30, 2021. For the nine months ended September 30, 2022, we recorded a benefit ~~for~~from income taxes of ~~$17.2~~$6.0 million compared to a provision for income taxes of ~~$5.1~~$58.3 million for the nine months ended September 30, 2021. The tax expense for the three months ended ~~March 31, 2021.~~September 30, 2022 differs from the same period in 2021 primarily due to additional estimated annual pre-tax income in 2022 partially offset by the release of a $12.2 million valuation allowance on deferred tax assets in 2022. The ~~change was~~tax expense for the nine months ended September 30, 2022 differs from the same period in 2021 primarily due to the release of a ~~$56.5~~$65.9 million valuation allowance on deferred tax assets ~~offset by additional tax expense of $34.2 million primarily related to increased income for the three months ended March 31,~~in 2022. The release of the valuation allowance was due to the expected realization of certain tax benefits in connection with ~~the recording of~~ a TRA liability. In addition, during the nine months ended September 30, 2021, $7.4 million of deferred tax liabilities associated with indefinite lived intangibles were recorded as a result of the IPO and tax expense of $10.2 million was recorded related to a change in tax rate in the United Kingdom.

Equity losses of affiliates, net of tax

Equity losses of affiliates increased ~~$5.2~~$66.6 million to ~~$20.7~~$84.5 million and increased $67.9 million to $145.0 million for the three and nine months ended ~~March 31,~~September 30, 2022 compared to the three and nine months ended ~~March 31,~~September 30, 2021. ~~The increase was~~Our equity losses primarily ~~due to the higher losses~~ related to our investment in Learfield IMG College ~~as well as losses from~~and the 20% interest we retained in the restricted Endeavor Content business, which we sold in January 2022.

During the three and nine months ended September 30, 2022 and the three and nine months ended September 30, 2021, we recorded $78.7 million and $137.5 million, respectively, and $17.9 million and $77.2 million, respectively, in equity losses resulting from losses related to our investment in Learfield IMG College. For the three and nine months ended September 30, 2022, our share of the results of Learfield IMG College included a $56.1 million charge as a result of its annual goodwill and indefinite lived intangible asset impairment test, primarily due to continued losses.

Net (loss) income attributable to non-controlling interests

27Subsequent to the IPO and associated reorganization transactions, non-controlling interests primarily relate to interests held by certain former members of Endeavor Operating Company who retained their ownership interests in Endeavor Manager and Endeavor Operating Company.

~~Table~~Net loss attributable to non-controlling interests was $2.5 million for the three months ended September 30, 2022 compared to net income attributable to non-controlling interests of ~~Contents~~$21.1 million for the three months ended September 30, 2021. The change was primarily due to the change in the amount of reported net loss for the three months ended September 30, 2022 versus the reported net income for the three months ended September 30, 2021.

Net income attributable to non-controlling interests was ~~$198.1~~$212.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 compared to ~~$27.2~~net loss attributable to non-controlling interests of $142.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The change was primarily ~~driven by~~due to the change in the amount of reported net income for the nine months ended September 30, 2022 versus the reported net loss for the nine months ended September 30, 2021 as well as the effect of the reorganization transactions.

SEGMENT RESULTS OF OPERATIONS

We classify our business into three reporting segments: Owned Sports Properties; Events, Experiences & Rights; and Representation. Our chief operating decision maker evaluates the performance of our segments based on segment Revenue and segment Adjusted EBITDA. Management believes segment Adjusted EBITDA is indicative of operational performance and ongoing profitability and is used to evaluate the operating performance of our segments and for planning and forecasting purposes, including the allocation of resources and capital.

Segment operating results reflect earnings before corporate and unallocated shared expenses. Segment operating results include allocations of certain costs, including facilities, technology, and other shared services costs, which are allocated based on metrics designed to correlate with consumption. These allocations are agreed-upon amounts between the businesses and may differ from amounts that would be negotiated in arm’s length transactions.

The following tables display Revenue and Adjusted EBITDA for each of our segments:


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021			2022			2021
Revenue:
Owned Sports Properties	$	296,689		$	283,481		$	402,272		$	288,521		$	1,030,891		$	830,867
Events, Experiences & Rights		825,813			539,610			440,605			446,333			1,894,290			1,514,615
Representation		357,321			248,909			388,335			664,723			1,103,611			1,241,864
Eliminations		(6,060	)		(2,418	)		(9,796	)		(8,274	)		(21,098	)		(15,189	)
Total Revenue	$	1,473,763		$	1,069,582		$	1,221,416		$	1,391,303		$	4,007,694		$	3,572,157
Adjusted EBITDA:
Owned Sports Properties	$	148,741		$	145,549		$	195,749		$	134,679		$	505,760		$	412,495
Events, Experiences & Rights		132,483			39,050			49,668			84,993			290,268			160,843
Representation		101,705			61,483			132,923			141,801			345,849			264,969
Corporate		(68,480	)		(46,616	)		(75,258	)		(78,156	)		(217,991	)		(187,476	)

Owned Sports Properties

The following table sets forth our Owned Sports Properties segment results for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021:


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021
(in thousands)
Revenue	$	296,689		$	283,481		$	402,272		$	288,521		$	1,030,891		$	830,867
Direct operating costs	$	94,716		$	92,216		$	131,537		$	102,641		$	329,102		$	275,935
Selling, general and administrative expenses	$	52,872		$	47,712		$	72,345		$	48,060		$	192,709		$	140,162
Adjusted EBITDA	$	148,741		$	145,549		$	195,749		$	134,679		$	505,760		$	412,495
Adjusted EBITDA margin		50.1	%		51.3	%		48.7	%		46.7	%		49.1	%		49.6	%

Three months ended ~~March 31,~~September 30, 2022 compared to three months ended ~~March 31,~~September 30, 2021

Revenue for the three months ended ~~March 31,~~September 30, 2022 increased ~~$13.2~~$113.8 million, or ~~4.7%~~39.4%, to ~~$296.7~~$402.3 million, compared to the three months ended ~~March 31,~~September 30, 2021. The increase was driven primarily by ~~an increase in PBR of $19 million driven by an increase in Velocity Tour and Unleash The Beast events and the elimination of fan restrictions. These increases were offset by a decrease in~~growth at UFC ~~of $8 million, which was~~ due to ~~holding one less PPV event during 2022 offset by the benefit from~~increased media rights fees, greater sponsorship, licensing, commercial PPV and event related ~~revenue.~~revenue driven by an additional PPV event as well as more events with live audiences, and an increase at PBR primarily due to the new team series format. In addition, the acquisition of ten PDL Clubs in December 2021 and January 2022 that operated under the DBH umbrella contributed $33 million. DBH was sold in September 2022.

Direct operating costs for the three months ended ~~March 31,~~September 30, 2022 increased ~~$2.5~~$28.9 million, or ~~2.7%~~28.2%, to ~~$94.7~~$131.5 million, compared to the three months ended ~~March 31,~~September 30, 2021. The increase ~~was attributable~~is due to ~~increases~~the changes in ~~the number of PBR events held, which was partially offset by lower event expenses for UFC from having one less PPV event.~~revenue described above.

Selling, general and administrative expenses for the three months ended ~~March 31,~~September 30, 2022 increased ~~$5.2~~$24.3 million, or ~~10.8%~~50.5%, to ~~$52.9~~$72.3 million, compared to the three months ended ~~March 31,~~September 30, 2021. The increase was primarily attributable to $8$14 million of expenses incurred by ~~Diamond Baseball Holdings partially offset by lower~~DBH, an increase in travel expenses related to UFC due to ~~one less event and fewer~~an increase in events held ~~internationally.~~outside of Las Vegas, including in Europe, and an increase in cost of personnel.

