ENDEAVOR : Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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
the Prospectus. The historical financial data discussed below reflects our
historical results of operations and financial position and relate to periods
prior to the reorganization transactions. As a result, the following discussion
does not reflect the significant impact that such events will have on us.

BUSINESS OVERVIEW

Endeavor is a premium intellectual property, content, events, and experiences
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, PBR and Euroleague, 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.

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, 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. Euroleague is one of the most popular indoor sports leagues in the world,
averaging attendance of over 8,500 per game in the 2019-2020 season.

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, and we have a strategic
partnership with the PGA-sanctioned Asian Tour. We also operate other events on
behalf of third parties, including the AIG Women’s British Open and Fortnite
World Cup. Through On Location, we are a leader in historically providing more
than 900 premium experiences 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 (“IOC”), the NFL, and
National Hockey League (“NHL”), 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.




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Additionally, we own and operate IMG Academy, a leading academic and sports
training institution located in Florida.

Representation

Our Representation segment provides services to more than 7,000 talent and
corporate clients and includes our content division, Endeavor Content. 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. Endeavor Content provides a premium alternative to traditional
content studios, offering a range of services including content development,
production, financing, sales, and advisory services for creators.

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

Endeavor Operating Company is a limited liability company, which is treated as a
partnership for U.S. federal income tax purposes and is therefore not subject to
U.S. corporate income taxes. Endeavor Operating Company’sU.S. and foreign
corporate subsidiaries are subject to entity-level taxes. Endeavor Operating
Company
is also subject to entity-level income taxes in certain U.S. state and
local jurisdictions.

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 has 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.

The COVID-19 pandemic resulted in various governmental restrictions and began to
have a significant adverse impact on our business and operations 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. Furthermore, following the merger of our IMG College business with
Learfield, the operating results of the merged business have been weaker than
anticipated driven by lower than expected sales and have been further impacted
by COVID-19 as a result of the delay, cancellation of or shortened college
football season




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and the prohibition of fans by many teams, which has resulted in impairment
charges at Learfield IMG College adversely impacting our equity earnings. We
also recognized goodwill and intangible asset impairment charges primarily at
our Events, Experiences & Rights segment, driven by lower projections as a
result of the impact of COVID-19 and restructuring in certain of our businesses.
In the future, any further impact to our business as a result of COVID-19 could
result in additional impairments of goodwill, intangibles, long-term investments
and long-lived assets.

In response to the COVID-19 pandemic, we implemented cost-savings initiatives
across the organization in 2020, including salary reductions, hiring freezes,
furloughs, reduced work arrangements, and reductions of our workforce,
eliminating costs for consultants, reducing travel and expenses, reducing our
marketing spend, cancelling internal company events, and reducing other
operating expenses, capital expenditures, and acquisition activity. We believe
the actions we have taken and continue to implement will enhance our financial
flexibility and provide us the ability to scale up quickly as the impact of
the COVID-19 pandemic subsides.

While activity has resumed in certain of our businesses and restrictions have
been lessened or lifted, restrictions impacting certain of our businesses remain
in effect in locations where we are operating and could in the future be reduced
or increased, or removed or reinstated. As a result of this and numerous other
uncertainties, including the duration of the pandemic, the effectiveness of mass
vaccinations and other public health efforts to mitigate the impact of the
pandemic, additional postponements or cancellations of live sporting events and
other in-person events, and changes in consumer preferences towards our business
and the industries in which we operate, we are unable to accurately predict the
full impact of COVID-19 on our business, results of operations, financial
position and cash flows, but acknowledge that its impact on our business and
results of operations may be material. The ongoing pandemic has had a
significant impact on our cash flows from operations. We expect that recovery
will continue to be gradual and that the wider impact on revenue and cash flows
will vary, but will generally depend on the factors listed above and the general
uncertainty surrounding COVID-19. As an example, for those live events that
resume, attendance may continue at significantly reduced levels throughout 2021,
and any resumption may bring increased costs to comply with new health and
safety guidelines. After considering the impact of COVID-19, the effects of the
Company’s related cost saving initiatives and the proceeds received from the
initial public offering and private placements, the Company believes that
existing cash, cash generated from operations and available capacity for
borrowings under its credit facilities will satisfy working capital
requirements, capital expenditures, and debt service requirements for at least
the succeeding year.

