‘The Last Gunslinger’: Inside Ari Emanuel’s Bid for Redemption With a Second Endeavor IPO

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“If they don’t do this, it’s the end of Endeavor,” one Hollywood insider tells TheWrap

Ari Emanuel
Endeavor CEO Ari Emanuel (art by Christopher Smith for TheWrap)

Ari Emanuel was yelling. On his birthday in late March — his 60th birthday, no less — the irrepressible Hollywood agent-turned-corporate leader was ripping into an industry colleague for a perceived threat to Endeavor’s flagship sports business, Ultimate Fighting Championship (UFC).

It was two days after Endeavor filed paperwork for a second run at an initial public offering, the one that had to stick, that had to work if Emanuel’s grand vision would be a sustainable entity. And if his debt-strapped corporate patchwork of businesses were to come together and redefine what a Hollywood talent agency could become.

“What the f— are you doing?” Emanuel growled, according to a person familiar with the call. “Calling my fighters? Tweeting at them?”

The executive on the other end of the line was not swayed, since he had dealt with Emanuel for decades and was used to the bullying style that inspired the creation of fictional superagent Ari Gold on the 2000s HBO series “Entourage.” So were the wider circle of colleagues, lawyers and others who were made aware of the outburst aimed at intimidating a competitor into backing away from Endeavor’s talent pool. “You better control your boy,” the executive’s lawyer told Endeavor’s lawyer, according to the insider.

“That’s how he is all the time,” the insider said. “Their entire IPO is riding on UFC.”

Emanuel was unavailable for comment about the phone call.

With billions in debt, a high-risk IPO, a messy divorce and a very public perch, Emanuel has stepped into the corporate spotlight in a way rare for any Hollywood figure. When he rang the opening bell Thursday morning at the New York Stock Exchange to commemorate the IPO launch of a company seeking a $10 billion market value, he erased the biggest stain on his résumé — Endeavor’s botched first IPO attempt in 2019.

Now, Emanuel has stepped into a role of his own invention, becoming the first head of a publicly traded Hollywood talent agency, to cap off his rise from the CAA mailroom into running one of the biggest entertainment companies of his era. What drives that type of ambition? In a rare interview published this month in The New Yorker, Emanuel offered a glimpse at his mindset. “In 10 years, is anybody gonna remember Bob Iger?” Emanuel said, managing to wax introspective while insulting the former Disney CEO who in his 15 years doubled the company’s annual revenue to $65 billion in 2020. “Probably not. They’re gonna remember Steve Jobs. They’re gonna remember Elon Musk. They’re gonna remember presidents, actors. You know, businessmen like me, they’re not really.”

The implication, of course, is that Emanuel wants people to remember him.

But other Hollywood insiders put Emanuel’s IPO dreams in a much darker light, that of survival. Endeavor has been hemorrhaging money — posting a $1.2 billion net loss over the last two years — and carrying a massive $5.7 billion in debt. “If they don’t do this, it’s the end of Endeavor,” one former studio chief told TheWrap. “They’re blowing $500 million a year. Right now they can hide under the pandemic — but as they come out of it, it’s not a fluke. Right now he can say our numbers are good because of the pandemic. But he can’t say that in 12 months.”

As Emanuel gets ready for another round with Wall Street, the last of which left him bruised and battered as if he stepped into the Octagon himself, one question remains on the minds of many in Hollywood: What does Ari Emanuel want? Is he trying to save the company he built from scratch or simply looking to level up to mogul status?

(Left to right): UTA’s Jeremy Zimmer, CAA’s Richard Lovett, Ari Emanuel, former ICM head Jeff Berg and Mike Ovitz (Getty Images)
More a Slick Operator Than a Shark

Emanuel is described by his associates as a tough customer — the New Yorker profile labeled him “heroically profane” — and often compared to his equally explosive brother Rahm, the former congressman, Obama White House chief of staff and mayor of Chicago. The third Emanuel brother is Zeke, an equally ambitious though less temperamental bioethicist and oncologist.

Even those in Hollywood who don’t know him know of him. One veteran movie marketing executive, now a producer, told TheWrap: “I only know that there are three brothers, they are all very powerful and they scare me.”

In one memorable moment during an AllThingsD conference back in 2012, Ari Emanuel let loose in front of the entire crowd after a question from Verge co-founder Josh Topolsky regarding digital piracy: “Go sit down and then think of something else, and then come back up and I’ll scream at you again.”

One can close their eyes and imagine those words being said by Piven’s hot-headed Ari Gold. But much like Ari Gold, somehow Hollywood has always found Emanuel to be a sympathetic and often humorous character despite his outbursts.