Adjusted EBITDA for the three months ended ~~March 31,~~September 30, 2022 increased ~~$3.2~~$61.1 million, or ~~2.2%~~45.3%, to ~~$148.7~~$195.7 million, compared to the three months ended ~~March 31,~~September 30, 2021. The increase in Adjusted EBITDA was primarily driven by increases in revenue partially offset by increases in direct operating costs and selling, general and administrative expenses.

28Nine months ended September 30, 2022 compared to nine months ended September 30, 2021

~~Table~~Revenue for the nine months ended September 30, 2022 increased $200.0 million, or 24.1%, to $1,030.9 million, compared to the nine months ended September 30, 2021. The increase was driven by growth at UFC due to increased media rights fees, greater sponsorship, licensing, commercial PPV and event related revenue from more events with live audiences partially offset by Residential PPV revenue. The increase was also due to an increase at PBR from the change in timing of ~~Contents~~the Unleash The Beast finals and the new team series format, an increase in the number of events and the elimination of fan attendance restrictions. In addition, the acquisition of ten PDL Clubs in December 2021 and January 2022 that operated under the DBH umbrella contributed $64 million. DBH was sold in September 2022.

Direct operating costs for the nine months ended September 30, 2022 increased $53.2 million, or 19.3%, to $329.1 million, compared to the nine months ended September 30, 2021. The increase is due to the change in revenue described above partially offset by lower athlete costs for UFC.

Selling, general and administrative expenses for the nine months ended September 30, 2022 increased $52.5 million, or 37.5%, to $192.7 million, compared to the nine months ended September 30, 2021. The increase was primarily attributable to $37 million of expenses incurred by DBH and an increase in cost of personnel and travel expenses.

Adjusted EBITDA for the nine months ended September 30, 2022 increased $93.3 million, or 22.6%, to $505.8 million, compared to the nine months ended September 30, 2021. The increase in Adjusted EBITDA was primarily driven by increases in revenue partially offset by increases in direct operating costs and selling, general and administrative expenses.

Events, Experiences & Rights

The following table sets forth our Events, Experiences & Rights segment results for three and nine months ended ~~March 31,~~September 30, 2022 and 2021:


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021
(in thousands)
Revenue	$	825,813		$	539,610		$	440,605		$	446,333		$	1,894,290		$	1,514,615
Direct operating costs	$	536,213		$	421,536		$	224,598		$	235,645		$	1,119,855		$	1,046,714
Selling, general and administrative expenses	$	162,172		$	100,271		$	169,125		$	138,567		$	494,087		$	351,642
Adjusted EBITDA	$	132,483		$	39,050		$	49,668		$	84,993		$	290,268		$	160,843
Adjusted EBITDA margin		16.0	%		7.2	%		11.3	%		19.0	%		15.3	%		10.6	%

Three months ended ~~March 31,~~September 30, 2022 compared to three months ended ~~March 31,~~September 30, 2021

Revenue for the three months ended ~~March 31,~~September 30, 2022 ~~increased $286.2~~decreased $5.7 million, or ~~53.0%~~1.3%, to ~~$825.8~~$440.6 million, compared to the three months ended ~~March 31,~~September 30, 2021. Media rights fees and media production revenue decreased $26 million primarily due to the timing of the 2021 UEFA Euro Championship and the 2021 CONCACAF World Cup qualifying matches, which take place every four years. Total event and academy revenue increased $21 million primarily due to new events, including Frieze Seoul, and events returning in 2022 that were cancelled in 2021, including the Aer Lingus Classic and various music events, as well as growth in Academy due to increased enrollment in summer camps and NCSA memberships. These increases in event and academy revenue were partially offset by certain events held in Q2 2022 that were held in Q3 2021 as well as the 2021 Ryder Cup, which is a biennial event.

Direct operating costs for the three months ended September 30, 2022 decreased $11.0 million, or 4.7%, to $224.6 million, compared to the three months ended September 30, 2021. The decrease is due to the changes in revenue described above.

Selling, general and administrative expenses for the three months ended September 30, 2022 increased $30.6 million, or 22.1%, to $169.1 million, compared to the three months ended September 30, 2021. The increase was primarily driven by increased cost of personnel, including the build out of the Olympics business, and the expense incurred by Barrett Jackson, acquired in August 2022.

Adjusted EBITDA for the three months ended September 30, 2022 decreased $35.3 million, or 41.6%, to $49.7 million, compared to the three months ended September 30, 2021. The decrease in Adjusted EBITDA was primarily driven by increases in selling, general and administrative expenses and insurance recoveries received in the prior year related to cancelled events.

Nine months ended September 30, 2022 compared to nine months ended September 30, 2021

Revenue for the nine months ended September 30, 2022 increased $379.7 million, or 25.1%, to $1,894.3 million, compared to the nine months ended September 30, 2021. Event and ~~performance~~academy revenue increased ~~$446~~$716 million primarily due to events returning in 2022 that were cancelled in 2021 or experienced fan restrictions due to COVID-19, including Super Bowl LVI, ~~Miami Open,~~ NCAA Men’s March Madness, ~~Frieze LA~~Miami Open, and various music ~~events,~~events. Increases were also due to the Madrid Open, which was acquired in April 2022, as well as ~~an increase of $38 million related~~growth in Academy due to increased enrollment and NCSA, which was acquired in ~~the second quarter of~~June 2021. Media rights fees and media production revenue decreased ~~$160~~$337 million primarily due to the expiration of two European soccer contracts in the second quarter of 2021 that were not ~~renewed and the additional matches in 2021 due to the modified schedules of the 2020 season due to COVID-19.~~renewed.

Direct operating costs for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 increased ~~$114.7~~$73.1 million, or ~~27.2%~~7.0%, to ~~$536.2~~$1,119.9 million, compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2021. Live event and performance costs increased ~~$305~~$462 million due to the increases in related revenue. This increase was partially offset by a decrease in media rights and media production costs of ~~$195~~$391 million due to the decrease in revenue described above, ~~including~~primarily due to the expiration of ~~two European soccer~~certain contracts in the second quarter of 2021 whose costs were in excess of revenue.

Selling, general and administrative expenses for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 increased ~~$61.9~~$142.4 million, or ~~61.7%~~40.5%, to ~~$162.2~~$494.1 million, compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The increase was primarily driven by increased cost of personnel, asincluding the buildout of the Olympics business, ~~recovers from~~and the ~~impact of COVID-19. The acquisition of~~expenses incurred by NCSA, ~~contributed approximately $27 million~~acquired in ~~selling, general and administrative expenses for the three months ended March 31, 2022.~~June 2021.

Adjusted EBITDA for the ~~three~~nine months ended ~~March 31,~~September 30, 2022 increased ~~$93.4~~$129.4 million, or ~~239.3%~~80.5%, to ~~$132.5~~$290.3 million, compared to the ~~three~~nine months ended ~~March 31,~~September 30, 2021. The increase in Adjusted EBITDA was primarily driven by the growth in revenue partially offset by increases in related direct operating costs and selling, general and administrative expenses as well as a decrease in insurance recoveries related to cancelled events.