RESULTS OF OPERATIONS

The following is a discussion of our consolidated results of operations for the
three months ended March 31, 2021 and 2020. This information is derived from our
accompanying consolidated financial statements prepared in accordance with GAAP.



                                                          Three Months Ended March 31,
(in thousands)                                              2021                 2020
Revenue                                                $     1,069,582$ 1,190,397
Operating expenses:
Direct operating costs                                         546,392            681,284
Selling, general and administrative expenses                   381,113            388,971
Insurance recoveries                                           (19,657 )          (17,119 )
Depreciation and amortization                                   67,236             80,447
Impairment charges                                                  -               3,050

Total operating expenses                                       975,084          1,136,633

Operating income                                                94,498             53,764
Other (expense) income:
Interest expense, net                                          (68,351 )          (69,984 )
Other (expense) income, net                                     (3,215 )           25,357

Income before income taxes and equity losses of
affiliates                                                      22,932              9,137
Provision for income taxes                                       5,085             48,604

Income (loss) before equity losses of affiliates                17,847            (39,467 )
Equity losses of affiliates, net of tax                        (15,471 )          (11,794 )

Net income (loss)                                                2,376            (51,261 )
Net income attributable to non-controlling
interests                                                       27,246              3,695

Net loss attributable to Endeavor Operating
Company, LLC                                                $ (24,870)$(54,956 )





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Revenue

Revenue decreased $120.8 million, or 10.1%, to $1,069.6 million for the three
months ended March 31, 2021 compared to the three months ended March 31, 2020.

Owned Sports Properties increased by $51.3 million, or 22.1%. The
          increase was primarily driven by an increase in media rights fees and
          event related revenue due to the increase in the number of events held at
          UFC.




     •    Events, Experiences & Rights decreased by $129.2 million, or 19.3%. The
          decline was primarily attributable to cancellations, postponements and
          capacity restrictions of live sport events and other in-person events
          partially offset by an increase in media rights fees primarily driven by
          the delay of the 2020 soccer season in Europe, which resulted in modified
          schedules for most leagues moving matches into 2021, all resulting from
          COVID-19.




     •    Representation decreased by $43.8 million, or 15.0%. The decline was
          primarily driven by the impact of COVID-19 on corporate spending on
          marketing and experiential activations as well as a reduction at Endeavor
          Content due to fewer content deliveries in the three months ended
          March 31, 2021.


Direct operating costs

Direct operating costs decreased $134.9 million, or 19.8%, to $546.4 million for
the three months ended March 31, 2021 compared to the three months ended
March 31, 2020. The decrease was primarily attributable to approximately
$226 million of reduced event costs resulting from the postponement,
cancellation and capacity restrictions of sports and live events due
to COVID-19. This decrease was partially offset by an increase of approximately
$108 million in media rights costs related to the COVID-19 delay of the 2020
soccer season in Europe, which resulted in modified schedules for most leagues
moving matches into 2021.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased $7.9 million, or 2.0%, to
$381.1 million for the three months ended March 31, 2021 compared to the three
months ended March 31, 2020. The decrease was principally due to lower cost of
personnel, reduced travel and other operating expenses resulting from the
ongoing impact of our 2020 COVID-19 related cost savings initiatives.

Insurance recoveries

We maintain events cancellation insurance policies for a significant number of
our events. For the three months ended March 31, 2021 and 2020, we recognized
$19.7 million and $17.1 million of insurance recoveries, respectively, which
primarily related to cancelled events in our Events, Experiences & Rights
segment due to COVID-19.

Depreciation and amortization

Depreciation and amortization decreased $13.2 million, or 16.4%, to
$67.2 million for the three months ended March 31, 2021 compared to the three
months ended March 31, 2020. The decrease was primarily driven by certain UFC
intangible assets becoming fully amortized in August 2020.

Impairment charges

For the three months ended March 31, 2020, we recorded $3.1 million of
intangible asset impairment charges primarily in our Events, Experiences &
Rights and Representation segments.

