The pandemic has been a tragedy. But, according to Chinese linguistic written symbolism, crisis and opportunity are two sides of the same coin. Such is the case in the business economy.
One company that may be very well positioned to deliver results this year is B2Digital Inc (OTCMKTS:BTDG), a company that has been mostly associated with Mixed Martial Arts PPV events. You may have heard of them. The company’s live events are now available on Apple TV and Amazon Fire TV, including over PPV.
BTDG styles itself as “the development league for MMA”. However, as it has explained, this is really about a roll-up strategy in the fitness facility space. They have cultivated a brand that scores with hardcore gym rats. And now they are buying up and branding a bunch of gyms. It’s a very interesting model.
And, in 2020, they walked into a marketplace that was selling gyms at rock bottom prices. That offered the company the chance to get this model rolling with its first three major gym additions at very strong values – one might even call this a distressed asset investment play. And that model is still in place with the pandemic still largely preventing smaller fitness players to stay in the game.
But the root of that value is the B2 Fighting Series brand. That’s ultimately the pearl in the oyster of this model. That’s why we point the stock out now.
Off and Running
To wit: B2Digital Inc (OTCMKTS:BTDG) just put out its Spring 2021 Fighting Live Event Season Schedule, and it looks like an ambitious plan that stands to advance the size of that pearl powerfully, with 17 big events across a diverse pool of metropolitan markets in 8 top fighting U.S. states.
“We will continue to emphasize our emerging model, which is heavy on pay-per-view marketing and delivery, relies very little on in-person attendance, and creates layers of value that can be monetized over time in our One More Gym roll-up strategy,” commented Greg P. Bell, CEO of B2 Digital.
According to the release, BTDG successfully navigated a very challenging context in 2020, driving record growth and topline performance by balancing live event media distribution, fitness facility revenue growth, grass roots marketing, and new over-the-top content delivery solutions to produce accelerating growth and performance. As 2021 gets underway, the Company is poised to continue those successful trends as it embarks on its most ambitious live event schedule ever while adding new fitness facilities to its branded One More Gym network to drive operational cash flows.
That’s the essence of the argument here. This is an “ecosystem” more than a simple product. The company has integrated a number of moving parts that support each other – the fights build the brand, the brand builds the stickiness of the gyms.
That model relies on two major initiatives: expand the audience of the live events and the expand the network of gyms.
As for the second part, the company noted last month that it plans to continue its roll-up strategy in the fitness facility market over the coming twelve months with the objective to acquire one to two new gym facilities every quarter and to increase these acquisitions as the spread of Covid-19 decreases nationally.
According to its own data, each acquisition represents at least $400K per year in rolling forward next twelve-month revenues based on past historical performance.
The Show Must Go On
As for the first part, B2Digital Inc (OTCMKTS:BTDG) also just announced a record number of live events set to roll out over coming months, pandemic or no pandemic.
The company noted that it has cemented a model – like so many live sporting event plays – that doesn’t really rely on in-person attendance. While it will be nice later in the year to start packing event centers with screaming fans, the company’s PPV model and digital streaming/OTT delivery has become advanced enough that it is now able to pull in just as many or more eyeballs for its events than it used to in pre-pandemic times.
“We are fired up about returning to exciting live events to kick off the new year, and we have a tremendous action-packed schedule set to roll out in 2021,” added Bell. “We have been fortunate during the past year to be in a position to capitalize on distressed asset opportunities while maintaining our brand positioning in the process. Now that we are closing in on the re-emergence of a more normal operating environment, those investments stand to pay off for our shareholders in 2021, both in terms of our live events and our fitness facilities.”
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