Representation

The following table sets forth our Representation segment results for three and nine months ended ~~March 31,~~September 30, 2022 and 2021:


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021
(in thousands)
Revenue	$	357,321		$	248,909		$	388,335		$	664,723		$	1,103,611		$	1,241,864
Direct operating costs	$	69,773		$	35,058		$	52,163		$	341,895		$	173,614		$	481,796
Selling, general and administrative expenses	$	185,882		$	152,159		$	203,016		$	181,322		$	583,851		$	495,173
Adjusted EBITDA	$	101,705		$	61,483		$	132,923		$	141,801		$	345,849		$	264,969
Adjusted EBITDA margin		28.5	%		24.7	%		34.2	%		21.3	%		31.3	%		21.3	%

Three months ended ~~March 31,~~September 30, 2022 compared to three months ended ~~March 31,~~September 30, 2021

Revenue for the three months ended ~~March 31,~~September 30, 2022 ~~increased $108.4~~decreased $276.4 million, or ~~43.6%~~41.6%, to ~~$357.3~~$388.3 million, compared to the three months ended ~~March 31,~~September 30, 2021. The ~~increase~~decrease was primarily attributable to the $334 million of revenue related to the restricted Endeavor Content business recorded in the prior year, which was sold in January 2022. This decrease was partially offset by an increase of ~~$52~~$62 million related to client commissions, due primarily to the continued strong demand for our talent and the recovery of live entertainment, predominantly music, and ~~$41 million attributable to an increase in~~ corporate spending on marketing and experiential ~~activations.~~activations as the prior year continued to be impacted by COVID-19. Excluding the revenue attributable to the restricted Endeavor Content business, revenue for the three months ended September 30, 2022 increased 17% compared to the three months ended September 30, 2021.

Direct operating costs for the three months ended ~~March 31,~~September 30, 2022 ~~increased $34.7~~decreased $289.7 million, or ~~99.0%~~84.7%, to ~~$69.8~~$52.2 million, compared to the three months ended ~~March 31,~~September 30, 2021. The ~~increase~~decrease was primarily attributable to the ~~above mentioned increase in marketing and experiential activations.~~sale of the restricted Endeavor Content business.

Selling, general and administrative expenses for the three months ended ~~March 31,~~September 30, 2022 increased ~~$33.7~~$21.7 million, or ~~22.2%~~12.0%, to ~~$185.9~~$203.0 million, compared to the three months ended ~~March 31,~~September 30, 2021. The increase was primarily driven by cost of personnel ~~as the business recovers from the impact of COVID-19~~and travel expenses partially offset by the sale of the restricted Endeavor Content business in January 2022.

Adjusted EBITDA for the three months ended ~~March 31,~~September 30, 2022 ~~increased $40.2~~decreased $8.9 million, or ~~65.4%~~6.3%, to ~~$101.7~~$132.9 million, compared to the three months ended ~~March 31,~~September 30, 2021. The decrease was primarily attributable to the $26 million of Adjusted EBITDA in the prior year related to the restricted Endeavor Content business, which was sold in January 2022. This was partially offset by the revenue growth from the rest of the segment, as discussed above, net of the increases in selling, general and administrative expenses.

Nine months ended September 30, 2022 compared to nine months ended September 30, 2021

Revenue for the nine months ended September 30, 2022 decreased $138.3 million, or 11.1%, to $1,103.6 million, compared to the nine months ended September 30, 2021. The decrease was primarily attributable to the $407 million of revenue related to the restricted Endeavor Content business recorded in prior year, which was sold in January 2022. This decrease was partially offset by an increase of $254 million related to client commissions, due primarily to the continued strong demand for our talent and the recovery of live entertainment, predominantly music, and corporate spending on marketing and experiential activations as the prior year was impacted by COVID-19. Excluding the revenue attributable to the restricted Endeavor Content business, revenue for the nine months ended September 30, 2022 increased 32% compared to the nine months ended September 30, 2021.

Direct operating costs for the nine months ended September 30, 2022 decreased $308.2 million, or 64.0%, to $173.6 million, compared to the nine months ended September 30, 2021. The decrease attributable to the sale of the restricted Endeavor Content business of $345 million was partially offset by an increase in marketing and experiential activations due to the increase in revenue described above.

Selling, general and administrative expenses for the nine months ended September 30, 2022 increased $88.7 million, or 17.9%, to $583.9 million, compared to the nine months ended September 30, 2021. The increase was primarily driven by cost of personnel and travel expenses partially offset by the sale of the restricted Endeavor Content business.

Adjusted EBITDA for the nine months ended September 30, 2022 increased $80.9 million, or 30.5%, to $345.8 million, compared to the nine months ended September 30, 2021. The increase in Adjusted EBITDA was ~~driven by~~primarily due to the growth in revenue, excluding the Endeavor Content business which was sold in January 2022, partially offset by the increase in ~~direct operating costs and~~ selling, general and administrative expenses.

Corporate

~~Table of Contents~~

Corporate primarily consists of overhead, personnel costs, and costs associated with corporate initiatives that are not fully allocated to the operating divisions. Such expenses include compensation and other benefits for corporate office employees, rent, professional fees related to internal control compliance and monitoring, financial statement audits and legal, information technology and insurance that is managed through our corporate office.

The following table sets forth our results for Corporate for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021:


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021			2022			2021
(in thousands)
Adjusted EBITDA	$	(68,480	)	$	(46,616	)	$	(75,258	)	$	(78,156	)	$	(217,991	)	$	(187,476	)

Adjusted EBITDA for the three months ended ~~March 31,~~September 30, 2022 ~~decreased $21.9~~improved $2.9 million, or ~~46.9%~~3.7%, to ~~$68.5~~$(75.3) million, compared to the three months ended ~~March 31,~~September 30, 2021. The ~~decline~~improvement was driven by a decrease in cost of personnel.

Adjusted EBITDA for the nine months ended September 30, 2022 decreased $30.5 million, or 16.3%, to $(218.0) million, compared to the nine months ended September 30, 2021. The decrease was driven by an increase in cost of personnel and other general and administrative expenses.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA is a non-GAAP financial measure and is defined as net income (loss), excluding income taxes, net interest expense, depreciation and amortization, equity-based compensation, merger, acquisition and earn-out costs, certain legal costs, restructuring, severance and impairment charges, certain non-cash fair value adjustments, certain equity earnings, tax receivable agreements liability adjustment, and certain other items, including gains/losses on business divestitures, when applicable. Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted EBITDA divided by Revenue.

Management believes that Adjusted EBITDA is useful to investors as it eliminates the significant level of non-cash depreciation and amortization expense that results from our capital investments and intangible assets recognized in business combinations, and improves comparability by eliminating the significant level of interest expense associated with our debt facilities, as well as income taxes, which may not be comparable with other companies based on our tax structure.

Adjusted EBITDA and Adjusted EBITDA margin are used as the primary bases to evaluate our consolidated operating performance.

Adjusted Net Income is a non-GAAP financial measure and is defined as net income (loss) attributable to Endeavor Group Holdings adjusted to exclude our share (excluding those relating to certain non-controlling interests) of the adjustments used to calculate Adjusted EBITDA, other than income taxes, net interest expense and depreciation, on an ~~after tax~~after-tax basis, the release of tax valuation allowances and other tax items.

Adjusted Net Income adjusts income or loss attributable to the Company for items that are not considered to be reflective of our operating performance. Management believes that such non-GAAP information is useful to investors and analysts as it provides a better understanding of the performance of our operations for the periods presented and, accordingly, facilitates the development of future projections and earnings growth prospects.

Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•

they do not reflect every cash expenditure, future requirements for capital expenditures, or contractual commitments;

•

Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income do not reflect any cash requirement for such replacements or improvements; and

•

they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

We compensate for these limitations by using Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance.

Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income should not be considered substitutes for the reported results prepared in accordance with GAAP and should not be considered in isolation or as alternatives to net (loss) income as indicators of our financial performance, as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our

obligations. Although we use Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income as financial measures to assess the performance of our business, such use is limited because it does not include certain material costs necessary to operate our business. Our presentation of Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income should not be construed as indications that our future results will be unaffected by unusual or nonrecurring items. These non-GAAP financial measures, as determined and presented by us, may not be comparable to related or similarly titled measures reported by other companies. Set forth below are reconciliations of our most directly comparable financial measures calculated in accordance with GAAP to these non-GAAP financial measures on a consolidated basis.

