ONE Championship reports record high $110 million in losses for 2021, $383 million in total

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

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. When their 2020 numbers showed $48 million in losses for the 12 months, ONE Championship CEO Chatri Sityodtong mainly claimed faux information:

“I’ll simply say like look, the web is a harmful place in case you consider all the things you learn,” Sityodtong said in September 2021. “There was tons of inaccuracies, tons of errors, it’s not even like one or two, if it had been identical to one or two I might level it out. I imply like, it’s not price addressing. Once more, it’s like I stated, um, like, I wish to let the reality communicate over time.”

A 12 months 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 duplicate of those paperwork, and aside from once more exhibiting huge losses in 2020, it additionally revealed how that quantity has greater than doubled in 2021.

In accordance with their latest submitting, ONE’s losses in 2021 are actually in triple digits at $111 million. With that big quantity, ONE’s has whole amassed losses of $383 million as of December 31, 2021.

ONE reported $56 million in “advertising and marketing bills” and $50 million in “administration and different bills” for the 12 months.

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

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Elevated income?

ONE reported their revenues for the 12 months 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 whole greater than $50 million in 2021, a small enhance from the $47 million they reported the earlier 12 months.

The second largest income for ONE was sponsorship revenue, 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’s price noting nonetheless that ONE nonetheless consists of non-cash parts as a part of their whole income. Deal Street Asia, which 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 providers being transferred “over time” sooner or later.

Readers of final years monetary statements may discover a discrepancy in what was reported final 12 months and what this new filings reveals 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.

An extra $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 in the past 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 recognises broadcasting and sponsorship income for money and non-cash consideration.”

Administration is required to make use of judgement 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 charge playing cards on the contract inception to the publicly out there market charges or quotes from distributors in related enterprise.

This has a corresponding impression on price of gross sales recognised which is able to equate to the quantity of income recognised.

It’s not possible subsequently 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 overall capital they raised in 2021 — and $38 million as a one-time honest worth loss.

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Is that this sustainable?

ONE’s ballooning losses have solely been made doable by their prolific capability to lift 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 stuck deposits. With the issuance of choice shares that 12 months, they raised one other $243 million ($56 million it from the convertible observe.) As of December 31, 2021, the Firm ended the 12 months with $519 million in share capital, however reported solely $172 million in money and stuck deposits.

With ONE on tempo to simply break previous $400 million in amassed losses in 2022, simply how sustainable is this example? Will they persuade extra traders that they’ll 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 revenue growth in 2022, and expects to be profitable in three years.

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

In 2017, Sityodtong told the Financial Times the corporate was “very, very near profitability,” and ended the 12 months with accumulated losses of $67 million dollars.

In 2018, they informed Variety that “annual revenues of $100 million are imminent,” however had these losses grow to $126 million.

In 2019, Sityodtong told Business Insider that the UFC and ONE Championship had been a world 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 Japanese hemisphere. And we’re the 2 huge 800-pound gorillas within the business.” They ended that 12 months with $229 million in total losses.

In November 2020, Sityodtong informed High Net Worth that “primarily based on our present trajectory (even with COVID-19), I predict that ONE Championship will probably be worthwhile inside 12 months and we’re on observe.” ONE laid off a significant percentage of its workers that 12 months, and had accumulated losses of $273.

For 2021, they claimed the reports on their finances were false, and that the “truth” would come out ultimately. Their newest filings present that losses ballooned to $383 million that 12 months. ONE now excuses 2020 as an “anomaly” because of the 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 price 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 because of the 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 raise, we had been in a position to resume funding in our core product of dwell occasions.

“We’ve gone from energy to energy 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 non-public.

Going ahead, it’ll in all probability even be quite a bit tougher for individuals to dig up their funds. With ONE recently re-domiciling in the Caymans and their extra opaque construction on enterprise, this 2021 report may probably be the final monetary assertion to be publicly accessible, till or until the corporate goes public.