We’re benchmarking ourselves against the NFL, not UFC: Chatri, ONE Championship

Chatri Sityodtong, founder, chairman and CEO of ONE Championship

As far as Asian sports media firm ONE Championship is concerned, its true competitor is major American football league NFL and not its US mixed martial arts (MMA) peer Ultimate Fighting Championship (UFC).

And it isn’t because the UFC isn’t a worthy competitor; it’s just not big enough.  

“For us, our internal benchmark is actually NFL,” said Chatri Sityodtong, CEO, founder, and chairman of ONE Championship. “NFL is worth $80 billion and that’s the world’s most valuable sports media property right now.”

He added: “There’s no reason why ONE Championship cannot be a $100-billion dollar property. We’re truly global, the market is truly global, so, in that sense, our opportunity is also truly global.”

The UFC is worth around $6-7 billion, according to Sityodtong’s estimates, with plenty of room to grow. In 2016, the US company was acquired for $4 billion by Endeavor (previously WWE-IMG) in one of the largest deals involving a sports brand. 

Today, UFC is still larger than ONE Championship, but Sityodtong is confident it won’t remain that way for long.

He declined to reveal ONE Championship’s current valuation but said that an “upcoming announcement” is likely to drive it up by a few billion dollars. The Asian sports media property was last valued at nearly $1 billion, when it closed its $166-million Series D round led by Sequoia Capital in October 2018.

Moving forward, ONE will look into monetising its 20-million-strong global fan base. The Asian media property’s total viewership and reach are already on par with the NFL, according to Sityodtong.  

“NFL has 17 million viewers per game. NBA has 4 million viewers per game… Last year, we averaged 20 million viewers per event,” he said. 

“Once you have that asset base, there are nine [different] ways to monetize it because now I can sell a T-shirt to my 20 million fans per event, right? So that’s the idea of what I mean by scaling viewership. The real monetization, meaning billions of dollars, happens now,” he added.

For the next year, ONE will be ramping up its eSports and athleisure divisions. Senior hires have already been made in both departments, including ONE’s eSports CEO, as well as former Lazada senior executives for ONE’s athleisure arm. 

ONE Championship is also actively hiring in the US, with new offices in Los Angeles and New York City. It will also open the US branch of ONE Studio, ONE Championship’s filmmaking outfit, in Los Angeles this year. 

Sityodtong kept mum on concrete details across all these developments but acknowledged that the rapid expansion of these verticals is likely to shift ONE’s revenue structure significantly.

He added that sponsorships and media rights currently make up the bulk of revenues. If executed well, ONE Championship will achieve profitability within the next 12-18 months. 

But when distilled to its true core, Sityodtong emphasised that ONE’s success boils down to its single-minded mission to display Asian “values, heroes and stories”. 

Since ONE began airing its content on US television with Turner in January, Sityodtong said that its viewership has already outstripped sports events such as the UEFA Champions League. 

The response, he says, caught both ONE and Turner by surprise. 

Our genre might be martial arts, but our platform is humanity,” said Sityodtong. “That’s why we were able to scale across so many different markets.”

Edited excerpts of an interview with Sityodtong:

You did a deal with Turner earlier this year that marked your entry into the US. How did this come about? 

When I first started ONE Championship, we were 100 per cent focused on Asia, with martial arts being Asia’s greatest cultural treasure, celebrating values, heroes and stories. 

Our values are integrity, humility, honour, respect, courage, discipline, compassion, [these are] the values of martial arts and of Asian society as a whole. Heroes who inspire the world, and stories that ignite countries to rally behind their heroes, stories of triumph over adversity or poverty or tragedy or impossible odds.

And then what happened was that we started looking at our digital and social media metrics, and we realised there was a big fan base growing all over the world, and it wasn’t just Asia. Our content was resonating, irrespective of geography, culture or governments. 

We realised that our formula of values, heroes and stories actually appealed to all of humanity. Our genre might be martial arts, but our platform is humanity.

This is the first time in history that a major US broadcaster has bought multi-million dollars worth, in terms of media rights, of Asian sports property. Normally, it’s the other way around. So it was a huge inflexion point for us.

Turner has about four or five major global sports properties, including NBA, Champions League and us. We are already ahead of Champions League after just a few months in terms of viewership on the platform. 

I had my corporate development team look at the pros and cons, and we decided that the US market is a huge market opportunity for ONE Championship now.

The US sports market is the biggest in the world in terms of dollars and sophistication. We are opening offices right now, as we speak, in LA and New York City.