Interest expense, net

Interest expense, net decreased $1.6 million to $68.4 million for the three
months ended March 31, 2021 compared to the three months ended March 31, 2020,
principally due to the decline in interest rates and the repricing of the UFC
Credit Facilities offset by an increase in our indebtedness.




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Other (expense) income, net

Other income (expense), net changed from income of $25.4 million for the three
months ended March 31, 2020 to expense of $3.2 million for the three months
ended March 31, 2021. The expense for the three months ended March 31, 2021
included an $11.4 million loss due to the change in the fair value of embedded
foreign currency derivatives partially offset by $7.8 million of gains from
changes in fair value of equity investments. The income for the three months
ended March 31, 2020 primarily included a $27.1 million gain recognized for the
acquisition of the remaining 50% membership interests of FC Diez Media and a
$8.1 million gain related to the deconsolidation of Asian Tour Media partially
offset by $8.1 million related to foreign currency transaction losses and
$2.3 million related to the write off of certain investments.

Provision for income taxes

The provision for income taxes decreased $43.5 million to $5.1 million for the
three months ended March 31, 2021. The change was primarily due to tax expense
of $32.3 million related to acquisitions and subsequent tax restructuring during
the three months ended March 31, 2020 as compared to March 31, 2021.

Equity losses of affiliates, net of tax

Equity losses of affiliates increased $3.7 million to $15.5 million for the
three months ended March 31, 2021 compared to the three months ended March 31,
2020
. Equity losses for the three months ended March 31, 2021 is primarily due
to the losses related to our investment in Learfield IMG College. Equity losses
for the three months ended March 31, 2020 is primarily due to the losses related
to our investment in Learfield IMG College and the impairment of one of our
investments offset by income from our investment in FC Diez Media prior to the
acquisition of the remaining 50% membership interests.

Net income attributable to non-controlling interests

Net income attributable to non-controlling interests increased $23.6 million to
$27.2 million for the three months ended March 31, 2021 compared to the three
months ended March 31, 2020. The increase was primarily driven by the increase
in the net income attributable to the UFC.

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,
          (in thousands)                      2021                2020
          Revenue:
          Owned Sports Properties        $      283,481$   232,167
          Events, Experiences & Rights          539,610            668,776
          Representation                        248,909            292,734
          Eliminations                           (2,418 )           (3,280 )

          Total Revenue                  $    1,069,582$ 1,190,397

          Adjusted EBITDA:
          Owned Sports Properties        $      145,549$   102,294
          Events, Experiences & Rights           39,050             69,123
          Representation                         61,483             68,613
          Corporate                             (46,616 )          (54,492 )




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Owned Sports Properties

The following table sets forth our Owned Sports Properties segment results for
the three months ended March 31, 2021 and 2020:



                                                    Three Months Ended March 31,
  (in thousands)                                      2021                 2020
  Revenue                                        $      283,481$      232,167
  Direct operating costs                         $       92,216$       90,458
  Selling, general and administrative expenses   $       47,712$       39,441
  Adjusted EBITDA                                $      145,549$      102,294
  Adjusted EBITDA margin                                  51.3%                44.1%

Revenue for the three months ended March 31, 2021 increased $51.3 million, or
22.1%, to $283.5 million, compared to the three months ended March 31, 2020. The
increase was driven primarily by an increase in media rights fees and event
related revenue due to the increase in the number of events held at UFC. This
increase was partially offset by a reduced number of events and lack of ticket
sales at PBR due to COVID-19.

Direct operating costs for the three months ended March 31, 2021 increased
$1.8 million, or 1.9%, to $92.2 million, compared to the three months ended
March 31, 2020. The increase was attributable to an increase in the number of
UFC events held in the three months ended March 31, 2021 partially offset by
savings from holding events at the UFC APEX facility and a reduced number of PBR
events.

Selling, general and administrative expenses for the three months ended
March 31, 2021 increased $8.3 million, or 21.0%, to $47.7 million, compared to
the three months ended March 31, 2020. The increase was primarily attributable
to an increase in travel expenses related to UFC’s Fight Island 3.0.