~~Table of Contents~~

Adjusted EBITDA


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021			2022			2021
Net income	$	517,666		$	2,376
(Benefit from) provision for income taxes		(17,234	)		5,085
Net (loss) income							$	(12,538	)	$	63,613		$	547,348		$	(450,778	)
Provision for (benefit from) income taxes								8,515			(7,718	)		(6,020	)		58,285
Interest expense, net		59,272			68,351			75,608			55,783			197,385			207,970
Depreciation and amortization		65,994			67,236			63,571			71,661			195,177			208,058
Equity-based compensation expense (1)		50,856			16,491			48,388			60,885			159,851			464,393
Merger, acquisition and earn-out costs (2)		12,794			10,985			30,529			13,107			57,891			38,291
Certain legal costs (3)		1,002			3,952			1,604			(266	)		11,204			4,260
Restructuring, severance and impairment (4)		518			407			869			2,179			2,829			6,612
Fair value adjustment - equity investments (5)		(1,653	)		(7,799	)		(291	)		90			(13,635	)		(13,614	)
Equity method losses - Learfield IMG College and Endeavor Content (6)		24,404			18,805			83,171			14,831			149,086			76,291
Gain on sale of the restricted Endeavor Content business(7)		(463,641	)		—			—			—			(463,641	)		—
Tax receivable agreements liability adjustment (8)		53,497			—			10,405			—			61,497			—
Other (9)		10,974			13,577			(6,749	)		9,152			24,914			51,063
Adjusted EBITDA	$	314,449		$	199,466		$	303,082		$	283,317		$	923,886		$	650,831
Net income margin		35.1	%		0.2	%
Net (loss) income margin								(1.0	%)		4.6	%		13.7	%		(12.6	%)
Adjusted EBITDA margin		21.3	%		18.6	%		24.8	%		20.4	%		23.1	%		18.2	%

Adjusted Net Income


	Three Months Ended March 31,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021			2022			2021
Net income	$	517,666		$	2,376
Net income attributable to non-controlling interests		(198,120	)		(27,246	)
Net (loss) income							$	(12,538	)	$	63,613		$	547,348		$	(450,778	)
Net (income) loss attributable to non-controlling interests								2,499			(21,128	)		(212,035	)		141,980
Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions		—			—			—			—			—			31,686
Net income attributable to Endeavor Group Holdings, Inc.		319,546			—
Net loss attributable to Endeavor Operating Company, LLC prior to the reorganization transactions		—			(24,870	)
Net (loss) income attributable to Endeavor Group Holdings, Inc.								(10,039	)		42,485			335,313			(277,112	)
Amortization		42,916			45,728			39,153			48,646			123,449			141,023
Equity-based compensation expense (1)		50,856			16,491			48,388			60,885			159,851			464,393
Merger, acquisition and earn-out costs (2)		12,794			10,985			30,529			13,107			57,891			38,291
Certain legal costs (3)		1,002			3,952			1,604			(266	)		11,204			4,260
Restructuring, severance and impairment (4)		518			407			869			2,179			2,829			6,612
Fair value adjustment - equity investments (5)		(1,653	)		(7,799	)		(291	)		90			(13,635	)		(13,614	)
Equity method losses - Learfield IMG College and Endeavor Content (6)		24,404			18,805			83,171			14,831			149,086			76,291
Gain on sale of the restricted Endeavor Content business(7)		(463,641	)		—			—			—			(463,641	)		—
Tax receivable agreements liability adjustment (8)		53,497			—			10,405			—			61,497			—
Other (9)		10,974			13,577			(6,749	)		9,152			24,914			51,063
Tax effects of adjustments (10)		21,104			(6,319	)		(8,952	)		19,176			1,323			90,407
Other tax items (11)		(56,513	)		—			(12,241	)		—			(65,924	)		17,608
Adjustments allocated to non-controlling interests (12)		113,408			(12,847	)		(67,416	)		(66,566	)		(16,044	)		(404,028	)
Adjusted Net Income	$	129,212		$	58,110		$	108,431		$	143,719		$	368,113		$	195,194

(1)

Equity-based compensation represents primarily non-cash compensation expense associated with our equity-based compensation plans.

The ~~increase~~decrease for the three months ended ~~March 31,~~September 30, 2022 as compared to the three months ended ~~March 31,~~September 30, 2021 was primarily due to grants under the 2021 Incentive Award Plan that were issued in connection with ~~and following~~ the IPO.

The decrease for the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021 was primarily due to modification of certain pre-IPO equity-based awards primarily to remove certain forfeiture and discretionary call terms as well as grants under the 2021 Incentive Award Plan that were issued in connection with the IPO.

Equity-based compensation was recognized in all segments and Corporate for the three and nine months ended ~~March 31,~~September 30, 2022 and 2021.

(2)

Includes (i) certain costs of professional advisors related to mergers, acquisitions, dispositions or joint ventures and (ii) fair value adjustments for contingent consideration liabilities related to acquired businesses and compensation expense for deferred consideration associated with selling shareholders that are required to ~~retain~~remain our employees.

Such costs for the three months ended ~~March 31,~~September 30, 2022 primarily related to ~~fair~~professional advisor costs, which were approximately $21 million and primarily related to our Events, Experiences & Rights segment and Corporate. Fair value adjustments for contingent consideration liabilities related to acquired businesses and acquisition earn-out adjustments ofwere approximately $8$10 million, which primarily related to our ~~Events, Experiences & Rights and~~ Representation ~~segments. Professional advisor costs were approximately $5 million and related to all of our segments.~~segment.

Such costs for the three months ended ~~March 31,~~September 30, 2021 primarily related to professional advisor costs, which were approximately $9 million and primarily related to Corporate. Fair value adjustments for contingent consideration liabilities related to acquired businesses and acquisition earn-out adjustments were approximately $4 million, which primarily related to our Representation and Events, Experiences & Rights segments.

Such costs for the nine months ended September 30, 2022 primarily related to professional advisor costs of approximately $33 million and related to all of our segments. Fair value adjustments for contingent consideration liabilities related to acquired businesses and acquisition earn-out adjustments were approximately $25 million, which primarily related to our Representation segment.

Such costs for the nine months ended September 30, 2021 primarily related to fair value adjustments for contingent consideration liabilities related to acquired businesses and acquisition earn-out adjustments of approximately $7$24 million, which primarily related to our Events, Experiences & Rights and Representation segments. Professional advisor costs were approximately $4$14 million and primarily related to our Events, Experiences & Rights ~~segment.~~segment and Corporate.

(3)

Includes costs related to certain litigation or regulatory matters in each of our segments and Corporate.

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(4)

Includes certain costs related to our restructuring activities and non-cash impairment charges.

Such costs for the three months ended ~~March 31,~~September 30, 2022 primarily ~~relates~~related to restructuring expenses in our Events, Experiences & Rights segment.

Such costs for the three months ended September 30, 2021 primarily related to the impairment of goodwill in our Representation segment.

Such costs for the nine months ended September 30, 2022 primarily related to a write off of an asset in Corporate and the restructuring expenses in our Events, Experiences & Rights and Representation segments.

Such costs for the ~~three~~nine months ended ~~March 31,~~September 30, 2021 primarily related to ~~severance related to~~ the ~~cessation~~impairment of ~~operations of certain events~~goodwill in our Representation and Events, Experiences & Rights ~~segment.~~segments.

(5)

Includes the net change in fair value for certain equity investments with and without readily determinable fair values, based on observable price changes.

(6)

Relates to equity method losses, including impairment charges, from our investment in Learfield IMG College as well as losses from the 20% interest we retained in the restricted Endeavor Content business, which we sold in January 2022.

(7)

Relates to the gain recorded for the sale of the restricted Endeavor Content business, net of transactions costs of $15.0 million.

(8)

Includes ~~a $53.5 million expense~~the adjustment for the tax receivable agreements liability related to the expected realization of certain tax benefits after concluding that such TRA payments would be probable based on estimates of future taxable income over the terms of the ~~TRAs~~.TRAs.