You say you’ve overtaken Champions League among Turner’s current list of partners. But where do you currently stand against the rest of them? What is your forecast? 

Our numbers are still small, relative to all of the masses. But again, the trajectories are what’s more important. So anywhere from 10x to 30x is what we’re seeing on the metrics. I’ll have to combine our digital, social and TV metrics to know what number it is in the US, but it’s still relatively small. The viewership is around a million-plus right now in the US per event or show, which is still relatively small.

You mentioned last year that ONE Championship’s revenue target was to hit $100 million. Did you hit that last year? Or is that your target this year? 

I’ll just say that we are in that range. And I will say that we’re growing around the triple digits is what our revenue run rate is right now in terms of percentage. We have a lot of different initiatives this year that could blow through a lot of our projections.

Where is ONE Championship on its monetisation journey now? 

When I look at the ONE Championship business model, you can’t monetize anything without a few first phases: One, product development, which is you have to have the best production value not only in the stadium, but in TV broadcast. You have to blow people away. 

Second, you have to have brand leadership, meaning that you have to be viewed as number one in the region at least, and ideally number one in the world for that genre. Then, you need the audience and scale. 

Just to give you some numbers, NFL has 17 million viewers per game. NBA has 4 million viewers per game. Last year, we averaged 20 million viewers per event. Once you have that asset base, there are nine [different] ways to monetize because now I can sell a T-shirt to my 20 million fans per event, right? 

Compare this to three to four years ago, when we only had 700,000 viewers per event. So that’s the idea of what I mean about scaling your viewership. The real monetization, meaning billions of dollars, happens now.

What is the breakdown of your revenue structure like?

Sponsorship is a little less than 50 per cent. And then media rights are also double-digit percentage. 

The next big leg is our video games, which we will be launching soon. We also just hired the head of our athleisure business, which, we believe, can be a huge business.

If you look at Nike, Adidas, Reebok and Under Armour, they spend billions of dollars on marketing and sponsoring athletes to wear their products so that the consumer will wear it. 

But if you think of ONE Championship, we already have an installed base of fans and athletes. So if we just put the ONE logo on a shoe, a pair of jeans or yoga pants, there’s no reason why we cannot compete against Nike, Adidas, Under Armour and Reebok.

So we’ve hired some senior ex-Lazada executives to run this business for us. And with eSports, we’re gonna make some big announcements about our first events in the next few weeks. We already landed a huge CEO for eSports, which we’ve not announced yet.

What about events? You were talking about doing 100 events in the next two years?

So next year, we’re planning 80 events a year. By 2021, I definitely believe we’ll cross 100-plus events. A huge jump for us is that some of these shows will be in the US. Some it will spread out to eSports as well. 

So we’re launching our first eSports events this year, about which we will make a big announcement in the next few weeks. It will be Asia’s largest eSports championship series. There’s no question about it.

How did you zero in on eSports as a vertical?

Because 80 per cent of our audience is millennials. We actually conducted a study about this. If you jump into a country like the Philippines today, 45 per cent of our fans are gaming fans or gamers themselves. So it’s a natural fit. It pulls in a new demographic and new audience to make our pie even bigger, right?

So if you think about corporate strategy for a second, we have a huge platform, world-class live events, we’re broadcasting live in 140 countries, doing content creation and various products and we have our own travel show. It’s easy to add a content stack and do eSports because we already have that platform. So ONE has built a platform and now we could arguably put different types of content stacks in there. 

Will you raise capital separately for some of these divisions like eSports?

We don’t need to, but possibly, yes.

Are you getting into the actual production of eSports? Or partner with others?

It’ll be across the whole gamut. Obviously, with our own video game, it’ll be very easy because we’ll own everything, but then there’s going to be games we invest in, and games that we partner with. 

How about the athleisure segments? Is that going to happen next quarter?

No, not yet. But I think the opportunity is just huge. Again, think about how big Nike, Adidas, Reebok and Under Armour are. They spend billions of dollars on marketing and sponsoring athletes to make their brand relevant. Our brand grows every day organically through our content and through our distribution. So it’s very easy for us to do this. 

We have already started, so we have athletic wear and kind of leisure wear, which is more like cool streetwear kind of stuff that’s already for sale. Opening physical retail stores is also a possibility. 

Are you going to partner with some of the e-commerce players?

So our ex-Lazada executives are going to open our virtual stores on Lazada, Amazon, Shopee, so you’ll start to see that coming out in the next few months.