Adjusted EBITDA for the three months ended March 31, 2021 increased
$43.3 million, or 42.3%, to $145.5 million, compared to the three months ended
March 31, 2020. The increase in Adjusted EBITDA was primarily driven by
increased revenue at UFC slightly offset by the increase in selling, general and
administrative expenses.

Events, Experiences & Rights

The following table sets forth our Events, Experiences & Rights segment results
for three months ended March 31, 2021 and 2020:



                                                    Three Months Ended March 31,
  (in thousands)                                      2021                 2020
  Revenue                                        $      539,610$      668,776
  Direct operating costs                         $      421,536$      513,750
  Selling, general and administrative expenses   $      100,271$      110,871
  Adjusted EBITDA                                $       39,050$       69,123
  Adjusted EBITDA margin                                   7.2%                10.3%

Revenue for the three months ended March 31, 2021 decreased $129.2 million, or
19.3%, to $539.6 million, compared to the three months ended March 31, 2020.
Event and performance revenues decreased $244.5 million attributable to the 2021
cancellations of Hyde Park Winter Wonderland, Frieze LA and Rio Open among
others and restrictions around the NFL Playoffs, Super Bowl and Bowl Games in
2021 partially offset by the Miami Open taking place in 2021 but cancelled in
2020 all due to COVID-19. These declines were partially offset by an increase in
media rights fees of $106.5 million primarily driven by the COVID-19 delay of
the 2020 soccer season in Europe, which resulted in modified schedules for most
leagues moving matches into 2021.

Direct operating costs for the three months ended March 31, 2021 decreased
$92.2 million, or 17.9%, to $421.5 million, compared to the three months ended
March 31, 2020. The decrease was driven by a reduction in live event costs of
$206.9 million due to COVID-19 related event cancellations, delays and
restrictions partially offset by an increase in media rights expenses of
$108 million due to the increase in number of matches in 2021.

Selling, general and administrative expenses for the three months ended
March 31, 2021 decreased $10.6 million, or 9.6%, to $100.3 million, compared to
the three months ended March 31, 2020. The decrease was primarily driven by
reduced cost of personnel, travel and other operating expenses resulting from
our 2020 COVID-19related cost savings initiatives.




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Adjusted EBITDA for the three months ended March 31, 2021 decreased
$30.1 million, or 43.5%, to $39.1 million, compared to the three months ended
March 31, 2020. The decrease in Adjusted EBITDA was primarily driven by the
reduction in revenue partially offset by the decrease in related direct
operating costs, reduced selling, general and administrative expenses and an
increase in insurance recoveries related to cancelled events.

Representation

The following table sets forth our Representation segment results for three
months ended March 31, 2021 and 2020:



                                                    Three Months Ended March 31,
                                                      2021                 2020
  (in thousands)
  Revenue                                        $      248,909$      292,734
  Direct operating costs                         $       35,058$       68,898
  Selling, general and administrative expenses   $      152,159$      155,226
  Adjusted EBITDA                                $       61,483$       68,613
  Adjusted EBITDA margin                                  24.7%                23.4%

Revenue for the three months ended March 31, 2021 decreased $43.8 million, or
15.0%, to $248.9 million, compared to the three months ended March 31, 2020. The
decrease was primarily attributable to the impact of COVID-19 on corporate
spending on marketing and experiential activations as well as a reduction at
Endeavor Content due to fewer content deliveries in the three months ended
March 31, 2021.

Direct operating costs for the three months ended March 31, 2021 decreased
$33.8 million, or 49.1%, to $35.1 million, compared to the three months ended
March 31, 2020. The decrease was primarily attributable to the above mentioned
impact of COVID-19 on experiential activations and reduced content deliveries.

Selling, general and administrative expenses for the three months ended
March 31, 2021 decreased $3.1 million, or 2.0%, to $152.2 million, compared to
the three months ended March 31, 2020. The decrease was primarily driven by
reduced cost of personnel, travel and other operating expenses.

Adjusted EBITDA for the three months ended March 31, 2021 decreased
$7.1 million, or 10.4%, to $61.5 million, compared to the three months ended
March 31, 2020. The decrease in Adjusted EBITDA was driven by the decline in
revenue partially offset by the decline in direct operating costs and selling,
general and administrative expenses.

