Endeavor sued for allegedly stealing ideas that led to successful IPO – The Hollywood Reporter
A consultant is suing Endeavor claiming he gave the company the blueprint to salvage its public market debut, which led to a successful $10.3 billion IPO, but he hasn’t been compensated or credited.
David Carde began his lawsuit, which was filed Thursday in LA County Superior Court, by comparing that alleged theft to when the the founders of Endeavor left ICM in 1995 and in the middle of the night “stole a bunch of customer records and stuffed them into an SUV parked near a freight elevator.”
“Following the embarrassment of the failed initial public offering, Endeavour’s crippling debt became an existential threat after the COVID pandemic brought the company to a halt,” reads the complaint, which is embedded below. “However, once Endeavor flew and then adopted Mr. Carde’s approach of communicating his company to the market, a path to a successful IPO became apparent and was ultimately achieved.”
The complaint also notes analysts’ criticism of Endeavor’s “spending spree” over the past decade. Carde specifically points to his acquisition of what has been described as a “hodgepodge” of unrelated businesses, including mixed martial arts organization UFC, art fair company Frieze and Professional Bull Riders. He also points out that the company lost $554 million in 2019 and had accumulated $4.5 billion in long-term debt.
The company planned to hold its IPO in 2019 but pulled it amid market skepticism.
“Simply put, no one thought Endeavor had a ‘structure’ for their company,” attorney Devin McRae wrote in the lawsuit. “No one thought Endeavor made sense as a business.”
No one except Carde, according to the lawsuit.
A week before Endeavor canceled its first IPO, a lawyer for Carde sent CEO Ari Emanuel a copy of his plan which he said correctly communicated Endeavor’s value to the market. He claims this illustrated how Endeavour’s infrastructure of supposedly unrelated companies is actually good for the business because it generates network effects, which is the concept that a product’s value increases at as more and more people use it.
Carde claims there was an enforceable implied contract because his attorney emailed his analysis to Emanuel and WME President Ari Greenberg.
“In the analysis itself, the document indicates that the plaintiff is represented by an attorney, Giordano, under the unambiguous title “REPRESENTATION: “In the entertainment industry, it is axiomatic and a custom and practice that when the ideas and intellectual property are submitted by representation, these materials may not be used free of charge by the recipient, but rather compensation will be demanded for any use,” writes McRae.
According to the lawsuit, Carde’s analysis was used in marketing materials for Endeavor’s second IPO by “each of Endeavor’s top 3 executives who repeat Mr. Carde’s thesis and objective.”
McRae adds, “Following the introductions that establish the contextual framework for the company’s network effects, Endeavor then proceeds to co-opt Mr. Carde’s proprietary technical scheme to generate the visual marketing materials that drive the company’s network effects. .”
The complaint, which seeks punitive damages, alleges implied breach of contract and unjust enrichment.
Endeavor has yet to comment in response to the complaint.