(9)

For the three months ended ~~March 31,~~September 30, 2022, other costs were comprised primarily of a gain of approximately $23 million related to the sale of DBH, which related to our Owned Sports Properties segment, losses of approximately $5$13 million on foreign exchange transactions, which related to all of our segments and Corporate, approximately $3 million of transaction bonuses related to the sale of the restricted Endeavor Content business in our Representation segment and an approximately $1 million loss on disposal of an asset related to our Events, Experiences & Rights segment.

~~For the three months ended March 31, 2021, other costs were comprised primarily of~~ a loss of approximately ~~$11~~$8 million related to non-cash fair value adjustments of embedded foreign currency derivatives, which related primarily to our Events, Experiences & Rights segment, and losses of approximately $2$4 million related to ~~transaction~~foreign exchange hedge contracts.

For the three months ended September 30, 2021, other costs ~~associated with~~were comprised primarily of losses of approximately $13 million on foreign exchange transactions, which related to all of our segments and Corporate, approximately a $2 million gain from an earnout related to the ~~repricing~~sale of an investment related to our Representation segment and a $2 million fee received from our Learfield IMG College investment in our Events, Experiences & Rights segment.

For the ~~UFC Credit Facilities in~~nine months ended September 30, 2022, other costs were comprised primarily of losses of approximately $33 million on foreign exchange transactions, which related to all of our segments and Corporate, a gain of approximately $23 million related to the sale of DBH, which related to our Owned Sports Properties segment, a loss of approximately $9 million related to non-cash fair value adjustments of embedded foreign derivatives, which related primarily to our Events, Experiences & Rights segment, and losses of approximately $7 million related to foreign exchange hedge contracts which related to our Events, Experiences & Rights segment and Corporate.

For the nine months ended September 30, 2021, other costs were comprised primarily of approximately $29 million related to a loss on debt extinguishment, which related primarily to Corporate, losses of approximately $15 million on foreign exchange transactions, which related to all of our segments and Corporate, and a loss of approximately $10 million related to non-cash fair value adjustments of embedded foreign currency derivatives primarily related to our Events, Experiences & Rights segment.

(10)

Reflects the tax effect of the adjustments noted above.

(11)

Such ~~item~~items for the three and nine months ended ~~March 31,~~September 30, 2022 reflects the release of a ~~$56.5 million~~ valuation allowance on deferred tax assets due to the expected realization of certain tax benefits in connection with a TRA liability. Such items for the nine months ended September 30, 2021 includes $7.4 million of deferred tax liabilities associated with indefinite lived intangibles recorded as a result of the IPO and tax expense of $10.2 million related to a change in tax rate in the ~~TRA liability.~~United Kingdom.

(12)

Prior to the IPO and associated reorganization transactions, reflects the share of adjustments attributable to the non-controlling interests in UFC. Subsequent to the IPO and associated reorganization transactions, reflects the share of adjustments attributable to the non-controlling interests of certain former members of Endeavor Operating Company who retain ownership interests in Endeavor Manager and Endeavor Operating Company.

LIQUIDITY AND CAPITAL RESOURCES

Historical liquidity and capital resources

Sources and uses of cash

Cash flows from operations have historically funded our day-to-day operations, revenue-generating activities, and routine capital expenditures, as well as serviced our long-term debt. Our other principal use of cash has been the acquisition of businesses, which have historically been funded primarily through equity contributions from our pre-IPO institutional investors, the issuance of long-term debt and proceeds received from our initial public offering and private placement.

Debt facilities

As of ~~March 31,~~September 30, 2022, we had an aggregate of ~~$5.6~~$5.3 billion outstanding indebtedness under our first lien credit agreement entered into by certain of our subsidiaries in May 2014 in connection with the acquisition of IMG (as amended, restated, modified and/or supplemented from time to time, the "Credit Facilities") and UFC Holdings, LLC’s term loan and revolving credit facilities (the "UFC Credit Facilities" and, collectively with the Credit Facilities, the "Senior Credit Facilities"). As of ~~March 31,~~September 30, 2022, we had total borrowing capacity of $405 million under the Senior Credit Facilities, of which approximately ~~$375~~$376 million was available to borrow.

Credit Facilities

As of ~~March 31,~~September 30, 2022, we have borrowed an aggregate of ~~$2.8~~$2.5 billion of term loans under the Credit Facilities. The loans bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or the Alternate Base Rate (the "ABR") plus, in each case, an applicable margin. LIBOR term loans accrue interest at a rate equal to adjusted LIBOR plus 2.75%, with a LIBOR floor of 0.00%. ABR term loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.5%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.00%, plus (ii) 1.75%. The term loans under the Credit Facilities include 1% principal amortization payable in equal quarterly installments and mature on May 18, 2025. In September 2022, we repaid $250.0 million of term loans under the Credit Facilities.

In May 2020, we issued $260.0 million as a separate tranche of term loans, which accrued interest at a rate equal to adjusted LIBOR plus 8.50%, with a LIBOR floor of 1%. OnIn June ~~29,~~ 2021, we repaid the outstanding principal of $256.7 million as well as associated fees and expenses incurred due to early redemption of $28.6 million.

In May 2019, we executed $1.5 billion in interest rate hedges to swap a portion of our debt from floating interest expense to fixed. The LIBOR portion of the facility has been fixed at a coupon of 2.12% ~~for five years~~ commencing from June 2019 until June 2024. In August 2022, the Company entered into $750 million of an additional interest rate hedge to swap a portion of our debt from floating interest expense to fixed. The LIBOR portion of the facility has been fixed at a coupon of 3.162% commencing from August 2022 until August 2024. As of ~~March 31,~~September 30, 2022,

~~Table of Contents~~

approximately ~~54%~~90% of our ~~Term Loans~~term loans is hedged. See Note 10, "Debt" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report for further detail on the Credit Facilities.

As of ~~March 31,~~September 30, 2022, we have the option to borrow incremental term loans in an aggregate amount equal to at least $550.0 million, subject to market demand, and may be able to borrow additional funds depending on our First Lien Leverage Ratio (as defined under the Credit Facilities). The credit agreement governing our Credit Facilities includes certain mandatory prepayment provisions relating to, among other things, the incurrence of additional debt.

The Credit Facilities also include a revolving credit facility which has $200.0 million of capacity with letter of credit and swingline loan sub-limits of up to $75.0 million and $20.0 million, respectively. Revolving credit facility borrowings under the Credit Facilities bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or the ABR plus, in each case, an applicable margin. LIBOR revolving loans accrue interest at a rate equal to adjusted LIBOR plus 2.00-2.50%, depending on the First Lien Leverage Ratio, with a LIBOR floor of 0.00%. ABR revolving loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.00%, plus (ii) 1.00-1.50%, depending on the First Lien Leverage Ratio. We pay Letter of Credit fees of 0.125% and a commitment fee of 0.25-0.50%, based on our First Lien Leverage Ratio. On June 29, 2021, we repaid $163.1 million under the revolving credit facility. As of ~~March 31,~~September 30, 2022, we had no borrowings outstanding under this revolving credit facility and outstanding letters of credit of ~~$19.6~~$19.3 million. The revolving facility matures on May 18, 2024.

The revolving facility under the Credit Facilities is subject to a financial covenant if greater than 35% of the borrowing capacity of the revolving credit facility is utilized (excluding cash collateralized letters of credit and non-cash collateralized letters of credit of up to $50.0 million) at the end of each quarter. This covenant was not applicable on ~~March 31,~~September 30, 2022, as we had no ~~borrowing~~borrowings outstanding under the revolving credit facility.

The Credit Facilities contain certain restrictive covenants around indebtedness, liens, fundamental changes, guarantees, investments, asset sales, and transactions with affiliates.

