China has long been an elusive market for many Western companies but not so for Endeavor Group, the global sports and entertainment conglomerate that owns the Ultimate Fighting Championship (UFC) as well as the WME and IMG agencies, among a suite of other properties.
Endeavor’s Shanghai-based Chinese subsidiary, Endeavor China, was founded in 2016 as a joint venture with local equity investors including Sequoia Capital China and internet giant Tencent. Since then, the company has built its business producing popular live events, including top golf and tennis tournaments, representing leading Chinese artists and athletes such as snowboarder Su Yiming and golfer Shanshan Feng, and consulting many of the foremost domestic and international brands.
Now established as a major player in the Chinese sports and entertainment market, Endeavor China has embarked on its next phase of growth under the leadership of chief executive Sum Huang, who joined the company in July 2021 having most recently served as co-founder and partner of XG Entertainment, an Alibaba-backed content provider.
“Compared to many people, especially compared to IMG teams, I’m a very much green new guy, a new leader to the whole team,” says Huang. “I’m probably the first very pure local Chinese executive Endeavor hired to lead an important business. I was born and grew up my whole 40 years in Shanghai, so [I have] a very local mindset. With some financial background and entrepreneur experience, I think I can bring a very unique angle to our business.”
Speaking almost exactly a year into his tenure and only a handful of weeks before he makes a keynote appearance at SportsPro APAC in Singapore, Huang says he has taken steps to make his mark on the business, primarily through leading by example.
“I need to run the management but I’m also the number one sales guy for us when we are talking about government relations, public relations, when we are pitching clients and renegotiating with any partners,” he says.
“It is very important for a local team to see, to witness, and believe their leaders are always on the front line. I think that is very important. That’s what I have been doing and what I have been pushing all the vertical leaders to do: to be a role model, to show their team how to make changes, how to find new directions, and how to get deals done.”
Huang’s immediate priorities have included building out and restructuring internal teams and setting a new direction for Endeavor’s Chinese business, which has itself undergone significant change in recent times.
In April, Endeavor China became a wholly owned subsidiary of the Endeavor Group as part of an undisclosed transaction that saw the firm’s founding Chinese investors convert their holdings into shares in the parent company. That deal, which underlined the investors’ confidence in the Endeavor business following its IPO and ongoing revenue growth in certain divisions, not least the UFC, was intended to streamline management and create operational efficiencies while fully integrating the Chinese offshoot within a wider Endeavor network that generated overall revenue of US$5.1 billion last year.
Indeed, operationally speaking, the share swap deal brings Endeavor China closer to the global business, its US-based leadership and its constituent verticals, including WME, IMG Media, premium hospitality provider On Location Experiences and 160over90, Endeavor’s creative and experiential agency.
“I can better leverage all the global resources,” notes Huang. “Being able to focus all my time and resources and energy on business only is the biggest result of this deal.”
According to Huang, Endeavor China now boasts a workforce of “close to 200 people in Shanghai plus Beijing”. That number includes an IMG team that has been in China for more than two decades, as well as a sizeable licensing division, WME and the UFC’s Chinese operation. Since last year, it has also incorporated Mailman, one of China’s leading digital sports marketing agencies that was acquired for a reported US$60 million a little over 12 months ago, shortly before Huang’s arrival.
“I see an unlimited potential for what we can do here,” says Huang. “What’s my priority? I think it’s very, very simple and straightforward: there’s only one job for me, which is to build a business here for Endeavor in China.
“It’s very important for me to figure out internally what type of resources are applicable, have potential, in the short term or long term, with a strong and close connection to this market. I think it’s very important for me to analyse, maybe through research or just through hands-on work, and to find systematic opportunities for Endeavor China in the future.”
If we look at the competitiveness of every single industry in mainland China, it’s very, very fierce – competition is deadly in China.
To that end, Huang says he is viewing Endeavor China’s future growth through both internal and external lenses. Within the company, his goal is “to break all the internal walls and greatly encourage cross function, cross vertical sales and collaboration”, motivating each division to consider the full set of Endeavor-owned assets and refer existing or potential clients to one another.
Externally, meanwhile, the aim is to stay abreast of market forces and macro trends impacting the agency business. As well as acting as a gateway into China for international clients, Endeavor helps Chinese companies and individuals access overseas markets, and it is the latter focus – what he calls “outbound business” – which represents clear growth potential for Huang.
“We are seeing more and more Chinese companies, industries going to the global market or regional markets outside of China… typically Southeast Asia, APAC area, Eastern Europe, the Middle East and Latin America,” he elaborates.
“I think the underlying logic for Chinese companies, especially the leading ones, going abroad is not only because they are strong enough that they can do that, but also because they have to. If we look at the competitiveness of every single industry in mainland China, it’s very, very fierce – competition is deadly in China.
“For many industries – like smartphones, like mobile games, like crypto – if [companies] can compete in China, they find they can easily conquer some [other] markets.”
