ONE Championship studies file excessive $110 million in losses for 2021, $383 million in whole

Regardless of all their large claims, ONE Championship’s losses proceed to develop at an alarming fee.

In every of the previous couple of years, Bloody Elbow has obtained copies of ONE Championship’s annual monetary filings with ACRA, which is Singapore’s shut equal to the SEC. Once they 2020 numbers confirmed $48 million in losses for the yr, ONE Championship CEO Chatri Sityodtong mainly claimed pretend information:

“I will simply say like look, the web is a harmful place when you consider all the things you learn,” Sityodtong stated in September 2021. “There was tons of inaccuracies, tons of errors, it is not even like one or two, if it had been identical to one or two I’d level it out. I imply like, it is not value addressing. Once more, it is like I stated, um, like, I prefer to let the reality converse over time.”

A yr later, Group One Holdings, the dad or mum firm to ONE Championship, has once more filed their newest monetary statements with ACRA. Bloody Elbow has secured a replica of those paperwork, and aside from once more displaying large losses in 2020, it additionally revealed how that quantity has greater than doubled in 2021.

In line with their current submitting, ONE’s losses in 2021 at the moment are in triple digits at $111 million. With that giant quantity, ONE’s whole amassed losses of $383 million as of December 31, 2021.

statements

Yr 2021 2020
Yr 2021 2020
income 67,698 56,797
value of gross sales -35,327.00 -18.117
Different (bills/)earnings -36,810 9,079
Advertising and marketing bills -56,172 -46,836
Administration and different bills -50,280 -49,401
Impairment lack of commerce receivables -97 -427
Loss earlier than tax -110.988 -48,905
Revenue tax expense -56 -265
Loss web of tax -111.044 -49,170

In hundreds (000s) of US {dollars} ($) Supply: ONE CHAMPIONSHIP (SINGAPORE) PTE. LTD. FINANCIAL STATEMENTS Yr ended 31 December 2021

ONE reported $56 million in “advertising and marketing bills” and $50 million in “administration and different bills” for the yr.

These newest annual filings had been signed on August 8, 2022 by two firm administrators, Chatri Trisiripisal (Sityodtong) and Teh Hua Fung, as properly the general public accounting agency Ernst & Younger.

ONE Championship’s funds: 2016, 2017, 2018, 2019, 2020

Photograph by studioEAST/Getty Pictures


Elevated income?

ONE reported their revenues for the yr at $67.7 million. This whole is a 19% enhance from 2020’s $56.8 million. Nearly all of income got here from broadcast rights, which totaled greater than $50 million in 2021, a small enhance from the $47 million they reported the earlier yr.

The second largest income for ONE was sponsorship earnings, which totaled $9.2 million in 2021, an nearly 30% enhance from 2020, when it totaled $7.1 million. Digital platform revenues the place additionally noteworthy, seeing the most important enhance from $1.75 million in 2020 to nearly $7 million in 2021.

It is value noting nonetheless that ONE nonetheless consists of non-cash parts as a part of their whole income. Deal Avenue Asiawhich was first to report on these newest filings, additionally identified how over 97% ($66.2M) of ONE’s whole 2021 income is comprised of products or companies being transferred “over time” sooner or later.

GROUP REVENUES

income 2021 2020
income 2021 2020
Ticket income 86 105
Sponsorship earnings 9,220 7.145
Broadcasting income 50,094 47,078
Digital platform income 6,969 1,754
Merchandise income 1,329 715
whole income 67,698 56,797

In hundreds (000s) of US {dollars} ($) Supply: ONE CHAMPIONSHIP (SINGAPORE) PTE. LTD. FINANCIAL STATEMENTS Yr ended 31 December 2021

Readers of final years monetary statements would possibly discover a discrepancy in what was reported final yr and what this new filings exhibits for 2020. After revisiting “the estimation strategy in figuring out the non-cash consideration for sure contracts” ONE has restated their broadcast revenues and advertising and marketing bills.

A further $8.6 million has been added to their 2020 broadcast revenues, which has principally been offset by an $8.8M enhance in advertising and marketing bills. This restatement raises the query as to how a lot of their revenues is basically from money transactions and the way a lot is it from barter.

ONE has used barter transactions previously to apparently inflate their revenues. Beginning in 2018 when Bloody Elbow and different shops started reporting on their funds, ONE eradicated the class, and started grouping in barter transactions with broadcast and sponsorship revenues.