Corporate

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 months
ended March 31, 2021 and 2020:



                                     Three Months Ended March 31,
                                      2021                  2020
               (in thousands)
               Adjusted EBITDA   $      (46,616 )$      (54,492 )

Adjusted EBITDA for the three months ended March 31, 2021 improved $7.9 million,
or 14.5%, to $(46.6) million, compared to the three months ended March 31, 2020.
The decrease in expenses was primarily due to reduced cost of personnel, travel,
and professional fees.

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, COVID-19 related expenses, and certain other items when applicable.
Adjusted EBITDA margin is a non-GAAP financial measure defined as Adjusted
EBITDA divided by Revenue.




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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 Operating Company adjusted to exclude our share
(excluding those relating to non-controlling interests) of the adjustments used
to calculate Adjusted EBITDA, other than income taxes, net interest expense and
depreciation, on an 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.

Adjusted EBITDA



                                                          Three Months Ended March 31,
(in thousands)                                             2021                  2020
Net income (loss)                                     $        2,376$      (51,261 )
Provision for income taxes                                     5,085                48,604
Interest expense, net                                         68,351                69,984
Depreciation and amortization                                 67,236                80,447
Equity-based compensation expense (1)                         16,491                 7,771
Merger, acquisition and earn-out costs(2)                     10,985                10,162
Certain legal costs(3)                                         3,952                 2,802
Restructuring, severance and impairment(4)                       407                16,942
Fair value adjustment - equity investments (5)                (7,799 )               2,809
Equity method losses - Learfield IMG College (6)              18,805                11,756
COVID-19 related costs (7)                                        -                    210
Other (8)                                                     13,577               (23,985 )

Adjusted EBITDA                                       $      199,466$      176,241

Net income (loss) margin                                         0.2 %                (4.3 )%
Adjusted EBITDA margin                                          18.6 %                14.8 %




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Adjusted Net Income



                                                                Three Months Ended March 31,
(in thousands)                                                   2021                  2020
Net income (loss)                                           $        2,376$      (51,261 )
Net income attributable to non-controlling interests               (27,246 )              (3,695 )

Net loss attributable to Endeavor Operating Company, LLC           (24,870 )             (54,956 )
Amortization                                                        45,728                59,964
Equity-based compensation expense(1)                                16,491                 7,771
Merger, acquisition and cam-out costs(2)                            10,985                10,162
Certain legal costs (3)                                              3,952                 2,802
Restructuring, severance and impairment(4)                             407                16,942
Fair value adjustment - equity investments (5)                      (7,799 )               2,809
Equity method losses - Learfield IMG College (6)                    18,805                11,756
COVID-19 related costs (7)                                              -                    210
Other (8)                                                           13,577               (23,985 )
Tax effects of adjustments (9)                                      (6,319 )               1,366
Adjustments allocated to non-controlling interests (10)            (12,847 )             (23,365 )
Valuation allowance and other tax items(11)                             -                 32,338

Adjusted Net Income                                         $       58,110$       43,814





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

The increase for the three months ended March 31, 2021 as compared to the three
months ended March 31, 2020 was primarily due to new awards granted subsequent
to March 31, 2020 and expense related to our future incentive awards.
Equity-based compensation was recognized in all segments and Corporate for the
three months ended March 31, 2021 and 2020.

    (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 remain our employees.

Such costs for the three months ended March 31, 2021 primarily related to fair
value adjustments for contingent consideration liabilities related to acquired
businesses and acquisition earn-out adjustments of approximately $7 million,
which primarily related to our Events, Experiences & Rights and Representation
segments. Professional advisor costs were approximately $4 million and primarily
related to our Events, Experiences & Rights segment.

Such costs for the three months ended March 31, 2020 primarily related to
acquisition earn-outadjustments of approximately $6 million, primarily related
to our Representation segment. Professional advisor costs were approximately
$4 million primarily related to our Events, Experiences & Rights segment.

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


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

Such costs for the three months ended March 31, 2021 primarily related
to severance related to the cessation of operations of certain events in our
Events, Experiences & Rights segment.