Endeavor-owned IMG recently brokered a US$100 million sponsorship deal for the UFC with blockchain firm Vechain.
“A totally different world”
Perhaps unsurprisingly, given their ongoing growth in the APAC region and elsewhere, mobile gaming and Web3-related sectors are now top targets for Endeavor China’s sponsorship and licensing divisions.
Traditionally, the licensing arm of Endeavor’s business has focused on licensing well-known lifestyle brands and intellectual property rights to the manufacturers of physical consumer goods like caps, apparel and luggage. Now, however, the agency is seeing considerable demand among video game developers and blockchain-related companies looking to license rights for virtual goods and digital assets sold via in-game transactions.
Having focused “aggressively” on mobile gaming in particular, Huang notes that Endeavor China has already done “a lot of interesting deals” with major developers such as Tencent, PUBG Mobile and ByteDance-owned Moonton. More, he says, are in the pipeline.
“We are accessing a totally different world from the original licensee group,” he adds. “I think it’s very interesting and now seems highly fruitful for us.”
On the sponsorship side, Endeavor subsidiary IMG has brokered similarly lucrative deals with Chinese-owned operators in the Web3 space. Those include an agreement between the UFC and blockchain firm Vechain – a deal reportedly worth US$100 million – and a new partnership on behalf of Italian soccer giants Juventus with Bitget, an Asian cryptocurrency exchange platform.
The key success factor for our team is the fast-learning spirit and entrepreneurship. When you see something, just jump on to it and act fast.
Sum Huang, Chief Executive, Endeavor China
To meet such rising demand among these new investors in sport, Huang says Endeavor is being opportunistic and actively focusing on boosting supply by broadening its IP offering and client base. That includes owning or representing more events and athletes locally within China, as well as bringing more specialist experts with strong connections into the company.
“In the long run, if we want to compete, then we need to greatly expand our supply – and that’s the one single goal I set for [our] China team in 2022,” he says. “Only by building a very strong sustainable strategy and increasing our supply [can we] talk about a long-term business.”
That strategy has already manifested in the acquisition and subsequent integration of Mailman, a move which Huang says has added “a lot of digital, fresh blood into our business”. By virtue of that acquisition, Endeavor China now boasts proven in-house expertise and knowledge in fast-emerging sectors like crypto and Web3, strengthening its position to capitalise as and when new business opportunities arise.
“We all of a sudden have a team of more than 110 people who are all fast learners, who all live and breathe the digital world,” Huang continues. “So the way they can live and keep growing is by learning, and that is very important for this new trend of Web3. In my view, nobody really knows where it will lead to but everybody knows it’s something big. And the result is you need to keep evolving yourself really fast and the churn rate should be very high.
“The key success factor for our team is the fast-learning spirit and entrepreneurship. When you see something, just jump on to it and act fast, and then change your strategy and tactics and start over fast.”
Endeavor China’s event portfolio includes the WGC-HSBC Champions golf tournament in Shanghai.
Like every large-scale event operator, Endeavor China has had to adapt in the wake of Covid-19. In the absence of traditional live events, the company has been forced to rethink where it does business and, ultimately, how it makes money.
In sport, Endeavor China operates the WGC-HSBC Champions golf tournament and the ATP Chengdu Open, as well as mass participation events like the Beijing Triathlon. Elsewhere, it also consults on events like Shenzhen Fashion Week and produces live concerts for top musicians.
That Chinese authorities have been slower to lift pandemic restrictions than other governments has invariably created headaches for Huang and his events team.
“We have to admit, it’s very, very challenging for our business, especially our legacy traditional business,” he says. “No events can be held, and looking at the music business, no live concerts can be held, no global tour can have China stops.
“We need to ask the question: why are we still building our events business? What kind of events business do we want going forward? And why are we still building our music business?”
Huang says Endeavor China has retained its “top-notch” teams responsible for event delivery and execution to ensure it is best prepared for whenever physical live events finally return to China, something he predicts will realistically happen next year. In the meantime, though, the company has focused on creating new IP and exploring other opportunities in the events space, just as it has done on the sponsorship and licensing side.
Virtual concerts have been produced for musician clients on online platforms like Tencent Music, WeChat and Douyin, the Chinese version of TikTok. New business divisions have also been added, including a music department dedicated to the Chinese market and Location Based Entertainment (LBE), a unit that will focus on creating immersive experiences around licensed and brand-owned IP, including theme parks, art shows, museums and sports venues.
“We keep pushing all the teams to think about what kind of business won’t be impacted by the current pandemic measures and by any possible future obstacles or challenges,” Huang explains.
“This tough, challenging condition [has] evolved our team to a stage where everyone has started to think about…new business models, how to build an event which has longtail ancillary value. What about building an event that has a Web3 feature or can simultaneously launch a virtual version or online version?
“People are adapting to this new norm. I keep telling my team ‘don’t expect [events] will come back, but just get used to the new norm’. It doesn’t mean that no events will happen again; in my view, it’s actually the contrast. Things can change real fast in China.”