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Ari Emanuel’s firm wants to buy half of UFC it doesn’t own

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Ari Emanuel is quietly hammering out a pricey plan to buy the half of Ultimate Fighting Championship that his entertainment empire doesn’t already own, The Post has learned.

The Hollywood super agent’s conglomerate Endeavor — which owns the WME and IMG agencies as well as the Miss Universe pageant — already owns 50.1 percent of the mixed martial-arts giant behind fighters like Conor McGregor and Ronda Rousey.

Now, Emanuel is looking to scoop up the remaining 49.9 percent as he stages a renewed effort to take Endeavor public following a failed IPO attempt a year and a half ago, sources said.

The fresh IPO bid, which is now being led by Morgan Stanley, will likely be filed early next month, sources said. Goldman led the first IPO roadshow, which had Endeavor seeking to raise over $600 before abruptly pulling the plug in September 2019.

The multi-billion dollar UFC buyout will likely require Endeavor to cut pricey deals with buyout firms Silver Lake and KKR, which collectively own 40 percent of the MMA company. Nevertheless, Endeavor execs believe that owning all of the popular combat club would allow them to present a “stronger package” to investors at a time when UFC has proven better able to weather the pandemic than most other live-events businesses, sources said. 

According to a person familiar with the deal, Endeavor is looking to sell equity in Endeavor to private investors ahead of the IPO. It will then use those proceeds to buy UFC. Endeavor, which was in debt to the tune of $5.5 billion last year, won’t incur more debt in the process, the source said.

The amount Endeavor is raising could not be immediately determined, nor could the amount it might be willing to pay for the rest of the UFC. A person with knowledge of the situation pegged the company’s valuation at between $6 billion and $10 billion, saying it’s been growing even as the rest of the company shrinks.  

“Why didn’t Endeavor do this before? It didn’t think it needed to,” the source said. “It was a potential thing they considered. They thought they would just go public and it would be fine. It’s not going to be that hard, right? They realized the rest of the company is not worth as much.”

The move comes as the majority of Endeavor’s businesses — which rely on Hollywood film and TV production, as well as live events such as sports, music and fashion — have been slammed by pandemic restrictions. The one exception has been UFC, which suffered a two-month hiatus before getting back to broadcasting its bloody mixed martial arts fights — giving Endeavor a much needed jolt to its bottom line.

Sarah Staudinger, Ari Emanuel, Jason Statham, Rosie Huntington-Whiteley and Neville Wakefield.
(From left) Sarah Staudinger, Ari Emanuel, Jason Statham, Rosie Huntington-Whiteley and Neville Wakefield.
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The MMA promotion company accounted for 80 percent of Endeavor’s overall profit in 2020, Endeavor president Mark Shapiro told Endeavor staffers in a December virtual town hall, sources said. In the same town hall, sources said, Shapiro revealed that the pandemic took a $2 billion chunk out of the overall company’s revenues as earnings plunged 80 percent.

Even pre-pandemic the mixed-martial arts promotion company accounted for a healthy 50 percent of the company’s annual earnings, said a source who pegged UFC’s pandemic profits at between $400 million and $450 million.

“Buying out the remainder of UFC makes for a better investment,” said source said. “The complexity of Endeavor’s business is still there, but the UFC is the crown jewel.”

After its first effort to go public flopped, Emanuel blamed the depressed IPO market, which saw investors tanking shares of newly listed companies like stationary bike seller Peloton and ride-hailing apps Uber and Lyft.

But sources told The Post that the slumping demand for the company’s stock was also due to Endeavor’s unusual mix of assets as well as its hefty $4.6 billion debt load. Investors also griped about the complexities of Endeavor’s tie up with UFC, noting that it would be simpler if the company owned the MMA promotion company outright, sources said.  

Endeavor declined to comment.

Initially, Emanuel had been planning to list Endeavor by merging it with a so-called SPAC, or special-purpose acquisition company, sources said. But those plans shifted quickly after management took a look at the math, a source said.

Endeavor executives calculated that a SPAC — which is generally a faster way to go public, as the auditing process is shortened — would cost Endeavor as much as $100 million in fees that would go to the SPAC sponsor.