Such costs for the three months ended March 31, 2020 included approximately
$10 million related to the impairment of certain other assets and investments,
approximately $3 million related to the impairment of intangible assets and
approximately $4 million for severance and restructuring expenses, in each case
primarily related to COVID-19, and primarily related to our Owned Sports
Properties
and Events, Experiences & Rights 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.




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    (6)  Relates to equity method losses, including impairment charges, from our
         investment in Learfield IMG College following the merger of our IMG
         College business with Learfield in December 2018.


    (7)  Includes COVID-19 related costs that are non-recurring and incremental
         costs that would have otherwise not been incurred. Such adjustment in
         2020 does not include the write-off of $9.3 million of deferred event
         costs, net of insurance recoveries, which is adjusted in our Events,
         Experiences & Rights segment profitability measure.


    (8)  For the three months ended March 31, 2021, other costs were comprised
         primarily of a loss of approximately $11 million related to non-cash fair
         value adjustments of embedded foreign currency derivatives, which related
         primarily to our Events, Experiences & Rights segment and approximately
         $2 million related to transaction costs associated with the repricing of
         the UFC Credit Facilities in our Owned Sports Properties segment.

For the three months ended March 31, 2020, other costs were comprised primarily
of a gain of approximately $27 million related to the consolidation of a
previously held equity interest in FC Diez Media, a gain of approximately
$8 million associated with the deconsolidation of Asian Tour Media Pte. Ltd., a
gain of approximately $2 million related to non-cash fair value adjustments of
embedded foreign currency derivatives and an approximately $3 million increase
related to purchase price adjustments to deferred revenue and ticket inventory
at On Location, all of which related primarily to our Events, Experiences &
Rights segment, and losses of approximately $8 million on foreign exchange
transactions, which related to all of our segments and Corporate.

    (9)  Reflects the U.S. and non-U.S. tax impacts with respect to each
         adjustment noted above, as applicable.


    (10) Reflects the share of the adjustments noted above that are allocated to
         our non-controlling interests, net of tax.


    (11) Such items for the three months ended March 31, 2020 relate to a
         $32.3 million tax expense recorded as a result of acquisitions and
         subsequent tax restructurings.

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 been funded primarily through equity
contributions from our pre-IPO institutional investors and the issuance of
long-term debt.

Debt facilities

As of March 31, 2021, we had an aggregate of $5.6 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”). We have UFC Holdings, LLC’s term loan and revolving credit
facilities (the “UFC Credit Facilities” and, collectively with the Credit
Facilities, the “Senior Credit Facilities”). We have available borrowing
capacity of approximately $311 million under the Senior Credit Facilities,
consisting primarily of availability under the UFC Credit Facilities.

Credit Facilities

As of March 31 2021, we have borrowed an aggregate of $3.1 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 0.50%, (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 May 2020, we issued a separate tranche of term loans, which accrue interest
at a rate equal to adjusted LIBOR plus 8.50%, with a LIBOR floor of 1.00%.




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On May 20, 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. As of March 31, 2021, approximately 49% of our
Term Loans is hedged. See Note 11, “Debt”, to our unaudited consolidated
financial statements for Endeavor Operating Company, LLC included elsewhere in
this Quarterly Report for further detail on the Credit Facilities.

As of March 31, 2021, we have the option to borrow incremental term loans in an
aggregate amount equal to at least $290.0 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. As of March 31, 2021, we had $69.1 million outstanding
under this revolving credit facility and outstanding letters of credit of
$25.0 million. The revolving facility matures on May 18, 2023.

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. For the financial covenant test period ended March 31, 2021, we
repaid $94 million under the revolving credit facility such that the quarterly
covenant test was not applicable. Subsequently, we drew $94 million under the
revolving credit facility in April 2021. In April 2021, we entered into an
amendment to the credit agreement governing the Credit Facilities to, among
other things, waive the financial covenant for the test periods ending June 30,
2021
, September 30, 2021 and December 31, 2021. In addition, following the
successful completion of our initial public offering in April 2021, the maturity
date of the revolving facility was extended to May 18, 2024.

