Wall Street observer Todd Juenger estimates the company will raise $900 million in its IPO and use it mostly to pay down debt, but even after doing so the firm's remaining net debt would exceed $3.1 billion.
The Endeavor initial public offering is "not for the faint of heart," in large measure due to its substantial debt, a Wall Street analyst warned on Tuesday.
"Most of the underlying earnings are both volatile and unpredictable," Juenger told his clients in his Tuesday research note. "There are also a number of existential risks, including reliance on bombastic UFC star personalities, the violence inherent in MMA combat, pressures on representation packaging and relationships with talent."
On the plus side, Juenger notes that "MMA is a growing sport with international appeal and an audience that skews young and male, a demographic that is very hard for brands to reach."
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