“He’s probably the most well-liked of the big agency honchos,” said a partner at a literary boutique talent agency who has observed Emanuel through several decades of his career alongside former ICM CEO Jeff Berg, CAA co-founder Michael Ovitz and CAA’s current CEO Richard Lovett and Jeremy Zimmer, CEO of UTA.

That’s because Emanuel was more excitable than mean, this individual said. “He would yell, but it was because he just wanted more and more. He wasn’t throwing Scott Rudin temper tantrums,” the agent said.

Still, others have said Emanuel blows hot and cold. “He’s a loyal friend, but you don’t want to have him as an enemy,” a friend told the New Yorker.

What Emanuel may want now, the agent said, is to expand as an entrepreneur, not just as a facilitator. “There’s something that Ovitz once told me when I asked him why he gave up the agency business,” the agent said. “There’s a point in your life when you’re handling another call from a disgruntled client that doesn’t like his trailer… meanwhile you are going to dinner with the titans of the industry, and you want to be above the fray,” the agent said. “It’s not the most creative thing in the world. Being an agent or a manager, you are kind of living off the gifts of your clients’ talents.”

Unlike the stereotype of the greedy Hollywood dealmaker, many said that deep down Emanuel was more slick operator than shark. “Jeff Berg wasn’t a warm and fuzzy guy at all,” the agent said. “Ovitz’s reputation was much better earlier in his career; in the end, he sort of flamed out. ” Contemporary peers like CAA’s Richard Lovett or UTA’s Jeremy Zimmer are not better liked than Emanuel, he pointed out.

Emanuel was diagnosed with ADHD and dyslexia in the third grade, according to a biography on the University of Michigan’s DyslexiaHelp website as one of several success stories about people who overcame the limits of dyslexia. He was good at math but struggled with reading and English. He was placed in special education classes in high school. In the biography, Emanuel attributes some of his frenzied pace and drive for success to being told he would never be college material.

The bio credits Emanuel’s pediatrician father and civil rights activist mother for instilling in him a drive to succeed. Growing up in Chicago, he was told to read the newspaper and be prepared to discuss current events at the dinner table. His mother stayed up late at night to help him hone his reading skills. And despite the dire predictions in his youth, Emanuel made the successful leap to higher education, attending Macalester College in St. Paul, Minnesota.

Emanuel moved to Los Angeles upon graduation to begin his career as an agent at CAA in 1987. In 1990, he left CAA for InterTalent agency and after two years joined International Creative Management (now ICM Partners), where he worked until 1995.

In what the Los Angeles Times described as a “bizarre episode” but now appears to be a signature of his ambition, Emanuel and three other top agents were fired from ICM in 1995 after their plan to form their own agency and take their clients was discovered. Television and film literary agents David Greenblatt, Tom Strickler, Richard Rosen and Emanuel were discovered to have removed client files from the ICM offices in a stealth operation. An individual close to the situation told TheWrap the “Young Turks” were dissatisfied with the old guard — and their aging clients — that they believed had a stranglehold on ICM in those days.

The same individual noted that the four were looked upon with scorn by that same old guard: “A UTA agent told me that the new agency wasn’t Endeavor, it was the Challenger,” the individual said, a reference to the NASA space shuttle that tragically exploded on takeoff in 1986. Yet the insider said some of the dismissive attitude was born of fear: “They were appealing to young talent, and that had never happened before.”

The Endeavor agency flourished. According to a 2020 article in Vanity Fair the company teemed with the same frat house atmosphere that had characterized Emanuel’s tenure at InterTalent. In 2002, agent Sandra Epstein sued the firm for an intolerable culture that included “sex on desks” and casual pot smoking. The Vanity Fair story described Emanuel as a volatile executive who berated employees and rivals and at one point was accused of “beating to death his laptop in the building’s garage.”

Epstein’s suit, settled for an undisclosed sum reported to be be north of $2 million, also called out Emanuel for not allowing her to send a script about a Navy Seal to Black actor Wesley Snipes because “Blacks don’t swim.” Emanuel consistently denied any allegations of racism. And Emanuel, the son of Israeli immigrants, publicly called on Hollywood to shun Mel Gibson, his former client, after the actor’s anti-Semitic and sexist remarks during his 2006 arrest.

Despite the controversy, the new agency managed to hold its own against powerful CAA, then headed by Ovitz and Ron Meyer, largely because of its specialized clientele of TV writers. At ICM, the Endeavor founders represented writers Shane Black (“Lethal Weapon”), Alexandra Seros (“The Specialist”), David Rosenthal (co-creator of ABC’s “Ellen”) and Stephen Kronish (co-creator of ABC’s “The Commish”). Much to the fury of ICM, the Endeavor crew managed to lure 50% of those clients from ICM. (Even today, Emanuel’s personal client list includes top stars like Dwayne Johnson, Charlize Theron, Mark Wahlberg, Oprah Winfrey and Larry David.)