The borrower’s obligations under the Credit Facilities are guaranteed by certain of our indirect wholly-owned domestic restricted subsidiaries, subject to certain exceptions. All obligations under the Credit Facilities and the related guarantees are secured by a perfected first priority lien on substantially all of the borrower’s and the guarantors’ tangible and intangible assets, in each case, subject to permitted liens and certain exceptions.

UFC Credit Facilities

As of ~~March 31,~~September 30, 2022, we have borrowed an aggregate of $2.8 billion of first lien term loans under the UFC Credit Facilities. Following a repricing under the UFC Credit Facilities in January 2021, borrowings under the UFC Credit Facilities bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or the ABR plus, in each case, an applicable margin. LIBOR term loans accrue interest at a rate equal to an adjusted LIBOR plus 2.75%-3.00%, depending on the First Lien Leverage Ratio, in each case with a LIBOR floor of 0.75%. ABR term loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.5%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.75%, plus (ii) 1.75%-2.00%. The term loans under the UFC Credit Facilities include 1.00% principal amortization payable in equal quarterly installments and mature on April 29, 2026. See Note 10, "Debt" to our unaudited consolidated financial statements included elsewhere in this Quarterly Report for further detail on the UFC Credit Facilities.

As of ~~March 31,~~September 30, 2022, we have the option to borrow incremental loans in an aggregate amount equal to at least $455.0 million, subject to market demand, and may be able to borrow additional funds depending on our First Lien Leverage Ratio (as defined under the UFC Credit Facilities). The credit agreement governing the UFC Credit Facilities includes certain mandatory prepayment provisions relating to, among other things, the incurrence of additional debt. On June 29, 2021, we repaid $180.2 million of first lien term loans under the UFC Credit Facilities. On October 27, 2021, we amended the facility to provide for a $600 million term loan, which we borrowed in full.

The UFC Credit Facilities also include a revolving credit facility, which has $205.0 million of total borrowing capacity and letter of credit and swingline loan sub-limits of up to $40.0 million and $15.0 million, respectively. Revolving credit facility borrowings under the UFC Credit Facilities bear interest at a variable interest rate equal to either, at our option, adjusted LIBOR or ABR plus, in each case, an applicable margin. LIBOR revolving loans accrue interest at a rate equal to an adjusted LIBOR plus 3.50-4.00%, depending on the First Lien Leverage Ratio, in each case with a LIBOR floor of 0.00%. ABR revolving loans accrue interest at a rate equal to (i) the highest of (a) the Federal Funds Effective Rate plus 0.50%, (b) the prime rate, (c) adjusted LIBOR for a one-month interest period plus 1.00% and (d) 1.00%, plus (ii) 2.50-3.00%, depending on the First Lien Leverage Ratio. We pay a commitment fee on the revolving credit facility under the UFC Credit Facilities of 0.25-0.50%, based on the First Lien Leverage Ratio and Letter of Credit fees of 0.125%. As of ~~March 31,~~September 30, 2022, we had no borrowings outstanding under this revolving credit facility and outstanding letters of credit of $10.0 million. The revolving facility under the UFC Credit Facilities matures on April 29, 2024.

The revolving facility under the UFC Credit Facilities is subject to a financial covenant if greater than 35% of the borrowing capacity of the revolving credit facility (excluding cash collateralized letters of credit and non-cash collateralized letters of credit of up to $10.0 million) is utilized at the end of any fiscal quarter. This covenant was not applicable on ~~March 31,~~September 30, 2022, as we had no borrowings outstanding under this revolving credit facility.

The UFC Credit Facilities contain certain restrictive covenants around indebtedness, liens, fundamental changes, guarantees, investments, asset sales and transactions with affiliates.

The borrower’s obligations under the UFC Credit Facilities are guaranteed by certain of UFC Parent’s indirect wholly-owned domestic restricted subsidiaries, subject to certain exceptions. All obligations under the UFC Credit Facilities and the related guarantees are secured by a perfected first priority lien on substantially all of the borrower’s and the guarantors’ tangible and intangible assets, in each case, subject to permitted liens and certain exceptions.

Restrictions on dividends

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Both the Credit Facilities and the UFC Credit Facilities contain restrictions on our ability to make distributions and other payments from the respective credit groups and which therefore limit our ability to receive cash from our operating units to make dividends to the holders of Class A common stock. These restrictions on dividends include exceptions for, among other things, (1) amounts necessary to make tax payments, (2) a limited annual amount for employee equity repurchases, (3) distributions required to fund certain parent entities, (4) other specific allowable situations and (5) a general restricted payment basket, as defined in each of the Credit Facilities and the UFC Credit Facilities.

Other debt

As of ~~March 31,~~September 30, 2022, we had certain other revolving line of credit facilities and long-term debt liabilities, primarily related to On Location, with total committed amounts of $62.9 million, of which ~~$10.0~~$13.0 million was outstanding and ~~$52.0~~$49.9 million was available for borrowing based on the supporting asset base. Such facilities have maturity dates in ~~2022~~2023 and 2025, bearing interest at rates of 2.75%. plus LIBOR.

Our On Location revolving credit agreement has $42.9 million of total borrowing capacity and letter of credit and swingline loan sub-limits of up to $3.0 million each (the "OL Credit Facility"). As of ~~March 31,~~September 30, 2022, we had no borrowings outstanding under the OL Credit Facility and no letters of credit outstanding. The OL Credit Facility matures on the earlier of August 2026 or the date that is 91 days prior to the maturity date of the term loans under the Credit Facilities. The OL Credit Facility contains restrictions that are substantially similar to those in the Credit Facilities and the UFC Credit Facilities.

Cash Flows Overview

~~Three~~Nine months ended ~~March 31,~~September 30, 2022 and 2021


	Three Months Ended March 31,						Nine Months Ended September 30,
(in thousands)	2022			2021			2022			2021
Net income, adjusted for non-cash items	$	241,331		$	125,943		$	662,590		$	741,224
Changes in working capital		(309,072	)		13,264			(291,564	)		64,987
Changes in non-current assets and liabilities		9,643			(210,037	)		34,143			(618,142	)
Net cash used in operating activities	$	(58,098	)	$	(70,830	)
Net cash provided by investing activities	$	544,739		$	7,610
Net cash used in financing activities	$	(19,143	)	$	(77,843	)
Net cash provided by operating activities							$	405,169		$	188,069
Net cash used in investing activities							$	(661,049	)	$	(408,630	)
Net cash (used in) provided by financing activities							$	(268,171	)	$	371,055

~~Cash used in operating~~Operating activities ~~improved $12.7 million~~increased from ~~$70.8~~$188.1 million of cash ~~used~~provided in the ~~three~~nine months ended ~~March 31,~~September 30, 2021 to ~~$58.1~~$405.2 million of cash ~~used~~provided in the ~~three~~nine months ended ~~March 31,~~September 30, 2022. Cash ~~used~~provided in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 was primarily due to net income, adjusted for non-cash items, of $669.1 million offset by the increase in accounts receivable of ~~$157.1~~$299.4 million due to timing of events and the decrease in deferred revenue of ~~$153.6~~$43.6 million due to events taking place in 2022, such as Super Bowl LVI and various music ~~events,~~events. Cash provided in the nine months ended September 30, 2021 primarily represents a net loss of $450.8 million from the continued recovery from COVID-19 and higher amortization of content costs of $319.8 million from content deliveries at Endeavor Content partially offset by ~~net income, adjusted for non-cash items. Cash used in the three months ended March 31, 2021 primarily represents~~ an increase in other assets of ~~$189.4~~$699.7 million from additional investments in Endeavor Content film ~~assets and an increase in accounts receivable of $76.8 million.~~assets.