Of their latest submitting, ONE notes that “The Group acknowledges broadcasting and sponsorship income for money and non-cash consideration.”

Administration is required to make use of judgment to find out the honest worth of non-cash consideration acquired and had relied on the speed playing cards offered by the sponsorship companions, after evaluation of its fee playing cards on the contract inception to the publicly accessible market charges or quotes from distributors in related enterprise.

This has a corresponding impression on value of gross sales acknowledged which can equate to the quantity of income acknowledged.

It’s subsequently inconceivable to find out how a lot of their revenues from broadcasting and sponsorship or how a lot of their $56 million in advertising and marketing bills are nonetheless composed of those barter transactions.

A 2020 redeemable convertible mortgage observe, which is debt that may later be transformed into fairness, would additionally account for an enormous chunk of each their reported capital and losses for 2021.

This stems from a June 2020 convertible observe of $72 million plus curiosity, which was transformed to choice shares on November 2021 with a valuation of round $93 million. They counted $56 million of that as share capital — nearly 1 / 4 of the entire capital they raised in 2021 — and $38 million as a one-time honest worth loss.


ONE Championship CEO Chatri Sityodtong speaking at SPORTel Asia

ONE Championship CEO Chatri Sityodtong talking at SPORTel Asia
Photograph by Sean Lee/Getty Pictures

Is that this sustainable?

ONE’s ballooning losses have solely been made attainable by their prolific means to boost cash regardless of all the things.

ONE began 2021 with a share capital steadiness of $274 million, however with solely $88 million remaining in money and glued deposits. With the issuance of choice shares that yr, they raised one other $243 million ($56 million it from the convertible observe.) As of December 31, 2021, the Firm ended the yr with $519 million in share capital, however reported solely $172 million in money and glued deposits.

With ONE on tempo to simply break previous $400 million in amassed losses in 2022, simply how sustainable is this case? Will they persuade extra traders that they will have the ability to flip issues round?

That could possibly be what ONE is banking on, with Sityodtong not too long ago claiming they’re on observe for double-digit income progress in 2022, and expects to be worthwhile in three years.

That is one thing Sityodtong and different ONE executives have been repeatedly claiming by means of the years although.

In 2017, Sityodtong advised the Monetary Occasions the corporate was “very, very near profitability,” and ended the yr with amassed losses of $67 million {dollars}.

In 2018, they advised Selection that “annual revenues of $100 million are imminent,” however had these Losses develop to $126 million.

In 2019, Sityodtong Enterprise Insider advised that the UFC and ONE Championship had been a worldwide duopoly in fight sports activities, “UFC controls an 80% market share of the western hemisphere, however ONE Championship controls 90% of the market share within the Jap hemisphere. And we are the two large 800-pound gorillas within the business.” They ended that yr with $229 million in whole losses.

In November 2020, Sityodtong advised Excessive Internet Value that “primarily based on our present trajectory (even with COVID-19), I predict that ONE Championship can be worthwhile inside 12 months and we’re on observe.” ONE laid off a big proportion of its staff that yr, and had amassed losses of $273.

For 2021, they claimed the studies on their funds had been false, and that the “fact” would come out ultimately. Their newest filings present that losses ballooned to $383 million that yr. ONE now excuses 2020 as an “anomaly” as a result of pandemic, and identical to yearly, claims 2022 is nice and profitability is about to occur.

“We proceed to develop our income year-on-year and improve our value efficiencies. We’re assured that we’re on a transparent path to construct a sustainable and worthwhile enterprise in the long run,” a Group ONE Holdings spokesperson stated in a ready assertion despatched to Bloody Elbow and different shops that requested for touch upon their funds.

“2020 was an anomaly as a result of restrictions imposed upon us by the worldwide pandemic as we had been unable to host any dwell occasions for a number of months. In 2021 as restrictions began to carry, we had been capable of resume funding in our core product of dwell occasions.

“We have gone from power to power in 2022 with a number of partnerships launched internationally that can have a big impression on our future income and profitability as we proceed to develop our model globally.”

ONE declined to touch upon Bloody Elbow’s questions on the quantity of non-cash transactions being included as “income” for the corporate.

The large claims ONE has made to the general public have but to match the precise figures they report back to the federal government in personal.

Going ahead, it’s going to most likely even be lots tougher for individuals to dig up their funds. With ONE not too long ago re-domiciling within the Caymans and their extra opaque construction on enterprise, this 2021 report might presumably be the final monetary assertion to be publicly accessible, till or until the corporate goes public.

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