Emanuel ringing the bell to open trading on the New York Stock Exchange Thursday morning

In 2009, Emanuel and then co-chief executive Patrick Whitesell — often described as Emanuel’s even-tempered opposite — pulled off their next chess move: a merger with the venerable William Morris Agency. But the merger turned out to be a takeover. Within weeks, the veteran chief of William Morris, Jim Wiatt, was gone.

From there, Emanuel’s ambitions really took flight as the company began to rack up the debt that threatens to bring down the whole structure. In 2014, WME paid $2.4 billion for New York-based marketing agency IMG and enabled the company to expand into sports, fashion, media and events. In 2017, the company controversially entered the content business by launching Endeavor Content, which develops and sells TV shows and movies.

This was followed by a $4 billion acquisition of the mixed-martial arts powerhouse UFC, which was led by another brash-talking CEO in Dana White. In that highly leveraged deal, the UFC took on $2.3 billion in debt and has to fulfill those obligations by 2026, when those loans come to term. The acquisition helped cement Emanuel’s pivot of Endeavor from a business model dependent on 10% commissions from Hollywood agency clients to a broader entertainment conglomerate that could appease Wall Street investors’ expectations for growth.

Despite the pandemic, the UFC has been among the first-movers in staging sports events (the UFC recently held the first full-capacity event during the COVID era on April 24 in a Jacksonville, Florida, match before 15,000 fans).

Many observers thought Endeavor overpaid for the UFC — and the company is now trying to raise $1.75 billion to buy the remaining 49% it doesn’t already own. Conventional thinking within the investor community has been that the only way for Endeavor to ease some of its debt burden is to raise money in the public markets through an IPO.

Endeavor’s revenue share from its representation business plummeted in 2020
Ari Emanuel on Earning Calls?

Emanuel may need to tone down his hard-charging ways now that he aims to be the face of a public company, one that will include talking to Wall Street analysts four times a year on earnings calls. Matt Bilinsky, a tech and media-focused attorney in Los Angeles, said its “not out of the question” that Emanuel could soften his style.

“Ari is a smart guy and really an elite communicator, and disciplined enough to alter his tactics when need be,” Bilinsky said. “The question is whether or not he thinks he needs to, and whether he now believes that a more brash kind of personality and cultish management style is more acceptable these days.”

A senior Hollywood insider has observed Emanuel flip a switch in his demeanor in person. When both happened to be at a restaurant talking to investors, Emanuel was practically drawling in an ultra-friendly Iowan twang while speaking to Warren Buffett, the insider said. “He knows exactly what he’s doing. I’ve seen him turn it on,” the individual said. “He wooed Warren Buffett, and he was so proper and prim. It was so strange.”

Charming investors is one thing — Emanuel must also calm a staff that has grown restive since the scuttled IPO two years ago. WME agents were asked to accept stock as part of their bonus in the anticipation of a payday that still has yet to come. At the same time, the first IPO filing disclosed that Emanuel and Whitesell each sold equity positions in the company in 2017 to the tune of $165 million. CFO Jason Lubin made a similar transaction for $21 million. That discrepancy did not sit well with senior staffers.

Since then, the company’s financial outlook has gotten inarguably worse. The COVID-19 pandemic bludgeoned the Hollywood talent representation and live event divisions throughout 2020. Layoffs and pay cuts followed, an upcoming buyback of agents’ equity shares was shelved indefinitely. Emanuel stopped taking a salary from the middle of April through the end of 2020, though he still pulled in more than $14 million thanks primarily to equity awards and a bonus.

Along with the layoffs, there were other high-profile departures that included partners Duncan Millership, Theresa Kang-Lowe and Sean Grumman.

The company’s financials, already debt-laden, took a further beating. According to SEC financial disclosures, Endeavor took a $625.2 million net loss in 2020, despite pulling in revenue of $3.5 billion. For the full year 2019, it garnered $4.6 billion in revenue and a net loss of $530.7 million.

The losses are partly due to the debt on its books since the acquisitions of IMG and UFC in the last few years, which rose throughout 2020 (in April, Endeavor’s debt load was closer to $4 billion). That’s a 25.7% increase from two years before. Endeavor had to borrow $260 million from Silver Lake to help weather the financial storm during the pandemic — but at a staggering interest rate of nearly 11%.

Despite coming off a year of falling profits and rising debt — and a live events business still facing a painful recovery — Emanuel is back for Round 2 with Wall Street. So what’s different this time around? For many, the big difference centers on the company’s newest board member: Elon Musk.

Emanuel and Musk are longtime friends and one insider argued that Musk’s involvement helped Endeavor reel in a few big firms, including China’s Tencent and Elliott Investment Management, to take part in the pre-IPO sale to raise funds for Endeavor’s takeover of UFC.