Investing activities increased from ~~$7.6~~$408.6 million of cash ~~provided~~used in the ~~three~~nine months ended ~~March 31,~~September 30, 2021 to ~~$544.7~~$661.1 million of cash ~~provided~~used in the ~~three~~nine months ended ~~March 31,~~September 30, 2022. Cash ~~provided~~used in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 primarily reflects payments for acquisitions of businesses, primarily for OpenBet, Madrid Open and Barrett Jackson of $1,434.5 million as well as capital expenditures and investments in non-controlled affiliates totaling $141.5 million offset by net cash proceeds received from the sale of the restricted Endeavor Content business and the sale of ~~$649.7 million offset by~~DBH of $910.8 million. Cash used in the nine months ended September 30, 2021 primarily reflects payments for acquisitions of businesses, ~~capital expenditures~~primarily for NCSA, Mailman and FlightScope, of $258.5 million, and investments in non-controlled affiliates, ~~totaling $104.7 million. Cash provided in the three months ended March 31, 2021~~ primarily ~~reflects proceeds received from sale~~Learfield IMG College, of ~~assets of $16.5 million offset by capital expenditures of $9.3~~$139.7 million.

Financing activities ~~improved~~decreased from ~~$77.8~~$371.1 million of cash provided in the nine months ended September 30, 2021 to $268.2 million of cash used in the ~~three~~nine months ended ~~March 31, 2021 to $19.1 million of cash used in the three months ended March 31,~~September 30, 2022. Cash used in the ~~three~~nine months ended ~~March 31,~~September 30, 2022 primarily reflects net payments on debt of ~~$14.5~~$314.0 million as well as distributions, payments of contingent consideration related to acquisitions and redemption of certain ~~of our~~pre-IPO equity interests totaling $45.7 million offset by net cash proceeds received in connection with the acquisition of ~~$7.1~~non-controlling interests of $92.5 million. Cash provided in the ~~three~~nine months ended ~~March 31,~~September 30, 2021 primarily reflects proceeds from the equity offerings, net of underwriting discounts, primarily from the IPO and private placements, of $1,886.6 million partially offset by $835.7 million used for the UFC Buyout and net payments on debt of ~~$60.7 million, redemption of certain of our equity interests of $7.2 million and distributions of $5.2~~$654.9 million.

Future sources and uses of liquidity

Our sources of liquidity are (1) cash on hand, (2) cash flows from operations, ~~and~~ (3) available borrowings under our Senior Credit Facilities (which borrowings would be subject to certain restrictive covenants contained therein). and (4) proceeds from potential divestitures. Based on our current expectations, we believe that these sources of liquidity will be sufficient to fund our working capital requirements and to meet our commitments, including long-term debt service for at least the next 12 months.

Our cash and cash equivalents consist primarily of cash on deposit with banks and liquid investments in money market funds. As of March 31, 2022, cash and cash equivalents totaled $2,030.3 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 On Location, were $147.0 million as of March 31, 2022. In connection with our buyout of the minority interests of Endeavor China and On Location in April 2022, the distribution restrictions are no longer applicable.

We expect that our primary liquidity needs will be cash to (1) provide capital to facilitate organic growth of our business, (2) fund future investments, acquisitions, ~~(including OpenBet~~ and ~~Madrid Open, which closed in April 2022)~~earn-outs and ~~settle acquisition earn-outs~~deferred purchase price payments from prior acquisitions, (3) pay operating expenses, including cash compensation to our employees, (4) fund capital expenditures, (5) pay interest and principal when due on our Senior Credit Facilities, (6) make payments under the tax receivable agreements, (7) pay income taxes, (8) make distributions to members and (9) ~~reduce our outstanding indebtedness under our Senior Credit Facilities.~~

~~Table~~an expected additional $250 million reduction of ~~Contents~~debt by the end of 2022.

We expect to refinance the Senior Credit Facilities prior to the maturity of the outstanding loans with the first maturity for outstanding term loans under the Senior Credit Facilities occurring in 2025. We currently anticipate being able to secure funding for such refinancing at favorable ~~terms,~~terms; however, our ability to do so may be impacted by many factors, including our growth and other factors specific to our business as well as ~~macro- economic~~macro-economic factors beyond our control.

Tax distributions by Endeavor Operating Company

Other than as described below, we expect to retain all our future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends for the foreseeable future.

Subject to funds being legally available, we expect that Endeavor Operating Company will make distributions to each of its members, including the Endeavor Profits Units holders and Endeavor Manager, in amounts sufficient to pay applicable taxes attributable to each member’s allocable share of taxable income of Endeavor Operating Company. Tax distributions made in respect of Endeavor Operating Company Units (but not Endeavor Profits Units) will generally be made pro rata in respect of such Units, as described in the Endeavor Operating Company LLC Agreement. However, in certain situations, tax distributions made to Endeavor Manager may be reduced (relative to those tax distributions made to the other members of Endeavor Operating Company) to reflect the income tax rates to which Endeavor Manager and Endeavor Group Holdings are subject and certain other factors. Non pro-rata tax distributions may be paid to holders of Endeavor Profits Units.

Tax Receivable Agreements

Generally, we are required under the tax receivable agreements to make payments to certain persons that held direct or indirect interest in EOC and UFC Parent prior to the IPO ("TRA Holders") that are generally equal to 85% of the applicable cash tax savings, if any, in U.S. federal, state and local income tax or franchise tax that we realize or are deemed to realize (determined by using certain assumptions) as a result of favorable tax attributes that will be available to us as a result of certain transactions contemplated in connection with our IPO, exchanges of Endeavor Operating Company Units for Class A common stock or cash and payments made under the tax receivable agreements. We will generally be entitled to retain the remaining 15% of these cash tax savings. Payments will be due only after we have filed our U.S. federal and state income tax returns. Payments under the tax receivable agreements will bear interest from the due date of the tax return reflecting the applicable tax benefits. We currently expect to fund these payments from cash flows from operations generated by our subsidiaries as well as from excess tax distributions that we receive from our subsidiaries. The amounts payable under the tax receivable agreements will vary depending upon a number of factors, including the amount, character and timing of the taxable income of EGH in the future. If the existing valuation allowance recorded against deferred tax assets is released in a future period as a result of having sufficient taxable income, among other criteria, or other taxtax attributes subject to the tax receivable agreements are determined to be payable, additional tax receivable agreements liabilities may be recorded. We ~~believe~~continue to evaluate the possibility that during 2022, the relevant criteria may be met, and at that time, we would release a valuation allowance, which such benefit may exceed $700 million. In addition, we would record the associated tax receivable agreements liability, which if based on all exchanges that have occurred as of ~~March 31,~~September 30, 2022, would exceed $900 million.

Under the tax receivable agreements, as a result of certain types of transactions or occurrences, including a transaction resulting in a change of control or a material breach of our obligations under the tax receivable agreements, we may also be required to make payments to the TRA Holders in amounts equal to the present value of future payments we are obligated to make under the tax receivable agreements. If the payments under the tax receivable agreements are accelerated, we may be required to raise additional debt or equity to fund such payments. To the extent that we are unable to make payments under the tax receivable agreements as a result of having insufficient funds (including because our credit agreements restrict the ability of our subsidiaries to make distributions to us) such payments will generally be deferred and will accrue interest until paid.

Critical Accounting Estimates

For a description of our policies regarding our critical accounting estimates, see "Critical Accounting Policies and Estimates" in our 2021 Annual Report. During the ~~three~~nine months ended ~~March 31,~~September 30, 2022, there were no significant changes in our critical accounting policies and estimates or the application or the results of the application of those policies to our unaudited consolidated financial statements from those previously disclosed in the 2021 Annual Report.

Recent Accounting Standards

See Note 3 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report for further information on certain accounting standards that have been recently adopted or that have not yet been required to be implemented and may be applicable to our future operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest rate risk

Our exposure to changes in interest rates relates primarily to the floating interest component on our long-term debt. The Senior Credit Facilities bear interest at floating rates and we regularly monitor and manage interest rate risks. ~~$1.5~~$2.25 billion of our Senior Credit Facilities have been swapped to fixed rates. For the remainder, holding debt levels constant, ~~as of March 31, 2022,~~ a 1% increase in the effective interest rates would have increased our annual interest expense by ~~$41 million.~~$32 million for the nine months ended September 30, 2022.