How do you see your revenue shifting? It sounds like you’re adding many different verticals to ONE Championship very soon.

I’m not going to comment on our revenues right now because there’s a scenario in which we may hit over half a billion very quickly. So yes, I’d rather just tell you that our revenues are growing triple digit percentages and will likely surprise on the big upside.

When do you then see yourself being EBITDA positive then?

We anticipate profitability in the next 12 to 18 months.

Are you targeting a listing? Because you had previously spoken about pursuing this.

I don’t want to target a date or year yet. A lot of things have changed, right? Before we’re just an Asia-only player. So under those circumstances, yes, we would have gone public in Asia, but now we’re truly a global player. 

There are so many other things we want to do that I think right now IPO would be a distraction for us. I want to get all these big pieces underway and humming. 

We also have to consider things like the economic climate, stock market valuations, right? So, when the time is right, we’ll do it. It’s definitely in the plan; it is just a question of when.

Where do you stand against UFC? 

So globally, we’re much bigger than UFC in terms of viewership numbers. For our March 31 event in Tokyo, we did 41.9 million viewers. UFC’s events probably do anywhere from 1 million to 5 million viewers globally.

But let me tell you why, it’s not because they’re actually hurting, it’s because they are typically behind a paywall. So they’re monetizing it more aggressively than us and that’s why their viewership numbers are much smaller than ONE Championship.

But UFC’s market value is still much larger than yours, right? 

Yes, their market value, I believe, is around $6 to 7 billion.

They were bought by Endeavor back in 2016 for about $4 billion. Do you think they’re worth that much?

Yeah, I definitely think UFC is worth that much and it’s going to be worth a lot more in the future as well.

So where is the gap here then? Your viewership is higher but revenue-wise you’re not there yet. 

Our strategic approaches are different. 

One player is saying: “Let me monetize maximum today behind paywalls.” The other is saying: “I want to do a Facebook strategy and get a billion users.”

Facebook doesn’t charge anybody. And they only recently started introducing ads more aggressively. They didn’t have this just two years ago. But that’s an approach, so as a media property, there are always two ways to approach this. 

We chose a long time ago to do the Facebook model – make it free, accessible to as many people as possible and build a large fan base. Our internal plans are to hit 100 million viewers per event within 2.5-3 years.

Who are you comparing yourself against then, if not UFC?

For us, our internal benchmark is actually NFL. 

NFL is worth $80 billion, and that’s the world’s most valuable sports media property right now. American football is a single country sport, so there’s no scalability. So we really genuinely believe that our competitive set is NFL in terms of our internal goals. 

There’s no reason why ONE Championship cannot be $100-billion dollar property. Because we’re truly global, the market is truly global, so in that sense, our opportunity is also truly global.

ONE Championship is a horizontal play across all martial arts. That’s why our tagline is “home of the martial arts”. UFC is only one vertical – mixed martial arts.

One of the things I’m most proud of, being the founder of ONE Championship, is that in the last eight years, there’s never been a single scandal by any of our biggest heroes on the front page of a newspaper. The only reason they’re on the front pages is for winning world titles or helping charities and underprivileged children. 

That is a very big source of pride for me because, at the end of the day, ONE championship is about doing good in the world, making an impact on billions of lives by igniting hope, strength, dreams, and inspiration. So instead of Superman, Spiderman, Batman, and Avengers, we have the real heroes and that’s ultimately what ONE Championship is about. 

And, quite frankly, we’ve crushed UFC in Asia. UFC is doing two events this year in Asia, right? We’re doing 45 events. So it’s not even close, not even on the same page. 

But I also think there’s enough space globally for both giants. We’re the largest in the East and they are the largest in the West. I think there’s definitely a space for that, like in every other industry.

How much is ONE Championship valued at the moment? You were valued at over $1 billion in the last round. 

I’ll just say we have some big news coming end this summer that will make us… what’s after a unicorn?

A decacorn?

No, not a decacorn, but we’re on the way to being a decacorn. 

Any new investors?

You’ve got to wait and see. It’s going to be some big, big news.

What do you invest the most in?

As a leader, I’m so blessed to serve the greatest team on the planet. I genuinely feel that from the bottom of my heart, but I worry that as we continue to hire across all these different offices across the continent but also now in America – will ONE Championship have the same quality of people? 

We give one job offer for every 200 applicants, but one of my biggest worries is that if we don’t hire right for the next leg, it’ll be very easy for us to misexecute. It’s always my worry, you know, the culture, the people.