Those fees would come out of Endeavor investors’ pockets, including Silver Lake, which owns a 35 percent stake in Endeavor in addition to its stake in UFC.

Endeavor, which confidential filed its IPO paperwork with the Securities and Exchange Commission in February, hasn’t completely ruled out a SPAC, one insider said. Still, it’s moving forward with the direct IPO plan on the belief that investors are interested in “direct ownership” of the UFC, sources said.

Consolidating its ownership of UFC has long been on Endeavor’s agenda, and Silver Lake and KKR have been looking to cash out their investments after holding them for more than five years. But the brutal impact of the pandemic on its other businesses accelerated talks.

Likewise Emanuel — the inspiration for the Ari Gold agent character in HBO’s “Entourage” — has been eager to try his IPO luck again as the vaccine rollouts return life to some of Endeavor’s businesses, including the agency business that boasts clients like Oprah Winfrey, Matt Damon and Ryan Reynolds, sources said.

As The Post has previously reported, the pandemic’s fallout forced Emanuel and other Endeavor execs to implement an aggressive $500 million cost-cutting plan, which included massive layoffs, selling off an $80 million stake in Epic Games and other start-ups and securing a $260 million loan.

Endeavor’s valuation is now “significantly lower” than it was when it first tried to go public in 2019, when it was valued at $6.4 billion on the low side, one source said.

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Tesla more than doubles Q1 sales, delivers 185,000 vehicles

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Tesla says it delivered nearly 185,000 electric vehicles in the first quarter despite a shortage of computer chips that has hit the global auto industry.

The number was more than double the deliveries for the same period last year. And it beat Wall Street estimates of 168,000 for January through March. The company says in a statement that the Model Y small SUV in China has been well received.

Tesla lists no production figures for its older models, the S sedan and X SUV, during the quarter, but it delivered just over 2,000 of them. It says new equipment has been installed at the Fremont, California, factory and production of new versions is in the early stages.

The strong sales are a sign that demand for the company’s relatively expensive vehicles remains strong despite the pandemic. Analysts polled by data provider FactSet estimate that the average selling price of a Tesla is $49,100.

Shares of Tesla are down more than 9 percent so far this year as some of the shine wore off electric vehicle and tech stocks, which had experienced a big runup last year. The stock closed Thursday down just under 1 percent at $661.75. Markets are closed for the Good Friday holiday.

Tesla Model 3s (seen here) and its Model Y accounted for nearly all of Tesla's first-quarter sales.
Tesla Model 3s (seen here) and its Model Y accounted for nearly all of Tesla’s first-quarter sales.
Xinhua News Agency via Getty Images

Tesla sold just under 500,000 vehicles last year, barely missing a target set by CEO Elon Musk. The company hasn’t given much guidance for this year’s sales figures.

Wedbush analyst Dan Ives called the first-quarter numbers a “jaw dropper,” and a huge home run in the eyes of bullish investors. “We believe China and Europe were particularly robust this quarter as the trajectory now puts Musk & Co. to exceed 850k for the year which is well ahead of whisper expectations,” he wrote Friday.

The Model 3 small car and the Model Y accounted for nearly all of the Palo Alto, California, company’s first-quarter sales. Tesla said it sold 182,780 of both models combined.

Ives wrote that analysts expected more than 12,000 sales of Models S and X, with the miss driven by the chip shortage.

The strong sales came even though the company shut down much of its Fremont production for several weeks in late February and early March. It did not say why, but it’s likely that the company ran short of computer chips.

President Joe Biden’s announcement this week of $174 billion in spending on electric vehicle incentives and charging stations, and rising global demand for electric vehicles should shift sentiment toward Tesla stock, Ives wrote.

“It’s been a brutal sell-off for Tesla and EVs, but we believe that will now be in the rearview mirror,” he wrote.

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55 firms paid no federal income tax last year, report finds

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Dozens of America’s biggest companies paid no federal income taxes last year thanks to a range of tax breaks — including some brand-new ones, a new report says.

The 55 corporations avoided a total of $8.5 billion in taxes on more than $40 billion in pre-tax profits in their most recent fiscal year, according to the Friday report from the Institute on Taxation and Economic Policy.