Certain tenors of LIBOR were discontinued on December 31, 2021 and the remaining tenors are expected to be discontinued on or after June 30, 2023. Our loans are benchmarked off LIBOR tenors, including 1 month and 3 month LIBOR, expiring in June 2023. Our Credit Agreement includes fallback language for the new standard benchmark rate that will be offered, Secured Overnight Financing Rate "SOFR." We cannot quantify the impact of LIBOR’s replacement benchmark rate at this time.

~~Table of Contents~~

Foreign currency risk

We have operations in several countries outside of the United States, and certain of our operations are conducted in foreign currencies, principally the British Pound and the Euro. The value of these currencies fluctuates relative to the U.S. dollar. These changes could adversely affect the U.S. dollar equivalent of our non-U.S. dollar revenue and operating costs and expenses and reduce international demand for our content and services, all of which could negatively affect our business, financial condition and results of operations in a given period or in specific territories.

Holding other variables constant (such as interest rates and debt levels), if the U.S. dollar appreciated by 10% against the foreign currencies used by our operations in the ~~three~~nine months ended ~~March 31,~~September 30, 2022, revenues would have decreased by approximately ~~$24.1~~$72.6 million and operating income would have improved by approximately ~~$2.0~~$0.6 million.

We regularly review our foreign exchange exposures that may have a material impact on our business and from time to time use foreign currency forward exchange contracts or other derivative financial instruments to hedge the effects of potential adverse fluctuations in foreign currency exchange rates arising from these exposures. We do not enter into foreign exchange contracts or other derivatives for speculative purposes.

Item 4. Control Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

The Company’s management has evaluated, with the participation of the chief executive officer and the chief financial officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Based on this evaluation, the chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of ~~March 31,~~September 30, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~March 31,~~September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we may be involved in claims and proceedings arising in the course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. For a description of our legal proceedings, see Note 16 to our unaudited consolidated financial statements included elsewhere in this Quarterly Report.

Item 1A. Risk Factors

Our business, financial condition and operating results can be affected by a number of factors, whether current known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of these potential risks and uncertainties, see Part I, Item 1A. "Risk Factors" in our 2021 Annual ~~Report.~~Report and Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022, which risk factors are incorporated herein by reference. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and the price of our common stock. ~~There~~Other than the risk factors set forth below, there have been no material changes in our risk factors to those included in our 2021 Annual Report.

36Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Except as previously disclosed in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 11, 2022 in connection with an acquisition, no unregistered sales of the Company's equity securities were made during the three months ended September 30, 2022. The shares of Class A common stock relating to such acquisition were offered and sold in private placements exempt from registration under Section 4(a)(2) of the Securities Act.

Item 5. Other Information

On November 8, 2022, Christian Muirhead ceased performing the functions and responsibilities of chief communications officer and, in his capacity of Co-Chairman of WME Talent Agency, reports solely to Mark Shapiro, the Company’s President, resulting in Mr. Muirhead ceasing to be an executive officer of the Company. In connection with the foregoing, on November 8, 2022, Mr. Muirhead’s employment agreement, dated as of April 19, 2022, was amended to reflect these changes (the “Amendment”).

The foregoing summary of the Amendment is not complete and is qualified in its entirety by reference to the Amendment, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

~~Table of Contents~~

Item 6. Exhibits

Exhibit Number
Description
Form
File No.
Exhibit
Filing Date
Filed/Furnished Herewith
3.1
Amended and Restated Certificate of Incorporation of Endeavor Group Holdings, Inc.
10-Q
001-40373
3.1
06/02/2021

3.2
Amended and Restated Bylaws of Endeavor Group Holdings, Inc.
10-Q
001-40373
3.2
11/15/2021

4.1
Specimen Stock Certificate
S-1
333-254908
4.1
03/31/2021

31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*

31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

*

32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

**

32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

**

101.INS
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

*

101.SCH
Inline XBRL Taxonomy Extension Schema Document

*

101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document

*

101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document

*

101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document

*

101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document

*

104
Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101

*


Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed/Furnished Herewith
3.1	Amended and Restated Certificate of Incorporation of Endeavor Group Holdings, Inc.	10-Q	001-40373	3.1	06/02/2021

3.2	Amended and Restated Bylaws of Endeavor Group Holdings, Inc.	10-Q	001-40373	3.2	11/15/2021

4.1	Specimen Stock Certificate	S-1	333-254908	4.1	03/31/2021

10.1†	Amendment No. 2 to the Equity Purchase Agreement, dated August 2, 2022 by and among Endeavor Group Holdings, Inc., Endeavor Operating Company, LLC and Light & Wonder, Inc.	10-Q	001-40373	10.2	08/12/2022

10.2	Amendment, dated November 8, 2022, to Term Employment Agreement by and among Endeavor Group Holdings, Inc., Endeavor Operating Company, LLC and Christian Muirhead, dated April 19, 2021					*

31.1	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*

31.2	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					*

32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					**

32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.					**

101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document					*

101.SCH	Inline XBRL Taxonomy Extension Schema Document					*

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					*

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					*

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document					*

101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document					*

104	Cover Page Interactive Data File – formatted as Inline XBRL and contained in Exhibit 101					*

* Filed herewith

** Furnished herewith

† Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company undertakes to furnish supplemental copies of any of the omitted schedules upon request by the SEC.

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		ENDEAVOR GROUP HOLDINGS, INC.

Date: ~~May 12,~~November 10, 2022	By:		/s/ Ariel Emanuel
			Ariel Emanuel
			Chief Executive Officer
			(Principal Executive Officer)

Date: ~~May 12,~~November 10, 2022	By:		/s/ Jason Lublin
			Jason Lublin
			Chief Financial Officer
			(Principal Financial Officer)


	Three Months Ended March 31, 2021
	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, 2021	$	168,254		$	22,519	$	468,633		$	(190,786	)	$	277,847		$	686,129		$	963,976
Comprehensive (loss) income		(2,098	)		—		(24,870	)		16,552			(8,318	)		29,344			21,026
Equity-based compensation expense		—			—		3,444			—			3,444			6,006			9,450
Distributions		—			—		(718	)		—			(718	)		(8,124	)		(8,842	)
Accretion of redeemable non-controlling interests		(271	)		—		271			—			271			—			271
Establishment of non-controlling interests		2,888			—		560			—			560			(3,448	)		(2,888	)
Balance at March 31, 2021	$	168,773		$	22,519	$	447,320		$	(174,234	)	$	273,086		$	709,907		$	982,993


	Three Months Ended March 31, 2022

Basic earnings per share
Numerator
Consolidated net income	$	517,666
Net income attributable to NCI (Endeavor Operating Company)		170,943
Net income attributable to NCI (Endeavor Manager Units)		27,177
Net income attributable to EGH common shareholders	$	319,546
Denominator
Weighted average Class A Common Shares outstanding - Basic		268,489,176
Basic earnings per share	$	1.19


	Three Months Ended March 31, 2022

Diluted earnings per share
Numerator
Consolidated net income	$	517,666
Net income attributable to NCI (Endeavor Operating Company)		5,407
Net income attributable to EGH common shareholders	$	512,259

Denominator
Weighted average Class A Common Shares outstanding - Basic		268,489,176
Additional shares assuming exchange of all Endeavor Profits Units		4,219,455
Additional shares from RSUs, Stock Options and Phantom Units, as calculated using the treasury stock method		2,863,781
Additional shares assuming exchange of all Endeavor Operating Units and Endeavor Manager Units		167,466,205
Weighted average number of shares used in computing diluted earnings per share		443,038,617

Diluted earnings per share	$	1.16