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, 2021, we have borrowed an aggregate of $2.4 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 0.50%, (b) the
prime rate, (c) adjusted LIBOR for a one-month interestperiod plus 1.00% and (d)
1.75%, plus (ii) 1.75%-2.00%. The term loans under the UFC Credit Facilities
include 1% principal amortization payable in equal quarterly installments and
mature on April 29, 2026. See Note 11, “Debt,” to our unaudited consolidated
financial statements for Endeavor Operating Company, LLC included elsewhere in
this Quarterly Report for further detail on the UFC Credit Facilities.

As of March 31, 2021, 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.




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The UFC Credit Facilities also include a revolving credit facility, which had
$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, 2021, we have no borrowings outstanding under this
revolving credit facility and no outstanding letters of credit. 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 tested on
March 31, 2021, 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

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 maintain the 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. Subsequent to March 31, 2021, the UFC LLC Agreement was amended to
remove certain covenants restricting distributions and other payments.

Other debt

As of March 31, 2021, we had certain other revolving line of credit facilities
and long-term debt liabilities, primarily related to Endeavor Content and On
Location, with total committed amounts of $365.0 million, of which
$250.1 million was outstanding and $8.6 million was available for borrowing
based on the supporting asset base. Such facilities have maturity dates in 2025,
bearing interest at rates ranging from 1.75% to 2.75%.

Other debt includes our Endeavor Content facility (the “Endeavor Content
Facility,” which is an asset-based facility (“ABL”) used to fund television and
film production). As of March 31, 2021, our Endeavor Content Facility had total
capacity of $325.0 million, and we had $220.5 million borrowed. Our ability to
borrow under the facility depends on there being sufficient borrowing base
capacity, which in turn depends on the number and size of productions we are
engaged in and the value of future receipts for the productions. The amounts
borrowed under the facility will increase if we enter into additional
productions, or decrease if we reduce our production activity. The Endeavor
Content Facility matures on March 31, 2025.

Other debt also includes our On Location revolving credit agreement, which has
$20.0 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, 2021, we had $19.6 million outstanding under the OL Credit Facility
and no letters of credit outstanding. The OL Credit Facility matures on
February 27, 2025.

Both the Endeavor Content Facility and the OL Credit Facility contain
restrictions that are substantially similar to those in the Credit Facilities
and the UFC Credit Facilities.




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Cash Flows Overview

Three months ended March 31, 2021 and 2020




                                                           Three Months Ended March 31,
(in thousands)                                                2021                2020
Net income, adjusted for non-cash items                  $      125,943$    85,187
Changes in working capital                                       13,264             78,541
Changes in non-current assets and liabilities                  (210,037 )          (71,206 )

Net cash (used in) provided by operating activities $ (70,830 )$ 92,522
Net cash provided by (used in) investing activities $ 7,610$ (351,779 )
Net cash (used in) provided by financing activities $ (77,843 )$ 313,884

Operating activities changed from $92.5 million of cash provided in the three
months ended March 31, 2020 to $70.8 million of cash used in the three months
ended March 31, 2021. Cash used in the three months ended March 31, 2021
primarily represents an increase in other assets of $189.4 million from
additional investments in Endeavor Content film assets and an increase in
accounts receivable of $76.8 million. Cash provided in the three months ended
March 31, 2020 primarily represents an increase in accounts payable and accrued
liabilities of $89.6 million and a decrease in deferred costs of $103.1 million
due to the adverse impact from COVID-19 resulting in changes to the timing of
payments from modified event and media rights schedules.

Investing activities changed from $351.8 million of cash used in the three
months ended March 31, 2020 to $7.6 million of cash provided in the three months
ended March 31, 2021. Cash provided in the three months ended March 31, 2021
primarily reflects proceeds received from sale of assets of $16.5 million offset
by capital expenditures of $9.3 million. Cash used in the three months ended
March 31, 2020 primarily reflects payments for acquisitions of businesses,
primarily On Location, of $306.7 million, capital expenditures of $25.6 million
and investments in non-controlled affiliates of $16.7 million.

Financing activities changed from $313.9 million of cash provided in the three
months ended March 31, 2020 to $77.8 million of cash used in the three months
ended March 31, 2021. Cash used in the three months ended March 31, 2021
primarily reflects net payments on debt of $60.7 million, redemption of certain
of our equity interests of $7.2 million and distributions of $5.2 million. Cash
provided in the three months ended March 31, 2020 primarily reflects net
proceeds from debt of $389.0 million offset by distributions of $62.8 million
primarily made by UFC and redemption of certain of our equity interests of
$5.1 million.