“He used getting Elon to get them to guarantee the billion dollars,” the insider told TheWrap. “Elon is the best marketer I’ve ever seen in my life.”

Bilinsky argues that Musk’s involvement is a major asset given the Tesla founder’s ability to whip up the investment crowd, particularly the so-called “Robinhood Investors” that led to GameStop stock’s quick rise and even quicker fall. Additionally, Musk is one of the most public-facing chief executives. With Musk and Emanuel leading the IPO charge, some investors might be willing to take a flyer on an IPO with some shaky fundamentals.

“The only factors that are more accommodating now than they were (in 2019) is just that so much money was created with with the amount of liquidity put into the market and then the growth of retail investing,” Bilinsky said. “Much like a Tesla or some other high visibility companies that are assets that seem to be inflated by the popularity of the founders and the visibility of the business as opposed to economic fundamental, maybe Endeavor can thrive in the public markets in that category.”

Bilinsky doesn’t see all the red on Endeavor’s balance sheet as particularly problematic as long as the company can make a case for growth that will eventually lead to profitability — with full ownership of UFC a key factor. “The business seems particularly reliant on the UFC and IMG and other events,” he said. “So you’re banking on a lot the events business coming back with a vengeance, which is not an unrealistic assumption.”

Endeavor’s representation business used to be the second largest revenue source, just behind live events. But 2020 battered that segment to a $700 million loss, dropping it from $1.67 million in 2019 to $943,873 in 2020. While that loss was due in part to the months-long pandemic shutdown and film release delays, a sizable portion of that revenue won’t be coming back. And Endeavor had to give up those extremely valuable packaging fees in order to end the nearly two-year standoff with the Writers Guild.

According to the insider, Emanuel is banking on Middle East money, including from Saudi Arabia, to help prop up the IPO. “This time around, he went around and said, If I get Elon — look how great we are — and we get the Robin Hood market. Middle East guys believe that,” the insider said. “He soft-circled $1.2 billion from the Middle East — Saudi money. Needed commitments, and he got it. It’s all Middle Eastern.”

Endeavor declined to comment on whether it is accepting Saudi investments, noting that it is currently in the “quiet period” before IPO day and cannot share material information that isn’t in its S-1 form — which incidentally does not disclose any Saudi-backed investments.

Emanuel’s ties to the Middle East are no secret. In 2018, Emanuel held a glitzy party for Saudi Crown Prince Mohammed bin Salman in 2018 and took $400 million from Saudi Arabia’s government fund. It was returned in 2019 after the murder of Saudi journalist Jamal Khashoggi. Khaldoon Al Mubarak, the head of Abu Dhabi’s Mubadala sovereign wealth fund, is a longtime friend who gave Emanuel and UFC the idea of staging fights in the Middle East during the pandemic, according to the New Yorker profile. Mubadala is one of the firms taking part in the pre-IPO sale to help Endeavor with its UFC buyout.

Jeremy Piven’s Ari Gold in “Entourage” was modeled on Ari Emanuel (HBO)

At 60, Emanuel is seeking to reinvent himself in a Hollywood landscape that is very different from 1987, when he and his partners launched Endeavor. The question is: Can he?

A WGA member and former producer suggested that colorful characters like Emanuel no longer have a place in a Hollywood that is driven by hedge fund investors — in fact, the same sort of investors Endeavor may be seeking out to go public.

Over time, the writer said, the power in Hollywood has shifted from “flamboyant studio heads to flamboyant producers to flamboyant agents” like Emanuel, but now rests in the hands of “vast investment hedge funds headed by people more powerful than he, looking at his agency as a piece of a puzzle to participate in an industry to turn a profit. In an IPO, he legally has to become a more careful corporate creature.”

The agent agreed that “colorful” just isn’t as much fun as it used to be in Hollywood. Nor is it still as popular to flaunt status and income as it was in the ’80s and ’90s.

In fact, some insiders said Emanuel’s opulent lifestyle — including his post-divorce purchase of a $27.5 million Beverly Hills mansion last year — may have complicated Endeavor’s losing battle with the WGA over packaging fees and content ownership. “The optics are really good for (writers) in trying to get rid of packaging and ownerships, and really bad for agents when you see a guy who is running an agency making so much money off of packaging and ownership deals,” the agent recalled a highly-placed WGA leader saying last year as the standoff dragged on. “It just solidified the position of the WGA.”

While Musk, with his roots in the freewheeling tech world, can probably get away with a little craziness — Emanuel may have less latitude as the leader of a newly public company.

“Emanuel represents the passing of an entire culture — not just in Hollywood, but in America, and the world,” the WGA writer said. Added the writer, with some wistfulness, “He’s one of the last gunslingers.”

Sharon Waxman contributed reporting to this story.

For the record: A previous version of this story included an incorrect photo caption for Jeff Berg.


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