ONE Championship’s most recent financial filings don’t paint a pretty picture.
According to the filings obtained by The Body Lock from Singapore’s ARCA system, for the year 2019, the promotion posted an after-tax loss of around 131 million Singapore dollars (S$), or roughly $97 million USD using a conversion rate of 1 USD to 0.74 Singapore Dollars. This brings the accumulated losses of the company to around $228 million USD. While revenue did increase from S$ 37.4 million to S$ 62.4 million in 2019, net cash flow from operating activities decreased by roughly S$58 million during the same time period from S$- 78.4 million to S$ -136.6 million. Total assets for the organization were more than halved in 2019 as well, dropping from S$199.8 million in 2018 to S$98.7 million.
Key financial metrics outline the company’s current precarious position. Return on equity (ROE), a financial calculation that is often used to compare a corporation to peers in its industry, dropped over 100% to a staggering -158.29% for 2019. Although we don’t know the exact ratio for promotions like the UFC and Bellator, it isn’t a far stretch to assume that both of those companies have a positive ROE calculation (especially the UFC). ONE Championship’s current ratio, which looks at a firm’s ability to pay debts due in a year or less, decreased from 19.63 in 2018 to 5.93 in 2019. In most situations, a current ratio above 1 is considered healthy and much more than that can indicate a company is using its assets inefficiently. That being said, such a large drop in a one-year time span is something investors would want to keep an eye on moving forward.
As reported by Bloody Elbow’s John S. Nash in more detail, losses for ONE Championship is nothing new. The company files under Group One Holding PTE LTD and includes wholly-owned subsidiaries including One Elite Agency PTE LTD, eSports PTE LTD, One China PTE LTD, among others. As the company has continued to expand into other areas and build its universe of superheroes, the promotion has struggled to become profitable.
The organization seems to be aware of the optics. In an interview with Pro Sports Asia, ONE CEO Chatri Sityodtong acknowledged that the company was operating at a loss but stated that he believed ONE Championship would be profitable by the end of 2021. In the same interview, Sityodtong also claimed that ONE Championship would eventually surpass the NFL, NBA, MLB, and others in terms of its total worth.
Unless the financials from 2020 have drastically changed from the previous years, however, that would seem to be a tall order. Although the promotion was able to raise around $70 million in funding last year, it was also forced to cut around 20% of company staff. The coronavirus also compelled the company to cancel several events over a period of months, most likely affecting its bottom line. As ONE continues to find its footing in an emerging market for the MMA industry, the organization will have to pivot quickly if it doesn’t want to continually rely on investors to help finance it in the future.