Future sources and uses of liquidity

Our sources of liquidity are (1) cash on hand, which includes proceeds received
from our initial public offering and the private placements completed in May
2021
, (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). 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. However, the ongoing COVID-19 pandemic
has had and continues to have a significant impact on cash flows from
operations. We expect that the impact of COVID-19 onrevenue and cash flows will
vary, but will generally depend on the duration of the pandemic, the extent and
effectiveness of mass vaccinations, additional actions that may be taken by
governmental authorities, changes in consumer preferences towards our business
and the industries in which we operate and additional postponements or
cancellation of live sporting events and other in person events.

Our cash and cash equivalents consist primarily of cash on deposit with banks
and liquid investments in money market funds. As of March 31, 2021, cash and
cash equivalents totaled $880.9 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 primarily consist of UFC ($346 million),
Endeavor China ($93 million) and On Location ($29 million) as of March 31, 2021.
Subsequent to March 31, 2021, the UFC LLC Agreement was amended to remove
certain covenants restricting distributions and other payments.

We expect that our primary liquidity needs will be cash to (1) provide capital
to facilitate organic growth of our business, (2) fund future acquisitions and
settle acquisition earn-outs 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 agreement, (7) pay income
taxes, (8) repurchase employee equity (9) make distributions to members and
stockholders, (10) the UFC Buyout and (11) an expected reduction of debt by up
to $600 million during the third quarter of 2021.




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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, 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 factors beyond our control,
including as a result of COVID-19. See”Risk Factors-Risks Related to Our
Business-We cannot be certain that additional financing will be available on
reasonable terms when required, or at all.”

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 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
Profit Units. In addition, prior to the initial public offering, Endeavor
Operating Company
paid a distribution to its members in respect of taxable
income estimated to be allocable to such members for periods prior to the
initial public offering, and Endeavor Operating Company may fund additional
distributions payable to such members (or their successors) following the
initial public offering to the extent such estimates of taxable income were
understated.

Tax Receivable Agreement

Generally, we are required under the tax receivable agreement to make payments
to the Post-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 this offering, exchanges of Endeavor Operating Company Units for Class A
common stock or cash and payments made under the tax receivable agreement. 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. The first payment would be due after the filing of our
tax return for the year ending December 31, 2021, which is due April 15, 2022,
but the due date can be extended until October 15, 2022. Payments under the tax
receivable agreement 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.

Under the tax receivable agreement, 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 agreement, we may
also be required to make payments to the Post-IPO TRA Holders in amounts equal
to the present value of future payments we are obligated to make under the tax
receivable agreement. If the payments under the tax receivable agreement 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 agreement 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. For a full description of the tax receivable agreement, see
“Risk Factors-Risks Related to Our Organization and Structure-We will be
required to pay certain of our pre-IPO investors, including certain Other UFC
Holders, for certain tax benefits we may claim (or are deemed to realize) in the
future, and the amounts we may pay could be significant.”

Critical Accounting Estimates

For a description of our policies regarding our critical accounting estimates,
see “Critical Accounting Policies and Estimates” in the Prospectus. During the
three months ended March 31, 2021, 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 consolidated financial statements from
those previously disclosed.




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Recent Accounting Standards

See Note 3 to the unaudited consolidated financial statements for Endeavor
Operating Company, LLC
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.

Off-Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide liquidity,
capital resources, market or credit risk support, or engage in any activities
that expose us to any liability that is not reflected in our combined financial
statements except for those described under “Contractual Obligations,
Commitments and Contingencies” below.

Contractual Obligations, Commitments and Contingencies

As described in Note 19 to the unaudited consolidated financial statements for
Endeavor Operating Company, LLC, subsequent to March 31, 2021, we entered into
new arrangements increasing our purchase/guarantee agreements by $1.3 billion,
which will be due in 2021 through 2028. There have been no other material
changes to our contractual obligations disclosed in the Prospectus.

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