In fact, 52 of those firms — including household names such as Nike, FedEx and Dish Network — ended up pocketing federal tax rebates worth a collective $3.5 billion, the left-leaning think tank’s analysis found.

And 26 of them haven’t paid a penny in federal income tax in the three years since the Tax Cuts and Jobs Act reform bill was signed into law in 2017, the report says. That group includes shipping giant FedEx and power company Duke Energy, which reported nearly $15 billion in pre-tax income for those three years, according to the findings.

Nike sneakers
Nike is among dozens of major corporations reported to be paying little to no federal income taxes.
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“Duke Energy fully complies with federal and state tax laws as part of our efforts to make investments that will benefit our customers and communities,” company spokesperson Catherine Butler said, adding that Duke paid more than $2 billion in annual state and local taxes in 2020.

Major companies have used loopholes in federal tax law to help their bottom line for decades, the think tank’s researchers note. But they got a fresh boon from the CARES Act, the $2.2 trillion stimulus bill that aimed to help businesses weather the COVID-19 pandemic.

Big firms were able to take advantage of a provision in the bill to use losses they racked up in 2018 or 2019 to offset profits from previous years, which slashed some of their 2020 tax bills to less than zero, according to the report. That measure accounted for at least $500 million of the 55 giants’ tax breaks, the report says.

FedEx stood by the CARES Act tax breaks, saying the law helped it and other companies “navigate a rapidly changing economy and marketplace while continuing to invest in capital, hire team members, and fund employee pension plans.”

FedEx truck
FedEx is said to be among major firms pocketing federal tax rebates while avoiding federal income taxes.
Alamy Stock Photo

But many companies also used more established methods for giving themselves tax discounts.

Those include write-offs for paying executives in stock, which were used by more than a dozen companies, while at least half a dozen took federal research and experimentation credits, the report says.

The list included some companies hit hard by the pandemic, including crafts retailer Michaels, as well as companies that thrived despite the lockdowns, like Salesforce.com, the cloud computing company that announced record 2020 earnings in February.

Salesforce logo
Salesforce is reported to be among thriving firms able to take advantage of numerous write-offs.
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By reining in tax breaks like those, “or by re-introducing some form of a ‘minimum tax’ requiring profitable companies to pay at least some tax in any profitable year, Congress and President Biden could take a major step toward a fairer and more sustainable tax system,” authors Matthew Gardner and Steve Wamhoff wrote in the report.

Salesforce, Michaels, Nike and Dish Network did not immediately respond to requests for comment.

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China admonishes H&M over ‘problematic’ map on website

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Swedish retailer H&M continues to clash with Beijing, this time over how it has portrayed the region geographically.

Chinese officials admonished H&M Friday over a “problematic” map on the company’s website in the latest sign of escalating tensions after the Swedish retailer criticized China’s controversial cotton-picking region.

Shanghai government regulators summoned H&M managers to a meeting after internet users complained about the map, officials said on social media.

Chinese officials did not provide any detail about the alleged offense, which they said H&M managers quickly corrected.

But H&M got in trouble with China in 2018 for listing Taiwan as a country on the Taiwanese version of its website. China claims the democratic island country is part of its territory.

H&M was told to “bolster its awareness of the national territory, and really ensure the standardized use of the Chinese map,” the Cyberspace Administration of China’s Shanghai arm said in a post on the WeChat social network, according to The Wall Street Journal.

H&M did not immediately respond to a request for comment Friday.

The map flap is just the latest headache H&M has faced in China, the fast-fashion retailer’s top clothing supplier and its fourth-largest market by sales.

The company was hit with boycott threats last week and had its products pulled from Chinese e-commerce platforms over a statement it made last year saying it does not source cotton from the Xinjiang region, where Beijing has been accused of forced labor practices against Uyghur Muslims.

H&M tried to tamp down the backlash Wednesday with a new statement saying it’s “dedicated to regaining the trust and confidence” of its customers, colleagues and business partners in China, where its store locations were reportedly scrubbed from digital maps last week.

The company said it wants to be “a responsible buyer, in China and elsewhere,” but did not mention Xinjiang specifically.

With Post wires

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